WRBY 10-K & 10-Q changes, risk factors and insider trading

We have grown rapidly in recent years and have limited experience at our current scale. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer, which may have a material adverse effect on our business, financial condition, and operating results.

We have grown rapidly over the last several years, and therefore, ourOur recent growth rates and financial performance should not necessarily be considered indicative of our future performance. For example, our net revenue increased 15.2%13.0% from $669.8 million for the year ended December 31, 2023 to $771.3 million for the year ended December 31, 2024. To effectively manage and capitalize on our growth, we must continue2024 to strengthen$871.9 engagementmillion withfor ourthe existingyear customers,ended growDecember our31, brand awareness, expand our retail footprint, invest in design and technology, expand our vision care offering, and evaluate potential opportunities to expand into new international markets.2025. Our continued growth has in the past, and could in the future, strain our existing resources, and we could experience ongoing operating difficulties in managing our business across numerous jurisdictions, including difficulties in hiring, training, and managing a diffuse and growing employee base. Failure to scale and preserve our company culture with growth could harm our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.

Moreover, the vertically integrated nature of our business, where we design all of our own glasses in our New York headquarters, contract manufacture all of our glasses frames, fulfill the glasses we sell at our own optical and fulfillment laboratories as well as at third-party contract laboratories, sell our products exclusively through our own retail stores, e-commerce site and mobile application, and service our products,business exposes us to risk and disruption at many points that are critical to successfully operating our business, and may make it more difficult for us to scale our business. If we do not adapt to meet these evolving challenges, or if our management team does not effectively scale with our growth, we may experience erosion to our brand, the quality of our products and services may suffer, and our company culture may be harmed.

In addition, the industry for stylish, affordable glasses, as well as for our other optical products and services is rapidly evolving and may not develop as we expect. Overall growth of our net revenue will depend on a number of factors, including those described under “—We may not be successful in our retail growth and vision care expansion strategy.” and “—If we fail to cost-effectively retain our existing customers or to acquire new customers, our business, financial condition, and results of operations would be harmed.” Even if our net revenue continues to increase, our net revenue growth rates may decline in the future as a result of a variety of factors, including macroeconomic factors, increased competition, and the maturation of our business. As a result, you should not rely on our net revenue growth rate for any prior period as an indication of our future performance. Overall growth of our net revenue will depend on a number of factors, including our ability to:

We also expectintend to continueinvest heavily in growth, but unforeseen expenses or ineffective resource allocation could lead to expendlosses. substantial financial and other resources to grow our business, andIf we may fail to allocatemanage our resources in a manner that results in increased net revenuefuture growth in our business. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays, and other unknown factors that may result in losses in future periods. If our net revenue growth does not meet our expectations in future periods,effectively, our business, financial condition, and results of operations may be harmed, and we may not achieve or sustain profitability in the future.

Our growth strategy contemplates a significant expansion of our retail store footprint and the expansion of our vision care services. For example, we opened our first permanent retail store in New York in 2013 and have since grown to 276323 retail stores across the United States and Canada as of December 31, 2024,2025, of which 236285 offered in-person eye exams. Our ability to expand our vision care services depends on our ability to attract and retain optometrists, opticians and other vision care professionals. See “—Failure to recruit and retain optometrists, opticians, and other visioneye care professionals for our retail stores could materially adversely affect our business, financial condition, and results of operations.” Further, as we increase the scope of services that we provide and expand in the types of payments we receive from customers from cash-pay to vision plans and health plans, we will increasingly be subject to a number of federal and state healthcare regulatory laws, including federal and state anti-kickback, false claims, self-referral, and other healthcare fraud and abuse laws.

•identify and lease retail space with a suitable cost and geographic profile;profile,

•construct and open our stores on a timely basis;basis,

▪•address regulatory, competitive, merchandising, marketing, distributionregulatory and otheroperational challenges encountered in connection with expansion into new markets where we have limited historical experience;experience, and

▪•build awareness of our retail store fleet and vision care offerings through advertising and marketing.

IncreasesDisruptions in component costs, shipping costs, long lead times, supply shortages, and supply changes could disruptto our supply chain and factors such as wage rate increases and inflation can have a material adverse effect on our business, financial condition, and operating results.

In addition, substantiallySubstantially all of our components are shipped directly from our contract manufacturers to our optical laboratories in the United States or our third-party optical laboratories in the United States and China, where lenses are cut and mounted into frames. These laboratories process most of the glasses ordered by our customers. Once processed at the laboratories, the finished products are then sorted and shipped using third-party carriers to our retail stores for customer pickup or directly to our customers. Our glasses frames for our Home Try-On program are shipped directly from our contract manufacturers to our third-party distribution center in the United States for shipment directly to our customers. We depend in large part on the orderly operation of this distribution process, which depends, in turn, on adherence to shipping schedules and effective management of our optical laboratory network and third-party distribution center. Increases in transportation costs (including increases in fuel costs), issues with overseas shipments, supplier-side delays, reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, supplier-side delays, and unexpected delivery interruptions or delays also have the potential to derail our distribution process. Moreover, volatile economic conditions and global events, such as geopolitical conflicts, natural disasters, or public health crises, may disrupt our supply chain, potentially preventing us from procuring timely deliveries or securing comparable alternatives at acceptable prices.

The inability to fulfill, or any delays in processing, customer orders through our optical laboratory network or any quality issues could result in the loss of customers, issuanceslower ofsales refundsand or credits,profitability, and may also adversely affect our reputation. The success of our retail stores and e-commerce sales depends on the timely receipt of products by our customers and any repeated, intermittent or long-term disruption in, or failures of, the operations of our distribution center and/or optical laboratories could result in lower sales and profitability, a loss of loyalty to our brands, and excess inventory. The insurance we maintain for business interruption may not cover all risk, or be sufficient to cover all of our potential losses, may not continue to be available to us on acceptable terms, if at all, and any insurance proceeds may not be paid to us in a timely manner.

We rely heavily on our information technology systems, as well as those of our third-party vendors, business partners, and service providers, for our business to effectively operate and to safeguard confidential information;information. anyAny significant failure, inadequacy, interruption, or cybersecurity incident could adversely affect our business, financial condition, and operations.

We rely heavily on our information technology (“IT”) and enterprise resource planning systems (“ERP”), systems, many of which are proprietary, for many functions across our operations, including managing our supply chain and inventory, processing customer transactions in our stores, allocating orders to the appropriate laboratories, our financial accounting and reporting, compensating our employees, and operating our website, mobile applications and in-store systems, including point-of-sale systems. We continuously evaluate our systems landscapelandscape, and we may have tobeen upgradeundertaking a multi-year process of upgrading our IT systemssystems, orincluding implementour newERP technology systems from time to timesystem, in order to support the needs of our business. Costs and potential problems and interruptions associated with such upgrades and implementations, or with maintenance or adequate support of existing IT systems, could disrupt or reduce the efficiency of our operations.

Our ability to effectively manage our business and coordinate the manufacturing, sourcing, distribution, and sale of our products depends significantly on the reliability and capacity of these systems. We are critically dependent on the availability, integrity, security, and consistent operations of theseour IT systems, which are highly reliant on the coordination of our internal business and engineering teams. WeWe, and certain of our third party providersproviders, also collect, process, and store sensitive, personal and confidential information, including our proprietary business information and that of our customers, employees, suppliers, and business partners. The secure processing, maintenance, and transmission of this information is critical to our operations. Our and our third party providers’ IT and ERP systems may be subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, network failures, acts of war or terrorist attacks, fire, flood, global pandemics, and natural disasters; and our existing safety systems, data backup, access protection, user management, and IT emergency planning may not be sufficient to prevent data loss or long-term network outages. Any material disruption or slowdown of our systems or those of our third-party service providers and business partners, could have a material adverse effect on our business, financial condition, and results of operations.

SecurityOur IT and ERP systems and the IT systems of our third-party service providers and business partners may be vulnerable to security incidents compromising the confidentiality, integrity, and availability of thisour information and the security of our IT systemssystems. These incidents could result from cyber-attacks, computer malware, viruses, social engineering (including spear phishing and ransomware attacks), credential stuffing, supply chain attacks, efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations, errors or malfeasance of our personnel, malicious code embedded in open-source software, misconfigurations, “bugs”, human or technological errors, and other security vulnerabilities in the software or systems on which we rely. We anticipate that these threats will continue to grow in scope and complexity over time and such incidents have occurred in the past, and may occur in the future, resulting in unauthorized, unlawful, or inappropriate access to, inability to access, disclosure of, or loss of the sensitive, proprietary, personal and confidential information that we handle.handle, Forincluding example,health ininformation, 2018,credit we experienced a credential stuffing attack in which malicious third parties likely used credentials compromised in data breaches suffered by other, unaffiliated companies to access accounts on our platform. In 2019, we received notice from the Office for Civil Rights, or OCR, of the U.S. Department of Healthcard and Humanother Servicespayment indicatingcard that OCR would begin an investigation regarding the incidentinformation, and ourpersonal compliance with the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy, Security, and Breach Notification Rules and requesting certain information related to the incident and our compliance with such rules. The Company paid a civil monetary penalty to OCR in December 2024 and the investigation was formally closed in February 2025.information.

While we employ a number of security measures designed to prevent, detect, and mitigate the potential for harm to our business or to our users from security incidents, such as from malicious cyber attacks or theft or misuse of user credentials on our network, these measures may not be effective in every instance. Because the techniques used to circumvent security systems can be highly sophisticated, change frequently, are often not recognized until launched against a target, and may originate from less regulated and remote areas around the world, we may be unable to proactively anticipate or address all possible techniques or implement adequate preventive measures for all situations. The rapid evolution and increased adoption of AI may also make cyber-attacks more difficult to prevent, detect, and mitigate. Attackers are increasingly sophisticated and using techniques and tools, including AI, that can circumvent security controls, evade detection, and remove forensic evidence. Moreover, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure you that our insurance will be adequate to cover costs and liabilities related to these incidents or that applicable insurance will be available to us in the future on economically reasonable terms or at all. Any such breach, attack, virus, or other event could result in additional costly investigations and litigation exceeding applicable insurance coverage or contractual rights available to us, civil or criminal penalties, operational changes or other response measures, loss of consumer confidence in our security measures, and negative publicity that could adversely affect our business, financial condition, and results of operations.

We also rely on a number of third-party service providers to operate our critical business systems, provide us with software, and process confidential, sensitive and personal information, such as the payment processors that process customer credit card payments, which expose us to security risks outside of our direct controlcontrol, and our ability to monitor these third-party service providers’ data security is limited. Certain of our vendors have experienced security incidents in the past, and we expect that other vendors or third-party service providers will experience security incidents in the future that could compromise the confidentiality, integrity, or availability of the systems they operate for us or the information they process on our behalf. Cybercrime and hacking techniques are constantly evolving, and we or our third-party service providers may be unable to anticipate attempted security breaches, react in a timely manner, or implement adequate preventative measures, particularly given the increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or obfuscate forensic artifacts. While we have taken measures designed to protect the security of the IT systems and confidential and personal information under our control, weWe cannot ensure that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. Moreover, we or our third-party service providers may be more vulnerable to such attacks in remote work environments,environments. which have increased since the COVID-19 pandemic. Because we make extensive use of third-party suppliers and service providers, such as cloud services that support our internal and customer-facing operations, successfulSuccessful cyberattacks that disrupt or result in unauthorized access to third party IT systems can materially impact our operations and financial results. There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied withwith, or effective in protecting our systems and information.

A security breachincident may also cause us to breach our contractual obligations. Our agreements with certain customers, business partners, or other stakeholders may require us to use industry-standard or reasonable measures to safeguard confidential, sensitive and personal information. As a healthcare provider and to the extent we provide services to healthcare providers, we are also subject to laws and regulations such as the Health Insurance Portability and Accountability Act (“HIPAA”) Security Rule that require us to adhere to specific technical safeguards, or to use industry-standard or reasonable security measures to safeguard certain information. A security incident could lead to claims by our customers, business partners, or other relevant stakeholders that we have failed to comply with such legal or contractual obligations. In addition, our inability to comply with data privacy or security obligations in our contracts or our inability to flow down such obligations to our vendors, collaborators, other contractors, or consultants may cause us to breach our contracts. As a result, we could be subject to legal action or our customers or business partners could end their relationships with us. There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages.

The cost of investigating, mitigating, and responding to potential security breaches and complying with applicable breach notification obligations to individuals, regulators, partners, and others can be significant. Further, defending a suit, regardless of its merit, could be costly, divert management attention, and harm our reputation. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition, revenues, results of operations, or cash flows. Any material disruption or slowdown of our systems or those of our third-party service providers and business partners, could have a material adverse effect on our business, financial condition, and results of operations. Our risks are likely to increase as we continue to expand, grow our customer base, and process, store, and transmit increasing amounts of confidential, proprietary and sensitive information.

We use artificial intelligenceAI for certain business purposes, including the automation of certain tasks, predicting market trends, and improving our customer experience.experience, Weand maydeploying expand our use of artificial intelligence in other areas of our business, including incertain customer facing applications. We are also developing products and services that integrate AI, such as the AI-powered smart glasses we are developing with Google.

Issues relating to our use of new technologies such as artificial intelligence may cause us to experience operational disruptions, negative publicity and reputational harm, competitive harm, criminal and civil liability and new or enhanced regulatory scrutiny, or criminal and civil liability, and to incur additional costs to resolve such issues. For example, artificial intelligence is based on predictive analytics, which can include unexpected biases and lead to discriminatory outcomes. In addition, if we use protected health information (“PHI”) for our artificial intelligence technologies, we must have rights and permissions to do so from our customers. If we do not have rights or permissions to use PHI or to de-identify PHI or if we do not de-identify PHI in accordance with HIPAA’s safe harbor method, and use PHI or de-identified PHI for such purposes, we may be subject to civil and criminal liability or other actions.

Further, perceived or actual technical, legal, privacy, security, ethicalethical, or other issues relating to the use of artificial intelligence could undermine the decisions, predictions, analysis or other output that such tools produce and create additional risks, such as risks of cybersecurity incidents. Additionally, any integration of artificial intelligence in our or our third-party service providers’ operations, products or services is expected to pose new or unknown cybersecurity risks and challenges. Further, use of artificial intelligence platforms by our employees, whether authorized or unauthorized, may also increase the risk that our proprietary information will be unintentionally disclosed or undermine our claims to certain intellectual property. Any of the foregoing, as well our failure to responsibly deploy artificial intelligence in our operations or the failure of artificial intelligence systems,operations, could adversely affect the performance of our products and services and our business, financial condition and results of operations.

The growth of our business is dependent upon our ability to continue to grow by cost-effectively retaining our existing customers, increasing their average order volume (“AOV”), defined as net revenue for a given period divided by the number of orders during the same period, and adding new customers. Although we believe that many customers originate from word-of-mouth and other non-paid referrals, weWe expect to continue to expend resources and run marketing campaigns to acquire additional customers, all of which could impact our overall profitability. If we are not able to continue to expand our customer base, increase their AOV or fail to retain customers, our net revenue may grow slower than expected or decline.

The growth of our e-commerce channel is also critical to our continued customer retention and growth. Historically, consumers have been slower to adopt online shopping for glasses and contact lenses than e-commerce offerings in other industries such as consumer electronics and apparel. Improving upon the consumer in-store experience through an online platform is difficult due to broad consumer demands on selection, quality, convenience, and affordability.lenses. Changing traditional optical retail habits is difficult, and if consumers and retailers do not embrace online optical retail as we expect, our business and operations could be harmed. Moreover, even if more consumers begin to shop for glasses and contacts online, if we are unable to address their changing needs and anticipate or respond to market trends and new technologies, including the integration of artificial intelligence and machine learning,intelligence, in a timely and cost-efficient manner, we could experience increased customer churn, which, in turn, would adversely affect our business and results of operations.

•the success of our marketing and advertising efforts; or

•deteriorating macroeconomic conditions and reduced customer spending;spending.

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (“Form 10-K”).10-K. This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

We generate revenue through selling our wide array of prescription and non-prescription eyewear, including glasses, sunglasses, and contact lenses. We also generate revenue from providing eye exams and vision tests, and selling eyewear accessories. We maintain data across the entire customer journey that allows us to develop deep insights, informing our innovation priorities and enabling us to create a highly personalized, brand-enhancing experience for our customers. We have built an integrated, omnichannel presence that we believe deepens our relationship with existing customers while broadening reach and accessibility. And while we have the ability to track where our customers transact, we’re channel agnostic to where the transaction takes place and find that many of our customers engage with us across both digital and physical channels; for example, many customers who check out online also visit a store throughout their customer journey, while others choose to browse online before visiting one of our stores.

•we generated net lossrevenue of $20.4$871.9 million, $63.2$771.3 million, and $110.4$669.8 million, respectively; and

•we generated Adjustedgross EBITDAprofit of $73.1$470.6 million, $52.4$426.8 million, and $27.2$365.2 million, respectively.respectively, representing a gross margin of 54.0%, 55.3%, and 54.5%, respectively;

For a definitiondefinitions of Adjusted EBITDA,EBITDA aand Adjusted EBITDA Margin, non-GAAP measure,measures, and a reconciliation to the most directly comparable GAAP measure, see the section titled “Key Business Metrics and Certain Non-GAAP Financial Measures.”

__________________ (1)Store Count number at the end of the period indicated.

(2)Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For more information regarding our use of these measures and a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin, see the section titled "Adjusted EBITDA and Adjusted EBITDA Margin” below.

We have thoughtfully expanded our retail store footprint over the past several years. During the years ended December 31, 2025, 2024, 2023, and 2022,2023, we opened 47, 39, 37, and 3937 net new retail stores, respectively. As of December 31, 2025, 285 out of our 323 retail stores offered in-person eye exams, representing 88.2% of our fleet, compared to 85.5% and 81.9% as of December 31, 2024 and 2023, respectively.

By providing these non-GAAP financial measures, together with a reconciliation to the most directly comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net income (loss) or other financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations are:

The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP measure, which is net income (loss):

__________________ (1) Represents expenses related to the Company’s equity-based compensation programs and related employer payroll taxes, which may vary significantly from period to period depending upon various factors including the timing, number, and the valuation of awards granted, and vesting of awards including the satisfaction of performance conditions, as well as the issuance of 48,486 shares of Class A common stock to charitable donor advised funds in February 2024. Included in stock-based compensation expense for the year ended December 31, 2023 is $2.2 million of liability based awards resulting from accrued bonuses that were settled in equity in the first quarter of 2024.conditions. For the years ended December 31, 2025, 2024, 2023, and 2022,2023, the amount includes $1.1$1.6 million, $0.6$1.1 million, and $0.6 million of employer payroll costs associated with releases of RSUs and option exercises, respectively.

(2) Represents charitable expense recorded in connection with the donation of 178,572 shares of Class A common stock in each of May 2025, May 2024, and August 2023 and May 2022 to the Warby Parker Impact Foundation, and 56,938 shares of Class A common stock to charitable donor advised funds in June 2023, and 34,528 shares of Class A common stock to charitable donor advised funds in November 2022.2023.

(43) Represents internal and external non-capitalized costs related to the implementation of ourmajor new Enterpriseenterprise Resourcesoftware Planning (“ERP”) system.systems.

(5) RepresentsPrimarily employeerepresents severancerestructuring costs incurred in the second quarter of 2025 and relatedthe costsfourth forquarter restructuring actions executed in Octoberof 2024 and August 2022 and charges for certain legal matters outside the ordinary course of business.

We primarily derive revenue from the sales of eyeweareyewear, products,contact optical serviceslenses, and accessories.eye care. We sell products and services through our stores, website, and mobile apps. Revenue generated from eyewear includes the sales of prescription and non-prescription optical glasses and sunglasses, contact lenses, eyewear accessories, lens replacements, and customer charges for optional expedited shipping. Revenue generated from visioneye care consists of in-person eye exams and prescriptions issued through the Virtual Vision Test app. Revenue from products is recognized when the customer takes possession of the product, either at the point of delivery or in-store pickup, and is recorded net of returns and discounts. Revenue for services is recognized when the service is rendered and is recorded net of discounts.

Cost of goods sold includes the costs incurred to acquire materials, assemble,assemble and sell our finished products.products, purchase and fulfill contacts orders through our third-party distribution partner, and provide eye exams. Such costs include (i) product costs, including freight and import costs and adjustments to the lesser of cost and net realizable value, (ii) optical laboratory costs, (iii) customer shipping, (iv) occupancy and depreciation costs of retail stores, and (v) employee-related costs associated with eye exams, which includes salaries, benefits, bonuses, and stock-based compensation. We expect our cost of goods sold to fluctuate as a percentage of net revenue primarily due to product mix, customer preferences and resulting demand, the cost and management of inventory, shipping costs, laboratory utilization, and the scaling of our eye exam and contacts businesses. Cost of goods sold also may change as we open or close retail stores because of the resulting change in related occupancy and depreciation costs.

Provision for income taxes consists of income taxes related to foreign and domestic federal and state jurisdictions in which we conduct business, adjusted for allowable credits, deductions, and valuation allowance against deferred tax assets. We expect our provision to fluctuate based on changes in our operations, our income before taxes, and tax laws or regulations.

Selling, general, and administrative expenses increased $19.7 million, or 4.5%, for the year ended December 31, 2024 compared to the same period in 2023. This increase was primarily driven by higher payroll-related costs, primarily from growth in our retail workforce, and investments in marketing, partially offset by a $23.2 million decrease in stock-based compensation, mostly related to the 2021 Founders Grant (as described in Note 7 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).

In February 2024, the Company and its wholly owned subsidiary, Warby Parker Retail, Inc. (together, the “Borrowers”) entered into a Credit Agreement with JPMorgan Chase Bank, N.A. and the lenders party thereto (the “2024 Credit Facility”), which replaced thea 2022previous Creditcredit Facility.facility. The 2024 Credit Facility consists of a $120.0 million five-year revolving credit facility with sublimits of $15.0 million for letters of credit and $10.0 million for swingline loans. The 2024 Credit Facility includes an option for the Company to increase the available amount by up to $55.0 million, for a maximum borrowing capacity of $175.0 million, subject to the consent of the lenders funding the increase and certain other conditions. Proceeds of the borrowings under the 2024 Credit Facility are expected to be used for working capital and other general corporate purposes in the ordinary course of business. The Company is permitted to repay borrowings under the 2024 Credit Facility at any time, in whole or in part, without penalty.

For the year ended December 31, 2023, net cash used in investing activities was $54.7 million related to purchases of property and equipment to support our growth, primarily related to the build-out of new retail storesstores, andinvestments in capitalized software development costs, and an investment in a private optical equipment company.

For the year ended December 31, 2024,2025, net cash providedused byin financing activities was $5.0$12.0 million, which was primarily related to cash paid for shares withheld for taxes for stock-based compensation, partially offset by proceeds from stock option exercises, shares issued in connection with our Employee Stock Purchase Plan (“ESPP”), and other equity activity..

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on February 26, 2026 (the “Annual Report”). Data as of and for the three and six months ended MarchJune 31,30, 2026 and 2025 has been derived from our unaudited condensed consolidated financial statements. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Special Note Regarding Forward-Looking Statements” and in Part I, Item 1A, Risk Factors, in the Annual Report.

•We’ve built a seamless shopping experience that meets customers where and how they want to shop, whether that’s on our website, on our mobile app, or in our 337352 retail stores as of MarchJune 31,30, 2026.

For the three months ended MarchJune 31,30, 2026 and 2025:

•we generated net income of $3.2$4.6 million and $3.5net loss of $1.8 million, respectively; and

For a definitiondefinitions of Adjusted EBITDA and Adjusted EBITDA Margin, a non-GAAP measure,financial measures, and a reconciliationreconciliations to the most directly comparable GAAP measure, see the section titled “Key Business Metrics and Certain Non-GAAP Financial Measures.”

In the second quarter of 2025, we announced a partnership with Google to develop AI-enabled glasses intended for all-day wear. We are working closely with Google on the development of AI glasses and intend to launch a series of products over time. As part of this collaborative arrangement, Google has committed up to $75 million for our product development and commercialization costs. In addition, Google has committed to investing up to $75 million in Warby Parker, at our option and subject to reaching certain collaboration milestones. During the three and six months ended MarchJune 31,30, 2026, the Company reduced selling, general, and administrative expenses by $2.0$4.4 million and $6.4 million, respectively, related to costs which are reimbursable by Google and are thus fully offset within the period. To date, wethe haveCompany has incurred $5.3$9.7 million of reimbursable costs.

In February 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). The U.S. presidential administration subsequently invoked additional tariffs under other laws resulting in a rapidly changing tariff environment. In April 2026, the U.S. Customs and Border Protection agency launched a platform to allow for the submission of IEEPA tariff refund requests. The timingCompany is accounting for any claims as loss recoveries and recognizes receivables when receipt of claimthe acceptanceclaims andbecome paymentprobable. remains uncertain and weRecoveries are inreflected theas processa reduction of estimating the potential financial impactcost of thisgoods ruling.sold Wefor willinventory continuepreviously tosold, monitoror the refund process and will recognizeas a refundreduction whenof theinventory rightfor togoods receivethat anyremain amounts becomes probable.unsold.

We have expanded our retail store footprint over the past several years. During the three months ended MarchJune 31,30, 2026 and 2025, we opened 1415 and 11 net new retail stores, respectively. As of MarchJune 31,30, 2026, 299315 out of our 337352 retail stores offered in-person eye exams, representing 88.7%89.5% of our fleet, compared to 86.1%86.9% as of MarchJune 31,30, 2025.

__________________ (1) Represents expenses related to the Company’s equity-based compensation programs and related employer payroll taxes, which may vary significantly from period to period depending upon various factors including the timing, number, and the valuation of awards granted, and vesting of awards including the satisfaction of performance conditions. For the three months ended MarchJune 31,30, 2026 and 2025, the amount includes $0.6$0.4 million and $0.7$0.3 million, respectively, of employer payroll taxes associated with releases of RSUs and option exercises. For the six months ended June 30, 2026 and 2025, the amount includes $1.0 million and $0.9 million, respectively, of employer payroll taxes associated with releases of RSUs and option exercises.

(35) Represents restructuring costs incurred in the second quarter of 2025 and charges for certain legal matters outside the ordinary course of business.

Selling, general, and administrative expenses, or SG&A, primarily consist of employee-related costs including salaries, benefits, bonuses, and stock-based compensation for our corporate and retail employees, marketing, information technology, credit card processing fees, donations in connection with our Buy a Pair, Give a Pair program, facilities, legal, and other administrative costs associated with operating the business. Marketing, which consistconsists of both online and offline advertising, includes sponsored search, online advertising, Home Try-On program costs, and other initiatives. We expect SG&A to increase in absolute dollars over time and to fluctuate as a percentage of revenue due to the anticipated growth of our business, intentional investments in marketing, and changing prices of goods and services caused by inflation and other macroeconomic factors. SG&A is expensed in the period in which it is incurred.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Net revenue increased $18.7$21.0 million, or 8.3%,9.8%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. Active Customers increased 4.8%4.1% and Average Revenue per Customer increased to $331$336 from $310$316 in the prior year period. Average Revenue per Customer growth was primarily driven by our eyewear business, which benefited from selectiveincreased price increases implemented during the second quarterpenetration of 2025premium lenses and theenhancements, recognitionlike ofour salesprecision placed in the last few days of 2025 that were delivered in 2026,progressives, as well as an increase in customers purchasing eye exams along with glasses or contacts.

Cost of goods sold increaseddecreased by $13.6$1.8 million, or 13.9%,1.8%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and increaseddecreased as a percentage of revenue over the same period, from 43.7%47.0% of revenue to 46.0%42.1% of revenue. The increasedecrease in cost of goods sold was primarily driven by increased product and fulfillment costs associated with our sales growth, particularly related to opticalthe laboratorybenefit andfrom lensIEEPA costs,tariff andrefunds, partially offset by increases in store occupancy costs and doctor headcount due to new retail stores.

Gross profit, calculated as net revenue less cost of goods sold, increased by $5.1$22.8 million, or 4.0%,20.1%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to the increase in net revenue over the same period.period as well as a benefit from IEEPA tariff refunds.

Gross margin, expressed as a percentage and calculated as gross profit divided by net revenue, decreasedincreased by 230490 basis points for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. The decreaseincrease was primarily drivenrelated to a 500 basis point benefit from IEEPA tariff refunds as well as 110 basis points from the one-time inventory write-downs in Q2 2025 related to the sunset of our Home Try-On program. These benefits were partially offset by deleverage in the fixed expenses portion of gross margin, which includes doctor headcount and occupancy, the impact of tariff costs related to glasses, and increased optical laboratory and customer shipping costs. These impacts were partially offset by selective price increases implemented during the second quarter of 2025, and increased penetration of higher margin progressive lenses and other lens enhancements.occupancy.

Selling, general, and administrative expenses increased $5.9$15.2 million, or 4.7%,12.8%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. This increase was primarily driven by higher payroll-related costs from growth in our retail workforce and higher corporate expenses, mainly related to technology costs, partially offset by lower stock-based compensation, mostly related to the 2021 Founders Grant as award tranches became fully expensed.costs. As a percentage of revenue, SG&A decreasedincreased by 180150 basis points, primarily driven by leverageincreased fromretail marketingcompensation and technology costs relatedas toa ourpercent nowof retired Home-Try-On program, stock-based compensation, and corporate expenses,revenue, partially offset by deleveragecustomer fromexperience our retail workforce.efficiencies.

Interest and other income, net decreasedincreased $0.1 million, or 5.1%,5.0%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to favorable fluctuations in foreign currency rates, partially offset by lower interest rates on our increased cash and cash equivalents balance.

Provision for income taxes decreasedincreased $0.6$1.4 million, or 43.5%,176.9%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to thean impactincrease ofin income before income taxes in the Onecurrent Big Beautiful Bill Act on taxable income.year.

Since inception, we have financed our operations primarily from net proceeds from the sale of redeemable convertible preferred stock and cash flows from operating activities. We also have access to cash from our 2024 Credit Facility, as described below, which remains undrawn as of MarchJune 31,30, 2026. We had cash and cash equivalents of $288.2$292.7 million, which was primarily held for working capital purposes, and an accumulated deficit of $682.4$677.8 million as of MarchJune 31,30, 2026. As of December 31, 2025, we had cash and cash equivalents of $286.4 million, which was primarily held for working capital purposes, and an accumulated deficit of $685.6 million.

Under the 2024 Credit Facility, borrowings under the revolving credit facility bear interest on the principal amount outstanding, at the Company’s election, at (a) the greater of the prime rate (as defined in the credit agreement) or 2.5%, plus an applicable margin of 0.65% to 0.90% depending on the Company’s leverage ratio or (b) adjusted SOFR (as defined in the credit agreement), plus an applicable margin of 1.65% to 1.90% depending on the Company’s leverage ratio. The Company is charged an unused commitment fee of 0.20% to 0.25% depending on the Company's leverage ratio. Both interest on principal and commitment fees are includedrecorded inas a reduction to interest expenseand other income, net on the condensed consolidated statements of operations.

The 2024 Credit Facility contains a financial maintenance covenant which only applies while total borrowings exceed $30.0 million, which requires the Company to maintain a maximum consolidated senior net leverage ratio of 3:1. The 2024 Credit Facility contains customary affirmative and negative covenants, including limits on indebtedness, liens, capital expenditures, asset sales, investments and restricted payments, in each case subject to negotiated exceptions and baskets, as well as customary representations, warranties and event of default provisions. The obligations of the Borrowers under the 2024 Credit Agreement are secured by first-lien security interests in substantially all of the assets of the Borrowers. In addition, the obligations are required to be guaranteed in the future by certain additional domestic subsidiaries of the Company.

Other than letters of credit outstanding of $4.3 million as of both MarchJune 31,30, 2026 and December 31, 2025 used to secure certain leases in lieu of a cash security deposit, there were no other borrowings outstanding under the 2024 Credit Facility.

In February 2026, the Company’s Board of Directors authorized a share repurchase program to purchase up to $100.0 million of the Company’s Class A common stock (the “Share Repurchase Program”). Repurchases under the Share Repurchase Program may be made in the open market, in privately negotiated transactions, or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. The Share Repurchase Program does not have a fixed expiration date, does not obligate the Company to acquire any particular amount of Class A common stock, and may be modified, suspended, or terminated at any time at the discretion of the Company’s Board of Directors. During the three and six months ended MarchJune 31,30, 2026, the Company did not purchase any shares under the Share Repurchase Program.

Net cash provided by operating activities was $24.5$54.1 million for the threesix months ended MarchJune 31,30, 2026, consisting of net income of $3.2$7.8 million adjusted for $26.6$55.8 million of non-cash expenses and $5.3$9.5 million of net cash used as a result of changes in operating assets and liabilities. The non-cash charges included $13.8$27.8 million of depreciation and amortization, $11.4$21.3 million of stock-based compensation, $1.0$4.0 million of non-cash charitable contributions, $2.1 million of amortization of cloud-based software implementation costs, and $0.5$0.6 million of asset impairment charges. The changes in operating assets and liabilities were primarily driven by a decrease in deferred revenue, partially offset by an increase in prepaid expenses and other assets and inventory.a decrease in deferred revenue, partially offset by increases in accounts payable and accrued expenses.

Net cash provided by operating activities was $29.4$69.6 million for the threesix months ended MarchJune 31,30, 2025, consisting of net income of $3.5$1.7 million, adjusted for $25.5$50.7 million of non-cash expenses and $0.4$17.2 million of net cash generated as a result of changes in operating assets and liabilities. The non-cash charges included $12.3 million of stock-based compensation, $12.2$24.6 million of depreciation and amortization, $0.7$21.2 million of stock-based compensation, $2.8 million of non-cash charitable contributions, $1.5 million of amortization of cloud-based software implementation costs, and $0.3$0.5 million of asset impairment charges. The changes in operating assets and liabilities were primarily driven by a decrease in deferredinventory revenue,and an increase in accrued expenses and leasehold liabilities, partially offset by increaseda accountsdecrease payablein anddeferred decreased inventory and prepaid expenses and other assets.revenue.

For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $16.1$39.0 million related to purchases of property and equipment to support our growth, primarily related to the build-out of new retail stores and investments in capitalized software development costs.

For the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities was $16.2$32.4 million related to purchases of property and equipment to support our growth, primarily related to the build-out of new retail stores and investments in capitalized software development costs.

For the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $6.2$8.5 million, which was primarily related to cash paid for shares withheld for taxes for stock-based compensation.compensation, partially offset by proceeds from shares issued in connection with our ESPP and option exercises.

For the threesix months ended MarchJune 31,30, 2025, net cash used in financing activities was $2.3$5.1 million, which was primarily related to cash paid for shares withheld for taxes for stock-based compensation.compensation, partially offset by proceeds from shares issued in connection with our ESPP.