Revolve’s Q3 Earnings Call: Our Top 5 Analyst Questions

Revolve’s third quarter was marked by strong margin expansion, which contributed to significant bottom line outperformance despite revenue coming in slightly below Wall Street expectations. Management attributed the solid results to improved gross margin, driven largely by advancements in its markdown optimization algorithm and a deliberate reduction in promotional activity. Notably, the expansion of owned brands also played a key role, with Co-CEO Michael Mente highlighting, “Our owned brand penetration of REVOLVE segment net sales increased year-over-year for the third consecutive quarter in Q3.”

Is now the time to buy RVLV? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Revolve’s Q3 Earnings Call

• Rakesh Patel (Raymond James) asked about the durability of margin gains from the markdown algorithm. CFO Jesse Timmermans replied that improvements are sustainable and supported by both inventory health and a robust pipeline of owned brand launches.
• Oliver Chen (TD Cowen) questioned how digital merchandising expertise translates to physical stores. Co-CEO Michael Karanikolas explained the company is experimenting with in-store strategies and expects to iterate for long-term optimization.
• Matt Koranda (ROTH Capital) inquired about FWRD’s growth despite luxury competitors’ challenges. Co-CEO Michael Mente emphasized that margin focus drove FWRD’s gross profit growth, and expects revenue acceleration as competitor inventory constraints deepen.
• Anna Andreeva (Piper Sandler) sought more detail on rising return rates and category performance. Management cited product mix and higher price points as factors, noting ongoing efforts to improve return rates and a likely rebound in handbags and accessories.
• Jay Sole (UBS) probed the trade-off between margin and sales growth in both segments. Karanikolas acknowledged the shift toward margin optimization this quarter, but reiterated the long-term goal of balancing top-line growth with profitability.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the progress of new owned brand launches and their impact on gross margins, (2) the effectiveness of physical retail openings—especially the Los Angeles flagship—in expanding customer reach, and (3) continued traction in international markets, notably China. Additionally, we will monitor how AI-driven operational changes and evolving marketing strategies support both growth and efficiency.

Revolve currently trades at $21.81, up from $19.98 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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