Greetings, welcome to the Nautilus, Inc. 2021 Transition Period conference call. At this time, all participants are in listen- only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. John Mills with ICR. Thank you. You may begin. Thank you. Good afternoon, everyone. Welcome to Nautilus' 2021 Transition Period conference call. As previously announced, Nautilus changed its fiscal year from the 12 months beginning January 1 and ending December 31 to the 12 months beginning April 1st and ending March 31st to include the primary fitness season for exercise equipment in the same fiscal year and to better align with the fiscal year-end of retail partners. As such, today, Nautilus is reporting financial results for the period January 1, 2021 to March 31, 2021, referred to as the Transition Period. Participants on the call from Nautilus are Jim Barr, Chief Executive Officer, and Aina Konold, Chief Financial Officer. Please note this call is being webcast and will be available for replay for the next 14 days. We will be happy to take your questions at the conclusion of our prepared remarks. Our earnings press release was issued today at 1:05 P.M. Pacific Time and may be downloaded from our website at nautilusinc.com on the investor relations page. The earnings release includes a reconciliation of the non-GAAP financial measures mentioned in today's call to the most directly comparable GAAP measures. For today's call, we have a presentation accompanying the call that management will refer to during their prepared remarks. On Slide two is our full safe harbor statement, which we ask everyone to read. You can access the presentation now by going to nautilusinc.com, then click on the investors tab, and then click on the events and webcasts, and the presentation will be there. I'd like to remind everyone that during the conference call, Nautilus management will make certain forward-looking statements. These forward-looking statements are based on the beliefs of management and information currently available to us as of today. Such forward-looking statements are not guarantees of future performance, therefore, one should not place undue reliance on them. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control and ability to predict. For additional information concerning these factors, please refer to the safe harbor statement and to our SEC filings, which can be found in the Investor Relations section of our website. With that, it is my pleasure to turn the call over to the Nautilus CEO, Mr. Jim Barr. Thank you, John. I'll spend the first part of today reviewing the exceptional performance in our 2021 Transition Period, then move on to the progress we've made against our North Star strategy. In this Transition Period, we delivered record-breaking results for the second straight quarter and produced our highest revenue quarter in company history. Results were driven by leveraging the continued strong demand for at-home fitness, along with the team's impressive efforts to solve unprecedented challenges in global logistics, bringing supply much closer to matching demand. Our growth and profitability contributions were once again broad-based across brands, segments, products, and geographies. For the Transition Period, net revenue was up 120% to $206 million. This is the first time revenue topped $200 million in our 35-year history. Excluding the divested Octane business, revenue for the period was up 143% year-over-year. The Direct segment grew 115%, crossing the $100 million mark for the first time in segment history, while the Retail segment grew 183%, excluding Octane, and posted its second highest quarterly revenue, second only to last quarter. Importantly, international revenue grew 200% versus last year or 340% excluding Octane. International is a smaller part of our business, but is an important beachhead for continued growth. Strong sales of our new connected fitness cardio machines, VeloCore bikes, the new treadmills, and Max Trainers, combined with continued momentum of our SelectTech strength products, drove these record numbers. The market reception to our new connected products has been tremendous, and we are proud to have introduced our brands to hundreds of thousands of new customers, acquiring nearly 340,000 new customers in the last 12 months. We've achieved strong growth in JRNY memberships from connected product sales, and I'm really pleased with the progress that the team is making in responding to member feedback to maintain and further build out our world-class fitness experience in JRNY. As we showed during Investor Day, JRNY membership growth accelerated after we introduced our first embedded screen product in September. At the end of March, we had nearly four times as many members as we did at the end of September. Despite pressure from increased inbound and outbound logistics cost, higher commodity prices, including steel and electronic components, and continued foreign exchange headwinds, gross margins came in higher than expected. Operating income for the period was $40 million, our third highest in company history. EBITDA was $40 million compared to just $2.3 million last year. Leading to a dramatic change in year-to-year cash and short-term investments. We ended the period with $113 million of cash and short-term investments, which has us very well-positioned to invest in North Star and our company's long-term growth. I'd now like to turn to an update on the execution of our North Star strategy. We unveiled this strategy on March 18th at our Investor Day. I hope our enthusiasm for the future of Nautilus came across, and that you gained a greater understanding of our long-term objectives and goals. This is a great time to be in the at-home connected fitness industry. Portion of the TAM, former gym-goers, are shifting into home fitness, and we believe our SAM, or serviceable addressable market, has at least doubled. In the now full year since the pandemic hit, habits and attitudes towards at-home fitness have changed in profound ways. Consumers experienced at-home connected fitness and saw that technology could deliver on many of the elements they could no longer get from the gym, trainers, online classes, connectedness, community, and variety. We've closely followed the sentiment of consumers since the beginning of the pandemic, and the trend has stayed remarkably consistent. We still see that 25% of former gym-goers do not ever plan on going back to the gym. As many have found, they prefer the convenience and safety of working out at home, which now has the added benefit of a more digital offering packed with variety. We also believe the emerging work-from-anywhere model will be widely adopted and help sustain the demand for our products and services. Studies indicate that two-thirds of U.S. workers prefer a hybrid workplace, and many of the world's largest employers already are committing to hybrid and remote work alternatives. As a result, we believe a meaningful number of gym-goers will continue to work out at home on days they work from home, in addition to maintaining their gym memberships, balancing between home and gym based on their work schedule. Our strong brand heritage of product innovation and wide omni-channel distribution are key strengths that we can build on as we enter the next phase of our company's evolution and build out our digital capabilities. We are transforming Nautilus from a product-led hardware company to a consumer-led digital company. Our strategy is rooted in five pillars designed to position Nautilus to deliver long-term value, including revenue of $1 billion in 2026, which equates to a 10% CAGR over the next five years. While we may have just introduced investors to North Star and the vision in mid-March, it has been part of our organization for a few months now. At Investor Day, we highlighted what we called early points on the board, such as the sale of Octane and personnel changes that enhance our capabilities. I'm pleased to report that this quarter, we continue to make important progress. One of the biggest opportunities is to become consumer obsessed, which is pillar number one of North Star. This means consistently working to deeply understand consumers and their needs and wants around fitness, which becomes the underpinning for our product and digital roadmap. We have evolved our media choices and are using more digital tactics to efficiently reach target consumers with newly refreshed marketing messaging. The key takeaway is for consumers to know that BowFlex offers a broad portfolio of connected cardio options as well as industry-leading strength products. Something for everyone, really. As I mentioned earlier, we acquired nearly 340,000 new customers in the last 12 months. Another clear indication we dramatically expanded our serviceable market. Our ability to continue to engage with these consumers and capitalize on their propensity to buy more than one product gives us confidence in future healthy top-line growth. We plan on returning to pre-COVID levels of marketing spend in fiscal 2022. In March, we introduced new creative that further speaks directly to the needs of gym-goers who want variety in their workouts and also want to be pushed to get their very best workout every time. It is still very early days, but we are extremely pleased with the initial results. Pillar 2 of our strategy is to scale JRNY. Our members have told us they want variety, hyper-personalized one-to-one adaptive workouts, immersive experiences like Explore the World, and trainer-led workouts on and off the equipment. We're meeting these needs through our innovative lineup of connected fitness products powered by our continually evolving digital platform, JRNY. The seven embedded screen JRNY offerings we launched in the last few quarters, two VeloCore bikes and the C7 bike, two new treadmills, and the M9 Max Trainer, continue to be tremendously successful. We'll be introducing an eighth product, Max Total, in the next few months. As I mentioned earlier, we've seen a four times growth in membership count since we launched our first embedded screen product in September 2020. Not only are we rapidly accelerating growth of our member base, we are constantly innovating and improving the JRNY experience. In the quarter, we added new adaptive workouts, expanded the number of Explore the World routes, and added new video content, including some new off-machine, trainer-led content. A few days ago, we launched the latest version of JRNY Mobile, the BYOD experience. It's important to acknowledge that we're just getting started. Equipment and digital experiences are considered together on the consumer purchase path, and we plan on making incremental investments in JRNY this year as we continually improve our members' experience. We're reiterating our fiscal year and 2022 goal of 250,000 members. Our longer-term goal of over 2 million members, which equates to approximately 20% of revenue being digital by fiscal year 2026. JRNY is critical to our North Star strategy as it enhances and differentiates our award-winning products, and we need to ensure we capitalize on the opportunity in front of us. Our progress and vision has also helped us attract talent. This quarter, we have hired a world-class Chief Supply Chain Officer, John Goelz, to lead us in continuing to turn our supply chain into a strong competitive advantage, and an incredibly accomplished Chief People Officer, Ellen Raim, who will help us leverage our talent into a strategic advantage. Ellen is replacing an awesome 18-year Nautilus veteran, Wayne Bolio, who retired last Friday. We thank Wayne for his incredible leadership, and we wish him and his wife, Grace, the very best in their next stage. As Aina discusses our plan for the first quarter of fiscal 2022, you'll hear that we plan to leverage our strong cash flow and increase investments into the digital future of our business. As discussed during Investor Day, we'll be making investments in the following areas: JRNY, Marketing, Innovation and Technology, Product Cost to Accelerate Membership Growth, People and Capabilities, and Partnerships and Tuck-in Acquisitions. Our intent is to reinvest a portion of our operating cash flow on a pay-as-you-go basis. This means our objective is to continue to be profitable, unlike some of our competitors, while we invest in our long-term vision. As we discuss the areas of focus and investment that we have planned for this fiscal year, it is important to bridge to the tremendous opportunity that our North Star strategy offers and reinforce our view on the long-term trajectory of this business performance. To that point, as part of our Investor Day, to illustrate our ambition, we provided long-term targets for fiscal year 2026. We said we wanted to cross $1 billion in revenue, with 20% of revenue coming from digital subscriptions, and that our goal was to reach 2 million members by the year-end of 2026. We want to highlight the strong upside we see in our digital transformation and share additional perspective about the long-term operating margins for the total company, as well as equipment and the digital side of our business. For the total company, we previously said that we expect a floor of sustainable operating margins of at least 10% by fiscal year-end 2026. The intent of this statement was to establish a more reliable long-term baseline for profitability and to emphasize that, unlike the Nautilus of the past, double-digit operating margins should be more sustainable due to recurring revenue from JRNY and a more balanced portfolio of products and services versus an overreliance on Hero product revenue. This statement did not fully illustrate the upside of the transformation to the new operating model. To provide more insight into the expected upside of that range, we are providing the following updated information. Total target operating margins are projected to be well above the minimum 10% and closer to 15% by fiscal year-end 2026. The rapidly growing digital subscription business, JRNY, is expected to have operating margins in the range of 20%-25% by fiscal year 2026. As membership numbers rise and the digital business continues to scale, the operating margin rate for the JRNY business is expected to continue increasing beyond fiscal year 2026. As a result, we see a path to total company operating margins sustainably moving higher than 15% after 2026. Our equipment business margins are expected to normalize given the return to typical advertising spend and the incremental costs related to higher mix of products with embedded screens, partially offset by improvements in the cost structure. As I mentioned on Investor Day, the path to 2026 operating margins may not be linear, as we intend to invest in the business opportunistically to accelerate the growth of the subscription business and the achievement of our North Star vision. We are confident that this additional transparency will help underscore our conviction in the North Star strategy and the path forward for the new Nautilus. We are transforming into a company that will deliver more predictable top-line growth and sustainably higher long-term margins because of a growing recurring revenue of digital subscriptions. Using a long-term ROI lens, we'll reinvest a portion of our earnings in investments that deliver the requisite ROI and bring us closer to achieving our fiscal 2026 goals of $1 billion in revenue and 2 million JRNY members. As I close, I'd like to emphasize how incredibly proud I am for our tremendous progress in the accelerated turnaround and growth transformation of our company that will take Nautilus to places it's never been before. We were an equipment-only company that suffered multiple years of revenue declines and a large loss in 2019. Pre-pandemic, we began to address the fundamental causes by adding bikes that had a stronger value proposition, changing our go-to-market approach, and adding key talent and capabilities. During the pandemic, we have fully leveraged the market opportunity to produce record-breaking financial results, including back-to-back, the two best quarters in our 35-year history. We also built assets we believe will last well beyond whenever it is that the world gets back to its new normal, including new customers, greater retail distribution, an enhanced team, and cash on the balance sheet. Finally, we now have a strategic vision that will take our company to a place it's never been before. Providing a differentiated winning fitness experience that is driven by consumer insights and combines equipment and digital experiences that put us in partnership with our members on their journeys to achieve long-term successes. We are committed to putting our consumer first, and our entire organization has adopted this mindset as we work to advance to our vision of a healthier world, one person at a time. When we achieve our transformational vision, we not only will have turned the company around, but it will be a new kind of company, more on-trend, more digital, and better prepared to be a leader in the fitness industry. We are proud of our accomplishments so far and even more excited and passionate about our future. With that, I'd like to now turn it over to Aina Konold, our CFO, who'll go over financial results and next year's guidance in more detail. Aina? Thank you, Jim, and good afternoon, everyone. I'm going to refer to the three-month period ended March 31, 2021, as a transition period, and we'll be comparing it to the same three-month period last year. As Jim covered earlier, net sales were $206 million, up 120% versus last year, up 143% excluding Octane. Gross margin increased by 40 basis points to 38.4%. Gross profit was $79 million, up 122% versus last year. The deceleration in margin rate improvement is because of continued inflationary pressures on product landed costs and FX, as the RMB continues to strengthen. Operating expenses grew by 9% to $39 million, leverage is the rate of sales to 19% versus 39% last year. Selling and marketing expenses were down 5% to $23 million or 11% of net sales, compared to $25 million or 26% of net sales last year, driven by a $3 million decrease in media spend. R&D costs were up 1% to $4 million or 2% of net sales, compared to $4 million or 4% of net sales last year, driven by increased investments in JRNY. G&A expenses were up 58% to $12 million or 6% of net sales this year compared to $8 million or 8% of net sales last year, primarily driven by bonus, stock comp, and investments in JRNY and other North Star initiatives. Operating income increased to $40 million versus last year's loss of $600,000, driven by increased gross profit. Income from continuing ops increased to $31 million or $0.94 per diluted share compared to last year's income of $2 million or $0.08 per diluted share. EBITDA from continuing ops improved to $40 million compared to $2 million last year. Turning now to performance by segment. Direct segment's net sales were up 115% to an all-time high of $102 million. Strength grew 179%, driven by BowFlex SelectTech weights and home gyms. Cardio grew 96%, driven by connected fitness bikes, the BowFlex VeloCore, and C6, and Schwinn IC4, and our new BowFlex Connected Fitness treadmills. We're really pleased that Direct's backlog at the end of the transition period was down to $27 million from $46 million last year, as supply is coming closer to meeting demand and our consumers are getting their products faster. Gross margins declined by 120 basis points to 50%, driven by higher landed product costs. Gross profit grew by 110% to $51 million. Segment contribution was $28 million versus last year's $2 million, driven by increased gross profit and lower media spend. Turning to Retail segment results. Net sales were $103 million, up 127% versus last year or 183% excluding Octane. Strength grew up 243%, driven by BowFlex home gyms and SelectTech weights and benches. Cardio was up 96%, driven by Schwinn and BowFlex connected fitness bikes and the new BowFlex connected fitness treadmills. Similar to Direct, we were able to reduce Retail's backlog. A quick note on this. We further refined our retail backlog to include all unfilled future retail orders. We used to report only current orders that should have shipped that quarter but missed the cutoff. At the end of this transition period, Retail's backlog was $179 million. The comparable number for last quarter was $209 million. Gross margins expanded 340 basis points to 26%, driven by favorable customer mix and fixed cost leverage, partially offset by higher landed product costs. Gross profit grew 161% to $27 million. Segment contribution was $20 million compared to $2 million last year. The improvement was primarily driven by higher gross profit. Turning now to other highlights. We ended this period with a much stronger liquidity position. Cash and short-term investments were $113 million compared to $26 million last year. Debt levels decreased to $14 million from $28 million last year, and we had $54 million available for borrowing on our Wells Fargo credit facility. AR was $89 million, 159% higher than last year, driven by the timing of customer payments on increased sales. Trade payables were $99 million, up 189% versus last year, primarily due to timing of inventory payments. Inventory was $68 million compared to $35 million last year. As a reminder, our inventory levels at the end of March 2020 were unusually low, reflecting the initial surge in demand due to the first set of stay-at-home orders. We had about $216 million of non-cancelable POs at the end of the quarter, compared to $35 million for the same period last year. Turning now to our forward-looking guidance. When we unveiled our long-term strategy in March, I said that at this earnings call I would give a perspective on fiscal year 2022, year one of our North Star long range plan. While many areas still struggle to battle COVID-19 and we keep them in our thoughts, we are thankful to see progress towards returning to normal. We're committed to communicating the progress of our transformation and expected impact of our North Star investments while balancing the need to further learn how market conditions will evolve over the coming months. Perhaps the most helpful approach we can take at this time is to communicate trends we are currently seeing. First, we remain bullish about the industry. We believe our SAM has increased, and the strategy we unveiled several weeks ago is the right one to capitalize on this tremendous growth opportunity. Orders from our retail partners have not abated from previous quarters, and this segment is driving the growth in our upcoming quarter. Further, we are highly encouraged by the strong reception to our new connected fitness cardio products. Sales of these products are growing at a much higher rate than non-connected products across both segments and represent a larger portion of our cardio equipment sales versus a year ago. Our research continues to show that about 25% of gym-goers have no intention of returning to the gym, and that those who want to return to the gym intend to have an option to work out at home, coinciding with a hybrid return to work plans, some days at home and some days at the office. Our research also indicates that people intend to spend a greater share of their wallet on out-of-home activities during the holiday season. At the same time, direct traffic, while still much higher than calendar 2019, is suggesting a return to more typical late spring seasonality trends. Our guidance for the first quarter of fiscal year 2022, which is the three months ending June 30, 2021, incorporates these trends that I've just mentioned. For the first quarter of fiscal year 2022, we expect net sales to grow between 40% and 50% versus prior year, or between 51% and 62% when excluding Octane. This assumes no new major challenges in global logistics or atypical end-of-quarter flow of goods. Compared to last year and consistent with prior year, we are experiencing gross margin pressures related to FX and pandemic-driven inflationary increases in steel and plastics and higher global logistics costs. Additionally, in Q1 fiscal year 2022, we expect incremental cost pressure due to the global microchip shortage. As these chips are a key component of our embedded screens, we're investing in spot buys to protect supply and meet our customers' demand for our embedded screen products. We are temporarily paying 40% plus more for SBCs, much more elevated pricing than we experienced in the transition period. We have a slide in the presentation to help investors understand the impact of these factors on Q1 2022's operating margins. It's important to begin with a normalized operating margin of 14.2% for the quarter ending June 2020 operating margins, which reflects the return to normalized media spend. We are expecting a five-point impact to gross margin related to commodities, FX, global logistics, and spot buying of microchips. These external factors are temporary in nature but are likely to continue for the next few quarters. Additionally, we expect our retail segment to be a larger percent of total sales versus last year, given this is the quarter when retailers begin their load-ins for holiday. This shift affects margins by about 1.5 points. The next set of impacts are related to strategic investments. We told you at Investor Day that we intend to reinvest a portion of our cash flow from operations in North Star, with a particular focus on JRNY, marketing, supply chain, and IT infrastructure. We call this pay as we go because it means our objective is to balance both near-term and long-term obligations. Each year, we will first seek to generate an appropriate amount of operating income, making sure that variable costs move with sales. We'll evaluate the next tranche of North Star investments, moving forward on the ones that will get us closer to our 2 million members and deliver the requisite long-term ROI. In Q1 2022, we are making incremental investments in JRNY and supply chain. Some of these costs hit COGS and some hit SG&A. These investments have attractive ROIs and are critical to our digital transformation. The last point on the waterfall, which I've called operational improvements, includes things like price increases that will go into effect on a rolling basis throughout the quarter and the benefits that we're starting to realize from the divestiture of Octane. As a result of the short-term gross margin pressures discussed and our intentional investments to build the new Nautilus, we are expecting operating margins for the quarter to be between 6.5% and 8%. Turning now to our expectations for the full fiscal year 2022. Like many other companies, we're still working to understand how our consumers will react once herd immunity is reached. We will continue to follow our pay-as-we-go philosophy in evaluating additional investments in North Star. We'll give you more color on our expectations for each upcoming quarter when we report earnings. At this time, we are providing full-year capital expenditure guidance. We expect capital expenditures to be between $12 million and $14 million, with the majority of the investment earmarked for JRNY. We are reiterating that we expect to have 250,000 JRNY members at the end of fiscal year 2022. Now, I'd like to turn it back over to Jim for his final comments. Jim? Thank you, Aina. We are very well-positioned to solidify and build our profound turnaround and for continued strong long-term growth and profitability as we transform into a digital leader in fitness. Our North Star is the absolute right direction for the company. It has traction, it is already generating early positive results. I want to end by thanking our employees and our partners for their commitment to our mission. You inspire me every day, over a year into the pandemic, I am blown away by what you have accomplished, and proud to be your leader. Now I'd like to open up the call to your questions. Operator? Thank you. Ladies and gentlemen, at this time we will be conducting a Q&A session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick your handset before pressing the star key. Our first question comes from the line of Mike Schwartz with Truist. Please proceed with your question. Hey. Good evening, guys. Just wanted to touch on the 2026 long-range targets and specifically on the margin outlook that you've now changed. I'm understanding the 10% that you gave us a couple of months ago was just a kind of a baseline, and now going to the mid-teens range. Maybe give us a sense of just maybe what's changed in the past several months to give you more comfort that margin should be a couple points higher than the low end of your expectations back in March. Sure. I'll start, I'll ask Aina to follow on. First of all, I think the real answer to your question is there has been no change. There's no more information available. We just wanted to provide more clarity on what was going on. We emphasized, as you know, that we wanted to get at least 10% operating income and that it would be sustainable. That is true, it's more of a comment on the floor than it is the upside. In retrospect, we said, look, we'd like to provide a little more clarity to add to what we said before, not change it, just add to it, that we've got upside in that range. We've always had these numbers. They've always been in our model. It's what we've always believed. We just wanted to make sure we provided more transparency and a greater look at the upside of what this business is going to deliver once it gets to 2026. Does that make sense? Aina, did you want to add anything? No, I think you covered it. The main clarification is instead of giving a range, we only gave the floor. We now feel like it's appropriate to really talk about where it's more likely to end up. Okay. That's extremely helpful. Then if I just kind of parse through the targets and then again, specifically in the margins, given what the margin target is for the subscription business, it looks like you're kind of calling out the low double digits, maybe even low teens for the equipment business in terms of operating margin. You've done that in the past, but in the past, when you achieved that, you didn't have the benefit of a lot of the optimization initiatives that you've undertaken over the past year plus. Maybe give us some more color or context around why that's the right number for equipment margins. Sure. I'll start, and again, we'll ask Aina to add on. For the equipment business, as Aina pointed out, we've got kind of downward pressure on forget about the short-term stuff, that's short-term, but in the long run, you're still going to provide screens and put them on machines that didn't have them before. That is going to have some downward pressure. There may be some things like last-mile distribution that consumers will begin to demand even more there. There's a lot of things that are changing in our business over time. Right now, you're not seeing the full impact of that because there aren't screens on everything, but that's the way we're going. There'll be those downward pressures. Aina, what else would you add to that? I don't have anything to add. Just want to reiterate, it's the screens and also that expanded increased customer touchpoint, like final mile and the orientation. Before, it was a little bit of you bought something, we dump it on your front step, and we never hear from you again. This is a little bit more than that, and we're just incorporating that into our product margins. Last mile kind of becomes our first touch point or one of our early touch points as we talked about in Investor Day. We want to invest in that, and we've got that in the projections. Okay, that's helpful. Maybe just one final question from me, if I may. It looks like you're turning back on marketing pretty heavily, particularly here in the first quarter. Are we to read that that's a sign that you now have the capacity, you now have the bandwidth to meet demand within more normalized shipping windows? Well, as Aina talked about, we're seeing kind of more seasonality in direct. We're just assuming that, hey, this is going to be more like a normal season. We're just going to return to the normal level of advertising, looking at the ROI. It works like a variable cost, and we'll drive the revenue based on that. Yeah, we're getting closer to supply meeting demand, especially in the direct segment that we're seeing first. Retail. Very, very strong, but we want to do advertising for all of that. Of course, we've got still pretty new products too that we want to talk about. Increasingly, we want to talk about JRNY. You know about it, but we need more consumers to know about it because the purchase path really is a total cost of ownership where you look at the actual equipment, how it works, innovation, things like VeloCore and leaning and all that. You also think about, Hey, what's the membership experience? What content do I have? What keeps it interesting day to day? You'll see a lot more of JRNY in our advertising as well, and we want to spend some money on that. Hopefully that answers your question. Aina, you want to add anything? Nope. No, you covered it, Jim. Okay, great. Thank you. Thanks, Mike. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question. Hi, good afternoon. Sure. A couple of questions. I just want to make sure I've got the waterfall right. Are you kind of implying, I guess mid-30% gross margins for the second quarter, just going through that kind of waterfall? Similar, yes. Okay. The five points for product cost increases is 100% in COGS, and then JRNY is mostly in COGS as well. Okay, perfect. Then on the gross margin and the kind of the chip shortage impact and the logistics and all of that, is this a situation that, based on what you know now, gets worse before it gets better? I know you mentioned that it might be a couple of quarter issue, but I'm just trying to think about the impact to the business, and as well as to your back orders. Yeah. I'll start and Aina can jump on too. It's tough to tell. It's like we look at the steel prices similarly and say, Look, that's got to be a COVID imbalance of supply and demand driving that, and that should come back. That's why we think these things are temporary. What constitutes temporary? How quickly the world gets back to being balanced on its various commodities and inputs to what we all enjoy, that's not exactly clear. When we say short-term, we don't know if it's going to be a couple of quarters, but we don't think it's going to be longer than a year, for example. We're just guessing like everyone else. What we did make a decision to do, though, is to pay more for it to make sure we have the flow of connected fitness equipment that is the installed base for our JRNY membership. We thought it's worth paying a little bit more for that component and making sure that we don't have a more restricted supply of those, and we can meet consumer demand for that. I think the answer is we don't know. It certainly doesn't act like it's a long-term problem, I don't know when it exactly abates. We've baked it in at least through this quarter. Do you want to add anything on it? Yes. Sharon, the way I'd put it is similar to when we started recognizing that this was not a sprint for the pandemic, when we started ordering from our suppliers several quarters in advance. We're assuming that this is going to be a temporary situation, but not a sprint. We want to make sure that we have enough put aside in our supply chain that we can meet demand through holiday. The one part of your question maybe didn't get to is that we're not anticipating it gets worse from where it is. Okay. We think it's pretty bad right now in terms of the spot prices, and we're not anticipating it gets worse. Again, it's a crystal ball exercise. I guess it's a good time to have a new Chief Supply Chain Officer. Sure. We sure need him. I think he's been on the job less than 45 days. Is there any kind of low-hanging fruit that he's identified? Other than getting chips, what is his major thrust of what he's focused on for 2021? Yeah. As we discussed at Investor Day, and you walked in the door to these things, I think short term, it's meeting supply with demand. We still have elevated demand, especially in certain products where we just plain can't even see a way to make enough of them still. We've got that. He's got to bring that closer, and he's working with our very valued suppliers to see better transparency and know what they can make and how quickly they can make it. He's working on that short term. Long term, we've kind of referred to our China Plus strategy. We'll continue to make things in China, but we'd like to diversify a bit globally. That'll be a bit of a longer-term thing. We are looking at a third DC to handle all this volume this year that we're going to bring online. He's going to help bring that online as well. He's got his hands full, as you point out. William McMahon, who's been doing this very well for us, has done a great job. It's great to have somebody who's spent their career in supply chain and global sourcing in particular to go after these types of things. We have high expectations, and John hasn't let us down so far. He's looking great. He's landed extremely well. Just started April 1st and really already making a great impact. All right. Well, great. Thank you. Thanks, Sharon. Our next question comes from the line of Steve Dyer with Craig-Hallum. Please proceed with your question. Good afternoon, Jim and Aina. Thank you for taking my question. Hi, Steve. Hi. I don't want to overkill the commodity cost chip, et cetera, question. Are you far enough into it to where you feel like from an operating margin perspective, given all the moving parts, that the 6.5%-8% could be sort of a baseline or a low water mark for the year, just assuming that everything eases a bit from here? I'll ask Aina to jump on that one. I think it's a good baseline. I wouldn't want to say it's the low water mark because we thought transportation costs were really bad, like in Q3 last year, and then it got worse. I'd like to say, as far as we can see, this is a good baseline, and every quarter, we'll update you if we see something different. Got it. You've talked a little bit about retail versus direct. Within the direct segment, I guess you've alluded to it as being sort of more normal seasonality. Normal seasonality for the June quarter historically, pre Jim and Aina, was fairly soft and I think would seem to indicate a pretty significant softening versus the last several quarters. Any other color there that you could sort of help us, as to maybe the last 45 days, what you're seeing there, relative to the previous call it year or six months? Yeah. I'll start on that one too, and I'll ask Aina to jump on after. Yeah, I think it's just normal seasonality, right? People are going outside. You look at Google searches for all sorts of terms related to fitness and it's down significantly. Probably started late January, early February, like the normal seasonality would do. Still stayed pretty high, though. Then, a little bit further down as the weather began to get better. It looks exactly like normal seasonality, whereas you look at the retail business, of course, they're thinking about the other side of that seasonality, when people are really back to looking at fitness equipment. Now with this elevated demand maybe doubling of the category, they're all trying to load up for the holidays. We're very confident in the holidays. The short term is always seen. I don't know if that's any additional color, but it's things that you can see in public information as well, that the interest in the category is sort of what we'd call a normal non-COVID year, which I guess maybe we, as a society, should feel pretty good about. Aina, anything you want to add? The one thing I'd want to add, Steve, is don't forget we're still working through a bunch of backlogs. The underlying kind of traffic and demand currently is probably more like the normal seasonality. Because we still have that big backlog, it may not look like that from the shipped revenue perspective. That's a great point. You're working off that backlog that we had coming into the quarter. Yeah. That's what I was trying to get at a little bit. Last one for me, just as it relates to JRNY. You talked about 250,000 members by the end of the year. Are you able to sort of characterize, does that imply an acceleration? Is that sort of the rate that you've been kind of adding over the last call it year or so? And then is the assumption that those would be mostly all paid subscribers? I know in or around Investor Day, you had talked about maybe doing some promotional stuff to sort of get people on and ingrain in the user experience. Thanks. Sure. No problem. We're not providing any additional guidance on that. We just wanted everyone to know, look, we said it once at Investor Day. We mean it again. We're still on track to do that. It's what the organization is focused on. Getting early traction and membership is super important to our long run. We're putting a lot of emphasis on that in terms of our goal setting and things like that. We're definitely seeing the increase in embedded products definitely helping. That was the way it was before. We're continuing to see the mix of embedded products continue to accelerate. That definitely helps us going forward. In terms of paid and regular, look, we're early in this business. That's a level of detail that we're not providing at this point. You can imagine that we're going to promote JRNY. We're going to make sure as many people get to experience it as possible. It's got a great price. It is very attainable. We'll run promotions on that as well. We'll definitely do that. We want people to try it. Already, we're doing two months free, and we might try other types of marketing to get members even faster than that. Hopefully, that gives you something, but really not a lot more than what we talked about before. Got it. All right. Thanks. Thanks, Steve. Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question. Hey, everyone. Thanks for taking my questions. Just a few for you. The first, Jim, in your prepared remarks, you talked about a new Max Trainer product. Just curious if you can tell us any more, whether it's timing or anything about that product. Should we expect additional, I would call that a big sort of, one of your big SKUs. Should we expect additional product launches this year? Yeah, sure. First of all, we're not providing more information as one of the few public companies in the space than any more of our product launches. We've been so ambitious the last 12 months or so getting all these things out there, but we do have a great innovation pipeline, but we're not going to talk any more about that going forward. Back to the Max Total, yeah. We've talked about it before. Essentially it's the top-of-the-line Max Trainer, and we're excited it has a bigger screen than the last Max Trainer, and therefore it really gets to benefit from JRNY. That was, as you would know, following us for a long time, the Max Total last time was the only embedded screen product we had until September when we went to VeloCore. Now that we're kind of refreshing everything across all those lines, including all the way to the top at the Max Total, which is going to be a great product. As we've talked about before, that high-intensity interval workout that comes from the Max Trainer is enhanced with JRNY training, and JRNY running it. We're really excited that more and more people will have that great experience. Okay. A couple questions on the retail business. Sure. I guess you answered the retailers are just sort of loading up for the holiday season. How is retail inventory? Do you feel like that's looking more healthy? Second part of the question is, your JRNY-embedded or compatible machines, do you feel like you have a good selection at retail of these machines that offer JRNY? Yep. No, good question. The JRNY embedded and the inventory. Maybe, Aina, you want to take the inventory one, and then I'll come back on embedded. I want to make sure I understand your question, George. Are you asking how I feel about the inventory at retailers or our inventory for our retailers? Inventory at retailers. I'm just trying to see if what we're seeing is retailers just finally sort of replenishing their inventory. Sell-through's been really good, so we haven't seen any kind of deceleration their sell-through. I think similar to what we want to do also for direct, where people just want to not be in that really deficit position we were in last holiday, where they want to build a little bit of safety stock, that might be what's driving it. Their sell-through is fine, and we are accommodating their ordering for not just this quarter, but next quarter and the quarter after that order. We're meeting that demand. Yeah. What Aina said is exactly right. Back on the connected products. Look, we went from one to nine of those in one year. We think it's great selection across all modalities and price points. Some of our retailers also have begun to sell some of the higher-priced items. For example, Best Buy does so much of its work selling online that they've been going higher than the typical kind of retail price ceiling of $1,500. We still have several great products below $1,500 that you can buy at retail that are connected. Now, when you're selling even Dick's and Amazon, you're able to sell products more online and not worried about the floor space and the inventory per door and all that typically has been a limiting factor for us. We're able to sell more and more of these products at retail. Okay, great. Thank you. Great questions. Thanks. As a reminder, ladies and gentlemen, it is star one to ask a question. Our next question comes from the line of Mark Smith with Lake Street Capital Markets. Hi, guys. First question for me is on the media spend. Can you just give us where that was in Q4? Was that right at about 2% in the transition period? Aina, can you answer that one? You mean like last year? No, this year, just the reported transition period. Oh. I'm going back through my notes. Ask your next question while I just grab it. Yeah, no problem. My next question's really on international growth. I know retail really looks solid. Can you call out any specific geographies that are doing well? Maybe discuss opportunities to boost international sales, and potential to really kind of hedge some FX in that manner. Yep. We have long done business in many countries through distributorships. I think it's something like 30-some odd countries that we do business in with value distributor partnerships. Recently, we've been making some traction going more direct to retail versus through distributorship in just a limited number of countries. Of course, there's better economics as you approach it that way. In terms of geographies, of course Canada we call North America, so that's international, but not really the way that we talk about it. Outside of that, and that's been great growth, outside of that, it's been Europe that has led the way for us. We have very strong growth in Europe and some great distributors and retail partners in Europe, and we continue to expand that particular business. Perfect. Aina, are you ready on the other one? I'm sorry, I can't find it easily. I'll call you back and give you that number. No, we can follow up offline. Thank you, guys. Oh, here's an actual media number. It's $10 million in this transition period, so $10 million versus last year's $13.2. $13.2. Okay, that's great. Thank you. Thank you. Thank you, Mark. There are no further questions in the queue. I'd like to hand the call back to CEO James Barr for closing remarks. Thank you to everyone on the call today, and for your continued support of Nautilus. We're looking forward to talking with you again on our first quarter fiscal year 2022 earnings call in August. Have a great rest of the day. Onwards and upwards. Thank you. Thank you. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.