FIGS, Inc. (FIGS) Earnings Call Transcript & Summary

Good morning, and welcome to another session of our Goldman Sachs School Retailing Conference. My name is Brooke Roche, and I cover the apparel brands and softline sector here at Goldman. And I’m thrilled to introduce our next session with FIG. Here joining me today is Trina Spear, the Co-Founder and CEO of FIGS, Inc. Welcome, Trina.

Thank you so much, Brooke. Thanks for having me.

Trina, would you like to kick it off with a few opening remarks?

Sure. Well, first off, it’s great to see a lot of familiar faces. We just saw that On Running had a presentation here, and it looks like we’re going to outdo them today. So thank you for having me, and it’s great to be here. I think, when we think about what’s happening in the world, the economy is shifting. The landscape is evolving. We’ve got the AI technology progressing. But the thing that never changes are the brands that you trust. And we look to be a global, iconic brand over the long run, just like Goldman Sachs, actually. Goldman Sachs, to be the brand that Goldman is, it takes thinking big, taking risks, doing things differently. And that’s what FIGS is all about, really focused on the health care community, and that’s what we look to do. So thank you so much for having me, Brooke.

Great. Let’s dive into a couple of current trends, given that there is a lot of focus on the cross currents in the macro today. Historically, the health care apparel sector has been very resilient. You’ve got structural drivers, tailwinds in employment. But the last few years have been fairly volatile. Can you talk about the trends that you’re seeing in the category today? And are there any emerging trends that provide indicators on the health of the consumer as you navigate through the fall season?

Sure. So I think it’s a really interesting industry, right, health care apparel. It’s a $12 billion industry in the United States. It’s about $80 billion globally. And it is resilient, and it’s nondiscretionary, right? Health care professionals need their uniform to go to work and do their job. It’s seasonless, right, all year round, working in health care institutions, saving lives and helping patients and curing diseases, those are the people that we serve. And what we saw is that health care professionals, they’re -- prior to COVID, they were buying about 4 to 6 sets of scrubs per year. That number increased during COVID, right, to about 8 to 10 sets. And over the past few years, to your point, Brooke, we’ve been in a bit of a COVID overhang, right, where people are buying more like 1 to 3 sets a year. And so we still feel like that overhang is here, and we’re well below that, call it, average 4 to 6 sets a year, and we look to normalize over time. I think some of the trends that we’re seeing recently are good, positive indicators of whether it’s repeat frequency, it’s some open-rate search volume. An interesting stat that I mentioned recently was there are similar searches for FIGS as there are for scrubs, so owning the category a little bit like Kleenex or Jacuzzi, right? The brand is the category. So super excited. And I think we are still in a challenging environment, right, election year, a lot of uncertainty in the world, but we focus on what we can control, which starts with product and product innovation, coupled with incredible top-of-the-funnel marketing.

That’s really great color. Before we dive into some of the strategic initiatives that you have, let’s quickly go through 2 questions that we’re asking all companies at our conference this year. First, what are your expectations for the com- for the environment in the second half of 2024 relative to your recent results? Do you expect things to be same, better or worse?

I got the back-outs. I think it’s -- we are being -- we’re -- it’s been incredible to see and encouraging to see the recent results. But I think, at the same time, we’re being cognizant of the environment, right? And we’re being cautious around what’s happening in the world, what’s happening with consumers in an election year, given the macro. And so that to say like, I think, once again, we are really encouraged by the strategy around product innovation, launching pinnacle products that really drive engagement and coupling that with storytelling to bring our customers back over and over again, regardless of the environment. And kind of I know people are talking about A Tale of Two Cities, right? Like, the best brands really are able to differentiate and continue to set themselves apart. We aim to be that brand while others find it difficult to do so.

The other question that we’re asking all companies at our conference today is on value-seeking behavior, which is a trend that we’ve seen emerge with the consumer in a bigger way this year. Do you believe that the consumer behavior of looking for value is a cyclical or a secular trend? Do you think it’s a function of macro, or is this permanent?

Yes, I think we’re in a little bit of a different industry. Like, our -- we serve health care professional, right? They’re RNs, PAs, dentists, dermatologists, gynecologists, students, and they make a variety of different income. 2/3 of our customers make less than $100,000 a year. And so our goal isn’t about kind of trying to have a crystal ball and know exactly what the environment is. Our goal is to be -- have affordable, accessible products at all times to serve our community. We have a wide assortment of products across our layering system. Our layering system is everything health care professionals are wearing to work, at work, from work, on-shift, off-shift, head-to-toe. It includes our scrub wear, our underscrubs, our outerwear, our compression socks, our -- we have a footwear partnership with New Balance. All of those products -- there’s actually a pretty wide variety of products and price points. And so pinnacle products, limited edition products are a bit more expensive. And -- but our core products, it’s $48 for a top, $48 for a pair of pants, super affordable, super accessible so that, as a health care professional, you can go to work and do your job well.

Let’s talk a little bit about your market share, and it’s something that you’ve gained notoriety as the brand of choice among health care professionals. How do you think about FIGS’ current penetration in the U.S. market? Where do you see the biggest opportunity for incremental gains in the U.S. from here?

Sure. So we started the company in 2013. So we’re about 11 years old. We’re a little baby. Most of the companies here are, like, 20, 30, 40 years old. And so we’re just getting started. We have about a 5% market share within the U.S. We have less than 1% internationally. And so we’re very early days on a long road -- have a long road ahead of us. There’s about 140 million health care professionals around the world. We have 2.6 million active customers. And so our goal is to continue to bring more health care professionals into the FIGS family, engage them with our incredible products and have them come back. We have a really replenishment-driven model. About 70% of our revenue is from repeat customers, which is a great dynamic. Obviously, you don’t pay for people to come back. And so that’s where we’re focused.

Are there any specific geographies or markets in the U.S. where you see bigger or greater opportunity for incremental customer count share?

I mean it’s really everywhere. Even our most penetrated market, which is Los Angeles, it’s where we started, it’s where we’re based, we have about 25% -- 20% to 25% penetration, right? And so even in our most penetrated market, there’s just still so much runway. And then there’s areas like the whole middle of the country where health care professionals may not yet know about FIGS. Our last brand study, we had about a 22% unaided awareness, closer to 50-ish percent aided awareness. So a lot of people don’t yet know about us. We’ve got to get there. And prior to FIGS, whether you were living in New York City, Mumbai, Kentucky, Paris, you had a pretty awful experience, right? We changed the game, right, bringing [Technical Difficulty] technical fabrication, design, functionality, pocketing, all really important as a health care professional to go to work and do your job well.

As we think about some of the constraints for gaining new customers, some of that has historically been fit. And you launched a plus-size product a couple of years ago, but fit has been on the agenda for this year as well. Can you talk us through what your plans are for your fit initiative this year and what that opportunity means for FIGS?

Sure. I think, for us, it’s actually -- we also -- it’s part of making a great product. Fit was always really important. And we have the best fit in the industry. I think it’s just a really exciting opportunity to ensure that we’re always improving. We’re always upgrading our fit, and we’re making sure it’s consistent. The consistency is key, right? Because unlike other fashion companies -- and we don’t even think of ourselves as a fashion company, we’re more of a function company. But when you think of it, right, you have new seasons and kind of old -- out with the old season, in with the new. For us, because of the replenishment-driven nature of the product, it is your uniform, what you bought 3 months ago must be exactly what you buy today, must be exactly what you buy 3 months from now. So really standardizing our core blocks across the assortment, ensuring that people can get exactly what they need. And their exact fit is super important. Whether you’re an extra, extra small or a 6 XL, we do have that broad -- that entire range, extra, extra small to 6 XL for women, tall length, regular length, petite. And so it’s just about every body is different, and we are aimed to serve and ensure that everybody -- that [indiscernible] for everybody.

As you roll that out, how are you managing inventory as you move through this transition?

Yes. I mean I think we have planned for this, and we have plans around what will be moving through in terms of the old fit in different regions and also ensuring that we have our donation program. So Threads for Threads, we donate scrubs around the world. And so we’ll continue to manage it. As you’ve seen, we’ve really been able to bring down our inventory balance over the last few years. We’re really proud of our ability to do that in a very disciplined and thoughtful way. The inventory balance will continue to come down through the rest of this year. We’ll be in a much healthier position earlier next year. And so we’re going to just be incredibly disciplined around it. As you all -- as you know, Brooke, we have a really low SKU count, high-volume business. We have this core portfolio of about 17 styles that make up the majority of our business. So we’re able to be very strategic as it relates to inventory planning.

One of the other growth opportunities that you have is your TEAMS business. Can you talk about how big that business is today, how large the market is and the opportunity for growth, and how quickly you think that you can grow that business?

Sure. We’re really excited about the TEAMS business. I mean, this really kind of plays into what’s happening in health care broadly, right? Concierge medicine is a huge growth driver, personalized medicine. Everyone is going to have their medical records, if you don’t already, on your phone, personalized care across profession and across the landscape, really, whether it’s aesthetics, fertility, the veterinarian part of the world, urgent care, and the list goes on. And so concierge medicine overall is expected to double to about $15 billion by 2032. And our TEAMS business is kind of perfectly positioned to capitalize on that tailwind as more and more institutions are looking to standardize and brand their teams. And they’re all kind of coming to FIGS to do that. That business is about mid-single digits of the total today. It grew 50-ish percent last year. And so really excited to continue to build this business, especially given what’s happening already within health care.

And on margins of that, what investments are needed, if any, to scale the TEAMS business? And how should we think about the margin profile of TEAMS?

Yes, the TEAMS business is more profitable than our e-commerce business. The TEAMS business, on the gross margin front, it’s a little bit lower because you get a bit of a discount because you’re ordering hundreds, thousands of sets of scrubs, right, for your institution. On the selling line, we get a lot of benefit because shipping that volume is a lot less expensive than shipping call it 2 sets of scrubs. And then on the marketing front, it’s all inbound today. And so we get a lot of benefit there. So the profitability profile is incredible. I think, going forward, we are really looking to invest in building an outbound sales force. We’ve already started this process. It’s an exciting opportunity. We want to invest behind the growth we’re seeing and look to bring on more multimillion dollar accounts as the health care industry continues to evolve.

One other area of the distribution opportunity is in your community hubs and your stores. You now have a store open in L.A. There’s some coming in Pennsylvania.

We already opened them. We opened Philly.

Oh, Philly’s open?

Yes, Philly’s open.

Oh, I’m sorry, guys. Philly is open. I have not personally been to the Philly store just yet.

I was just talking about that this morning.

Can you talk about your expectations for those stores and the pace at which you think that you can open them over time?

Sure. So we have our Century City store or community hub in L.A. We have our -- one in Rittenhouse Square in Philly. And what we’ve seen is incredibly encouraging. So 40% of our customers are new. 80% of apparel sales are offline. So omnichannel is real. You have to be both online and offline. Having that experience where people can come in, feel and touch and experience the product, try it on is really important, and we’re really excited about what we see. In the Century City community hub, we’re doing about $1,800 a square foot, and that’s better than the best brands in the world. And so we’re continuing to build out our strategy. We’re going to be very disciplined. We’re going to be very thoughtful and strategic about where we go, really finding markets where it has a high density of health care professionals, like Philly, where we are underpenetrated. And that ratio is really important as we figure out where to go next. And it’s exciting, though. I mean, I think we’re -- we -- up until the point we opened Century City, we were the largest digital-only brand in the world. So having multichannel, being where your customers are, is really important, and we’re excited about the future of what our community hub strategy will be.

Now that we’ve spoken about the channels and the areas of new customer acquisition, let’s talk about the product. And innovation has been a big focus for you this year, and you’ve spoken about some of the innovation that you’re seeing and the momentum in new product categories. Can you elaborate on the sales trend that you’re seeing in core versus newness today?

Sure. I mean, I think it’s been exciting to see that our innovation engine is actually working faster than we thought. And that’s happening not just within scrubwear but also in our nonscrubwear. Nonscrubwear now is about 20% of our business. And a few years ago, it was only as of a few years ago where it was -- we were a scrubwear business, and we really [ wanted ] fabrication, which was our FIONx proprietary fabrication. And so it’s been exciting to see how we’ve built out our scrubwear portfolio and built out all of these other categories to really serve our community and ensure that we are meeting the needs of our customer base. Our philosophy around this was that pinnacle and newness and innovation drive the core. We’re starting to see that happen. And so these different areas of the business all kind of are synergistic and ladder-up to fulfilling need and ensuring that we are delivering what our customers want when they want it. And because we are a uniform business and we really view the entire portfolio as your uniform, you just can come to FIGS, get your underscrubs, your scrubs, your outerwear so that you can go to work. And I think we’ve been very, I think, intentional about diversifying our product portfolio and really ensuring that the innovation is not only getting people excited and people are kind of coming for that. They’re also coming back more to replenish their core, which is the other important piece there.

You spoke a little bit about new category expansion and nonscrubs is now 20% plus of your business. What are the most successful nonscrub categories for your business today? And how does that inform your view of future opportunity for category expansion?

Sure. So outerwear is probably the biggest within there, and it is the biggest within there. I think, before FIGS, everyone was worrying Patagonia, which is a great company. They’re private, so they’re not here. But everyo- you know, that’s made to go hiking and rock climbing. That’s not made to be worn indoors as a health care professional. They don’t have pockets for your stethoscope and your alcohol swabs and your flushes or keys in your money and all the things that you need on a 12-hour, 16-hour shift as a health care professional. And so seeing the outerwear business, which was nothing a few years ago, growing the way it’s grown has been really incredible to see. It’s become part of that whole uniform layering system, right, where you need -- it’s freezing in hospitals. You need your fleece, you need your sweater-knit, you need your vests on shift. These are on-shift products. Second is underscrubs. So you kind of were raring maybe a Gap cotton shirt, right? That’s not technical. It’s not antimicrobial. It’s not a liquid-repellant. It’s not functional and technical the way that our products are. So now you’re wearing a FIGS salta -- that’s what it’s called [indiscernible] underneath your scrub top, and it’s -- that’s probably the second biggest. We have a footwear partnership with New Balance, and so footwear is the other piece there. And so these are all -- even just take outerwear and under scrubs for a second. These categories are growing in a way with very limited assortment, very limited. And so that’s what gets me excited, right? There’s so much to build in terms of weight, in terms of different environments, different climates, where you’re working outside, you’re outside on shift. We just did a campaign about Dr. Chloe, a veterinarian in South Africa working with rhinos, the most badass woman ever. You got to look at the campaign. It’s great. We just did a huge campaign with Team USA. We allocated Team USA’s medical team for Olympics in Paris in 2024. No brand, no company in any country has ever done that ever, right? Products for the medical team supporting the Olympians? Next level. And so that was a cross -- to your point about category, that was a cross-category, right? All the outerwear pieces scrubwear, underscrubs, compression socks, footwear, scrub caps and the list goes on. So it’s exciting because it’s still so early in how we’re building these categories. Even from a product architecture standpoint, we categorize impact level. What are you doing on-shift? What are you doing in your job? Low-impact, medium-impact or high impact, if you were to take every category across that framework, I mean, you would -- less than 10% of the page would be filled out in terms of all the needs that health care professionals have and how we can serve them in more ways.

Would you ever consider expanding to nonhealth care apparel? Or maybe said another way, are there any limiting or gatekeeping factors that you consider before extending your business to a new category?

There’s a lot of gatekeeping factors, right? It has to serve a need. But I do think there’s a lot of off-shift that we’ve done incredibly well with. So how are you recovering after that 12-hour shift, right? How are you now getting geared up to that -- to get up at 7:00 a.m. the next morning, get to work and do your job well? And so that’s early, early days, but there’s a lot on the off-shift front that we’re working on, even in -- within sweatshirts, sweatpants and the list goes on. But I think there’s -- like I said, these are people. Sometimes people think, oh, health care professionals need this whole other world. They’re people. They’re working around the clock. They have -- they are just like me and you, they’re watching reality TV. They’re shopping at different stores. They want an experience just like what everyone else has in the world, and that’s what FIGS is giving them. We’re the only company that saw them as real people. We call them often humans. They’re real people doing incredible work. And yes, it’s about the product but it’s also about the brand, putting them on billboards, putting them in commercials, celebrating them the way that athletes and celebrities are celebrated. That’s what this brand is about. And so that product has to level-up and the experience has to be there.

Let’s wrap up the conversation on innovation and some of the newness with a discussion on margins, because sometimes the newness can come at a margin that is lower than your core. Can you talk a little bit about how big the gap is today and your path to the potential timing and cadencing of narrowing that gap as you scale those new product categories?

Yes. I think what we are excited about is that the pinnacle product, right, this newness that is at a bit of a lower margin, it drives the core, right? So as that continues to drive core, core is at a higher margin, and it has -- there’s even more leverage, as that core continues to grow, to have that margin, over time, improve. So that’s point one. The second point is that the -- just like we saw within FIONx scrubwear, we saw incredible margin curve over time as that volume increased and backed us having really high-volume, low SKU count, even in these nonscrubwear categories. As these newer categories build, we will be able to see margins benefit over time. And so I do think we had -- have best-in-class gross margins, right? They were 74%. Now they’re 68%. Like, I think, at the end of the day, we have strategically, structurally advantaged gross margins, right? And they are best-in-class. And our goal is to keep them that way. But at the same time, as we build the business and we have a more broadly diversified, healthy business across category, across channel, that brings higher LTV, that has higher loyalty, that has lower CAC. All of these things accrue to a better bottom line, which is actually our goal. Our goal is to be the most profitable company ever over time, not necessarily just focused on gross margins.

You’ve mentioned marketing a couple of times and some of the new campaigns that you’ve embarked on this year, whether that is the Indestructibles or the Olympics. How should we be thinking about the learnings from some of these new campaigns and how that informs your view of marketing going forward? And how should we be thinking about the run rate marketing spend as a percent of sales for your business?

Sure. So I think it’s -- we’ve always talked about how every big customer is a walking billboard acquiring that next customer for us. 60% of our traffic is direct. People learn about the brand from a colleague, from someone -- they were in densely populated institutions, right? Everyone was like, "Oh, what did they just launch? Oh, this is so great. What are you wearing? That looks awesome. " And they come directly to us to purchase their scrubs. And as we hit tipping points within these health care institutions, we’re able to really see CAC gains, right? And when I talk about CAC, I’m really talking about digital CAC. We’re able to take those gains and put them into new markets. We’re able to take those gains and invest in top-of-funnel. When I talk about top-of-funnel, I’m talking about TV, out of home for those of you who saw our head, shoulders, knees and toes. Anybody? Actually -- okay, great. We got a few. Okay. The other TV commercial is tied to Team USA. But doing that is a luxury, right? Doing that gives us the ability to really connect with a customer at the point of awareness, bring them through the journey to consideration, finally to conversion. That journey is super valuable. Those are the highest LTV customers. They have the -- they are the most loyal to the brand. And so that is why we are so passionate about pinnacle product with top-of-funnel marketing, those 2 things coming together. That is the strategy. We are doubling down on it. And to your question around marketing as a percent of sales, we’ve talked about this 15-ish-percent. We actually think that will be less than that over time. It’s because the CAC gains will outweigh the investment in top-of-funnel. But that’s kind of how we see the world playing out.

That’s very helpful color. Let’s speak about international, because that’s an emerging growth story for FIGS. And you have a presence in over 30 countries today.

Yes.

How should we be thinking about the markets that you’re most focused in scaling? Is that Canada, U.K., Australia or somewhere else? And then how do we think about the localization that is necessary in your investments there to grow the brand sustainably over time?

Yes, so Canada, U.K., Australia, those 3 markets have been -- those are the earliest ones we’ve launched. We’ve localized those markets. We’ve invested in digital and the brand awareness piece. I think the brand building and scaling, to your point, is the next piece there. Europe, more generally, has a big opportunity as it relates to the TEAMS business because more -- a higher percent of that market is actually B2B, right, where people are buying on behalf of their institution or their private practice or their clinic. And so that really is overlaying kind of with our TEAMS business, which is exciting, as we’ve built out that technology and made it easier for institutions to purchase FIGS. And then newer markets, like Mexico, Philippines, they’re performing incredibly well. And the beauty of what we do is that every market is profitable. We are a digital company, and so we’re able to kind of really see that demand, build the market in a really strategic way without making a ton of investment. And then as we continue to build that market and localize currency, payment solutions, marketing, even some of our products, how we merchandise that on the site, as we do that, we can invest more as we see that working. That’s a very different way to build the brand internationally than was true 10, 15 years ago, right? And so being -- seeing that -- we could even know -- take the whole world -- where the traffic is coming from and decide to launch based on the trends that we’re seeing. That’s a huge advantage, given the presence and the brand that we already have.

One of the unlocks for your international business is the new distribution center, and you’ve been making some big investments in supply chain over the course of the last year or so. Can you elaborate on those investments? What is changing in your supply chain? And what does that enable for your business?

Sure. I actually have a video on my phone I’ve been showing everyone. So if anyone wants to see our distribution center after, I’ll play it for everyone. But it’s been really exciting, right? We’ve invested in our supply chain. We’ve invested in our distribution, automation, ensuring that you don’t have -- there’s no people, right? There’s no people in our distribution center. It’s all automated. It’s all robotic. It enables us to have a more reliable experience for our customers. That’s what it’s all about. How do we get our uniforms to our communities faster, more reliably and with a better experience? From a supply chain -- from the production angle, it’s been a huge -- as we diversified our categories, we’ve also diversified our supply chain. Our goal is to work with the best manufacturers for the thing -- for the product that we’re making. And so really investing behind that and ensuring that we are working with the best partners, I think it’s a real testament -- bringing our inventory balance. We were at $190 million a couple of years ago. Bringing that down to where it’s at now in a pretty healthy position, where it’ll be in a very healthy position early next year, is a testament to the decade-long relationships we’ve had with our suppliers as we continue to build that. We’re focused on continuing to have the best relationships with our manufacturers, continuing to also build out another distribution center in Canada next year. So we’ll give more color about that, but all with the goal of making our experience the best it can be.

As we cycle through some of these larger investments in your supply chain and distribution centers, how should investors think about the right selling expense rate as a percent of sales on a medium or long-term basis?

Yes, when you look at the selling expense this year, that 200, 250-ish basis point increase was really due to the transitory expenses associated with building our new distribution center in Phoenix. And so that will fall off. I think, on some areas, that investment, as we scale, we’ll continue to get leverage from that. But if you were to just kind of take last year’s selling, we’ll be around that next year.

Excellent. Very helpful. On gross margins, earlier, you talked about the strength and the structural benefits that you have as a branded DTC business with your high gross margin. There has been a little bit of mix shift pressure this year. And as recently, you’ve been as high as 72%. Is the low 70s% margin achievable in the near to medium term?

The 70% gross margin, I think we talked about that. I think that was very much still a function of when we were a scrub -- scrubs -- majority, the vast majority, I mean like 90% plus scrubwear, 90% plus FIONx company. Not to say that we can’t get back there. But our goal isn’t to just focus on that. Our goal, as I said earlier, is actually to build the bottom line. And so as we have great product, we bring customers back more. We’re not paying to acquire customers. We’re not paying to reengage our customers. And it’s a healthier business, right? It’s a healthier business to have a broadly diversified by category or broadly diversified by channel business. And so that’s really where we’re focused. There is opportunity within our costing and within our pricing. I mentioned this on the last call. A lot of that -- we are focused on this innovation, right, getting it right, new fabrications, new categories, building them out. We haven’t spent a ton of time on the opportunity side as it relates to costing and pricing. I’m very happy our new CFO is here, Sarah Oughtred. So she is excited to dig in here, too. But it’s all opportunity.

On costing and pricing, the other side of that is promotions. And there’s been a lot of focus on promotions in the industry. We’re asking all companies at our conference today whether or not you expect your company to be more or less promotional this holiday season versus last year, and how does that compare to your expectation for the industry?

Sure. I mean, our promotional cadence in 2024 is similar to 2023. We expect that to stay true through the rest of this year. I think we are still working through that inventory. And so having -- we believe -- are promotions -- is it really about promotions? We use them to really celebrate our community. [ You probably ] know about Nurse’s Week. It’s our biggest week. It’s our Super Bowl. It’s really about celebrating nurses. And obv- and yes, you can get a little bit of a discount. We have kept our discount promotional rate relatively stable. It’s, I would say, best in the industry, one of the best in the industry. And so really look to keep being disciplined around our promotional rate, being strategic and thoughtful around when we engage our community in that way. And yes.

So putting all of this together, you’ve got momentum on the top line. You’ve got new innovation. You’ve got marketing. You’ve got some opportunity in selling expense. As we think about the adjusted EBITDA margin and profitability rate of your company, how should we be thinking about bridging from the about 10% margin this year back to the high-teens level that you’ve outlined?

Sure. I think, at the end of the day, we are focused on the long run, right? We have $270 million of cash in the bank. We have no debt. We just announced a $50 million buyback. We believe we -- our cash flow [ generative ] [Technical Difficulty] plus the cash balance we have to not only do the buyback but invest in our future, invest in our growth levers, invest in the business. And so we do believe 2023 mar- EBITDA margin is a trough. But we also are focused on building the business in the right way, the hard way, for the long run. Our next closest competitor is a fraction of our size. This is our game to execute, and we will continue to execute and continue to deliver and invest behind what we see is working. And that is our goal, to take big risks, to think as big as we can and continue to change the industry.

Great. And with that, I’m afraid we are out of time. Thank you, Trina, and thank you for all -- everyone in the audience for joining us today.

Thank you, Brooke.