Lifevantage Corp Q2 FY2025 earnings call

• The MindBody GLP-1 System launched in October 2024 in the U.S. had remarkable success, with revenue growth and cleared backlog by end of December. Clinical results showed 140% increase in natural GLP-1 production, fat reduction, and maintained muscle mass.
• A third-party in vitro cell study showed synergistic benefits of combining MindBody with Protandim Nrf2 Synergizer, activating new genes and enhancing antioxidant defense and fat metabolism.
• International rollout of MindBody System begins in March, following strategic measured launch approach. Modernized Evolve Compensation Plan has been crucial for success, attracting influencers and simplifying path to success for consultants.
• Welcomed Todd Thompson as Chief Information and Innovation Officer to enhance digital experience for consultants and customers.

Second quarter revenue was $67.8 million. The Americas region had revenue of $57.2 million, a 46.3% increase, representing 84.4% of total revenue. The Asia-Pacific and Europe region had revenue of $10.6 million, a 15.5% decrease. Total active accounts in the Americas increased 25% sequentially from the first quarter. Gross margin was 80.5%, a 190 basis point improvement from the prior year.

• Reiterated fiscal 2025 revenue guidance of $235 million to $245 million, a 17% increase at midpoint from previous guidance.
• Adjusted EBITDA expected to be $21 million to $24 million, up from prior guidance of $18 million to $21 million.
• Adjusted non-GAAP earnings per share expected to be $0.72 to $0.88 versus previous $0.70 to $0.80.

Q: How to continue scaling and build off solid growth in active accounts, and efforts around brand awareness?

A: Looking to expand product offerings and initiate proactive advertising outreach. Existing consultants have done well, and social sellers are being built upon with potential for growth as they learn about other products.

Q: Any material expenses post initial launch phase?

A: Expect elevated incentive costs in Q3 related to pre-existing incentive programs, gradually decreasing in Q4 to normalize. Most launch-related costs behind us.

Q: Margins and flow through for the rest of the year?

A: Flow through should be consistent or slightly better. Elevated incentive and variable comp expenses in Q3 and Q4, but expecting incremental leverage in FY2026.

Q: MindBody subscriptions and sales in stacks vs standalone?

A: Average subscriptions about 80% of revenue, MindBody tracking low double digits above that. Higher proportion of MindBody sales in stacks expected going forward, including with Nrf2 or Collagen. Initial sales had high standalone units, but trends show increasing stack sales.

Q: Special dividend opportunity?

A: Special dividend is an option, but balancing against internal investments in brand awareness, IT, and inventory management to support growth.