WW International, Inc.

Good afternoon and welcome to the WW International Third Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Cori Kincher, Investor Relations. Please go ahead.

Thank you to everyone for joining us today for WW International's third quarter 2021 conference call. At about 4 o'clock p.m. Eastern time today, we issued a press release reporting our third quarter 2021 results. The purpose of this call is to provide investors with some further details regarding the company's financial results, as well as to provide a general update on the company's progress. The press release is available on the company's corporate website located at corporate.ww.com. Supplemental investor materials are also available on the company's corporate website in the investor section under presentations and events. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the press release. Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings of the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today and, except as required by law, this company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Joining today's call are Mindy Grossman, President and CEO, Nick Hoskins, COO, and Amy O'Keefe, CFO. I will now turn the call over to Mindy.

Thanks, Cori. Good afternoon, everyone. Before we get started, I want to give context to the announcement last month about my decision to step down as President and CEO of WW after the first quarter of 2022. When I joined Weight Watchers in July 2017 to lead the transformation of the brand, I knew it was an opportunity to have both a business impact and a human impact. Our purpose, we inspire healthy habits for real life, for people, families, communities, the world, for everyone. To be the brand that can democratize wellness for all is truly what WW represents today. We have transformed digitally, creating a holistic weight and wellness ecosystem, expanded and diversified our member base, and leveraged the power of community at the core of all that we do. I am proud to have built and led the extraordinary WW team through this transformation and the challenges of the past two years. But what I'm truly excited about is the launch next week of the most groundbreaking food program innovation in the company's history. An entirely new science-based personalized program for efficacious, livable, sustainable, healthy weight loss and overall wellness. My intention is to lead the company through this launch and the winter 2022 season and then provide a seamless transition to new leadership. This has been a profound experience and I will always be part of the WW family as a member, an advocate, and an ambassador for all that we do. And I can assure you that the entire WW team shares a common purpose and will carry on the impactful work that we're doing around the world each and every day. But turning now to our third quarter results. Revenue was below our expectations as digital growth did not offset the expected year over year headwind from the workshop business. Year over year digital recruitment trends softened further from Q2 levels bringing our total end of period subscribers to 4.5 million, down 4% year-over-year, and digital subscribers to 3.7 million, down 3% year-over-year in the third quarter. Traffic and search continue to be under pressure, and we believe this is an industry-wide trend for digital weight loss programs. We are deliberately adjusting our spend, putting more investment into the fourth quarter where we believe our new marketing assets will have greater impact by amplifying our exciting new food program innovation. We managed our cost structure effectively to deliver an adjusted gross margin of 62% in the quarter. In addition, we executed on our G&A cost reduction plans, driving savings ahead of our initial expectation for Q3 and focusing our resources behind the initiatives which will drive a successful 2022. The shift in consumer behaviors around weight loss prioritization over the last several months has resulted in 2021 being a more challenging year than we anticipated. However, it in no way diminishes our enthusiasm and confidence in our 2022 food program innovation and the potential it has to drive significant sign of momentum in January. the time of year when many people focus on their goals for the year ahead and reprioritize their health and wellness. On Monday, November 8th, we will be launching our new food program globally. Because we believe this innovation is so important and powerful, today we will be providing you with a preview of the key program elements ahead of Monday's official launch. In addition, To give you a behind the scenes perspective on this breakthrough new program, we will be hosting a virtual innovation event on November 18th for analysts and investors. During the event, we will share more color on the development process, the science and insights behind our new program, and discuss how we are bringing it all to life. Details will be announced in the coming days. As I've mentioned previously, The cross-functional, multi-year effort behind this innovation was the most comprehensive and well-executed that I have witnessed since joining WW. On Monday, we will globally launch our new food program with truly individualized plans that are custom-built for each member. Each member will have a unique point budget and their very own zero-point foods list based on the foods they say they love and can't live without. For the first time since 2015, we are updating our proprietary award-winning point system to account for added sugar, unsaturated fat, fiber, and additional nutrients. WW's team of registered dieticians and nutrition scientists developed the rigorously tested modernized food algorithm to reflect the latest science in healthy eating recommendations and nutrition. And for the first time, Members will now be able to earn points for practicing healthy behaviors, enabling them to grow their daily budget by eating non-starchy vegetables, reaching a daily water goal, and exercising. We have purposely created a scientifically advanced program that puts our members front and center so they can find satisfaction in adopting healthy habits that are livable, realistic, and sustainable. As part of the onboarding assessment, each member takes to customize their zero-point foods list and personalized budget, those members who indicate they have diabetes will receive a food plan specifically tailored to their unique food needs, guiding them towards foods that are less likely to impact blood sugar levels and consistent with the American Diabetes Association and the International Diabetes Federation guidelines. We believe this is a powerful program innovation. as research has proven that individualized programs work in helping people achieve their weight loss goals. During the six month clinical trial, participants experienced clinically significant results as it pertains to their weight and overall health and wellness. Not only did we see clinically significant weight loss during this time, but we also saw notable improvements in overall quality of life and well-being decreased hunger and food cravings, and improvements in both physical activity and adoption of healthy habits. As always, from the innovation launch through late December, our primary focus will be on inspiring and onboarding our current members to the new program and experience, building a network of millions of WW members who could advocate for the program and create excitement during our winter recruitment season. We are also aiming to start building momentum ahead of our fall-winter campaign with targeted pre-winter digital and social assets launching prior to December 26th. Food program innovations have historically been high member recruitment catalysts for WW with the launches of Point Plus, SmartPoint, Freestyle, and MyWW all driving sign-up growth. I will speak more about our winter season marketing plan shortly, but first I will turn it over to Nick to discuss our operating performance in more detail.