Hims & Hers Health, Inc. (NYSE:HIMS) Q3 2022 Earnings Call Transcript

And as you mentioned, that drives both the higher retention, but also what it drives is a greater push towards more folks opting to have longer relationships with the platform. And as a result of that, that is a pretty significant dynamic that is driving the AOV. But I would say that the right way to think about it is that you are somewhat correlated in the mix and the duration. We’re investing in both of those in unison. And then Andrew, if you want to take the other one.

Andrew Dudum: Yes. Thanks for the question. I think the other side of it is there’s just a tremendous amount of investment internally around core engagement and retention dynamics within each of the customer profiles. So we mentioned the launch of the Android application this quarter as well as the iOS applications in Q1. Those are really platform built essentially to personalize and customize and experience for a patient in a way that really dramatically increases engagement and increases adherence to their treatment protocol in a way that means they actually feel better at the end of it. So this, I think, is an area where we’re spending a lot of time. It involves member benefits such as original content, more catered content throughout your life cycle, easier access to your provider.

We talked about intelligent routing so that patients can be fed and directed to the appropriate person quickly so that any concern is handled with speed and ease. So these investments, I think, are also really starting to pay pretty material dividends in regard to high engagement dynamics. And I think we’ll continue to see that. And so I think there’s a lot of enthusiasm that, despite the accelerated growth, we are also maintaining and increasing and improving the retention dynamics as you scale and as you hit more people top of the funnel. And I think that combination is fairly rare to see.

Unidentified Analyst: Just a quick follow-up on Jonathan’s question around long-term margin profitability. Just wondering if there have been any changes in your long-term margin expectations and the timing to get there. Maybe give us an update there. More import I’m trying to understand if the path or drivers to get to those profitable targets have changed in any way as you had already thought a couple of years back when you came public. Clearly, you’re seeing benefits from internal pharmacy, step-up in multi-month subscription. So maybe you’re willing to invest more in sales and marketing. Just curious if you can spend some time on the building blocks to get to your long-term margins. Have they changed in the past couple of years?

Yemi Okupe: Yes. I think it’s something that we’re constantly in evolving, thinking on. We’re in the process right now of a pretty robust multiyear journey and doing a complete refresh of that. So the short answer is that the dynamics have evolved in the intent, in the new levers that we would pull, we’ve outlined in prior calls. What we will do is we’ll provide further clarity early next year in the Q4 earnings call around specifics around what our expectations are for 2023 as well as more midterm targets.

Operator: Our next question comes from Michael Cherny, Bank of America.

Michael Cherny: Congrats on a nice quarter. Andrew, I’m not going to get ahead of myself in terms of trying to figure out who the celebrity is that you’re going to announce in ’23. However, relative to some of the other questions, I would love to know, especially how you think about the dynamics on targeting celebrities like that versus some of the other areas, I don’t think it’s been touched on detail. I apologize if it has. But obviously, there’s been a lot of fluctuations from an ad rates perspective. And so relative to the conceptual components, in terms of your go-to-market strategy, you forgot the category dynamics. Have you seen anything else in terms of that make you allocate dollars differently over time?