WRBY Q2 Deep Dive: Retail Expansion, AI Partnerships, and Margin Leverage Define the Quarter

Eyewear retailer Warby Parker (NYSE:WRBY) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 13.9% year on year to $214.5 million. The company’s full-year revenue guidance of $884 million at the midpoint came in 0.6% above analysts’ estimates. Its non-GAAP profit of $0.08 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Warby Parker’s second quarter saw revenue growth driven by continued retail expansion, product innovation, and a disciplined approach to cost management, even as the market responded negatively to the results. Management credited the increase in active customers and retail channel strength, with co-CEO David Gilboa highlighting “disciplined execution and ability to adapt in a dynamic environment,” as the team navigated tariff impacts and optimized its store and digital presence. Despite a challenging April, the company reported sequential improvement through the quarter, citing success in both new store openings and the ramp-up of insurance customers as important factors supporting overall sales momentum.

Looking ahead, Warby Parker’s raised full-year outlook is underpinned by ongoing investments in store growth, digital experience enhancements, and new partnerships—most notably its collaboration with Google for AI-powered intelligent eyewear. Management sees opportunities to leverage AI for personalized digital tools and to reallocate resources from the soon-to-end home try-on program into customer acquisition. CFO Steve Miller emphasized that “continued SG&A leverage and supply chain flexibility” will support margin expansion, while management pointed to a strong pipeline of new stores and insurance partnerships as key tailwinds for sustained growth.

Key Insights from Management’s Remarks

Management attributed the quarter’s growth to higher customer acquisition, increased retail productivity, and the rollout of new digital and product initiatives, alongside ongoing cost controls and selective price increases.

• Retail channel expansion: New store openings, especially in underpenetrated suburban markets, remained the primary driver of customer growth. Management noted that over 50% of major markets still have only one location, indicating further expansion potential.
• AI-driven digital experience: The introduction of Advisor, an AI-powered recommendation tool, is helping replicate in-store personalized service online, supporting e-commerce growth and enabling the company to sunset its legacy home try-on program.
• Insurance customer ramp: Growth in the insurance business, particularly through the Versant Health integration, brought in higher-value customers who spend more, select premium products, and return more frequently, enhancing customer lifetime value.
• Product innovation and mix: Management pointed to strong demand for glasses, especially progressives and premium lenses, as well as the launch of new collections and collaborations. Contacts and eye exams also posted robust growth, reflecting progress toward a more holistic vision care offering.
• Tariff mitigation and cost discipline: The team executed a three-pronged response to tariffs, including shifting supply sources, selective price increases, and disciplined SG&A management. These actions helped offset margin pressures and delivered incremental EBITDA flow-through.

Drivers of Future Performance

Management expects growth to be driven by retail expansion, digital innovation, and continued insurance penetration, while maintaining cost discipline to support margin gains.

• Store and channel growth: Warby Parker plans to open more locations and expand its presence in Target shop-in-shops, with over half of future store growth targeting suburban areas. Management believes further market densification will drive both in-store and e-commerce sales through higher brand awareness and convenience.
• AI and digital investments: The rollout of AI-powered tools, such as Advisor, and the partnership with Google to develop intelligent eyewear are expected to enhance customer engagement and unlock new growth opportunities. These initiatives aim to increase conversion rates and support higher average revenue per customer.
• Margin improvement focus: Ongoing SG&A leverage, supply chain diversification, and selective pricing actions will be used to offset external headwinds, including tariffs. Management intends to reallocate resources from the discontinued home try-on program to higher-return marketing efforts, supporting both profitability and top-line growth.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the pace of new store openings and performance of Target shop-in-shops, (2) adoption and conversion rates for AI-powered digital tools like Advisor, and (3) continued growth in insurance customer penetration and the integration of new insurance partners. Execution on the Google AI eyewear partnership and effective cost management will also be critical signposts for Warby Parker’s trajectory.

Warby Parker currently trades at $23.11, down from $24.30 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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