Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q2 2024 was slightly above the midpoint of guidance despite a stronger-than-anticipated FX headwind of over 4%.
- Non-GAAP earnings per share were near the top end of the range, reflecting progress in business transformation while managing costs and driving efficiencies.
- Rhyz business segment saw a 32% revenue increase, contributing nearly $68 million and accounting for over 15% of total Q2 revenue.
- New products like ageLOC WellSpa iO, RenuSpa iO, and TRMe weight management system generated over $60 million in revenue.
- Nu Skin was named the world's number one company for beauty and wellness device systems by Euromonitor.
Negative Points
- The operating environment remains challenging due to macroeconomic factors and pressures on the direct-selling industry.
- China market continues to face challenges due to macroeconomic trends.
- Gross margin declined to 70% from 72.9% in the prior year quarter, impacted by growth in the Rhyz business which carries a lower gross margin.
- Selling expense as a percentage of revenue increased to 37.7% from 37% in the prior year quarter.
- Reported earnings were negative $2.38 per share, or $0.21 excluding restructuring and impairment charges.
Q & A Highlights
Q: Can you give more detail about the Nu Skin/Mavely app and explain how it will work from the perspective of a sales leader? How do you balance all these launches with stabilizing the core business?
A: The Mavely app allows affiliates to curate and share brands easily via social media. For Nu Skin, the app will enable affiliates to share Nu Skin brands and access other beauty, wellness, and lifestyle brands. Regarding balancing launches, we focus on back-to-basics principles, encouraging sales leaders to share products they love with others. The new products provide additional options for affiliates to target broader demographics.
Q: How will sales generated through the Mavely app be booked?
A: Sales through the Mavely app will be recorded as revenue in Mavely, but it will all come under the parent company, Nu Skin.
Q: Can you expand on the revised operating model in Latin America and Southeast Asia? What are the key changes, and how quickly can we see productivity changes?
A: We are focusing on three key components: product portfolio, business model, and operational infrastructure. We have already begun tests in Latin America, such as reducing the product portfolio and evaluating local manufacturing. We will continue these tests throughout the year and will provide more details in our 2025 guidance.
Q: Can you explain the updated 2024 guidance, especially the difference in the implied second-half net sales and EPS guidance?
A: The top-line guidance was adjusted due to a larger-than-expected foreign currency headwind. The pressure on gross margin comes from FX impact and geographic revenue shifts. We are also seeing a slight uptick in selling expenses due to investments in performance areas. Despite these pressures, we are focused on cost efficiency and maintaining our G&A savings goal.
Q: Any updates on the affordable luxury launches and how they have been received? Also, what trends are you seeing in demand for higher-priced items and in China?
A: The Peptide Pout product sold out quickly and was well-received. Higher-priced devices are performing well, but other high-end consumables are facing challenges. In China, the macroeconomic environment remains challenging, but we see long-term potential despite near-term hesitancy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
