Q1 2022 NU Skin Enterprises Inc Earnings Call
Before our unique beauty and wellness products. However operations in the latter part of first quarter were impacted by Covid related Lockdowns and other factors and we anticipate these disruptions and the loss of momentum to impact our <unk>, our Q2 and annual results.
In other regions the rollout of meta in college, and plus and other new products, coupled with the continuing advancement of our social commerce initiatives remain encouraging contributing to return to growth in southeast Asia and continued growth in the U S and Taiwan, Connie will provide a bit more context in just a few minutes.
Nevertheless, given the global uncertainties in China, EMEA and the broader economy, we're lowering our outlook for 2022 by approximately $150 million.
Now in spite of this in the short term challenges we remain focused on the transformation of our business with New vision 2025, let me provide just a bit more context on that while still in the early stages. We are fully engaged in this major strategic transformation to capitalize upon the commercial shifts a product personalization in Butte.
And wellness, social commerce, and the gig economy, our transformation from traditional direct selling to becoming the world's leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform is all about defining a new framework for our company to win in this evolving landscape.
For the first time in three years, we are preparing to meet with our team elites in London to align with our top global sales leaders around new vision 2025, and our three strategic imperatives empower me affiliate powered social commerce and our digital ecosystem. Let me just briefly talk about progress on each of the three.
Right.
Our empower me personalization beauty and wellness strategy is intended to provide consumers with deeper insights into their individual skincare and body care needs.
Connected devices will be a key aspect of empower me beginning with the launch of Loomis spot Io in early Q3, followed by some limited previews of body Io beginning in Q4 now these unique input output devices will enhance the consumer experience and forge even stronger connection.
With the company through enhanced personalization of product and content curation, improving customer loyalty and lifetime value.
Next affiliate powered social commerce builds on our roots of person to person marketing to amplify messaging around authentic personal recommendations from our roughly 250000 paid affiliates by leveraging social media scale and reach in 2022, we are leveraging key learnings from our western Mark.
As we refine our product promotions cadence in introducing new global pricing model, beginning with Loomis by Io and further train our sales force around the globe to embrace this new social Commerce model.
And thirdly, we continued to build out our digital first ecosystem with the introduction of Vera and stellar apps towards the end of the first quarter. The Werra App Leverages AI and machine learning to guide consumers through their personalized beauty and wellness journeys, while the stellar app enables brand affiliates to easily access key infer.
<unk> and tools to better manage and build their businesses all from their mobile devices. Both apps were introduced in English at the end of the quarter and other languages and capabilities will be added throughout 2022.
Now to help you better understand our transformation and measure progress along the way we committed in February to providing greater transparency into additional key drivers are first notable changes to begin reporting the number of paid affiliates, which is a broader segment of our sales force who actively share products with customers on a much.
More flexible basis, and who act as a pipeline for future sales leaders Connie will describe that a bit in just a couple of minutes with.
I'm also pleased to report our ongoing ESG efforts as we seek to improve People's lives and the world in which we all live we recently released our fourth annual sustainability report, where we highlighted our progress in several key areas, including the reduction of 131 tonnes of plastic and more than 34 tons.
A paper in 2021 due to packaging changes to more than 60 products and other related initiatives. In addition, the two communities awards. We recently received further reflect our tremendous commitment to our entire organization towards corporate social responsibility.
<unk> also continues to lean into diversity equity and inclusion is we're pleased to be named to Forbes list of the worlds.
Top female friendly companies for 2021 as well as their list of America's Best employers for 2022, where we ranked number two within packaged goods and number 57 out of 500 midsized companies overall.
So in summary, while there are near term uncertainties with China, Europe and the broader economy. There are also new opportunities arising as our world continues to evolve I am optimistic about the future as we work towards new vision 2025, our agile model is built on a saw on a strong foundation and is globally diversified.
Which helps to mitigate risks and enables us to continually find new pathways for growth in the early phases of new vision 2025, I really im as confident as ever in our future as we leverage our capabilities and resources to transform to becoming the world's leading integrated beauty and wellness company powered by our <unk>.
<unk> affiliate opportunity platform, so with that I'll turn it over to Connie to provide some additional insight on market performance Connie.
Thank you so much volume.
Ill share more information about that mark.
All right.
I will provide detail on the ambition.
Sure.
Quite that Ryan mentioned earlier only concluded okay.
Yeah.
Alright.
Thank you.
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New customers and nurtures relationships.
Brian .
Encore.
Model.
We'll go next.
Consumer purchases.
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That's correct.
Youre welcome.
Good morning.
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Thank you.
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Alright.
We have recorded.
Going forward.
Just a question of a number of sales leaders.
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Great.
In the last quarter.
I'll be providing offerings.
Hey, Mark.
Great question.
Power corridor.
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And then two.
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Before I book does not include customers, who buy directly from <unk>.
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Information.
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We are selling products.
We're leading our sales organization.
No.
Segment quarter, our multiyear growth.
Perfect.
At quarter.
Quarter one.
Coupled with solid.
Perfectly.
We continue to progress.
Our global revenue evolution.
Well America.
The market continues.
Paul.
Economic factors.
The U S market.
2%.
Carry forward momentum from last year.
Collagen plus launch.
And there are some correction.
Also continue to drive further adoption.
Commerce model in the U S.
Okay.
We have.
Thank you guys.
Hi.
<unk>.
The adoption of social commerce.
We haven't gotten the collagen.
Thank you Tony.
Wrong.
And we believe can do the same in Latin America.
EMEA is in the midst of come from.
Eggman this down 25% in constant currency.
One the Ukraine has created.
Eastern Europe .
Pat.
Across the entire region.
Throughout EMEA has spent much of their time and resources to support our direct.
And our Hearts really do truly go out to all those whose lives have been thrown into turmoil.
From a business perspective, as Brian mentioned, we have suspended operations in Russia and Ukraine.
Lisa identifying opportunities to rebuild the business momentum.
Ladies and gentlemen.
Conflict.
As Brian mentioned, our mainland China business has been disrupted due to severe COVID-19 related lockdowns and other factors.
The team was able to deliver better than anticipated results in the market during the quarter due in part to effective online product promotion.
And the other earnings continuing to be under strict lockdown.
Further the disruptions of sales events and promotional activity.
Wiring frequent.
As we stated last quarter.
Challenging headwinds to continue in India and China.
We are looking forward to the launch of <unk> me small.
No.
On behalf of the year to help shift the momentum with.
The 6% constant currency revenue growth in Hong Kong and Taiwan.
And by strong performance.
Okay.
Taiwan.
With new customer acquisition.
<unk> customer loyalty program with 4% growth in customers for the Taiwan, Hong Kong segment.
Along with one of the markets hit hardest by strict COVID-19 shutdowns during the quarter, but we were able to mitigate some of the <unk>.
Pact of the Lockdown with a live shopping broadcast events.
Taking the learnings from this virtual shopping event to inform how we organize future events and help drive social commerce growth in this market.
While Japan was down slightly the market was able to regain some momentum in the second half of the quarter. After a slow start due to strict COVID-19 lockdown.
<unk> H block metal.
And with sales that significantly exceeded attention.
With Korea also experienced a slow start to the quarter and was down 4% in local currency.
Created positive momentum later in the corner with a successful <unk> launch and we are highly encouraged by 200% increase in new subscription.
In the second quarter, we will continue to focus on signing up subscribers and we move on ATR 90 challenge, which is typically driven sales and customer acquisition.
Finally in Southeast Asia Pacific, We grew revenue, 11% in constant currency one of the key drivers of this with our ability to energize our sales leaders.
Please go ahead.
Launch.
Loosening of long lasting COVID-19 restrictions throughout the region. This preview have boots on LNG ahead of the full launches of H block meta and Lumi Spa later in the year.
Looking ahead, we are building energy amongst the affiliates continued launches of a blockbuster and collagen plus.
Our global markets and the upcoming and program launch with our first connected device for Luna.
In the third quarter. We also continue to train and focus our leaders on social commerce adoption and the digital tools, we are making available to them.
Customers to both our businesses, we anticipate some ups and downs of Mr. Li.
We remain confident in our execution.
Goldman transformation of our business with pension.
Vision 2020.
Okay.
Mark will go into more details on our financial performance.
Hey, Connie let me let me just summarize we had a difficult connection on our side and so I want to make sure that the analysts heard so let me just quickly highlight a couple of things on that and then we're happy during Q&A to to answer your answer any additional questions. So for.
First Connie just described our monthly paid affiliate number we can talk more in Q&A about that but again. This is a new indicator that sits really between customer and sales leader. That's a key pipeline metric as we transition more to social commerce in it and so youll be seeing that data happy to talk more about that.
On the geographic front real quickly.
You just summarized there America's growth really.
Continues to be somewhat of a bifurcated path, where we have strong growth in the U S, which was up 15%, but Latin America continues to be pulled down.
By the macro economic environment as we all understand EMEA was down 25% in the quarter predominantly related to the conflict and really the distractions across the rest of the markets.
There she talked about mainland China, obviously that continues to be a major focus for us, but these extreme lockdowns in Shanghai and now extending through Beijing, Guangzhou, which are the major parts of their business.
We're taking the guide down as a result of that as we continue to struggle Hong Kong and Taiwan were up 6%, which we were pleased with related to new product introductions and some some good promotional activity there Japan was down slightly.
On a year over year basis, but.
But we continue to be optimistic about momentum there.
Korea was down 4% still struggling with some lockdowns, but we are seeing some encouraging signs with subscriptions with TR 90 business and the like I think a key bright spot for US was in the South South Asia Pacific, which grew 11% predominantly related to me.
Previews and and and also the market opening up a little bit more although there are some continued lockdowns. There. So that's just a brief summary on the markets and again during Q&A happy to go a little bit deeper if you had any questions on that but mark with that one sure.
Sure Thanks, Ryan and thanks, Tony and thanks to all of you for joining our call today I'll provide a brief Q1 financial review and then give initial Q2 projections and update full year 2022 guidance for additional detail. Please visit our Investor Relations website for the first quarter our results beat.
<unk> with revenue of $604 $9 million with a negative foreign currency impact of 3% we were down 8% in constant currency compared to Q1, 2021, which was our largest first quarter in company history.
In Q1 2022 revenue benefited in part by sales late in the quarter prior to an April one price increase.
Earnings per share for the quarter was 76.
Our gross margin was 73, 3%. This Q1 result was below our expectations largely impacted by increased sales and promotions of Loomis by devices as we prepare for the launch of the new connected booming spot <unk> device planned for Q3.
Gross margin for the core <unk> business was 76, 5% compared to 77, 8% in the prior year quarter.
We anticipate gross margin improvement throughout the year with global price increases largely implemented in Q2 as well as planned new product introductions.
Selling expenses as a percent of revenue was 41% seven.
70 basis points below the prior year period for the <unk> core business selling expense was 43% compared to 43, 7%.
General and administrative expenses as a percent of revenue.
With 24, 6% compared to 24, 8% in the prior year.
For the quarter G&A declined $19 million year over year as we remain focused on carefully managing expenses.
Operating margin for the quarter was eight 6% compared to nine 3% in the prior year period.
We anticipate operating margin gains over the course of the year as we work towards our mid term stated goal of 13%.
The other income expense line reflects a $1 5 million expense compared to a $1 6 million gain in the prior year.
Cash from operations was $7 5 million compared to a negative $18 9 million in the prior year.
As a reminder, Q1 is seasonally our lowest cash quarter.
We are pleased with the inventory decline of $17 million during the quarter and remain committed to strategically invest in inventory to support our supply chain and planned for and plan to further reduce inventory levels as global supply chain constraints ease.
We paid $19 3 million in dividends and repurchased $10 million of our stock with $235 $4 million remaining in authorization.
Our tax rate for the quarter was 23, 6% compared to 26, 5% in the prior year period and was within our guidance range of <unk>, 21% to 25%.
Our <unk> segment, which includes our manufacturing partners declined 12% in the quarter.
Remember that revenue reflected in our <unk> segment only represent sales to third party customers rise revenue can fluctuate significantly depending on the available production capacity allocated to new skin versus those external customers.
The short term demand for external customer product was soft in the quarter as many of our large customers. We're long on inventory and were impacted by continued supply chain constraints.
Our manufacturing entities continue to benefit our core nu skin business by helping shore up our supply chain and generate U S profit that lowers the overall tax rate.
We continue to carefully seek investment opportunities in this segment to further enhance our capabilities.
Given the continued economic uncertainty increasing COVID-19 related factors foreign exchange pressure and geopolitical conflict, we are adjusting our annual guidance.
We are reducing revenue by $150 million, consisting of a $100 million reduction in China, a $25 million reduction in EMEA.
$25 million reduction due to increased FX headwind as the dollar continues to strengthen.
We are now expecting 2022 revenue of $2 512 to six $2 billion, we anticipate earnings per share of $3 62.
$3 90.
This guidance assumes a negative foreign currency impact of 3% to 4% and a tax rate of 25% to 28%.
We are projecting second quarter revenue of $590 million to $620 million, assuming a foreign currency headwind of 3% to 4% and a tax rate of 25% to 28%.
Q2 earnings per share guidance is <unk> 75 to 85.
So while we face near term headwinds, we remain focused on making the right operational decisions and investments to resource the transformation of our business to new vision, 2025, and becoming the world's leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform and.
And with that operator, we will now open up the call for your questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing Keith.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question today comes from Steph Wissink with Jefferies. Please go ahead.
Thank you good afternoon, everyone. Ryan Thanks for Recapping Susan's comments that was helpful. I wanted to just focus in on that affiliate class as part of your overall business model can you just help us think through what tools are available to them today and maybe how broad spread those tools have been deployed and then as you think about that group.
Specifically what are their biggest advantages to your model whether that connectivity to the end consumer data intelligence feedback loop. If you could just talk a little bit about that cohort that would be great. Thank you.
You bet Stephen Thanks for the question. So yes. The paid affiliate classes is a really important one for us and will be for you is as the transformation continues to evolve.
They are a more flexible.
Group, whereas sales leaders have qualifications that are required to maintain sales volume requirements affiliates are really more of what I would define as kind of the gig the gig economy type shares were they.
They participate much more flexibly.
It is a fairly it's a newer classification or I guess focus for the company. Although we've had affiliates for a long time, but with social commerce and the social sharing aspect.
Port that we really place more focus on them and so the tools so far as I mentioned, the stellar app in the werra app or specifically the stellar app that we just introduced literally I think of the last day of Q1. So we're just we're starting to roll that out as a predominant tool for them that will help them to effectively share.
Products manage their connections through various tools that we have some CRM activity and the like and so that's a really critical tool.
We offered to them.
It's in the very nascent stage of that we're really still developing that we call. It an MLP a minimum level product now we really expect by the end of this year that that tool will be much much more robustly developed.
I think advantage wise, what we like about this this group again plays into the gig economy, where they are far more people interested in you had kind of flexibly working.
Oops, driving et cetera, and so this affiliate position coupled with our velocity compensation structure gives that much more flexible approach to the business.
You see it today.
Alright, that's great and then my second one is on your innovation I'm really curious about what a connected device can afford you in terms of more iterative innovation in the future versus I think what we've known of you in the past is these big launches and then you kind of manage the post launch cycle.
It seems like you could actually have a bit more of an iterative approach. So maybe talk a little bit about whether it's through Iot or to some of your other digital technologies, how do you feel like youre shifting a bit in your innovation approach.
And I am glad you asked the question I'll comment I'd actually like Mark to maybe share a few thoughts from his Amazon days on this because it really is an important part I mean, we really see this shift staff from a from a customer integration standpoint between the company and our customer to be very important from a strategic shift.
<unk> and <unk>.
I kind of liken it to almost a netflix shipping Dvds versus having persona driven.
Content curation in our case, it's persona driven product curation for us what will be very important with these iot connected devices and coupled with the werra App is the personalized product experience that will that we will be able to offer through both the app and the connected device will be base.
More upon their personal needs and desires of the customer and so you can imagine from a preferential perspective will have preference data through the app, where they fill out a personal product recommendation that gift it.
It helps them profile their personal beauty and wellness needs that then moves into their purchase history. So what products. They are buying and then using AI and ml. We can feed recommendations through that process. So I would see again at the very early stages. It will be somewhat basics so to speak in terms of how that experience.
But just as we've seen with Netflix over the last decade. The degree of personalization through persona driven management is going to increase significantly in a lot of this for me is why we're so focused on new vision 2025, and taking US a couple of years to build these personas out and continue to advance them, we'll see.
Start this with the Io Illumina Io device and it will continue but mark maybe talk about the journey on the digital product side of it for sure. Thank you Ryan and thank you for the questions. This is probably what I'm. Most excited about for our company going forward is really this deeper understanding of our customers with the data that we should be able to.
Gather with connected to know our customers better than ever.
That information will help us facilitate what our products become going forward I think back to my time at Amazon. So think seven years back when the Alexa device in the Echo devices came out they didn't do very much. They would they were activated alarm clock. They could maybe play your favorite music. They can tell you adjust and then how fast.
Forward to today, what the Alexa enablement offers and it is so broad.
Think about that from a device perspective, if we find our customers are spending 65% of the time on the right side of their face versus the left side of their face maybe there's something we can do in the design of the next generation product that makes that better.
Better for that customer.
We find that they are using it three times a week versus five there are so many things that we can learn about the customer that will help us make our next generation of products that much better in a bit.
All of the personalization that really had mentioned.
And this is Connie hopefully technology will be suddenly to me right now.
You'll be able to hear this but I think what's really exciting for me about the iterative process is that it translates from the data into how we operationalize and how we as a company for it.
Rams and iterate on the our own program.
On the data that's collected meaning we can improve the programs that are designed for customer acquisition for retention as well as for loyalty development. The more we learn about the behaviors and the more we learn about preferences as well as consumption of the content that is.
The company created and user generated the more weekend.
Personal lines as well as the definitely execute and implement programs that are relevant and key to customer retention.
Alright, thanks, Tony Thanks, everybody.
Thanks Steph.
The next question comes from Doug Lane with Lane Research. Please go ahead.
All right good afternoon everybody.
Mark can you elaborate on.
What the magnitude is of the pricing that's going into effect this quarter.
Where it is geographically and what plans may be as the year progresses.
Yes, so we instituted a global price increase this year about 5% most all the markets around the world have implemented that in the start of Q2, there was a <unk>.
Couple of markets that we will implement that in the early summer even later in the year.
Okay. Thank you.
Then.
Most of your peers have reported already and there seems to be a thread of.
Very difficult April the channel and I just wanted to see if you could just qualitatively give us your characterization of how April was.
Yes, so I mean, so far we as we're watching the quarter unfolded, it's probably unfair to look at a single months simply because our product launches and introductions in our promotion schedule varies market to market again.
Again, I think what we're probably most focused on right now Doug is is China and the broad media that we're hearing.
Well from our teams where these lockdowns are going from Shanghai, We're now hearing them they are in Beijing and Guangdong.
As the Guangzhou area, so the three major metropolitan areas.
China, So we're watching with.
Yes.
Significant.
Focus to understand what the government there is going to do and how severe it's going to be but it's hard to comment as of now other than to say that there is a lot of uncertainty and that's why our guide is where it is.
A large reason.
No that makes sense to me.
Can you talk about live meetings, you mentioned the team elite meeting coming up in London, How big is that and is this this is the first meeting really globally since the pandemic started of any size.
Yes, so great question, Doug and I want to reiterate our view of the future. Doug is very digital first we do not see ourselves moving.
Back towards that more traditional network marketing type of style.
We're investing heavily on the digital front, we believe that the wave of the future from a scale standpoint and so.
I wanted to just be clear I mean, while we while we certainly believe that in person activities are important such as this this team elite trip, where we get to align its been three years since we've met with our top leadership. So that's very important for us succeed.
Success trips as well and have the world those have been able to resume predominantly in the west again in Asia. There is still some pretty severe lockdowns on travel in many parts of the geography, but so those are those have been going on predominantly in the west and that those are helpful from a kind of a motivation and alignment because those are qualified trip.
That motivate sales leaders to do it as far as the broader larger meetings. The convention type meetings, we really haven't turned those back on and I would imagine in the future as we think about it there is a place for that at a limited basis, but it's not going to be the extent that we were in the past we believe that.
That model has had its day and has played out and we need to be investing in our digital first approach.
Okay.
Alright. Thanks.
Yes, if I may I think there will be a new version of a hybridized world of how the balance in this shift.
I think there's a lot more agile between virtual digital and in person and I think it's going to be a really exciting opportunity for us to scale and reach even more people going forward beyond what the walls are halls have a certain bundle location may hold for us. So we are leaning into that and we've seen some interesting not only in.
But encouraging success across all markets, who have been limited due to external factors.
Okay. Thanks Thats helpful.
The next question comes from Mark <unk> with Stifel. Please go ahead.
Yes. Thanks afternoon, everyone can you hear me alright, yes.
Perfect.
I guess Mark first for you what was the impact from the sell in ahead of the pricing that you had called out in the press release and I'm also curious what's pricing contemplated in the original guidance I guess I'm just trying to get a sense of how to think about I know you don't talk about volumes, but how would we think about kind of the underlying volumes relative to the revenue guidance.
It was updated now inclusive of the benefit of 5% pricing, but offset obviously by some impact of not just the pricing and volume impact, which is everything else that's going on in the world.
Yes, Thanks, Mark we were trending towards the high end of our range all the way up until the last couple of weeks of the quarter and then we saw a surge of revenue. The last couple of weeks of the quarter that kind of pushed us to that $15 million over the high end of the range. That's why you can't quantify exactly how much of that.
Revenue beat was due to the price increase you can you can argue that maybe somewhere it was somewhere in the range of $10 million to $15 million based on where we are trending.
Up until the last couple of weeks of the quarter.
And then the price increase yes.
In our original guide we decided on the price increase post our original guide, but it is contemplated in the updated guidance that we gave today.
Got it.
Yes, It makes sense and then just broader strokes two on the guidance reduction from a revenue standpoint by geography, the number seem like pretty rounded numbers I guess I'm just curious how you got there.
Thinking about the impact from what's going on given given what youre expecting now.
Yeah for sure so starting with the easiest one FX is about one point worse than what we had originally guided so that works out to be about $25 million and again the breakout of the 150 is intended to be somewhat rounded right. We do have ranges on each side of those numbers.
We are seeing a significant impact to our EMEA business and we contemplated that when we looked at that it was about $25 million.
And then as we looked at what we were seeing in China. It was about $100 million. So all of those numbers are plus or minus $2 million to $5 million, depending on the size of them, but the overall impact of about $150 million.
Got it okay, great appreciate it thanks al.
Thanks Mark.
As a reminder, if you would like to ask a question. Please press star one Keybanc Jordan for the question queue.
The next question comes from Linda Bolton Weiser with D. A Davidson. Please go ahead.
Hi, how are you.
Hi.
Sorry, I missed it but when you were talking about margin performance I think you said something about something something that impacted gross margin in the quarter can you just kind of repeat what that was and then you had given gross margin guidance range for the year of 75% to 76% is that still what you're thinking.
Linda Thank you for that question, yes. So we did have increased sales and promotion of the lumi spas that are currently shipping.
And that those the performance of those promotions performed above our expectations.
And that did drag down gross margin in the quarter. There was a plus to that in that we're reducing inventory of those original lumia spas in anticipation of the launch of the new lumi spot connected Iot device.
And then as far as our guidance for the year with.
With the 73, 3% in the quarter, we believe that our model still gets us to I originally guided 75 to 76.
We can still get into that range, but it would be towards the bottom end of that range.
Okay. Thanks.
Thanks, and then.
Can you just comment on.
Another company today that reported definitely from what you did about the dampening of things in EMEA because of the Ukraine War.
Is there anything at all you can do.
The hard thing, but is there anything you can do to.
Improve the morale or the sales activity I mean is there any type of promotion maybe that you used in the past.
It just strikes me that this could be.
The dampening thing because of the Ukraine more could continue for some time. So can you just talk about your past experiences with this type of thing.
Yes, no. It's a great question I think.
As we evaluate we certainly.
Our mindful.
Sensitive towards the the neighboring countries in particular, if you think of the likes of Poland or Romania.
Hungary.
We need to be mindful of.
Their mindset today, but what we look at and Linda or just as you said number one what promotions are we able to do that excite and ignite activity at the customer level.
And.
Can we do more of that yes are there additional product introductions, we can bring in the market and the answer is yes, and so we do have a series for the remainder of the year. As this conflict is now entering I think days 72 or <unk> 74.
We're getting further and further away and unfortunately, it's normalizing.
The current state of affairs, and so we do we would anticipate that that will be able to utilize those levers.
To ignite more more.
More energy into the market, but we wanted to do it in a very responsible manner, given the mindset and the framing of many people in the country. So, but we will leverage those those throughout the remainder of the year to help improve the morale generally and Linda I might add is while the Q1 results our neck.
<unk>, 25% year over year on a two year look back that market is still up 50% and so we're still pleased with the leaders who have joined the business. We're pleased with the way the business is operating and the fact that even with all this going on in the world, we're still maintaining much.
2021.
Sure.
Okay.
Just.
Can I just ask something about your your apps that you've been talking about.
Can you just clarify whether the consumer facing one.
Like does that actually enable the consumer to order your products through the app or do they still have to go through a wrap or some other website or have they order through right on the app.
Yes, Yes, I love that you asked that it's a really cool if you haven't downloaded I'd encourage you to download it does allow you to buy directly from the App, but also it allows you go in and you fill out a skin personal skin consultation.
It allows you to take itself being to measure progress in like fine pours wrinkles et cetera.
And then and then I'll provide you some recommendation that also allows you to buy right. There from the App. So it is a it's a pretty good experience and again, it's what we call a minimum level product right now we're building upon it but it has that good feature and functionality in it.
And as a whole line of this app as well.
Sorry for that.
Whole point of this App is also to allow for it really I call. It democratizing the consumer experience. It allows for every customer to have access.
Formation and to discover and journey through what the App offers in terms of product information coupled with your personal preferences and needs that both taking into account through questionnaire format as well as visual lead through a camera that will take a picture of your skin.
So I think it's really.
Number one super fun and at the same time, we hope.
Every consumer's journey as they engage with us.
Okay sounds good thank you.
Thanks Linda.
It looks like and I apologize the call went a little bit longer we know you're very busy covering too many companies out there, but I do want to just say thank you to you from the analyst point of view, we laid out our multiyear transformation and new vision 2025 in February and I. Just want you to know we are acutely focused on that vision, we understand that.
Near term headwinds within direct selling within the broader economic landscape and I want you to know as a management team. We're committed to this vision and to the transformation, it's not always easy and there is a lot of puts and takes along the way. That's why we tried to be really conservative we don't foresee everything as we go but we do commit to you.
To be as transparent as possible and so again thanks for your time, thanks for participating in the call. If you have any additional calls or would like to reach out feel free to reach to Scott pond or to Mark and myself, we're happy to answer any questions. As we go but again I just wanted to thank you for your time.
And with that I think will end.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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