Warby Parker (WRBY) FY2025 10-K Risk Factors: 16 New, 10 Dropped

What the changes say

Warby Parker expanded disclosures on supply chain tariff risks from China and other countries, new partnerships like Target and Google AI smart glasses, and evolving ESG and tax regulations.

What changed since the prior 10-K

New

NewRisks Related to Our Business and Industry
macroeconomic factors, increased competition, and the maturation of our business. As a result, you should not rely on our net revenue growth rate for any prior period as an indication of our future performance
Unforeseen expenses or ineffective resource allocation from heavy investments in growth could lead to losses and hinder profitability.
NewRisks Related to Our Business and Industry
Disruptions to our supply chain can have a material adverse effect on our business, financial condition, and operating results
Disruptions in overseas suppliers, contract laboratories in the US and China, or third-party carriers could delay the delivery of glasses to retail stores and customers.
NewRisks Related to Our Business and Industry
economic conditions and global events, such as geopolitical conflicts, natural disasters, or public health crises, may disrupt our supply chain, potentially preventing us from procuring timely deliveries or securing comparable alternatives at acceptable prices
New or heightened tariffs implemented in 2025 by the US government on imports from China, Italy, Vietnam, and Japan increase product costs and market uncertainty.
NewRisks Related to Our Business and Industry
Our use of artificial intelligence may result in operational disruptions, reputational harm, competitive challenges, regulatory scrutiny, liability, or security risks that could adversely affect our business, financial condition, and results of operations
Using artificial intelligence in predictive tasks and AI-powered smart glasses developed with Google may cause operational disruptions, regulatory scrutiny, and privacy liabilities.
NewRisks Related to Our Business and Industry
A variety of organizations and stakeholders measure the performance of companies on such ESG topics, and the results of these assessments are widely publicized. We may face heightened scrutiny on such ESG topics given our status as a public benefit corporation and certified B corporation
As a public benefit corporation and certified B corporation, the company faces heightened scrutiny and potential activism regarding its environmental, social, and governance disclosures and goals.
NewRisks Related to Our Business and Industry
campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business
New mandatory ESG and sustainability regulations across jurisdictions may increase compliance costs, supply chain complexity, and litigation risks.
NewRisks Related to Our Legal and Regulatory Environment
eyeglasses is also regulated in most states in which we do business. In some states, we are required to register our stores as an optical retailer
State laws requiring store registrations as optical retailers and complex healthcare regulations create compliance costs and exposure to investigations.
NewRisks Related to Our Legal and Regulatory Environment
private rights of action to individuals who believe their personal information has been misused, such as the CCPA
Privacy and communication laws like the TCPA, CCPA, and Canadian PIPEDA expose the company to costly litigation and statutory damages for marketing and data practices.
NewRisks Related to Our Legal and Regulatory Environment
example, we have registrations in a number of foreign countries in which we are not currently offering products or services, and those registrations could be subject to invalidation proceedings if we cannot demonstrate use of the marks by the applicable use deadlines in those countries
Foreign trademark registrations in countries where products are not yet offered could face invalidation if use deadlines are not met.
NewRisks Related to Our Dependence on Third Parties
regulatory requirements, at acceptable costs and on a timely basis. Our ability to obtain a sufficient selection or volume of inputs on a timely basis at competitive prices could suffer as a result of any deterioration or change in our supplier relationships or events that adversely affect our suppliers
Operating without long-term contracts leaves the company vulnerable to suppliers raising prices, lengthening lead times, or granting exclusivity to competitors.
NewRisks Related to Our Dependence on Third Parties
lengthy interruptions to our business. All of the aforementioned risks may be exacerbated if our business continuity and disaster recovery plans prove to be inadequate
Security incidents, cloud configuration failures, or cyberattacks on Amazon Web Services could disrupt website operations and customer data.
NewRisks Related to Taxation Matters
To the extent we expand our operations into new geographies, the effects of being subject to taxation in such jurisdictions may increase our worldwide effective tax rate and harm our business, financial condition, and results of operations
The enactment of the One Big Beautiful Bill Act on July 4, 2025, and other tax laws may increase the worldwide effective tax rate and impact financial performance.
NewRisks Related to Our Existence as a Public Benefit Corporation
actions. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of our stockholders
NewRisks Related to Ownership of Our Class A Common Stock
depending upon the size of the issuance or exercise. Any such issuances could result in substantial dilution to our existing stockholders and cause the trading price of our Class A common stock to decline
NewRisks Related to Ownership of Our Class A Common Stock
We cannot guarantee that our share repurchase program will be fully implemented or that such program will enhance the long-term value of the share price of our Class A common stock
NewRisks Related to Ownership of Our Class A Common Stock
Prolonged or pervasive economic downturns could also slow the pace of new retail store openings or cause current locations to close

Dropped

DroppedRisks Related to Our Business and Industry
Increases in component costs, shipping costs, long lead times, supply shortages, and supply changes could disrupt our supply chain and factors such as wage rate increases and inflation can have a material adverse effect on our business, financial condition, and operating results
DroppedRisks Related to Our Business and Industry
transportation industry, disruptions to the national and international transportation infrastructure, and unexpected delivery interruptions or delays also have the potential to derail our distribution process
DroppedRisks Related to Our Business and Industry
We use artificial intelligence for certain business purposes, including the automation of certain tasks, predicting market trends, and improving our customer experience. We may expand our use of artificial intelligence in other areas of our business, including in customer facing applications
Wage rate increases and reliance on a single cellulose acetate supplier.
DroppedRisks Related to Our Business and Industry
bribery, and international trade laws. Problems in any of these areas could result in a reduction in sales, increased costs, sanctions or penalties, and damage to our reputation and brands
National and international transportation industry disruptions impacting distribution.
DroppedRisks Related to Our Business and Industry
January of the following year. Seasonal trends cause fluctuations in our quarterly results, which may impact the predictability of our business and operating results
Artificial intelligence usage and potential predictive biases.
DroppedRisks Related to Our Business and Industry
We derive most of our revenue from sales of our glasses. A decline in sales of our glasses would negatively affect our business, financial condition, and results of operations
DroppedRisks Related to Our Dependence on Third Parties
bankruptcy. The occurrence of one or more of these events could impact our ability to get products to our customers, result in disruptions to our operations, increase our costs and decrease our profitability
DroppedRisks Related to Taxation Matters
As and if we expand the scale of our international business activities, any changes in the United States or foreign taxation of such activities may increase our worldwide effective tax rate and harm our business, financial condition, and results of operations
DroppedRisks Related to Ownership of Our Class A Common Stock
reporting, and IT personnel with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404
DroppedRisks Related to Ownership of Our Class A Common Stock
could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock

Reworded

96% rewrittenRisks Related to Our Business and Industry
Environmental, social, and governance (“ESG”) matters may adversely impact our business and reputation
Updated ESG language to state stakeholders may judge performance, softening prior references to long-term sustainability contributions.
95% rewrittenRisks Related to Our Dependence on Third Parties
We face risks associated with suppliers from whom our products are sourced and are dependent on a limited number of suppliers
Added specific mention that around half of cellulose acetate is from a single supplier and that contract manufacturers purchase components.
90% rewrittenRisks Related to Our Dependence on Third Parties
Our business relies on Amazon Web Services, and any disruption of, or interference with, our use of Amazon Web Services could adversely affect our business, financial condition, or results of operations
Retitled and maintained Amazon Web Services dependency risk without substantive operational text changes.
87% rewrittenRisks Related to Our Business and Industry
Strategic investments, partnerships, alliances, or acquisitions, could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations
Added specific examples of recent partnerships, including Target Corporation shop-in-shops and AI smart glasses with Google and Samsung.
Was: Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations
85% rewrittenRisks Related to Ownership of Our Class A Common Stock
Additional stock issuances could result in significant dilution to our stockholders and cause the trading price of our Class A common stock to decline. Sales of substantial amounts of our Class A common stock could also negatively impact the trading price of our Class A common stock
Added PSUs alongside RSUs and stock options as potential sources of dilution from equity settlements.
81% rewrittenRisks Related to Our Legal and Regulatory Environment
We are subject to extensive state, local, and federal vision care and healthcare laws and regulations, and failure to adhere to such laws and regulations would adversely affect our business
Maintained healthcare regulatory disclosures regarding Medicare Advantage and anti-kickback laws with minor wording adjustments.
76% rewrittenRisks Related to Our Legal and Regulatory Environment
Failure to adequately maintain and protect our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively
Refined intellectual property protection language regarding jurisdictional availability and devaluing proprietary technology.
75% rewrittenRisks Related to Our Business and Industry
We have limited experience at our current scale. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer, which may have a material adverse effect on our business, financial condition, and operating results
Updated 2024 to 2025 net revenue figures ($771.3 million to $871.9 million, a 13.0% increase) and added employee scaling and culture risks.
Was: We have grown rapidly in recent years and have limited experience at our current scale. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer, which may have a material adverse effect on our business, financial condition, and operating results
68% rewrittenRisks Related to Our Legal and Regulatory Environment
Legislative or regulatory reforms may make it more difficult and costly for us or third-party manufacturers to obtain marketing authorizations for, or to manufacture, market, or distribute our products
61% rewrittenRisks Related to Our Business and Industry
Our business is affected by seasonality
59% rewrittenRisks Related to Our Legal and Regulatory Environment
Eyeglasses, contact lenses and visual acuity charts are regulated as medical devices by the FDA, and our failure, or the failure of any third-party manufacturers, to obtain and maintain the necessary marketing authorizations for our products could have a material adverse effect on our business
57% rewrittenRisks Related to Ownership of Our Class A Common Stock
Certain provisions of our certificate of incorporation, our bylaws, and Delaware law may prevent or hinder attempts by our stockholders to change our management or to acquire a controlling interest in us, and the trading price of our Class A common stock may be lower as a result
51% rewrittenRisks Related to Our Business and Industry
We believe that our company culture has contributed to our success and if we cannot maintain this culture as we grow, our business could be harmed
49% rewrittenRisks Related to Our Existence as a Public Benefit Corporation
Our status as a public benefit corporation may not result in the benefits that we anticipate
44% rewrittenRisks Related to Taxation Matters
Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited
44% rewrittenRisks Related to Taxation Matters
Changes in our effective tax rate or liability may have an adverse effect on our results of operations
41% rewrittenRisks Related to Our Business and Industry
We could be adversely affected by product liability, product recall or personal injury issues
40% rewrittenRisks Related to Taxation Matters
Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our sites and our financial results
39% rewrittenRisks Related to Our Business and Industry
Our e-commerce and omnichannel business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability
37% rewrittenRisks Related to Our Legal and Regulatory Environment
We may incur costs to defend against, and could be vulnerable to or face liability for, intellectual property infringement claims brought against us by others
Was: We may incur costs to defend against, face liability or for being vulnerable to intellectual property infringement claims brought against us by others
36% rewrittenRisks Related to Our Business and Industry
We have a history of losses, and we may be unable to sustain profitability
Was: We have a history of losses, and we may be unable to achieve or sustain profitability
35% rewrittenRisks Related to Ownership of Our Class A Common Stock
Our business and financial performance have in the past, and may in the future, differ from any projections that we disclose or any information that may be attributed to us by third parties
Was: Our business and financial performance may differ from any projections that we disclose or any information that may be attributed to us by third parties
31% rewrittenRisks Related to Our Legal and Regulatory Environment
Our products are also subject to similar state regulations and various laws and regulations of foreign countries governing manufacturing. We or our third-party manufacturers may not take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our products
30% rewrittenRisks Related to Our Business and Industry
The optical industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted
30% rewrittenRisks Related to Our Business and Industry
If we fail to maintain and enhance our brand, our ability to engage or expand our base of customers will be impaired, and our business, financial condition, and results of operations may suffer
26% rewrittenRisks Related to Our Business and Industry
We may not be successful in our retail growth and vision care expansion strategy
22% rewrittenRisks Related to Our Business and Industry
If we fail to cost-effectively retain our existing customers or to acquire new customers, our business, financial condition, and results of operations would be harmed
22% rewrittenRisks Related to Our Legal and Regulatory Environment
Our business could be adversely affected by legal challenges to our business model or by actions restricting our ability to provide the full range of our services in certain jurisdictions

All 71 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business and Industry

01We have limited experience at our current scale. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer, which may have a material adverse effect on our business, financial condition, and operating results75% rewritten
02macroeconomic factors, increased competition, and the maturation of our business. As a result, you should not rely on our net revenue growth rate for any prior period as an indication of our future performanceNew
03We may not be successful in our retail growth and vision care expansion strategy26% rewritten
04Disruptions to our supply chain can have a material adverse effect on our business, financial condition, and operating resultsNew
05economic conditions and global events, such as geopolitical conflicts, natural disasters, or public health crises, may disrupt our supply chain, potentially preventing us from procuring timely deliveries or securing comparable alternatives at acceptable pricesNew
06Our use of artificial intelligence may result in operational disruptions, reputational harm, competitive challenges, regulatory scrutiny, liability, or security risks that could adversely affect our business, financial condition, and results of operationsNew
07If we fail to cost-effectively retain our existing customers or to acquire new customers, our business, financial condition, and results of operations would be harmed22% rewritten
08The optical industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted30% rewritten
09If we fail to maintain and enhance our brand, our ability to engage or expand our base of customers will be impaired, and our business, financial condition, and results of operations may suffer30% rewritten
10We have a history of losses, and we may be unable to sustain profitability36% rewritten
11Failure to recruit and retain optometrists, opticians, and other eye care professionals for our retail stores could materially adversely affect our business, financial condition, and results of operations
12Strategic investments, partnerships, alliances, or acquisitions, could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations87% rewritten
13Our e-commerce and omnichannel business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability39% rewritten
14Future operational success depends on our ability to develop, maintain and extend relationships with managed vision care companies, vision insurance providers, and other third-party payors, or otherwise continue to attract these members to shop with us
15Our profitability and cash flows may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage
16Our business is affected by seasonality61% rewritten
17Environmental, social, and governance (“ESG”) matters may adversely impact our business and reputation96% rewritten
18A variety of organizations and stakeholders measure the performance of companies on such ESG topics, and the results of these assessments are widely publicized. We may face heightened scrutiny on such ESG topics given our status as a public benefit corporation and certified B corporationNew
19campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our businessNew
20We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain, and motivate our personnel, we may not be able to grow effectively
21We believe that our company culture has contributed to our success and if we cannot maintain this culture as we grow, our business could be harmed51% rewritten
22We could be adversely affected by product liability, product recall or personal injury issues41% rewritten
23Refunds, cancellations, and warranty claims could harm our business
24We expect a number of factors to cause our results of operations and operating cash flows to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance
25We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all
26Our credit agreement contains restrictions that limit our flexibility in operating our business

Risks Related to Our Legal and Regulatory Environment

27We are subject to extensive state, local, and federal vision care and healthcare laws and regulations, and failure to adhere to such laws and regulations would adversely affect our business81% rewritten
28eyeglasses is also regulated in most states in which we do business. In some states, we are required to register our stores as an optical retailerNew
29private rights of action to individuals who believe their personal information has been misused, such as the CCPANew
30Our business could be adversely affected by legal challenges to our business model or by actions restricting our ability to provide the full range of our services in certain jurisdictions22% rewritten
31Failure to adequately maintain and protect our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively76% rewritten
32example, we have registrations in a number of foreign countries in which we are not currently offering products or services, and those registrations could be subject to invalidation proceedings if we cannot demonstrate use of the marks by the applicable use deadlines in those countriesNew
33We may incur costs to defend against, and could be vulnerable to or face liability for, intellectual property infringement claims brought against us by others37% rewritten
34Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations
35Eyeglasses, contact lenses and visual acuity charts are regulated as medical devices by the FDA, and our failure, or the failure of any third-party manufacturers, to obtain and maintain the necessary marketing authorizations for our products could have a material adverse effect on our business59% rewritten
36Our products must be manufactured and distributed in accordance with applicable laws and regulations, and we or our third-party manufacturers could be forced to recall our products or terminate production or be subject to enforcement action if we or they fail to comply with these regulations
37Our products are also subject to similar state regulations and various laws and regulations of foreign countries governing manufacturing. We or our third-party manufacturers may not take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our products31% rewritten
38Legislative or regulatory reforms may make it more difficult and costly for us or third-party manufacturers to obtain marketing authorizations for, or to manufacture, market, or distribute our products68% rewritten
39Failure to comply with laws, regulations, and enforcement activities or changes in statutory, regulatory, accounting, and other legal requirements could potentially impact our operating and financial results
40Our use of third-party open-source software could adversely affect our ability to offer our products and offerings and subjects us to possible litigation
41We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition, and results of operations
42We cannot assure you that all of our third-party intermediaries, employees, representatives, contractors, partners, and agents will not take actions in violation of anti-corruption laws, for which we may be ultimately held responsible. As we expand our international business, our risks under these laws may increase
43We could incur significant liabilities related to, and significant costs in complying with, environmental, health, and safety laws and regulations
44From time to time, we may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and operating results

Risks Related to Our Dependence on Third Parties

45We face risks associated with suppliers from whom our products are sourced and are dependent on a limited number of suppliers95% rewritten
46regulatory requirements, at acceptable costs and on a timely basis. Our ability to obtain a sufficient selection or volume of inputs on a timely basis at competitive prices could suffer as a result of any deterioration or change in our supplier relationships or events that adversely affect our suppliersNew
47We rely on a limited number of contract manufacturers and logistics partners for our products. A loss of any of these partners could negatively affect our business
48We rely on third parties for elements of the payment processing infrastructure underlying our business. If these third-party elements become unavailable or unavailable on favorable terms, our business could be adversely affected
49Our business relies on Amazon Web Services, and any disruption of, or interference with, our use of Amazon Web Services could adversely affect our business, financial condition, or results of operations90% rewritten
50lengthy interruptions to our business. All of the aforementioned risks may be exacerbated if our business continuity and disaster recovery plans prove to be inadequateNew

Risks Related to Taxation Matters

51Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited44% rewritten
52Changes in our effective tax rate or liability may have an adverse effect on our results of operations44% rewritten
53To the extent we expand our operations into new geographies, the effects of being subject to taxation in such jurisdictions may increase our worldwide effective tax rate and harm our business, financial condition, and results of operationsNew
54Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our sites and our financial results40% rewritten

Risks Related to Our Existence as a Public Benefit Corporation

55As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value
56Our status as a public benefit corporation may not result in the benefits that we anticipate49% rewritten
57actions. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of our stockholdersNew
58As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations

Risks Related to Ownership of Our Class A Common Stock

59The trading price of our Class A common stock has been volatile and could decline significantly and rapidly
60We cannot predict the effect our multi-class structure may have on the trading price of our Class A common stock
61Our business and financial performance have in the past, and may in the future, differ from any projections that we disclose or any information that may be attributed to us by third parties35% rewritten
62We do not intend to pay dividends for the foreseeable future
63Additional stock issuances could result in significant dilution to our stockholders and cause the trading price of our Class A common stock to decline. Sales of substantial amounts of our Class A common stock could also negatively impact the trading price of our Class A common stock85% rewritten
64depending upon the size of the issuance or exercise. Any such issuances could result in substantial dilution to our existing stockholders and cause the trading price of our Class A common stock to declineNew
65We cannot guarantee that our share repurchase program will be fully implemented or that such program will enhance the long-term value of the share price of our Class A common stockNew
66Certain provisions of our certificate of incorporation, our bylaws, and Delaware law may prevent or hinder attempts by our stockholders to change our management or to acquire a controlling interest in us, and the trading price of our Class A common stock may be lower as a result57% rewritten
67Changes in general economic conditions could reduce consumer demand for our products and services and otherwise negatively impact our business
68Prolonged or pervasive economic downturns could also slow the pace of new retail store openings or cause current locations to closeNew
69If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
70The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members
71Changing climate and weather patterns leading to severe weather and disasters may cause significant business interruptions and expenditures

Other Warby Parker 10-Ks

FY2024 10-K risk factors
65 risks
This initial risk disclosure emphasizes Warby Parker's rapid retail expansion, history of net losses, and heavy reliance on eyewear product sales and third-party supply chains.
Filed Feb 27, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.