Nu Skin Enterprises, Inc. (NUS), a global direct selling company, reported its second-quarter 2024 earnings with revenues marginally surpassing guidance at $439.1 million, despite a 4% foreign exchange headwind. The company's non-GAAP earnings per share were at the higher end of the expected range.
Nu Skin (NYSE:NUS)'s core business experienced difficulties amid broader economic challenges, but sequential growth was seen in certain markets including the U.S., South Korea, and Southeast Asia-Pacific. The Rhyz brand, part of Nu Skin's portfolio, showed a notable revenue increase of 32% to nearly $68 million. The company is pushing forward with its transformation strategy, focusing on expanding its integrated beauty, wellness, and lifestyle offerings.
Key Takeaways
- Nu Skin's Q2 revenue hit $439.1 million with non-GAAP earnings per share at the top end of the guidance range.
- The Rhyz brand's revenue grew by 32% to approximately $68 million.
- Nu Skin is expanding its product offerings and focusing on its transformation into an integrated beauty, wellness, and lifestyle company.
- The company reduced general and administrative expenses by nearly $20 million through cost efficiency programs.
- Nu Skin revised its annual revenue guidance to $1.73 billion to $1.81 billion with adjusted earnings per share of $0.75 to $0.95.
- Investments in growth initiatives and cost efficiency measures are ongoing despite market pressures.
Company Outlook
- Nu Skin expects to navigate current economic challenges and continue investing in growth initiatives.
- The company plans to enhance brand awareness and penetrate developing and emerging markets further.
- Nu Skin is investing in Mavely, an affiliate marketing platform, to strengthen its business model.
Bearish Highlights
- Nu Skin's core business is facing pressures from the global economic downturn and challenges within the direct selling industry.
- A non-cash impairment charge of $141 million was recorded due to these pressures.
- There is a projected foreign currency headwind and pressure on gross margin and profitability.
Bullish Highlights
- The company has seen sequential gains in key markets like the U.S., South Korea, and Southeast Asia-Pacific.
- There is resilient demand for higher-priced items, and the company is focusing on affordable luxury launches.
- Nu Skin is optimistic about the long-term potential of the Chinese market for premium devices and brands.
Misses
- The company has observed challenges with higher-end consumables compared to the performance of devices.
- Nu Skin has narrowed its revenue guidance range due to a mix shift in revenue from different regions and a 4% FX headwind.
Q&A Highlights
- Nu Skin is managing expenses effectively, with a focus on cost efficiency savings in general and administrative expenses.
- The company is experiencing higher tax rates due to profitability by geographic segment.
- Nu Skin launched Peptide Pout, an affordable luxury product that sold out quickly and will be promoted globally.
Nu Skin's second-quarter performance reflects a company adapting to an evolving global market. Despite the headwinds, Nu Skin's strategic focus on cost efficiency, product innovation, and market expansion indicates a proactive approach to maintaining its growth trajectory and shareholder value. The company's commitment to becoming a leading beauty, wellness, and lifestyle ecosystem remains steadfast as it continues to evolve its offerings and business model.
InvestingPro Insights
Nu Skin Enterprises, Inc. (NUS) has demonstrated resilience in its second-quarter earnings, with a notable revenue increase in its Rhyz brand and a strategic focus on expanding its integrated beauty, wellness, and lifestyle offerings. Delving into the financial health and market performance of Nu Skin provides additional context for investors, as reflected by real-time data and InvestingPro Tips.
InvestingPro Data:
- The company's market capitalization stands at $516.54 million, reflecting its current market valuation.
- A robust gross profit margin of 71.87% in the last twelve months as of Q1 2023 indicates Nu Skin's effectiveness in managing production costs relative to sales.
- Despite a challenging environment, Nu Skin maintains a dividend yield of 2.31%, showcasing its commitment to returning value to shareholders.
InvestingPro Tips:
- Nu Skin has raised its dividend for 23 consecutive years, signaling a reliable track record of shareholder returns.
- Analysts predict the company will be profitable this year, which may signal a positive outlook for investors considering Nu Skin's future earnings potential.
These insights, particularly the impressive gross profit margins and anticipated return to profitability, align with Nu Skin's reported strategic focus on cost efficiency and market expansion. The company's ability to maintain and grow its dividend over an extended period also underscores its financial stability and dedication to shareholders.
For a deeper analysis and additional InvestingPro Tips on Nu Skin, investors can visit https://www.investing.com/pro/NUS, where 7 more tips are available to guide investment decisions.
Full transcript - Nu Skin Enterprise Inc (NUS) Q2 2024:
Operator: Good day. Thank you for standing by. Welcome to the Nu Skin Enterprises' Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Pond, VP of Investor Relations. Please go ahead.
Scott Pond: Thanks Shannon and good afternoon everyone. Today on the call with me are Ryan Napierski, President and CEO; and James Thomas, CFO. On today's call, comments will be made that include some forward-looking statements. These statements involve risks and uncertainties and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks. Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our Investor website for any required reconciliation of non-GAAP numbers. And with that, I'd like to turn the call over to Ryan.
Ryan Napierski: Thanks Scott. Hello everyone. Thanks for joining us today. I'll start by providing a performance summary of Q2 and then share progress update on our ongoing enterprise transformation vision, strategy, and plan as we continue to evolve our core Nu Skin business from a traditional direct selling model towards a more expansive integrated beauty, wellness, and lifestyle company, including our Rhyz ecosystem. The second quarter played out similar to the first with revenue slightly above the midpoint of our guidance despite a stronger-than-anticipated FX headwind of over 4%. Non-GAAP earnings per share were near the top end of the range, reflecting continued progress to plan for our business transformation, while managing costs and driving efficiencies. Overall, the operating environment remains challenging for our core Nu Skin business, due in large part to macroeconomic factors and pressures on the direct selling industry itself. Despite these challenges, we were encouraged by sequential gains in several of our markets, including the U.S., South Korea, and parts of Southeast Asia-Pacific. Most notably, we experienced year-over-year improving trends and paid brand affiliates globally, which translated into improving new sales leaders. China remained challenging due to macro trends in the market. Our Rhyz business continued to perform well with revenue up 32% to nearly $68 million, accounting for over 15% of our second quarter total. Growth at Rhyz was led by our Mavely affiliate platform and our Wasatch Manufacturing business. Rhyz plays a critical role in our enterprise transformation that I'll speak to in a moment, and we expect revenue from Rhyz to continue to grow at a faster pace, reaching 20% to 25% of overall revenue mix by 2025. Let's dive deeper into both our Nu Skin Core and Rhyz businesses. In our core Nu Skin business, new products, including Ageloc, Wellspa IO and RenewspA IO, along with our TRME weight management system were the main growth drivers delivering over $60 million of revenue in the quarter. Adding these new wellness -- the new wellness IO devices to our cadre beauty devices has resulted in Nu Skin being named as the World's Number One Company for Beauty and Wellness Device Systems by Euromonitor this past year. To-date, our IO devices have produced more than 20 million connected treatments and over 100 million data points that are helping us to better understand our consumers' unique habits and behaviors, which drive 2 times to 3 Trme weight management system greater purchasing than that of non-connected device consumers. During the quarter, we continued to feel the impact of the challenging macro environment affecting consumer spending, and customer acquisition in the majority of our regions, particularly for premium goods. Nevertheless, we were encouraged with sequential gains in several of our KPIs, including double-digit customer growth in our two largest segments, the Americas and Mainland China, along with gains in sales leaders in the key markets of South Korea and Southeast Asia-Pacific. We just held our first in-person live event for our Western markets in over five years within the even larger events slated for our Eastern markets in September. It was a great reminder of the power of getting together in person and we were able to drive energy and alignment along our leaders as we shared three key initiatives. First, we previewed our next major product division, Mind 360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters. Mind 360 is built to serve customers who are seeking support for stress management, cognitive performance, and sleep in this rapidly growing $9 billion global cognitive health market. Second, we discussed plans to enhance our overall brand awareness, announcing our integrated brand building plans as we strive to build greater presence wherever our customers seek to find us, including enhanced digital marketing and third-party marketplaces like Amazon (NASDAQ:AMZN). Improving overall brand awareness will lead to greater engagement and conversion for our customers and affiliates as we build synergistic value in the marketplace. And third, we announced our increasing efforts and focus to further penetrate developing in emerging markets around the globe, beginning with the revised operating models in Latin America and some Southeast Asia markets beginning in the second half of this year. Developing markets represent more than half of the markets in which Nu Skin currently operates and are significantly underrepresented in revenue and operating performance. Our revised operating plan will include a more localized product portfolio and business model that will enable us to reach a broader demographic than historically feasible through our current business model in these markets as well as streamlined operations. We will leverage these learnings as we prepare for our previously announced exploration of the India market. Our team is very focused on building successful developing and emerging market business models that will take Nu Skin's mission of being a global force for good by empowering people to improve lives to new markets around the world. Shifting next to Rhyz. As I mentioned previously, Rhyz continues to perform at an accelerated pace as we invest in, build, and scale these businesses towards long-term integrated beauty, wellness and lifestyle ecosystem. Rhyz is made up of several businesses ranging from technologies, manufacturing and more recently, brands. Every investment in Rhyz holds synergistic value to the other businesses in our ecosystem and play critical roles in our long-term vision and strategy. One critical business within Rhyz Mavely, our everyday influencer platform that connects more than 70,000 affiliates to over 1,200 beauty wellness and lifestyle brands in the United States. Mavely is rapidly becoming a leading affiliate brand platform, leveraging technology that enables brands to access our army of everyday influencers to share their brands via social media. Leveraging machine learning and working to implement next-generation AI, Mavely curates brands for its affiliates to share by a social media simple, fast, and easy. And we're leveraging the Mavely platform to develop a Nu Skin Mavely app instance that will enable our affiliates to share Nu Skin brands more easily, while gaining access to hundreds of other brands to promote and share. Additionally, Mavely enables the promotion of other Rhyz brands such as BeautyBio to Mavely affiliates. We anticipate that affiliate marketing will continue to outpace virtually all other forms of advertising and promotion, and we believe that our approach to integrated affiliate marketing via Mavely will become a more meaningful player in this rapidly shaping industry. In addition to Mavely, the benefits to vertical integration across manufacturing and our owned and partnered brands enables us to accelerate product innovation and speed to market as we move more quickly to keep pace with consumer trends in beauty and wellness. Rhyz also provides us optionality to drive brand awareness and engagement, meeting more consumers where they discover and shop. We continue to invest in Rhyz as a critical innovation accelerator for our overall enterprise transformation strategy. Leveraging the expertise of companies within Rhyz has been instrumental in accelerating our innovation agenda in product and device research and development, sustainability, and supply chain capabilities. We'll continue to expand on this and share progress with you in the coming quarters. So, in summary, our enterprise transformation remains on track with second quarter results in line with guidance and a halfway point of 2024. We've continued to demonstrate our ability to adapt to challenges and deliver within expectations. We're focused on accelerating innovation across our Nu Skin core business with our Mind 360 product division, an enhanced business model for developing and emerging markets and integrated brand building efforts. We're also investing in key enterprise growth initiatives, including Mavely and several other businesses in Rhyz, which continue to deliver strong growth. We have a long runway into the future and provide us with synergistic tools and capabilities that we can leverage across the enterprise. Operationally, we continue to focus on managing costs and driving efficiencies throughout our ongoing transformation. Despite the persistence of macroeconomic headwinds, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty, wellness and lifestyle ecosystem. So, with that, I'll turn the time over to James to cover second quarter results in more detail, along with our guidance, and then we'll open it up for questions. James?
James Thomas: Thank you, Ryan. Thanks to all of you for joining today. I'll provide a brief Q2 update and then speak to Q3 and 2024 guidance. For additional details, please visit our Investor Relations' website. For the second quarter, we posted revenue of $439.1 million, which was at the midpoint of our previous guidance range and included a slightly larger-than-expected negative foreign currency headwind of 4.2% or $21 million. Reported earnings were negative $2.38 or $0.21 excluding restructuring and impairment charges. Our gross margin was 70% compared to 72.9% in the prior year quarter. Our overall gross margin continues to be impacted by growth in our Rhyz business, which carries a lower gross margin. Gross margin for the Nu Skin core business was 76.1% compared to 77.2% in the prior year quarter. This decline in margin can largely be attributed to the geographic shift of revenue in the core and fixed overhead costs on lower volume. We are accelerating our SKU rationalization project and expect to see sequential improvements in gross margin with an approximate 20% reduction in our overall SKU count by the end of 2024. Selling expense as a percentage of revenue was 37.7% compared to 37% in the prior year quarter. For the Nu Skin core business, selling expense was 42.2% compared to 40.2% in the prior year period. Our core Nu Skin selling expense typically ranges between 40% to 42% with a slight increase, mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition. General and administrative expense declined nearly $20 million due to the continued execution of our cost efficiency program, related restructuring activities in the quarter, and bringing overall operating costs more in line with current revenue levels. As a percent of revenue, G&A for the quarter was 26.9% compared to 27.4% in Q2 2023. Over the past several years, our core Nu Skin business has faced challenges due to global economic downturns, the rising cost of capital, and overall direct selling industry pressures. These factors have contributed to a depressed market valuation, which resulted in a non-cash goodwill and intangibles impairment of $141 million, mainly across the Nu Skin reporting units. Additionally, in the second quarter, we incurred $8.4 million in restructuring charges and plan to extend our restructuring program as we continue to evolve our operating footprint as we transform our business. Our operating margin for the quarter was negative 28.6% or 5.4% excluding restructuring and impairment charges compared to 8.5% in the prior year quarter. Interest expense was $6.7 million for the quarter compared to $5.8 million in the prior year. The other income expense line reflects $0.6 million of income compared to $0.4 million of income in the prior year quarter. In the second quarter, we continue to make strides in our inventory management and portfolio optimization plan, which helped generate healthy cash flows from operations of $51.2 million, which also generated free cash flow of $43.1 million in the quarter. We paid $3 million in dividends, paid down $25 million of our outstanding debt during the quarter. We did not repurchase any stock and have $162.4 million remaining on our current authorization. Our tax rate for the quarter was 10.2% or 41.4% excluding restructuring charges compared to 27.5%. For both the third quarter and the year, we anticipate an adjusted tax rate of 36% to 42%. This annual rate reflects an anticipated higher global effective tax rate, primarily due to the expected geographical mix of our earnings. Shifting attention now to guidance. Based on our first half performance in 2024 at the midpoint of our prior guide, increased FX pressure in the current state of the business, we are tightening our annual guidance. We now expect 2024 revenue in the $1.73 billion to $1.81 billion range with earnings per share of negative $2.01 to negative $1.81 or adjusted earnings of $0.75 to $0.95. Our guidance now assumes increased foreign currency headwind of approximately negative 4% to negative 3%. We are projecting third quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3% with reported earnings per share of $0.08 to $0.18 or adjusted earnings of $0.15 to $0.25. Looking ahead, we are confident in our ability to navigate the challenges and opportunities that lie before us. Our solid balance sheet and strong cash flow position us well to invest in growth initiatives, while returning value to our shareholders. We will continue to execute our enterprise vision and strategy with discipline and focus, ensuring that we remain well-positioned for success. And with that, operator, we'll now open up the call for questions.
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Chasen Bender with Citi. Your line is now open.
Chasen Bender: Great. Thanks. Afternoon guys. I wanted to first ask if you could give a little bit more detail about this Nu Skin Mavely app and explain how it will work specifically from the perspective of a sales leader. Once I have it in hand, how do I operate it? What does it mean? And how do I interface with it? But then at a higher level, obviously, you are launching products like Mind 360, you have more affordable luxury. You have this new app coming online. It seems like there's a lot coming at sales leaders really one at a time, they need to get back to basic blocking and tackling. So, just generally, how do you think about balancing all of these launches with competing attention versus stabilizing the core of the business?
Ryan Napierski: Yes, Chase, good questions. We'll kind of walk through a couple of those things quickly. Yes. So the Mavely app, if you go to the app store today, you can download a Mavely app and walk through how it works in terms of curating brands as an individual every day affiliate stands up. So, as we're looking towards Nu Skin, the Nu Skin Mavely instance of that Nu Skin affiliates as we build this out and put it into the market, they'll be able to download the app and go through a very similar experience, curating the brands that work for them, then they'll be able to -- it's a simple post and share technology that works with link that -- and it's pretty smooth, pretty easy to share. So, that's kind of how -- it's a simpler way to basically share those brands and then get access to other beauty wellness lifestyle brands on the Mavely app. So, pretty straightforward that way. As far as the focus of the field and we totally agree with you, that's a lot of our discussion in houses, how do we ensure that we continue to innovate while enabling our sales force to focus on those back to the basic principles. In fact, a big part of our live events theme and discussions were around back to basics, which is really sharing products you love with people and getting them to do the same. That's really the basic fundamentals. So, as we look to new products into the market, whether it is affordable luxury, whether it's Mind 360, these are additional products for them to share with people that they love and get them to do the same. So, it's not as much about adding new products in for them to focus on typically people-orient, especially in the affiliate marketing world, they oriented products that they relate to most. So, they're not all moving the same thing. And you can even see that with some of our new product launches in the last five or six years. It's the world has kind of changed quite a bit, where historically, we would launch a new product and nearly the entire sales force would focus on that one new product. That's really not how the affiliate world works any longer. It's more of identifying products that relate to you and relate to your target customer as a social influencer and micro influencer. And so having those optionalities or the optionality of additional products to select from, it then enables them to build their business their way, so to speak. So, we are mindful of the balance and the back to the basics. Again, I go back to basics simply means sharing products you love with people and getting them to do the same. That is the basics regardless of the product we put in front of them. We're targeting products that enable them to reach broader demographics and broader target markets. If that makes sense.
Chasen Bender: Got it. No, that's good detail. And then just mechanically, if a sales leader uses the Mavely app shares a product and generates the sale, how is that booked? Is that booked as core Nu Skin sale? Is that booked as Rhyz sale?
Ryan Napierski: Yes, James, go ahead.
James Thomas: Yes. So, I mean we're still working through the mechanics of how that will come through. But a sell that runs through the Mavely app that we will be recording revenue in Mavely, but it will all come to the same parent company in Nu Skin.
Chasen Bender: Okay. Okay, got it. And then I wanted to ask about the revised operating model in Lat Am and those Southeast Asian markets. Could you just expand on that? What the key changes are in your mind? And frame how quickly you think you could see positive activity and productivity changes and then ultimately, translating that into a time line for those changes to hit the P&L?
Ryan Napierski: Yes. Yes, absolutely. So, really from -- as we look out at these -- what we call developing markets are these markets where Nu Skin present has a presence. We have well over half of our markets that sit in that LatAm, Southeast Asia, East Europe, even parts of China, frankly, that are just different than the major urban cities. And as we look at that and the opportunities there, certainly, there are three key components of our operation there that we are reconsidering or evaluating. The first is the product portfolio and ensuring that we have the right products at the right prices. Second one then is the business model to enable the right behaviors for selling those products. And then the third one is the operational infrastructure that in various geographies is a little bit different. For instance, in Latin America, quotas or installment payments are the predominant form of payment versus, say, credit cards or the like elsewhere. So, as we're looking at these developing markets, and we've already begun work in Latin America, in Argentina, for instance, where we've reduced the product portfolio of the existing and are evaluating local manufacturing opportunities for new products to get price points at the right place for the demographic -- the target demographic that we're going after, evaluating the business model. We're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards for that and then scaling the operations. So, we've already begun those tests in LatAm. We will continue to expand those tests throughout the end of this year and evaluating a couple of markets in Southeast Asia, like the Philippines, in Thailand, Vietnam, these parts of the world where just the socioeconomic status is just different and much different than the more developed markets we operate on. So, as far as how we see it in the P&L, we haven't really worked that through the remainder of this year. I think we're very much in a continued testing and refining process. And then we'll be talking with you more in our 2025 guide and probably further detail about that.
Chasen Bender: Got it, that's helpful. And I'm sorry, I don't mean to hog the entire call here. So, apologies. But just one more, if I may. I wanted to ask about the updated 2024 guidance. It looks like the implied second half net sales guidance went from down about 4.3% at the midpoint to down about 7.5%, but the implied second half EPS guide went from down $0.91 a to $0.55, if my math is right. And so James, I was hoping maybe you could spend a little time framing the difference there just in context of the expense management efforts you're calling out, are you investing more? If so, where are those dollars going? Just some additional color on that side, unpacking the change and any investment posturing would be helpful? Thanks.
James Thomas: Absolutely. And that's a great question. It's something that we've looked at in terms of how we saw the first half come through as we perform the guidance towards the midpoint of our revenue guidance. You're right on top line, we have narrowed that range for where we performed under the high guide in Q1 and Q2. And then the big discussion point that we didn't anticipate when we gave guidance was a foreign currency headwind of 4% plus that we've built through our models. And so when you run that foreign currency through on top line, we've brought down the top for that rationale. We've been able to hold the bottom with what we see coming through in Q3 and Q4. The pressure comes on gross margin when you see -- if you see how we performed in the quarter compared to the prior year, when you roll FX through on gross margin and then even some geographic shift that we've noticed within the Nu Skin segments of where we performed to our expectations, we're getting more revenue from some of our less profitable regions, less revenue from some of our more profitable regions. So, it created a little bit of mix shift and pressure in gross margin as well as just a slight uptick in selling expense as we've invested in areas to go after performance within the plan. G&A, we continue to be hyper focused. I will continue to go in and drive those cost efficiency savings that we set out to do, looking to be on pace with the original savings goal that we set out of $65 million coming out of G&A in 2024 compared to our prior year. So, that's a little bit of a bit color of why there's pressure. And then with that pressure on profitability comes an impact to our tax rate. If you noticed the higher tax rate that we have modeled out or we gave in our script there, we are seeing pressure on our tax rate due to the profitability by geographic segment around the world. So, just flushing that through trying to get clarity on where we think we'll land from an earnings perspective.
Chasen Bender: Got it. That's really helpful color. I appreciate it. I'll pass it on from here.
James Thomas: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Sydney Wagner with Jefferies LLC. Your line is now open.
Sydney Wagner: Hi, this is Sydney on for Ashley Helgans. Thanks for taking our question. Just three from us. So, any update that you can give on some of the affordable luxury launches you discussed last quarter and how those have been received by the market? And then second one was last quarter, you mentioned while you did see some pressure from the consumer side, demand for higher-priced items was still resilient. Just curious if that was a trend you still saw play out this quarter? And then just any additional color you can give on China and what you're seeing there? Thank you.
Ryan Napierski: Yes. Sure. No, Sydney, it's great. Thanks for joining the call. Yes. So, affordable luxury as we mentioned, we're doing quite a bit of research and development on that right now with more products to come. One product that we put out in the last quarter was a product called Peptide Pout which is a lip application that literally does that touch the lips. James might be wearing it right now, I can't tell. But the Peptide Pout, and it was a great social seller. In fact, sold out very quickly sold out of stock and will be a very good promotional product around the world. So, that was one that we brought to market very, very quickly, and we have several more that are planned just like that over the coming quarters. They generally -- they're interesting because they -- these types of affordable luxury products are a little bit more promotional in nature, meaning that they kind of run in really quick turns and they're sold almost like in a sellout fashion. You can almost imagine some of these influencer brands that hit Nelcella [ph], a full production run through and then they reload. So, we're seeing similar dynamics to that with Peptide Pout as we put it out there and then with the others, we're kind of forecasting similar models. So, you'll be seeing a few of those, but that's just one example of one that's moved forward. You were asking about kind of higher-priced product resiliency. I mean I think generally, our -- we've noticed that our devices hold up reasonably well in this kind of hyperinflationary market, while some of our other higher-end consumables tend to struggle a little bit more. So, I would say that it's a little bit more mixed from a consumer behavior standpoint around high-priced items, but our devices continue to perform well, but we see some challenges in some of the other items. So, I think it's just what's maybe a more durable good that tends to do a little bit better, at least we're observing that. And then to your third question around China. China just continues to be a very interesting macroeconomic market. It seems every time I drive home, I'm listening to CNBC or the Bloomberg report it. It's reading us something a little different. I was over there just about a month ago meeting with many of our employees and our team over 800, in fact. And really interesting, there's still a lot of ambition in the market. The economy is obviously struggling over there. And so I think there's near term, call it, hesitancy built into the market, and that's why we're being very conservative on our go-forward looks. But I continue to believe heavily in the potential of China. It's still the world's second largest market. It still has a very strong consumer demand. There are a lot of local brands, Chinese brands in the beauty space, in particular, are growing at pretty aggressive pace, and that's very different than it was five to seven years ago, especially by [Indiscernible] or TikTok over there. So, a lot of social brands that are of China origin are really starting to take market share over there. But as a premium device and a premium brand market, we see a long-term potential there. I just think it's going to take more time for the market to get back on its feet.
Sydney Wagner: Thank you.
Ryan Napierski: Thanks, Sydney.
Ryan Napierski: I think that's all of the questions we had for the call today. I appreciate all of you dialing in. We acknowledge you're kind of juggling between other calls across the board. So, we appreciate the time you're able to give us. We look forward to giving you more updates in the quarters to come as we continue to evolve our business towards our vision of becoming the world's leading beauty, wellness, and lifestyle ecosystem. So, with that, we'll speak with you next quarter. Thanks a lot.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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