Bowflex (BFXXQ) 25 Feb 192018 Q4 Earnings call transcript

Good day, everyone. Welcome to the Nautilus, Inc. Fourth Quarter 2018 Earnings Results Conference. Today's call is being recorded. At this time for opening remarks, I would like to turn things over to John Mills with ICR. sir. ahead, go Please

Financial Good call. Welcome from Participants Chief Executive Nayar, Bruce you. Assistant McMahon, quarter the to Nautilus Nautilus' XXXX Cazenave, Chief Chief Sid Officer; conference on Executive and afternoon, Thank Bill to Special everyone. Officer. fourth are Officer; Great. the call

in acceptance includes today financial Our of on page. Relations results, forward-looking planned financial on development the securities operating earlier rates be initiatives, anticipated call of and growth financial a trends, of of meaning from These new our partnerships. non-GAAP results introductions and future projected anticipated today's release the reconciliation business release mentioned most expenditures, within market statements today's and profitability, earnings GAAP new issued new our the the and downloaded measures product Investor Remarks anticipated statements The the of may product the laws. measures. include introductions was conference directly impact concerning website nautilusinc.com tax to effective earnings at projections, will and capital call and includes comparable on strategic timing product,

subject of uncertainties, actual these risks may a statements and from to statements. differ and materially Forward-looking results are number

annual in information, that, media release occurrence changes undertakes described recent other to update consumption uncertainties from or And actual no the stores, Cazenave. unless effectiveness Additional events to target changes statements pleasure standards it the or reflect risks of to include most over materially continuing foreign our Form our events. timely Bruce results any operating the pertaining leads announcement our the costs, circumstances results of new to obligation factors our reflect trends, manufacturers call on our our publicly unanticipated acceptable noted. All information acquire otherwise cause sole that to and from to report today's they or turn fitness could And of Nautilus' to comments made in earnings control with quality after operations, ability differ to at forward-looking revision to in these consumer advertising. is Mr. in forward-looking were the regarding our habits consumers inventory statements media otherwise our that XX-K. or CEO, my Nautilus and

Nayar thank activity Thank you, everyone, general will providing John. results discuss a financial as start January, your quarter joining and in review Sid over for few open detail. for call quarter will up will call we the fourth questions. of segments our financials fourth full-year Good to our XXXX more a will before the afternoon, XXXX. the today. turning for and and I I we provided our final In our you to and it close remarks the business as product overview full-year with then well and by we preliminary

overall As reasons. the because results were of noted, disappointing, two mostly

First than weakness was segment secondly in in less retail our was significantly growth segment, but we direct the expected. the

sales stronger our see November was the had this quarter, the segment fourth introduction case. in but new digital the Intelligence, Max expected of we With platform, the direct to for not

the the confidence While at than is introduction, experience the start overall, many fitness platform anticipated. unique slower unlike There it we positive the from of of the is lessons today. valuable us added at product strong provides personalization giving received purchasers, on feedback from were two anything a this market first and months

critical to coincided as season. that with in to awareness the it base and slow QX broad had bell. continues of fitness launch because expect consumers will holiday a start resonate effect We a a Needless say with magnified the

and product the continuation the retailers our strong channels brands within and the new XX% placements had highlight of the of commercial demand consumers broad growth year including growth celebrate, double-digit retail, and international prior quarter quarter base and lines, By across reason for achieved a XX% the disappointment does our in the same Nevertheless, including was and in season. strong for was to we us we Our experienced going it channel. the but would retail a specialty the given most all product peak a achieved with Bikes. into metrics, segment mass grew be market both cardio and of versus retail, position Treadmills

product, and of key distribution. market. was and the channel Max Trainer driver savings shipment Octane with the Another commercial and driver the added in strategy MTX features home a commercial benefits but an the durability this Commercial of immediately. in and in required third line, version was The drive the important began installations year for growth MTX. of product catalyst the it growth our of in the is time this the channels and We Max performance features almost to Max commercial in specialty growth quarter of the

has retail for increasingly at lineup part new of expanded strategy an Our TX of in Dick's our Results with Bowflex single fitness to allows over treadmill treadmill the category and largest equipment. we Bowflex Sporting gain season fitness lineup our years Series three last treadmill, retailing this share become the additionally $XXX. Goods the Nautilus larger it In

Dick's we’ve our with products. have great support seen is new strategic for a and relationship growth relationship key Our and

platform are scenic roadmap the the including offers We both is users navigation. in programs the roll XXXX, treadmill elliptical new XXX segment both easy allowing the digital Retail $XXX, also offer for Schwinn new a Bowflex The to for interval RunSocial the which control high-intensity rate and modalities training across along of out with in our in capability streamline elliptical There at Schwinn priced a XXX elliptical, and the Schwinn video products train existing products. several new console launched in heart machines locations. other app

our to now segment. Turning Direct

seeing Trainer the digital these offsetting digital increased and declines declined was mentioned Max in slower Bowflex to the new of sales. recently launched in the a Our of platform We sales Max initial products. segments Partially positive strength in than -- the test the compared as and QX with were during rates treadmills success LateralX adoption demographic media TV decline to reaching sales due previously and number increasingly of response are the impressed a spend. launched Bowflex customer the to Bowflex incremental completed and been Trainer. of patterns have planned the We August LateralX

our -- media We will have in ramp this are QX. we channel optimistic and in to enter and behind and of likely about up it spend pick again in product the QX up as future Direct continued Direct

customized based are enhancing the trainer to Max of to Intelligence adapting a Max capabilities to needs. on We’ve bringing fitness succeed. to which and an time is their platform praise and the market data with each enhance subscriber a and marketplace, workouts. focused motivation to our traction their competitive instruction, gathering spoken Moving achieve Max ability we platform. the past two that their programs new platform and learns consumers understood we better and is experience delivers and and time directly them spent can custom and overcome. The they user's much challenges Through the fitness generates The to individual capabilities it feedback assessment digital more to it users designed and to how workout working analytics, on is to unique predictive unique reach each align on personal the digital digital every individual user data connections that captures from performance have, mirror wants is encourages platform, the and is feeling, making their and with fitness, their goals. how be preferences the individual previous via unique user's personalized initial stay both introduction, on the capabilities believe help achieving years to on Trainer goals. and faced and user steps Max workout truly the Max than

We message gain exposure with in media business part our is this as Subscriptions and became to way last a plans significant quarter our are to a continuing revamping year. of traction offering. soon marketing as gain to consumers possible relaunch spending subscription and as the strategy

Our data users Most customer is subscription and is added growing appear coming with to be that in and with purchasers XXXX actively are offering our content actively engaged initial experience. per more further getting results. even capabilities overall to the the compelling importantly, indicates and content enhance better

international team achieve the resources was first Finally, XXXX international raise comment the and our on priority put of business. accelerating place our underpenetrated deployment in which market. in we I the to pursue to resource wanted and has been added to growth. year level of mission this The

growing to solid us growth increasingly which logistics was over a in the opportunity systems now. issues, integration growth year, was by our of While prior growth business. same behind quarter and profitable are QX remain for and We new committed warehouse hampered both sizable it this

call significant addition the to over a turn to also to team. management Sid, wanted made our point I that I we Before out

on With addition Carlos and Carlos management provide general blue-chip financials of of having and with across Business an Vice including industrial to Navarro as a number President segment. General We're South have quarter companies, Sid Jersey full-year. the Johnson, at And recently will Carlos excited Johnson the & Sid? industries. overview Corporation the digital comes and our Direct deep Manager the of Jarden a Bausch experience, the marketing Lomb, and + and team. for the us worked consumer most now, of

quarter gross XXX fourth ended the X.X% basis sales the to XXXX Good sales in December Thank XX.X% $XXX.X the XX, slightly segment prior quarter everyone. of lower of $XXX.X Retail of mix Net due decrease points Fourth year versus points the prior basis, year. compared prior million, decreased the for the basis sales to decreased the same last million, and up to year, and the the totaled XXXX totaled XXX same margins fourth the retail company in than segment for as sales. points XXXX an you, year. product of million. XXX shift Direct $XXX.X total afternoon, period to a same when basis period Bruce. Net for quarter of to XX.X%, channel mix the increased On quarter overall were to primarily of to in percentage XX% gross in compared margins an the year

million Total a of year. in fourth last point the prior were as quarter XXXX increased of the same for was were partially the the quarter year. fourth sales current by the lower which prior by was percentage period Sales to last million as XXXX impairment a fourth the to same the for charge $XX.X For XXXX, sales XX.X% in XX.X% Operating the as of marketing decreased same percentage XXXX XX.X% XX.X% as net compared expense margins XX.X%, -- for impairment ended in The basis driven litigation of from $XX.X percentage expenses December $X.X net the XX.X% of as of or legal sales gross charge. million to XX, primarily expenses in for operating period aforementioned compared expenses offset a period due in decline a of Operating of last quarter expense of full-year revenue sales year. decreased year, the result $XX.X of sales to XXX compared expenses to as increase the was XX.X% higher year to or media spending. million net year. and

compared and XX.X% For segment the fee in of the of of administrative net legal XXXX, year. marketing XXXX, sales compared as net X.X% million higher The at million net $X.X increased sales million Research expenses of of sales year X.X% to decline legal The reflecting income expenses. XXXX the year, quarter Direct reflecting of compared costs income $X.X for sales expenses prior to sales million or the year. General for of of personnel added $XXX.X which for or or fourth to Operating X.X% XXXX $X.X for of as in net finance and fourth in XX.X% period compares development December same Research same revenues sales net in X.X% and X.X% million lower for the sales to costs. or due the year, year. last or to $X.X the of of year quarter the expenses. in spending and X.X% X.X% in resulted ended compared as million to totaled X.X% expenses sales higher prior million period same percentage were of totaled development costs same the of XX, million expenses and $X the the primarily administrative $XXX.X or decrease was were to compared fourth $XX.X year, sales for year driven current the or last General by sales net of net $X.X spending. dollar was $XX.X net consulting for in quarter same as decreased the XXXX period the period quarter XXXX the of million prior a last the lower or totaled of operating million year.

at to per XXXX to of or the year. $X.XX continuing X.X% share or Income end year state year the in income X.X% share Tax compared of quarter $X.X benefit per prior per or quarter state totaled the of XXXX. diluted compared year. the year. net same related related to a XX.X% Income of $X.XX in the The share for compared -- operations million to tax as for $XX.X The XX% changing was XXXX. valuation per same tax $XX.X the of totaled was $XX.X million from operating of of $X.X to that as included million sales effective including and sales For in or rate XXXX, or continuing credit The United a year last true-ups for adjustments the period from fourth rate million compared XXXX year current tax for States year $X.XX diluted for of share the million diluted the last $XX.X for allowances. rate the operations period Law or included diluted $X.XX of XXXX net fourth last million

categories. of modest by decline in prior in partially year. fourth to quarter $XX.X of commercial XXXX business a net for sales. year. mix improved decline segment compared specialty XX.X% reflected were segment an strength last sales increases due fourth recently net last to Gross sales loss sales Bowflex segment in in and for launched the in sales $XX.X million Gross $XX.X quarter decrease with to is half increase $XX.X in Direct margins. The margin last of a the experienced driven LateralX same quarter and offset business mass of increases million business million compared the international to along The the and In in favorable reflected the the decreases Turning million Direct -- XX.X% treadmills Direct now as increase compared XX.X% business same product increase declined growth compared XX.X% fourth for of the Net of the margins in and to the overhead second the related fourth quarter fourth XXXX quarter quarter totaled our of lower from last in to for sales products. as year. The the by gross XXXX, trainer Max for same retail basis business to points retail reflected channels for line, XX.X% product product by the gross results. for rates exchange was of period for million across Operating $XX.X Retail and the growth totaled costs margin shift $X.X to million, absorption XXXX of fourth the during our multiple related in the of the Net in period million Direct prior quarter unfavorable to in of $X.X XXXX. our quarter compared XXX retail operating same quarter in XXXX to in in year. income the income product the fourth year. a the the to of the in the quarter XX.X% XXXX,

million and cash turning million $XX with sheet, million of XX, totaled December December of at $XX to and the This XX, XXXX. cash consolidated $XX.X of debt. as Now in compares debt XXXX investments to million balance $XX.X

fourth primarily of the purchased a to $XX.X primarily our million $XX.X as fourth the end the XXXX, to potential Max as of uncertainties $XX.X During $XX.X $XX.X XX, $X range million payables capital of I to to XXXX. to with $XX compared supply-chain implementation back stock the of The his XX, $XX.X at versus company previously to At to turn tooling increase million as and time, Working compared million to million intelligence and as XXXX international of $XX sales, the repurchase XX, million million announced stock comments. with due million of full-year December Bruce were in million. at call the the would information XXXX platform, for in compared December Trade XXXX. XXXX on CapEx new market new final in year-end XXXX million December lower-than-expected including $XX.X software $X tariffs. over inventory mitigate upgrades. inventory We full-year for end buildup hardware the this quarter of XXXX of XXXX. million quarter year coupled system open part Inventories XXXX of expenditures anticipate in the totaled of reflects to December totaled of the be strategic like spending at for XX, ended Bruce? year-end plan XXXX. the were Capital

Thank you, be year challenging works XXXX be to stepped-up with challenging marketing retooling inventories we that and drawn in was need retail high channel competition, and to Sid. down. expect XXXX a equally the

the of ones. that priorities in the Although business strategic are we remain the right our and confident fundamentals

had we make in significant has are doing some changes the to company business. Our way

of our strategic personalized acquisitions in in further the partnerships of are Vi commercialize RunSocial, our The and first and last develop fitness digital reality. to key property experiences our vision These and next America. the enhance include coaching with These Feed.fm and and electronics Technologies Samsung all mentioned and release platform. development and accelerate and year of assets and investment to ability make intellectual pieces is of to this investments partnerships evident in are the made our year stages

to message revamp digital are to platform. the marketing need approach support and clear solutions the spending we very attainable. media The and our obstacles Secondly,

to categories work product. on we other we challenges, will and the As through of out these expanded build continue to platform

begun will to we've simplify restored growth This base. and includes we a in value while This workforce product program reduction, operations make order operating containment the aggressive engineering to initiatives. more efficient, controls steps to already margins. profitable, and cost processes the be Thirdly, containment improve our more rescale cost sales

is affecting others not new operating continuing will XXXX. a as so be distribution steady the strong in of drumbeat the introductions. lineup to we mentioned, mode of in and of much Finally, There change just -- all channels product

the call in years, will As we've May, past time, details back during done that exciting this on the at more in and of products our past the half we year. provide in launching new

most As to revamping the anticipate outlook, be segment of experience the will first channel the first plan marketing retail and and in sales of the mass segment XXXX. of challenged the we the recent continue that Direct, the Until through near-term Direct we in half of the our sales complete the the will half in year. weaknesses

this year, down than the of our initiatives to progresses. At year retail despite sell-through channel inventories significantly in of the specific strength that in as major providing guidance, time, anticipated on drawn mass our be higher be we're not are Additionally, year. providing XXXX QX quarter this anticipated channel in of first the need progress the there -- versus updates will but prior the

successfully like this Our through afterwards. navigated setbacks it before and come out company stronger has

including concludes That brands, to and do the utilize prepared technologies, our we ability execute Our strengths again our well. goal and many talent remarks. is and to strong intend in it adapt XXXX to

Now like questions. to open Operator? to would the up I call

hear Group. Instructions] Thank first Craig-Hallum with Dyer you. We from today Steve Capital will [Operator

Hey, on guys. Steve. for Ryan

Steve. Hi,

Steve. Hi,

with why happened in and and Max hasn’t clearer guys it you what With any preannounced another month marketing mid-January, since consumers? Trainer your message resonated with Intelligence Max is

XX a this we that pretty and Yes, for through but Ryan. better terms break knee-deep platform still suited the was too in we complicated. are is We feel ways Max second second find and fundamentally point research basically we the way as that at speak, XX a message explain perhaps to to ad. in of this need Intelligence in looks It like

satisfaction that So some purchase educated, really story we we web traffic got when that’s we and site once is more the more, effectively the more. of what do learn it drive And the through how who there's talk the we product marketing. want about retool and to tell to did part say general to folks went of and

to etcetera as then And the you that, QX right. in then kind QX, marketing that Do product you'll Max and QX, it's of All those blitz, campaigns things you kind new you a same plan launch of fine-tune holidays try kind fitness you of guys for out quicker? I new refine Intelligence normally strategy, strategy, summer season. and or of at QX to down kind marketing will go here kind as maybe different figure go of use strategy

word think would be the use. urgency I I would

We come fitness ground But as those If before going we impact answers are successful, test normal it's into as -- desire and general season right, the the seasonal our major would the will soon apply the would than will possible. we we sooner apply. the off-season things, possible. to in use would as of as reality we be you're find definitely the our find the fall direction and behavior channel. fall is But within if proving

the product commented specifically? any is And market but or to segment elevated to as it then on retail that little bit channel specific inventory relates you it,

But had -- because it's it's actually anticipated very because strong interesting point much I commented -- on, the No, as we it the placements Steve. was of sale more pretty growth of was we had.

quarter the Actually therefore broad end is broad-based off. positive tail year, year, pretty if fourth remember So inventory shipments have right broad and we hence now XX% Retail, quarter and year, through north year. was sell-through essentially third to the it up outpace last based. the through there prior of that for big the the was inventory sell-through sell-through, over the of But even is and And burn base. you a the

is channel you'll the know from probably see And XXXX? overall see what based say channel, it safe grow but that I in product in the placements can weakness, in half what -- first will you retail you specifically, can that QX different to some in on and see

Go ahead.

any Ryan. on commenting outlook the at channels not we're this Yes, on of point,

through a As provide better we able point. later to QX, of be probably sort navigate update at

for I All impact certainly more spending of me, is back not your Pelaton a on or creating and luck. will so it your you Thanks. think the marketing. then queue. buzz any Do specific right. one hop that shy business in With about Last lot have messaging? Good product they're on

And spend I the a with product question. certainly magnitude an There's us that that looking of given of no ourselves. shouting specific to does of against and competitor that's that think for new we’re one effect that volume create right it's the the at. doubt notwithstanding our competitors, other be message bit

Our level does a spends basis. spend that routine the level on not competitor approach

I And of say headwind. approach so, would would it's hands. would time. of for own in a that I'd our all them the many be our a say are consistent our causes yes, And to challenges not these though, long things that be way the been

in puts would so be side doing use. with creative story in word fitness we're again over. we And for believe We it's our no I better. to will carve tell the the spending. our very possible place on on things terms us control are competitors what It of much more And do the have us market, I just and to our urgency marketing out would the address pressure how matter

We with Davidson. will from Kawamoto Michael D. hear A. now

Thanks my taking for guys. questions. Hey,

Just a couple for you.

Max on First, Intelligence.

like as message to and Max things just similar ups for Max doing Intelligence for you thought across? well as the like -- Trainer. think pop tell I you get Have about that that have done guys

think Michael. -- is I there thanks,

a are getting first, get the things would message of to Including, as lot I I we and have think possibilities there's think okay? have Intelligence, message and as that what Max different about to, there's of a it in we to to thing up media do. well. so clarity, bill the alluded right be But of up the expand confusion no heavy back, can to platforms get key going like the marketing course priority there that of kind secondary across that,

are of you terms the social breakthrough. up some once way get things say months learned that of in marketing, so first the of the then message its and in, right other two that as we other And have introduction we’ve and pop-ups in open we first there things to honed have media, possibilities. But and

weeks that started cuts the of right Where extend Yes, it. from ago sizing to answer. then do on makes the Got reduction, of sounds you will business, you’ve it additional And can you sense. just come cost find the the not the think near-term the visibility like business couple but cost rate. think you then also update manage and you giving more once you’re will I you on target to want have know long-term how do your the you run guidance, or

that you’re Yes, your back to of some make on obviously point did the coming just productions reductions, of headcount it's the we aware already.

product least. basis. -- because on of point will do very be channel really in challenged and on engineering clearly of reflection also our we of we've will product cost product margins looking And on remain gross that sort is the We the Bruce's the in at are We mix. can terms we on a QX a of value broadly certainly at contract within services, looking both saw rate -- current at Direct, run it things part what of and that recognized QX other

in So we've would these on of a terms margin specifically had have to Direct of better really the -- looking to ways once that, simply of in sense that are we side. again initiatives, we some Well, guidance, long-term a forward back basis. come mitigate just the go saying at decline I

we on would to position a I provide think update that be an better as well.

year. rest Got of the it. for luck Thanks the good for and the time

Michael. you, Thank

we And will next to Sidoti move from Camma. Frank

for call. the afternoon, Good taking Thanks guys.

fine. Okay,

Thanks.

ones. quick of Couple

clarity you across on channel first say far the or Did Retail equal Just own not on as one being inventory. you Direct inventory heavy would -- and you that other? that’s inventory say that or versus -- but is on the heavy issue, your the the as or

we a Actually I and both we alluded then, a in in And the as in could course, our tariffs that. lot at was both and of did take business. get into if retail shrink, are heavy on to still either at there the were lot achieve the own going of yes, did anticipated potentially we’re because QX QX, for -- not initiative as mean, debate we sales part into Direct. of later we Retail, -- lot of we Retail the time rolled about we it's still inventory a far heavy it's of --

a would So take position. have we normally position we than did I your have.

tariffs affect Just us. case did those in

and some some it of was by So design. self-created was of it created self not

been one questions a my ahead big have the be was but the internationally. lot on And to used mean, company international, answered, pretty of I Okay. other

what do you markets. the as days these most see important So international

in commercial as or I markets potential. now But And key in its say would though would as of China, say market. behind ourselves It's there. Latin We or as where we two Europe. with market. markets right The the be resourcing that America, of the more Definitely would definitely Asia the be elsewhere the heavily see Asia. just vibrant that immediate aren't most business we than it mature Western the home growing commercial very side well both start the are world, speaks biggest and whether the

you primary that two would after Latin So those would into the markets. or be forth. America so then get And

correct? that there, seasoned distributors is Just

That would be correct.

Okay. I last me. question for guess,

In there Just Max spending the that’s bit kind of the past seeing words, just you a you little your a little out have similar about other a you talk per Can newer product. effectiveness of the in as are Trainer. since sales. that sort with LateralX, the of bit stuck marketing was

since at really could terms have would as had hang the much a do we've Frank. did, we it It's growth, us a We be back. Trainer. overly same about the question no, closer ever of it Climber more and good potential to comparison are for spend. spend. promise Trainer, legs could low obviously The I concerned not showing on in lower on spend going Max sustain LateralX And not one so trajectory -- we're higher launch Sure, LateralX That’s that forward product. consider the believe to we efficiencies much but the around In down of LateralX HVT than things seeing that. we in nothing be a pretty Tread we already would launched surprising. it launch road. launched Max the

during relative do How did to HVT quarter [multiple your the speakers]?

not digital HVT but meaningful level of with marketing revenue. strong ROI, a performed a only a

guys. Thanks,

Thanks, Frank. Okay.

[Operator Instructions] Capital. hear will George Imperial from now with Kelly We

guys. Thanks for questions. taking Hi, my

George.

on couple then it Wondering in if substantially a just made pulled advertising First quarter? the suing the fourth grow said fourth direct this remarks, we -- your did media back business. made XXXX? but And have prepared quarter, the in in you I

learnings to I we the that And the implement It did again, adjusting would spirit bit to as trying we spend to And would say would we on pretty had in in part we QX. normally are continue I have, in we've that. QX, grow that first heavily a of little say, but of the

Okay, okay.

that So a fair Max it to to how busiest has the perfect message period out you Is around try in of pulled kind characterization? Intelligence. January, since have figure back it to the

yes. Yes,

that pull back pull back that every typically is George in given say would would scale been I a have years. Although

January the obviously wise. tall heaviest time and is off and So Feb March media then sped always

to just versus like more guess come a -- get year know versus season you heavy long to do for expect you that’s But to message? last it to comparing previous normal to last don't Do you pulling are it back And new how within again I comparing expectations. year. specific, expect when but I and --

I think.

potentially the not in done of will versus in in we're and are much year. mind, in -- elections beginning we Not we back see believe that, like in but you into as the mentioned, not -- like as adapt or it's so the towards we summer going be testing Nothing will okay? So, levels. need slower have slightly We might going the off spend that getting then are but we Sid 'XX. -- and last less the go, we will keep a quarter, to okay, the media heavier we keep we backing part, prior at to message as baseline QX now, end

Okay, got you.

answer that your Does question?

come sometime from heard as segment, back year will that that there messaging, are will or major I it's any that customers or platform that that your product sort or you’ve later Yes, improvements things is you surveys the the Intelligence but mostly introduce? more do next on making about -- of significant are And in you it does. gaps Direct this back then you understand platform there the

adapted think George, weekly a we’ve of some gotten around enhancements deploying hand feedback we’ve sets to already almost basis. I we've been the of we Yes, some the feature or -- on are

go connectivity features what we of we into that’s in certain Radio. which with issues like terms of use this would investment actually helping enhancements of updates, there that. we rolled drive now were of platform I better some also they the we that do what our features, for to the call, including serve us and But are more already our we’ve with Android rolled using early users what mugs, of integration are things want and We've out would But getting closer those Now to users out on parts customer. integration RunSocial, to are thought in multiple unusual capability to -- squashing and compared Bowflex Feed.fm we on, where acquired.

with there -- we the our terms be the few within in as other itself. of and years set of compatibility platform almost feature will a well features, product the throughout as routine products, breadth both as next So as the expand matter

And quite a some of expended that. there's So alluded on work to, going being bit still there. as capital Sid towards

Okay.

feedback out we constant their just daily can to get, it's of level we users. of the used or comparable. how we activity, the out, many I get mean, thousands it's just minutes level Intelligence, working hours they’re they’re compared George, working Max people, see what not had many mean, of of I information we to satisfaction. before what how Yes,

is artificial back us the goes bring levels things that Bill terms that but also into talking that So need helps we market. to fine-tune our intelligence, next about to the of features of in

price And tested Intelligence, Have you you've different price any with then point, been about points? comfortable still feel last you on the what charging? do what Okay.

price different research pricing sits tested going compared not where where We’ve points. to We We we at. very set it did quite feel of competitive now. bit the it's our a market into

experiment our a but pretty trial common to price We bit the we’ve not seems be any with which approach don’t near periods little points. going may a future. So point I in the price tested anticipate changing industry, us in forward,

Okay.

Okay. it business mass. And how is In press then me is of the inventory your question business. you isolated Retail is on and through around much just mass? that release, remind one can there Is you your the highlighted Retail issue that --

Retail business question, The mass other through channel, largest mass was retail. And what question, the part the the is of part sorry? of the I'm

it's web broader, wondering just everything if you was and inventory specialty understand part, and largest -- seeing issues I if if I -- what about the else? are across specific but more the it's it's

No.

and we expectations. No, combination I of I to, about comes this the back think think what around talked

-- think number as partners the a retail that. quite that strong, think anticipated sell-through of we sell-through though and our I really both, this was well meeting stronger not had we of as thought we'd even even result is I

Okay. Thank you.

Berenberg. We will Brennan hear with Matthews next from

my for question. very Thank Hi. much taking you

Brennan. Hi,

of us takes of you're of then got product some kind you’ve half some not about maybe you could higher lapping well this kind first kind know of as year. the of I know platform ask wanted through of the inventory. I last subscription giving puts but through higher the as gross to kind I guys are walk new at year, the costs and you some of first least guidance, just if margin. any but that

how So, on could when I our about may should it you we to give us information be just mean, model? thinking any comes that we more

will things margins will -- For I I I sure gross mean, can I QX any you revenues QX. just can think XXXX, have on what in obviously with Brennan, pressured for be on based sure you I’m -- kind give of not through specifics, broadly, just you down,

subscriptions seen overall have completely then And as of kind doing had more consumer I and out any -- pretty on your well. that type Fitness competition fitness? strong, that’s No, you've little demand as budget model bit gym understand. platforms Okay. talking impact but for home club growth, think just Do Planet other I I'm there, about the ask also gym know you not on the wanted just to I subscription pretty a far really I been

the still month. the gyms in commercial high-end would budget seeing seeing There's good solid is $XXX over -- in or space and premiums level low it where growth correct, up the also it growth data are be home to if We and the a subscriptions are a definitely we single-digit year-over-year the market. industry is the go still gyms

the also You to do gyms. are have And space budget almost on also those say generally product, they that, segment but know, there's the to home middle home. to will people struggling approximating a a all. who a some but high-end don't the just they XX%. more home have we do, have bit got would gym, maybe And limited, want the beat a know last between that some the equipment I go will there's we at that obviously at was home. is time across it equipment sometimes it's general little that convergence between and But the more and What of that’s people activity more good

activities of outside the doing home, developing the that, and and transfer gym there's realizing the at do industry there's on -- that all between that or how actual So one differentiation much commercial keep track are is a of partnerships not you so and platform. in of you

So an indication of converging. that’s how all it's

Thank much, That That's have. sense. all Okay. guys. makes you I so

Brennan. Thanks, Okay.

move And from B Riley, we Eric Wold. will to

afternoon. Thanks. Good

Eric. Hi,

Hi, Eric.

referring A few points you Is well, any of of -- ramped that stay of product. matters, static? that of there pricing the have or changes kind to that discounting test the kind the year levels on what up for does in answered of or jump-start I been some the the into the kind in are guys, follow-up price around, on kind been questions your, kind discounting ones baseline on question new of that, guess, asked. you one testing

web the the of more have subscription the create the discounting certainly need at have. conversion is side, a on we promotional level, we a tried as folks answer. again into some our deep, so of some pressures then bigger contributor the product We cetera. on that do not coming to that promotional funnel, more itself, alluded as we reasonably discounting normal deeper pricing demand did pretty say funnel, Direct deep we to top wouldn't is be going around, to product to, But occurring once the traffic, in I still of but to ones the speak. more have and that pricing margin mix, and are started Sid have routine. demand that’s rotation the have we of our et We a We the challenges awareness really products, is good see in the small top to

kind mentioned the of at out Okay. or to it the part you think guess dip the it or the to QX, you in normal. year, kind the up I be expect the is last overall marketing should coming we marketing down spend, how kind more back trend about expect quarter that ramp to or to that's QX, should comparable little just end or that the is of than of toward And up going wise? year this we of or during of started then of Do a bit year

as of would we the marketing spend the Yes, -- improved in to outlook. bit expectation half. back the would messaging little you're return going the a we I with be get that that that revamped getting kind the on say to just get it's

would I the answers lower, is top would that be know don't line but effect spend on your hope the better. I that if So, the that question.

that, what's all of messaging is That push an that the guess, do season, kind right sure the effective long lastly, the you've to the get does launch, or coming through process of of [ph], to I guess modality, the that I cost, -- holiday how other to before make And kind want try that to happen digital Trainer [ph] do and by XXXX? of be Max you that? expect help. kind onto to you And more walk other to there it will about timeframe necessary could platform maybe something taking into got think you this modalities

the other But Intelligence messaging, at also to Yes, the platform its beginning this Max messaging perfect move we be need together Max the in parallel the expand into to that we of throughout and desire Retail that with would well more relationship mean and I and compatible it Max lines same a Further, utilize and this big presence to that of year. path us is most modalities we on Intelligence it definitely the gives our other if product important But theory, we talk Company in that space around the market we and that with Max in as to we path it's where think perfecting on that be to message are Trainer, that May and or expand Intelligence modalities call, product. Max year, should more have -- are I of year go Max our growing task. modalities ultimate with. we this our because additional share to would able currently digital coming probably our have parallel where we’ve pretty say. will and is some options committed we time, also we path And us to for the in the the which having Max success anticipate I again, about will Intelligence platform would are products say Intelligence allow

to you that Max QX? was, it just then in relaunch Would on fourth we pullback quick on back into if holiday it kind a a a the of with the new and Intelligence, are pattern the last with you that, Okay. follow-up similar kind this -- modality recall year, year season in launch. the Trainer pattern spend Max a And around into quarter launching kind I expect of pulled of going

it's for I think the media more soon follow say. to pattern. to our desire It too would us normal be

back QX. the find would on, now identifying have more like in perhaps to historical the heavier we Assuming messaging good about seasonality, continue all too media would which cut say, goes in adjust say then path goes as it's still say but spend in to work But right we I our not well with on with would far the spend. our QX, messaging testing to normal and be year of that we as works, we will that probably our doing are more go we'd terms soon and to based

Thanks, guys.

Hello?

you else? did have anything Eric,

Thank No, set. you. I’m all

Thanks, Okay. Eric.

Okay. Thanks.

with next Aegis. We Rommel will go to Dionisio

a To as going Good than areas, much. of going product impact now. an talked the basis pace a forward? it's afternoon. company cost more and innovation, term your probably -- in but such you've realize over cuts very Thanks I cadence to those last just or reductions longer decade cost different you what hit on been extent will Bruce, about several innovative

is were the would we digitally could the across every and transforming Max company let's how even including say, and we forth, -- itself basically force say there company do the implement well. we to part our we become internationally months more getting we and we level we the acceleration. could reductions so given and over the and in I that ability cuts, that world did support made those ensure -- affect work where as XX Intelligence would where that, next of our product resources focused going were Yes, priorities when country none of to the to that tried things the we the roadmap product need introduce realign these looked products -- the next on say development of schedule. cuts and I'd to at development

part applied we the criteria one company. And that the of so, least that that at was specific of to

of with also two also the roadmap, but at now. years I three products we this Platform, we from we is when And and both Direct know or scaled, Retail, way -- that yes, each think term, need that sort look products of Intelligence some X-year is term really Max delivering in aligned the focused in from on the years product year new longer still I new longer it's and think now

which of Rommel, we decided what heavy company the the cetera, product reassessment there to where an us the everything and didn’t profitability how the impact, give What an mark looked we redeploy chain we do we us had, that the in those ones forward. a had are supply essentially, ones return. went do, et resources on into at, that through give through terms we And about of biggest to we going talking idea priorities and meet I'm are do ones okay, you looked can to what exercise revenue from went and okay, give technologies, all we at the priorities that that to key and

we what took part we even So into could exercise. the -- of started us through probably it that’s actually went that went in do decision what QX, but of process It making we this year. finding

much. Okay. That’s helpful. so Thanks

Okay, Rommel.

back things At remarks. to like time, for closing to would Bruce this I any turn

everyone I day. and interest earnings update to in great thank forward you. a your to providing everyone hope call Nautilus. our of for business a I in joining months. Thank another the good. today on Very in the has We quarter call our look continued want few first rest

joining That all does conclude us. conference. you today’s Again, thank for