Kits Eyecare (KITS) 2024 Annual Gateway Conference summary

Business model and growth strategy

• Focuses on making eye care easy through a vertically integrated, direct-to-consumer digital platform, removing inefficiencies and passing savings to customers.

• Achieved rapid growth, reaching CAD 150 million in revenue, with an average 30% quarterly revenue growth over the last seven quarters, all funded from cash flow and maintaining positive adjusted EBITDA.

• Built a large, recurring customer base, with nearly 65% of annual revenue from repeat customers, leveraging a cost advantage and efficient marketing spend.

• Initial strategy targeted contact lenses for recurring revenue, then expanded into glasses with significant investment in automated, onshore lens manufacturing.

• Millennial demographic is the primary growth driver, with the business model designed to scale profitably as this cohort moves online for optical needs.

Financial performance and guidance

• Revenue has doubled per quarter over two years, growing at eight times the industry rate, with online sales taking share from fragmented brick-and-mortar competitors.

• Q3 revenue guidance was raised above the previous CAD 39–41 million range due to strong momentum, projecting around 32% year-on-year growth for the quarter.

• Marketing spend is tightly controlled, maintained at 12%-14% of revenue, with a focus on decreasing this ratio as scale increases.

• Gross profit and adjusted EBITDA are expanding as the company leverages its existing infrastructure, with minimal future CapEx required.

• Targets for the next 2–3 years are CAD 250 million in revenue and 10% EBITDA, with a five-year goal of CAD 500 million revenue and 15%-20% EBITDA.

Operational highlights and customer acquisition

• Automated optical lab can produce over 4,000 prescription glasses per day, enabling fast delivery (1–2 days) and low prices ($28–$38 per pair).

• Customer acquisition cost is about half the industry average, aided by word-of-mouth, city-focused marketing, and a high repeat rate.

• Initial promotions, such as free first pairs, helped build a loyal customer base; ongoing strategies include city-by-city market penetration.

• Gross margin is expected to rise toward 40% and beyond as glasses become a larger share of sales and scale increases.

• Value proposition for premium lenses is driving adoption among both millennials and older demographics, with significant price advantages over traditional retail.