WW International Inc.(WW) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $293 million, down 9$88 million, reflecting lower than expected G&A expenses and a deliberate shift of marketing investments into Q4 [44][40] Business Line Data and Key Metrics Changes - Total subscribers at the end of Q3 were 4.5 million, down 4% year-over-year, with digital subscribers at 3.7 million, down 3%, and workshop subscribers down 11% year-over-year [42][14] - Workshop gross margin improved to 33% in Q3, with a goal to return to over 40% gross margin [31][29] - E-commerce sales were below plan due to lower digital member signups and ongoing global supply chain pressures [33][34] Market Data and Key Metrics Changes - The majority of international markets have only recently begun reopening in-person workshops due to easing COVID restrictions, impacting subscriber growth [30][29] - Digital retention remains strong at nearly 11 months, while workshop retention is improving sequentially, with overall member retention at approximately 10.5 months [32][32] Company Strategy and Development Direction - The company is launching a new Food Program globally on November 8, 2021, which is expected to drive significant member recruitment during the winter season [18][54] - The new program features individualized plans and updates to the proprietary point system, aiming to enhance member engagement and satisfaction [21][26] - The company is focusing on optimizing its marketing spend and leveraging existing members for word-of-mouth promotion leading into the winter season [76][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2021 has been a challenging year due to shifting consumer behaviors and wellness fatigue, but expressed confidence in the upcoming Food Program innovation to drive growth in 2022 [17][60] - The company expects to end 2021 with a year-over-year decline in subscribers, translating into a revenue headwind of approximately $25 million entering 2022 [51][45] - Management emphasized the importance of the upcoming winter marketing campaign and the potential for increased interest in WW as consumers recommit to their health and wellness [54][60] Other Important Information - The company is pursuing opportunities to rebuild its licensing business and expand its brand into new product categories [36][35] - Capital expenditures are anticipated to be in the$40 million range for 2021, with continued investments in technology and digital product resources [49][48] Q&A Session Summary Question: What caused the shortfall in digital revenue? - Management noted that the reopening of the economy has not progressed as quickly as hoped, leading to a decline in digital weight loss program performance [65][66] Question: Are there signs of reversing wellness fatigue among consumers? - Management indicated that while there is significant competition, they are focused on maximizing marketing spend and leveraging existing members to build momentum [74][76] Question: What specific challenges does the company face in the last quarter? - Management highlighted that while there are industry-wide pressures, the rebranding from Weight Watchers to WW has been positively received and is seen as an opportunity [97][98] Question: How is the company preparing for leadership change? - Management emphasized the strength of the existing team and the importance of a smooth transition, ensuring that the upcoming program launch remains a priority [79][80] Question: What impact did Apple’s IDFA changes have on marketing? - Management acknowledged that the changes have influenced their marketing strategies, but they are confident in their comprehensive winter plans [90][91]