Marc Suidan: Yes, Joanna, let me start off with you asked about the renewal rate. So when we first increased BOD in last July from $99 to $120, it was an experiment to see how would the renewal rate be impacted. We didn’t see much of a negative impact, but it was pretty good. Now we’re obviously monitoring very closely BOD to BODi, now superficially this may seem like a pretty big price increase, but I’ll just say the biggest starts are actually people who sign up to what we call a total solution pack. And the average total solution pack before, which is basically the combination of digital and nutrition subscription was $180, and now it’s $220, right. So I would say we haven’t seen any pushback at all on the price. Now, to be more prudent, that’s why we’re not giving full-year guidance, because there’s a lot of change we’ve deployed.
To be more prudent in our internal forecast, we factored in a lower renewal rate but in general, I would say the jump is not as big on everybody as it may seem from the get go. And then you asked about the margin across our three areas. So we’re not giving specifics there. But here’s what I would say. Digital right now is in the high 70s. We brought down our per episode cost by 50%. So I really think at this point, it’s a question of scale. So as soon as it starts picking up in size, and I’m talking more on the revenue size, you’d be amortizing the production cost over a bigger base, and that should bring back the digital margin into the low to mid-80s. On the Nutrition side, look, it used to be at one point, mid-60s, it went down to low-50s.
Right now, it’s around mid-50s. Our aim is to slowly work its way back up. As you know, we’ve done a lot of things to improve our supply chain, like closing West Coast warehouse. We’re aggressively managing inventory. As you can tell, it’s down by more than half for the year. But most importantly, the product mix by pushing more Shakeology and reducing low margin products, that’ll be the biggest beneficiary to that nutrition margin to get it closer to 60%. And then look on the Bikes, as you know, the bikes is the game lifetime value of that customer. So we’re not going to aim to be profitable from the first sale on the bike. Our aim is to attract customers at a point where we’re not losing too much money up front by gaining a customer. And our data shows that they’re the most committed customer in terms of workouts and renewals so that the lifetime value of that relationship is healthy and positive.
Joanna Zhao: Got it. Okay, that’s super helpful. My last question is just to clarify for anybody who get on this new brand of BODi, is it optional to do the Nutrition/superworld dessert? And also, is it optional to get on the bike or all of that is a part of sort of your program that people get on the BODi will have access to all, so which means that we’ll see an uplift on Nutrition subscription as well as the connected fitness units delivered.
Carl Daikeler: Certainly, that’s the expectation. There’s a few levers there. This is Carl, by the way. Good to hear from you again. First off, you’re right. We’ve consolidated fitness, the eating plans and the positive mindset content into this one subscription, which comes down to about $15 a month. And you can imagine based on the number of apps out there, you’d have to have three or four apps to equate to what we’re putting into this one synthesized offering. But what’s beautiful about this is, for the first time now, the bulk of our subscribers have visibility to the biking content. They couldn’t see it before because it was locked behind a different paywall. So now, again, the important strategy about connected fitness was selling it into the database.
