Jeff Yurcisin : Thank you, Sergio I’m truly proud of our accomplishments in our first year as a public company, including the incredible milestone of positive adjusted EBITDA for the first time and continued progress on our mission. Our team deserves credit for the difficult decisions that have been made to get us to this point, but we must continue transforming ourselves, pushing ourselves to be more profitable while better serving our customers. We have fantastic order economics, more than 1 million active customers, a trusted brand that delivers trustworthy products and a mission that unites us. And moving forward, we will continue to be ruthlessly focused on our customer, improve the core shopping experience, expand selection and deliver new innovation.
With our incredibly strong foundation and renewed focus on the core of our business, I am confident about our future and excited about what’s in store for growth — thank you all for listening to our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions.
Operator: [Operator Instructions] We’ll move first to Dana Telsey with Telsey Advisory Group.
Dana Telsey: Welcome, Jeff, and nice to see the progress on the adjusted EBITDA. As you think about the balancing act, investing and the path to profitability, how are you planning going forward? What do you think of how you’re planning marketing spend going forward, what you’re looking at? And when you think about new customers and existing customers, given the pull down in the active customers, what are you looking for to show continued growth, awareness and market share gains? And lastly, as you think about the balancing act with adjusted EBITDA, should this be a — as you think about qualitatively for next year, is it breakeven adjusted EBITDA more for the back half of the year? Or is it more in 2025?
Jeff Yurcisin: I appreciate the question. I’m going to break this up into a few kind of parts. First, yes, we are prioritizing profitability, but we are still investing in marketing and new customers. I think compared to our previous levels that which were unsustainable, we have pulled back. And for those that study cohort curves and are deep into cohort modeling, you realize that the subsequent quarters right after that type of pullback in advertising are the hardest comps and the greatest challenge is to Grove. So we see those kind of curves bottoming out in the back half of next year. And so when we think about where Grove will come from, there will be just a natural benefit of our cohort curves. But also, we see a real path of drop of driving innovation and an initiative that both improve profitability while still improving revenue.
So first thing that jumped out is we’re really going to obsess over this customer experience that I believe will do great things from a retention perspective. The second thing we’re going to do that we referenced was increasing assortment to grow lifetime value of customers. The third thing that you referenced in your question was this trade-off between new customers and some of these existing customers. What I love about this business is the 5 million customers who try Grove And when you go speak to those that are “inactive”, there’s still a lot of. And so we see a big opportunity as we improve that core customer experience for us to go back, reintroduce ourselves to those customers and to continue to drive [growth] there. I think from a profitability perspective, as you go down the P&L, I see opportunities at the gross margin level, we mentioned efficiencies across our fulfillment ecosystem.
I still think in terms of advertising, we can keep getting more and more efficient. And those are some of the big areas where we see both this balance of dry focusing on profitability first, but still with high confidence of being able to deliver growth — sequential growth and ultimately, year-over-year growth towards the end of the year. And the last question I think you had is specific to profitability. Some of these changes that we’re talking about where we see opportunities will take some time to flow through the P&L, but we are expecting to be EBITDA positive for the full year 2024 period.
Operator: [Operator Instructions] We’ll move next to Susan Anderson with Canaccord Genuity. Your line is open.
Susan Anderson : Nice to see the profitability and welcome, Jeff on board. I guess just looking at fourth quarter, I’m curious that you talked about it moving kind of back to the nonprofitable range. I guess, is that because marketing spend will be higher in fourth quarter than what it had been in the third quarter. We’re just curious the different levers there that you’re going to have for fourth quarter versus what we saw in third quarter?
Jeff Yurcisin: Great question. Yes, primarily marketing spend, you will see continued investment marketing as a percentage of revenue. We will stay there. And then I think what we see is we just see new paths to find leverage in the P&L that may take more than the next 90 days for us to unlock. And that’s why we’re much more confident about 2024. And then there’s also just a seasonal arc to our business when you think about the quarter that will have a little pressure on profitability in Q4.
Susan Anderson : Great. And then just I’m curious the performance that you saw in the quarter between your wholesale business, which I think is still pretty small in DTC. And then how you’re thinking about those 2 as we look out over the next 3 to 5 years?
