WW International Inc (WW) 2021 Q4 法說會逐字稿

Good day, and welcome to the WW International Fourth Quarter 2021 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Corey Kinger, Investor Relations. Please go ahead.

Thank you, everyone, for joining us today for WW International's Fourth Quarter and Full Year 2021 Conference Call. At about 4:00 p.m. Eastern Time today, we issued a press release reporting our fourth quarter and full year 2021 results. The purpose of this call is to provide investors with some further details regarding the company's financial results as well as to provide a general update on the company's progress. The press release is available on the company's corporate website located at corporate.ww.com. Supplemental investor materials are also available on the company's corporate website in the Investors section, under Presentations and Events.

Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the press release.

Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today, and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Joining today's call are Mindy Grossman, President and CEO; Nick Hotchkin, COO; and Amy O'Keefe, CFO. I will now turn the call over to Mindy.

Thank you, Corey, and good afternoon, everyone. I would like to start by speaking to last week's announcement that Sima Sistani will be joining WW as our new CEO as of March 21. Sima has a strong background at the intersection of media and technology and has a track record of building powerful digital communities. She was the founder and CEO of Houseparty, a face-to-face synchronous social network and community focused on bringing support and empathy to online communication.

Under her leadership, it grew into a community of over 150 million users. And in 2019, she led the sale of the brand to Epic Games, where she served as the senior executive, leading social gameplay and feature development for their gaming products, including Fortnite. She also held leadership positions at both Yahoo! Mobile and Tumbler. I've known Sima for over 2 years, and feel she is the right individual to lead WW. She's a visionary, an entrepreneur, an inspired leader.

Her proven track record in building and scaling businesses, her ability to innovate, her depth of experience in product, technology, digital community building and her passion, drive and focus on purpose so aligns with the WW mission and business. She is also a health and wellness enthusiasts and proud WW member. I know that she's excited to be leading the team through the next phase of growth for the brand and the business.

Now turning to our 2021 results and PersonalPoints launch. Looking back, in many ways, 2021 was an unusual year with consumers undergoing several shifts in sentiment and behavior. Through these changes, we maintain rigorous prioritization as we accelerated our digital transformation by developing and launching our newest food program innovation, PersonalPoints, creating an entirely new coaching and content experience in Digital 360, enhancing our e-commerce experience and product portfolio and investing for the future in health care and diabetes.

At the start of 2021, myWW+, our first nonfood innovation, delivering a more interactive and personalized app experience than ever before, accelerated our digital performance last winter. This strong performance at the beginning of the year was difficult to sustain as consumer sentiment shifted during the next phase of the COVID-19 environment, as evidenced by industry-wide declines in traffic and search trends for digital weight loss programs beginning in Q2. At the same time, we were actively managing the COVID-related impact on our Workshops business, with subscriber levels being reduced to approximately half of pre-COVID levels. This created a significant subscriber and revenue headwind throughout 2021.

We ended 2021 with 4.2 million subscribers. End-of-period digital subscribers were 3.4 million, down 7% year-over-year, and end-of-period Workshops subscribers were 727,000, up 1% versus 2020, but down 42% versus year-end 2019. Throughout the entire year, our cross-functional teams were relentlessly focused on the development of PersonalPoints and its successful launch in November.

PersonalPoints is an important step in our multiyear personalization journey. I, again, would like to thank our dedicated employees for bringing this innovation to life in a seamless synchronous launch to more than 4 million members across 12 different countries and in 7 languages.

Our Winter 2022 marketing campaign amplified PersonalPoints, with a broad suite of assets to drive connection, interest and action, including motivational and entertaining ads featuring Oprah Winfrey and James Corden as well as the utilization of over 500 unique digital assets. It was also gratifying to see WW recognized for program effectiveness and digital innovation leadership.

In January, WW's weight loss leadership was recognized once again by U.S. News and World Report Health Experts in their 2022 Best Diets ranking. WW retained the #1 spot for both Best Site for Weight Loss and Best Diet Program for the 12th consecutive year.

We also received high marks in the category of Best Diet Overall, Easiest Diet to Follow, Best Diets for Healthy Eating and Best Diets for Fast Weight Loss. In addition, Digital 360 was recently selected as a Good Housekeeping 2022 Fitness Awards winner, being named Good Housekeeping's App Choice Best for Building Habits. These accolades further build on the evidence that WW works, delivering solutions that fit members' lives and provide a livable path to sustainable weight management and healthy living.

The need for proven, sustainable and accessible weight loss and wellness solutions is more important today than ever before. And in a world where digital has accelerated and technology has been an enabler, we are all still craving physical interaction and human connection. That's why WW has such an important valuable role as people are looking for science-backed community and coaching from a brand they trust.

I am confident that the company under the leadership of Sima will continue to innovate, be obsessed with data and focus on the critical priorities that will advance the business, support our members and expand WW's impact around the world.

I will now turn the call over to Nick to discuss our current performance and our go-forward strategy in more detail.

Thanks, Mindy. Let me echo how excited I am to welcome Sima as our new CEO. A strong digital experience, along with her passion for our mission and her insights and perspectives into community building, will be invaluable to WW.

Now I'd like to discuss our winter season performance and our key focus areas to improve our business trajectory in a challenging environment. Our sign-up trends improved markedly since the launch of PersonalPoints. Member recruitment is down year-over-year so far in 2022, with similar percentage declines in both Digital and Workshops.

As of February 19, subscribers were 4.5 million, up approximately 9% from year-end 2021. However, this lift is significantly below increases in prior food program innovation years. Importantly, overall retention continues to be strong at about 10.5 months, and we are announcing early signs that Workshop retention is starting to rebound from COVID-impacted levels.

While the Omicron spike significantly impacted our results, we are examining all aspects of our business to drive performance improvements. Our members have validated that we have a strong food program innovation in PersonalPoints. However, from our recent research, there are also some clear takeaways on the current consumer mindset and their motivation to start a weight loss program. While consumers acknowledge the intent to lose weight, they are telling us that they are not motivated to commit to significant changes. Instead, many are looking for easy methods, small steps and personal support. Therefore, it's imperative for the WW Digital experience to be easy and intuitive, backed by science and with access to community and coaching. These insights are driving both our spring marketing approach and will continue to inform our product development priorities and agenda.

We are intensely focused on optimizing all aspects of our marketing. While traffic across our consumer touch points has been lower versus prior years, our global marketing and data analytics teams are doing outstanding work in driving sign-up conversion and maximizing ROI and marketing spend. In the U.S., this performance marketing approach delivered a 15% increase in conversion year-over-year during the first 7 weeks of the year, although offset by a significant drop in traffic. We will continue to invest in our performance marketing capabilities to ensure that we are making real-time data-influenced decisions to drive site conversion.

As always, we are highly focused on price realization and maximizing subscription LTV. This winter season, we have introduced a number of creative offers that are rooted in urgency and offer the best value for longer tenured commitment plans. These have been successful with over 70% of our U.S. sign-ups in January choosing a 6-month or longer plan, up from about 50% a year ago.

We have made significant strides in our digital experience over the last 6 years, as demonstrated by our 4.8-star-rated app and numerous awards. However, we will continue to evolve our experience, to focus on personalization and ease, and at the same time, bring more coaching and community into our digital experience.

And in our first year of offering Digital 360, we gained valuable insights on how we can deliver coaching, content and community in new ways. Member engagement, community building and the personalized experience are key elements of both member success and continued expansion of retention. As demand for in-person workshops did not pick up in January, we are actively assessing our cost structure and optimal mix of leased studios and flexible third-party locations.

We believe in the power of in-person community and accountability and the differentiation it delivers for members looking for that high touch experience. We are focused on delivering the experience and availability our members' demand, while balancing the fixed and variable costs in order to return Workshops to being a 40% gross margin business.

In the U.S. market, we currently have a footprint of 430-WW branded studios and 650 studio apps or third-party locations. While COVID severely impacted our Workshop business, we are positioned to be able to flex and manage growth as the environment opens up and people want to once again have the interest and support of coaches and the WW community.

I'm excited by the opportunity for WW to build a diabetes business. For the first time, WW members who indicate they have diabetes receive a food plan specifically tailored for their unique food needs. In just the 3 months since launch, 6% of U.S. members are now self-reported as people living with diabetes compared to the 12% prevalence of diabetes among adults who are overweight or obese, demonstrating the incremental opportunity of serving this important segment. We plan to introduce a dedicated WW offering complete with content, coaching and community specifically designed for people with diabetes later this year.

Turning to our Consumer Products business. We have essentially rebuilt our e-commerce business from scratch during the last 2 years, growing it from a $22 million revenue business in 2019 to $85 million in 2021. We are focused on further expanding this important channel for incremental revenues by increasing member penetration, the frequency of repeat orders and transaction value. Through product bundling, SKU expansion, particularly via our marketplace and dropship partner, licensing and in-studio and multichannel opportunities, we aim to enhance and expand our consumer products business.

As we grow this business, our teams are conducting a thorough review of our supply chain opportunities, demand planning, volume commitments and new product development process to preserve and expand margins as we profitably grow this business.

It's an important time to actuate urgency arising and simplifying our key intents, dedicating resources, time and talent and what is critical and presents the best return on investment. Given the uncertainty of the environment, we continue to analyze and assess all areas of the business, our revenue opportunities and our cost structure. I look forward to working with Sima when she joins later this month, and I'm sure we will have more to say on this during our Q1 call in May.

I'll now turn the call over to Amy to review our financial performance and outlook.

Thank you, Nick. We closed out Q4 with performance within the range of our most recent guidance. Category demand and traffic continue to be a challenge for us in the quarter, resulting in modest pressure on revenue, the impact of which was more than offset by strong gross margin and lower marketing spend.

For the full year 2021, we ended the year with 4.2 million subscribers, down 6% from the prior year, and in line with 2019. Workshops end-of-period subscribers of 727,000 were up 1% year-over-year, but down approximately 50% from pre-pandemic levels. Digital end-of-period subscribers, including 222,000 D360 subscribers, were 3.4 million, down 7%. Revenue of $1.21 billion was down 12% year-over-year, driven by a 38% decline in Workshops revenue. Digital revenue of $788 million or 65% of total revenue was up 6%. While e-commerce revenue was up 10% year-over-year, total consumer products revenue of $117 million was down 11% as in-studio product sales continue to be down significantly.

Adjusted gross margin of 61.2% is up 300 basis points from the prior year, primarily driven by a combination of digital mix and fixed cost structure adjustments over the course of the year.

Full year marketing spend was flat to the prior year, while G&A was up $9 million on an adjusted basis, mostly related to temporary salary reductions in 2020. Adjusted operating income of $216 million is in the middle of the guidance range, but down 24% versus the prior year, driven almost entirely by volume decline.

2021 GAAP EPS of $0.95 was below prior year by $0.13. Note that 2021 GAAP EPS reflected the $0.42 negative impact from onetime items. Related to cash flow and leverage, ending cash of $154 million is net of $52.5 million of voluntary prepayments on the term loan in December. Operating cash flow of $157 million for the year remains strong, with $175 million of revolver capacity. We ended the year at 4.5x net debt leverage, which increased modestly from Q3.

Looking forward to 2022, we will not be providing full year guidance today. We are continuing to evaluate consumer sentiment and the full year impact of current trends on the business and, of course, awaiting Sima's arrival. However, we will discuss how Q1 is shaping up.

While we saw a meaningful lift in recruitment compared to trailing trends upon the launch of PersonalPoints in Q4, recruitment is down versus the prior year on a quarter-to-date basis in 2022 in both Workshops and Digital. As Nick mentioned, through week 7, end-of-period subscribers of $4.5 million are up approximately 9% from year-end 2021, which is far below increases we have typically experienced with prior food program innovations. We expect to end the quarter at roughly the same level of approximately 4.5 million, which would result in end-of-period subscribers at the end of Q1 to be down in the mid- to high-single digits compared to the prior year, and in line with Q1 of 2019, but with a mix of approximately 85% digital.

Given the year-over-year recruitment declines, plus the lower incoming subscriber headwind from 2021 of approximately $30 million, which has increased from our prior estimate of $25 million, revenue in Q1 is expected to be down year-over-year to approximately $300 million.

For Q1, we expect operating income to decline from the prior year, resulting in an adjusted operating loss in the mid- to high single-digit millions. And EPS is expected to be a loss in the range of $0.26 to $0.31.

For the balance of the year, we are planning cautiously as the demand environment has proven to be difficult to predict. If the current trends continue and if there is a normal slope of decline from Q1 to Q4 in subscribers, then end-of-period subscribers, revenue and adjusted operating income will be down year-over-year in 2022.

As Nick mentioned, you can expect, in this environment, we will be focused on cost management. We have prudently managed costs during times of uncertainty in the past, particularly with the Workshops fixed cost structure balancing near-term profitability with driving long-term growth. Given the softer start to the 2022 diet season compared to other food program innovations, we must reevaluate our cost structure across the board. That work has been ongoing.

Note that WW has an attractive, profitable business model that generates significant operating cash flow with low capital expenditures. Our recent refinancing has significantly lowered our weighted average cost of debt and mandatory repayments. While our leverage ratio will likely increase in the quarters ahead, reducing our leverage and our debt balance remain capital structure priorities for WW. Our executive team and Board are focused on getting the company back on track to profitable growth.

As Nick mentioned, we are conducting a thorough analysis of all of our business lines, assessing the revenue opportunities, cost structure and profitability potential in order to drive performance improvement, profitability and value for shareholders.

I will now turn the call back to Mindy.

Thank you, Amy. As you heard today, the team is focused on managing through the near term and optimizing for the future. The organization is acting with purpose and intense prioritization to drive value for the business, as well as WW members around the world.

I'd like to thank all our WW employees, including our amazing coaches, our executive committee, our Board of Directors, particularly Ray Debbane and Oprah Winfrey, our partners, ambassadors and our members for all the experiences over my nearly 4.5 years at WW. I will always be part of the WW family, and look forward to watching the company's continued journey, successes and positive impact on millions of lives around the world.

Thank you for joining us today, and we are now happy to take your questions.

(Operator Instructions) Our first question comes from Greg Badishkanian with Wolfe Research.

This is Spencer Hanus on for Greg. Can you just unpack this tight season a bit more and comment on how much of the slowdown has been driven by marketing or driving recruitment versus kind of environment or just generally with dieting? And then should we look at -- look to 2023 diet season as the next opportunity to rebuild subs? Or could you see an unseasonal bump in recruitment this year?

So we did see sign-up trends in launch of PersonalPoints, but not to the degree that we've seen it in other seasons. Other thing to note, if you look throughout the year, we are planning conservatively because of the [environment]. But if you recall, Q1 was at a significant [high]. Started seeing challenges throughout the environment started in Q2. So although traffic and search right now continues to be under pressure, that's the industry-wide trend, and we're working hard to maximize both retention, as well as our performance marketing, which is why you saw a significant increase in our conversion, up 15% just for the first 7 weeks of 2022. So the marketing messages and ambassadors are resonating what we are focused on and what the industry as a whole, we need the traffic momentum to pick up. But again, we're circling against softer comps.

Got it.

Just to add some color. Mindy is absolutely right. When we launched PersonalPoints back in November, we saw about a 27 percentage points lift compared to trailing trends on a year-over-year basis. So we saw the program working. But category demand we're teasing has been industry-wide. We've seen pressure in traffic. So for example, in diet program in January, for example, you just look at search, it's down 20%. So while we're converting well compared to the prior year, it's just not offsetting the level of pressure that we're getting for the category.

Got it. That's helpful. And then how should we think about the size of the cost-cutting opportunity in the business? How close can you get back to that 2017 SG&A spend level? And then with marketing, do you see any opportunity to drive greater efficiency out of that line as well?

Yes. So I'll start on SG&A. Spencer, I think it's just too soon to tell, right? We're looking at every opportunity across the board to evaluate the cost structure. And Nick and I both mentioned in the script. So I think looking forward, we hope to be able to share our plans with Sima as the new CEO transition, and hope to provide you all more color on a later call. As it relates to marketing, I'll let Nick jump in.

Okay. I think that's right, as you'd expect with we're assessing all areas of our business, and you've seen our track record of nimbly managing that cost. So from a marketing standpoint, we are also being nimble, getting our messaging drive as we had the spring campaign, responding to our consumer reset learnings and continuing the team's very strong work, that performance marketing and the conversion gains that we'll be managing.

And I think one note to that, we talked about conversion as well as retention. But in addition, we're seeing sign-ups to longer tenured plan. So over 70% of sign-ups are greater than 6 months versus 50% last year. And we're still seeing a number of sign-ups from new members and the mix of lapped and new is fairly consistent, and then cancels are down year-on-year. So that really speaks to the strength of the program.

Our next question comes from Lauren Schenk with Morgan Stanley.

Great. I guess, how should we think about the studio footprint and relative opportunity over the medium to long term? I guess, is there a scenario where that becomes a very, very small piece of the business and kind of what the margin structure of the company look like if that were the case?

And then, I guess, if this is more macro-driven and perhaps the world goes back to more normal trends in the back half of the year, in that macro backdrop, would you expect your subscriber growth to accelerate through the course of the year? I guess, what sort macro changes are you looking towards in order to see the business reaccelerate?

I'm talking about the studio business. Like first of all, coaching is just so important for us strategically. And that's why during COVID, we launched Virtual Workshops as an example. And then in-person and the power of in-person community and accountability is such a hallmark of our competitive differentiation. I've been proud of the fact that during COVID, we've been able to optimize our footprint, shift the mix of our retail footprint from WW-branded studios to more flexible studio apps.

And that's -- you've seen that have a strong impact on the margin starting to rebound. We believe we can make studios a 40% margin business. Frankly, as demand for in-person rebounds, we're well positioned with a very flexible footprint and cost structure and still nationwide coverage to be able to serve people in-person once again.

Lauren, the only thing I would add to that is we made really good progress by taking out fixed costs from the Workshops line of business over time. I mean, if you look at our end-of-period subscribers, at the end of 2021, we're down 42% compared to 2019. And in quarter 4, Workshops gross margins were up close to 36%. And so we've been really responsive to managing that cost structure over time, and we'll continue to do that.

Any comment on the macro?

Sorry, Lauren, we're having a hard time hearing you. Can you repeat that last part?

Yes. Just if we do end up in a world where things truly reopen in the back half of the year, would you expect subscriber trends to accelerate through the course of the year? And I guess, just high level, kind of what are some of the macro factors that you're looking at to monitor potentially the reacceleration of the business?

Yes, Lauren, we have been doing constant, both qualitative and quantitative, analysis of everything that's happening by market and consumer behavior. To your point, as we start to see things lift, we would hope that we would see further momentum, especially against the comps that we have. But for right now, because of the uncertainty, we're planning with ruthless prioritization. But on the flip side, we can ramp up very quickly as we see demand in increase.

Our next question comes from Steph Wissink with Jefferies.

I wanted to follow up on just a debriefing or diagnostics on what you learned in November and December, and then what changed in January. Sounds like you had a pretty good start to the Points program launch, but then something shifted. I just wanted to understand a little bit more about what you noticed, what you were able to do intra-quarter? And then give us some sense, and maybe this is to Lauren's prior question, do you have any plans over the course of the next 3 to 6 months to target those cohorts that you think are the most likely to convert or to extend the life cycles of those that are on longer-term plans?

Just to be clear, we saw a momentum in PersonalPoints throughout November, December, January, not just at historical highs. So significantly up from where we were. So it wasn't like a disruption. Clearly, we did see some disruption focus kind of where we are in Workshops with kind of increase in Omicron. So I just want to level that -- the PersonalPoints trajectory.

And from -- and I agree 100%. So the challenge that we've been having is in category demand. So search and traffic have been down significantly. So while we've seen an increase in demand related to PersonalPoints, it's coming from a much lower base, right? So that's been our challenge. And we haven't seen that getting better or getting worse as we headed into January. It's been about the same.

Okay. That's helpful. And then just on the Workshops, I know you've talked about making those of a more variable model, and you talked about the fourth quarter step-up in margins. How do you think about the structural margins of that segment relative to maybe your historic average? And what you think you can achieve to the point of if traffic does start to come back and level out across your Digital and your Workshops business?

Yes. So I can start on that one. I mean, the moves that we've made in the Workshops business is really, first and foremost, making sure that all of our members have the opportunity and access for a face-to-face environment. But what we've been doing is flipping fixed cost structure to a variable cost structure. So moving away from leased spaces that have been more inefficient to more pay-as-you-go model in our -- what we call our studio app. And so while we got up to about 36% gross margin in Q4 for the Workshops business, we think that we can absorb and leverage a lot more demand in the same mix construct.

So while I won't commit to going over the 40% that we were pre-pandemic, we're well positioned in a more efficient model to get back there as demand returns. In addition to that, we also have our Virtual Workshops model, which of course, has a very low fixed cost structure and a high contribution margin. So I think we're really well positioned as demand begins to return. But as Mindy said before, we continue to plan cautiously. How we're planning the business is not assuming a rebound of self-demand, but we're well positioned for it when it happens.

Our next question comes from Linda Bolton-Weiser with DA Davidson.

I think, according to my calculation, the services gross margin was actually down year-over-year in the fourth quarter. That seems unusual with the shift toward digital. So is there any particular reason why that gross margin was down in the fourth quarter?

So our digital -- so overall, our gross margin in the quarter was up slightly 10 basis points on a year-over-year basis. Digital was just under 80%. At 78%, Workshops margin improved sequentially. There's nothing specific in there. I mean, it's still is an incredibly strong gross margin in the digital business.

We continue -- we've found that economic value is certainly driving demand in this environment. We've been trading that off for a couple of things. One, longer-term business plans. And Mindy mentioned this before, over 70% of sign-ups are on 6 months or longer. So we could be trading a little bit of margin for increased retention strategy. But overall, no significant changes there.

And 61% gross margin for the quarter shows the power of the business model.

Okay. And then I follow a public company called Medifast, which has the OPTAVIA, it's a food-based program. And they are now bigger than you. So they're the largest publicly traded company in weight loss by revenue. And they're still experiencing strong growth. They expect strong growth here in the first quarter. They had strong growth in the fourth quarter.

They're reporting that their consumer research shows that the pandemic has made people aware that health and wellness is important and that people are very focused on that and have a certain percentage of Americans have goals to become healthier. So it just seems like their research and the trends that they are kind of reporting are way different than yours. So are you aware of their program? Have you researched it? Like can you just kind of give a little color on what your thoughts are there?

Linda, we're very familiar. Again, I can't speak to their research versus our research. It obviously is a very different business model in terms of really selling product and food programs. But like every other area of competition, we're certainly focused on everyone in the category. But again, I want to be specific, it's a very different business model.

Yes, that's true. And then, I mean, your new CEO is going to come in, and she's going to try to diagnose what the issue is because as a leader in weight loss, one of your objective has to be to drive interest in the category as well as to maintain or gain market share. So I mean, is there -- are you just kind of throwing up your hands and saying, "Well, we'll just wait for her," or is there something that you can do to change seeing things this year in 2022? Or is it really just a 2023 fix would be the earliest that we could see improvement?

So to be clear, there's no throwing up our hands. I mean, the team has been very, very focused over the last number of years. If you recall, how we were going into 2020. And if you think about a significant portion of our business, which has been in the Workshops business, was completely shut down. So we're -- we pivoted the model, we built the virtual to be able to balance that as much, continue to invest in our digital assets, our marketing, our data, our commerce, as well as revamping our entire health solutions business.

So I would, in no way, shape, form, say we're just waiting for someone to come in and wave a magic wand. The team is doing a significant amount of work, which is what we've been trying to articulate, so we can accelerate our business throughout here in what we can do and being able to use the flexibility of our business model.

Our next question comes from Doug Lane with Lane Research.

Just, I guess, my question is, if during this reevaluation process, you did decide that you didn't need to be in the Studio business, how long and how difficult would it be for you to completely exit that business, if that's what the decision was?

Look, I think that decision is so hard to comprehend because as we've said, in-person community and coaching and how that interacts with our leading digital platform and making our digital experience easy and intuitive, we think there's huge value in the combination of in real life experiences with our leading digital platform.

Okay. Fair enough. And then the other topic I wanted to talk about was the digital marketing environment. Rates are up, and there's been a lot of shift in the whole environment. And I was just wondering how -- what you're seeing with costs, what you're seeing with the shift of how you go to market digitally and how that's impacting your 2022 strategies?

Yes. Look, focus on digital performance marketing has been very important as we look to maximize ROI on that marketing spend and to make huge strides in '21 building global capabilities that our channels such as paid search and e-mail are working well for us. We've revamped our approach to social also.

I think the tailwind we're looking for, as we've said, in terms of coming out of very unusual year where people are making fewer New Year's resolutions than ever, the tailwind we're looking for is overall category demand lift to bring traffic to our site. In the meantime, we're doing all we can to offset that big traffic environment with a strong focus on conversion and getting people to sign up for longer tenured plans at the outset.

Thank you, all, for joining us today. I certainly want to recognize all of the WW teams around the world for their talent, passion and commitment to our brand and our business over the course of my tenure. And I truly believe that the long-term opportunities for WW is significant, our leadership position in weight management, our science, our attractive business model and unique competitive advantages. And finally, I want to once again welcome Sima. I know she looks forward to working with all of you in the future. And thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.