Healthcare apparel company Figs (NYSE: FIGS) reported Q3 2026 results beating Wall Street’s revenue expectations, with revenue up 25.7% year on year to $190.7 million. In addition, next quarter’s revenue guidance ($232.2 million at the midpoint) was a positive surprise, coming in 4.7% above analysts’ consensus estimates. Its GAAP profit of $0.10 per share was 42.9% above analysts’ consensus estimates.

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“Our momentum continued in Q3, which marked our fourth straight quarter of greater than 25% net revenues growth, powered by consistent strength across our categories, channels and geographies,” said Trina Spear, Chief Executive Officer and Co-Founder. “This inflection in our business reflects the combined power of great product, marketing campaigns that resonate deeply, a passionate community and strong industry fundamentals. It has been a landmark year so far for FIGS, and I’m extremely proud of our team’s ongoing execution and unrelenting focus on our mission. We are also off to a great start in Q4 and believe we have a foundation for sustainable top- and bottom-line momentum as we look ahead to 2027.”

Revenue growth

Examining a company’s long-term performance can provide clues about its quality. Any business can deliver a good quarter or two, but many enduring ones grow for years. Over the last five years, Figs grew its revenue at a 14.5% annual rate. Though this growth is acceptable on an absolute basis, revenue growth alone is not enough in the consumer discretionary sector, which can display significant earnings volatility. The bar for the sector is particularly high, reflecting the nonessential and hit-driven nature of the products and services offered. Additionally, the five-year compound annual growth rate covers a period beginning around Covid, when revenue was depressed before rebounding.

Long-term growth matters most, but within consumer discretionary, a longer historical view may miss a company riding a successful new product or trend. Figs’s annualized revenue growth of 16.8% over the last two years is above its five-year trend, a positive sign.

We can better understand the company’s revenue dynamics by analyzing its number of active customers, which reached 3.18 million in the latest quarter. Over the last two years, Figs’s active customers averaged 7.7% year-on-year growth. Revenue growth outpaced customer growth during the same period, indicating that the company’s monetization has risen.

This quarter, Figs reported strong year-on-year revenue growth of 25.7%, and its $190.7 million of revenue topped Wall Street’s consensus estimates by 4.4%. Management is guiding for a 15% year-on-year increase in revenue next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 8.1% over the next 12 months, according to S&P, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.

Operating margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses, from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Figs’s operating margin has risen over the last 12 months and averaged 8.2% over the last two years. The company’s improved efficiency is a positive, but its suboptimal cost structure means profitability remains inadequate for a consumer discretionary business.

This quarter, Figs generated an operating margin of 11.6%, up 5.3 percentage points year on year. This increase was a positive development and shows it was more efficient.

Earnings per share

Long-term changes in earnings per share, or EPS, matter for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Figs’s full-year EPS turned positive over the last five years. This is a positive development and marks a critical point for the company.

In Q3, Figs reported EPS of $0.10, up from $0.05 in the same quarter last year. The result easily cleared analysts’ consensus estimates, a positive outcome for shareholders. Over the next 12 months, Wall Street expects Figs’s full-year EPS to shrink by 4.5% from $0.37 to $0.36, according to S&P.

Key takeaways from Figs’s Q3 results

Figs delivered some important positives in Q3, with EPS topping analysts’ consensus estimates and revenue guidance for next quarter exceeding Wall Street’s consensus. Investors were likely hoping for more: Shares fell 2.5% to $19.60 immediately after the report.

Is Figs an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation when deciding if the stock is a buy. Read the full research report here (it’s free).