Nu Skin Enterprises, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Nu Skin Enterprises' second quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host for today, Mr. Scott Pond, Vice President of Investor Relations. Please go ahead.

Thanks, Olivia, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO, Connie Tain, Chief Global Growth Officer, and James Thomas, CFO. On today's call, comments will be made that include some forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings reviews and our SEC filings for a complete discussion of these risks. Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website for any required reconciliation of non-GAAP numbers. And with that, I'll turn the call over to Ryan.

Thanks, Scott. Hello, everyone. Thanks for joining us today. In Q2, we continue to advance key initiatives enabling New Vision 2025, our multi-year transformation to becoming the world's leading integrated beauty and wellness company that's powered by our dynamic affiliate opportunity platform. While we remain confident in the direction and future outcome of our strategy, we The persistence of macro headwinds has made the journey more challenging than expected, especially over the past several quarters. Nevertheless, we remain committed to our strategic direction, investing in the future through EmpowerMe personalization, social commerce, and our digital ecosystem, while pivoting our action plan based on near-term needs in the business, which I'll speak to in just a moment. Our second quarter revenue was $500.3 million, while earnings per share were $0.54. Both revenue and EPS were in line with our guidance and up on a sequential basis, mostly reflecting 8% year-over-year growth in mainland China, where momentum continued to build ahead of plan. With ongoing economic uncertainties in the market, we remain cautiously optimistic given the healthy growth of paid affiliates and sales leaders during the quarter, both encouraging signs leading to sustained second-half growth. Our growth in China was offset by general softness in other markets, driven in large part by macro-related pressures negatively impacting overall consumer sentiment and spending. Aggressive strategic price increases over the past several quarters around the globe to combat margin pressures have taken their toll on customer acquisition, which has led to sluggish sales channel performance, most notably in developing markets, including Southeast Asia Pacific, Europe and Africa, and Latin America. In the Americas and South Korea, we launched new products including new color lash and brow serum as well as TRME, which performed below expectations due in large part to declines in our channel dynamics impacting paid affiliates and sales leader counts. In the second half, we will be doubling down on efforts to stabilize consumer demand and regenerate growth in sales channel while continuing to focus on our long-term new vision 2025 business transformation. Let me briefly describe our plans for the remainder of the year. We're in the final stages of preparation for the launch of the company's first holistic wellness and beauty device, Ageloc WellSpa IO. This device system, which helps users restore, revitalize, and recover their bodies, will be introduced in several markets in Q3 and is expected to be rolled out in nearly all markets by the end of 2023. WellSpa I.O. will be our second connected device, building upon what we've learned from the launch of our Ageloc LumaSpa I.O., which has generated more than 6 million connected treatments to date, helping us learn more about the needs of our customers. WellSpa I.O. will be complemented with an enhanced interactive I.O. experience in our Vera app that will coach users through their optimal journeys. With the introduction of this next device, we expect to make steady progress towards our annual goal of 15% of revenue coming from connected device systems on our way to the longer-term target of 30% of revenue by 2025. Second, affiliate-powered social commerce. We're doubling down on our efforts to accelerate growth of our sales channel with the introduction of a new channel growth program in most of our markets called EmpowerStart. This new program is focused upon motivating brand affiliates in their journey to becoming new brand representatives and sales leaders. Empower Start aligns with our Empower Me Creator program introduced in Q2 to focus our channel development efforts on both early and developing leaders, critical for regenerating growth in the channel. We anticipate that these two programs working together will bolster both affiliate and sales leaders in the second half and motivate customer acquisitions. Also, please note as you look at our paid affiliate numbers, we have adjusted the eligibility requirements for rewards in some markets to more narrowly focus on those affiliates who are actively building a consumer base. This adjustment will roll out in additional markets over the next several quarters. And third, our digital ecosystem. We continue to see solid adoption of our Vera and Stella apps, which are central to our initiatives around leveraging the power of a robust digital ecosystem by enabling us to drive deeper connections with customers and affiliates. We're well on our way to hitting our full year targets of monthly active users for both apps, and we'll begin transitioning to focus on growing customer acquisition, conversion, and lifetime value through deeper connections. Also in June, we began the implementation of Equinox, our new e-commerce global platform in North America. This new platform significantly expands the transactional scale of our business as we lean further into social commerce. Despite some early growing pains, migrating to a new platform will significantly expand our ability to create a more dynamic customer experience while enhancing operational efficiencies. Now, regarding our RISE ecosystem, we're pleased to report 33% year-over-year growth in RISE as manufacturing performed well in the quarter and booked orders remained strong through year's end. Rise continues to grow to become a larger part of our enterprise as we build out this synergistic ecosystem of capabilities that benefit our core business as well as enable our broader enterprise transformation. We made two important investments for our future in the second quarter. First, as you saw from our previous release, we completed the acquisition of BeautyBio, an omnichannel and clinically proven clean skincare and beauty device brand. The company's approach and mission are closely aligned with our core values and our enterprise strategy. BeautyBio has unique device IP in hydration facial and micro-needling technology, both fast-growing segments of the beauty device marketplace, which we anticipate leveraging for our core new skin business. For BeautyBio, our unique expertise in devices, manufacturing, and technology will help this business reach its potential as part of the RISE ecosystem. BeautyBio will continue to operate as an independent business as we seek synergistic opportunities to strengthen all businesses through RISE. Second, we made further headway into the personalization space with a majority investment stake in LifeDNA, a leading DNA assessment and recommendation technologies company. We believe that personalization in the beauty, wellness, and lifestyle space will deepen over time to the genetic level, and that DNA will become an increasingly important source of information for our consumers to understand their personal care and wellness needs that can influence the quality and longevity of their lifespan. While it's too early to discuss the application to our business, our investment is indicative of our commitment to evolving our core Nu Skin business through personalization, And when combined with developing technologies like AI, we believe it will help Nu Skin become a meaningful disruptor in the beauty, wellness, and lifestyle space. So to wrap it up, the agility of our organization is a key strength as we adapt our business and tactics to this more challenging environment. While the pillars of Nu Vision 2025 have not changed, understandably, we're adjusting time and cadencing factors as needed. In addition, we are re-emphasizing other critical aspects of the core business, including safeguarding the enterprise and optimizing profitability. And we remain highly strategic in our approach to allocating capital and prioritizing investment decisions. So with that, let me turn the time over to James to take you through our financials in more detail. James has a long history with the company, having served as our Chief Accounting Officer for the past several years. He's had a strong background in the wellness space and has been instrumental in leading various elements of our strategic transformation and resource prioritization efforts. So, James, take it away.