SKIN - Earnings call transcript Q2 2021 | The Beauty Health Company

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Operator

Good day and thank you for standing by. And welcome to The Beauty Health Company Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker, Dawn Francfort. ahead. go Please

Dawn Francfort

found Thank Chief conference everyone. Financial financial joining Beauty Health call Liyuan can The which With and at Good on Company; Officer me to you of discuss Officer. Company’s the be and afternoon call released Clint XXXX Chief our the Health website we investors.beautyhealth.com. Carnell, afternoon, is this for on Executive Company’s Woo, results, Beauty second The

Company’s to we may language, safe started, guidance the would you Before all make Management assumptions. including harbor like I’m with. remind you’re get statements, sure and which underlying of I familiar forward-looking

are statements based that uncertainties that results materially. cause actual to Forward-looking involve risks and differ on expectations could

EBITDA income, the SEC of SEC. GAAP call most non-GAAP discussion comparable as gross and margin. measures non-GAAP release, contain these further to adjusted EBITDA This included earnings such risks measures adjusted financial our a Reconciliations website. the adjusted available the on furnished net our of are adjusted with adjusted gross business, margin, profit, measure of to in will and For filings related the see our

The I Health Clint Carnell, of over like Company. to to Now, Executive Officer turn call Chief would the Beauty

Clint Carnell

today discussion And everyone. you Thank Good you, Dawn. afternoon, of quarter for for joining results. thank second us a our

and challenging resilience I our of employees without to have achieved a to simply not I’d and and have enabling driver first still a of success, achieve of this of like Despite we get the center everything we level our the performance. key them. do environment, and started, providers and at record They Before are could thank any us our worldwide. employees shown providers passion, our

quarter. a review to turning our Now, of

adjusted with our materially strong quarter EBITDA both, We exceeding and sales first half are and own our of XXXX with expectations. very performance pleased second

behavior towards lasting gain we consumer health capitalizing Our continue favorable represent we believe a initiatives on key wellness. trends, shift which are the and strategic traction, in to self-care and

consumers. we investments have to the the and brand our while our we growth progress programs accelerate easier building year, our subsequent to strengthening units Delivery outsized the we significant quarter growth drove to Systems end, in on in Now, levels. global forge grown as COVID-XX over closures XX,XXX comps to significant connection a portion And prior from was XXXX with our of related compared and

business distributors We join in strategic them family. see as and welcome Germany, to France we our markets as are the Mexico pleased also the we’re Australia, to these thrilled internationally. to team And HydraFacial growing to have

$XX.X continue strengthened further over our leverage our and net Turning management, ramp May. our driven financials, significant our paying adjusted in expense improving while our gross position, financial growth strong debt, to was million, and sales by off of strategic following business investments. up expansion EBITDA to XXX% combination we profile, year-over-year, disciplined margin We

our are remain We is they to our to consumers as track the globally. deeply achieve Beauty on We significant play. firmly goals where progress making on resonating community work connecting and our live, long-term brand of our Health strategic vision

XXXX in top-line of results, discuss guidance I’ll on and more year our We’re full-year those the therefore raising our back detail. strong

the the call, in have Beauty by today’s both we strategies in performance outlook financial driven and confidence updated our our and our call discuss then I discuss will results Liyuan, HydraFacial detail. model, QX favoring our turn For the business unique our Nation. who to outlook, and will color quarter will more then XXXX Health around I and second given growth consumer provide evolving behavior

in over XXXX. increasing in the comparison, XXX%, period XX% sales pre-pandemic increase and grew strength second our strengthened our levels, Consumables Systems, our revenue. year-over-year XXX% our Now, quarter moved which as I a the on mentioned, quarter exceeded increased XXXX continued XXX% a results exceeded and Delivery as And we versus by expectations Sales second across board. led meaningfully by through

year XX% from of profit to Our our XXX% generating $XX.X adjusted ago, gross X,XXX margin drove mentioned, compared a over the EBITDA an adjusted EBITDA million, gross as increased which basis adjusted improvement adjusted to prior improved a points I margin. previously year. And

the objective the the quarter, our our we that with platform to During build continued community Company. Health benefits establishing into everyone, the connected a of Beauty and consumer, provider,

innovation; initiatives, make to infrastructure. our international three on are growth consumer this awareness; continue We of which key quarter delivering our raising and comprised progress expanding

So, touch specificity. on some to I’d those like with

HydraFacial in build to First, marketing to leveraging respect HydraFacial to accelerated community of efforts. our and efforts the brand, passionate our our Nation consumer awareness the drive our investments with awareness, we expanded

continue education loyal program, HydraFacial have business through estheticians. development largest be professional to build holistic partnership our universities our on CONNECT, as with of and training, for and And we world’s to community We created strive our influential the estheticians, passionate providers. we clinical highly

more as closures We’re following to retail the the our in COVID-XX. to locations also beginning see related channel reopen, improve business

continue our our progress make We partnerships of the awareness into to consumers’ expanding and retail extending on brand.

these tour markets in-person bus first investments well properly in will U.S. June on over accelerating We our to virtual off this As inaugural and quarter, building X,XXX to in event initiatives, event begin Las on drove coast-to-coast continue Miami register Vegas brand XXX distanced. beside EstiPalooza see we Xst programs. the marketing September. reopen called activate people May kicked our that in and our attendees, into Xth our GLOWvolution, hosted

customers site we event, provide treatments were to to period. able a on this two-day XXX over During

also a a and We two Center. Experience Dubai events, pop-up hosted London international

we awareness, order these to esthetician community engagement At regions. meet these Now, capacity promotional activate markets. effectively these the are the and expanding same effective consumer offerings sales, in create the highly allows events strategically consumer They at build us to the our results in in local demand partnership demand. to events select system expanded in delivery This system implement our these time, locations delivery demand. activating consumer into which turns drive with

it super approximately two-thirds of one-third try to time, first and and customers; it, the who to consumers HydraFacial effects customers times effective, plan eight people our users events for of strong time consumer And the of said these of most another highly Our do tried very XX% they will multiplier frequent a others going you recent roughly repeat have six in get HydraFacial HydraFacial, two-thirds, make because first to per become who for have event, year. approximately to become the try treatment.

building about programs. and Given become know through the that are learn users, repeat brand they once people on treatment of focused with intently these we consumers we awareness HydraFacial,

we to with and seamlessly connects technology continue in products that order innovation in initiative Second, HydraFacial create community. to invest our our

our mentioned, product, previously investments are we to connected we are right build technology to our delivering right sure the make R&D community. accelerating As the we upon

moment, product Our thrilled remain in and launches, not will be detail more in on-track, more discuss upcoming launching new a we about them. could which I

launched We serum are adding innovation the Murad Dr. serums, that during at quarter. co-branded including our

to we we And our allows that with expand and beta highly us seeing are connected directly, remains testing the our by customers. from app early direct-to-consumer consumers encouraged are We providers while are mode, live, our new app response our capabilities. play, they in connect where our and as work we

the build as acquisition we top our Third, up quarter. quarter, team our announced in this sales presence and priority a growth invested over we is Global international XXX% with for expansion increasing of to four distributors. this continued

expansion. infrastructure to support while scaling rapid and initiatives the in marketing consumer investing are demand, team to our grow our globally We

with our announced consistent During global These France acquire total stock. the our and price $XX four our and quarter, on our we key internationally, in Mexico partners direct further cash a agreements solidifies are of acquisitions Germany, accelerating strategic including to growth in in approximately distributors, which for markets. Australia, purchase presence million focus

We’re our building well in larger EMEA infrastructure markets. out headquarters as the as local plans and with international teams in for APAC,

XXX% we proof this as of sales brand powerful our the in what proud quarter, year, have extremely platform Beauty sustained built past we this given of well The the growth are is further quarter business have consumer momentum Health. challenging accomplished of and We particularly environment. as over

we third these growing forward our by to new look we significant installed opportunity and base fund quarter to and for beyond, business investments. our leveraging see infrastructure As our

highlighted. another to as is we and out of details guidance us. million. that’s our shift increased second as well key see This top XXXX. million. up sustainability multi-dimensional upon a And Coming the result investments growth in you our line on for approximately expect behavior. significant the of accelerating previous in previously the walk to pandemic, continued strategic our investments strong We our three sales quarter, from a top in now, in based are I see health of are momentum quarter, $XXX line to of in guidance As initiatives We as now I’d $XXX And range we million ahead upcoming opportunity in the $XXX like the through growth strong that of our wellness the raising guidance of and our consumer lasting capitalize results self-care.

and will expanding white consumer initiatives, partnerships, particularly the building important awareness increasing the for priority continuing is build us. First, our our expanding address out an our channel, to marketing team accelerated space consumer in through By and us. our retail awareness we opportunity significant before

to continue demand. highly We events in deploy order consumer effective activate will to our

our an U.S. Baum Experience coast position created awareness strategy. consumer have we of in seen announced Chief coast to And may appointment further tour newly of GLOWvolution August step you the important into This Our supporting on Ben bus continue will the is Xth, to role September. Officer.

are in to retail further extend locations. see with significant expand expanding presence where channel in will select focus this our channel, the awareness the retail the through This consumer enter to We new our partnership, our upon in presence channel. opportunity as partnership we Nordstrom’s we build our

innovation we community. increasing the HydraFacial are and our investments accelerate to will that entire R&D connect Second, rollout

in of are connect the a XXXX. highly expected to our continuing handheld are with quarter our the we our seamlessly track And encouraging. expand our early in app, We a connected which testing XXXX. rollout HydraFacial remain We’re ability test in on X.X broader connected device and will device to launch with to consumer, results launch also fourth

community. driving a term ability interact our with long-term beauty to consumer focus on community engage innovative connected products connected launching directly and believe important and them will of our business. the We’re be longer seamlessly the our interactive and through driver building technologies, an health We

as key in celebrating markets direct go markets distribution our in new other through partnerships. build global we’re footprint presence we strategic Third, and

our This in growing the August team resources on add Stephan includes to demand, our expand EMEA, globally continue Becker effective this to President rapid order the will October. our as to consumer support meet to as Xth infrastructure this named of incremental well announcement of being We growth.

Indra And where distributor Pamamull direct in go partnerships markets strategic of important APAC, in we’re And see we’ll other The President just establish markets. family. as to We opportunity. continuing an who Health also yesterday, hired Beauty new joined certain we

as built year expect in we strong deliver conclusion, our with performance in exceed the on which build unique multiple Our significant foundation accelerate as us, company our a proof continue beauty couple dynamic growth profitable business capitalize updated This second like to call in is community. we are unique, further the connected of have Liyuan, these extremely to momentum well to our and we are is in with a platform as as for U.S. Liyuan? a will financial results. years. business business we in The opportunities, provide story in compelling the quarter international will reinvest second the our as In to a health financial you growth outlook over I’d presents a And our opportunity discuss for and platform. investments we just quarter, our turn with pleased now, well-positioned who category. the we And opportunity. of our

Liyuan Woo

and you, good Thank afternoon, everyone. Clint,

their people our work and for mindset outcome-driven four Before still distributor This, along throughout globe I team acquisitions a of business growth begin, our around drove to the thank our growth the in commitment this stacking Their demonstrates I’d our with continued our quarter. of challenging environment impressive like the team model. unique hard dedication a quarter. closing and and

There COVID-XX-related meaningful XXXX market on discussion finalized performance. business touch second valuation provide closures our Xth I’m were four mainly sheet we’ll balance to the which a the words to make then million to non-GAAP adjust our mark-to-market our year, since of remarks, of on as non-cash Beauty the quarter my guidance. valuation quarter results, few is out to comparisons earnout our focus on reflect reminder, the measures significant details our historical Health address more merger to entries due X.X from second May we financials and updated will acquisitions, information. accounting on this and our HydraFacial And in review a we and of as going shares of comparison in we XXXX here The the it a as reverse our believe core Just XXXX. prepared related select

second Let our me start results. with quarter

pleased this minute second may with strategic across results our record metrics. talk all you business Clint we As on to model. are expectations mentioned, of build as performance to me our to very we Since company, our quarter past initiatives a continue exceeding key our quarter with about take new be our let many

increase and We predictable a fairly cycle, second of year’s from and quarters significant in $XX.X $XX.X was largely seasonally million sales last due in have strongest second our $XX.X sales quarter of from XX% million sales to million the in fourth COVID-impacted globally with the Net reopened. in and the region increased as year. quarter. businesses lifted The end continued quarters the acceleration materially of our at XXXX. up the accelerated EMEA strong while U.S. in of the with APAC and our strength the expansion and Delivery our Consumables systems XX,XXX active restrictions quarter, the in more COVID-XX partners growth in The of Systems almost

Now, few highlights from our a I’ll three share regions.

due important of on were rollout. to vaccines Systems region $XX.X from by XX% compared productivity ago, reopen the restrictions strength to primarily our million began our XXXX million, level. grew Delivery increased representative to sales sales U.S., a solid The in note It’s and more the over quarter driven in year available Second lifted. government to were $X.X was traction continued and our that higher Americas as partners to

the quarter. still in the in had non-medical we partners until did reopen select late not who channels in states However,

state Some continued to to accommodate U.S. with capacity regulations. locations operate reduced and local

record increase quarter. We our customers some second saw also Consumable for orders which reopening, to contributed

marketing we activity. prime on As to own and Clint GLOWvolution birthday HydraFacial’s our day EstiPalooza to successfully sales training Xst, promotional activations, volume. in Friday and sales. our such the and contributed as event Black also earlier, increase mentioned EstiPalooza celebrated May equal That created was positively

net events We’re on the and very a second in and year promotional EMEA activation our marketing of quarter XX% million, efforts $XX.X $X.X XXXX, sales in selective prior with digital focus our and with expanded from million outcome. physical grew the by our results. is from positively other Kingdom, in activations many distributors Russia also and result impressive, marketing events driven the in we by experienced United Middle continued given the European strength East. closures and This COVID-related have especially Pop-up launched our markets. impacted trackable

Turning to for $XX.X sales XXXX, both Australia. meaningfully of Japan, XXX% million, of China, Taiwan APAC. increased in of second over quarter primarily the Net and XXXX driven by and growth

be increased to in in continuously expand continue presence our we While both region we experienced medical our non-medical on system through have China, and the channels. and productivity rollout very-focused sales

Health by Consumers backdrop, growth Beauty Consumables continue the programs expands demand-driven the mature as our training Against globally. to for share awareness contributed take this brand our sales is services increase all sales. Overall, and marketing Delivery throughout Our market markets. HydraFacial APAC Systems and both well-positioned more asking has for to in also been our name, channels. across to especially are

to Moving profitability.

our enhancing initiatives, chain prior savings focused quarter supply Delivery the for expenses margin cost the and was basis improved to sequential comparisons million well increase fixed SG&A a leverage several XX%, higher year’s as selling COVID the attributes, from bulk improvement on quarter global margin compared sales, were were The We’ve including $XX.X as sustainable by cost of points the XXX XX% remain initiatives. managing while $XX.X first Our strategic for through driven in up as the XXXX. gross of price last adjusted for year. million from Systems, both structure risks. from significantly impacted

to points approximately of increase second XXX XX.X% basis the due of strategically selling As to sales, quarter to XXX ramp quarter This in a was to and XX.X% expenses. compared marketing in marketing The decreased mainly percentage compared due sales was first XXXX. basis planned of by decrease to up of leverage. our XXXX the points

XXXX continue we until quarter on as earnings engagement. strategy, during and community were key our Creating restrictions the shared investment marketing as and we our sales, focus in select consumer our will to and well second market training, delayed reopened on marketing in investment the lifted demand we optimizing As is first COVID-XX call, programs strengthening quarter.

R&D, device on HydraFacial to accelerate of our XXXX quarter home the launch Moving system. our delivery and invested million our second to we of Nation the new $X in app, upgraded

As has main Clint shared, strategic pillars investments. innovation one the of of is our

We will of continue innovation in half to in XXXX. the second invest

million transaction and million, expenses. stock-based are off expenses million compensation $X.X $XX.X non-cash Our costs G&A included of $XX.X

Excluding these expenses was by costs increase cost. includes million non-payroll-related quarter The XXXX $X.X insurance first million, company the mainly in which XXXX. compared D&O million G&A of items, to were G&A public of SOX $XX in QX our against expenses driven $XX.X and

costs the of XXXX. public totaling We expect second million for $X such will company half continue approximately

at ramp started second invest have half expect also such up infrastructure We in the and international to will technology investments of in XXXX.

category, accelerating capitalize of leader a long we’re for to As our us on the ahead run in growth. investments this

is GAAP an use our that important adjusted to to addition In manage EBITDA profitability measure measures, internally. businesses we

For increased was headcount $X.X and sales by higher of and EBITDA to increased adjusted margin our and an the marketing loss result EBITDA as spend. improvement, adjusted million of due strong $XX.X is for and gross expenses, XXXX. increased partially personnel-related The profitability growth, commissions in offset improvement scaling sales a versus million quarter, as well in

shares was Our quarter net million. million outstanding Weighted approximately adjusted were XXXX. the in average $XX $X.X income for

distributors July shares million the issued shares earnout outstanding, As the XXXX. of X.X for including today, four by acquisition $XXX Xst, we have million approximately closed

placement public are X.X exercisable October until XXXX. redeemable private million and X, XX.X not warrants nor Our warrants

million with $XXX cash than quarter ended in the equivalents to Turning outstanding debt. cash more no balance We sheet. the with and

Healthcare. our May part we reminder, all on of combination with debt Xth as business a Vesper repaid As outstanding

details Now, the year. I share our full for outlook more will

we range sales expect million. any mentioned, $XXX Clint up in to our trends, guidance $XXX approximately prior of million million, to related barring net COVID-XX $XXX As of deterioration the from

previously, variant first I in higher both than sales in optimistic more in third Delta the APAC the historically to closer, while observing regions. remain sales stated been cautiously quarter. and As We quarter have EMEA related

at We’re we the leaving business. back sales our adjusted generated investing million, $XX additional into prioritize EBITDA the intend to as outlook

So, in global share accelerate initiatives we and category infrastructure our created. increased branding gain health spending that the beauty global will on

investing will of half deployment the and While investments we significant infrastructure, returns potential both, speed including with us provide immediately see assistance international might readiness believe for these people on not in second we XXXX, our in M&A. and ahead growth

anticipate expenditure We in continue to million capital to of XXXX. up $XX

Our sales reflects upward highly net far our revision performance in guidance encouraging so XXXX.

solid includes forecast we first results in that trends third have strong the the continued into quarter. half and Our

uncertainty we’re the However, in cautious COVID-XX given potential risks the global which Delta the new remain we and closures of of vaccines. rollout for operating, the further market the from environment the of variant uneven

XXXX, visibility, varying figures sales. system price In points, of model, to with to strong pleased half factors year, ahead we’re [ph] Systems impacted, and to largely first our like look half as XX,XXX. second installed directly negatively we As a we base total the Delivery due trade-in, we to trade-out, factors in I the have correlate Subsequent such global note guidance have our international if our to closures COVID. of remainder over Clint grown solid market, Systems Delivery our noted, which our would that as not be persisted. would barring do quarter-end, summary, reopened to distributor

position to it Health we growth, With questions. shareholder to back those global uniquely the We I’ll Beauty that comments, for call Operator? up strategy focus operator our as creating for have open the long-term on turn confidence value. will

Operator

question with the instructions] Our O’Brien Matthew comes of Piper you. Sandler. [Operator from Thank first line

open. line go Your Please is ahead.

Matthew O’Brien

taking end real kicking the year, for about some impact new I in the the these just questions. assuming be Clint, half right open. -- I’m the you’re as the distributors hotspots. in COVID far curious of kicking Good investments know are any The or in. afternoon. things not the all the you’re those are back year. there guidance for somewhat I are there, at distributors as -- guess, will Liyuan comments But, Thanks assuming

conservative in that trying recur So, far some half the QX year. of QX? company? there back way the Was showed up Are as first the of that you half much won’t growth to in just versus public doesn’t guidance as a assume be as somewhat ordering the newer delays maybe in

Clint Carnell

is business, COVID-XX, XXXX Thanks, with to guidance, and obviously Clint. appreciate be showed we any and current we durable thoughtful think and related Matt. to be variant I Delta challenges temporary. you want that to joining but appear Yes, a have This I the the us, early question. XXXX very

So, the the back half half really the of about good back of of feel year. visibility business -- we the

Matthew O’Brien

So, than conservative just more anything else?

Liyuan Woo

of we we up guidance, numbers on we That’s model some Matt, QX, and technically the will our Well, the trends did assuming speaking into open QX out. capture how are more.

Matthew O’Brien

And Okay. release. Clint, Delivery from Thanks was number, Systems for kind of again, that. eye-popping the then, the

from earlier the some Delivery should coming have forward. So, And demand from? if I I year can a ever it’s don’t that which that’s little where growth for that’s talk you’ve you QX. the a some showed in But, there had bit think from in of a about would I been the quarter Systems best of indicator leading perspective up QX, think going business then, pent-up was know this again.

where the just performance, over months? can what next of of and you should -- So, the saw about in think if talk terms ramp channels should those to about systems that then we of XX some how you you some X

Clint Carnell

from I think think, I physicians into certainly focused tailwinds hard macro wellness, back community that, boom HydraFacial being particularly concerned lockdowns, come with estheticians, on to and were as their spa work owners benefited we one wherewithal. the marketplace. I our the Matt, zoom about think, med benefiting for we’re rewarded and during the worked and has we’re And also health very effect and is we HydraFacial. Sure. the that

more multiple increase our We as to consumer systems on we’re And getting purchases. continued come Delivery into awareness. Systems, spend consumers those

that’s see when see strong. Systems we hope And So, good Delivery time expected. laying business, to an we the down all to we’re We see high. for And, that rates than at trend continue. more very yield leads

Matthew O’Brien

with more I by staying Got it. you’re in about $XX one The increasing investments, If million EBITDA site. same here. sneak could the the guide

So, up about the things. the on domestically? called Is primarily versus that’s investments. bucket -- more those of planned maybe little be of helpful. you’ve event. You other some would if it But, you’ve previously be investment ‘XX you areas sooner returns side could out infrastructure of you where can than for a of some a versus talked these international bit That kind ramping some Thanks.

Clint Carnell

Sure. It’s a great question.

So, when are very percentage Consumer really like pretty the HydraFacial great of aware, London Nation. very sticky like for us part the buckets in GLOWvolution, three the Center, simple. Dubai, their lifetime time. awareness, the of consumers are they things and high become consumers become a value Experience first a They’re those

beta. really Project opportunistic getting Casa Accelerating consumer and awareness out excited the has So, feedback some us. app we and have in and really been Syndeo for raising on-track is early innovation, great about those,

then, systems, of finally, to development a excited we Ben that the have that, front senior processes, product significant see accelerated multinational you’ve got get Indra, we’ve with. And organizations. very seen in really leaders successful Stephan, and personnel; us infrastructure, scaling experience, international the yes, in transformative the the about hire So, And the while numbers. with the really, we’re pretty we’re really you process pleased real growth

investment less seeing, consumer the Company for that outside the of U.S. growth we the foot particularly handle in the type we and to ensure product. the on feel performance ensuring keep have of provider the and we same and accelerator so, the all we the while to the infrastructure, place And and same have experience, that scores have we the the business, of and infrastructure we our NPS where are given tailwinds the need same

Liyuan Woo

And things Matt, learn when So know to and react around to actually turning bucket, how globe. point, been the the marketing up we or add activation, the about, and just to it that right? constantly test just to comes that we’ve that talking

up on that or we obviously, country and situation, can Now, the down. turn it depends the

on up that based turn trends to planning we’re seeing. we’re the So

bit investment R&D, In to bucket. we’re that’s at we’re and going that. that do terms to we’re incremental a in speed, buying And looking continue of

to it ERP biggest where that growing we’re layers the process infrastructure. probably We things. to other ready, comes when to that as the Clint’s system is people, think, I fact mentioned international systems, company point, investment especially well. truly, implementing But, and we’re the adding there’s

much terms to bit emphasize little pull in of and of up kind a the when overall very international the there’s comes speed on of investment infrastructure. But it So, infrastructure.

Operator

Thank you. line And Wissink Jefferies. next question our of the comes from with Steph

line ahead. Please go is Your open.

Steph Wissink

Liyuan mentioned Thank on just a you. Good bit, little afternoon, R&D everyone. unpack follow-up I But prior spend to But I wanted question. a question Matt’s have think you speed. just X.X, curious bit front a in then you quarter, little of plan should fourth up XXXX? as R&D device the the of step how and about think handheld we for the in

Liyuan Woo

Yes.

also place. of there’s meant support we what out, taking production the So, roll using it’s the by external that where is we and as obviously element

can sure, in period, robust also, and the rollout. referred very time, So, product roll to that transitional on we out robust,

product, also to it the only execution we So, if it’s that sense. about just investment specified when to in category out that when roll makes speed, R&D not but talk in comes really function, that’s

Steph Wissink

helpful. very That’s

terms higher prior So, to would expectation EBITDA step be framing maybe just would guidance, recommend you the had R&D of in function adjusted what modeled? the we maybe spend a biggest slightly versus

Liyuan Woo

smaller the element. we there’s emphasize, being more as is R&D and a in then, actually dollar I bucket would infrastructure mentioned, followed and to think international invested really more by scaling. I say And the degree, marketing

Steph Wissink

that’s commercial a just or on or the little whether then, to of to of you partners? And new you’re what go-to-market wanted finding unpack bit in think about market, to mix marketing, helpful. I professional really That’s how your your to strategy plan device as you Okay. the launches. your consumer change Any

Clint Carnell

it’s Steph, Yes. Clint.

As there evolving things to would I really is BXCXB becoming we of say that are as company. -- look, a couple

with it, continuing relationship units the the a raising consumers. the now, to accelerate that’s and when at app, look base directly we you when you Wi-Fi out But about significant look think see there the connectivity we’re out at have you If the you provider building there, consumer awareness.

awareness, We’re channel That’s building profitable. our providers utilization and really brand consumer capabilities partners. more making accelerating our with increasing

the the it’s adding. that really has think I really Company So, -- fact

If brand activation HydraFacial. results good awareness key we to revenue really with you company consumable -- our in engagement that’s that look creates of at just the three our the And that consumer P&L. executives, builds experience, experience added, really and then the is creating that becomes one that

Steph Wissink

quarter good Very helpful. Congrats on the everybody.

Operator

Thank our next with Linda Davidson. Bolton you. line from question comes of D.A. the And Weiser

go Your line open. is Please ahead.

Linda Bolton Weiser

little on bit if Yes. wondering it kind but you little term you Hi. bit, your think you more the SG&A. increases what will your I And as I was lifts the it what effect Thank mean then, could a take income longer distributors talk sales maybe imagine statement internal? these of about would a And acquisitions. distributor is? you. the that

Clint Carnell

And Yes. to answer for Hi, part first the part and second the question. then hand I’ll Linda. thanks Liyuan.

I First, that think we principles, way partners. has successful acquire for us. and those been those but in local I And we important. because so a it’s secure it’s are think existing go we relationships unusual, our And

in disruption And with expect we a manner collaborative So, did really to we business. also the don’t these our distributors.

marketing, way. out things digital the infrastructure, need in and as to consumer ability then them, they and bringing and physical the sets, roll disciplined systems Raise doing maybe to we’re a the to the what we’re through they globally, point events, sophisticated grow so, products they ability more right? do awareness where and need skill processes, And more transformation, and

already going sizable distributors. countries. to pretty for out are these in be these business building grown a to we they’ve But, So, infrastructure

these in just close consumer, markets, think markets. the and So, it the we all in things do getting that doing to domestic about supercharging the

the you’ll think disruption businesses. I they’re us on but see well being And really no in business. already really to those, interested run opportunistic So, be

there’s -- Liyuan, So, that this is don’t supercharging. provided a to know providers. standpoint, a I numbers the discount from to they distributors And that we pass significant then along end

the and So, and for for feel up we the to us, was that obviously you good pick that valuation, it them. good approach distributor,

Liyuan Woo

Yes.

right, half four we already previously, what Australia we going model when the Germany, the distributors these France, the we’re if as were second are, about the Linda, four So take we Mexico. you assuming think and out on to of year. Obviously, distributors shared number,

top numbers where Clint’s So, Obviously, modeled part almost the direct it we that shared so infrastructure growth market. actually previously, up with we further is that trend. globally, to the of of with support depends top-line are level, which the on going EMEA on transfers, be both investing up, the you transfer can precisely, Clint’s line. to already, to to and APAC there’s see to going pick our XX% investment points, the We’ve they But it’s geography points. the in are we into to our and at

Linda Bolton Weiser

I then, lot chain, if experiencing shortages And talking you about or component curious good. you difficulties supply your are move just the sounds products? shortages, for your any in companies any demand a any at was all for as robust of Okay, components, are of the of

Liyuan Woo

of of to securing always day-to-day the lines, Linda. ship when really of Yes, create level and to the to as it to a I really network the We’ve everywhere mind trying having view customer, in chain innovate of base. here product well it we point sure optimization, components run. very way have certain to our help terms that that make these a shortage, into out previously, top of our at we’re reason catch sales supply And Like, top And right? enough of we some been in of right? product of from up So, very precisely of we’ve but mind example, look actually for that’s comes end these the these roll do long how these new as think we supply our there’s thoughtful lines, us. been of level think we’re trying I closer much you business, if experience we’re new chain, working part the to having for level. that and Obviously, or we’re products you globally, on vendor goal demand being diversify

Clint Carnell

job. supply And chain, and owned demand our has our nice investment planning. of also, a Linda, team of improve done the historically, were Yes. private And thesis think to improve we big equity, parts I one by was really the

core you ‘XX end and to build at we the new facility us remember, actually the a into If gave then competencies. moved chance of COVID

more the great job So, team risk and are challenges a of doing that I the Liyuan think external mitigating against. it’s

put anything chain there So, external I I CEO, right it’s I It’s environment is that would experiencing. say challenging, or supply that on is don’t too that overly concerned. don’t optimistic, fundamental any a is now, to business think but CFO just everybody yellow our being just think

Linda Bolton Weiser

sold great. to Okay, the number try. But, are And of in you systems give disclose year-to-date? then, finally, that the I’ll or quarter a just were willing it

Liyuan Woo

Yes.

talked This have we Linda, remarks model we that’s the different. of this. trade-in, trade-out, a emphasized about have point why the I that in is distributor I think So, bit kind prepared we

right? at why launching actually new example, We’re and delivery quarter, end sure, This XX,XXX, we you, we’re system. of is almost for after then always tell to of for quarter over. directionally want the the At make type the it’s we

a as But you you just give a we’ll of number. it I at year, a very was to proxy, we’ll the where So, precise everybody. much But the give with we emphasize, end are. directionally shared want

average, You unit. call can per XX,XXX do it

way. move, But rolling can change. those do could that your as modeling out, shift and products You we new profiles especially

So, -- very by year. mindful. we make the number give want to end everybody is the be the precise sure We’ll you of just

Linda Bolton Weiser

Okay. and you very congratulations. Thank much,

Operator

of line with next And from question comes Kyle our Rose Canaccord. the

is Your Please line go open. ahead.

Kyle Rose

questions. Thank you Great. taking for the

or in there Is the of on you’re prepared trend to call different international like is there acquisition you’d remarks, the related you a to there? think, on that that -- distributors side. seeing I is just pricing the U.S. commented positive or in trends the box some the out the

Clint Carnell

Yes.

question just Kyle. the Not not thanks think, because And yet we yet us. the Xst for your did and for on joining side, of those I acquisitions July. international

brand. just strength I we’re reflective. think be wouldn’t seeing that in overall So, the

very rates. Our sales force has retention high

We’re seeing unit strong really productivity.

ASPs when competitively price strength the underlying the going in typically think it’s it’s to I are and marketplace. it’s up, demand, So, of brand, ability the

then next be model no disclosure that’s a and lot revenue have that but seeing have second because we units. we’re of have. for trade-in in a I systems, Linda we’re strength think why there question we we which trade-offs, trying that’s have are the we about And to thoughtful units, generation of lot strength really had, the recurring early products, good is ASP, So, in of different, and upgrades and question,

Kyle Rose

bit can on more about then, now interacting the and envision testing? you term And physicians company closer Great. you’re as how just a app and that that connecting you working to maybe Maybe well in or perspective, as little maybe consumers talk estheticians? from longer the a

Clint Carnell

strategy testing I’ll working still our give we’re we’re and because And this learning, we directional, always go-to-market on Kyle, sure. as you and Sure, do.

are basically using underlying We’re working there. channel app they understand is app their We’ve of out conditions to partners. should just with tool talk just a esthetician got spa, our types equip plastic a It derma starting your with that is conversation, the or for and into to that. medical spa take guide better. as products what be services or consumers and for what the a consumer point give her nice you day skin And and essentially, to help a

skincare that potentially data, products device what with That you’ve code health and to will believe way scan QR of think, esthetician sharing and that device. forward, And regimen you so have, is, your what services are directionally know skin home type connect that you from if it doing, home the you your of a the type the see that the you’ll is. us X.X your you what knows you buy device where app. would we have you going I been you interact what condition

our for are consumer provider treatment HydraFacial the journey from performance looking out So, providers that and just and skin consultation give that really to health the that do more giving that we’re when promoting yourself -- so what there. knowledge, we’re in you we’re you in hour their hug good present is or XX-minute just better products that

other than no you is really what it products. in consumer see So, different facing connectivity,

that We’re and has healthcare. consumer bringing little technology-vary just been an that that’s historically area to a

Kyle Rose

Great. historically talking then, about acne bit is, question least physicians you levels I a and -- patients. any the talked or just plan that serums new forward maybe QX, that, been you that serum oil launch? a might the more Obviously, maybe based to the the comment boosters one little And of on could at you’ve Thank think and some Wondering, the on me something on launched last we’ve specific so you. maybe, about to with you with trends if for a one bit respect and to like respect you little in just quarter. updates is diligence customize, to to users focused, talked

Clint Carnell

on this of try Yes. shoot They’re from athletes. have it regimen treatment because And call children are Kyle. I’ll make both Thanks, will parts my great for always sebaceous two this a after and answer me Sure. to because I’ll HydraFacial glands suffered HydraFacial is that. in oily simple. acne. them and they’ve They probably

know, has pharmaceutical world that and been bust actually not types littered claims, there’s for overemphasize companies clinical different the are And Our cure acne with the position diverse as acne. trying is a company is very condition, because you to a gone of to of as acne. lots

company, part conjunction n lead improve treatment that let patient’s we as of other with in of But is HydraFacial will all we we provider regimen. estheticians services to our an treatments what with So, make work that plastic our dermatologists, the surgeons, outcome. or

trying like we that can’t medical the better professional on claim to promise market. of more the something -- is safe working we with to that maybe have we a acne-focused we’ll along those I consumer isn’t all that it’s guidance diagnosis having and with company we condition and time. regimen the really and think think But consumer served do having acne meet the dictate that treatment over-deliver believe provider. under say foremost, to help to are the the first guide look bring I look and with serums to than and And we

Kyle Rose

Thank for you the Great. perspective.

Operator

Sachs. you. with line Thank question Amit of comes Hazan Goldman And our from next the

open. go is Your Please line ahead.

Amit Hazan

quarter. the I bit then, on our think just for make contribution about XQ XQ, that a to color versus on question XQ tight sure start also, to what that second. them? and you to you quarter? a about all of this think to get is to XQ prior just for question have Hey. are nice -- contribution set on to with related Maybe the us the in XQ. What where for what Good guide prior back is give And going that level increased -- that going -- what the -- in now? else want kind you And you far to Can coming to as afternoon, distributors an how want could guidelines but little in purchase I’ll gave? of folks. of consider, congrats And with really, gave U.S. especially you the numbers general and kind add for on nice a direct XQ, expectations a any to you’re from what’s so and seeing you just more Delta, guide those we’re

Clint Carnell

I’ll Sure. the the Delta, COVID. to first then over that, looking Thanks part we’re of for answer Liyuan. question. at it maybe and thanks we for turn at joining looked Look, just and like

I And CEO we temporary, incredibly we and have very we’re demand, an see just management you, a really and resilient providers, we’re you fun. any we see team But, robust business, leading consumer very-diversified. strong see these We just will will as is see think durable through or challenges tell We I business. this them. don’t tell

you’ve at If channels, desirable a you when got macro we diversification. tailwinds got great We’ve type really do. great of got global look diversification. product we’ve our the it’s And that’s

line thoughtful to be So, the trying I with guidance. think we’re top

continuing business that place and because shareholder we we need awareness the the in in longer rights, increasing that infrastructure things We’re short term. and believe invest are consumer to raising the are

very flare world. so, see any from the business, partners a our temporary around serious that’s well the And And see. business the feel nature of ups we terms we’re but our hearing distribution this really variant Delta external as as nuisance. the of we our what good about just It’s partners just durability situation, we and of that in as channel an

Liyuan Woo

the add at country need you look I Even ground, the at lot opening by went lot QX, close, countries you geography, if a that, European open to to think a if you’re through talking And of Obviously, look trends. always Yes. and right? and by about I current there’s of closing.

some impacting in the China. you’re variant, If you Because Delta probably right that’s you the saw now, news it’s look most, in of the APAC Japan, right? the happening seeing trends at

think we these based some the distributors, added kind figure QX if the for about our we by country on of current and as that token, you same well. out into So, By by of QX, have trends QX numbers. region, and

the speaking additional on not it’s for the revenue, that of accretion the are QX. We terms actually material trend truly changing in

Amit Hazan

on update give would I color partnership, was and new then, Nordstrom the also you for be it Sephora an around and you’re both, And that? Okay. this there could the just hoping and anticipating great progress any year, more detail

Clint Carnell

Sure. I’ll Health fantastic think them. Company. for that. Beauty be want And speak to partner take just Sephora a to -- don’t of continues The I they’re I

we than stores. their And us like of everyone HydraFacial. fantastic where circle, up keep are flagship we’ll relationship clear, grew for and kid work But retailer have a in as Nordstrom’s are And be the is partners. challenged as really excited and monitoring in to. channel continue to see will both would it’s open that being and services we’re about providing our that say I said, on providing we we’ll one where as they’re think support to they studios. Nordstrom, a system with to possible. the to we who HydraFacial are. skin just situation the And them the treatment, full be services And front And come able fun that a I posted Seattle foot more was it.

level channel, And in benefits then, professional us our as provide win-win. that the out spas, around One experiences brings we retailers raises the what really them closer our is products from get drive them. buy And med to a set, consumer, back to return partnerships plastics day is, to help to more and to we services drive see people think, in derms, good I really spas. to with we these just HydraFacial. consumers our it awareness of able we’re our

they’re the receiving treatment. keeping and flywheel And HydraFacial through those that there consumers getting consumer, experience influence so, the to of a and closer it’s us capturing them the because really for them

more just us. of from revenue to I expect see we you relationship So, the on level how can just that And view set beyond those to want component.

Liyuan Woo

And can less you a add a don’t Amit, problem we X%. right? situation than relationships, just they’re to or with you you about, any if of a if penetration that revenue or have point, shared Sephora look or here, because these even at to think here had We all previously, concentration

of we all a So, of we’re and them. have customers actually with working lot

Amit Hazan

much. so Thanks

Operator

the Thank Bruce with of comes Benchmark. from Jackson line you. And our last question

ahead. go Your line is open. Please

Bruce Jackson

Hi. Good margin was volume was And margins The the driving impressive. wondering you improvement. and for taking of questions. if in the quarter in afternoon. gross Thank a I gross the were role mix

Liyuan Woo

Yes. Bruce. Hey,

a So, pretty role, as we’ve especially savings we addition the that the impacting mentioned, in year. initiative that fact sales the that plays to I fruition, had first the to fact significant comes leverage think of the half on

So, factor that was main contributing the to that.

mentioned of obviously, We some these accretions, always there’s impact that continue risk the supply earlier, to work offset if on accretion. chain But, that a as could negatively makes or we sense.

Clint Carnell

that. this warehouse management Yes. in automate And ‘XX. It system. people we required building give designed then, in significant We only capacity. And us to had a during our reduced we to really of historically, the Bruce, COVID, December was through chance amount moved was of

noise XXXX. we a to there started as ramp so, And early up was in lot of

got here the facilities automation personnel a we the lean, at headquarters. and And the so, working, investments we’ve we’re pleased with way a made, better-performing team

there that some system pleased and coming but normalizing. So, we’re we’re see the pleased noise out we’re to of was with it,

Bruce Jackson

sustainable you forward? are then, levels And Okay. these think going do

Clint Carnell

and time it’s challenging during Well, we’ve been as and raised a our guidance public company. twice, new a

build continues it overcomplicate not that high the that and as to, still would really We that the provider. have can growth about way our put we consumer we continue awareness, expect we the investors systems so out and we that we there placements raise to to this that we with Bruce. the out to want thoughtful be do, the to So, infrastructure, we to of And NPS continue ensure we our consumer want business. try scores do what say we’ll that guidance,

HF right continue invest our quickly largest lot says, in plan university of educator or website is sell of now, CONNECT to becoming providers. master Our a the estheticians. products,

that, You we and real we’ve And more a community. and And us, providers that in try value if to half beauty London, more deliver us got us see from can just we new a serums to profitable, and trust is just for company. it technology and pleased our consumers do as see hopefully come we buy happening source that Dubai, they’re the through not a as of connect for the are the for to GLOWvolution. consumer has overcomplicate now, quarter the systems if next generation way health, first activations the public year and going

Bruce Jackson

congratulations Okay, Well, taking my And thank the great. quarter. on question. for you

Clint Carnell

Thanks, Bruce. it. I appreciate

Operator

question-and-answer like does turn that further And I you. any over for to would Thank session. conference the our Carnell conclude Clint And back remarks.

Clint Carnell

you sharing look we and community. all us to much. appreciate please you thoughtful want Well, And HydraFacials. show to you next us today talk And thanks for so analyst forward QX Great. results. And the thank from everyone. I you I I questions #hydrafacialnation and will Thanks more joining and our Facebook. Instagram quarter. to follow on importantly, our of And

Operator

you call. Thank for concludes This conference participating. your today’s

You may now disconnect.

The Beauty Health Company (SKIN) 11 Aug 212021 Q2 Earnings call transcript