WW - Earnings call transcript Q2 2022 | WW International, Inc.

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Operator

Good day, and welcome to the WW International Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Corey Kinger, Investor Relations. Please go ahead.

Corey Kinger

Thank you for everyone for joining us today for WW International's Second Quarter 2022 Conference Call. p.m. X:XX about At we [ph] press results. today, second reporting quarter XXXX issued Time release a our Eastern financial as The provide on further company's investors of the with as purpose this some details call company's progress. regarding general provide a to is to results update well the The is the available company's at website located press release corporate.ww.com. on corporate website section under investor Supplemental are available also the investor on and in events. materials the company's corporate presentations measures directly are on disclosed this call comparable measures of GAAP most press financial available non-GAAP of Reconciliations the also to conference part as the release.

a from remind filings Before let that risk These that begin, with Commission. subject contain to company's uncertainties we explained those will are statements cause Exchange factors materially forward-looking forward-looking Investors me to detail the discussed aware everyone be here could in this and and the risks whether results events, that should risks today. statements. call Securities in forward-looking otherwise. various filings are law, of statements. revise more actual any differ forward-looking the required these discussion to by statements forward-looking result company and All uncertainties new refer and of of except are made as statements, no update to for or Please a future publicly today detailed any obligation as the as of undertakes information, and statements, such or

the over Sima. to Joining today's call will are Sima Sistani, CEO; call I now and Amy O'Keefe, turn CFO.

Sima Sistani

who business spoke road I on shared simplify I've to performance, business, executing only afternoon, more the weight Good you the Watchers with established weight increased health the lose do before. Organization, It's scientific we're risks. that building last know the significantly my also health. losing higher solutions some that and we loss that. refocus weight last the value When worldwide billion and helping Corey. ever efforts for everyone, and just weight, have fact not successful than the May, Thanks map on the our initiatives people with excess We is adults a priorities namely of on thoughts of today. necessary of drivers, days seen recent Health out It's I've for associated our World want improves of than point, diagnosing that product to to and According But XX and focus immediate assessment obesity a well X.X you I mass effective launches spent obesity amounts at headed. us in overweight. thank weeks. seven is modest even Weight need where cases been To them do yet minority the are needs. market preventable, and is high prices address the on drugs. of joining

at now need delivering program fitting The Our sustainable the I access a to about via to recommended weight way. number came loss a And member and motivation into a for tell forward. but our weight life. shared only member months right a many Watchers more is, Weight movement even. digital is phenomenon, along the evolve, which I'm of after Their the enough the paid company, pride not consumer and Watchers the brought lose what weight empathetic success has digital around interest XX% true weight, us jeans, not It been the the about way. insights to loss coaching Weight That and product a subscriber of community was three our past it it the growth. and health excitement Watchers even now because in that best of the is confident for more one, successful Weight focused key path but am a to being lose healthy, to do anticipate I move and a skinny that a into in building mobile to to that community doctor that clear-eyed workshops our bringing want not program, but vision isn't goal to and it's was but of people experience. with wins where has on been I committed we time digital science-backed That's experience, first will and to attention rather positive, that members team fixing. what take is health.

quarter, one with we of We trends to that, year business, the executed be drive so sign-up with a ensure XXXX. to but returning number actions the In years on the throughput far. will simplify ahead. to the growth are A initiatives that the groundwork rundown executed we year, do of a critical current for urgency acting transition and of just and accountability. what sign-up This on goal in stabilizing second quick lay will

reducing As above layers and VP to previously order by of redundant about with decision-making. in announced, leadership restructuring XX%. simplify flatten to on minimize focused executive we position These primarily and commenced and organization the actions were a decreasing workflows improve

We leadership these a now have team. functions. with we broader global We changes will effective structural the allow structure management realigned we operate as of one international operating Instead GM view having as regional of our roles, are of believe resources country-level for reporting key more teams. consolidating

a U.S. pleased smoothly, expectations. completed wage following XXX is to process immediately We helping of our sunset member-facing product gone us with year-over-year third-party the and driving approximately earnings closed quarter, consistent all workshops. coaches May decision. in announced are expanding bringing when who XXX the experience. received May Xst, U.S., process fixed managing the commencing the optimizing to with time, gross increased and cost of footprint morale call these business, we fixed are commitment our say Effective XX I'm increase, demonstrated boosted our which locations. and investing XXX we Digital has our while has our in retain we are At our that a the locations move heart our We our same employees locations the margin. the our our In workshops' structure attendance members in-person to

to Turning and business. e-commerce Consumer our Products

As have with rationalizing XXX of we revenues. North end in consumer our have QX, count SKUs of of XX% the our begun XX% active QX, previewed, we contributing SKU was the approximately active product SKU By America. we the count XXX. end At

grow high-margin We efforts refocusing licensing business. also our our to are

we continue there our business, evaluate As to recent are very two updates.

not WellnessWins. rest effective and our committed a we families Weight came behavior decision The and quarter, XXXX, sticky I our a we Therefore, could Kids for is kids informed believe are instilling members gained into first, have that rewards for a our in sunset but activation acquired outcomes. we've This that for evergreen August innovation. longer and the decided go-forward the the and coaching XX. meant out and After in of phase not team to decision between native short, and Kurbo, science scale, in path to fits of which the The our was too better reality company and confident now product lot to needs decision-making made for years ground culture, bias we is to I'm a the we program that the driving of in-app families, flexing And inspire plan. unique Kurbo to lightly. thesis Watchers gaming we we our achieve update, and help acquisition have will were effectiveness to program best don't because action, social evaluated second better program experiences, will muscle a our teams it's the suited synergies In and our are we in there. provide. This features be engagement building forward that motivate. no data

We the success. correlate to leveraging behaviors data our and then identify are encourage with that member

retention. call behaviors that XX video to chat party are matter? was identified user was early example, time really party. know Of But three-person hours network food Watchers, metrics a we singular members' of Facebook's on we improved KPI In growth. that a are We effect to Having that critical. first getting a this much we and days. weight years, for identifying at on paramount that to deeper And aha in honing in our behaviors in course, retention. user tracking house their are and a a goes sign-ups longer For this moments XX By the to aha and than lead moments. create will acquisition, to to engagement At what the it a that the seven months the connections getting success, critical driving friends Weight efficient delivers us their help retention. and focus

it's clear our innovation, analysis, program have our and now that performance. As negatively of impacting performed have XXXX better, this should PersonalPoints, sign-up part could

the But is launched of are challenge were science as the elements a added We We algorithm with latest no the forward, and recent consumers added and The view. has to have alike. super the program to Watchers' is data community that always into people White this good point believe a complexity consumers innovations. move living the resonate alike, such science when a including simplicity. for are begging power that I sugar. people PersonalPoints we that isn't why did its members to and deeper plans news of new incorporates digging lagged fats our behind in and a unite the challenge. to science, efficacy two are PersonalPoints supports no diagnose of that PersonalPoints diabetes been two been experience nutritional in PersonalPoints There ability the advances point’s deliver The so with and for saying ability fiber, healthy that not

and Our connection. members for long simplicity

group. easily loss connect, It for recommendations can better feel instance, journey will lonely. other The them, it we For easier supportive be easy make sharing they find to is a recipes, off and be. and weight comprehend people the ability members The like hard. of like the can of part to

critically to experience by update program our and is improved best We validated data simple, science testing to program, engaging. deliver combining are the elements effective evaluating that and an and behavior ways

food creating app focused In to new a program experience. remain evolution, on we addition

on and executing Our around tech road our are future community. accountability teams coaching, of and pipeline pillars with map the three product a

tracker since shipped soon, already scanning improvements. nutrition on-boarding, such feature as improvements predictive label For and I coming we've example, optimized joined, tracking, food weight improvements

updates seem may development individually, small. app we're So and represents increasing delivering our the It how modernizing and quick those wins. these velocity

in the a purchase double-digit instance, update growth take in led rate. single workshop For to funnel our UI

trends with opportunity year, efficiencies in to sign-up of social a as back as are we an in on our map, we announce and investment as the leader has growth, does and particularly omnichannel half in pleased increased taking brand an lever product marketing our Tolleson fall working driving Amanda search Chief that the join analytical, She marketing. Amanda I'm businesses. campaign, While execute Officer full-stack and XXth. including business. to subscription be strategy on Marketing into will see marketing actions XX media the to that and a is mind, we road August Weight stabilize minded, also With in Watchers years' product nearly experience performance

several which same are omnichannel as recruitment time, member community week January sign-ups drive to in members. Looking satisfaction our ahead, workshops. One workshop Walking critical participating of improved believe delivering well, June, overall of May. Watchers and the among business, trends the activations are launched The Weight resulted a is scores part since such Mondays initiatives an helped for the June essential highest as versus Motivational is Weeks and I there tested we In in-person high in At competitive workshop differentiator. our that advantage. campaign reinvigorate experience

workshops. drives for iterating best recruitment identify We the what to continue engagement will potential and

to is talked we diabetes. is U.S. be members about among under-penetration call as just BMI living in be is XX the in significant diabetes serving adults area with half XX%. self-reported focus people estimated with prevalence on should U.S. diabetes our The The percentage over about members our of that, highest segment. our need QX of a Another illustrating which a with living

meaningful diabetes including clinically specifically create the six-month three plan program. X.X% our our statistically clinical in reduction to that which circumference and weight was Results efficacy Weight the in with Watchers positive The was by to than program more first latest needs, unique from validated average in the loss the this serving step HbAXc designed waist by X.XX, for capability introduction of trial. by Decrease results body of The from significant adding tailored decrease trial we their by diabetes delivered population have X.X%. distress effects, a center program and X demonstrated food of our inches.

experienced participants hunger well-being. and in XX.X% XX% Additionally, in overall improvement a decrease

continuous and features changes to the product create time gives living our and We entered for of seamless performance enjoying core turn Abbott, control offering, patterns outlook. weight and app, and care members further the expected glucose strategic weight to of see partnership to their to content is with diabetes who our Last our with their call are the consulting complementing Number global glucose X gain care, the world's to I health program as integrated to which their And to experience products monitoring reach CGM provider partnering systems. diabetes. love become diet. they while and track foods program loss over in experience ability in other our with to with to month, in track doctor The added glucose Libre to over XXXX. discuss the we their they with living that QX a glucose better U.S. the FreeStyle tailor it for healthy possible product have goals, blood diabetes In now people members Abbott's Amy are Watchers words, a living X recommended leader our we Weight In with people and alongside use Number Watchers make order diabetes people we will for enhance available Weight portfolio ability levels. a to their

Amy O'Keefe

second to have while our FX and expected, line headwind, softer prior than structure actions we operating the in adjusted trends to particularly cost enabled year. with despite expectations, was The income in quarter. QX us XX% Thanks revenue was for pressure versus taken margin down we subscriptions top year-over-year rightsize our extend operating that digital Adjusted with e-commerce. revenue line Sima. our in were Combined an demand

we below with X.X XXX,XXX XXXX, in subscribers, worsening quarter to our finished business million year during sign-up expectations, from prior primarily the and our the XX% QX approximately due the digital down quarter. For trends

workshops. sunset our was and consistent included on particularly the which end-of-period the of in to The of numbers year-over-year remain number the total subscribers mentioned, in of is DXXX subscriber’s DXXX workshop pricing, month Note, $XX.XX were with completed transitioned in impacting of majority workshops. expectations. these quarter DXXX impact conversion former Sima largely As per the QX were U.S., XXX,XXX At comparisons, for end, was XXX,XXX. the

impact would down of sales digital FX of down mainly down of greater have subscribers as subscribers XX% digital was Revenue decline and members, sign-ups and DXXX transitioned further basis have we $XXX anticipated XXX year-over-year. down the Excluding X% including pressure in on would XX% points than headwind. traffic workshop XX% end-of-period these been been of end-of-period approximately million and e-commerce. had E-commerce quarter, result This lower is due were to the conversion. the

year-over-year revenue of our We labor and on leverage from spend X% is Adjusted and actions approximately our basis the prior year, down in to modest than the and exit lower primarily from we've related footprint studio operating taken we of planned. optimize a have reduction SKUs. unprofitable SKU are actively counts margin costs. to Marketing we but million quarter was rationalizing points in $XX seen a a XX the up quarter, in as gross in improvement XX.X% resulting margin impact gross

to half winter sign-up As lean the trends we XXXX the to ahead of into campaign plan in back marketing stabilize mentioned, fall the Sima season.

to of some $XX G&A we from year. marketing savings million redeploy So million or to the the was XX% half versus year of down Adjusted the prior of with $XX some FX. benefit expect back

approximately of the We took the we realize from are an expected quarter, restructuring QX to $XX savings restructuring in actions for charge which starting benefit million.

franchise adjustments. with from was we of in a related EPS non-cash fair franchise loss operating $X.XX with in a offset have Additionally, income charges, items we the operations. expectations. primarily charge down restructuring impacted by current included In note in was of on out-of-period QX $X.XX headwind, to in year been with revenue goodwill. Canada Adjusted testing partially our intangible benefit impairment our from by the FX tax we from These net A intangibles $X.XX, but charges, and was value impairment impairment; conduct took acquired acquired negatively $X.XX and rights the annual of QX, non-cash determine comparability. cautious our rates impacting to million, spending prior a $XX impairment $X.XX pressure GAAP which versus environment. line

announced is restructuring Our as plan, on track. last quarter,

organizational $XX we will You recorded that this impact G&A. on the focused will which million approximately streamlining structure, QX, action of restructuring was primarily recall costs. In

end $X approaching now our to at pressure half, high record $XX of end year the the expect and in additional decline We from of our our subscribers Shifting subscribers We back $XX expect a $XX XXXX for annual the lower end-of-period estimate sequential to an of from expected continued back million, million than of to full half to up of year the year typical. expect savings result million. our over be estimate in prior QX increasing range. at steeper to savings within million $XX XXXX, a outlook previously as of is the QX QX million, we revenue

continued In addition, headwinds. and demand category to expect macroeconomic we create factors impact FX to

that We to marketing the the the will plans demand and and teams back accordingly, half, the break business continue are and trends. managing develop assuming we're product while those in trends through execute

Additionally, range XXX,XXX will restructuring end of than would to be higher-impact forecasted, of to in expected resources now refocus X.X about of is goals which the mid-double year we full With we with subscribers managing of to and a expect simplifying year plan million for the lower our end QX, down subscribers. X.X X.X the costs digits. million low- is initiatives. in which the to the jump-off to a will at continue million we point execute enable on us to the business, Revenue

up year first prior the we half. in to expect Given in $XX for million versus guidance. Related year our full year-over-year is margin half, the around in the adjusted down basis year-over-year points the expansion at be marketing, gross are XX%, would of I XXX prior first which range to

expected we shift to million the our from we As plan some for am full to of at XXXX. guide, below be or that half. is back expecting savings I $XXX in prior down which the to marketing year,

Excluding pressure expenses range. on the we items in million affecting comparability, while top we will In adjusted preserve short, are likely $XXX additional the land to profitability. are experiencing managing line, G&A diligently

income the expected headwinds range. year our now to for additional is full to and million rate be $XXX in adjusted income approximately incorporate tax operating We be to we revising effective year FX adjusted are $XXX The to million operating expect the guidance XX%.

clarity, For rates. interest EPS than comparability. incorporates restructuring, affecting expected to which to expense expected be year $X.XX items higher higher about is $X.XX other impairment of of per due full $X in impact of Therefore, comparability. the GAAP the $XX is million to impact this to fully excludes and impairment affecting And items of approximately prior share, the million, be interest and negative net diluted other range $X.XX approximately guidance restructuring,

Turning to the sheet. balance

revolver. low We ended and plus flow CapEx times, million quarter X.X responsibly. EBITDA our continue we cash QX leverage QX manage to to and to will increase slightly was subscription capital. steady generate $XXX debt cash with at net adjusted up million ratio of an cash, at versus working model QX. $XXX million continue approximately And from an $XX undrawn X.X liquidity We one, times from of

half ratio the CapEx into million of to our expect to and $XX increase approximately be XX-month and year million, software $XX trailing primarily respectively. expected by are back this capitalized and XXXX. driven We D&A leverage over

to XXXX in discussed, end have year-over-year we As a subscribers. with expect we decline

ending before summary, in starting for any model, an At growth of subscription sign-up of Again, subscriber midpoint into base business expectations is million. the growth. subscriber XXXX, range in lift our before lower our translate in the important from performed would quarter this in factoring from Given even sign-up of macro subscribers XXXX XXXX is the approximately the despite any In for revenue expected challenging factoring the benefit component opening we earnings $XX XXXX. nature revenue a landscape. within member headwind a of

back trends in are is cost costs managing appropriately structure turn margin on we of call while for now stabilizing subscriber expansion. For I the a the Sima. operating and balance to focused ensuring place will year, the scalable

Sima Sistani

through Weight Watchers. the I all right making with Amy. been organization a of lower We and year and to streamlined greater standard for Watchers, the gold the Weight of to structure cost we a in have confident priorities intersection is faster Thanks science a decision-making its transition effectiveness. growth. experience ownership. set narrowed am has the XXXX profitable in of a return rigor and at data-informed are company decisions for community, now

help our weight people grounded trials. over experience, We peer-reviewed of studies are their proud and by better randomized years program a in over providing heritage XX of XXX and nearly mission to manage XX science-backed sustainable, controlled our

We have the science.

When have joining to so confident need to return We the to our members expertise. DNA that, into Thanks I coaching questions. happy will experience, and connected, inspired, We supported. digital take us our now am are just growth. feel today, we your do the bring we business for

Operator

today from Spencer [Operator Instructions] Our come first Hanus question question go ahead. will first Please Research. with Wolfe

Spencer Hanus

in half guys back trends. a not that in those stronger current Great. on one when Thank stabilize of trends. have track the you strong you quarter? trend spend? digital just on talked improvement question. then the guys deploy My in XXXX you return to seen investing generating in an first record the And Have subscriber marketing about dollars Why season the you diet subscriber in for

Sima Sistani

question. for thanks Spencer, the Hey

So the are COVID. look, behaviors, shifting difficult ensure landscape And but our trends. spent in are cultural subscriber a we've changing time responsibility a is dynamic. post lot it's we that of to relevant People diagnosing

because by loss X for hid clear doctor ourselves We're program wellness management. weight didn't enough we loss haven't And message. our loss a times favors for weight versus Watchers a what we've than big about need apart. It's is do penetration for more This X the – us small. is few So is doing weight that recommended said Number relatively being over that behind set we ever effective loss higher Weight know past prideful it we any yourself is years, away and that before. proven than the weight moving weight the from and market

down we million quarter. a couple So there million the to was that We given factors We that's we're on $XX we the of that second $X why in to pulled redeploying half. the being marketing environment. Europe first for that think contributing macro the could were capture performance. enough are marketing mind said, money. the just the half, spend in all We believe And in didn't share back second

mentioned, As PersonalPoints the back despite and have sign-up. We us, didn't relates and from performed of QX mouth to could both list. for perspective. NPS marketing and know spring engagement lower better word improve from break a campaign QX program ultimately and trajectory simplifying was recruitment the through the a finally, of And then message,

the the that leaned marketing. simplicity, historically specifically path us So things a and marketing on we've of to cultural and we're enhancements product is and it's this critical focusing what on with question to do rolling grow improving process. a turn means now confident backlog to focused We on your of shoulders of those the lifting program to – is move shifting. all product more going is program on I'm that the the and support tide, that's to makes on didn't take to we're heavy off But and we're lift by we're strong including undeniable, the that recruitment, doing message a delivering it, landscape the marketing right pillars,

the season. winter the and through cut to build that so it need we in for so can the time is narrative that us start to on fall we And

that focus we're rolled AB that path. that's at haven't on seeing I'm the And yet out moment. test data even our we on the So already right

confident. So I'm really

Spencer Hanus

And it's the advertising and further subscriber helpful. then do costs an pull you that is the or think optimizing That's on decelerating further? on operating Okay. trends, spend to of cost opportunity business, with out whether there

Amy O'Keefe

Amy. it's Spencer, Hey

that curve. actually, of think I got we cost ahead

been pretty pleased. I've so And

I $XX mentioned of on actually increased We of QX. actually think we restructuring updated we've $XX charge or annualized our million. that the we our the in restructuring million – charge call importantly, But increased the increased on estimate took savings that. to estimate has for

$XX $XX to million million. be expected, to we to million. it I the going deliver So think $XX to we we're savings. last We to it [ph] $XX was $XX We've were able going time, annual million think – of deliver taken million

that year the ahead And so of we got I'm pleased out into XXXX. of benefit impact full here. the of obviously, see see – And of I think quite that that the going the we'll gate

we the And the talked the mean, we on guys to just plan. starting May; there. was in you we there more related were so details, And into did execute cost we as for I to early looking think to back got itself, restructuring synergies,

So we went ahead and increased SMS. our

Spencer Hanus

Fair Thank Okay. enough. you.

Operator

will question Jefferies. ahead. next Please Stephanie Wissink from with our And go come

Unidentified Analyst

It's Chris everyone. [indiscernible] Steph. for Hey

in do we've specifically? noticed you in back that focus asked sign-ups. about a kind then commentary? what So two, approach subscribers you I of half stabilizing longer for year. on I back on take because with typical, kind is of talked than expectations the the deeper is the could discounts of some subscribers to so half that stabilizing declines right? up And you The of help through some of reconcile then, the kind followed of But you me more coming steeper the questions, two guess, just

strategy of in the expect should part if that here? revenue So subscriber, per back the lower of that I the is guess, year, the we is And case. half

Amy O'Keefe

will that Hey Chris, it's Amy. I start one.

was – the On actually which that, range, to we was much QX of just we to pretty historical end sequential clarify that it was down Last XX%. the decline, And comment. our right slope be significantly that – about higher than pretty roughly XX%. trend, very the in midpoint decline, of prior so at subscribers the of was about going to trailing that something this to end-of-period is in time watch guided closely, that that the five years year,

like we pressure guide quarter. digital the felt got candidly, close. what But subs the saw additional I we end-of-period was pretty on in sign-ups on So

than fast on expected sign-ups been. digital QX. we're on the as QX, I the it's up not we're as quarter-over-quarter in than we in that sign-ups more basis a So have worsened number what same bucket is really filling year-over-year And seeing

a really trend a it's cancellation it's other issue. So words, really sign-up for issue clarity. – It's not in

so a And thought trend, get XXXX. hit a I what we to and little we've is performance. right that both From talked sign-up trending path the bottom stabilizing getting that. we're than the worse trending just on down growth and bit found a ourselves we all back sign-up performance, in the those from QX XX% about this about can is so to trends, period

Sima Sistani

I learning We're pricing changed. that, promotion I I of and and really would mean, always from And pricing, discounting strategies. just nothing the on testing Yes. different the mean, new promotional add has and

Unidentified Analyst

both you. of I kind of sign-ups? helpful, the subscriber terms super far discounted of in new of That's costs kind thus any and price resulted guess Yes. new in learning’s customer, of kind has

Amy O'Keefe

Yes.

discounting from hasn't behavior our So a perspective, very much. changed

a know on fact, look look page per on I in apples-to-apples basis guys at X%. actually week. – a if year-over-year revenue I In digital, On we're up you –

And increases price base – some the impact of of so to the we've been taking offset discounting. price

basis. we're a sign-ups. – we lot little about From how urgency we're marketplace. internally But overall, discounting So rate. as we've see perspective, that, net-net-net, talked losing And to got on a but the ahead. the still my pretty it obviously continue margin market in we're still moving expanding and we've actually get we And to a still quarter-by-quarter past see effective not in

Sima Sistani

compete pricing mean, add And takes continue just need same time that as that we're average between strategies. I'll deliver we I the something we as to most some to our new map. And months as one-to-six Yes. various the of to roughly we that, product But on it's on value, is price. ultimately, competitors. price on focused our not road And test discount

Unidentified Analyst

you And of maybe kind last just then away into Okay. campaign. and subs. spring a talked fall Great. super about just a But campaign helpful. from of one moving me, weaker moving for That's kind

any expecting what approach be versus we should the how kind least the spring? So you Thanks. changes at of to versus or done in market historically you've

Sima Sistani

weight I – weight away don't unapologetically at message, moving and about mentioned ourselves favors we think be that we loss any did top mean going more think I we leading we're Yes. clear I to from I by – the loss. a

start for that building the just overnight. at we we're narrative. to And So forward doesn't to It instance, looking happen we're when that. need looking fall,

into mind ourselves You building have consumer the with in the to start for share that winter. change positioning

all necessary been lifestyle that testing for expert also need weight few fulfills really because well. of behavioral science. that we from in But about effective, in We're excited I you'll the and programs loss as So deem learning think roof. to order that on the interventions the we've front and us criteria it be see panels shot ultimately, rooted that of to one just I'm

Operator

come go Craig-Hallum ahead. from next our Group. Please will And Fuhrman Alex Capital question with

Alex Fuhrman

big the about comments my Hey, experienced for as normally it the wanted fairly that you reconcile If small to quarter. question. have guys. of of understanding trying that shortfall like Thanks Just kind coming I be pretty your into I'm brand to in your ask Any drop-off you has that wouldn't months. correctly, there membership a second membership you anyway. of taking sounds was and that curve? from membership months May be are members any program. wouldn't seeing of shortfall the reduction like mean June pretty normal retention? a new member's typically in recruiting part big that in coming normally It seems a existing to mostly I kind period people been would into XXX,XXX change the a on the the those shortfall, during considering that ton just of

Amy O'Keefe

understand. Yes. Yes, I

a So digital. from One, it's of coming things. couple mostly

on and subs look to go to there's because the the it's and the bear end, in noise some I in trying mind in period that at to quarter. if at kind also, just related DXXX. But here in complicated clarify, call through So of –

DXXX into So we did subscribers those Workshops. push sunset

so And compared less digital and reported. to subs has has about previously XXX,XXX balance more Workshops

basis So to on a to second. for going here a restated talk I'm it

down subs in down at of period subs Workshop restated the end Digital XX%, where the And were coming were QX understand from. X%. So I you're

I from a and think to basis than on QX, much declined a that from certainly sign-up at Digital the it higher in, QX pace performance sequentially a came year-over-year expected. we perspective was

market, this were in moving we lot in like guide, for in that in so felt sure bottom. the found really forecast the the there a And of pieces

this we spent. to we about of actually came Europe. we we – guide out that pieces, also, than Alex, quarter, did the moving spend this, I of marketing And more so just, into factor right? everything It And is so get the is all so of some in we in did hey, million think within part the $X the that we other all expected of

got so they And on like going to they the And or going of macro had anticipated. was the that efficiency the were million share lower were feel sort think that brakes. much get region to headwinds sort we so in the $X while of we Europe, didn't really stepped some than of is with of given facing, sign-ups were the be able benefit of of mindset cost everything marketing, recruits and – that I on

pretty yes, was that we But given So $X marketing, hadn't a guide think of of just I a I bottom. Sima? reduction miss. mean, I the million found XXX good agree

Sima Sistani

I of metrics, we us. Yes. back just And program. better could we complicated level even looking a talked performed that want though our – I have to and mean QX, the at to terms in it's saw, nutritional about for delivers that, engagement PersonalPoints that add science efficacy, it same at

around as And rectify the path can on news And that impacted we you in that a not that. able aren't thesis already and word, so certainly, then spreading We're working is And think forward. the the improve you're engagement. QX. if I and to fix good we're that activated, us

So evolve we're continuing looking the forward to doing program. that to and

been do didn't a could to better, have we're improve we I it but need lot we work, mean, again, what to it So know and not saying it.

Alex Fuhrman

of lot Thank both. makes a you Okay. sense. That

Operator

And our come go next with Please Davidson. question from ahead. Bolton-Weiser will D.A. Linda

Linda Bolton-Weiser

I'm and And almost about bring by the imagining that saying to you I IRL, last you little experience you sounds need could now you that in workshop that experience, world. changing a be know, you don't bit maybe way the that find digital. digital important today, it, on that to but to it like you're it a to how of think and talked didn't saying Sima, strategically talked Hello. in-person it replicated referred is Yes. kind call,

on So have what can a you should product, let clarify subscribers your one thinking? Can And us type you're also, know access you workshop had Thanks. that? alluded experience. to offering, you maybe the to currently one thinking idea that all price of a

Sima Sistani

Sure, sure.

Digital coaches are when supporting me peer-to-peer staying there people they that saying about alluding on So experiences, the definitely are I'm is part that's together. from a ends IRL lonely is because the provide. of the problem. to needed being through where a years saying because am that loss to let you I'm humans it, other is for connection the experience. feel each I order people two emotional that than And journey remember, up only talking of journey. missing coming but a their about They're emotional workshop belonging, other the solution people but are weight-loss can of an because clarify, facilitating experience. out something very lonelier Digital. and experience coming That's solve weight we're It's they're the of In ever, loss, weight COVID,

what's gaming I a this the as program think I've do of to of reminder, where online that a building just going a social go experiences part to bring empathy sticky this decades So came experiences. and catalyze vision I of product. spent we been with that since I just and XXXX. future clear in should

we not more that build So figuratively we better I to magic mean it I'm of that community. literally. bring what it can online. I'm saying saying need that

stay for the answer that community. loss come that You for the weight you Does question? your

Linda Bolton-Weiser

one simplify about you have even what maybe And offering? absolutely. that to product to idea the Yes, further

Sima Sistani

Yes.

of We strategies. pricing are different testing lot a

guest we this on more we I think up report and how simplify the at that time. to front, show side can on nothing that

Linda Bolton-Weiser

Okay. cadence just innovation. when referred were program about new curious referring your – to on a And thoughts program strong that kind like to – you backlog. Is talking I'm then you of of the

you cadence do been of launch. Or same every rethinking the kind to kind be major been a we've going Are expect that of you there's of So kind other year that? that forward?

Sima Sistani

said product backlog. I No,

the get product to experience. program have we're we're right that We're look, not issues program that that wait features modernize a be program out, roll a we in seeing to the within and going going to the done do now. be product, a road mean clear, humans to going – innovation, years we and And continue the them at to But We're what and place over UI us But about app past map. we more backlog, see talking be for will program. years. has need the where to this our product that about mobile evolve And experience. approach. think to I just just better evergreen referring two So really moment. clear the I improve solve and deliver into the work that is we shipping mean, was basically help app that our The when to was I I help to I by

Linda Bolton-Weiser

Great. Okay. much. Thank you so

Sima Sistani

Linda. Thanks

Operator

come will our Stanley. Schenk And next with question Morgan go Lauren from Please ahead.

Nathan Feather

Feather Nathan on Hey, Lauren. this is for

you we Can then about trajectory subscribers you've You it acting the second of How you kind should EU and financial consumer there then bit noted on U.S. given throughout the marketing consumer? a pulling the back impact the on a Thanks. the what one just quick And there. how more Kurbo. little if think backdrop did about think work a the talk about like and of started year? weaker macro would little

Amy O'Keefe

Amy. Hey Nathan, it's

quarter clear, the be and in in performance Europe to America Just similar. North quite was

end-of-period kind for XX%. by if I segment, subscribers was XX%. at down look Europe America of down – was CE North right, So example, was

North So end that just didn't that would my still Europe same share it in have like end-of-period clarify in a QX. pulled basis $X an kind marketing of we America roughly that comments, about year-over-year up basis actually place. from warranted. ended going mindset a to they Well, back I and But of on on that the from actually like it investment just of America, In – the year-over-year they perspective. was because ended in on million perspective same Europe they think about to they were get a an were the bit. up little – North period felt they And was spot felt they think invested

basis because that's up ended And of that pulled or we your that's Europe not. than on if marketing. that you're on wasn't America – what part if getting a for did example, same so don't at Does market question? in that a better But ended each segments, performance North so in operating I year-over-year the know income in roughly there you answer answer – at back look up spot. spot in

Nathan Feather

tax. the pulls back more guess, the about is macro extent think broadly I more to across the and thinking the thing, that generally? more just extent same, was trajectory two. I the impact the performance marketing trying about same How that we should a the lower extent just going weakens to there the the maybe if bad impact forward of kind think of the right, the the to macro consumer guess because – that is about necessarily to

Amy O'Keefe

the I Yes. I mean back, I same decision we what think the that ending think right, in us – up told spot. that made it right QX Europe, pulling in was in

reasons in of Europe. We've have. the of talked the that example. I flip think And so in it the talked some the otherwise that to the side right, are are we in about the sentiment. would DXXX the We've than driving that is think the was think to stabilize some disproportionately in made trying that that, U.S., shifts trends, we've that trend PersonalPoints, some the more about the about the that, the for quarter it about and And in hit certainly was Sima or I of noisier consumer the the we reasons it bit challenge back of – that a challenge, performance of impact conversion some talked macro U.S. factors little the is talked than half.

Sima Sistani

now just we've performance I would marketing function. Yes. also our in-house say,

really an moving of our of have we But at we looking and small business. efficiently. fall of opportunity Kurbo. the because part to so on that's And see part to your reason the to more also nimbly, a Look, part the that's spend move second we're ability honestly, question

a that scale think provide this I But mother could and were solution. make actually think is best kids synergies just cause in a – unique personal So obesity obesity. the I needs, we And in And don't was a there the note, the are Kurbo and not has there. pediatric – help pediatric that I have that dent about I initially and we consulting. on with that my the just and reality deeply thesis think to done a care

Nathan Feather

all. helpful. It Thanks is

Operator

next from question ahead. come Please Sean Morningstar. with Dunlop will the And go

Sean Dunlop

thanks taking first about the of Hi, is business. the profitability just My one for the question. long-term

Amy, guide about maybe So for I recognize help it's But pretty here. us to think from can you tough baseline a G&A.

that maybe inflation, up the about not to way there and Is XXXX. kind guess. pause for X% million, by incremental So $XXX $XX year's of then after million think I last the new mocking for $XX the base? that million I'll And

Amy O'Keefe

very looking. fast forward was and That

And so to guide a I'm I think on not in position that.

though. what Here's say, I will

the great really however, in I'm goal for exit cost year-over-year XX% back to sign-up of that what in fixed QX, you run back over yet think little to I I a add some get basis full we and some a us add that – I say being haven't G&A with the time; be would Savings G&A hit And down you'd on we for bring the structuring. down – a not XXXX from now, looking million, structure year scalable we're would Right I XXXX. for nail bit think inflation were guided we growth. impact that. inflation right? at at year this we today. to a position under as when a at think think $XX of rate in I of was G&A

Sima Sistani

and test around we're pillars We're critical progress. the the our yet. gives And we're out that worth loss But confidence coaching, to rolled we pivoting that things simplicity, for the path on growth. I is it a need weight add, before. right And seen as I keep lift, it's feel me we've higher ever and already said, repeating. improving the like program right the all accountability, AV And focusing the community, but haven't doing on marketing. to seeing I'll turn than I saying just know We're the running tide: this, we

Sean Dunlop

Got it. helpful. That's

low that And Amy. XX% operating what that for then If altogether for sort quickly at Sima. maybe clawing inappropriate? as maybe about is guess towards Or business of back I is you're high-teens this margins, So internally? looking we're thinking operating margin, about

lengthening about we that and As of to and that think lot a out lot kind of of to metrics internally we're workshops Is are terms the that that? What investments and be so that of for making in saying sub beginning we're the that of this? year? looking at of Is marketing in in with we in you're be maybe What a next start to should of the programs sort going a respect time? to we're on. rolling monitoring you subs out bump looking it the are be worst going of

Amy O'Keefe

got margin, relates overall my to in I in were I it structure to we've As right, XX-plus mean, think where XX% running operating percent. close we we're goal, QX. a

on done So margin up. gross side both we've we've QX right? I to variable, estate And margin up XX%, the think workshop is gross been growth, in the with the XX was So to climbing our got of kind So particularly expenses a were scalable by back strong that work workshop real a business. really with of we've way, and fixed pre-pandemic lot we right? on turning operating from

timely cost fixed we're basis costs. think on doing business to all that things cost I of of variable to And right a and the so out take the shift

with would be G&A love keep my I'd of operating back about would anticipate goals So if loud for love sort to to I gross what above get I to had margin XX%. margin, out sub-XX% into as increase several last that right? years a And sales spend. particularly or of pretty the percent impacting we've the over seen inflation I – think XX% marketing range, marketing significantly

And for the like – goal XX% marketing that operating margin. get to we would range, me so my in back had, get XX% to example, this business is if XX%,

how part that to going structure. is and is in leverage And earnings for the I to sign-ups think right? need to that growth is time. order me that I I start return the long very returning over to growth cost doable take, think answer hard so getting to to on

Sima Sistani

metrics. And I'll the pick up on

say can month. and engagement regular at reasons. weight going key. That's share we're competitive first not looking loss we're for the during I progress details obviously, But the So to

are matter, encouragements, identifying – actively were engage. those described the And that earlier. to much make moments Second starts That's that aha behaviors, step predictive what with and the is members triggers then I more likely larger those the moments, the the doing ship simplifying simultaneously instance. as app watching better enhancing those for on metrics working that be trends features. And Points that various reveal we're program, experience, on we those all these, the we're we our while and essential closely could engagement

they So loss critical be mouth the and Watchers, subs got end that of they success result for people us. to Weight saying word found is driver more going to of ultimately – the is weight success, leads with that

– we're now. focused right we're where So on that's

Sean Dunlop

Very helpful. so Thanks much.

Operator

question next our Please go Michael Lasser come And from will ahead. UBS. with

Michael Lasser

order standpoint happen needs for reverse Good to evening. Do taking standpoint in external growth all anything a the question. Thank you to the think from an my competitive you either environment, you subscriber trends? or economic for in

Sima Sistani

actually. I no, don't, Hey Michael,

in and to we're whatever operate through break to And is cultural the landscape responsibility, I has it's that our more with say we And moved given. actually environment is this than think I shifted. haven't would anything, it.

to by message that time. we haven't to paradigm. think, see – doing all turn out you're behind coming over moving us wellness We're with the few hiding to forward. provocative we the feeding last right And I much So the need ultimately, things the more the any done I going and – change think ourselves years. And favors

Michael Lasser

One loss that's on focused weight presumably?

Sima Sistani

Exactly.

Michael Lasser

Weight resonate they've does? because order as to in get you just Watchers well the brand think the subscribers back been need reemphasize Watchers doesn't historically where name you to as Do Okay. moniker to WW Weight

Sima Sistani

you Watchers. of our I But Weight heritage is nickname, mentioned before, And part will that We're and – an It's you'll and name it's will. prominently, WW it's embracing our our more still Weight corporate yes. Watchers important legacy. there. see our if much

Michael Lasser

very much Okay. Thank and you luck. good

Sima Sistani

Michael. Thanks

Amy O'Keefe

Thank you.

Operator

to I'd over the will conclude Sima for closing like any session. And this to our Sistani conference turn remarks. back question-and-answer

Sima Sistani

that discretionary ever. as health know rooted than a is weight we not in the been is has I XXXX, onus people Weight for Since the matter. mentioned, science. us on remind loss just Watchers So higher need to And is

a that behavioral We're program order I a makes pillars it of We necessary loss improving are critical lifestyle with deem our our go, this enhancing simplicity, and few be the for programs criteria product been I one think what all to program on expert focused undeniable. vision of XXXX. came ultimately that where since marketing the will on clear and in business. I've interventions effective. should in fulfills catalyze message delivering product that those us weight panels

to path We growth, updated today. confident have all right strong just return things us a thesis doing on to I the company you you forward. the the we're thank forward I'm year. want for all We to to throughout and keeping joining look the

Operator

conference you attending has for presentation. Thank The now concluded. today's

disconnect at now may your You this lines time.

WW International (WW) 6 Aug 222022 Q2 Earnings call transcript