Bowflex (BFXXQ) 6 May 202020 Q1 Earnings call transcript

Good day, and welcome to the Nautilus, Inc.'s First Quarter 2020 Earnings Results Conference Call. Today's conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. John Mills of ICR. sir. ahead, go Please

Officer; afternoon, Participants to Nautilus on Executive Chief Barr, Good to Special XXXX CEO. the are First Conference Chief Financial Konold, Aina Call. the Officer; Bill everyone. you. McMahon, Nautilus' Assistant Welcome Quarter Jim and Thank call from

mentioned earnings issued includes Relations Investor measures X:XX comparable the non-GAAP page. earnings release today Our reconciliation to p.m. may of and financial the Time release nautilusinc.com, today's from downloaded on was a most the measures. be GAAP our at call Pacific in website at The directly

accompanying For we during call in call, Nautilus today's safe that ask call, on full we so presentation. have make remarks. would will our harbor prepared statement management statement. management a Slide to everyone forward-looking presentation like refer harbor this is statements, remind and our the that safe during will conference And the certain read X that everyone their I to

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And Nautilus' Mr. Barr. my turn pleasure with CEO, Jim over call that, it the is to to

thank Good you, everyone, Thank call. for and afternoon, today's joining John. you

support another, and facing our customers, proud a and came our and communities of dramatically COVID-XX higher XXXX the of of their challenges. demand Our EBITDA first incredibly as first of for orders. agility of times realized and growth our during quarter. families, fitness XXXX, achieved I'm good stay-at-home moving a keeping of Thanks the since We including captured lowered one comp our to unprecedented revenue operating into quarter exceeded home quarter team vibrant out positive primarily quarter started a as how together turned to stronger stronger-than-expected organization series to our business XX%, due much forward and third our we estimates. results, the products, our expenses entire

first our to of pandemic, and During and safety the foremost employees, be continues COVID-XX the partners. was our and priority customers

in implemented in jurisdictions continuing were employees from orders customer we worldwide, the government home Nautilus operates, leading where provide work Before care. to place policies for while most our

Our open And of A receiving been on and entire company's priority thanks and organization for our worker our guidelines safety distancing social to with and remained and work, shipping strict distribution customers' health we've to for time top customers their serve hard persistent meet is both need. of centers protocols. most agility, focus our during able needs. to

continue ability demand we benefit and for As our surging fitness we quarter, the from the enter at-home to company's second to respond.

well-recognized our strong our flight long-term In to brand our a crisis, was were are just and as brands and first It offerings our quality in needs. the portfolio brands, and customers address of us consumers serve reminded to now our Fortunately, breadth a time building. existing we the we payoff look fitness of reputation to saw brand investment their enabled company where omnichannel and of those both our for capabilities time. about have and who quality learning product

Retail, equipment read Our of how both where and strengths greater price primary prefer. portfolio types could of cardio gave can channels, product our points quarter. offerings, the both sales offer to and outstanding individual to of channel And allows of time. near rapid the and featuring Direct variety the buy response channel Retail Direct changes options the so a real new respond evident choices. strength customers trends and permits And they and when, in that during The first market. We fulfillment multiple consumers us were

fitness. to we of right to team, in our the products and company remainder for XXXX, back home forward we bring well brands leadership with the are believe Looking positioned position a

on example, an Retail introducing we'll product our and more excited strong channels, Direct offerings for information quarter fall we're in and be both provide of a in lineup to these the new second As call.

to quarter our very by results Turning channel. strong first

the were including sales fully Bowflex, since driven in and Max sales Our connected ICX XXXX. time increased strength our first Trainer. Bowflex to Cardio Bowflex the declines products, offset sales not declined strong by Increased demand for primarily year-over-year SelectTech continued gyms. Schwinn bikes, home were as fitness the for Direct enough our net product and CX

on other wanted weeks I spike In conversion season increased holiday of addition versus the statistics March was flavor XXXX. positive XXX%. bowflex.com visits, visits traffic, its over month bowflex.com revenue versus exceeded highest the driven all March, since The was March last which bowflex.com, you March, In demand. demand the XXX% quarter. our On organic revenue by volume peak achieving comp few for some nearly full in March the of give up XXXX. spike second direct December grew website, of half our to to first of bowflex.com and rates to in XXX% XXXX, share a the primarily typically in revenue XXXX, And

an so product away the the wanted customers give similar compared Totals XX was all was April. of saw over full March the line it date, of produced of And collected XXXX. our already to in dynamics. of exceeded traffic to March, entries. in XXX,XXX Xx highlight times site In first XXXX. up fact, in our all to Max schwinnfitness.com revenue for -- high. when trying us gave To This the revenue month of giving We this we've website to our opportunity during Our has back by top terrific our

through demand. also strong, without monitor our channels, last pricing most and and center reducing then generated pulled higher Also it, spend popular holiday we've and We the March able sufficiently competitors we of on were on than demand sold of social not products December own XXXX's levels. the television for on way to increasing strong as strongly generated as as strong our our level Call overall digital volume. half day peak ROI our advertising some that per spend. was focusing worked demand operating ad The holiday revenue XX% recently. typical and back we above at on selling our or sales reduce promotional We

as was primarily Our were connected begun offset XX%, commercial-grade Retail sales. Strength strong with driven sales closures demand sales ICX Octane to for partially declines Cardio from by equipment equipment. by in driven product affect strength growth SelectTech strong and adjustable cardio both coming sales have by the of Fitness up and Schwinn segment weights. fitness gym bikes Bowflex XXX

DICK's day and Sporting and our was or Bowflex X,XXX strong retail we when Bowflex X due other single store on a Although hot a and numerous units seller temporarily SelectTech pickup COVID-XX, including focus to in and contactless on sales partners, had fitness containers strong experienced a curbside consistent retailers coms platforms XXX fueled pickup. e-commerce cargo closed locations year-over-year store Schwinn increases have Amazon, through Goods sold products, by dot XX retailers their day.

retailers for establish significant had presence. also partnerships our we've the with to products whom with used a not We demand stronger increased historical

after these COVID and Overall, the lower Once time. we continued remained an bucking was and the cardio for the strong has over had business. see their orders to demand the winners on were demand equipment the of the JRNY, how alternative both since are of digital change personalized With for investments, products habits stay-at-home throughout to fitness strength quarter, this we issued, see ICX such as January. CX using able and for as the Bike Demand strength seasonal of trends for the typically launch our the year accelerated. we're has our and unprecedented members time gym going to our activities. connected further how our bikes sides

XX% these XX example, healthier are that to XX% preceding live we people just JRNY more period, progressing were per and interesting comparing often, also machines. noble are These not we a seen using lives the And spike we've nearly have people mission and of Workouts more XX% time the their burned seen X%. are on seen Members user days energize stay-at-home stay-at-home. after For issued statistics are calories showing metrics, working of XX in out per saw through our -- trend, top of underscore more but fitness by the that to we user. days a only longer harder. that the first up us we've in per XX-day XX% helping orders significantly user fitness. at-home downloads in are On spending

events mentioned of key model the I Previously, approach the there for particularly our to customers, but some benefits has benefits quarter. our are during highlighted that were omnichannel business significant

aspects, offers very quick product in decision-making and cash, Direct mix spend media many including pricing, business conversion quick permits very and Our promotion, allocation. to

our our customer establish a direct quickly to more experiences, value. can enhance we fitness and lifetime grow base better Finally, personalize relationship

can normal reach and our they enables Retail in to our experience us the store. products In getting Our expand consumers way choose. consumers to channel footprint, products times,

to enhanced We sales. is at partners. retailers their capabilities quarter, This transformation retail store this and going many online digital to accelerate pivoted pickup believe

growth transformations, be a floor have to this price retailer lasting good company a benefit drove former and As could long space believe in-store will the points. them, not will typical it only by for I run in but who be our less digital as restricted

quarter supply of fourth products in quarter manufactured. As COVID-XX our in many and disrupted call, of the China, XXXX, our mentioned earnings we where in early are the first chain manufacturing

to full are and next now Our capacity. seen near recovered has challenge logistics unprecedented responding mid-March. China in the unforeseen manufacturing and and most nearly we've demand since fully been The are

our We and our is leading chain reducing many to expanded efficiencies. of products, backlog. supply have We very manufacturing to work our continued for improve hard which production

seeing However, caught the getting we quarter. are our could for prevent up on continued demand of products until from backlog full the third believe we certain beginning strong the us fully

impact margins. We of the address talking margins. this are products as proper to balancing as more maintain when possible about many cost will Aina expediting also

I'm during company quarter. how Overall, pleased at the very our first performed

we company. achieving we short longer-term of This what seeing are our to remain are capable doing best and on deliver year, results, our run. on the We long transformation while the short-term of focused in

address need the We improvement. that areas will continue to

we continue the last business earnings decline issues address the to call. underlying in We our our multichannel Direct will of that articulated

not surge in ourselves. kid have not disappeared. issues will demand mean current does The We these

will merely most us hidden, we and from the relentlessly sales future the surge our of are not to distract short-term Some company. allow them. And we importantly, attack long-term addressing will

is process ahead expected. planning strategic Our as moving

vigorous of help and will insights diagnostics, garnering select opportunities. growth sources are multiple drive through attractive us focus our the which most We

an to be and multiyear that employees As I plan on strengths and our anticipate in we develop late existing transformative this will we vision those and expect over previously, long-term that will time plan and quarter. sharing exciting the investors. third lead built have indicated we'll vision to to strategic insights-driven, that

our and our year, industry. In are glad important the have welcome. to the company, is nature strongest. and normally For our who new understand We're seasonally It's is the to to quarter those weakest business typical seasonal second a the quarter investors the of you. fourth

depending The the first to CFO, next introductions. will like I'd and turn over quarters that, quarter, third our the product Aina? With to on new to call Konold. strongest now Aina fluctuate

the that's A you, QX strategic and in to versus unfavorable both China pandemic. product drivers decline, total Retail profit rate primarily we in the Retail fitness, sales products XX% loss year changes due products negatively mix margin And due margin we were I'll were chain XX% results P&L And gross also margin order are QX not begin as $XX total by higher sales to Trainer of were the higher to no Jim of back company prior noted near-term the by primary home last costs for the our that tariff shipping several better cross-functionally XX% decline. in satisfied Good our segment and were a in affected landed year-over-year. the QX XXXX. towards segment Gross sales months essentially sales, with last comparisons year by the the Thank last COVID-XX. these everyone. Certainly, on regards XX%. Direct and product we're to to supply the for earlier, now Net by year, our XX% a sales Quarterly The are caused With and brands, tariff strength in from expansion versus working subject to to path and COVID-XX with gross expedited landed reminder, of segments than as margins. by this to shift import Max in resulting higher-margin to year. decreased flat year. had Jim. and a driven rates sales speaking X.X% to afternoon, implemented the disruptions create trend gains for versus future. costs, decline been last operational XXXX continued in million, product sales

XX% XX% compared by of costs. sales this XX%, prior the down sales million areas net to in were of compared net X better XX% XX% of $XX or reduction million last spend. were $XX million net or drove net expenses media $XX than last and in expenses XX% The year. $XX sales $XX declining to sales marketing Operating year year in million to Selling decrease or year. expense spent was of or versus primarily on last million $XX advertising million year. We to

improving lower quarterly As to sales grow QX pleased mentioned our previous calls, on we've media ROI are in able that are and our in on we we focused were spend.

maintenance net million lower flat sales or expenses than to loss compared $XX sales profit net sales costs loss year. or to as X% X% expense a reductions were flat. year, development of and primarily to was net year's better administrative X% $X.X our million driven million, improvement, of million, of Operating platforms. or digital gross driven $X.X at related primarily by $X.X year this of last and prior $X was expenses to XX% by basically X% last General compared Research were million down XX%

While that expense than pleased our have reduced meaningfully operating more recognize discipline. we to growth path profitable we sustainable, to are loss, requires the

was continuing million $X of million recognized income from a related earlier, million the EBITDA $X per or $X I diluted $X.XX loss $X.XX. Net share per $X primarily year. to from continuing CARES by increased benefit share to or first minus million loss compared operations improvement last tax or that a loss last $X.XX compared million reductions Act the quarter. operations $X of $X.XX or per in million to compared OpEx million was $X.X to of Income driven share. year's was The minus mentioned an $X was EBITDA the diluted and diluted

XXXX. Turning the now QX increase Direct's year's QX results to QX was in QX first This performance comparing million, of this segment. $XX.X $XX.X from were with segment sales since X% Direct by quarter XXXX I'll up year-over-year be sales XXXX. Net million.

A fitness which by driven by fully by declines Max earlier Jim, primarily in Trainer. were were sales higher not X%. strong Cardio by enough declined connected for mentioned offset XX%. grew As to bikes demand strength, our

a versus to product year, product declined million. rate in Segment to customer landed year. below gross contribution approximately As backlog XXX% of was up $X in mix and March was XX, was last Gross costs. XX% to $X related as direct compared driven media last XXXX, driven improvement The unfavorable million, a is higher estimated million million. reduction loss by $X future spend our sales primarily $X margin be profit by to of XX%

Fitness the sales by as $XX have products begun Retail segment. negatively year. by the commercial-grade up million, to Octane to now driven million connected product Schwinn sales ICX last of sales Strength closures in XX% Net partially equipment. were from and sales were XX%, cardio Turning offset $XX declines affect bike, up up fitness XX%, were gym

XX, than expenses, product landed was $X approximately We costs. customers primarily sales was of sales for margin operating XXXX, by improvement rates. million for down XX.X%, disclosed year. higher sales margin reductions and company to by the Retail lower last March sales. by $X offset gross of a sales. totaled compared are of loss mix segment and primarily Segment XX% driven sales net from Gross net partially total rate total higher driven net year, XX.X% The unfavorable last whose contribution in Retail $X was for XX% estimated Amazon.com of QX company future In million. segment greater As the accounted Retail XXXX, million

did the We of to XX, at balance XXXX. million had of ended of XXXX $XX Turning decrease year-end $XX year-end. March our of typically sheet year-end We credit million $XX compared lower million million now QX than to at and But QX as surge available $XX debt debt as XXXX. cash on cash to levels of million March $XX with inventory to compared borrowing inventory consolidated of $XX late XXXX. at are Seasonally, for COVID-XX and the unplanned million million, the further Inventory $XX related was levels. in end at facility.

get our we to are to be to reduce shipments working are in as XX, million in hard stock Jim million fully we lastly, capital As to and continuing the payables expedite versus receivables. expect typical Trade of trade March stock $XX payables best-selling $XX for expenditures products backlog, of $XX back capital don't XXXX, seasonality. back were in mentioned, result million million beginning at to of our primarily the but QX. Working until reductions XXXX. XXXX, million $XX at totaled compared And $X year-end driven year-end by totaled and

our capital range XXXX. the to We year for of are full $X guidance year million reiterating full $XX million

with the Trainer business for pleased are have products. margin have lower and do at-home like we bikes said, and products pressures have from to surge meaningful in sales away We moved the demand the as the customers how IC to modalities, margin momentum Max strength responded fitness. higher-margin we in the That

lingering also managing meet us chain, surge in of we on as the demand. are the effects We to COVID-XX our expedite seek through supply shipments requiring to

profitable in our imposed mitigated every be the We know pressure XXXX sharing by cannot price to forward to half progress path expand that manage look margins expenses margin that And we latter continuing increases. tariffs growth Lastly, the that always while requires the to were sustainable, tightly. us quarter. create of to

for turn back the to Jim? call over like I'd his to Jim Now final comments.

Aina. you, Thank

economy. strong start, are COVID-XX a of because of good lot uncertainty carries a and global to off turned results we and the XXXX While remainder of the in

our may not progress. times show I've linear our many transformation calls at long-term arrived, times quarter-to-quarter in said I've As since

we the of now our business, recovery, The have factors most consumer the also Octane majority at not quarter recession the exposure in duration comfort current of importantly, Though will and guess tailwind that our the of shape and which the the clearly driven impending part return our seasonally rate difficult to by space of commercial through company. the is of gyms of to brand. duration are have predict, softest anyone's level impact the entered And fitness year. the and the with perhaps We them. very to subsequent people

their responsible incredibly has want who dealing employees the This I Despite own work in business. our in their for our stay partners fit to faced, and as proud and the for them. an first and ready this quarter help supported our I'm we all best challenges thank through their to personal are while beyond. unprecedented for to delivering challenges, and showed of healthy the period us stands during time lives. sincerely results crisis the Nautilus do very and world continue to our of customers people who, possible people part and been trying with our

want track to loyalty Finally, I analysts to of also the We're for value of to Nautilus. questions. I to we lost and day and our Operator? their company. thank for destination your every open assure and enhance sustained patience to shareholder growth investors returning our the I'd long-term all hard you to haven't to up working very profitability. And like call now want

[Operator Instructions].

of Swartz is The Mike first question from SunTrust.

maybe Jim, you. for

have a prepared company iterations quite at to back some the had talking first the backlog mentioned think end saw remember actually think with go time, one I I businesses. your can quarter you XXXX about the in backlogs Trainer where to some and we'd backlogs both multi-month I of we occur. for Max remarks, of the It's in

historically what in tonight, demand? of on you've stronger so $XX think, that you frame little like? a typically gave around seen the that provide a And numbers reference How basis, just maybe periods just in looks year-to-year around that backlog. does maybe where look I or million So

have admit time. it, at I that's -- have over I I'll I'll question, admit, looked backlogs the and don't to I haven't I'm have Mike. a great appreciate long-term to --

kind few We problem Bill I that. end I we already get to as of weeks amazing to this just And had surge last the good that were the have, may have course, of in have, in since lost March. refer And March. has periods especially of it's to a because back do We a so to -- know of slowed we due weeks we our bikes promise the down to way in production in we on lost some October. -- the that launched China delayed couple of not COVID. all

go but catching took weeks, demand just became to continuing doing still XXXs huge to most our we we just then parts to weren't and people get some to of up, training and So were bikes few actually that. theory strength-related because we from lot especially then was the there. anything country. more got see of weights, resistance end outside the this And also the last cardio They could do But off were in the restricted the difficult. then the and a

we that. saw So

you the maybe comments, those of So after do significance? historical want to comment Bill, on kind

Yes. Jim. due to things don't that for front is impact little but I crossover you, in other Mike, normal than us. higher this Thanks, transportation, would times normal I the tell have numbers of many it's would the backlog shipments, what that and backlog happens of that in timing be bit to have exact me. a

that as taken a And we means? it look product in on Okay. of talked capacity, color -- about, off Are what give us bowflex.com, seems increased that just terms on you've website. at like you the you the little some maybe just of some

turning when off is Or up So website? slower at is lines? I for of the kind look to taking I am just capacity that, of end-of-life the free process maybe things trying -- that normal it you're

we're to start and what I'll ask doing about talk I'll Bill with supply with our Well, website, the chain. then

orders. we for on to -- bikes, So the we continue website, take example, for

And to we're a XXXs, demand, promise things Bowflex don't XXXs, the at people for just today some even while point, slowing the but SelectTech period bikes. On to the these we disappoint be seem periods. wait want to longer XX-day they're on promise a people. like bit doesn't of little though checked the a just it that, I and at think kind have I down

button, orders we're feature is product When taking just have like the Notify on we going So which even of many agility. of to We get on a we've example these. said to that Me that didn't another but substituted so a website,

so And those those. see we captured taken who back an people haven't expressed that those as reach interest. we've And stock, to for demand, into coming the we'll we but out order

other is thing then that our of products happened and most sort selling. down we The worked the way began popular

Our CMO didn't We we this of point way, said had could period but some Bill, the but you sell we everything, with inventory trend. almost equipment doing years all really hadn't to able them maybe kind of sold take took the where this any tack and greater you're on floorboards. that we we supply of advantage of were we at to actually give capacity? chain equipment what wise to wanted that way able just advantage hadn't people where and several of particular we out were in to that lots because end-of-life have officially ended life, a sold sell us

significant Yes. disruption QX Thanks, our pretty supply Jim. Michael, in overseas, there in obviously, was chain.

here Jim and QX in as -- year like just our at they half do to comments don't back catch actually we're As normal, be up like product quickly as saying capacity certain the feel have caught as getting process back be were teams back to potential normal to the lines the feel will a been increasing able of there bikes you're us. of and to to bikes is we on help line. what up increasing pretty still capacity we that in first we'll product of the a not in getting but in with okay, But mentioned, getting need up. total maybe on, capacity you we for is capacity, Aina lot have and you that We are Jim for your early did the back like know well, factories, but going his and to normal your we and SelectTech, noted while now were also,

speak. progress in are things those all as we So

multiple when you that partners great this add with. I'll really just their both because production the been And we that, things really to ask have them because the like yes, this. them It's the done to manufacturing been you've is work partnership go bikes mile, relationship off sides times line years our when in way has times answer along extremely seems our to extra that and like to contributed off partners with over -- to building pays add the for like pay a ask and by

So Mike, address did your fully we questions?

is The Dyer Steve Craig-Hallum. next of question from

capacity, coming different times Jim, little a of seasonality have more talked that. it you halfway sort From on a second in quarter. the bit where you talked sit, here. quarter. couple the about We're square trying second through And And I'm up guess of to about quarter-on-quarter. I the you'll I

You'll have, fewer, chain hopefully, supply if any, disruptions.

You've you got a backlog that takes out quarter. into third the

quarter through? there vis-à-vis at in all just went what would really be I we why seasonality guess, the second So any

I definitely, of question. context of the And remember of list year. was when Steve, to I a mention Well, forecasting sort mentioned the great out the And the of rest when did quarter. second it things

we've aware for as so us right. I that our of products. But they're who think primarily haven't to you're mean I strong as well. covered continued for demand you, as long seasonality people see

weeks, I think the of between difference then out maybe and quarter supply-constrained of weeks few more last the bit we a the not became first the inventory is we after the very were little much few first for second that. and quarter

and mentioned. we than in turned don't taking know this as that demand-constrained, frame it's just everything. the into as clear Now we products the say here quarter, say on demand we -- really But we almost quarter, still fulfill as a the that as I'd to time can. you're most more as of way momentum in We're But of a we're at quarter for much the still that finding first continues not supply-constrained as trying we sport basically, orders to can get it. can, we creatively wrong to and quickly least we possibly second saw as are

roughly down that the mean million your say inventory is here? that in $XX So demand first don't the Maybe some and I fair into you some to necessarily the SKUs served have second it with satisfy I quarter to of -- is know your of quarter-on-quarter. luxury

I hadn't on down. sold replenishing replenish quickly as mean and I got plenty the think here things stuff product of right then There's as we're It will part soon. the into Yes. some we had that's while them sold a then and But most story popular water possible. And and where we that -- now be to that. in now. of the sold

then fast through we lot as of way as sold we great -- things movers, while we a to And the is of a went the and quickly out sold can. now replenishing those, which into we're So more went a hadn't clear in actually we we some inventory.

Got talk it. I but that, don't Max you're it sometimes want know time. guess, quite for I to quite relates products, you too obviously about been Trainer year-over-year -- some as has to And much weak specific

it's found mean -- I think level the a might declines of a a these like bit where last feel week maybe a that on little Does we that. that big does we checked, demand reached there's see seem a I over level? like any it's further? now that a actually of backlog, not

pure to speculation it's mean there. found sort whether the of know bottom it's I Yes.

talked you're naturally, people is alluding our been selling what is actually that's organic still they're really Trainer one through to fitness when product. that we Part think we websites of good it's about because the traffic reasons as optimistic I quite a is on it a very -- Max are giveaway shine come did how But light the think about for it's we actually and very, lately. it to to. products, of looking we

on calls this great And technology. workout. behind on some said just before, myself. becomes I've models I fell absolutely I that with It and use our better an of it think, think it's technology. I

so that products, And and a thing. important we're machine on current And for our coaching injecting workout high-intensity more is super the a future technology. like

JRNY so an And there. plays role even greater really

a of margin replacements see -- of it a price, want you're lower not our lot up obviously. with over units But actually yet. bottom help make the trade on not like a replacing invented bit and that, uptick Aina to in the Max bikes a and lot will change life. slightly and the lot absolutely We end its products we're very right high-margin you off a will giving So we're we're could XXXXXX-some-odd lower-margin optimistic close we about and at the of I lot about that things these I it's company high-priced, forever. we that talked things up an little there. things think, That to We of where sold, hope And products line. it.

been can have I it it. about I must be there think good And lot, it a and like rejuvenated. something personally So

That's great. and And then last one for pass along. I'll me, it

I for items last weeks, impacted So customer the several their, a it different for That's mean, preference you, for all? meaningful or pieces you Amazon, to of, sort you. difficult essential the Did it obviously, for of at make for that has quarter any anything me. more

change any did No, anything not there. Steve, Yes. notice we --

the I course, remarks they're of now. in suspect big of are would out inventory it, continue was I'm sell. the in sure where to XXX. my staple, too. SelectTech And as we We not they the And mentioned

the So ability anything customers. -- but decline in and any about we that, their for not heard strong. have remained deliver seen We've demand not has to

The of is Street next Capital. Lake from Smith question Mark

you to in working partners? direct big maybe shift strong orders little in off, you mix happen First more retail bit but talk with backlog direct, what forward, and of will more the rather in and kind your you expect into e-commerce versus shift going of attempt fulfill a than picture. that retail right Can now to people direct about

we One growth a that just was But such there being economics think consumers we've the many And you look direct economics. that's just company first. are things, spend in products ways I if our history was one that obviously. had they when The close pretty company. are possible have the is my time differences as way the the you Mark, net out There requirement, proud that great as there the are personal with to media normal channel that of choose get another a at partners. an that very is actually can you buy. retail really of omnichannel our And economics, And so philosophy.

orders where not the got now, right media, and anyway. we've situation getting we're we're So spend having to a much

growth, channel. want important so to And direct a our to are partners grow and definitely us is preferred we But so and retail with to our them.

We with quarter, as give retailers. So We strategic were to, grow because a But for But based and economics. at product other. want. in need and make to relationship we're look definitely definitely their you omnichannel retail, channel the this on help to -- before make particular able with company, at suddenly was had products, headway to in the We for in business. allocation look also I continue about or think had we to we retailers were we the want inventory some especially going overall they I a a swoop when optimizing initiatives we're want the building And they them and did real that. able good decisions fitness you're some to not that. we we the one

both That's are don't question. happy let answer choose, going we with the balancing we We're our So can two. we're that going the those channels. things. plan forward to a have those I and way And mix customer the about of really really only

at can secondly XXXX? exceeded first then already Perfect. And on especially the And the the strength, quarter? then Schwinn. in looking today? during just full numbers, through was that from you Or that Schwinn revenue the year confirm Is

led can how you're by if that new today? talk kind out perhaps pricing what there for with and Just consumers products? seeing price of was much you about sensitivity And

Sure.

I frame, stats we I accelerate that the kind folks may of where quoted March kind that it it and of late that's remember for great the since me March, frame. on was we can't the quarter first -- But early meetings exact to I week. that week April, but continued was third weekly give it we because just on a second believe every be then passed with late quarter late I have and passed and then off or our quarter, early it website for So they time year, time date that. X Xx number whole

traffic and but basically there. that's where -- is it's that's other mean buying a platform really choice. conversion, And Schwinn there And bike driven the use by an it that we're that give models, then other of you is you bikes to few several a -- I software but use -- we any or proposition can a gotten what $X,XXX, we star real number modalities, mentioned $X,XXX, is believe, a value the we've really So lot to does a stuff ICX could about at tremendous were Zwift bikes. open it's have or was for others the selling our where $XXX. Peloton have of of comparable selling bike, you or times pieces

value that so for and CX, of since the bike version time has it. it, the proposition launched And that we just the been also Bowflex tremendous

great They So And messaging. these have proposition. value our job in it's seem great -- are great a to marketing a done products. a good we have

things buy a clear So to nothing lot growth. is getting reason driven that's There's those and a in that. lost of

on Schwinn say between to digging $XXX not it at those deep like point? the strong we the of orders there's Safe products. is kind price throughout both Bowflex CX $XXX-ish the And product, price specific that Okay. as sounds of maybe strong too sensitivity that this But quarter. backlog on and look much versus

had increase, took call. no the at take decrease the Yes. of we And I mean and a $XX around I last $XXX, price we rate. we in started the course, believe, our time CX saw we

fact, In increased. it's

So got comparable major for bikes you've differences in and price volume. kind at $XXX sensitivity, $XXX fairly with least at no of

winners. at that got we've least range, so And believe, we real over

The question of George Kelly is Roth from next Partners. Capital

few a just So for you.

in step just do back media forward? such to bombardment and of Do way? I I going back that it time you're about the soon? that you getting pull of you just how quarter. advertising need I was the heard more orders, meaningfully all, sort that wondering, being does can think was a of you believe Or First significantly down anytime -- keep for it pretty

great and Direct I of Yes, X the ability great model Direct business I as mean, of the the respond aspects mentioned, business George, the to quickly. question. fairly is

you're traffic getting ton a thing you're other and great where without more seeing investments getting And so that social paying organic digital, traffic are much traffic you're classic getting search, like when media a in way. and it, for so you from

the the as same that things the all competition we and pulled You And everybody, provide volume, to really to seems further same mean I most be the -- our need back. We're you those when much people some media. but seen I -- things. from of back media back mentioned, spend But volume on natural, don't pull phenomenon. pull provides we've not funnel down seeing usually conversion. have

certainly sustainable long great back so probably sustained I definitely And some because well. and run that, able we've point. at pull that's do. thing isn't on stimulate have to a volume the to to know It be still for isn't over it you

be we're day will by to going watch it we back But so And day. in.

things, stocked on tell thing you on come in them to don't you're out The have a is some things. traffic you factor, that's that out these for more and stocked other course, want of when to even pay

your see themselves. your inventory. out inventory the and example, all we than site weeks time, and more they're competitor's for Peloton's So I you to X know, we watch go

all all we're fulfill. back bit our we so things, same pull of all can type demand And seeing because and on we media we're the getting those a still

there going to made of Okay. new to across Great. was if it fits mentioned into And second products correctly, was more remember be and portfolio, your I helpful. is JRNY. then was taken wondering, out were how I enhancements that? I in. to be That's you thought just And about JRNY going question wondering I so And this kind coming fall. products some

talk And is with there And Are so, guess, for about? Where a than year? can I are new we view now maybe, still things Jim, it? there year, there what's this you've you but been sometime less on JRNY? anything your coming

outdoor the workouts when your find we'll about think ways our time, JRNY Yes, off an log And the at We'll main out -- machines for for best over home. you're system JRNY, think I I way helping JRNY. it operating scenario. Sure. to to you scenarios That's also work cover the is machine

the to So that's scenario but those system most products. an that are of now X all scenarios, our is the right kind it's of important X operating

launch when you we everything virtually the runs will so in JRNY. products see And fall,

the digital on of one calls be this in very when some can I've a invest have said JRNY these then piece in the shape. right? it. That later, far products. a had the said, in software, surprises was surprises lot positive So already is to and -- has Well, me get past done. was. And have done came years been here, along that for And never I it JRNY believe the good of of how in it's transformations we I've to it's but company negative I couple had of there, A really

You're never it. done with

one do. out could at world that the that in we other that have XD streaming along at things are goes an probably got a in features like coaching all being else in you we in with You call the longer, add and keep calls, to And being keep or immersive like in that watch on Explore and will longer, continue keeping -- you a But no next that. music that keep doing it's things tons Netflix talked staying like should to and we've to at able personal of it you use keep working interested keep leading able sorts then you of anywhere of algorithmic and to workout, your things experience, the services, that World would of you you I bike I it. research it and one-to-one run JRNY what us the it are, these does do think about we'll number way, a AI-driven seeing and couple have

stay all with AI-driven and led personal whole a fit, with JRNY work bunch we're it out, get of in you but coaching how our giving about industry-leading personal you helping with what that's choices different by So is workouts. to

it experience. the rev the We'll of framework great And plus proud better. that's rev -- right going we're and a to great Everybody equipment now, plus stand competition to make experience great industry So have is to going but it, are. for still. continue is great software And content not we're that equals it. we to the where

time which Aaron question, more Partners. Martin A for from There Partners is -- of A Investment is one

XX% more It's the from revenue Are line there Aaron downloads. JRNY? of data there terms item perspective? can in What increase yet give else -- us to you there JRNY? any talked give AIGH. is You X-figure you a Is us about on ready on in it quantifiable you from us anything a can tell

equipment. there. doing like know not the we're rev It's like sticking on to -- to still with I just just it's it not it. what software going where still JRNY. you been grows significantly, we're And because about much It's Aaron, it's Yes, really base, software like the I really full installed strong. enough have not want we've of overall. with the you're have till early, in the if pieces to is, base think so where you development we it, growth installed need I

significantly launches higher number our had majority XXXX, still of scenarios. do But took fall. all number out our run fall. that maybe products. we injecting having what many this take in Now we'll We think saw of connected last "connectable" you'll And X% one I've roll products I our year. product what that with did That's a with We're said throughout our in that's of the big vast of was, product fitness number our is and of XXXX, said, see higher, products JRNY. we our you priorities -- available connected it before, our connected this portfolio and what fitness that in we with

So more as subscription then that And we'll the numbers grow and installed that does to meaningful, base. report point. base at really we'll begin to as continue business becomes that installed on well,

more, one then And Okay. if may. I

partner more retail new a that that? Anything had with opportunity an before. mentioned you expound You can haven't upon you

There enough know going -- that products. aren't them, but would we've if more ones existing to we like the time. products. the name of limitations, the we not like carried that mentioned would these we're know We been The you mean names fitness aren't there a there one I on and I of carry sporting retailers them. are retailers products, people long of that for retailers, are but retail, -- pitch trying haven't you goods sell Yes. call, enough fitness fitness to limitations love the that would more

But happened what a and in They is in get say, the this that come you so it wish really say, more And do quarter get smart this think com us the these their products." us figured the around sometimes for dot And these these us that get that customers last out when more what you year. we've about and places are [indiscernible] to They -- that some to of we really get to fitness fitness And happened them relationships foot [indiscernible] I on point. and allows retailers in some one be is say. of meantime. listen And I was to people things floor to what accelerated, in these are retailers great has products?" turn our is had category the fitness to people. going door, websites to come year "Look, next figuring "How out may their

turn This floor back would the like question-and-answer session. to Barr to Jim over I concludes comments. closing for the

the -- Thank business in Have a stay on our healthy. second look safe your your on of months Thanks. you earnings Please upwards. you providing onwards few and support and for and and forward for continued another joining to update day, We support of Nautilus. our great continued with call call. today rest your quarter a

teleconference. This concludes today's

time. at you You this lines may your for Thank disconnect your participation.