It’s still considered great value for everything they’re getting. Because when you take the 179, and that’s like $15 a month. So from all the research and pilots we’ve done, we haven’t seen anything that worries us the other way around. We’re seeing a lot more positive because those people are more engaged. Retention is looking healthier for the BODi cohort. The nutrition subscription attach rates looking healthier. So everything we had in our vision, we’re seeing play out through all the pilots and tests we’ve done in since our launch.
Jonathan Komp: Okay. Two more questions for me. Just as you think about the timeline for renewal, the 2 million digital subscribers that you ended with. Could you just share more insight? What time of year you expect the majority of those to renew, and how will you — at what point will you know the success rate of your switch, and how would you react if the results are any different than you’re expecting?
Marc Suidan: Yes, so the majority are on an annual subscription, which means they flow monthly through March of ’24. There’s a bit of skewing towards the first six months, because some are monthly, some are quarterly, some on a six month plan, but the majority are an annual. So I say a bit skewed through the first six months. But overall, we’ll see that 112 come through every month, all the way through March 2024.
Carl Daikeler: One of the things I’ll say, Jon is — Johnathan, is that the $179 does give us an advantage that we didn’t have at the lower price point. And that is — and we’re in the middle of — in the midst of testing customer acquisition now through our direct channels. We run that very cautiously because we’re sensitive to the cash flow implications of “Buying Subscribers” that have too long of a payback. But the $179 gives us much more room to buy a customer and get return of capital within year. So we’ve got room to run a higher LTV or a higher LTV per start on those new digital subscribers. And if anything goes sideways on us, we’ve been very conservative with the way we forecast the renewal rate. But if anything goes sideways on us, we have extra room in acquisition and intend to frankly, this is where growth can come from, that we take that extra room in the margin, in the margin of the $179 versus the $119 for customer acquisition.
So we can shift our emphasis over on acquisition from renewal if anything goes sideways. But again, you balance all these factors, right, because the thing we promise the market — me the way I like to run the business is, I like to run it free cash flow positive. So our — the first thing we need to assure for is that we’re running in a positive EBITDA as soon as possible. Then we start to make sure we’re investing in growth, but not the other way around. So we’re balancing these things and we’re doing it in a conservative rational way, given some of the other uncertain macro factors at play.
Jonathan Komp: Understood. Just last one for me on the Connected Fitness business, it’s obviously a drag on the income statement currently, so could you just share more specifics on the LTV that you see for that customer? And how do we know that it’s not a broader distraction on the business, just given the size where it’s at today? Thanks for taking all the questions.
