Kits Eyecare Q2 Revenue Climbs 17.8% as Prescription Glasses Gain Traction

Kits Eyecare’s bet on prescription glasses is starting to reshape its revenue mix — and the company’s latest numbers show why management is leaning further into that strategy.

The Vancouver-based online eyecare retailer (TSX: KITS) said second-quarter revenue rose 17.8% year over year to C$58.4 million, or 17.9% on a constant-currency basis. Prescription glasses revenue jumped 54% to C$11.1 million, representing nearly 19% of total revenue, up from 14.5% a year earlier. Kits delivered 148,300 pairs of glasses during the quarter, a 32.4% increase.

For the first half, revenue reached C$115.9 million, up 20.5% from a year earlier, or 22% on a constant-currency basis.

The glasses push is also translating to stronger financial results. Net income came in at C$1.5 million, or C$0.04 per share, compared with a net loss of C$700,000, or C$0.02 per share, in the same period last year. Adjusted EBITDA rose 14.3% to C$2.9 million, representing 5% of revenue and marking Kits’ 15th consecutive quarter of positive adjusted EBITDA. Operating cash flow hit a record C$7.8 million, with free cash flow of C$6.4 million.

“We intentionally directed acquisition and merchandising efforts toward glasses entering 2026,” CEO Roger Hardy said on the earnings call. Kits’ vertically integrated model — frame design, lens production and fulfillment — is a key part of that plan, he noted, positioning the company to benefit from faster delivery times and higher-margin sales as glasses volume grows.

The shift hasn’t been without friction. Management acknowledged that glasses growth contributed to a slower overall revenue-growth rate than in the first quarter, partly because glasses are a higher-consideration purchase that requires more marketing spend per customer. Marketing expense accounted for 17.4% of revenue in the quarter, up from 15.2% a year earlier. Kits said it reduced spending through the quarter and ended at levels closer to historical norms; management expects the baseline marketing rate to settle in the mid-teens while it rebalances toward contact lenses in the second half. Hardy described contact lenses as Kits’ primary customer-acquisition channel.

The customer data helps explain the trade-off. Repeat customers generated 65.5% of second-quarter revenue, up from 60.6% a year earlier, and repeat revenue totaled C$38.3 million. The installed customer base grew 27% year over year, outpacing total company revenue growth. The company also said newer glasses customers are spending significantly more on their first orders — 50% more than the comparable cohort a year earlier — without any change to entry-level pricing. Management attributed the lift to multiple-pair purchases, premium lens upgrades and newer product categories.

Premium lens upgrades accounted for 45.2% of glasses revenue in the quarter. During Q2, Kits introduced anti-fatigue lenses for screen-time and close-up work and expanded its Pangolin smart-glasses line into sports. COO Joseph Thompson said the company expects continued expansion in premium lens offerings, including digital progressive lenses, thinner lenses, photochromic lenses and SunRx products.

Gross margin expanded 160 basis points from a year earlier to 37.9%. CFO Ibrahim Kamar said the improvement came from operating execution rather than tariff refunds. Fulfillment expense ticked up to 10.9% of revenue from 10.7%, partly due to fuel surcharges from carrier partners that Kits chose to absorb rather than pass on to customers. For the first half, fulfillment expense was 10.7% of revenue.

Kits also used the quarter to strengthen its balance sheet. It repaid a C$290,000 promissory note, exited its Bitcoin ETF treasury position and bought back and canceled 89,200 shares for C$1 million under its normal course issuer bid. The company ended the period with C$27.4 million in cash and no debt, up from C$19 million at the end of Q1. Including its undrawn C$15 million asset-based lending facility, Kits had roughly C$42.4 million in accessible liquidity, plus a C$5 million uncommitted accordion. Hardy said the company continues to evaluate acquisition opportunities but hasn’t identified a deal that has moved forward.

Retail expansion is also beginning to take shape. Kits opened its Toronto flagship at 735 Queen Street West late in the quarter, a location not included in second-quarter results. Thompson said early performance has exceeded expectations, with spillover activity in the surrounding area also boosting branded searches and digital demand. The store spans more than 2,500 square feet, roughly twice the size of Kits’ Vancouver flagship, and required less than C$1 million in capital expenditures. If the current momentum holds, Thompson said the company could identify roughly two additional locations in the second half of 2026.

On the insurance side, Kits added Manulife to its Canadian direct-billing platform through TELUS Health eClaims. Thompson said the move gives approximately 7 million Manulife group benefits members real-time coverage verification and direct claims processing. Adoption during the first month was faster than for prior carrier integrations, he said, though he cautioned that the data is still early.

For the third quarter, Kits guided to revenue of C$62 million to C$64 million and adjusted EBITDA margin of 4% to 6%.

More broadly, the quarter underscores a deliberate strategic shift: Kits is accepting slower aggregate growth in the short term to build a glasses business that can drive higher order values, stronger repeat rates and better margins over time.

Kits sells prescription glasses and contact lenses through a vertically integrated digital platform, with in-house lens manufacturing and a digital fitting experience it says is powered by OpticianAI. The company designs its products in Canada and ships worldwide.

This article originally appeared on MarketBeat.