Jack Wallace: Hi, thanks for taking my questions, and congrats on a great start to the year. Andrew, I just wanted to give you an opportunity to, and thank you for addressing your comments from last week, and over the weekend. Just wanted to give you an opportunity to just give us some idea, for how the public response reaction to your comments had any observable impact, to the business and thinking more specifically around attention, or excuse me, attrition and retention, new customer acquisition, as well as employee attention – attrition, and inbound resumes? Thank you.
Andrew Dudum: Thanks, Jack. Yes, great question. So, no material impact that we expect in the business. The guidance that we shared today reflects all of the latest thinking. And so, we don’t expect that to be a big concern at all going forward.
Jack Wallace: Great. Thank you. And then I just wanted to get a little more color on the CapEx investments, Yemi. Should we think of the first quarter’s CapEx number being a fair kind of jumping off point into the second half of the year, and I appreciate your response to the prior question? And then second, in terms of the therapeutic category, it sounds like maybe weight loss is getting some additional attention, with the expanded capabilities there. But any other categories existing that might be getting some extra attention as well as preparation for new categories? Thank you.
Yemi Okupe: Yes, I can start with the first part of the question, maybe I’ll throw it over to Andrew for the second half. I think what we really see, Jack, is, as mentioned, kind of in the prior question, we’ll look to calibrate the capital expenditures relative to the growth that we are seeing. I think historically, if you were relying two years ago, capital expenditures were fairly minimal in the low $1 million to $2 million range. Over the course of the next three years, like we do expect just more intensity in the CapEx. We don’t expect to return to those levels for the next three years, but it will fluctuate as we start to invest in machinery, or expanding capabilities in the facilities. So it’s hard to give an exact like quarter-to-quarter number, but we do expect it to be elevated, similar to what we’ve seen kind of in the latter part of last year to last quarter.
Andrew Dudum: Yes, I think a lot of these capabilities are centered around both pharmaceutical complexities. So you can imagine form factor variation. We got a number of form factors on the breadth of specialties and portfolio today, but there’s quite a few more that we can be bringing to market. There’s complexity in specific ingredient compounding. So, there’s actually necessary processes, for more complex ingredients that are more challenging to put together into these form factors. And then obviously, there are categories that we are excited by that we’ve talked about in the past. Hormonal balance, menopause, testosterone, pain management, insomnia, right. These are categories we’ve always talked about and believe and believe there’s a lot of people struggling and an opportunity to deliver hyper-personalized treatments at very affordable prices.
And so, a lot of that CapEx investment is not only going towards some of the near-term categories, but building the foundation for what’s going to be necessary a couple of years from now.
Jack Wallace: Great. Thank you so much.
Andrew Dudum: Thank you.
Operator: Your next question comes from Jonna Kim with TD Cowen. Please go ahead.
Jonna Kim: Thanks for taking my question. Just wanted to get a better understanding of sort of what changed in terms of the full year guidance in the first quarter, versus how you guided in the fourth quarter. And just curious, which areas deliver offside versus your original expectations? And also what changed in terms of your second half expectations? Any color will be helpful there. And just another question is, have you seen any change in consumer behavior, by different income cohorts across your categories? Thank you so much.
Yemi Okupe: Maybe I can start with the first part of the question on the guide, and then – can turn it over to Andrew for broader clarity around what we’re seeing with the consumer. I think really, Jonna, what we did see in the first quarter is just record level momentum, both in terms of the magnitude of consumers that were coming on to the platform. Relative to what we were expecting as well as the frequency, which was they’re opting for personalized products. As we mentioned, those typically do carry higher retention levels. And so, really what’s embedded in our guidance, is just the strong momentum that we’ve seen. And we’re seeing that across pretty much all of our specialties. Given the fact that we’ve innovated the suite of products, whether it’s sexual health, dermatology, or the new weight category, we’re seeing continued strength across each of our specialties.
And we expect to continue to innovate with a very attractive pipeline on each of those specialties. And so really, that’s what’s embedded in the guide is a very strong pipeline of things to come. The strong uptick in consumer acquisition in the first quarter, and then just the adoption of personalized products.
Andrew Dudum: Yes. And then regarding consumer confidence, I think we continue to see strength across the demographics of income levels. I think probably, because of a couple of things and this has happened historically, when consumer confidence has dropped and others have struggled in traditional consumer channels and our business has remained resilient. I think you’re talking about categories and products that are incredibly emotionally resonant, and core to the well-being of the consumer, right? They’re products that when the customer wakes up in the morning, and look in the mirror are highly impactful to how that day goes, and how they show up in the world. And so, I think very, very sticky in that way. On top of that, I think the strategic pricing initiatives from the last year have continued to make those even further affordable, such that we have not seen any types of concerns in consumer strength whatsoever.
Jonna Kim: Got it. Thank you so much.
Operator: Your next question comes from Aaron Kessler with Seaport Global. Please go ahead.
Aaron Kessler: Great. Thanks, guys. Congrats on the quarter. A couple of questions. One, maybe just you can update us on the women’s kind of performance or the Hers’ performance in the quarter, I think you noted a pretty strong growth last quarter. And then just on the mental health side, maybe an update there. I think our recent survey was showing pretty high rates of depression, particularly among younger adults. Just curious kind of what you’re seeing there as well? Thank you.
Yemi Okupe: Thanks, Aaron, and great to have you. On the Hers side of the business, continuing to see it be one of the fastest growing, if not the fastest growing parts of the business. And this is comprised of Hers dermatology, Hers hair, the Hers weight loss category as well as the mental health business. All of those are growing very robustly, and I think really pulling the company ahead in a dramatic way. When we look at some of the penetration rates that the business has in those categories. It’s quite small. You’re talking 1%, 2% penetration rates in very, very massive markets. And so, we suspect that the brand and the investments in the brand that we’ve been making in the last year or two, are really just starting to unlock the awareness levels necessary to start taking massive share.
But we believe strongly that from what we can tell, we’ve got strong product market fit in those three or four categories. The breadth of portfolio of offerings is expanding very rapidly. Many products in the last quarter and many to come in the next couple, in a way that gives us confidence that, that growth rate will be able to be sustained for quite some time.
Aaron Kessler: Great. Thank you.
Yemi Okupe: Thank you.
Operator: Your next question comes from Glen Santangelo with Jefferies. Please go ahead.
Glen Santangelo: So yes, thanks for taking my question. Hi guys, I just wanted to sort of unpack some of the numbers here, maybe a couple of financial questions, if I could. I mean the subscriber growth of 41% in the quarter was almost equivalent with the sort of the revenue growth – drove. But when I sort of peel back that, the layers a little bit, it looks like the monthly sales per average subscriber were flat. But yet your average order value was up 21%, which may be suggest that you’re continuing to have some success booking multi-month subscriptions. I was wondering if you could just give us a little bit more a little bit more meat on both those two numbers, because I think what some are trying to assess as well, as we get the churn question a lot. And so, I’m just trying to make sure I understand, how all these metrics sort of play off one another?
Yemi Okupe: Yes, sure. Thanks for the question, Glen. I think we stated in the past that the primary growth lever that we’re focused on as a company, is around subscriber growth. And so, a lot of the strategic initiatives, whether it’s around personalization, or some of the pricing elements we’ve talked to historically in the past. Those are geared towards both making it attractive, to the consumers to come to the platform as well as keeping consumers on the platform for multiple years, if not even decades. And so, largely our performance this quarter was primarily driven off of the subscriber growth, as you mentioned. We expect that to continue to be the case. And with respect to the monthly average revenue per subscriber/AOV, really, our focus is, as you mentioned, continuing to make sure that the multi-month bundles are attractive.
And we see continued success there. With respect to some of the movement that you see in AOV, it is driven primarily by that, as well as some of the product mix – dynamics as well with the way we’re coming online.
Glen Santangelo: And Yemi, maybe just one more quick question on the guidance. If I sort of look at the adjusted EBITDA margin you put up in 1Q and what you’re sort of implying for 2Q, it seems to suggest a reasonable step down in the back half of the year to be consistent with your sort of full year guidance. I was wondering, is that some level of conservatism you’re building in? Or are there some – you’ve talked on this call about some planned investments that may ultimately be made. So, I’m just trying to make some sense of why we should expect the margin in the back half of the year to go down?
Yemi Okupe: Yes, I think it’s a great question. I think Q1 was definitely a phenomenal quarter for us, and we are very excited by the remainder of the year to come. Really what we are doing is we’re leaving ourselves flexibility. As we’ve mentioned, we do continue to look for ways to pass value back to consumers. Whether that’s the case of leaning back into marketing as we start to have new categories come online – sorry, new products come online. We will look to opportunistically have the flexibility to invest there. And then as we mentioned before, over the course of several quarters, we do run experiments, identifying what are the most accretive ways to pass value back to consumers. We’re very close to finalizing some of those experiments and excited by those. And so, do you want to leave ourselves flexibility in the guide to have the capability to roll out some of those.
Glen Santangelo: Okay. Thank you.
Operator: Your next question comes from Jailendra Singh with Truist Securities. Please go ahead.
Jailendra Singh: Thank you, and thanks for taking my questions, and congrats on a strong quarter. First couple of clarification questions on the subscribers using personalized solution 1Q at 35%. What was this figure among the new members you added in 1Q, in terms of using a personalized solution? And second part of the question is, like what is your outlook reflecting in terms of this figure by end of the year?
Yemi Okupe: Yes. I think maybe I can start with some of the more granular details. And then you can hand it over to Andrew to add some of the broader questions. We didn’t explicitly guide to basically a new number specifically. What we do see is that the adoption for new subscribers of personalized products. Tends to be higher just, because I think many of those users for the first time when they come to the platform are identifying the attractiveness of personalized solutions. Is also what we do see is that in many of the newer categories, the adoption rate is quite strong just, because the vast majority of the user base is disproportionately oriented towards new users. And so, we do expect that number to basically creep up each quarter alongside it. We’re excited by the potential that, that means for retention. And then Andrew, not for business….
