Feb. 28, 2024
WW reported its results for Q4 2023 and the full year today. WW reported results in line with analysts’ expectations in Q4 FY2023, with revenue down 8% year on year to $206 million. “2023 was a pivotal year as we began transforming our business for the future. We returned WeightWatchers to year end subscriber growth – for the first time in 3 years – up 7% year-over-year,” said Sima Sistani, the Company’s CEO.
Full Year Fiscal 2023
Revenues of $889.6 million
Gross margin of 59.5%; excluding the net impact of restructuring charges, adjusted gross margin of 61.9%
Ms Sistani reported: “We are on track to deliver growth in total subscribers in 2024, expecting to end the year with subscribers in the range of 3.8 million to 4.0 million, including between 140,000 and 160,000 subscribers to our new WeightWatchers Clinic (formerly Sequence)” Management said that 70% of clinical sing-ups came from past WW members.
End of Period Subscribers in Q4 2023 were up 7.1% versus the prior year period, driven by the Digital business and the inclusion of 67,000 Clinical Subscribers.
Guidance: The firm expects revenues to be between $830 and $860 million in 2024, with clinical revenues of $100-100 million. It expects to have 3.8-4.0 million subscribers. Gross margin of 66% is projected, up from 61.9% in 2023.
Conference Call Information:
Management said that they expect sequential growth in clinical subscribers during each quarter of 2024, and expect to have 140,000 to 160,000 subscribers by the end of the year. It reports seeing less seasonality in its business, with New Years resolutions not being as important to consumers as in past year. By contrast, in Q1 2022, 40% of sign-ups came in that quarter. Importantly, management stressed that it will only use FDA-approved, brand name weight loss drugs and NOT compounded medications such as those used by some competitors. This may mean less subscribers acquired in the short term, but is in line with their long-term safe approach.
The company spent $238 million in 2023 on marketing (26.7% of sales), and it expects that figure to be flat in 2024. WW says that 40-45% of its clinical patients get approved for GLP-1 meds–higher than the average by 5-10%. WW will work on growing its B2B employer programs and expanding access to insurance, and payment options. It claims that employers are looking for weight loss providers with a strong behavior modification capability, and a plan that uses FDA-approved weight loss meds. The company expects to have 85,000 clinical plan subscribers by the end of Q1 2024. WW customer retention rate is now approaching 11 months. WW also said that Oprah Winfrey will be utilized in an event in May, but is no longer on the WW Board.
Marketdata/DietBusinessWatch Commentary
We are glad to hear that WW will not just jump on the bandwagon and use compounded Semaglutide meds. That’s the wise and prudent approach. We also think that growing the employer B2B business is a good move. Regarding the clinical business, with expected 2024 revenues of $100-100 million, this represent just 12.8% of total revenues. What about the other 87% of revenues that will come from non-medical plan members? That’s the key to a return to growth, in our mind. What program enhancements or strategy will bring back these members?
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