Greetings ladies and gentlemen and welcome to the Nautilus, Inc. second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Should anyone require operator assistance, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Mr. John Mills. Thank you. You may begin. Great. Thank you Jen. Good afternoon, everyone. Welcome to Nautilus's second quarter fiscal 2022 conference call. Participants on the call today 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'll 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, including a reconciliation of the non-GAAP financial measures mentioned in today's call, is the most directly comparable GAAP measure. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2020. For today's call, we have a presentation 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 by going to nautilusinc.com, then click on the Investors tab, and then click on the Events, and the webcast and the presentation will be there. I would like to remind everyone that during the conference call, Nautilus management will make certain forward-looking statements. These forward-looking statements are based upon beliefs of management and information currently available to us as of today. Such forward-looking statements are not guarantees of future performance, and 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 Nautilus' CEO, Jim Barr. Thank you John and thank you all for joining us. Today, I'll begin with some thoughts on the home fitness market dynamics over the past 18 months and the outlook going forward as context, then cover our financial performance in the quarter and the first half. Next, I'll discuss our strong progress on our North Star strategy, including JRNY. I'll end with our plans to further accelerate our investments in JRNY and in marketing. You've heard us talk in detail over the past 18 months about the dramatic expansion in the size of our SAM, 2-3x by our most recent estimates. This kind of industry growth is very rare and underscores our strong opportunity as the number 3 in market share. There is strong evidence that much of this market expansion may be permanent because the principal driver is profound and fundamental secular changes in workout attitudes and habits that favor home fitness. Our frequent surveys continue to indicate that 25% of former gym-goers do not intend to ever go back to the gym, and that others who say they will return to the gym plan to work out more often at home than they did pre-pandemic due to remote or hybrid work models. Workout place is highly correlated with workplace. We are seeing these changes and attitudes play out in consumer behavior. For example, in a recent study we commissioned, 66% of respondents report that they work out at home versus 43% pre-pandemic. Connected fitness and our transformation are still in early innings. I'm proud that we have positioned ourselves well during the pandemic for post-pandemic success. We now have a portfolio of new connected products, a strengthened JRNY digital offering with a growing member base, stronger consumer targeting, expanded omni-channel distribution, and a stronger team. It is remarkable what we have accomplished in the last two years. I'll talk more about that a bit later. Now I'll briefly speak to our second quarter and first half financial results. In the second fiscal quarter of 2022, net sales were $138 million, which represents nearly 125% growth versus two years ago. Our net sales were $155 million in the same period last year. The primary driver of our miss to guidance was due to global shipping challenges beyond our control that affected the end of quarter cutoff. Specifically, we would have met our guidance of $145 million-$155 million if just a portion of the $22 million of finished goods inventory we had ready and waiting on the dock for retail customers had been picked up. There are a variety of reasons for the delay in pickup, including retailers' inability to secure containers in time. In fact, $12 million of the $22 million had shipped by the end of October. For additional perspective, this was the second strongest September quarter in the past decade for Nautilus. Excluding Octane, our retail segment in the second quarter was up 19% compared to the prior year period and up 175% compared to the same period two years ago. The direct channel exceeded our internal goals and was down in the second quarter due to seasonality, which didn't occur last year, but it was up 134% compared to the second quarter two years ago. International, which is reported as part of the retail segment, continued to achieve very strong year-over-year and two-year growth in the second quarter, up 57% and 655% respectively. As expected, gross margin for the second quarter of fiscal year 2022 was lower due to abnormal shipping and logistics costs, 8 points, commodities and components and foreign exchange, 4 points, and continued investment in JRNY, 1 point. The cost pressures related to the global supply chain disruptions are obviously affecting many industries, including ours. While the impact is significant, we believe these external margin pressures will normalize over time, and when coupled with the expansion of our addressable market, will result in improved operating margins for Nautilus. Despite our sales miss, we achieved our adjusted operating margin guidance for the second quarter of low single digits while increasing our investment in advertising and JRNY by nearly $8 million versus LY. Especially given the atypical retail seasonality patterns we have seen, it is important to also discuss the first half of the year in aggregate. For the first half, net sales were $323 million, a 28% comp to LY, and a 215% comp to LLY, excluding Octane. Keep in mind, 2022 is comping against the pandemic sales in 2021, so we're quite pleased with our first six months performance. In fact, this first half ranks as the best comparable period in Nautilus history. For the first half, adjusted operating income was $22 million or 7%. Moving on to our progress on our North Star strategy. During our Investor Day in March, when we laid out our long-term vision and strategic plan, North Star, one of the areas we highlighted was our supply chain. We have made great strides by working down backlog, improving our inventory position relative to last year, and opening a new DC to alleviate the widely known supply issues affecting global shipping. We are proud to have built and shipped the inventory to meet consumer demand without the disappointment of last year's long waits. We have overcome shipping issues and will not be among those sellers with empty shelves this holiday season. Even with these successful investments, we expect gross margins to continue to be under pressure as global supply chain disruptions continue to persist. We continue to address unprecedented challenges, such as container availability, cost of shipping and storing inventory, elevated commodity costs, availability and spot prices of electronic components, and delayed retailer FFO pickups. We have developed a much stronger and more agile supply chain, thanks to disciplined execution on our North Star strategic plan. Next, I would like to turn to innovation. This quarter, we announced and completed the acquisition of VAY, a leader in motion and vision technology. This acquisition directly supports our aim to accelerate our software development capabilities and add new and innovative features to the JRNY platform, moving us closer to our vision for JRNY as your highly personalized one-on-one fitness coach. VAY's proprietary technology enables computers to understand human motion using cameras on its computer vision software, analyzes movements, and provides real-time individualized feedback and coaching on exercise. VAY has a particular unique strength in using cameras found on today's mobile devices, such as smartphones and tablets. VAY's existing partners include Microsoft and ETH Zurich, one of the top science and technology universities in the world. We plan to integrate VAY's motion tracking capabilities into JRNY to further advance and accelerate our highly personalized workout experiences, including automatic rep counting and form coaching. Our initial focus will be on strength training and off-product workouts, such as body weight, yoga, and floor exercises. We are excited to have increased our software capabilities through this tuck-in acquisition and plan to incorporate the first set of features from VAY into the JRNY experience during our fiscal 2022 fourth quarter. Over the past year, we've made tremendous advancements with JRNY and are seeing very strong adoption and tremendous growth in JRNY members. We are excited about the value and the experience that JRNY provides. It is focused on the individual. It provides a greater variety of choices of equipment and ways to work out than competitors. We have added classes, of course, but JRNY brings what we call entertainment beyond the class. We provide all this at a great value, typically one half to one-third the price of our competition. Just last week, we announced that JRNY now includes strength video workouts for both SelectTech 552 and 1090 dumbbells. SelectTech is one of our strongest selling offerings, and this is our first entry into strength training with JRNY. The new updated digital platform now includes a video library of instructor-led strength workouts for these Bowflex SelectTech dumbbells. In the near future, we will also be adding strength workouts specific for the Bowflex SelectTech 840 kettlebell and the Bowflex SelectTech 2080 barbell. We also announced that for a limited time, new JRNY members are eligible to receive a 12-month complimentary trial membership. This marks the latest step to make the JRNY experience available to more consumers, whether they are using cardio or strength equipment or both. Previously, consumers could not easily experience JRNY without owning one of our connected cardio products. We are excited to expose the JRNY experience to a much broader audience. We were also excited to announce last week our latest connected cardio product, the new connected Bowflex Max Total 16. The new Max offers a 16-inch HD touchscreen and integration with the JRNY digital fitness platform, so users stay engaged and motivated during high calorie burn interval workouts. The BowFlex Max Total 16 machine blends the low impact of an elliptical and the high intensity of a stepper to offer a short, high intensity interval workouts in a compact design. The initial reception of our JRNY-powered Max machines has been phenomenal, and we're excited about how we have improved upon this industry-leading product unique to BowFlex. We've increased JRNY content, adding over 100 Explore the World immersive experiences and have released hundreds of new trainer-led videos during the first half of the fiscal year 2022. We've done so with our own first-party content and through partners such as FitOn. We also launched jrny.com, a new web-based consumer portal to better highlight JRNY platform's features and benefits, as well as helping members more easily manage their JRNY accounts without calling customer service. The team and I are delighted with our execution and progress in connected fitness via our new equipment and the JRNY platform, and we're only just beginning. All of this progress in the last few months has led to very strong membership growth and lowered our churn significantly. While it is early, our growth is extremely promising. I am pleased to report that our current member count is approximately 200,000, more than three times the year ago period when we had about 65,000 members. This incredible growth is before the holiday season, before our new product introductions, JRNY enhancements, and special limited time trial offers that I just discussed. As planned in our North Star plan, we have stood up and are building a highly profitable digital business on top of a successful equipment business. The consumer experience on our equipment is enhanced by our digital offering, and our digital business is fueled by the economics of the equipment business. We have been working tirelessly to make JRNY a leading fitness service that matches our incredible lineup of equipment. Our digital connected subscription service is driving the future of Nautilus, and the execution and results of our North Star strategy have exceeded our expectations to date. I'm delighted that we are even further along in our long-term transformation than we expected on Investor Day in March. This progress ultimately will enable us to have more predictable growth and higher profitability that will generate attractive long-term returns. There remain challenges to overcome, such as post-COVID recovery-driven margin pressure from inflation and transportation costs, which have been more severe than anyone expected. In fact, 12 points in Q2. In the first half of our fiscal year, we were proud to have overcome these challenges, stayed committed to North Star investments, and still remained profitable. It was an incredible accomplishment to do it all. As we look at the second half, we assume that these margin challenges, while temporary, will likely persist for the remainder of our fiscal year. This led us to an important decision point. Do we choose to remain profitable by pausing or reducing our North Star strategy investments, or do we capitalize on our progress and continue to invest with confidence using our balance sheet? Faced with this choice, our board and management team have made the strategic decision to not only stay committed to North Star, but to accelerate our investment in the second half of the year. We are choosing progress towards our long-term goals over short-term profit maximization. Specifically, we are increasing our second half forecasted OpEx spend by $12 million-$14 million in JRNY versus LY, and marketing as a percentage of sales will increase by 9-11 points versus last year. This will permit us to more quickly grow our membership base and transition to a higher gross margin business earlier than originally laid out in our Investor Day. Additionally, we have improved our liquidity by increasing our line of credit to $100 million. This allowed us to deploy cash for tuck-in acquisitions like VAY, gave us working capital to invest in inventory, and importantly, gives us room to accelerate our long-term investments. We also expect that this near-term investment will enable our JRNY digital platform business to be accretive sooner than previously expected. Aina will be providing specific 2022 guidance during her remarks and will include a waterfall of margins to show where we are investing. We also expect margins to climb each year from 2023 to 2026 and beyond. Simply put, we are leveraging our profitable equipment business to build digital faster due to strong results. We are unified in our confidence that this is the best approach for our company and for our shareholders. I'll now turn it over to Aina Konold, who'll give us more detail on our second quarter financials and guidance for the rest of the year. Aina? Thanks Jim and good afternoon everyone. Today, I'll talk about results for Q2 and the first half of fiscal year 2022, and we'll provide guidance for the second half. I'll start with slide 11 of the presentation, total company P&L results for Q2 2022, with comparisons to the same quarter last year. Net sales were $138 million, down 11% to LY on a GAAP basis. Excluding Octane, we're down 5% and up 150% to LLY. Sales declined year-over-year primarily due to Direct's return to normal seasonality and global logistics challenges affecting retail. As Jim mentioned earlier, we had over $22 million of FFO orders ready for pickup that didn't make the cutoff. Unfortunately, our sales guidance range wasn't wide enough to accommodate this level of disruption. Gross profit was $42 million and gross margins were 30.5%, down 13 points from LY. Eight points of the decline is due to logistics, 4 points due to raw materials, components, and FX, and 1 point related to increased JRNY investments. Turning to operating expenses. This year, we booked a $5 million settlement related to a class action lawsuit and incurred $1 million in acquisition costs for VAY. Last year, we booked $8 million of gain on disposal group related to Octane. Given these unusual costs, we believe it's better to look at our operating results on an adjusted basis. Please see our press release for a reconciliation to GAAP. Adjusted operating expenses were $39 million or 28% of sales versus last year's $32 million or 12% of sales. Selling and marketing expenses were $22 million or 16% of sales, up $3 million to last year, driven by higher advertising. Adjusted G&A expenses were $11 million or 8% of sales, up $2 million to LY, primarily driven by increased investments in JRNY. R&D was $6 million or 4% of sales, up $1 million compared to LY, again driven by increased costs related to JRNY. In fiscal Q2, advertising was $12 million and JRNY OpEx was $5 million. Adjusted operating income was $4 million and adjusted operating margins were 3%, in line with guidance of low single digits. Our presentation includes a waterfall chart on page 13 that describes the year-over-year change in operating margins. The biggest driver is lower gross margins, followed by increased advertising and investments in JRNY. Adjusted income from continuing ops was $1 million or $0.03 per diluted share versus last year's $28 million or $0.87 per diluted share. Adjusted EBITDA from continuing ops was $7 million or 5% compared to last year's $38 million or 25%. Please refer to our press release and the presentation accompanying this call for more information on segment performance for the periods 3 months and 6 months ending September. Let me now turn to slide 15 for results for the first half, which is the 6 months ended September 30th, 2021, compared to the same period last year. Net sales were $323 million, up 20% on a GAAP basis. Excluding Octane, sales were up 28% versus LY and up 215% versus LLY, driven by strong growth in retail. Gross profit was $98 million, and gross margins were 30%, down 13 points versus last year. The decrease was primarily due to increased logistics 7 points, raw materials, components, and FX 5 points, and 1 point related to increased investments in JRNY. The following statements for the first half exclude the impact of this year's legal settlement and acquisition costs and last year's loss and disposal group. Adjusted OpEx was $76 million or 24% of sales versus last year's $58 million or 21% of sales. The $18 million increase was essentially driven by $12 million more in advertising and $6 million more in JRNY. When we saw Direct begin to return to seasonality in Q1, the equipment side of our business worked hard to keep costs flat to LY despite higher unit sales this year while continuing to advance North Star. First half advertising spend was $23 million, and first half JRNY OpEx was $8 million. Adjusted operating income was $22 million or 7% compared to last year's $58 million or 21%, driven by lower gross margins and higher OpEx. Please see slide 17 in the presentation for a waterfall chart walking through the year-over-year changes. Similar to Q2, the largest driver of the decline are supply chain related, followed by increased investments in advertising and JRNY, partially offset by operational improvements as the organization worked to keep costs in line with lower sales. Adjusted income from continuing ops was $15 million or $0.46 per diluted share, compared to $45 million or $1.40 per diluted share. Adjusted EBITDA from continuing ops was $28 million or 9% compared to $64 million or 24% of net sales. Turning now to the balance sheet as of September 30. Cash was $22 million and inventory was $163 million, with about 40% in transit as of 9/30 compared to $68 million at year-end. Given the continued disruption in global logistics, we made a strategic decision to bring inventory in earlier to be in a better position to meet peak seasonal demand. Our inventory is concentrated in our best-selling products, and we're incurring incremental storage and transportation fees to position us well for holiday. AR was mostly flat at $89 million, and trade payables were $115 million versus $99 million at 3/31, primarily due to the timing of payments for inventory. Debt was $17 million versus $13 million at year-end, and we had $49 million available for borrowing in our facility. On October 29th, we amended our facility, increasing our revolver size from $55 million to $100 million and extending the maturity date to October 29th, 2026. On a pro forma basis, using our new expanded facility, we would have had $94 million available for borrowing at 9/30. Turning now to our expectations for the rest of the year. As Jim highlighted, we're pleased with the progress we're making on North Star and the solid momentum in our JRNY business. We now have 200,000 members. Engagement is growing, churn is declining, and our path to bringing JRNY to scale has become clearer as we gain new capabilities through our recent acquisition and content partnerships. Certain aspects of our environment are challenging. Like nearly every other business, we're experiencing near-term external pressures on gross margins, which worsened in Q2 versus Q1. While we're really proud that we were able to overcome the majority of the pressures in the first half, we don't believe that putting our future on hold for near-term results is the best way to deliver long-term shareholder value. Our board, the management team, and our employees have strong conviction that the path to sustainable, profitable growth is through having a high-margin subscription business to complement our enduring equipment business. We'll do that by capturing greater share of the connected fitness market, by improving and enhancing the JRNY platform, and we'll be investing in that. Let me now share our expectations for the second half of fiscal year 2022, six months ending March 2022. Please follow along starting on slide 20 of the presentation, as the slides include a waterfall that we think will be helpful in understanding the changes in operating margins. We expect sales to be between $290 million and $320 million, which represents growth versus LY of between 47% and 62%, or a two-year CAGR of 21%-27%, versus the six months ending March 2020. This sales guidance reflects our plan to continue bundling 12-month JRNY trials with cardio equipment sales. We'll be deferring the JRNY portion of the bundled sale revenue and amortizing it monthly for the subsequent 12 months. Our expected deferred revenues of $6 million-$7 million will reduce sales and negatively impact gross margins in the second half by 2-3 points. We expect the same macro supply chain headwinds to continue in the second half, negatively impacting gross margins by 12 points. We continue to increase our investment in JRNY in the second half. Second half JRNY costs, which includes depreciation, content, customer support, and per-subscriber variable costs, will be between $6 million and $8 million this year. Second half OpEx JRNY, which includes R&D, IT, product management, and the amortization of stock-based compensation and earn-out associated with our VAY acquisition, will be between $18 million and $20 million this year. We plan on investing more in advertising this year to remain competitive and share our voice and to highlight the improvements in our connected fitness experience. As a rate of sales, advertising will increase by 9%-11%. Lastly, we will continue to invest in our infrastructure and in our team. We doubled our equipment business, but most of our increased costs have been targeted towards JRNY. We're upgrading our tools and adding new capabilities to the equipment side to optimize and scale for the future. We believe these investments will accelerate membership acquisition and will ultimately result in the JRNY business unit being accretive several quarters faster than originally planned. We could have chosen to pull back on spend in the second half, put our future on hold, and deliver operating income in the low single digits%. As we told you during Investor Day, we will always lean more towards protecting the long-term prosperity of the company versus achieving near-term profits. Therefore, for the second half of the year, we expect operating loss margins in the mid-teens% and Adjusted EBITDA margins in the low teens%. We continue to expect CapEx to be between $12 million and $14 million for the full year, with the majority earmarked for JRNY. Lastly, we now expect JRNY members to be between 250,000 and 350,000 by the end of fiscal 2022. Looking beyond fiscal 2022 and into fiscal 2023, we see a path to Adjusted EBITDA profitability. Specifically, we anticipate year-over-year gross margin expansion driven by a stabilization in the logistics environment. We'll also begin to recognize the accretive impact of our higher-margin digital subscription business as we add members and leverage our growing scale. This will enable us to achieve gross margins in the low 30% on a blended basis for the full year. As a result, we expect to be Adjusted EBITDA profitable for the full fiscal 2023. One final comment on our long-term expectations. By accelerating our investments into JRNY, we now expect to achieve mid-teens operating margins by fiscal year-end 2025, one year earlier than we initially modeled, with fiscal year-end 2026 delivering operating margins in the high teens. In closing, our liquidity position is strong. We've invested our cash in our best-performing inventory, and we have an expanded $100 million credit line. We are well prepared for the upcoming fitness season with a robust inventory position, strong digital offering, well-funded marketing, leading equipment connectivity, and a team passionate about our vision of creating a healthier world one person at a time. Now I'd like to turn it over back to Jim for his final comments. Thank you Aina. Before we go to questions, I would like to briefly take stock in our progress over the past two years. Faced with a favorable market dynamic, we acted decisively to set a new strategy and execute against it. Our progress to date is undeniable. I'd like to give just a few examples. In 2019, we had only one connected product in our portfolio until December and no meaningful installed base for our subscription business. Now we have a complete portfolio of connected fitness cardio machines unified by the JRNY membership platform and ecosystem. Our install base ticked up in late 2019 with the launch of two new bikes, but we did not have much scale in connected cardio units sold. By contrast, in just the last year, we have sold more than 4 times the number of connected cardio units as 2019, rapidly growing our installed base of JRNY-powered units. The Max Trainer, our most important and proprietary product, was in a multiyear decline in 2019. This quarter, I'm delighted to report that the new connected fitness M9 Max Trainer, now revitalized with JRNY, was number one in dollar sales in direct. Two years ago, we were mostly a mechanical engineering company with about 12 developers in software UX FTEs. Today, we continue our legacy with strong equipment, but we have 160 people engaged in software development. This fundamental change in our business toward connected fitness has already yielded tangible results. JRNY had 14,000 members at the end of 2019. Today, as we've said, we have approximately 200,000 and are on our way to achieving our first-year goal and accelerating towards our 2 million member goal. JRNY has been built on consumer insight, and we are improving it every quarter with accelerated investment. We are inspired by our mission to be a leader in individualized connected fitness. Two years ago, we had no meaningful consumer segmentation. Our products and marketing appealed more to consumers who didn't like working out, and we were not driving a significant number of new customers to our brands. Today, we are relentlessly focused on high-value targets who prioritize fitness day in and day out and are highly correlated with gym-goers displaced during the pandemic. As a result, we added over 400,000 new customers to our brands versus a typical year of adding 100,000. We also are recalibrating the BowFlex brand to ensure we resonate equally with men and women and to bring our younger cohorts who thrive on connected fitness, and we will appreciate the variety of the challenge that our JRNY platform offers. In 2019, we were still not fully committed to omnichannel. Today, we are passionate about letting our consumers shop when, where, and how they want. I'm really proud of the way we have invigorated and strengthened our retail segment, more than doubling our number of retail doors and radically diversifying our retailer base. We were shrinking and in survival mode in 2019, in need of a turnaround, greater liquidity, and a clear strategic direction. Since then, we have more than doubled our revenue and strengthened our capital structure, which gives us the confidence to continue to invest in the future and an inspiring on-point and very focused strategy North Star that we believe will deliver more consistent, more predictable growth based on a balanced equipment portfolio and a growing recurring revenue base and levels of profitability not achieved in our history. We have also built a world-class team and strengthened our digital talent. Our market opportunity has grown tremendously. The U.S. home fitness market size appears to have doubled or tripled off the 2019 base due to important changes in habits and trends favoring home fitness. The progress our company has made over the last two years is incredible and gives us strong confidence that our outlook for the future has never been stronger. It is with this confidence that we stay committed to our North Star strategy and are investing for the future. I want to thank all our leaders, employees, suppliers, distributors, and retail partners. Your incredible efforts are not only transforming our company but changing consumers' lives by empowering healthier living through individualized connected fitness experiences. I'd now like to turn it over to questions. Operator? Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you'd like to ask a question, please 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Steve Dyer with Craig-Hallum. Please proceed with your question. Thanks for taking my question. Good afternoon everybody. A couple questions on JRNY, some encouraging early signs there. I guess a two-part question there. One, I guess, are you willing to share or able to share anything that you're sort of seeing that's better than expectations there? Are you seeing, you know, sort of more subscribers? Are you seeing more associated, you know, sort of members or accounts on those subscriptions? You know, anything there I guess would be as to what you're seeing would be the first one. The second one then would be the increased JRNY spend. Is that, you know, sort of to the extent you can sort of talk about that, is that accelerating spend that otherwise would have been done next year? Are you ramping up sort of marketing given what's going on in the marketplace to stay relevant and front of mind? I have one more. Thanks. Sure. No, thank you for your question, Steve. Good questions. Yes, so I'd say the short answer is everything on JRNY seems to be going better than we expected. Specifically, we did call out the member number. That's going faster, and as I mentioned, it's kind of pre-fitness season and free, you know, some special offers to get this out there. We've disconnected JRNY from the cardio equipment so more people can experience it. I guess that's one, just the membership. The churn is down. You know, we're not providing it yet. You know, as you know, we're committed to providing a set of metrics on an ongoing basis beginning with our fourth quarter call, when we said it would be material. We'll continue to do that. Engagement is quite high. And by that I mean the number of hours and workouts per user are going up. Attachment is up, so that's, you know, of the people who are eligible to use JRNY, how many of them are actually using it? All of those things give us really a lot of confidence that we are ahead of schedule on many of these things, and hence we've sort of changed our goals as well, and are more aggressively moving towards our long-term goals. I'll hand it to Ina on the spend question. You had two questions on the spend. First, about JRNY spend. Yes, it's an acceleration of spend we thought we'd be doing a little bit later, but we thought given the momentum and the proof points that we could accelerate it. You asked about marketing. Yes, we're increasing marketing as a percentage of sales, and that's in a combination of we now have a great set of connected products and experiences we wanna tell consumers about, and we do wanna be a little bit more competitive and just share our voice in the back half of the year. As we said about the brand advertising as well, we think a portion of this investment is durable, right? We talked about the fact that we have the Bowflex brand that is top of the market in terms of recognition relative to our closest competitors. People know the brand, but the brand, when we talk about the brand, it sometimes emotes the idea of the rod gym, and we want people to be thinking about more modern views of our brand related to JRNY and digital experiences and things like that. We'll be spending on that so that we move the brand to where we wanna move it. That's very helpful. Just a couple quick ones. I think you had talked back at your Investor Day about staying profitable through all of this and paying as you go, I guess, so to speak, was a term you used a couple times. The decision to swing negative or unprofitable in the next two quarters, is that primarily a function of accelerating JRNY, or is that also sort of some of these other cost headwinds are just, you know, bigger than you anticipated at the time? Yeah. It's a combination of really both those things. You know, our strong progress is a big part of it. When you're doing well, you go, "Hey, can we get there faster?" You challenge yourself to do that. But to be totally honest, it's, you know, these 12 points of margin compression. When we started out at that pay as you go and we thought we could do it all, you know, we thought we had such a, you know, a strong tailwind there that we'd be able to overcome all of those points, especially the landed product cost of about 7 points. We thought we could overcome all of that and still invest in JRNY. By the time we got to the second half and we looked at it, and we were really looking at, you know, the logistics problems getting worse throughout the first half and sort of peaking in the second quarter. We have to anniversary that for the entire back half, and that's just too much to overcome when you look at it that way. We were really faced with that choice, and we just really wanted to put investors in our, in our framework there. We literally said, "Hey, look, we can break even, but is that the right thing for the business?" We would have to actually slow things down, which slow down some hiring. We'd slow down JRNY development. We wouldn't market as much, and we could deliver a profitable second half, but that did not seem right. You know, what you're seeing in the market is, nobody's really going for a profit motive. Growth is more important. Membership growth is more important. We saw a way to really accelerate toward that much faster. That's why we made the decision. We did wanna kind of put you all in our mindset. We are 100% confident that is the right decision. All right? I mean, we didn't come here. We came here to change the company in this direction. We have a tremendous opportunity to do that. We have a balance sheet that supports it, and we're going for it, and we think that's the right way to go. Some investors might want the short-term profit, but we want the investors that are here for the long term because the long term is just a beautiful thing. Yep, got it. Thank you for the color. I appreciate it. Sure. Thank you. Ladies and gentlemen, our next question comes from the line of Mike Swartz with Truist Securities. Please proceed with your question. Hey, good evening guys. Mike. First question. I guess, how do you think about customer acquisition costs in the current environment? I guess where do we expect that to level out and really start to see some benefits, you know, over the next couple of years? Yeah. I mean, obviously, direct businesses are challenged with the cost of customer acquisition. I was trying to get at that a little bit in my script and my talk, because we're actually. You know, if we were trying to acquire JRNY members without an equipment business, that would be brutal, right? The cost of customer acquisition in a purely digital business would be very, very tough. The way we look at it, and we described a little bit of this at Investor Day, but still the way we think about it, is we are leveraging our equipment business. By selling the equipment at the margins that we're selling them, we acquire customers, and then those customers attach to JRNY. You'll see in our advertising over time that JRNY will go from having a cameo appearance in our advertising to a co-star to being the star over time. That's how it'll roll. We're really leveraging that customer acquisition cost for a highly profitable piece of equipment to acquire customers this way. Of course, we're doing these free trials as well, and we're doing free trials on the SelectTech stuff, so you can go back to previous customers and acquiring previous customers for JRNY, much easier thing. You have their email addresses, you just send them a note saying, "Hey, we've got a great way for you to use your SelectTech that you've been waiting for. We probably should have had it earlier, but we have it now. Why don't you come try it? Then that product gets better over time. You know, we talked about the VAY acquisition and, you know, rep counting and form coaching and things like that on that. That's the way we think about it. You know, it's still a challenge for all these businesses that have a direct component. As I said, we have this digital business and this physical equipment business. Great. Thanks for the color. Second question just on, I think you've provided some longer term margin targets, and it sounds like you're moving them one year ahead of maybe when you previously thought you would generate, you know, the target margins. I guess is this purely just a function of, you know, JRNY proceeding faster than expected, or are you changing any of the margin targets that you gave before? Specifically, I think you said subscription margins would run closer to 20-25%. Is that still the right way to think about that? Yeah. I mean, we're thinking two ways. We're thinking about it earlier and accelerating it. We also, as we've gotten to see how the early economics have worked out on our subscription business, we think we'll have elevated margins. Aina, anything to add to that? No. When we were working it through at the beginning of the year, you know, we hadn't inked a lot of these contracts that we now have. We have a lot more clarity, and we've acquired, you know, our first tuck-in and can see the underlying cost structure, and it's favorable to what we were thinking, and then the economics are improving faster than we had initially modeled. Okay. That's helpful. Maybe one final question for me. I think you've said the 200,000 subscribers at the end of the quarter. Can you provide any context or color on how many of those are paying subscribers? Just to correct that we said members, which is a different definition than subscribers. Right. Right. Yeah, no problem. We'll demystify this over time. As we said, we're actually providing a lot more about our subscription business than we plan to do. Our commitment is, by the fourth quarter of this year when we report fourth quarter, that we'll have a set of metrics that you can look at for our subscription business that'll be robust enough for you to really look at the health of that business. Until then, you know, we're providing selective information, and, you know, we've focused on this member amount. We're not saying what this churn is, but I'm happy that it's coming down as we work on quality, as we get our analytics better, as we get our jrny.com stood up, as we build more content, as we add new features. That's coming down. That's it. We'll stay committed to giving you a robust set of metrics in the timeframe that we promised, but we're kind of leaking it a little bit early. Part of the reason for that is we wanted people to understand why we're making this decision to invest further into JRNY. Okay. Gotcha. Thanks Jim. Sure. Thanks Mike. Thank you. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question. Hi, it's Matt Curtis on for Sharon, actually. Thanks for taking the question. Sure. First question is on the product pipeline. I mean, you recently added the Max Total 16. I'm just wondering how many more product introductions you have scheduled for this fiscal year and roughly when those are expected to launch. Yeah, I mean, we don't provide our complete roadmap for competitive reasons. They seem to just pop up. You've seen our competitors doing the same thing, so we don't warn people off our total roadmap. But we did the M9 recently, the nine-inch screen on the Max Trainer, and the M16, our new Max Total, as you alluded to. Last week, I talked about the BYOD strength product in JRNY. Basically, it's not a new physical product, but it's a new way to use our physical product. You can buy the dumbbell and the training together, or if you have the dumbbell, you can just get the training added to your account going forward, and you'll be able to try it. That's a big thing. Like I said, the VAY acquisition, we're gonna continue building more features into that that'll help you with those workouts. That's kind of our, the early part of strength. We said in the call that that part is coming in in the fourth quarter of this year. Beyond that, we're not commenting, but I will say we have a robust pipeline of strength products. Now, we've kind of worked our way all the way through the cardio line and modernized that, and now we're focused on strength, which, you know, for Bowflex, is really what the brand stands for. We're very excited about several products we have in the pipeline, but I am not at liberty to talk about them in detail right now. Okay. Understood. Then, on the margin pressure you're expected to see in the second half of the year, could you just help us flesh out what quarter of that pressure would be more weighted to? I mean, I would expect it would be more pre-holidays, but I'm just wondering if that's the case or if it's gonna be more evenly spread out. That's a great question. Let's start with the supply chain. That'll be more evenly spread out. Same thing with the fixed investments in JRNY, like OpEx. I mean, we're you know we're building like an infrastructure for that. It's the advertising that I think will be movable, and I can't give any more color than what I have now for the back half because we really wanna preserve our agility, and we will deploy that marketing firepower in the appropriate moment to like really drive membership growth and people to our websites and to our retail partners' stores so they can buy the equipment. Okay. Understood. Thanks very much and good luck during the holidays. Thank you. Thank you Matt. Thank you. Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question. Hey, everybody. Thanks for taking my questions. Maybe to start with your comments on 2023. I was curious if the second half of this year is, I think it's 10%-12% negative EBITDA margin. Can you help bridge the gap most of that margin to get to profitable EBITDA next year? For all of it. What else is implied in that? Then also, kind of similar question, but, what about sales growth? Do you expect to hit positive sales growth at any point next year? Great question. I'll start with the margins. The big driver of our path back to profitability really is the expansion or the easing of the headwind in gross margin specific to logistics. We have very clear path on how some of these things will moderate. The most important would be work down our inventory and sell the inventory that we brought in early, we won't need as much of the storage and the, you know, extra transportation costs that we're incurring this back half. Secondarily, we've begun already the negotiations for a larger portion of our containers being under a fixed contract rather than being on the spot market. Lastly, it's a small piece, but we're really pleased that JRNY will actually begin to help us on the gross margin line next year. Excited for that to be helping us. Those are really the big drivers of us getting back to Adjusted EBITDA profitability in fiscal 2023. I don't know if you wanna comment, but can you talk about your expectation on revenue growth for next year? I think it's, like, similar to everybody, right? Like, we always planned, and we talked about this during Investor Day, that if there is a pandemic high, it would likely moderate, and there'd be some sort of settling down. Again, not settling back down to where it was in 2019, but settling down and not continuing to grow at this frenetic pace. We're, like, similar to other people, trying to figure out is that now? Is that gonna go on for a few more quarters? Our assumptions are pretty wide to get to that Adjusted EBITDA profitability where we either model a slight decline, maybe a slight increase. I'm not counting on massive sales growth to deliver the profitability. I'll just reiterate what I said about the market. That's why I really wanted to start this whole talk today with what we're seeing in the market, and we just really believe in the strong secular changes in towards home fitness. It doesn't tell us where it's gonna peak and what it comes down to, but it's not coming down to anywhere near where it was, as Aina said. We see that, and we see it not only in attitudes, but we see it in actual workout habits that we're monitoring. Then connected fitness, that's the other reason to believe as well, is that is just in its early innings. I mean, we are just... Many people found connected fitness during the pandemic, but you know, not everybody's delivering great against that, and it's all very early relative to what we all think we can deliver for consumers. I think, you know, no matter what you think the industry dynamics are, and even if it does crest and work its way down a little bit, the whole idea of connected fitness, I think, is another add on top of that. You know, we're feeling very strong about that. You know, obviously, it takes a crystal ball to know for sure. The other thing that's really tough is cutoffs, right? We just talked about. We just got killed with this September thirtieth cutoff where we had enough to easily meet our guidance there, so on the sales side, but it didn't happen. You know, that holds us back a little bit, especially, you know, when we're talking about next year already. You know, so we're providing the first half here, and then as we get closer, we'll let you know what we think about 2023 as things work themselves out. Okay. I guess another thing I'll just say is that, like, the reason we changed our fiscal year, honestly, was so that we could take stock in the fitness season and how the results went before trying to predict the next year. At the core of your question is exactly that. We're just, you know, about just before Black Friday is when we start seeing seasonal pickup in both retail and the direct business. We're kind of weeks away from knowing how that's going to begin, and then we're a fitness season away from knowing how it's going to actually play out. Hopefully that makes sense to you. Yeah, that's helpful. Thank you. Last question for me is, what was direct media spending in the quarter? Hold on. I'll send that to you. I have the total advertising for the quarter, but I don't have just direct. For the quarter Q2, it was $12 million, but it's primarily direct. Okay. Most of $12 million. Thanks everybody. Have a good one. Thank you. Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Mark Smith with Lake Street Capital Markets. Please proceed with your question. Hi, guys. Can you guys talk a little bit about the pricing environment and competition, you know, as we move into the important holiday and early, you know, January season? You know, what you're seeing, especially as people are using, you know, equipment for kind of member acquisition. Yeah. No, that's a great question. You know, I think we're all seeing it, right? I think it's a combination of using the equipment to acquire members as we're doing ourselves. Also, some of the competition having equipment, probably a lot of inventory equipment. I've seen it mostly in bikes, but I've seen it kind of across the board where the promotion, you know, nobody promoted much last year and everybody's promoting most things this year, in particular bikes. You know, we've seen iFit drop their primary bike down to about the $1,500 range. We've seen Peloton do the same. So, you know, we have to be competitive with that. We think the combination of JRNY trials, which we can afford to give away and bundle, I would say, it helps us to do that, and it doesn't hurt our P&L at this point as much. You know, that's part of our approach to that. We're also running promotions on our stuff as well. I will point out, though, that earlier when we had pricing power, probably more pricing power, we were not promotional. In fact, we raised our prices. That helped us kind of fight off this margin pressure a little bit longer. Now we have to look at the market and, you know, especially in these days where, you know, it's the high volume part of the year. I mean, we look at it almost every day about whether we should do a promotion or price change there. We continue to do that, but I do think you're gonna see a lot of promotion this holiday, 'cause I think we're not the only ones that said, "We better bring in inventory early." I think people have a lot of inventory. I'm just deducing that from what we said, and then we've seen what's been reported as well. On that, you know, as we look at inventory within retail, you know, moving into this important season, you know, how confident are you in your inventory that you have enough out there and, you know, especially in kind of this pricing environment? Sure. Yeah, I mean, we definitely have enough. I would say, we have stocked up, and we've stocked up on the best-selling products. Because we knew that we weren't actually gonna be able to you know, to perfectly predict, as our results showed, what sells in what quarter, we invested in the inventory of our new and high best-selling products. And we're in much fewer SKUs than we were before this. We've cut a ton of SKUs. We're just focusing on kind of the fat part of the curve, you know, and that gives us a lot of confidence. So I think we have enough, and we believe it's in the right stuff. You know, that's always the second thing to try to make sure you have. We've got it. It's all fairly new. Nothing old and dusty, nothing kind of at the tail of the curve. We feel like as confident as we could feel going into this holiday season that we've made the right choices. We'll see how it turns out. Anything to add? I don't have anything to add in inventory, but I do wanna correct what I said about advertising. Total advertising is $12 million, and we attributed $7 million to direct and $5 million was brand. Because in Q2, we invested a lot of brand marketing in things like the Olympics. $12 million in total, $7 million for direct, $5 million for brand. I think that was clear, Mark. Yep. Nope, that helps. Thank you. Sure. Thank you. Ladies and gentlemen, at this time, there are no further questions. I would like to turn the floor back to management for closing comments. Thank you to everyone on our call today for your continued support of Nautilus. We look forward to talking to you again on our third quarter fiscal year 2022 earnings call in February. Have a great rest of the day. Onwards and upwards. Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.