Breaking Down FIGS, Inc. (FIGS) Financial Health: Key Insights for Investors

You're looking at FIGS, Inc. and wondering if their premium healthcare apparel story still has legs, especially with the market's recent volatility-and the quick answer is that their operational discipline is starting to pay off, but you can't ignore the headwinds. The company's latest Q3 2025 results show a clear return to net profitability, reporting a strong net income of $8.7 million, a sharp turnaround from the prior year's loss, on net revenues of $151.7 million, which grew 8.2% year-over-year. That's a defintely solid beat, driven by a higher average order value (AOV) of $114.00 and a growing base of 2.78 million active customers. But, to be fair, the raised full-year 2025 net revenue growth outlook of approximately 7.0% is still modest, and the analyst chatter is focused on two clear risks: how they'll manage persistent tariff headwinds that could pressure gross margin next year, and the execution risk tied to their new physical retail expansion, like the recent NYC Community Hub. We need to dig into the balance sheet to see if the cash flow can truly support that growth against those costs.

Revenue Analysis

You want the bottom line on FIGS, Inc. (FIGS) revenue health, and the direct takeaway is this: the company has accelerated its growth in 2025, leading management to defintely raise its full-year outlook. They now project full-year 2025 net revenue growth to be approximately 7%, a significant jump from earlier low-single-digit expectations.

The core of FIGS, Inc.'s top line remains its premium apparel for healthcare professionals, but it's the mix and the momentum that matter. In the third quarter of 2025, net revenues hit $151.7 million, representing an 8.2% increase year-over-year, which was the strongest quarterly growth rate in two years. That's a solid rebound, and it shows the brand's pricing power and customer loyalty are holding up, even with economic headwinds.

Here's the quick math on where that money comes from. The business is overwhelmingly driven by its core product, scrubwear, but the non-scrubwear category is showing renewed life. Scrubwear net revenues for Q3 2025 were $127.0 million, growing at 8.4% year-over-year. That means scrubwear still accounts for roughly 84% of total net revenues. The non-scrubwear segment, which includes items like outerwear and footwear, saw Q3 2025 net revenues of $24.6 million, up 7.2%. That's a good sign for diversification, but the scrub is still the king.

The geographic split also tells a story of targeted expansion. While the U.S. market is the powerhouse, international growth is the clear accelerator. U.S. net revenues for Q3 2025 were $127.3 million, a respectable 7.5% increase. But look at the international side: those revenues climbed to $24.3 million, an 11.7% increase year-over-year. This is a critical near-term opportunity, as the company is rapidly expanding its footprint, jumping from 33 to nearly 60 planned international markets by the end of 2025. You can dive deeper into who is driving this demand by Exploring FIGS, Inc. (FIGS) Investor Profile: Who's Buying and Why?

The table below breaks down the key revenue segments for the third quarter of 2025, which gives you a clear view of where the growth is concentrated:

What this breakdown highlights is a healthy, albeit concentrated, revenue base. The primary risk, though, is the heavy reliance on scrubwear. Plus, management is monitoring inventory growth-a 23% year-over-year increase-for potential margin risks, even with process improvements in place. Still, the fact that average order value (AOV) increased 5.6% to $114 in Q3 2025 shows customers are buying more or higher-priced items, which is a key indicator of brand strength.

• Scrubwear remains the backbone, driving $127.0 million in Q3 2025.
• International sales are the fastest growing, up 11.7% in Q3 2025.
• Full-year revenue growth is now projected at approximately 7%.

Profitability Metrics

You want to know if FIGS, Inc. (FIGS) is making money and how efficiently they're doing it. The direct takeaway is that while their gross profitability is exceptional for the apparel sector, their operating and net margins are thin, but they are showing a strong upward trend in 2025 due to better cost control.

In the third quarter of 2025, FIGS reported net revenues of $151.7 million, an increase of 8.2% year-over-year. This growth is healthy, but the real story is in the margins-the percentages of revenue that turn into profit-which tell us about their operational efficiency and pricing power.

Gross Profit and Operational Efficiency

Gross profit is your first line of defense; it shows the revenue left after subtracting the Cost of Goods Sold (COGS). FIGS's gross margin is a major competitive advantage, reflecting their premium direct-to-consumer (DTC) model. For Q3 2025, the gross margin expanded significantly to 69.9%, up 280 basis points from the prior year. That's a staggering figure for an apparel company. Here's the quick math: on $151.7 million in revenue, that 69.9% margin translates to approximately $106.0 million in gross profit.

This high margin is defintely a result of a lower mix of promotional sales and improved return rates, which offset the ongoing headwind of higher tariffs. It shows pricing power and a strong brand that can command full-price sales. You can read more about their brand positioning in their Mission Statement, Vision, & Core Values of FIGS, Inc. (FIGS).

Operating and Net Profit Margins: The 2025 Trend

The operating margin (Earnings Before Interest and Taxes, or EBIT margin) and net profit margin tell us how well the company manages its overhead-selling, general, and administrative (SG&A) expenses. This is where the 2025 story gets interesting. FIGS has been laser-focused on cost management, and it's paying off.

In Q3 2025, the operating margin was 6.4%, a massive improvement from a negative margin in the same period last year. Net income for the quarter was $8.7 million, resulting in a net income margin of 5.8%. This is a dramatic shift from Q1 2025, which saw a nearly break-even net income margin of just (0.1)%.

The trend is clear: they are getting leaner. Operating expenses as a percentage of net revenues dropped to 63.6% in Q3 2025 from 73.2% a year ago, driven by lower fulfillment expenses and reduced stock-based compensation. That's a huge swing in efficiency.

Industry Comparison: A Tale of Two Margins

When you compare FIGS's Trailing Twelve Months (TTM) profitability ratios to the industry average for apparel, you see a major divergence. Their high gross margin is a huge plus, but their operating and net margins are still lagging the broader sector, which is typical for a growth-focused DTC company with high SG&A investment.

• FIGS TTM Gross Margin: 67.98% vs. Industry Average: 63.39%. FIGS is a premium outlier here.
• FIGS TTM Operating Margin: 4.86% vs. Industry Average: 18.27%. This gap shows the cost of their brand-building and fulfillment structure.
• FIGS TTM Net Profit Margin: 3.03% vs. Industry Average: 9.85%. They have a lot of room to improve net income.

The opportunity is clear: FIGS has a superior gross margin, so any sustained reduction in operating expenses will flow directly to the bottom line, quickly closing the gap with the industry's net margin average. The full-year 2025 Adjusted EBITDA margin guidance of approximately 10.3%, up from a previous range of 8.5% to 9.0%, signals management's confidence in this operational leverage.

Your next step should be to monitor Q4 2025 results for continued operating expense discipline.

Debt vs. Equity Structure

You want to know how FIGS, Inc. (FIGS) funds its growth, and the simple answer is: mostly through equity. As a direct-to-consumer (DTC) brand, FIGS carries a remarkably low level of financial leverage, which is a clear sign of a conservative, cash-flow-focused balance sheet. This approach defintely reduces risk, but it also limits the potential for debt-fueled, high-speed expansion.

Looking at the most recent data from the quarter ended September 2025, the company's total debt is minimal. This total is comprised of short-term debt and capital lease obligations of approximately $9.4 million and long-term debt and capital lease obligations of about $44.7 million. Here's the quick math: that puts their total debt at roughly $54.1 million. That's a small number for a company with a market capitalization over $1 billion.

The real story is in the debt-to-equity ratio, which measures how much debt a company uses to finance its assets relative to the value of shareholders' equity. For FIGS, this ratio as of September 2025 stood at a lean 0.13.

• Short-Term Debt: $9.4 million
• Long-Term Debt: $44.7 million
• Total Stockholders' Equity: $413.3 million

To put that 0.13 in perspective, the average debt-to-equity ratio for the broader Apparel Manufacturing industry is around 0.92, and for Apparel Retail, it's about 1.2. FIGS is operating with significantly less debt than its peers. This low leverage suggests strong financial health and a low risk of bankruptcy, as indicated by a high Altman Z-Score of 8.2.

FIGS has not had any major, public debt issuances or significant refinancing activity in 2025, which reinforces their preference for equity funding and retained earnings over external debt. The company's strategy is to grow organically, relying on its strong brand and digital platform, which you can read more about in their Mission Statement, Vision, & Core Values of FIGS, Inc. (FIGS).

This balance between debt and equity is heavily skewed toward equity funding, which is the capital contributed by shareholders. This structure means lower interest expenses and more operational flexibility, but it also means the company isn't using the potential financial 'lift' (or leverage) that debt can provide to amplify returns on equity. It's safe, but not aggressive.

The action here is to recognize that FIGS's low debt is a moat against economic downturns, but don't expect their growth to be turbo-charged by aggressive borrowing. They are financially sound, not financially leveraged.

Liquidity and Solvency

You want to know if FIGS, Inc. (FIGS) has the cash on hand to cover its near-term obligations, and the answer is a resounding yes. The company maintains an exceptionally strong liquidity position, but a closer look at the cash flow statement reveals where that cash is going-mostly into inventory and investments, which is a key trend to watch.

As of the most recent trailing twelve months (TTM) data, FIGS, Inc.'s liquidity ratios are stellar. The Current Ratio, which measures current assets against current liabilities, sits at 4.82. This means the company has nearly $5 in liquid assets for every $1 in short-term debt. That's defintely a comfortable buffer.

Also, the Quick Ratio (or acid-test ratio), which strips out inventory-often the least liquid current asset-is still very strong at 2.93. For a direct-to-consumer apparel company, this is a sign of excellent financial health; it tells you they can cover almost three times their immediate liabilities even if they couldn't sell a single scrub top right away. This is a massive strength.

Working Capital and Inventory Trends

The working capital position is robust, but the trend shows a deliberate increase in inventory. For the nine months ended September 30, 2025, the company reported a negative free cash flow of $5.1 million. Here's the quick math: this negative figure isn't due to poor operations, but rather a strategic build-up of inventory, which increased by $27.84 million in the same period. Think of it as cash being temporarily locked up in scrubs on a shelf, not wasted on operating losses.

• Liquidity Strength: Cash, cash equivalents, and short-term investments totaled $241.5 million as of Q3 2025, providing a huge cushion.
• Working Capital Use: The inventory build-up is a near-term drain on cash, but it's an investment to support future sales growth and mitigate supply chain risks.
• No Immediate Concern: The high current and quick ratios mean this inventory increase poses no immediate liquidity concern.

Cash Flow Statement Overview (9M 2025)

Looking at the Consolidated Statements of Cash Flows for the nine months ended September 30, 2025, gives a clearer picture of where the money is moving. While the core business is profitable, the cash is being deployed aggressively across all three major activities.

Here is the breakdown of the primary cash flow activities (in millions of USD) for the first three quarters of 2025:

The $30.66 million in positive Operating Cash Flow (OCF) shows the business is generating cash from sales, even after the inventory hit. The large Investing Cash Flow outflow of ($69.18 million) is primarily the company parking cash in short-term securities, not massive capital expenditures, which is a low-risk use of capital. Finally, the Financing Cash Flow of ($39.13 million) is due to share repurchases, a sign of management's confidence in the stock's value. Overall, the liquidity is excellent, but the negative free cash flow is a short-term trade-off for inventory and share buybacks. You can read more about this in Breaking Down FIGS, Inc. (FIGS) Financial Health: Key Insights for Investors.

Next Step: Portfolio Manager: Assess the impact of the $27.84 million inventory increase on future gross margin projections, assuming a successful sell-through in Q4 2025.

Valuation Analysis

You're looking at FIGS, Inc. (FIGS) and asking the core question: is the market pricing this growth correctly? My take is that FIGS, Inc. is defintely trading at a premium, suggesting the market is baking in significant future growth that needs to be monitored closely. The consensus analyst rating is a 'Hold,' and when you look at the multiples, it's easy to see why.

The stock has had a strong run, which is a good sign of momentum. Over the last 12 months, the share price has climbed by a remarkable 88.72%, reflecting a strong recovery and market optimism. However, with the stock trading around $9.10 as of November 2025, the average 1-year analyst price target sits lower, between $8.10 and $8.60. This gap signals a potential near-term headwind or at least a lack of conviction that the price can sustain its recent highs without new, major catalysts.

The Premium Multiples: Why FIGS is Priced for Perfection

The valuation ratios tell a clear story: FIGS, Inc. is expensive relative to its current earnings. Growth companies often trade at high multiples, but these figures demand scrutiny. The market capitalization is around $1.50 billion, which is a lot of future growth you are buying today.

Here's the quick math on the key valuation metrics as of late 2025:

• Price-to-Earnings (P/E) Ratio: The trailing P/E is extremely high, sitting around 92.47. This means investors are willing to pay over 92 times the company's last four quarters of earnings per share (EPS). For context, the market average is typically much lower, so this signals a growth stock where profitability is still nascent.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is 35.86. This metric, which is often better for comparing companies across different capital structures, is also elevated. It suggests a high valuation relative to its core operating profit (Earnings Before Interest, Taxes, Depreciation, and Amortization).
• Price-to-Book (P/B) Ratio: The P/B ratio is around 3.38. This is the price of the stock divided by the book value of the assets per share. A P/B over 1.0 means the market values the company higher than its net tangible assets, which is expected for a brand-driven, direct-to-consumer business like FIGS, Inc.

For fiscal year 2025, the company is anticipating sales growth of about 7.0%, reaching approximately $594.3 million. The valuation multiples are pricing in a much faster growth rate than this near-term forecast suggests. This is a classic case of a growth stock where you are paying for the next three to five years of success right now.

Dividend Policy and Analyst Sentiment

If you are looking for income, you'll need to look elsewhere. FIGS, Inc. is a growth company focused on reinvesting capital, so it does not pay a dividend. The dividend yield and payout ratio are both 0.00%.

Analyst sentiment is cautious, which is a good reality check against the stock's recent price surge. The consensus rating is a 'Hold,' with the eight covering analysts split: one 'Strong Buy,' one 'Buy,' five 'Hold,' and one 'Sell' or 'Strong Sell.' This divergence shows a fundamental disagreement on whether the premium valuation is justified by the company's ability to continue expanding its market share in healthcare apparel.

To dig deeper into the company's operational performance and competitive position, you can check out the full analysis in Breaking Down FIGS, Inc. (FIGS) Financial Health: Key Insights for Investors.

Risk Factors

You're seeing FIGS, Inc. (FIGS) post some solid numbers-Q3 2025 net revenues hit $151.7 million, an 8.2% jump, and management raised the full-year Adjusted EBITDA margin outlook to approximately 10.3%. That's great execution. But as a seasoned analyst, I focus on what can derail that momentum. The biggest risks right now are not about demand; they are about external cost pressures and operational execution.

The near-term financial health of FIGS, Inc. is defintely being tested by two major, interconnected risks detailed in their recent Q3 2025 disclosures: trade tariffs and inventory management. You need to understand the scale of these external and operational headwinds.

• Tariff Headwinds: This is the clearest financial risk. The company estimates the unmitigated annualized tariff impact is roughly 440 basis points (bps) on their financials. While only about 110 bps is expected to hit their bottom line in the 2025 fiscal year, the majority of the financial pain is projected for 2026, forcing a tough conversation about pricing next year.
• Inventory Build-up: The balance sheet shows inventory climbed 23% year-over-year to $151.2 million as of Q3 2025. Here's the quick math: higher inventory means more working capital tied up, plus it increases the dollar exposure to those intensifying tariffs and raises the risk of needing significant markdowns (excess-stock risk) if demand slows or product cycles change.

The competition in the healthcare apparel space is also heating up, so FIGS, Inc. can't just pass all those tariff costs to the customer without risking market share. That's the core strategic dilemma.

Management is aware of these pressures and has mitigation strategies, but they require flawless execution. One clean one-liner: Tariffs are a cost problem, but inventory is a cash flow risk.

The company is addressing the inventory issue with process improvements and targeted write-offs, but the real mitigation for the tariffs is a wait-and-see game. They are not planning pricing actions in 2025, but may revisit that lever in response to further tariff developments, which is a big decision for 2026. Plus, their ambitious acceleration of international expansion to nearly 60 markets and the opening of new Community Hub stores, while growth drivers, introduce execution risk-expanding that fast always does.

Here is a snapshot of the two key financial risks and the company's stated response:

If you want a deeper dive into the Q3 performance that led to this outlook, you can read the full analysis here: Breaking Down FIGS, Inc. (FIGS) Financial Health: Key Insights for Investors.

Growth Opportunities

You want to know where FIGS, Inc. (FIGS) is going next, and the data from 2025 is defintely pointing to a clear playbook: global expansion and product depth. The company is moving past its initial hyper-growth phase and focusing on disciplined market penetration and margin improvement, which is a smart pivot for long-term value.

The core of their strategy is simple: take their premium, direct-to-consumer (DTC) model to more healthcare professionals worldwide and give their loyal customer base more things to buy. This is how they plan to sustain momentum after raising their full-year 2025 net revenue growth outlook to approximately 7% year-over-year.

International Expansion and Community Hubs

The biggest near-term opportunity for FIGS is geographic expansion. The company is aggressively scaling its international footprint, jumping from 33 countries to nearly 60 planned international markets by the end of 2025. This is critical because over 80% of global healthcare professionals are outside the U.S., meaning the addressable market is huge.

In Q2 and Q3 2025, they launched in key markets like Japan and South Korea, plus 12 new markets across Latin America. They are also accelerating the opening of physical Community Hubs, with three new stores slated for Q4 2025 in major U.S. cities: New York, Houston, and Chicago. These hubs are not just stores; they are brand anchors that deepen customer relationships and allow for product discovery, which is something the pure-play DTC model can't fully replicate.

Product Innovation and Category Expansion

FIGS is not just selling scrubs; they are building a head-to-toe outfitting platform for healthcare professionals. Product innovation is a key growth driver, evidenced by the debut of new performance fabrics like FIBERx. This focus on technical apparel is a significant differentiator. They are also expanding their non-scrubwear categories, with a roadmap for further growth in outerwear, underscrubs, and footwear. This category expansion increases the average order value (AOV) and customer lifetime value. In Q3 2025, the AOV already grew 6% to $114.

Here's the quick math on the growth drivers:

• International markets: Expanding to nearly 60 by EOY 2025.
• Active Customers: Up 4% to nearly 2.8 million in Q3 2025.
• Average Order Value: Up 6% to $114 in Q3 2025.
• New Products: Launching FIBERx and expanding non-scrubwear.

Competitive Moat and Financial Outlook

The company's competitive advantage, or economic moat, remains strong, rooted in its proprietary fabric technology (like FIONx), its DTC model, and a powerful brand identity that fosters customer loyalty and repeat purchases. This combination allows FIGS to command premium pricing. The financial performance reflects this strength, with the full-year 2025 adjusted EBITDA margin expectation raised to approximately 10.3%.

What this estimate hides, however, is the impact of tariff headwinds, which are expected to intensify into 2026, though management is actively working on mitigation. Still, the strong Q3 2025 net income of $8.7 million shows a clear return to solid profitability.

To be fair, the market for healthcare apparel is getting more competitive, but FIGS's focus on a lifestyle brand and superior product quality positions them well. You can see their foundational principles here: Mission Statement, Vision, & Core Values of FIGS, Inc. (FIGS).

The following table summarizes the key financial trajectory for the first three quarters of the 2025 fiscal year:

The accelerating revenue growth through Q3 2025 and the raised full-year guidance show that the strategic investments in international markets and new products are starting to pay off. The next step is to monitor the Q4 2025 results for confirmation that the international and Community Hub momentum is strong enough to offset any tariff impacts.