Okay. Okay. Exciting for me. This is my last one of the day. I've been going since 8:00 A.M. This is gonna be a nice break. I'm eager to get a break. My teammate Ankit back there, huge thank you for all the heavy lifting he's been doing in terms of writing notes, and I'm looking forward just to getting in and hopefully getting these things turned out pretty quickly. We're here with a still relatively recent company in public markets. I'm gonna start with a bit of a preamble. I'm not a big golf fan, although some of you may know I live in Jupiter, Florida, which is like the golf capital of the world. One other guy who lives there is Tiger Woods. I was entranced by his rise to success in the late 1990s. He seemed almost superhuman. Eventually it all came crashing down as personal issues and injuries arose, causing him to proclaim an end to his golfing career. In 2018, he was back, winning tournaments. Phenomenal comeback. What's my point? Well, the journey for the next company I'm on stage has some parallels. Olaplex was founded in 2014. Within 5 years, it was generating $150 million in sales, and just 2 years later, it had quadrupled to $600 million, which seemed like a superhuman accomplishment. Now the growth has been crashing down, and investors question whether or not the brand can ever mount a comeback. Well, the company's leadership team is not only, adamant that's possible, they argue that's inevitable. Here today to tell us what's happened, why the recent setback is just a pause on a long run way of growth, is the firm's CEO, JuE Wong, and CFO, Eric Tice. JuE, Eric, thank you so much for joining us. Thank you, Jason. I don't know if you agree or not with the parallels, but let's hope that that comeback story is exactly what we're seeing and talking about here at Olaplex in the next couple of quarters. As we step back, so far we've got two chapters, right? We've got the chapter of phenomenal growth. We've got the chapter of taking a pause, a reset, and let's hope the third chapter is one of revitalization. I know you guys are confident we'll get there. Before we get to the revitalization, let's first ground ourselves in the very first chapter. You know, what led to such phenomenal success? Right. That's a very good question. Like anything, you need to have a product line that works. We have a product line that not only works, but is backed by patented and proven technology. When we saw that growth, it was really because it delivered on its promise and people could see the results. That evidence, I think, was born out first in the salon channel where they became phenomenal advocates for you. How critical were they to the rise and stardom of the Olaplex brand? The professional community, the stylist, continues to be the backbone of who Olaplex is. When we do independent survey, whether, you know, many years in a row, we still show that the number one source of truth is recommendations of hairstylists to their clients. This is why when we talk about our, you know, reset year, how important it is that we continue to engage them, educate them, and support them. Mm-hmm. Mm-hmm. It sounds like that's where we should be. If that's tip of spear here, that's where we should be looking for proof points that the business is finding stability in turning. It's gonna be led out at the professional channel. Is that your expectation? Well, it is the professional channel, let's first of define it. We are truly an omnichannel, right? The professional channel gives us what we call the credibility-. Mm-hmm. The authority. The retail channel gives us brand awareness, and the direct-to-consumer channel allows our consumers to have convenience, where they can reach us wherever, whenever, and however they want to. It is synergistic. One channel cannot do without the other. Ultimately, the reset year is about building a stronger and more resilient Olaplex to really be able to target and work with all of these channels. Mm-hmm. Why do we need a reset? What drove... The business was going exponential growth. What caused the pause? What caused, actually, not the pause, the drop, like the drop in demand that's caused this reset? You, you know, and definitely Eric would build on this, you sort of said it yourself. We grew tremendously. When we went IPO, following the IPO in September, we reported a 82%, then a 112%, and last year was a 18%. All of this growth was because we had products that work, our technology is there, and we felt like with all that is happening, we saw what was happening with the macroeconomics. We saw the promotionality that was happening, you know, in the category. The category is still the fastest growing. That is the prestige hair category, albeit at a slower pace. There was also a lot of misinformation about Olaplex out there. We felt that it was important to take a reset because we could. We are still cash generating, highly profitable, and we have the opportunity to really take this reset and get ourselves to a stronger and better place. That is why we took it, and we feel like, you know, things are working out because we mentioned in our last in our Q1 earnings call that there were certain key things we were doing. Spending and investing more behind sales and marketing, more education, engaging our stylists, and having a more assertive PR program. We were happy to report just on May the 9th that from the Q1 reporting, our sell-through is stable, and we believe it will continue to do so. Where is it stable? It's stable Q on Q, stable year on year. What does stable mean? Yeah. The intent of that comment is to say that the sell-out dollar trend in absolute dollars has stabilized across channels, and we track that through sell-out data that we receive from all of the accounts. Mm-hmm. key accounts in the US and most of our distributors internationally as well. That has stabilized since our Q4 call at the end of February up until this point. We think that that's step one. That's step one. The actions we've taken have worked to stabilize that trend as we continue to invest and build momentum as we go into the second half of the year. Is that like door? Like for like? Yes, yes. Okay. These are absolute dollar sales. 'Cause you had distribution expansion. Yeah, yeah. still in the system, right? That's mostly in our international markets. on a like for like basis, step one was stabilize- Yeah. the sales against some of the challenges that we experienced in the last few quarters, and build from there. We believe in the investments and actions that we're taking, will help us to build that momentum into the back half. The international business has been performing substantially better. Is that really just distribution or what do like for like sales look like internationally? It's not just distribution. In the first quarter of the year, international sales were flat, relatively much better than the U.S. Within that, we have parts of the business in Western Europe where we're deploying our omnichannel strategy. We've anniversaried a lot of the distribution gains there, but we're still seeing strong tailwinds. We have parts of the world, you know well, our cross-border e-commerce business into China is growing and becoming a more material part of our business there as well. Those are all tailwinds. Those were, you know, offset by some of the more mature international markets like the U.K., Australia, that had trends more similar to underlying trends in the U.S. Okay. I think the rumors, the bad PR, we're talking about the hair loss stuff, right? Yep. Even I was looking on Sephora last week as I'm typing up some questions for this, and I'm just looking at the reviews, and like, there's days old reviews where people say, "My hair fell out." So it's. They're top. Like I click on reviews, they're top of the list. It's the first thing I see as a consumer looking here. It sounds like those haven't gone away. They're still pervasive. How do you get them to go away if they're not founded in something? Like, if they're baseless, why are they still there and recurring so much? I think what is important is to take a little bit of a step back. you know, we look at this, we also take independent, sort of survey with a third party to kind of really understand where is the sentiment, where is the conversation and where is the chatter? We are finding that positive sentiments are trending up. Negative sentiments are trending down. Yes, you are saying that when you go on certain sites, you are seeing some negative reviews. We have been very clear and very transparent in making sure that we help ourselves kind of like look at where all those information is being directed. We have published clear methodology of how our products are being tested so that they actually we can prove that it's compliant against FDA standards, against the manufacturing compliance of safety, and that our products do not cause hair loss or hair breakage. When we are able to do that, not only through on a PR setting, but also in an education setting with our stylists, with our business partners, with the beauty advisors, it will help intercept and bring the noise down. We are not going to rest on the fact that sentiments, you know, have improved because you've just brought it up. Look, I'm seeing it on a reviews website or a site. We will continue to be diligent because ultimately conversations need to be had. We are empathetic to the people going through this emotional toll, but we can categorically say with the testing that we have done, with the, you know, information that we have on our health hub, we are confident our products do not cause hair loss or hair breakage. Has anything changed in the formulas? You've been out there in the market for nine years. Since 2014. Yeah. Nobody was complaining about losing their hair until all of a sudden just a couple months ago. Well, I don't think that, you know, people are complaining for the sake of complaining, right? I think what happens is, it's a fact of life when a brand gets to a certain high profile, you generate a lot of buzz and interest, positive or negative. It is the job of the brand to help answer those misinformation. Mm-hmm. Mm-hmm. You weren't ready, right? You weren't ready to respond to that or respond to it quickly because you didn't have the right people, the right investment, the right capabilities. Well- That's what's happening in the reset period? I think the reset acknowledges the fact that we need to do more. We actually did come out, you know, and very transparently showed and published the testing methodology. What we are saying is that we've been doing a lot of things, but what we need to do is more of that. Mm-hmm. What are the more? The more is in sales and marketing. We have always been very focused on performance marketing, which is the lower funnel of marketing. We are now looking at a full funnel, which includes brand building, consideration, which is more like education, and then the performance bit, which we have always done. It's amplifying what works for us and then double-clicking on things, on new activations that even perform better for us. We just had WW on stage beforehand. We talked about media. They're spending $a couple hundred million behind their brand. We had Freshpet on earlier, a small company, pet food company. They're spending $80 million in media buy. You don't really do any traditional media. Is that in the consideration set? So- As you're looking to go up the funnel? If you think about it, when we started in 2014, we took a new model, but we also took the harder road. It is much easier or much harder, I would say, to try to build a relationship, to build advocacy, and to build long-lasting support for the brand. That's what we took. We started with the stylist. We really gave them and elevated their artistry with the technology that we have. Now what we are ready in this reset year is how do we help amplify the brand's awareness so that the pro community continues to benefit, our retailers continue to have the ability to drive traffic to their doors, and then our direct-to-consumer continues to provide that convenience. It is very intentional where we have come from. You are absolutely right. In the beginning, it was more organic, but it was also very deliberate why we did what we did, because we needed to build the foundation. Now, given our cash, you know, our ability to generate cash that we do, we are highly profitable. We can now invest, you know, more materially and more deliberately into the business. Okay. The long entrenched relationships with the pros, the salon stylists out there, have you seen any of that conviction, that loyalty, that commitment to you wane in the wake of some of these concerns out there? They have struggled. I mean, I'll be honest with you, they have struggled with all this misinformation coming at them. Hairstylists are very emotionally intelligent individuals, and when they see hurt like this, they want the brand to give them the tools to respond to it. We have been doing that. You know, we could have been faster in doing that. That's why we are doing what we are doing now in the reset year, to provide them the tools, the knowledge to really help advocate for the brand in a way, in a knowledgeable way, not in a combative way. Okay. Okay. Are these concerns as pervasive internationally as they are in the U.S.? Not. We talked about the international growth or that it was flat year-over-year in sales in the first quarter, more insulated, you know, particularly in non-English-speaking markets, than some of the trends we've seen in those markets and the U.S. There are tailwinds there, and there's tremendous amount of white space to continue that growth for years to come. It's flat with meaningful distribution expansion in pharmacies, in more Douglas stores, in travel retail, suggesting if we strip those out, the business is declining at probably a fairly substantial level in those markets as well. As I mentioned, there's a mix impact within there as well of, you know, those parts of the world that are in, you know, good growth levels and some of the markets that are more mature that were more, impacted by some of the same challenges we've seen in the U.S. What are the same challenges? Like we said, macro, misinformation and, you know, promotional intensity, somewhat linked to the macro as well. Yeah. The U.K. would be a good analogy and example of that, closer to the trends that we've seen in the U.S. The competitive piece is a bit surprising because my perception was you had weathered a lot of storm. I mean, years ago, Wella came out with Wellaplex. I mean, you can't copycat any closer. L'Oréal had come out with a number of products. Este`e Lauder had come out with Bumble and bumble. Like, the big, well-heeled competitors had already come at you, and all of a sudden, the competition was an issue. Like, your business was growing exponentially through that. What made it more vulnerable in the last year to competition? I think to tie in with not only competition, but also the intensity in promotions. When you have promotions, it used to be, you know, promotions were calendarized. You kind of know when they are coming, you know, whether a retailer A was gonna come out with an annual program. Today, you can tell almost every other week, people in this room itself will be getting an email soliciting that there is a special promotion and act on it while time lasts. Competition, at the end of the day, we have not found one competitor or one competitive set of brands that are taking material market share away from us. What we do believe is that the consumers may be interested to try something, and they will. I mean, like, it's human nature. At the end of the day, we are very confident our product works because we have the technology not only to back it, we have the support of the stylist, and we are able to really show before and afters that are very compelling. The confidence is not, you know, from a forced place, but rather seeing is believing and the products are delivering the results. We are still the number one brand across the channels, number one prestige haircare brand across all the channels that we play in. In virtually every segment that we participate in, we have the number one brand, and we are a partner of choice with our retailers. We need to really continue to capture that love and that interest and double-click on this reset year by investing behind it and really getting our message out, you know, collectively through all the cohorts in this space. You're still the number one, but you're losing a lot of share year-on-year. Is that, is that right? Sorry, go ahead. Yeah. If you look at the first quarter alone, we were lapping the incredibly successful launch that we had into Ulta in January of last year. That is true. We declined more than what the category grew in the first quarter. That was expected. Yeah. Included in our guidance outlook for the first quarter. How about in Sephora? We don't comment on, you know, specific customer trends, but that's true across the Circana space, which captures. Yeah. specialty retail and direct. Yeah. I ask only because I totally get it on Ulta. I mean, that was a massive launch with. That was really heavily supported, so it's gonna be hard to comp. The rest of your retail universe doesn't have the same type of comps, and hence the nature of the question. Ultimately, like I said, we are still the number one brand for them. We are still the number one in every segment that we play. What I want to kind of like emphasize is the fact that we are still a partner of choice with them, and our consumers are still there. I mean, I was just there at Sephora Fifth Avenue this Saturday. 50% of the customers that came were new to brand. The other 50% were customers who were familiar with us. Nobody in that consumer set, I mean, I sold to at least 21 customers, you know, one every 9 minutes. It really shows that the co- brand resonates. Yeah. Yeah. For a cohort of consumers who has a problem, this stuff works phenomenally well, right? It solves a problem. It seems like there was a cohort of consumers who were buying it in the last year or two who didn't really have a problem solved or that type of problem solved. They were there because it was the hot new thing. Is that fair? Is that a reasonable interpretation of kinda what's happened here? How do you become a little more targeted going forward to make sure that you're getting the product in the right people's hands, the consumer who's got a problem, and therefore they're gonna be a repeat consumer and not just, "Oh, this is neat, and now I'm moving on to the next shiny new toy that comes around"? Sampling is one of the key proven, sort of programs that we have done in the past. Mm-hmm. We will continue to do so. We have also said in our earnings call that there will be 10 million pieces of samples out there getting into the hands of people. Every time we sample, our conversion rate is anywhere between 25%-35%. We feel confident that there is a way for us to get back at the consumers who have not tried us, get to the consumers who have tried us but may not be familiar with some of the other products we have in our lineup. Ultimately, it is still education. Till today, our first SKU that we launched, people still think it is a protein mask, and it's not. It is a bond-building treatment. Think about it. After 9 years hearing the same song, they are still singing the wrong lyrics. We need to correct that. Mm-hmm. Mm-hmm. I would just also add to that, think about some of our recent product launches, our dry shampoo this year, our clarifying shampoo, and our hair serum last year. There are primary benefits of those products, which are to be the very best dry shampoo that we can offer to the consumer. The secondary benefit is the bond-building technology. It's not all the primary benefit in every product we're offering. We're also offering new technologies in these spaces that really broaden the, you know, the consumer base that we're able to reach. Yep. Yep. Innovation's a contributor. Distribution's been a contributor. I was surprised to find your product now being sold on Walmart. It looks like it's a 1P 'cause Walmart's saying, "We're fulfilling it." It's not the marketplace type product. Are you selling to Walmart? We are not. No. Thank you for asking, and we covered this a little bit, or we attempted to last week on our earnings call. Our business model has not changed. We are not selling directly into, for example, U.S. mass drug grocery customers. What you're seeing there is diverted product into those customers. Sadly, this is very common in the professional haircare category and space. You'll see other brands in those channels through diversion as well. We take it very seriously. We don't just rest on that. We have technology in place. We have levers that we do seek to pull legally, operationally, and with QR codes that we have in the product to trace back the product, and we intend to root that out. It's not easy to do overnight. It's there because the product is in high demand. Yep. we do track it through, you know, data sources like Nielsen, and it is still relatively small, in terms of actual volume going through those channels. Mm-hmm. we wanna root that out. If Nielsen's picking it up, right? I mean, it's not going through the brick-and-mortar, or is it? Are you actually seeing it in store? No, no. Well, we've seen what you've seen, Jason, which is. Yeah. Walmart 1P. I don't think Nielsen's picking that up. In some other channels, just not about that customer. Okay. Yeah. I mean, it sounds like it's one of your distributors. Who else has the volume to buy that much? What we often see is, you know, one thing that's common in these cases is aggregator distributors that are taking small bits of volume from lots of places and offering it to. Mm. Mm-hmm. to these customers. Even though it might be small volume, you know, they might take them up on that. Sure. Like we see La Mer on Costco. No, that's not Estée Lauder. Yeah, your, to your point, it happens. Okay, let's just make a list here real quick of all the initiatives you have. You mentioned 10 million samples. When and where are those samples? They have started being deployed as of February of this year, and they are going to Sephora, Ulta as well as Ulta specifically in the 1,300 salons. Everybody who gets a service will get a sample. In terms of Sephora, it will be what they call buy online, pickup in store. We are also doing samples with the beauty supplies locations. All of this will have some sort of feedback and return reported to us somewhere in Q3 of this year. Okay. Okay. You've got your feet on the street. Yes. sales force, they're out there touching. In the stores. Yeah. -stores. They have been deployed at this time, and we will be measuring them as it goes. When we did that last year with 75 store as a test, as a pilot test, we saw lift in those stores where we do have people in the, in those premises. That's happening now? Yes. You've got your salon education program. Yes. The education program has always been ongoing, but we are going to amplify even more because online education is one thing, but in person also I mean, like, the world is coming back. Look at this conference. I mean, you know, everyone is, I mean, not in this hall, but definitely in all the hallways. There's a lot of people. There's 28 one-on-ones happening simultaneously. Yes. Yes, Yes, exactly. There's a lot of people out there. Yeah. Okay. Sorry, when does the amplification start on that? It's ongoing, and we have already deployed the people in there. What I think you're also alluding to is the fact that we have hired people to really target what we call the key opinion leader salons. These are salons that are very influential to the other hairstylists, that is a group of salons that we are going after, and we have hired people that will be knocking on doors, calling them. Once they are secure, their mode of operating is they actually would order online with us rather than having us, you know, see them on a frequent basis. Our interaction with them will be education, eventing, and support for them. Okay. Okay. What are the other chunky initiatives that are being deployed? We also have on the upper funnel, out-of-home advertising, connected TV, digital advertising across the online medium, and all those are rolling out at the end of May. End of May. Okay. Yeah. You've got an aggressive PR campaign or push that's already underway, right? Which has been ongoing, yeah, since February. Okay. That continues. We are also putting together a scientific advisory board that's being assembled as we speak and should be deployed, you know, anytime soon. That sounds like it's added to the P.R. stuff. Correct. Yeah. It's integrated with that. All right. What other chunky levers, or is that it? That's a big list, by the way. No, that's a big list. I think what, you know, Eric has always been, you know, very clear with the whole entire team is that let's track, measure, and see what works. When it works, we are going to double click on it. We don't have to wait until year-end to know, right? As these things are being deployed, especially for the conversion part, the sampling and the people in store, if it works, we can immediately see what the response is. In terms of the upper funnel, the branding, in terms of the advertising, what we will need to do is measure on a monthly and quarterly basis the brand sentiment, brand health, and brand awareness metrics. All that will then tell us what is working and what is not working. When we tested it in November and December last year in New York City, in Times Square and Soho, we found that when those billboards were there and directed to a call to action to the surrounding stores, those stores saw a lift. Okay. I imagine you're tracking NPS levels with salon professional stylists? Correct. Okay. How are they trending now? At the moment, we still see, you know, we do independent third-party surveys through that. Overwhelmingly, 80%-90% have told us that they want to continue to buy our products. Will recommend it to their clients, and if they're not certified by Olaplex, they intend to get certified. Okay. That sounds okay. It's, you know, it's early days, but we believe that they are working. Yeah. That's what's important. These are the proof points. These are the investments, and the proof points are gonna be evident, should be evident as we get to the third quarter. Right. -into the fourth quarter. We're gonna know if this stuff is working and if the base business has indeed turned a corner. We can start to focus on how you will add on to the base. If the base is leaking out, it's kind of a moot point. Before I pivot to that, how we add on to the base, any questions from the audience? I don't see any hands rising, we'll just keep this going. Okay. That's how we get like for like sales back up and growing. We've got expansion opportunities on top of that, both distribution, geographic reach, as well as product segment stuff. Mm-hmm. Let's attack both. Which one do you wanna attack first? Which one matters to you more, I suppose, in terms of building out the portfolio from product perspective versus building out your distribution geographic reach? The good news with our product portfolio is that we have a clear line of sight all through 2028 because it takes 24 months to really build a, you know, any launch innovation. We have that. We have always said with the, you know, fundamentals of our, of our category is strong. The fundamentals of our brand is just as strong. If you look at the runway that we have, we are in the U.S. 50% of our business is in the U.S., about 50% is in international, but primarily in Europe and the U.K. We have the rest of the world, Latin America, the Middle East, Asia. We started obviously in China, as you know, we have reported, albeit it's a smaller business, but we started in 2020 on cross-border. At any time, if we did nothing, we are the top nine brand on Tmall cross-border, and when we have activation like 11.11, 618, we are the top three brands. Haircare brands, sorry. You know, I think international is as important to us as our product innovation, as our people are, and we've been building the infrastructure. Eric, I think, you know, if you want to build on that. I think you said it on international, JuE, just on the product offering opportunity. First, within haircare, we still have many sub-segments of the category that we don't exist in yet, which are incremental opportunities to us. Again, examples like a dry shampoo. Before we came out with that dry shampoo, you had to go off-brand to, you know, have that in your regimen. We have, you know, many more examples like that in the pipeline. Like, styling products come to top of mind? That's a sub-segment. Yeah. you know, we have some styling products. Our, Nº.6 Bond Smoother or Nº.7 Bonding Oil and our Nº.9 Bond Protector Nourishing Hair Serum are used. Mm-hmm ...styling products, but there are other styling products that don't exist in our portfolio today that represent significant opportunities for us. Okay. However you look at it, right, we have 12 retail SKUs. Forget about the back bar, there's four of them. 12 retail SKUs guided this year, you know, in a range that the productivity is really high. Compare us to any other brand out there. To generate the revenue that we have, they need at least 100 SKUs. You can tell not only our runway for distribution expansion in international is great, our runway in product innovation is just as material. Yeah. Yeah. Yeah, I hear you. The metrics as they stand today are still very impressive and clearly not reflecting your stock, right? Your valuation's cheap, even if your business was stable with the amount of cash it spits off. Suggesting, of course, investors don't believe it's gonna be stable, that it's gonna continue to shrink. They're valuing a smaller business than consensus estimates have today. It, it all roots back to skepticism on the ability to resuscitate a brand like this. I'm curious, are there case studies you're looking at? 'Cause that's part of the thing. People, investors are like, "Hey, give me precedents of a brand that's gone through this cycle, had just phenomenal growth, came crashing down, and then turns back up like Maverick in the movie, shooting back up over the mountain." Are you aware of any of those? Like, what are the case studies or precedents? You know what? I would like to turn that question to you. You cover so many, you know, companies. What do you think? In this short a timeframe, I can't think of any. I can definitely think of brands that got tired. Let's take beer, Pabst, as an example. Old, mature brands that almost have a degree of nostalgia and find a degree of revitalization years down the road because of something like that, but rich in heritage and, that's a different type of thing. I struggle. I haven't come up with a good example. I would just say two things. One, I do wanna refocus on the longer arc here. The incredible growth that we've had as a business, triple digit for many years in a row. Still, even 18% growth last year was ahead of the category. You say crashing down, you know, this is a reset year. It's difficult in that sense. Yes. We believe the reset is there to unlock this next phase of growth for the business. I don't like to use different, you know, company names, but one of the analogies and examples that's been given to us, a business that we have a tremendous amount of respect for, is a business like e.l.f., that also went public. Mm-hmm. You know, went through a period and then, is obviously performing very well today. Yeah. Yeah. Yeah. Maybe I should look at that case study a little bit closer. Yeah. Okay. Any questions from the audience? On that note, let's wrap it. You guys have had a phenomenal run. This is interesting. It's... I hope this is just a transition phase. I think it is, and I think there's gonna be real value creation on the horizon, but it's gonna be a show-me story as the back of the year progresses. I appreciate you detailing everything that you're doing, and now we know what to look for and the key proof points to monitor as we progress through the year. Thank you so much. Thank you. Thanks, everyone. Thank you. Thanks. Take care.