And I think an existence proof that there’s an appetite amongst consumers for that kind of positioning is the Tread+ by a way of example. So if you give people something they want, they’d be delighted to pay for it, but it has to be a uniquely compelling user experience. And which is why we’re leaning heavily into investing in product innovation. And now we have to have the right talent in the building to pursue that. We had some pretty interesting talent walk into the building last quarter. And I’m pretty optimistic based on what’s being discussed in the building today.
Liz Coddington: And then just really quickly on that question about POP and impairments. In Q2, we did book an impairment charge of roughly about $2 million to bring our — the value of POP in line with what we sold it for and that gets closed in early Q3.
Operator: Thank you. One moment for our next question. That will come from the line of Youssef Squali with Truist Securities. Your line is open.
Youssef Squali: Great. Thank you. So a couple of questions. Maybe starting with Bike rental, that’s one of the positive developments that you had in the business. Can you maybe just remind us about maybe the size of it today, but more importantly, kind of the unit economics. I think in the letter, you mentioned attractive unit economics. How have they kind of performed over time. Where are we now relative to maybe the rest of the business? And then on Q4 guide, Q4 is typically one of the weaker quarters that you’re guiding for an inflection point to growth there. Can you maybe just help us with the puts and takes as to what needs to happen for you guys to hit that milestone? Thank you.
Barry McCarthy: I’m going to let ask Liz to take most of that, but I just want to make one observation about FaaS linking back to a previous question. We had about seasonality. So the one thing we learned last year about FaaS and saw again this year FaaS, it’s not very seasonal. The demand seems to be pretty consistent across the calendar year. Now we did see accelerated growth in FaaS this quarter, but that’s because of some work we’ve done on landing pages and the way we’re merchandising it to members to make it more easily discoverable and put it on level footing with a sale rather than bearing it down in the footnotes where it had previously lived and allowing it to service on Google Search by a way of example, rather than bearing it. Liz, do you want to talk about the Q4?
Liz Coddington: Yes. So let me first — let me talk — I do want to provide a little bit of information about FaaS around the unit economics. So our unit economics for FaaS are improving. Our churn was better than it was in Q1. It’s — as I mentioned, it’s still higher than it is for those who buy our Bikes out right. And we’re continuing to work on closing the gap between that rental churn and purchase churn. But it did improve quarter-over-quarter. It was slightly under 5%, and we’ve talked about it being around 5%.
Barry McCarthy: 100 basis points quarter-over-quarter.
Liz Coddington: Yes, 100 basis points of improvement quarter-over-quarter versus Q1. With that — part of that — as a result of that, we have — our average payback is now averaging around 16 months for FaaS, which is also an improvement over Q1. But one thing to note about that is that we are still using pretty rich mix of refurbished units. And as we lower our churn going forward and continue to make improvements there and also continue to provide the right incentive structure for folks to buy out their rentals, we expect to be able to shift to a richer mix of new Bikes at some point in the future as we continue to sell down sell through that refurbished inventory while achieving an attractive payback results. So that’s all good news.
Now there was a question about the Q4 inflection, and I think that, that is really looking at revenue growth. Q4 is — from a subscriber perspective, our guidance is that we’ll end the year for Connected Fitness subs just slightly — if you look at our implied guidance has us ending just slightly above where we started the year. So it is a seasonally tough quarter for growth. And part of the revenue growth that you see in Q4 is driven by the fact that we will be continuing to deliver Tread+ and so again, our Tread+ mix to date so far, maybe that — hopefully that will shift over time, skews a lot towards existing subscribers rather than new ones. And again, that makes sense because we just re-launched it. And so that will help bolster revenue in Q4 on a year-over-year basis.
Operator: Thank you. One moment for our next question. And that will come from the line of Simeon Siegel with BMO Capital Markets. Your line is open.
Simeon Siegel: Thanks. Hi. Good morning, everyone. So congrats on the strength of third-party retailers. Can you remind us what the unit level revenue and margins look like for a Bike sold or any equipment sold via third-party retailer versus when you sell it directly. And then you called out and I think you’ve spoken a few times encouragingly about the continued growth in the secondary market sales. Can you just let us know roughly what percent of the current CF subscriptions are on their second or life or so? Thank you.
