Thanks everyone for joining us. Good morning. I'm Lauren Schenk, Morgan Stanley Small & Mid-Cap Internet Analyst. I'm excited to be joined this morning by Sima Sistani, WeightWatchers CEO, and Heather Stark, the CFO. Before we begin, one disclosure on my end, please note that all important disclosures, including personal holding disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at morganstanley.com/researchdisclosures or at the registration desk. Sima, it's been about a year since you joined WeightWatchers. What initially attracted you to the business and the opportunity to lead the CEO? I actually joined WeightWatchers in 2014 as a member first. At the time, I was really struggling with my postpartum weight and developed a thyroid condition. Even though my mother was a registered dietitian, I struggled. As opposed to, you know, I tried every snake oil and fad that was out there. On her recommendation, I started WeightWatchers, and it worked. You know, between the accountability, the Science-backed program, the community, it gave me the... Even though I had the education, having grown up in a house with a, you know, registered dietitian, I needed that to succeed. It's a, it's a funny story because back in later in 2020, fast-forward, I'm on a walk and I'm listening to the Oprah's podcast, and she's talking to Tina Fey, who's a lifetime WeightWatchers. Tina's talking about how she's not on other social, but she loves WeightWatchers because it's such a positive community. It occurred to me in that moment as I'm building Houseparty, "Oh, wow, this is a social network." You come in, post a paywall, you're connected with other people who have a shared interest, and they're expressing their vulnerabilities. This whole time, I'm trying to think about ways to build empathy and to digitize social relationships, and the opportunity was right in front of me for a product that I knew and loved. I reached out to the board at that time. I was interested in getting involved at the board level. The timing wasn't right. When they called me two years later, it was for this operating role, and I jumped at the chance because I could take, you know, my background in growth tech and social and map it to something that has the opportunity to have outsized massive health outcomes for people. I keep saying, you know, what we are really doing is building a digital Blue Zone. Blue Zones are places in the world where people have longevity. It's not just because of what they eat or how they move, it's their social circles that keep them accountable to healthy habits. Yeah, I'm very excited to be here and, I'm almost at my 1-year anniversary. Great. What has been some of the greatest learnings or surprises over the past year? I feel I came in with a real clear line of sight of what I wanted to achieve from a product perspective, given, my experience as a, as a member. I think I was anticipating technical debt, which actually wasn't the case. It was more organizational debt. On the tactical side, it was really about building the right culture around the stack that we had, being more data-informed, you know, product-led agile development and putting, you know, a culture of bias to action so that we could have a, a better throughput in terms of our shipping velocity. On the organizational side, I realized that WeightWatchers, even though was now 80% digital, you have over, you know, 70% of our subscription revenues coming from digital. We're still operating like a retail company, not like a tech company. It was immediately about building a digital-first culture, removing things like the GM layer, global team, having sort of a member-first standpoint, data-informed A/B testing processes, doing everything from, you know, basically, I think some of the best practices that are obvious in Silicon Valley, as we find ourselves here today, and bringing them to WeightWatchers. The best part was there was a group of people who were really ready for that. We did have to do some restructuring to get ourselves there and put more wood behind fewer arrows. Ultimately, I think we have a great team in place to execute. Great. Let's move to the big news of this week, your entry into the clinical weight management space with the acquisition of Sequence. What initially attracted you to the business? Maybe talk about how you're thinking about integrating the core WeightWatchers product. Being an evidence-based program, we're always following the Science. We're seeing and you know, looking at the advancements and what's happening across the clinical pathways. It's not a fad. It's not a trend. These are really sound advancements in the Science of obesity. What is clear is that alongside lifestyle and behavior change therapies, for some, there are biological and genetic underpinnings that need to be addressed with medication. I think it was clear to us that the Science is moving in that direction, and this is an opportunity for us to add a lot of value to the consumer who is trying to understand the space, who will need care management through the process, who is looking for conveniences and. There was a place for us and a responsibility to really lead from a point of Science and the other piece about this is I think it's really important to understand that these medications, they're meant to be in conjunction with lifestyle behavior change. What they do is help the adherence to those changes. You know, that becomes an and, not an or. Ultimately, if we are the leaders in weight loss solutions, then we should be that across the spectrum, full stack, whether that is lifestyle, whether that's functional, whether that's clinical. You know, I'm really excited by Sequence and what they can help us bring and add value to our member network. Great. If you look at the landscape of businesses like Sequence, what was it about that business in particular versus the competitive set that attracted you to it? Sure. You know, when I started last year, I did an audit of all the new modalities that are out there to understand them better, and we kind of quickly recognized this as an area that was moving quickly. We did a build versus buy analysis. We met with the landscape, with the various companies in the landscape. What was so clear about Sequence was that it was a complement. They have taken a tech-first approach. They've built a platform that is where the UX is completely simple and delightful for both the clinician and for the patient. They've taken the complex process around pre-authorization, which is something that is being done manually and with, you know, a lot of the other places. They've taken it and put it on tech rails, such that it makes the program scalable, it makes the access easier. The team, It's a great team. They are entrepreneurial. They've been founders several times over. That being said, they agree with our sentiment that this isn't a place to move fast, break things. This is a space where you have to approach it responsibly. They're looking at a wide formulary. They've taken themselves out of the process, just connecting their, you know, the patient with the clinician and just, you know, making that experience more simple. Ultimately, look, we looked at the numbers. They have been around a year. They've already have 24,000 active members without marketing. It's completely word-of-mouth. The NPS is so high on their program. They're building towards a... They have a $25 million, you know, annual run rate, they're profitable. You know, between all of those things, their excitement and their connection to the vision of what we're trying to do, we saw, okay, now we can pair that up with all of the things that we index in, where we spike on community, and we know that that's going to be an important part of this. We spike on, you know, Science fact, lifestyle, behavior change programs. Between that and what they do well, it was a puzzle piece that just could come together very seamlessly. Great. If you think about your existing WeightWatchers base today, do you have data on what percentage of people have a BMI of 27 or 30 or...? I think those are two of those numbers are some of the qualifiers for taking these drugs. Is there any risk that having access to these sort of drugs makes them stay on WeightWatchers programs for a short period of time? If you look at our membership base, about over 70% have a BMI of 27 or higher. Just over 50% have a BMI of 30 or higher. Ultimately, though, it's still about, I should say that is at the time of subscription. It's about whether it's medically appropriate. Even if you have that BMI, in some cases, there need to be, you know, other health indicators. I think that's what we wanna provide, is if this is a pathway that the member chooses, they have Sequence as an option. This is a in conjunction with the WeightWatchers program. There are a lot of side effects, we know, with these, with these drugs. It's important that they, that we help address some of the things that can come up around muscle loss, nutrient density, and how you are adhering to your, you know, your program is gonna be really important to minimize those side effects. Also, the community, we know that this is something that people are facing alone, and they want more support, not just from a peer to coach care team perspective, but from a peer group perspective. That's also something that we can provide. The convenience element is so important. The ongoing ability to, you know, get the advice you need around how you titrate these dosages. Like, it's not like you get the prescription and then it's over. You have to continue to revisit that every month. Alongside that, again, the pre-auth... You have to get pre-authorized every single time that happens. There's actually a high touch, high support platform. Interesting. I mean, let's turn back to the core business. You've talked a lot about the importance of community to WeightWatchers. How do you think about WeightWatchers and better delivering that community aspect in a digital world? I mean, this is what I've done, right? Between Tumblr and Houseparty and Fortnite is think through third spaces. The workshop experience has been that gold standard for many years. You know, COVID really catalyzed the mix shift to digital, and in a lot of ways, the app didn't evolve. It still meant it's like a second screen tool essentially to the workshop experience. We're building that from a digital first standpoint, and you can look to really see that turnover in the second half of the year with features like chat and progress and, you know, there's a lot more fun things that we have planned on our product roadmap to really bring that to life and help people stay connected. I think the community aspect is really important because that's what drives retention. You know, in a lot of ways, we want you to be so successful that you don't need us. Mm-hmm. In order to kind of have that maintenance mode to continue to be successful, to take the successes you've had and share your lived in experiences, that's what makes the program special. That's what was happening in the workshops. The community enablement is what keeps people there. You come for the weight loss, you stay for the community. Right. One of the hallmarks of WeightWatchers of the past decade has been the biannual food plan innovation. Do you feel like that's still the right strategy for the business going forward, or will it be less emphasis on kind of the food plan piece? Yeah, I mean, we're now all about the evergreen innovation. Look, we just announced one of the biggest innovations we have, and it's not timed to any sort of particular seasonality or moment, but timed to how can we solve a problem for our members? That's how we're going to be thinking about things. We introduced a simplified program. We'll be introducing, you know, chat and some other great features in the second half of the year. I think we really wanna smooth out the curve that has existed before, the volatility that has existed before around our business. The way you do that is by having an evergreen innovation strategy that's always on. Maybe let's turn to marketing. In connection with the plan launch this fall, you're shifting some of your marketing from 1Q into 3Q. Can you talk about the rationale for that and how you, what seasonality you've seen from an LTV to CAC perspective historically? Well, I'll let Heather add here, but I'll start by saying that again, I think that we You know, the decision to move, you know, almost $20 million into the second half of the year goes back to what I was just, you know, talking about before. In the past, where a lot of the attention was in January, I think there's an opportunity to address member problems throughout the year. We know we have exciting things coming in the second half of the year. We want to map our media spend to those moments. When you map spend to features that add value, it drives organics too. It's the efficiency, it increases from a CAC perspective. That was a part of it. The other part of it is around just overall performance, media efficiency. Yeah, sure. By taking $20 million out of Q1 and pushing it into the back half of the year, A, it times very well with the exciting product features that we're shipping. But also just from an efficiency perspective, what we know is that, you know, historically, we've spent very heavily into peak seasons like January, and we were really saturating in reaching our members and the sort of last dollars in were less effective to be spent going to chase more members in the first quarter of the year. Whereas in the back half, we had typically been budget constrained and had pulled back and hadn't spent as deeply in the back half of the year as we could have from an efficiency perspective. We know by shifting the seasonality, we are, A, lining up with the product feature launches, but also, B, really driving an improved efficiency of what we're spending, and we expect to see about a 5% lift in overall, full year LTV to CAC by doing this and an improvement in our sign-up trend as a result. I wanna emphasize, too, because I understand a lot of people are focused on the year-over-year, but we're changing our strategy. We're managing to the long-term health of the business. This is the right thing for the long-term health of the business. This is the right thing to drive total sign-ups and subs higher by the end of the year. I frankly, I think it's a mistake to overly focus on comping to a completely different strategy from the year before. One follow-up on the marketing piece and maybe the strategy of marketing. WeightWatchers has historically also been known for its celebrity partnerships, whether it be Oprah or James Corden. Is that the right strategy going forward? Is the thought that maybe there's less dependence on the celebrity endorsements? And if so, is there an opportunity for marketing as a% of revenue to maybe come down over time? I think that the market, again, around brand and marketing strategy, it's changed because the landscape has changed. It's, it's noisy. There are a lot of different channels for consumers to reach content. On any given day, somebody new is famous on TikTok. I think that we have focused our attention on eatertainment. We have focused our attention on influencers with, you know, segmenting into specific cohorts to reach our her. You know, the results from a data perspective are there. It's working. Also, from a qualitative perspective, people understanding and agreeing that WeightWatchers is the right program for them. You know, I think that's not to say that we wouldn't ever lean on that strategy in the future to introduce new things. For instance, I think it might make sense on the clinical side, where in some cases, it helps from an education standpoint when you're trying to bring something new to market. But I'm really excited about the way we showed up in January and across the whole, you know, peak season, if you will, because it represented a new WeightWatchers, one that was focused on life cravers. How we were describing it is like, when you think about weight loss, a lot of negative words come up. Rather, we wanted to turn it up on its head. Like, we are a program for people who love food. We don't want you to feel deprivation on our program. That's the opposite. We really leaned into that and the real-life stories around that and the people who are having success on that, and it resonated. You know, both we saw it in, again, the LTV CAC, but also in our brand affinity metrics. Okay. maybe let's spend a minute on retention. As you, I think, mentioned in one of your earlier responses. Mm-hmm You know, in a way, there is good churn to this business. How do you think about managing, you know, churn as an output and retention? Maybe give us an update on where retention sits today and where you think it can go through over time. Yes. I will update that, but I also wanna say that I think the way we've historically measured retention, it's not where we're focused anymore. We're focused on engagement because engagement ultimately drives retention. That's why we speak to activation rate and what happens in those first 30 days to really make a member successful and want to stay committed to the program and to the community. That's where we're focused. That being said, you know, retention's around 10 months, just under 10 months, and we're expecting that to increase in the second half of the year, given all of the improvements that we are seeing in activation rate, and that being a leading indicator of, you know, feeding into our churn model and our retention models. We have over, you know, 400 different retention curves that we're measuring across, you know, all of our different markets on any given day to stay connected to our members and their experience and ultimately the LTV. Great. I have a question for both of you. There's been, you know, several rounds of restructuring over the past couple of years. Do you feel like you're finally at the place where the cost base and the studio footprint have been right-sized, and are there any other areas where you see greater efficiencies? From strategic standpoint, it's been about building that global team. A lot of that restructuring was in service of that. The other thing that we really wanted to do was, is focus the team. We were spending our time in areas that where, you know, where the ROI wasn't as great or lines of business that had a, you know, low margin contribution. Ultimately, I think we have nailed the strategy, and we've, you know, right-sized our workshop footprint. We have rationalized our, you know, portfolio of offerings. For instance, exiting commerce, bringing down the consumer product SKUs, getting out of businesses like Digital 360, one-on-one coaching, et cetera. That's given us the ability and the focus to expand, for instance, into clinical. Mm-hmm. Definitely. I would echo that it's about simplification and focus and recognizing we needed an appropriate cost base for what we wanted to do and what we wanted to accomplish and take the noise out while improving the margins, you know, specifically in the workshop business. That's the biggest change that we're making right now, in addition to the changes we'd already made, as Noelle mentioned. Despite all the disruption from COVID and the COVID rationalization, do your subscribers have actually been relatively flat over the past 2 years? How does the in-person experience fit into the, you know, sort of future vision of WeightWatchers? I always say in real life is the best thing that's out there. You know, we want to be able to be digital first and convenient. I think that there's this opportunity to really create more flexibility around how people show up in person and when they show up, and whether that's coach-led or whether that's mentor-led or peer-led. We have a lot of fun that we're gonna have around that, and I think that our new more flexible footprint will allow us to achieve that. I think it's a real moat for us, especially as we enter, you know, new spaces. Taking our core business into account, you know, that's a great accountability lever. If you're struggling, if you're succeeding, there are those moments where you want to do that in a space with other humans. You can't hug a screen. We really wanna activate that. On the other side, with clinical, yes, I think that people, especially in this space, are more likely to choose D2C, and telehealth because of its convenience. There will be things that I think can really be achieved from an education standpoint by having somebody come in person and meet with a care professional. I'm really excited about what we're gonna continue to do in the IRL space as well. We're still omni-channel, and it's the clicks to bricks that set us apart. We have a few minutes left. Maybe, we'll wrap up by asking what are the one or two things you think investors most underappreciate or misunderstand about the story? You know, coming off of the last round of, you know, calls off of our earnings, you know, I think it's surprising to hear how many people are recognizing the chronic weight management medications as here to stay. This is not a fad. Yes, it's trendy in the media right now, but this is a paradigm shift in our market. We are at an inflection point, and no, I don't think that it has contributed to the demand pressures we've seen in the business to date. I do think this is a massive growth opportunity for us. We can lead from a point of responsibility, from a point of Science, and capture this moment. In the same way, you know, I would liken it to, you know, Facebook when mobile happened, and there was that shift in how people accessed. It's not like the, you know, the web internet went away, but the social internet was starting. It's true here. It's like the biological underpinnings of obesity are now being able to be treated by these medications. Of course, we want to provide, you know, a full stack solution to our members. I think leading from a consumer approach from 60 years of brand trust is going to be game changing. I think, you know, that was the biggest thing that came across is people, because of the media attention, not really appreciating what's happening in our industry and in our space and how we are best in position to really to add value and create amazing consumer outcomes between what we already do with lifestyle and behavior therapies and what we can do with, you know, a sound, responsible clinical intervention. Excellent. That's a great place to wrap up. Thank you both so much for your time, and thanks everyone. Thank you. E lse for just joining us. Thank you. Thank you.