Nov. 6, 2017 -
"Weight Watchers delivered strong performance across all major geographies in the third quarter, which resulted in high-quality earnings results," said Mindy Grossman, the Company's President and CEO. "We are excited about the upcoming winter season and the launch of our new program, which has received highly positive and enthusiastic feedback in consumer trials. We have a tremendous opportunity to continue to evolve Weight Watchers into a global, healthy living brand."
"Our solid financial performance continued with year-over-year revenue growth, gross margin expansion, increased profitability, and strong cash generation," said Nick Hotchkin, the Company's CFO. "We are confident our business momentum will continue throughout the balance of the year, and therefore, we are raising our earnings guidance for the full year 2017."
Revenues in Q3 2017 of $324 million, up 15%, or 14% on a constant currency basis, year-over-year
WTW expects full year 2017 revenue of approximately $1.3 billion, a double-digit increase over the prior year.
Total Paid Weeks in Q3 2017 up 20% year-over-year
Q3 2017 End of Period Subscribers up 18% year-over-year to 3.4 million
Operating Income in Q3 2017 of $91 million, up 37%, or 34% on a constant currency basis, year-over-year
eighth consecutive quarter of member recruitment growth
Gross margin rate was 54.7%
For the year, marketing expense is expected to be about $205 million
In Q3, North America revenue increased 16% on constant currency and end-of-period subscribers increased 19%. Performance in our international markets has markedly improved throughout 2017. Continental Europe revenue increased 14% and end-of-period subscribers increased 24%. In the U.K., revenue was up 9% and end-of-period subscribers increased 7%.
End of Period Subscribers in Q3 2017 were up 18.4% versus the prior year period, driven by growth in all major geographic markets. Q3 2017 End of Period Meeting Subscribers were up 10.6% and End of Period Online Subscribers were up 24.4% versus the prior year period.
Cash balance was $178.2 million as of the end of Q3 2017.
The company hired Sanjay Mehra as Chief Strategy and Growth Officer. In this role, Sanjay is focused on growth opportunities and developing strategic partnerships and initiatives.
Over the next month or so, WTW will launch an evolution of its SmartPoints food plan, which claims to provide even more freedom and flexibility than ever before.
See the complete press release and financial tables here:
As we predicted years ago, WTW badly needed a change in top management, and when that did happen, getting rid of slacker Jim Chambers, things would improve. Having two powerful women in top management and on the board so far has worked wonders (Mindy Grossman, Oprah Winfrey). We wonder, though, how much of this significant uptick in sales and attendance is due to the perceived change in tone, and heavy advertising, and how much is due to real changes in the program.
Is it just "the Oprah effect" and "the Mindy effect", or has Weight Watchers' program and services truly improved? Are group leaders suddenly that much better? Is the company's app and website that much better? Are customers suddenly flocking from competitors such as NutriSystem and DIY plans? Is the company suddenly more nimble in rolling out new services faster?
In the conference call, management said that much of the improvement is due to better collaboration and knowledge sharing across markets. They also say that they "have a vision of delivering a more personalized, seamless and unified experience for our members." That's fine. So why don't they customize their plan and have special programs for men, seniors, diabetics, African-American and Hispanic women, people with food allergies, post-menopausal women, etc.?
Management also talks about their strength in being a global brand. Well, they've been an international brand for decades., What's new about that now? They also talk about being smarter with data analytics. NutriSystem has been using data analytics for at least 4-5 years now. Is WTW just now discovering some things that other weight loss competitors have known and been implementing for years, playing catch up?
Maybe the diet giant has finally awakened.