VANCOUVER, Canada—Kits Eyecare Ltd. (TSX: KITS / OTCQX: KTYCF), a direct-to-consumer glasses manufacturer and digital eyecare provider, reported this week that its revenue in the first quarter dipped roughly 2 percent to $20.1 million. This compares with revenue of $20.4 million in the year-ago period. Sales of eyeglasses in the quarter rose 63 percent year-over-year, totaling $2.6 million in the period. Contact lens sales fell 7.2 percent in the quarter to $17.5 million, the company reported in its consolidated financial statement for the quarter ended March 31.

Kits also noted that its marketing expenses declined 40 percent to $2.7 million in the quarter, as the company “scaled back investments in light of macro-economic uncertainty.”

"Glasses revenue increased 63 percent year-over-year in the quarter, while marketing investments decreased by 40 percent,” Roger Hardy co-founder and CEO, said in the earnings announcement. “Revenue remained constant in the quarter, demonstrating the strength and recurring nature of our customer base and the company's ability to adapt quickly to macro uncertainty.”

He added, “Seventy percent of our revenue came from returning customers, and gross profit margins expanded 650 basis points to 30.5 percent in the quarter. Overall, we made tremendous headway in what was a challenging environment. Having proven our model's resilience and category leading loyalty metrics, we will continue growing our glasses business in the coming quarters.”

According to chief operating officer Joseph Thompson, Kits delivered a total of 148,000 eyecare orders in Q1. “We are proud to have delivered a 20 percent quarter-on-quarter increase in custom progressive eyeglasses in the first quarter of 2022. Our vertically integrated high-volume onshore optical lab has allowed us to avoid supply chain disruptions and to maintain a healthy growing gross margin, while delivering prescription glasses to customers in as little as one day,” he added.

Among the other highlights of the quarter cited by Kits were:

  • Gross profit grew 24.7 percent year-on-year.

  • Revenue reached a two-year compounded annual growth rate of 18.0 percent in the first quarter of 2022.

  • Record two-year active customers of 710,000, an increase of 29.3 percent year-over-year.

  • Gross margin expanded to 30.5 percent in the first quarter, a 650-basis point expansion.

  • Returning customers comprised 70 percent of first quarter 2022 revenue.

  • Subscription Autoship orders grew to 25.1 percent of total contact lens orders (up from 23.9 percent) in the first quarter of 2021.

  • Adjusted EBITDA improved to negative $0.9 million.

  • Strong cash balance of $18.3 million at the end of Q1.