WW International Inc.(WW) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $311 million, down 10% year-over-year on a constant currency basis, with workshop subscription revenue declining nearly $50 million or 43% in constant currency [40][41] - Digital subscription revenue increased 11% year-over-year on a constant currency basis, now representing 75% of total subscription revenues [41] - Adjusted gross margin was 61%, up approximately 100 basis points from the prior year due to a shift towards a larger digital subscriber base [41][42] Business Line Data and Key Metrics Changes - The company ended Q2 with 4.9 million total subscribers, down 2% year-over-year, with digital subscribers at 4.1 million, up 6% year-over-year [14][41] - End of Period Workshop subscribers were 748,000 in Q2, showing slight improvement from Q1, but still down year-over-year [16][41] - Digital 360 ended the quarter with approximately 230,000 subscribers, up from approximately 150,000 at the end of Q1 [15] Market Data and Key Metrics Changes - The company noted that consumer behavior and motivation for weight loss did not spike as anticipated, following a more typical seasonal pattern [24][41] - Workshop trends have been positive in the U.S., while recovery is slower in countries with ongoing restrictions [26] Company Strategy and Development Direction - The company is focused on four key priorities for 2021: enhancing member engagement, expanding Digital 360, preparing for the 2022 Food Program Innovation, and expanding into healthcare and diabetes [56][58] - A comprehensive plan is in place to optimize performance in the second half of the year, with a focus on executing key marketing initiatives [58][68] - The upcoming 2022 Food Program Innovation aims to provide a more personalized experience for members, particularly targeting those with diabetes [62][66] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a shift in consumer sentiment towards enjoying social reconnection rather than focusing on weight loss, impacting Q2 results [10][12] - The company plans to be conservative in its full-year guidance, expecting full-year revenue to approach $1.3 billion [43][44] - Management remains optimistic about the potential for growth in 2022, particularly with the launch of the new Food Program Innovation [90][92] Other Important Information - The company closed 64 U.S. studios in Q2, resulting in a $5 million restructuring charge, continuing a trend of reducing its physical footprint [28][42] - The company expects e-commerce sales to return to growth in Q3, despite challenges in global supply chains affecting product availability [34] Q&A Session Summary Question: Overall level of fatigue with wellness - Management noted that consumer sentiment shifted towards enjoyment rather than immediate weight loss, impacting expectations for Q2 [76][78] Question: Guidance for the year and effectiveness of fall marketing campaign - Management indicated a more conservative approach to guidance, with expectations for the fall campaign to drive interest in the program [81][83] Question: Regional differences in consumer behavior - Management observed positive trends in U.S. workshops, while international markets were slower to recover due to restrictions [87] Question: Return of consumers and frequency of engagement - Management reported a trend of studio members returning for community and coaching, with expectations for a strong influx of lapsed members during Food Program Innovation years [95] Question: Impact of higher marketing rates on recruitment - Management acknowledged some pressures in marketing efficacy but emphasized a diversified approach to marketing spend [100] Question: Health Solutions business update - Management expressed optimism about long-term growth opportunities in healthcare and diabetes, particularly with tailored food plans for diabetes [102] Question: Addressable market and competition - Management reiterated that DIY weight loss remains the biggest competition, while also acknowledging macro pressures affecting immediate weight loss desires [105][106]