Q2 2020 NU Skin Enterprises Inc Earnings Call
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Ladies and gentlemen, thank you for standing by welcome to be used to Twentytwenty Newsfeed Enterprises earnings Conference call.
Time, all participants are in a listen only mode. After the speakers presentations will be a question for section to ask the question during his section.
Third one on your telephone please be advised that todays conference is being recorded.
Priority for their system. Please press star Zero I've had like designed to conquer over to your speaker today Mr. Scott on Vice President of Investor Relations. Please go ahead Sir.
Thanks, and good afternoon, everyone today on the call with me are rich would chief Executive officer lined appear ski President and Mark learns Chief Financial Officer on todays call comments will be made that includes some forward looking statements. These statements involve risks and uncertainties and actual results may differ.
Materially from those discussed were anticipated.
Please refer to today's earnings release, and our FCC fighting for discussion of these risks also during the call certain financial numbers, maybe discuss that differ from comparable numbers obtained in our financial statements.
We believe these non-GAAP financial numbers. This is in comparing period to period results in a more consistent manner. Please refer to our investor page at IR got Nu skin dot com for any required reconciliation of non cat and with that I'll turn the time over to rich.
Thank you Scott and welcome everyone to our conference call. Thank you for joining us today.
We're pleased to report constant currency revenue growth in the second quarter and results well above our guidance was $612.4 million of revenue and earnings per share of 81 cents.
These results were driven by the strength of our socially enabled business model strategic investments in technology and digital tools are balanced product portfolio and strengthen our manufacturing segment.
I'm, particularly proud of the way our global sales leaders are embracing digitally enabled commerce, which has empowering them to accelerate customer acquisition and increase their productivity.
This is evidenced by customer growth of 29% and also by the percentage of digitally enabled transaction, which reached more than 85% for the quarter.
We continue to focus on customer growth, believing it will lead to increased sales leader protik productivity and ultimately salesforce expansion.
We are encouraged by the strong growth in customers this quarter and the sequential improvement in sales leaders.
We believe our plans product introductions of Ageloc boost to neutral essential will further drive these key metrics from the back half of the year.
Our strong revenue growth the lead our strong revenue growth in the quarter came primarily from the west with double digit gains in our Americas specific and AMEA region.
Our China business showed stabilization with sequential growth in customers sales leaders and revenue.
I want to provide a few more details regarding how we are working through this global pandemic.
We continue to focus on the health and wellness of our customers our sales leaders in our employees as our top priority.
The majority of our employees around the world continue to work remotely travel remains restricted and were leveraging technology to the very best of our ability to keep optimal communication and interaction with our global sales force and our employee base.
During the past 18 months, we've navigated many challenges and learn lessons that have accelerated adoption of digital technology and tools.
For example, we began transitioning many of our global in person meetings to online virtual experiences last year and this is an essential part of our success today.
We will continue to invest further and technology.
Amplify the power of social sharing of our products through a robust digital infrastructure expanding the reach of our sales leaders to more customers.
We believe our business is very well positioned to succeed with our strong product offering the flexibility of our velocity compensation program and the technology improvements we have made to enhance the abilities of our salesforce to work remote.
In the West region, where our sales leaders are more mature with social sharing practices. We have seen an acceleration of the business, even with the impact of cold wet and associated economic uncertainty.
We believe we're now beginning to see early signs of this adoption in some of our Asia markets as well, which Ryan will address in more detail in a few moments.
Our manufacturing segment performed well reporting growth of 20%.
These manufacturing companies have provided significant benefit to our global business by helping us work through supply chain challenges associated with Covance.
We see continued growth potential in the sense segment as we plan to make further strategic investments in our manufacturing capability.
For example in the fast past few months, we have added new capacity to produce liquid pouches and powders and have also significantly increased our capability around the growing sanitizing and cleansing category.
Also.
We reported revenue in our grow Tech division in the quarter and while small we continue to make progress and developing our indoor grow lighting and technology and believe this will provide additional opportunities for growth in the future.
In the first half we generated strong cash from operations raised our dividend strengthened our balance sheet and reduced our outstanding shares by nearly 8%.
Looking ahead due to the trends, we're seeing in customer growth and what we anticipate will be a strong product introduction in the back half of the year. We are raising our 2020 revenue and EPS guidance, which mark will lay out in more detail shortly.
Overall, we continue to feel confident in our strategy.
And believe we will generate growth in second half of the year, while building momentum for 2021.
With that I'll turn the call over to Ryan to per boredom provide more detail around our global business right.
Thanks Rich good afternoon, everybody. We're encouraged by the improving performance of our business and are grateful for the lessons we've learned over the past several quarters nearly three years ago, we initiated our expanded vision of becoming the world's leading business opportunity platform as we leaned into the evolution of macro trends, including the gig economy Influencer.
An affiliate marketing and social Commerce. This strategy is driving a transformation of our business to become more customer obsessed global and digital first which is enabling our sales leaders were influencers themselves to build their businesses on Nu skin's opportunity platform.
The implementation and adoption of better technologies and tools to support our Salesforce and building their online businesses has happened more quickly because of meeting restrictions in mainland China in 2019, and current limitations due to go do to co bit around the globe in today's reality, we're face to face interactions are more restricted country.
Renewed investments in digital capabilities are helping our sales leaders to attract customers at an accelerated pace, which historically has been a leading indicator of our sales leader growth to follow.
Growth in Q2 was led in the west where socially enabled businesses more broadly adopted as a result, our global business is more geographically diversified than before which we believe will result in greater operational stability over time.
I'd like to provide a quick summary of our market segment performance during the quarter mainland China performed within expectations and continues to stabilize following a very difficult 2019, when the industry contracted more than 30%. According to the World Federation of direct Sellers Association.
For Q2, our local currency revenue declined 18% year over year, but increased 8% on a sequential basis. While we're seeing approved meetings increase there are still limitations on the number of participants primarily due to cobot 19, we're optimistic our digital transformation will continue to reduce our really.
Hi, it's up in person meetings.
We're particularly pleased with with continued customer growth, which was up 42% for the quarter and anticipate sales leader growth and a return to revenue growth for the market in the second half with our upcoming product previews.
The Americas and Pacific generate 48% constant currency revenue growth as our sales leaders leveraged the power of our socially enabled business to attract new customers, which grew by 67% our leaders have expanded from our traditional socially shareable products like 80, 24, toothpaste and instead glow sunless Tanner to also include.
Device systems, such as Loomis spot, which was up 96% year over year in the region.
EMEA also experienced renewed constant currency revenue growth of 21% with 51% customer growth led by the UK, Germany, Poland in South Africa, we anticipate our strong customer growth will lead to continued sales leader growth, which was up 20% year over year.
In other Asian markets, improving sequential customer trends are helping stabilize our business and we anticipate sales leader improvements as we introduced our new products in the back half of the year.
South Korea perform mostly in line with expectations with revenue down 5% in local currency, even considering the stronger impact of cobot in this market Southeast Asia constant currency revenue declined 9% due in part to logistical challenges related to covert night team. However, we are beginning to see some promising market try.
Ends with solid customer growth.
We're also encouraged as more of our southeast Asia leaders are expanding their social capabilities.
Japan has been a relative bright spot over the past several quarters for Q2, we reported a 2% local currency growth with improving sales leader and customer trends as we attracted younger demographic.
Lastly, Hong Kong in Taiwan revenue declined 17% in constant currency, but were stable sequentially.
As we continue to execute our strategy to empower sales leaders to grow customers through our engaging platforms, enabling products and empowering programs. We're ahead of schedule in returning the business to revenue growth and we have strong plans in place to build on this momentum in the second half of the year and leading into 2021.
From a platforms perspective, we've historically been a person to person business and we continue to leverage technology to enhance our customer reach with more than 85% of our global revenue coming through digital transactions as part of that continued digital transformation. We will launch several tools in the second half of this year, including our.
New Vera App. This app will assist sales leaders in providing personalized product recommendations to their customers based on an individual skin assessment, leveraging artificial intelligence and machine learning algorithms.
In term of our in terms of our product pipeline. We are currently preparing for a global preview of our next few device system innovation Ageloc boost in most of our markets around the world. This new product will build on them number one at home beauty device systems brand position with a proprietary micro current device that promotes brighter.
More useful looking skin in the us in EMEA, we plan to rollout a new bio adaptive skincare line under our new neutral Central's brand both products will be introduced using our proven launch process with a global preview in the fourth quarter and local market launches throughout the first half of 2021.
Finally regarding empowering programs our latest innovation is called enjoy a consumer rewards program focused on encouraging long term loyalty through redeemable rewards points and improved customer relationship management. In Q2. This program was introduced in southeast Asia and mainland China and is scheduled for release.
Police in the us in the second half of this year and other markets to follow so in summary, while the macro environment remains uncertain Im pleased with the growth trends, we're seeing and I'm confident in our strategy and our ability to continue this momentum as we prepare for our 2020 product previews and beyond and with that I'll turn the time over to Mark.
Thanks, Ryan I will discuss our financial results for the quarter provide Q3 guidance and update our full year 20 to 20 outlook.
As a reminder, you can find additional financial information in our release and the supplemental slide been tables on the Investor section of our website.
Both second quarter revenue and earnings per share came in above the top end of our prior guidance.
Due to revenue was $612.4 million and was negatively impacted 3% or approximately $20 million by unfavorable foreign currency fluctuations.
Earnings per share for the quarter were 81 cents.
Gross margin for the quarter was 74.8% compared to 75.3% in the prior year quarter gross margin was negatively impacted by additional freight charges due to increased customer demand and incremental costs associated with Covidien 18.
The new skin gross margin was 77.6% compared to 77.8% in the prior year.
Selling expense as a percentage of revenue was 40.6% compared to 39.4% in the prior year.
Selling expense for the new skin business was 43.3% compared to 41.5%.
While our selling expense normally fluctuate plus or minus 1% the larger than typical increase was primarily due to accelerated revenue growth in the west.
General and administrative expense was essentially flat year over year.
As a percent of revenue it was 24.7% compared to the prior year of 24%.
We continue to focus on controlling expenses. During this period of uncertainty and would expect DNA to decrease as a percent of revenue in the second half of the year.
Our operating margin for the quarter was 9.5%.
The other income expense line reflects a 1.6 million dollar gain compared to a 3.3 million dollar expense in the prior year.
During the quarter, we paid $19.4 million in dividends and repurchased $46.5 million of our stock.
$362.8 million remaining authorization.
Our tax rate for the quarter was 29.8% benefited by us profitability.
During the quarter, we generated $97 million in cash from operations and increased our cash position on our balance sheet.
Our financial position remains strong and we are confident in our ability to maintain adequate liquidity.
And flexibility to successfully navigate this current prices pursue our strategic plans and return value to our shareholders.
Due to the strong second quarter results strengthening trend and the upcoming product introductions, we are increasing our annual guidance by approximately $200 million.
We will continue with wider than normal guidance ranges due to the uncertainty of cobot 19.
We now anticipate annual revenue of $2.37 billion to $2.45 billion with earnings per share of $2.85 to $3.10.
Our guidance assumes a negative foreign currency impact of 2% to 3% and a tax rate of 29% to 34%.
Our third quarter revenue guidance is 600 in $5 million to $635 million with earnings per share of 78 to 88 cents.
This assumes a negative foreign currency impact of 1% to 2% and a tax rate of 28% to 32%.
With that we will now turn the call back to the operator for questions and answers.
As a reminder to ask a question and press Star one on your telephone to withdraw your question. Please press perhaps.
Your first question comes from the line.
Okay, all loan from Deutsche Bank. Your line is open.
Hi, everyone.
Paul Congratulations.
I, just I wanted to delve a little bit deeper.
The strong results in the U.S. and in New York.
And it sounds like it was driven by a social selling so I think mark.
As Ryan mentioned, a little bit about that.
But im curious what what did you do what drove.
The huge increase this quarter and what type of products being sold.
Thanks, guys about that question and really really encouraged with the progress we've seen in the West region, which we're now starting to see in southeast Asia as well.
So that's very encouraging we mentioned on our.
First quarter call. It we were encouraged by what we were seeing from a customer acquisition standpoint in the first quarter and that related particularly to the west and then we saw that continue throughout the quarter on right and why don't you speak to other things we're seeing in the west specifically, yes, fives I think you summarize the well we've seen so.
Social sharing and the socially enabled business.
Really take hold well.
Across the broader portfolio, which has been helpful. Historically.
Social sharing it's a relatively new way of building and it's taken time to get broader adoption, but we've seen good adoption through the west in through M&A, we've seen at it.
Transition from those kind of those historic.
Easily demonstrably all lower price point products that were very good like 80, 24, as I mentioned, but reaching into now our broader portfolio, which we're really encouraged about when we get into the beauty device systems brand luma spot as I mentioned very strong.
We see galvanic spa costs strong as well and they seem to be very very very effective at higher price points as well as well. So our field is adjusting well in adopting the new models are proliferating and sharing how they do it well and then it's expanding to a broader portfolio.
Okay and then.
As part of your guidance like is there a specific sales amounted to that to you.
Allocated to bid to.
Big.
Launches that you talked about.
Then the central bio adaptive skin care.
Yes, Pfizer that's a great question I think as you look at how we laid out the guidance for the for Q3 and for the year you can back into our Q4 number and you'll see that our Q4 number it has roughly a 50 million dollar increase over Q3.
And part of the reason there as we look back at when we launched looming Spa and if you remember back to when we launched limit by that generated roughly a $100 million incremental and so we have built in for $50 million incremental for a couple of reasons. One we're starting with a slightly lower amount of sales leaders and we're cautiously.
Optimistic about whats going to happen with those sales leaders as the growth and customers translate.
To sales leaders. There is also continued uncertainty around cobot and so we thought it prudent to be a little bit careful with that incremental add for the fourth quarter. Although we're extremely excited about what we're seeing in the trends we're seeing associated with this product launch.
Okay sounds good and could you just just on China.
You said, the China was in line with expectations.
So I'm curious how are you thinking about China, specifically in the back.
Yes, thanks for that question as well, China performed really close to where we had anticipated in the second quarter made a nice improvement from a year over year standpoint down 18% compared to a little bit more than 30% in the first quarter and we anticipate that trend to continue to.
The improved throughout the year, we still believe that with the product launch in the fourth quarter, we'll be able to show slight growth in China at the beginning of the year. We mentioned, we anticipate a china to be down 20% to 25% and in the modeling right now it would be closer to 20.
Okay, great. Thank you so much.
Right.
Your next question comes from the line Olivia Tong from Bank of America. Please go ahead.
Great. Thank you congrats on the great results.
Well, just sort of follow up there a little bit.
For the us probably the highest growth we've seen in a non convention period in quite some time, so maybe could you parse out a little bit differently.
Obviously got a record number of customers meters in us I would imagine at some of it. Some of it's ahead of the take launch, but there's also a lot more than your typical increase heading into a launch. So is this colin and looking for more flexible income stream or is it.
Thank you for a recession and loss Johnson looking for supplemental sources of income maybe just sort of talk there that the customer and leader base, a little bit and where that incremental sale is coming from that would be helpful. Thank you.
Yes, Thanks, Olivia Ryan and I will take a shot at this.
We're really encouraged with the US we actually build built to re launch that we did in January of this year.
Just a refocus on our key key metrics that we're going to drive the business and we started to see some strong customer acquisition really happening in the first quarter. This is very strong growth and interestingly enough while the product launch in the back half of the year is important it's not a key driver to the growth that we've seen so far.
It will be the neutral essentials product that we launch in the back half of the year with boost small launching in the.
First half of 2021, but we're just seeing a real excitement around the business a real strong increasing customers, which has now leading to a full earned fuller pipeline of sales leaders.
We did start to see those sales leaders jump in the second quarter this year too so.
Really really good progress there and Ryan what would you add to that yes, I would only add Olivia going off of Pfizer's Pfizer's question. I mean really it's we've been really focus to rich as point on customer acquisition, and really trying to understand and support and when I say understand I mean support.
This socially enabled model and as we've gone through this digital transformation, we're really leaning into how to support that better and then magnified I think by the external factors that I mentioned before really those macro trends retail shifting online social commerce improvements Influencer marketing.
And to your point around the gig economy as well as I think those trends are coming together, but I really would attribute the our ability to capture that activity.
Support at first of all with our sales leaders and the capture through our digital.
Tools in our digital mediums, that's been really key to it and then to richest point on that balance between the customers in sales leaders were very encouraged to that point to see the growth in both and anticipate that that will continue as we support the the socially enabled model moving forward.
Got it and then if I could ask you about China the difference and the difference between the growth of leaders on the growth of customers I know there you can have.
The volatile, but that differential seems to be keep it keeps getting wider so what's driving that almost massive disconnect between the growth of leaders and customers.
No yes, great questions. It as you know we've been very very focused on customer acquisition and retention around the globe and certainly those issues efforts continue you may recall at the end of last year, we had a fairly significant.
Customer bump as we implemented some new CRM capabilities there in the market, which has enabled us to retain more customers. Despite a lagging sales leader number. We've continued the that expansion of up customer driven tool support with that enjoy program that.
I referenced in.
And my private prior comments and that drove additional activity in Q2, so that the customer growth continues to do well digitally speaking, we're seeing an improvement in customer per sales leader productivity as well as we're able to support that more effectively digitally for the sales leaders, yes, we continue to be very focused on that.
Ill longer longer term it ultimately we know both metrics have to rise.
With that we are very much focused on that in the second half.
Leading up to this boost global preview in the boost preview in China, which historically has been good for China, China is good at that launch process. They understand that the salesforce I understand that and so we anticipate doing that but longer term as we've said the meeting restrictions do play a significant part.
Of the sales leader creation, and so that continued pivot digitally while we're seeing improvements it's still hasn't made up for the complete roll up those meetings. So that's a that's maybe a summary Olivia.
Got it and then just lastly.
Relative to expectations a lot of the EPS beat in the quarter came from below the line.
I can take Ninetyk sequential swing other income much lower taxes.
I know the Texas West Park, it sounds like it was mostly country mix, but.
Way to get clarity on those particular in second half and mature expecting because as consumer quite a bit. Thank you.
Thanks, Thats a good question in other income yet as a bit the big swing there was the foreign currency gain and lower interest expense. So the lower interest expense will continue going forward and then I tried to give you a little bit more narrow tax range than what we had given in the past and did skew that lower we are seeing improved profitability.
The U.S. and with that profitability us being driven by the growth in or Nu skin us business, but also the increased profitability of our manufacturing entities, which grew 20% in the quarter.
As we generate more us profit our tax rate will go down and so we are signaling a lower tax rate for the second half as well.
Thanks very much.
Thank you Olivia.
Your next question comes from the line.
From Lane Research your line is open.
Yes, hi, thanks, good afternoon.
Mark can you can you give us what the sales trends were four nutrition versus personal care in the quarter.
Yes, there was very little shift it was it was about a one point improvement in nutrition and about a one point improvement in manufacturing and then that was offset by the decline in.
Personal care.
Okay.
That's helpful and then.
Trying to get a feel for new products.
As important as they are it's a little bit complicated. This year, it's not just one product in one quarter everywhere and you've got the two products.
Staggered timing and different market. So can you can help clarify how this is going to play out over the next two or three quarters.
Yes, Doug.
Maybe from a very high level standpoint, you can think about it this way all the markets will receive a new product in the fourth quarter milk.
Markets will receive boost and the western markets. This is generally speaking well get nutritious essentials.
Those products will be previewed on a limited basis, but quite a bit of availability.
In the fourth quarter with the full launch is happening in the first quarter of next year and then as we move into the second quarter generally speaking.
Those that really boost in the fourth quarter will then bring neutral essential and those that relief.
Neutral essential will have boost.
On a very high level standpoint, that's what we're looking at.
That's helpful. No. Thanks, Rich and then on the on the boost I mean it.
It's a fairly extensive product arguably discretionary and we're going to global recession. So I mean, what is your level of confidence that it will be as well received as maybe just talk to other launches that might have been done like really spot in a more favorable macro environment.
Yes, I enter interesting Doug on that note on price points and frankly this has been something really pleased to see again when I go back to that socially enabled model.
The that traditionally we felt that that model.
Required a lower priced product.
But what we're finding is the price value proposition ultimately as what matters and as long as the value matches. The price consumers are willing to pay for a highly beneficial product. So as I mentioned, our r. Loomis Vod device, our galvanic spa device, which are both galvanic, obviously higher price point the luma spot.
Boost will fit right in the middle very very.
The middle position, so very similar in that in that range, but we anticipate that it will do very well based upon the research we've done so far the feedback early feedback we've had its a good product and it's fitting that the right positioning there. So we're pleased we're actually pleased and encouraged that.
Well, we'll see boost that be a significant complement to the other devices that are there at the price point, where where it is.
Okay. Thanks, Ryan that's helpful. Im just lastly can you update us on your grow technology business, where it stands as far as fundamental performance and where you think it fits in strategically.
Yes, Thanks, Doug we.
About three years ago began investing behind a technology to produce ingredient in a pure and traceable manner and more sustainable using less land and water. We continue to believe our customers will demand a higher and higher level of sustainable and traceable ingredient going for.
So we've stayed very focused on that and as we continued to develop that technology, we actually see other potential uses for the technology, which will be able to provide we believe revenue and growth opportunities for the company. So as those continue to develop and and we get closer to a significant revenue opportunity then we will up.
Further, but the technology has made good advancements we've been able to produce really solid data.
Support the technology and we continue to believe that that customer trends in the demands around sustainability and around traceable ingredient where we.
Ken.
Really zero in on that level of product development is going to be really help.
Okay. Thank you.
Once again.
Question. Please press star one on your telephone withdraw your question. Please.
Perhaps.
Your next question comes from the line of Seth Lewis from Jefferies. Your line is open.
Thank you good afternoon, everyone at two quick follow up questions. The first is just on the enjoy customer loyalty program or that product can you talk a little bit about that Ryan I think you mentioned rolling it out in southeast Asia, and China, and it will be coming to the rest of the world Here's Tim maybe talk first about that and then I have one follow up.
Yes, great stuff. Yes. This has been a program that we've been we've been working on and actually testing in refining for that for the past several quarters and in various markets to get it right enjoy it really is it's a rewards program that rewards for loyalty. So think of second month orders multiple lower.
There's a subscription based orders and then having benefits.
For the consumer around those and so that enjoyed program has been a good complement the market. So we rolled it out in in markets like as I mentioned in Q2, a couple of markets in Southeast Asia, and then in mainland China, We're seeing some good benefits. There just one one note in particular the enjoy program has been particularly Hello.
Well in reactivation of customers, who had previously had purchased in the last six months and so we've seen in an increase in that reactivation rate, which is all part of our approach is our sales leaders are very effective at attracting new customers. We believe that the company through digital technology can be.
More effective in supporting them in retaining and reactivating those customers. So thats really where enjoy is set to get to set by the way with this acceleration in customer acquisition.
Around the west throughout the West I should say.
We're very much focused as I mentioned in enrolling that program at program out in the USA and throughout EMEA over the next few quarters, because we anticipate that weve anticipate that need calming and now it's here so will in fact there.
Great and then my second one is also on technology, it's related to the VR App.
So can you just help us think through how year leveraging data to make personalized product recommendations. I think you also mentioned some AI and machine learning embedded in that App, maybe talk a little bit about what you expect.
In terms.
Both for the customer Andrew and your sales have what you expect in terms of the leverage about data.
Yes, absolutely step appreciate you asking that we can't wait for you to use. This this app, it's going to be really cool. So you. All you all role will recall our partnership with a WMS.
A couple of years ago with cloud and one of the benefits. The came with that are comes with that is the the access to micro services.
And with those Microservices access, we're able to really do significantly more around predictive analytics right and leveraging all of the transaction data that we have when you think of across our various platform from the scanner on the health side or or devices.
You know any survey research, we have it all of that big data or bigger data.
As is leverageable in defining algorithms. The Vera App is really based upon a personal skin assessments. So you can think of a series of questions as well as a photograph of your face that is set and then through that personal information and the photograph as well as the data we have.
<unk> around the broader customer segments as well the consumer themselves.
Vera produces that personal recommendation and so it's actually quite a bit different there are face recognition technologies and tools out there today ours is generally speaking quite different because it leverages big data from multiple sources.
In a predictive manner and so thats, probably the it's I believe it's it's the most robust tool out there in terms of facial recognition for product personal recommendation engines and the last thing I'll say on that a little bit long, but I'm excited about this is it's a tool that is placed in the hands of our sales leaders who.
And then push it out to their prospective customers and future sales leaders to left to utilize the tool and get that personal recommendation engine and so it's really in in enabling that sales leader productivity to improve.
Great. Thank you very much.
Thank you step.
Your next question comes from the line of Mark Astra Chen from Stifel. Your line is open.
Hi, everybody. This is actually Peter on for Mark. Thanks for taking my question, so with selling expenses, increasing as a percentage of sales in the quarter.
Should we expect that to continue especially as as customers sales.
Its customers sales leader counts increase into into Fourq, even with new product introductions. Thank you.
Yes, thanks, Peter the.
Sales leader or the sales incentive increases due primarily to the quick uptick in sales, where the group volumes of our sales leaders increased to a higher level, so pays out a slightly higher rate.
The only reason that we'll continue to remain really high would be.
Really fast continued fast growth or even accelerating growth otherwise, we'll see that number come down a little better as we go into Q3 in Q4.
Okay. Thanks for those questions I think that last question, we really do appreciate Everybodys time, and we at the beginning of the year I remember talking about our excitement for the back half of this year and that we really felt like we could turn the business to growth and.
The strength of our product launches were or something that we are really confident would drive growth in the business. We're excited that momentum in the business has picked up a little bit earlier than we thought which is going to allow us we believe to be in a really good position to be successful with those launches.
Certainly and uncertain time out there, but we became we become more and more certain as we see the key indicators in our business pointing in the right direction.
And that gives us good confidence as we move into the back half of the year.
Thanks for listening and good luck, everyone with everything you're doing and well we'll talk to you in a couple of months.
Right.
This concludes today's conference call. Thank you for your participation have a wonderful day you may now disconnect.
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