WW International, Inc.

Good day and welcome to the WW International Incorporated third quarter 2023 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. Please note this event is being recorded. I would now like to turn the conference over to Corey Kinger of Investor Relations. Please go ahead.

Thank you, everyone, for joining us today for WW International's third quarter 2023 conference call. At about 4 p.m. Eastern time today, we issued a press release reporting our third quarter 2023 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 Investors 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 with 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, the 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 Seema Sastani, CEO, and Heather Stark, CFO. I will now turn the call over to Seema.

Thanks, Corey. Good afternoon, everyone, and thank you for joining us today. I am thrilled and gratified to confirm that we have now successfully returned Weight Watchers to a subscriber growth trajectory. a significant achievement and a direct result of our work in reinvigorating our core business. Q3 end of period subscribers totaled 4 million, up 6% year over year. This Q2 to Q3 sequential change is the strongest in our reporting history. In addition, this is our first quarter of reporting year over year subscriber growth since Q4 2020. Before I dive into our results, I want to remind everyone of our four priority areas for 2023, which we've remained laser focused on as we turn around the business. One, reinvigorating our core business through an evergreen product innovation strategy and a modern marketing toolkit. Two, compounding our head start in the clinical space. Clinical is highly complementary to our core offering, and we now have a portfolio of solutions to meet the broad and evolving needs of members. Three, being a partner of choice for health providers, payers, and employers by leveraging our expertise and relationships, and a step program solution that delivers a cost-effective behavioral and clinical weight management solution, setting a new standard of care in this space. And four, building community experiences, both in real life and digital, that will broaden our reach and increase engagement and satisfaction for both behavioral and clinical pathways. We are executing well on each of these initiatives and have hit several key milestones in recent months. Let's start with our core business. Our activation rate and metric defined by a member's food and weight tracking engagement and weight loss progress during their first 30 days on the program continued to trend in the right direction with Q3 up approximately 7% year-over-year. As a reminder, activation rate matters because activated members' attrition rate is roughly half of a non-activated member, and they are more successful on Weight Watchers over the long term. Similarly, our engagement rate. which is measured across our entire membership base beyond those in the first 30 days also continue to trend positively with Q3 up approximately 13% year over year. NPS or Net Promoter Score as a measure of how likely our members are to recommend the program to a friend for our digital business also continues to improve up 12 points since Q1 2022. and reaching its highest level in the last two years, demonstrating the enhancements to our product over the past year are driving member satisfaction. A key component of our core business reinvigoration is the introduction of high-value product features that drive both member engagement and retention. Two examples this quarter include the recently launched What to Eat tab in our app, as well as progress and trends. While it's early days, these enhancements are driving an increase in food and weight tracking, which we know are critical to member success. As we outlined earlier this year, we shifted a portion of our annual marketing spend from Q1 into Q3 to better optimize our CAC efficiency throughout the year. This strategy was successful in continuing our sign-up momentum and bolstering our starting subscriber position headed into next year. We've been adept at managing to customer lifetime value acquired or LTV. So far in 2023, approximately 80% of signups chose a six month or greater initial commitment. This is up from less than 70% in 2022. This extends the period of time the subscribers receive commitment term pricing, therefore lowering absolute dollar monthly revenue. Importantly, Over the member subscription length, it improves our financial return and ensures we are building toward the long-term health of the business. Turning to our clinical offering, while GLC1 medication shortages continues as expected throughout the quarter, we remain extremely pleased with our progress despite the supply-constrained environment. Clinical subscribers ended the quarter at 45,000. an increase of approximately 23% from Q2, a growth rate which we believe exceeds the growth rate of the total number of GLP-1 prescriptions dispensed, demonstrating that we are taking share in this developing market. We are encouraged by the progress and the future potential for this critical and unique pathway. While the vast majority of our marketing to date has been focused on our core Weight Watchers business, We have also been conducting small-scale marketing tests primarily in digital, social, and email for our clinical offerings in order to continue to seed awareness and generate data-informed learnings ahead of the return of GLP-1 medication supply. As I stated on our last earnings call, we see this time as an opportunity where we can utilize this window to scale up operations. We continue to onboard new clinicians up another 20% since the end of Q2, as we are focused on delivering a strong and timely member experience. Behind the scenes, our teams have been hard at work at integrating the Sequence and Weight Watchers platforms. I'm impressed with the agility and dedication of our teams as they become one unified team to advance and enable a seamless member experience. Ahead of our peak season, we will be introducing a dedicated program for Weight Watchers members on GLP-1 medications. As we know, there are different needs for someone on chronic weight management medications. For many, these medications are highly effective. However, they are most effective when used in conjunction with lifestyle intervention. We are using our expertise to develop a tailored program that addresses those needs such as prioritizing a nutrient-dense diet and protecting against loss of muscle during weight loss. We believe this tailored offering will be a unique differentiator and competitive advantage for Weight Watchers, whether a member receives their prescription through us or not. While GFP1s seem to be in the headlines every day, it remains a confusing environment for consumers. We are leading this conversation and will continue to be the trusted resource for those interested in exploring if such a pathway is right for them. As a global leader in weight health, we are reframing the conversation around weight management in order to destigmatize obesity and make evidence-based solutions achievable and accessible to those in need. To help organizations navigate this new landscape, Weight Watchers for Business which was previously referred to as WW Health Solutions, is building on our existing employer-sponsored business with a full-spectrum weight health platform called Pathways for employers and payers looking to manage costs and improve health outcomes for their population. Weight Watchers for Business utilizes evidence-based step therapy with proprietary de-escalation protocols designed to drive clinically significant weight loss outcomes while controlling costs. A leading third-party actuarial firm validated model shows that implementing the Weight Watchers program could yield a 3.9 times ROI for employers covering GLP-1 medications, with an estimated net savings of $3,375 per participant per year over a two-year period. Take note, as this is worth saying again, Implementing the Weight Watchers model for those on GLP-1 can deliver both health outcomes and cost savings. Given cost is top of mind concern for payers, we are confident that our proprietary pathway solution is best in class in the market and sets us well apart competitively. I'm confident we are taking the right steps to deliver a B2B offering that is not just viewed as an employee perk, but as a true partner of choice for value-based care. This is a process that won't be accomplished overnight, but one that I am very enthusiastic about for the mid and longer term. And finally, on our fourth priority, building community experiences. For my first day at Weight Watchers, and as a longtime member myself, I have stressed the importance of the three pillars of coaching, accountability, and community. The community of Weight Watchers members, both in workshops and digitally in our app, is a unique differentiator that is often essential to members' weight loss journey. We know that members connecting in real life is an impactful and differentiated part of the Weight Watchers experience, and we are exploring ways to bring more of that impact to our entire community of members in the years ahead. I believe IRL is essential to building lasting communities. Our teams are eagerly testing new features and service design for how we foster and enable in-person connections while enhancing them digitally. In summary, 2023 has been a transformative year for Weight Watchers. We've returned our core business to subscriber growth, quickly positioned our clinical business as the gold standard in weight health with the ability to scale as supply comes back, and launch the next wave of enhancements to our product and program that will provide the foundation for a more engaging digital experience. Each of these milestones on a standalone basis represents huge progress for our organization. When combined, the progress and advantage is exponential. That's the white space where we see a unique opportunity for Weight Watchers to drive huge value There is no question in our mind that the combination of behavioral program with the clinical option for those who need it, supported by both in-person and digital communities, represents a sizable opportunity and one on which only Weight Watchers can deliver. I will now turn the call over to Heather to discuss our Q3 financial results and 2023 outlook.