WW International (WW) 3 May 182018 Q1 Earnings call transcript

Good day, and welcome to the Weight Watchers First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Corey Kinger, Investor Relations. ahead. go Please

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

CEO, Hotchkin, Mindy. over and Joining are I and now turn company's call Mindy Grossman, CFO. to the will Nick today's President call the

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Mindy. Thanks,

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percentage brand momentum. XXXX. approximately operating XXX be We online up leverage in is in approximately expect and sales. in that is our points This of of basis Impact XXXX business, investments targeted year-over-year Summer be Marketing in to technology business expense by due expected campaign. a gross million margin the The offset and will initiatives flat or advance to partially marketing and increase our $XXX spend investments strength to largely digital year-over-year as absolute reflects our of long-term

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year, the XX% of the are tax the reflects for quarters with assuming a expectation of rate tax for a XX% one-time the currently which the roughly year. benefit rate full QX about of We remaining

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call that, Q&A. So, we'll turn the thank with us today. the you joining to for call on the now operator for And

you. Thank

Alex Fuhrman Please comes Your ahead. first question go from Capital Group. Craig-Hallum from

my much year. very start the for you Thank taking on really a Hi. to and question, terrific congratulations

Thanks. Alex.

all much goals about, Seems to more curious real simple year. thinking I A Freestyle company belt, ask little a logged. for been about of under for And very months you run how the have program? since that under wanted the scanned user of obviously then, has things health same few amount same bit now and prior looking program, are been program. that look home follow. turned about a that you it's you have impressive same they some the like the more switched many couple been to Freestyle that and new health still it the members Has So, under goals? items to attracting, statistics broadly does mentioned same are mean the people being just a a that's over and weight? over the this Do at people the amount that then, Freestyle? you've the or to the prior of how And program weight the program? losing have to Have Is tracked since as people cohort program the reaching compared about to the lose engagement changed people more I'm joined who

Sure.

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that's a proof point. So

conversation is I new seeing number Watchers the in In broader and XX% the big a recruits. around around think terms are we're Weight you of excited of set – a What we about. saw what of cohorts, change that's

Smith, a there's of So, around look Greenspan, young at conversations DJ Khaled, you Chef all dads. sudden, if Eric Kevin

of going inspire worlds we we very marketing, people. are So, audiences, influencers discrete have custom we and today's around a right the target other who in be to specific goals can can

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that we weight people, I one want in impact will if broader move loss still we as want into tools We of the people's critical. going globe. all a lose healthy the on that Now, health number journey. say to do to know that management never leader because bigger, that's can perspective, help and We we even activity the that to as it's stronger are them around the position very our but mindset, is integrate that

Alex. Hey, Nick. This is

but million why to really Just to reaping subscribers, retention X.X the an our nine Freestyle that's homerun, all having all-time of add, and we're of support is a months, is digital over now benefits that world-class app developed well high. our

weeks has it year, ago. the first few of I really seen people with about it's like a and love And well. coming on of both. could, would advertising. couple campaign started April commercials your the gone much the you if a did have recall, Thank the lot don't you sounds in that great. I advertising to weeks I last That's If you call out think ask, I'm of sure then,

opportunity in historically a little Summer and of on presence to a you a bit much haven't little times fall the of to Can So, to of some Is wasn't talk advertising? November, Impact year-around in in the were and looking throughout plan be ahead campaign, level the the about having advertised really there bit the where marketing October advertising? more there recall also you I a summer. and lot advertising If become your year some consistently now? of

Yes.

an that believe living. around we presence we have So, ongoing should healthy

we whether cadence be, times going more approach that that there to Now, want in up, ramp to that's year not we I Pavlovian a how regular January, mean that what will does believe of that it. aren't whether you that's But summer. is the call,

But planning testing are the extremely I because our doing. (XX:XX:XX) for think learnings heard that lot most even our into for TV We're as are U.S., also to you a we those be going efforts you our well, recent well. our spot efforts, mentioned we're within which advertising, digital and when be also extremely doing spots. can in social winter is take the we summer being around And in testing campaign. we in Nick we'll go so testing from both the diligent marketing of that

multiple benefits. a that strategic having cadence So, has

the strategy Okay. really ambassadors the to us and also. Look, think be influencers visible year is I throughout enabling of

it driving numbers. lastly, the wrong about such you Thank me really numbers, about right the of signed the the I'm for initial prepared think that you were the much what up ho in I ago. very mentioned more offerings it of in increase if the was gung members that, that think Watchers? remarks a in differently that joining I fact XX% been version it signup have But you much. huge Weight six-month And I marketing this struck a then, or if correct just new people X% just is ask, just could – If year was those versus me, year

that absolutely in and I the – our nimbleness six economics in think And the XX% biggest on of the to to versus is on right. the and learning X%. that Lose Us hooks se. behavioral why numbers that's team people get messages six get chance it's people I Yeah. months months was the per XX U.S. best showing get offers in good psychological ones plan think kind It's and successful marketing of offering mix QX, right, us And agile working Lbs why real so That's Oftentimes, aren't for for testing upfront to join messages us. join. signups the discounts The too. well

you very both helpful. That's Thank much. very

Thanks.

Thank you.

comes Please Your Anderson go from from ahead. next question Riley, Kara B. FBR.

Hi. Good afternoon.

Hi, Kara.

think of side? big utilization the that portion being you program you better or among wellness how the the app for today? picture the total works for your do one members you can about you can do Just And a better you is fitness When do of of or how really company on fitness the everybody, what me. do think think

side. Kara. focused the huge we've mindfulness teams a opportunity, the as And we side, Yeah, I well dedicated think activity as have got on both

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our range within well journey have add in a and plan, within we as long what we'll the environment. as journey we additional discussed where content elements the So, app physical

couple So, see you the over the of will continue implementations next of course years. to

Thanks.

you. Thank

go comes Your Badishkanian from Greg next Please Citi. ahead. question

Fred for Wightman Hey, Greg. on actually guys. It's

Hi, Fred.

look that you platform are out accelerated markets, at about in are of changing not some strength that seen we how in rolling that guys you mean again quarter. thinking international the you Is have If into they the the I markets today? this

how So, thinking. here is we're

global definitely we processes truly we ensure to to are be allow expansion. to capabilities our working able thinking technology, the potential us a further our to have that for the will diligently We be are business. And have really

strategy the in markets, of have in, way the right making the strategy markets. the should right or doing that markets in under potential focus and our the it, you for in is are is strategy Nick sure or the we brand. now emerging growing partners what So, The timeframe the Then, them. and about we're we strengthening them what technology and what going think

done there and and we we've to So, if you that relative countries will did will or set new markets, that say goals we launching look through but strategic be work. the the technology after later be that end-XXXX, at

you we America. our We've in (XX:XX:XX) and a Latin because, barely Fred, when I in at Brazil, at are small Pacific. Asia presence business, mean look in business all don't have a got

we've opportunities. got terrific long-term So,

three about into stay talk that you Can said sort do grow little a bit you Makes then, future? target just mind? there length room the more much think ago. more XX% of years have sense. And versus in was up of you is I a that? a And I to how mean

in is to we're value prioritization retention different that, not about be then, years become more looking see I'd just lens in journey, our will and that. engagement, we of target of our I can weight, not we can And and different members we adding strategies the for know the saying our our personalize And program, in our as community, talking will like are we months. talk recruitment a that And impact. And more around a the through holistic have in retention. we that serve So, partner said, wellness, lastly, keep we about the more our an for that investments, my terms the if that content. we the

a do what we amount and can We their all to our tests are at sure get people servicing we for as around that. no phase tremendous we're much as So, of that constant make feedback learn, efforts loops lives. of matter

that? going And looking about you you a in? Could talk M&A And to meant areas what forward. the what involved might little bit more get a one, last sounded then be bit to Great. open more you you by

down balance look us structure rapidly our improving as capital being happening sheet times from and X that clear last that's just quarter. now, priority say would X.X with levered I times

the if and West consider strategic But business that, with acquisitions and there start-up improving sheet small you small Coast, us balance our on our we'll economic rational, selectively, the is them. priority. growing successfully within tuck-in as good are So, acquisitions, do

you. Thank

you. Thank

question comes Hottovy Research. Morningstar Your go ahead. from R.J. Please next from

Thanks, well follow-up on new and as users the the had rates. time regarding retention a I both, the question platform first afternoon. I come that to as have good guess

time some able as as plan, that first start new nine a of you to time just is curious looking that big your retention the get tactics retention been broader any Mindy, tactics to user. of And other all demographic talked part users, hit new not that the of is to rewards thoughts to particularly you just the some You've that already of future whether or you to of rate the talked group, Obviously, but that a period about this that assuming you'll things what going. over near going are you've kind that be some a with be keep broader attract month these there first that that, really WW about rate? but the at with techniques promote the to

room to have in our so still base. much grow of We terms Yeah. diversifying

digital, capabilities are. different know to of the more and they relevant first marketing much So, so who thing. we we within data, could that's the both And because today, of because people, be segments

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comfortable retention. parcel and with all part inspired their get of feel people like communicate, that more the and So that people they share journey, themselves that can becomes

are with had do second there potentially, Thanks. out And maybe down the question the just out to I partnerships that road. had and, there

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us before. more permission and in do of capability So, partnerships space able kind we able have the this it actually that to we'll gave that to been wouldn't to have have be

Thanks.

you. Thank

Your comes ahead. from next Please go Camma question Sidoti. Frank from

guys. afternoon, Good

Hi, Frank.

Hi, Frank.

Thanks for taking the call.

you said then? length to – understand Just wording, that that Are significantly other said? one if I is, is That and a way to my weight, member, maybe the pay I like the my one. Is what you weight? quick point stay of clarification months when define actually I'm to closer be just here. I'm a continue on You do average goal I meetings X.X would get to on can you But there used that? I well goal you mean need

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didn't time, thought, basically completely? of wrong got comp – I weight if program one it do time, they their I of maintain maybe sort a at for point amount that certain have had customer wrong, they I goal in or

you no, no, No, do.

Oh.

they've of yeah, their – then they there's to amount if weight But a for time, long maintained can continue comp, goal fairly yes.

Okay, okay.

mean And, versus right. to time. the was three eight years ago, Frank, I you heard months number retention yeah, long a nine for

engagement been driving for driven paying primarily is commitment plans our digital Connect it's like over strategy by and by world-class over So is it's is XX, thing it. nine but passing into It's what's in leading nine X well things app. increase the that off don't too, over well are XX% months. and (XX:XX:XX) and engagement three (XX:XX:XX) however Long-term years want really the us. But get months. I between The helping to more and important strategies.

My question of your on was Okay. being have is second demographics, wondering you any I is, And men? mix in have stopping just that diet man, since improvements general, with being it. with you made only second thing a consumer? primary demographic seen part – about is good female, have we the people, the, I about this yet? at months brand six But all XX-year-old are six months. is seeing other you younger ambassador even any a or your and are basically, It's shift Khaled with been well, not you guess still a

Yeah.

So, what the takes of you But And we're start both really about But movement members. of really see how to point... that which I'm in to excited time. have perception, where I'd that your movement go. is It's we right, seeing movement. answer is,

have anything, that? like or men targeted marketing specific because you programs haven't for seen Do I

not Yeah. some That from see to announcement Watchers our for you're men. going strategy. Weight not us big is of is What

to – women. marketing, for we're then And you you'll unbelievable commercial if a men, diversity channels monitor beyond that we and after I eating within we're how the trying overall length, and doing It later. know, in certain efforts see weight become then marketing will demographics. healthy our cohorts we months going around the look because is lose What now. is you the just, activity Our many – just be definitively. our works healthy like see for running people And as our what we certain program turn in Freestyle right it like living two far works program as will at do works we lost for and across targeting

have if better experience. be to healthy, an going ultimately to dialogue have So, around are you what means a ongoing people can it

elements other track app such tie blood cetera, (XX:XX:XX)? health that pressure, therefore as your those et metrics would Does into

I what have, don't would call, we medical side of the Today, things. Yeah.

elements Officer as within valuable. Scientific be what activity app. now, at we're on integration looking focused wave Right mindset – and the Our Chief constantly the could we're other next of

Great. Thank you.

for question-and-answer That like now conference session. you. to concludes Grossman Thank turn closing I'd Mindy our remarks. the to back

journey you, certainly to a I privilege be thank do. interest progress. want It's on And thank our So, our in forward And everything Thank deeply that impacts for millions. the you, of company look you. and a to teams And everyone, for joining at today and us we your keeping informed lives continued business. in global thank everyone. to our our they you