Strategic Sale of Mavely - Nu Skin Enterprises Inc (NUS) subsidiary Rhyz Inc sold its Mavely affiliate marketing technology platform to Later for nearly $250 million, including cash and a minority equity stake in the merged Later/Mavely business [1] - The sale generated a five-times return on Nu Skin's investment in Mavely, which was acquired in 2021 [3] - Mavely will continue to provide technology and social commerce solutions to enhance Nu Skin's affiliate marketing operations [1] Impact on Nu Skin's Business - The integration of Later and Mavely will enhance Nu Skin's capabilities in expanding its beauty, wellness, and lifestyle ecosystem [2] - The transaction provides additional capital and resources for innovation in Nu Skin's core business and further investment in Rhyz companies [2] - Proceeds from the sale will reduce company debt, fund core business innovations, and enhance shareholder value through stock repurchase programs [3] Market Performance and Challenges - Nu Skin shares gained 17.6% in the past three months, outperforming the industry's decline of 17.5% [6] - The company faces challenges in its core direct-selling business due to macroeconomic factors, inflationary pressures, political uncertainty, and weak consumer sentiment in key markets [5] - Nu Skin lacks clear visibility into when its core direct-selling business might return to growth [5] Industry Comparison - Abercrombie & Fitch Co (ANF) has a Zacks Rank 1 (Strong Buy) with expected fiscal-year sales and earnings growth of 15% and 69.3%, respectively [8] - The Gap Inc (GAP) holds a Zacks Rank 1 with projected fiscal-year earnings and sales growth of 0.8% and 41.3%, respectively [9] - Helen of Troy (HELE) carries a Zacks Rank 2 (Buy) but faces expected declines of 5.3% in sales and 19.2% in earnings for the current fiscal year [10]

Acquisition Overview - Later acquires Mavely for $250 million, funded by Summit Partners [1] - The acquisition aims to enhance full-funnel marketing impact and measurable ROI for marketers while maximizing creator earnings through social commerce [1] Strategic Benefits - The deal extends Later's capabilities into the purchase funnel, enabling end-to-end creator-driven marketing from awareness to conversion [2] - Later's AI predictive analytics will leverage Mavely's first-party performance data from over 120,000 creators, who have driven over $1 billion in GMV across 1,400 major brands [2] - The combination of Later and Mavely will deliver seamless, full-funnel experiences for marketers, offering ROAS-based campaigns and driving predictable, attributable outcomes [3] Leadership and Vision - Mavely's cofounders and leadership team, including CEO Evan Wray, CTO Sean O'Brien, and CFO Kevin Kenefick, will join Later's leadership team [3] - The acquisition aligns with Later's vision to redefine how marketers and creators collaborate, empowering creators to build sustainable, income-generating businesses [3] - Mavely's CEO Evan Wray emphasizes the potential to create a more comprehensive platform that delivers value to both creators and marketers, positioning creators at the center of the marketing ecosystem [4] Future Focus - Later will focus on combining the strengths of both platforms to drive innovation, enhance creator collaboration, and help marketers plan, budget, forecast, and deliver measurable results [4] - Mavely will continue to provide a world-class creator experience, maximizing creator earnings and accelerating the vision through the business combination [4] Company Background - Later is a leader in social media and influencer marketing software, services, and data, helping brands, agencies, and creators maximize return on social through streamlined creator partnerships and campaign management [6] - Mavely is an Everyday Influencer Platform that empowers creators to monetize their content by promoting major brands, driving hundreds of millions of dollars in sales annually with attributable data from post to purchase [7]

Core Viewpoint - Nu Skin Enterprises, Inc. (NUS) is experiencing significant challenges, with a 40.1% decline in share price over the past six months, underperforming the industry and broader market indices [1][5][12] Financial Performance - In Q3 2024, Nu Skin's revenues fell 13.8% year-over-year to $430.1 million, with sales leaders down 19% and the customer base decreasing by 15% [5][10] - The company anticipates 2024 revenues between $1.70 billion and $1.73 billion, indicating a 12-14% decline from the previous year [10] - For Q4 2024, expected revenues are between $410 million and $445 million, reflecting a decline of 9% to 16% from the prior year [11] Cost Structure - Selling expenses as a percentage of revenues increased to 39% in Q3 2024 from 37.6% the previous year, with core business selling expenses rising to 43.5% [7] - The elevated cost structure poses risks to near-term profitability as revenues continue to decline [7] Macroeconomic Challenges - Persistent macroeconomic obstacles are affecting consumer spending in key markets like South Korea and China, alongside pressures in the U.S. direct selling industry [5][9] - Inflationary pressures, political uncertainty, and weak consumer sentiment are expected to persist into 2025 [9] Currency Fluctuations - Nu Skin's international presence exposes it to risks from volatile currency movements, with Q3 revenues impacted by a 3.4% negative effect from foreign currency fluctuations [6] - The company anticipates unfavorable foreign currency impacts of 1-2% and 3-4% on Q4 and 2024 revenues, respectively [6] Future Outlook - Management has lowered its 2024 outlook due to ongoing pressures in the core business, lacking clear visibility on when growth may resume [9][10] - Despite innovative launches and long-term strategies, current financial struggles suggest caution for investors in the short term [13]

Group 1: Market Trends and Stock Performance - The holiday week has seen significant gains in stocks related to diet drugs, referred to as the "vanity" trade, including IPAR, ELF, ULTA, and HIMS, alongside the Retail sector ETF (XRT) [1] - Nike (NKE) and Nu Skin (NUS) are highlighted as stocks that could perform well moving forward, with NUS showing gains today [1] Group 2: Nu Skin Company Overview - Nu Skin is an American multi-level marketing company specializing in personal care products and dietary supplements [2] - The company faced a scandal in 2016, resulting in a $47 million class-action settlement and a $750,000 fine from the SEC due to allegations of bribery [3] Group 3: Recent Developments and Financial Performance - Since 2022, Nu Skin has launched new products, including the RenuSpa iO, which are integrated beauty and wellness devices endorsed by Venus Williams [3] - In the third quarter, Nu Skin's revenue missed analyst estimates by 2.5%, but its EPS exceeded estimates by 17% [3] Group 4: Technical Analysis - The NUS stock chart indicates that since early 2023, the price has not cleared the exponential moving average (EMA), which is significant for potential breakout [3] - The EMA aligned with the 50-week and 200-week moving averages in January 2023, but they are now far apart, suggesting a compelling breakout opportunity if NUS clears the EMA [3] Group 5: Market Indicators - The Retail sector (XRT) is bullish above 84, with 80 as price support [5] - Other market indicators include pivotal price levels for major indices such as S&P 500 (575 support, 600 resistance) and Russell 2000 (new all-time high) [5]

Business Model and Free Cash Flow - Nu Skin Enterprises Inc demonstrates a proven business model with consistent long-term free cash flow generation [1] - The company has identified multiple catalysts for free cash flow growth including recent acquisitions of LifeDNA and BeautyBio [1] - New product launches such as ageLOC WellSpa iO are expected to contribute to future free cash flow growth [1] Investment Strategy and Research Focus - The research service focuses on value investments with companies trading around 10x earnings and offering dividend yields [1] - Primary research coverage includes small and mid-cap companies across multiple regions including the United States, Canada, South America, UK, France, and Germany [1] Analyst Position and Disclosure - The analyst maintains a beneficial long position in Nu Skin Enterprises Inc through various financial instruments including stock ownership, options, or other derivatives [2] - The analysis represents the independent opinion of the analyst without external compensation or business relationships with mentioned companies [2]

Core Insights - Nu Skin Enterprises, Inc. (NUS) reported disappointing third-quarter 2024 results, with both earnings and net sales falling short of Zacks Consensus Estimate, leading to a downward revision of its 2024 outlook due to ongoing macroeconomic pressures and challenges in the direct selling industry [1][10]. Financial Performance - Adjusted earnings for the third quarter were 17 cents per share, a decline from 56 cents in the same quarter last year, missing the Zacks Consensus Estimate of 20 cents [2]. - Quarterly revenues amounted to $430.1 million, a decrease of 13.8% year over year, with a negative impact of 3.4% from foreign currency fluctuations; on a constant-currency basis, revenues fell 10.4% [3]. - Gross profit increased to $301.5 million from $292.3 million year over year, but gross margin (excluding inventory write-off impact) decreased to 70.1% from 71.8% [5]. - Selling expenses decreased to $167.6 million from $187.8 million in the prior-year quarter, but as a percentage of revenues, it rose to 39% from 37.6% [6]. - General and administrative expenses were $115.6 million, down from $130.9 million year over year, but as a percentage of revenues, it increased to 26.9% from 26.2% [7]. Customer and Affiliate Metrics - Sales leaders decreased by 19% year over year to 38,284, while the customer base dropped 15% to 831,768, and paid affiliates fell by 20% to 149,264 [4]. Regional Revenue Performance - Revenue declines were noted across various regions: Americas (-15.8%), Southeast Asia/Pacific (-13.4%), Mainland China (-24.5%), Japan (-11.6%), South Korea (-29.1%), Europe & Africa (-22.9%), and Hong Kong/Taiwan (-17.1%) [7]. Financial Health - As of the end of the quarter, the company had cash and cash equivalents of $227.8 million, long-term debt of $373.5 million, and total stockholders' equity of $706.9 million [8]. - The company declared a cash dividend of 6 cents per share, payable on December 11, 2024, to shareholders of record as of November 29 [9]. Future Outlook - For 2024, Nu Skin anticipates revenues between $1.70 billion and $1.73 billion, indicating a 12-14% decline from the previous year, with unfavorable foreign currency impacts expected to affect revenues by 4-3% [10]. - Adjusted earnings per share for 2024 are projected to be between 65-75 cents, down from $1.85 in 2023 [11]. - For the fourth quarter of 2024, the company expects revenues between $410 million and $445 million, reflecting a decline of 9% to 16% from the previous year [12].

ad NU SKIN Q3 2024 Financial Overview 1- Important Information Regarding Forward-Looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company's current expectations and beliefs. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws and inclu ...

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $430.1 million, down from $498.8 million in the prior year, reflecting a negative foreign currency impact of 3.4% or $16.7 million [29][30] - Earnings per share for Q3 2024 was $0.17, compared to negative $0.74 in the prior year [29] - Gross margin improved to 70.1% from 58.6% in the prior year, with the core Nu Skin business gross margin at 76.5% [30] - Selling expense as a percentage of revenue increased to 39% from 37.6% in the prior year [31] - General and administrative expenses declined by approximately $15 million year-over-year, with G&A as a percentage of revenue at 26.9% [32] Business Line Data and Key Metrics Changes - The Rhyz segments exceeded forecasts, growing over 20% year-over-year, primarily driven by Mavely, the affiliate marketing platform [6][9] - Manufacturing continues to perform well, servicing various beauty and wellness brands [10] - The core Nu Skin business is undergoing SKU optimization, with a target to reduce another 30% of low-performing SKUs by 2025 [12][27] Market Data and Key Metrics Changes - Growth was observed in several markets in Latin America and Southeast Asia, while pressures continued in larger markets like South Korea and China [6][7] - The company is exploring future market expansion into India, which has significant potential due to its large population and growing economy [23] Company Strategy and Development Direction - The company aims to evolve its core business towards a more integrated beauty, wellness, and lifestyle ecosystem [5][24] - Near-term priorities include product portfolio optimization, a new sales performance plan, and operational optimization in underperforming markets [11][15][16] - Long-term strategies focus on building a leading beauty and wellness ecosystem, with new product launches and innovations in cognitive health and nutrition [17][19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing challenges in the macroeconomic environment but remains optimistic about long-term potential, particularly in China [7][68] - The company is focused on cost optimization and operational efficiencies to improve profitability and cash flow [10][36] - Future guidance for 2024 revenue is projected between $1.70 billion and $1.73 billion, with anticipated earnings per share of negative $2.32 to negative $2.22 [34] Other Important Information - The company is on track to achieve G&A savings of $45 million to $65 million [28] - A beta version of Mavely will be released to U.S. brand affiliates, enhancing their ability to engage with customers [22] Q&A Session Summary Question: Timeline for stabilizing the core Nu Skin business - Management indicated that while there are ongoing initiatives, stabilization may take until 2025 or even 2026 due to current challenges [38][40] Question: Contribution of Rhyz and Mavely - Rhyz is performing well, with Mavely being a significant contributor, and the company continues to invest in this platform [44][46] Question: Profitability and gross margin concerns - Management explained that geographic mix and the decline in higher-margin markets like China have impacted gross margins, but they are optimistic about future improvements [52][54] Question: Update on affordable luxury launches and nutrition expansion - The company is focusing on affordable luxury products and shifting innovation towards the nutrition segment, which has shown higher customer retention [60][66] Question: Expectations for China amid government stimulus - Management remains cautious about the impact of government stimulus on consumer spending in China, hoping for improved consumer sentiment [68][69]

Revenue Performance - Revenue for Q3 2024 decreased 14% to $430.1 million, compared to $498.8 million in Q3 2023, and for the first nine months of 2024, revenue decreased 13% to $1.3 billion from $1.5 billion in the prior-year period[85]. - The total revenue for Nu Skin in Q3 2024 was $356.996 million, down 18.5% from $438.245 million in Q3 2023[90]. - The Americas segment revenue decreased by 15.8% in Q3 2024 and 21.1% in the first nine months[90]. - Mainland China segment revenue decreased by 24.5% in Q3 2024 and 21.1% in the first nine months[90]. - Total customers decreased by 15% year-over-year to 831,768 as of September 30, 2024, down from 978,907[97]. - Customer, Paid Affiliates, and Sales Leaders declined 15%, 20%, and 19% year-over-year, respectively[85]. - The company faced macroeconomic pressures impacting consumer spending and customer acquisition, contributing to revenue declines[86]. - Seasonal factors, such as local New Year celebrations in Asian markets, negatively impact revenue in the first quarter, while the third quarter is affected by vacation patterns[150]. Profitability and Earnings - Earnings per share for Q3 2024 increased to $0.17, compared to $(0.74) in Q3 2023, while EPS for the first nine months decreased to $(2.23) from $0.03 in the prior-year period[87]. - Net income for Q3 2024 was $8.3 million, a significant improvement compared to a net loss of $37.0 million in the prior-year period[129]. - Gross profit as a percentage of revenue increased to 70.1% for the third quarter of 2024, compared to 58.6% for the prior-year period[118]. - Selling expenses as a percentage of revenue increased to 39.0% for the third quarter of 2024, compared to 37.6% for the prior-year period[120]. - Interest expense decreased to $6.5 million in Q3 2024 from $7.5 million in the prior-year period, primarily due to reduced borrowings on the revolving credit facility[126]. Investments and Capital Expenditures - Total Rhyz Investments revenue for Q3 2024 was $73.1 million, a 20.9% increase from $60.5 million in Q3 2023[90]. - Capital expenditures for the nine months ended September 30, 2024, were $29.0 million, with expectations of total capital expenditures for 2024 ranging from $35 million to $55 million[132][133]. Strategic Initiatives - The company plans to introduce a new sales performance plan in Q4 2024 to enhance affiliate marketing and attract new affiliates[86]. - The company plans to introduce a new sales performance plan in North America and South Korea starting in November 2024[100][109]. - New product launches generated approximately $27.8 million in revenue for the first nine months of 2024[100]. Foreign Currency and Economic Factors - The company may reduce exposure to foreign currency fluctuations through foreign currency exchange contracts and intercompany loans, but does not use derivative financial instruments for trading or speculative purposes[158]. - The reported revenue and earnings are positively impacted by a weakening of the U.S. dollar and negatively impacted by a strengthening of the U.S. dollar due to a significant portion of business derived from outside the United States[156]. - The company's revenue and profitability forecasts for goodwill impairment assessments considered recent and historical performance, strategic initiatives, industry trends, and macroeconomic factors[148]. Impairment Charges - The company recorded a non-cash goodwill impairment charge of $130.9 million in Q2 2024 due to the estimated fair value of several reporting units being less than their carrying value[124]. - An impairment charge of $10.1 million was recognized for the BeautyBio retail asset group in Q2 2024, as its carrying value exceeded the estimated fair value[125]. Cash Flow and Financial Position - Cash generated from operations in the first nine months of 2024 was $86.0 million, up from $64.5 million in the same period of 2023[130]. - As of September 30, 2024, the company had $237.8 million in cash and cash equivalents, down from $267.8 million at the end of 2023[130]. - The company had $70.0 million and $365.0 million in outstanding borrowings under its revolving credit facility and term loan facility, respectively, as of September 30, 2024[134]. - The effective tax rate for the nine-month period ended September 30, 2024, was 5.8% of pre-tax income, influenced by goodwill impairment and restructuring charges[128]. Investor Relations - The company's Investor Relations website provides access to financial reports and other material information for investors[153].

Company Performance - Nu Skin Enterprises (NUS) reported quarterly earnings of $0.17 per share, missing the Zacks Consensus Estimate of $0.20 per share, and down from $0.56 per share a year ago [1] - The quarterly report reflects an earnings surprise of -15%, with the previous quarter's earnings being $0.21 per share against an expectation of $0.18 per share, resulting in a surprise of 16.67% [2] - Revenues for the quarter ended September 2024 were $430.15 million, missing the Zacks Consensus Estimate by 3.14%, and down from $498.77 million year-over-year [3] Stock Performance - Nu Skin shares have declined approximately 66.6% since the beginning of the year, contrasting with the S&P 500's gain of 24.3% [4] - The current Zacks Rank for Nu Skin is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.30 on revenues of $457.1 million, and for the current fiscal year, it is $0.78 on revenues of $1.76 billion [8] - The cosmetics industry, to which Nu Skin belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, which may impact stock performance [9]