Revolve Officially Files for IPO - Fashionista

Revolve Officially Files for IPO

The influencer-fueled retailer also revealed sales figures — and marketing expenditures — for the past couple years.
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Revolve held a month-long #Revolvesummer activation in Bermuda this past July. Photo: @revolve/Instagram

Revolve held a month-long #Revolvesummer activation in Bermuda this past July. Photo: @revolve/Instagram

Apparently all that influencer marketing has paid off. On Friday, Revolve filed documents with the Securities and Exchange Commission with the intention of listing an initial public offering on the New York Stock Exchange. The news follows a recent expansion into Europe as well as the biggest, most influencer-filled #RevolveFestival Coachella weekend it's thrown yet.

The Los Angeles-based company, which goes by Revolve Group Inc. in the filing, encompasses the e-commerce destinations Revolve.com and Fwrd.com, as well as 19 in-house brands under the Alliance Apparel, Inc. (which Revolve acquired in 2014) umbrella.

In an overview within the filing, Revolve boasts of its success in wooing millennial consumers with its digital-first approach to transforming the shopping experience, as well as its leadership in social media and influencer marketing. These things are also listed under its "competitive strengths." But since social media followers and impressions aren't quite enough to warrant an IPO, the 150-page filing also reveals financial details that the company rarely divulged over the years since it didn't have to. They're especially enlightening given that one of the most common questions around Revolve is how it pays for the aforementioned extravagant activations and the influencer vacations it hosts year-round.

In 2017, the company reported $399.6 million in net sales and $5 million in profits, numbers it's set to exceed in 2018. For the six months ended June 30, 2018 (a period that includes its most sales-generating time, festival season), it reported $245.1 million in net sales and $15.8 million in profits — that's a 179.9 percent growth, or near-tripling, in profit over the same period last year.

That's all well and good, but we were curious to see the figures regarding how much money it's spent on marketing. Co-CEO Michael Mente admitted that its latest Coachella activation — where it took over a hotel and an estate, hosted over 90 influencers and dressed several hundred, and brought in musical acts like Chance, the Rapper and A$AP Rocky — "broke the budget." But what was that budget? In the six months ended June 30, 2018, it reported spending about $36.5 million on marketing, about $10 million more than it spent that same period last year. In fiscal 2017 as a whole, it spent about $55.5 million on marketing. Despite those expenses, the company still managed to make a significant profit, suggesting those influencer partnerships and month-long trips to Bermuda might be worth it.

The Fashion Law points out that the nature of those influencer partnerships could be problematic in the context of an IPO, though, given that Revolve and its contracted influencers do not always make an effort to comply with FTC guidelines around disclosure of sponsored social media posts.

That issue, and Revolve's overall success as a company, feel extremely representative of today's fashion business landscape, especially after Farfetch, another e-commerce platform, just went public.

Homepage photo from #Revolvefestival 2018: BFA

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