Q3 2023 Grove Collaborative Holdings Inc Earnings Call
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Please standby your program is about to begin.
Yeah.
Good afternoon, and thank you for standing by welcome to grow Cooperatives Holdings, Inc. Third quarter 2023 earnings conference call. At this time all lines have been placed on mute to prevent any background noise. Following the Speakers' remarks, we will open your lines for questions. As a reminder, this conference.
Is being recorded.
During today's call our gross CEO, Jeff Jacobsen CFO stirred you asked about this.
Before they begin their prepared remarks, I will review the forward looking statements Safe Harbor.
Some of the statements made today about future prospects financial results business strategies and industry trends and group's ability to successfully respond to business risks may be considered forward looking and such.
Such statements involve a number of risks and uncertainties that could cause actual results to differ materially.
All of these statements are based on gross view of the world and their business as they see it today.
As described in the SEC filings, the underlying facts and assumptions for you.
These statements can change as the world and their business changes.
For more information please refer to the risk factors discussed on their most recent filings with the SEC, which are available on group's investor relations website at investors start growth Darko.
During today's call. They will also discuss certain non-GAAP financial measures reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in the earnings release, which is also available on our Investor Relations website I would now like to turn the call over to Jeff your cause him to begin.
Thank you operator.
Hello, everyone and thank you for joining the call today.
Wanted to start this call by saying, how honored and excited I am to be joining grub as CEO I'd.
I'd like to thank my predecessor.
Our executive Chairman of the board and as Bert The board of Directors grows leadership team and all of our employees who put their trust in me to lead. The next chapter we have all been incredibly supportive during my transition.
I joined grow because fundamentally I believe that every individual can make a positive impact and drive change beyond themselves.
What unites Scruggs key is that we are all committed to a singular purpose one that is bigger than ourselves.
Create and curate high performing planet first Brooks and aspire to transform the consumer products industry into a force for human and environmental.
Having solid growth because some years before joining I've made a number of assumptions about the business and after 75 days into the role and reaffirmed four core fields.
Okay.
We had an incredible brand.
It is the leading platform for natural shoppers and is well positioned with our customers, including both active customers and the ones that haven't made a recent purchase will continue to come back to us because they believe in our mission.
When you listen to these quote and active customers you realize they to love our products and brands with the home and personal care markets amounting to about $380 billion. We know there is room for our trusted brands to grow.
Okay.
We are the leaders in sustainable homecare and have strong potential to expand beyond that category.
A formidable foothold and homecare is an entry point and a springboard for growth to expand our presence deliberate innovation.
Launch wholesale into other categories that are relevant to natural shoppers.
We can do this because of the trust, we built in our core products and offerings.
We said, we would expand into health and wellness and we are doing.
By week more customers continue to trust us with their broader sustainable means.
Third we have best in class talent. The growth team is one that is made difficult decisions and cost cutting measures and it worked through unfortunate but necessary reductions.
Yes.
Please teach in the broader culture are incredibly strong and United around our mission.
I'm deeply impressed by the team and energized by what we can accomplish together.
Fourth and last week.
We have a strong business foundation with Great unit economics, and are well positioned for profitable growth.
<unk> happen overnight.
But the longer term goals seem reasonable given secular trends around natural shoppers and convenient digital experiences both of which will benefit us as we go forward.
Yeah.
Our brand leader.
Leadership.
And strong foundation on what has gotten us to today.
I'm proud of the team's results to achieve.
Positive adjusted EBITDA for the first time this quarter.
It demonstrates that we do what we say this focus on profitability remains priority number one for the company. We will maintain this focus while we reshape our customer experience and culture and our culture will start with the customer at the center of every decision, we will systematically listen to customer need and entity to unlock new growth.
Pass in the next year.
I have succeeded two founders.
Ryan D to C business is two 1 billion plus dollars and no profitably scale our business.
I have seen firsthand a number of positive things in my first 75 days and it may be confident that we have what it takes.
In a while.
I remain focused on profitability in the near term it did not join growth just to ensure it is profitable.
We have a lot of work ahead of us, but I see a clear path for.
Profitable sustainable growth.
I plan to prioritize profitability and to ramp up growth behind an improved margin structure and customer experience that we will build in the coming.
As a result, I'm comfortable with 2024 revenue below 2023, because I'm confident by the end of 2020 for growth will be growing sequentially.
Positive adjusted EBITDA.
We'll exit the year with ongoing profitable growth for the quarters to come.
And I know how to get there.
Sure.
It started becoming even more meaningful in the lives of our customers. This will be through a systematic consistent data driven decisions to serve Nashville shoppers.
And expanding our role as the trusted brand and platform that helps customers make the right sustainable decisions for themselves.
Their families and their homes.
Second we will win with sustainability as a point of differentiation. This.
This means leaning into our mission.
Even more focus on our environmental impact through plastic carton and deforestation offsets.
Education on the sustainable alternatives that exist today and that are coming tomorrow.
These inputs will lead to results.
In the long term, we are well positioned to be the trusted brand and platform for high performing planet right for them.
Nashville shoppers in their homes.
Now, we'll turn to the results.
I am incredibly pleased to share the current third quarter results, which represents accumulative quarters, a great work.
Difficult decisions and smart planning by the team.
Hey, Scott.
This quarter marks the first quarter of positive adjusted EBITDA in the company's history.
Scott in our journey towards becoming a growing profitable organization.
We are in the midst of a transformation that cool.
And today's results prove that point, while it's not the finish line. It is a notable accomplishment worth highlighting.
<unk> reached far sooner than we had previously thought possible.
We do not expect a positive adjusted EBITDA every quarter going forward, but this result highlights the mask.
Improvements growth has made over the last two years again I want to give kudos to the team for the incredible work that went into driving this result.
Adjusted EBITDA in the third quarter of 2023 was positive $2 million.
From a law suit.
$2 $6 million in the second quarter of 2023, and a loss of $9 $6 million in the third quarter of last year.
I'm not a comparable period over period, it's worth highlighting that our Q1 2022, adjusted EBITDA, which was just seven quarters ago was negative $40 million.
The holistic P&L transformation has been truly incredible and rare among our industry.
This improvement was achieved despite revenue declining in the third quarter, which was down six 6% sequentially and 26% year over year.
The revenue decline continues to be impacted by the advertising spend reduction, which was down 53, 1% in the current quarter when compared to Q3 2022.
As we eliminate our lowest performing marketing spend maximize our return on investment and continue our aggressive push to sustain profitability.
Even at lower levels of snap, we are pleased with the results and continue to see strong performance in unpaid channels.
Contributing to current quarter performance and continuing the trend from prior quarters were new records for net revenue per order and gross margin.
Net revenue per order improved to $65.24 increasing from $64.82 in Q2 of 2023, our previous record.
Furthermore, gross margin increased 190 basis points from last quarter to 53, 8% and was 180 basis points higher than our prior record in Q1 2023.
We're excited to continue moving the needle on these important metrics.
We will remain focused on profitability.
Finding leverage across the P&L.
Already discussed our marketing efficiency in that revenue improvement. So now I want to highlight our progress on omnichannel expansion and operating expense discipline.
Yeah.
Meeting our customers, where they shop is critical to our objective of making planet friendly household essentials as accessible as possible.
We continue to balance growth in the retail channel with our overall profitability objectives and sharing our growth strategy is capital efficient.
During the quarter, we are excited to share that we expanded our retail distribution to include he he and weapons.
Well the 420 key points of distribution.
Darn approximately 50 wegmans stores with the expectation of being rolled out to 100 locations by year end.
These ambitions take our retail footprint to over 7500 brick and mortar locations.
Our business in retail has been a learning experience.
<unk> by the partnerships that we have with critical retailers and can see the progress in bulk product.
And in the numbers.
I believe many other brands be envious of our current shelf positioning.
We also continue to make progress on Amazon, where we increase increased our SKU assortment to include laundry room spray and other product categories expanding on the product lines launched in the prior two quarters.
And the six months since we've launched our flagship brand growth come on Amazon you have over 900 positive customer reviews again, our business is affected because customers love our products.
We are not only focus on improving operating efficiency in the retail channel, but across the entire P&L.
Even with the massive improvements in operating expenses over the last seven quarters, which are down 58, 5% from Q1 2022.
We continue to make progress.
With my own fresh eyes.
See additional opportunities for the organization.
Current quarter operating expenses are down 38, 5% year over year, and 14.9% quarter over quarter.
Well a portion of the reduction is due to lower variable costs from fewer orders. We are seeing the benefits of our outbound carrier mix optimization driving down shipping costs.
We also see it in the elimination of duplicative or unnecessary vendor spend the optimization of advertising channel allocation to ensure the highest return on our investment and smaller teams, allowing for more rapid decision making.
I've been impressed by the entire organization to be let us work and difficult decisions to streamline our expense structure.
Focus needs to and will persist.
Continue to see opportunities across the P&L to find points of leverage that will improve our economics and will enable us to be both profitable and growing in the near future.
As we look to the future.
Wanted to share my vision for growth and how we will focus our overall efforts to grow and scale the business.
Today and moving forward.
We will remain focused on one customers two sustainability and three profitability.
We are in business because of that customer.
We are here to serve them and be their trusted destination to find high performing Atlanta first products.
Sustainability is the foundation and our differentiation. It's why we are unique in the industry and profitability is a necessity.
I'm going to start most discussions with our customer in mind, and you'll hear us talking more and more about our customers on earnings calls.
It's through increasing value to customers that businesses create sustainable growth we.
We are excited about the VIP program and during the third quarter of this year, we launched the VIP Hot.
This new feature provides our vips with exclusive benefits, including samples earned gifts discounts and early access to limited edition collections.
We are thrilled to provide our best customers more value, particularly in the current economic environment and reward them with newness Youre a dedicated program.
While it is our recent launch we are excited by the early trends.
Additionally.
Our customers told us they want more selection.
The tenant is guiding our category expansion are high including strict ingredient standards, and providing transparency and education to customers to help them on their sustainability journey.
The expansion into the health and wellness category has proven that customers continue to place high trust and growth and are open to grabs recommendations and selection beyond cleaning products.
Since Q2 2022, we have nearly doubled the percent of orders containing a wellness skus.
No health health and wellness products continue to make up a small percentage of our total sales expanding our assortment continues to be a focus.
Our initial launch will focus on multi vitamins and other daily regimen products to drive repeat orders.
We look to expand into other sub categories to round out our selection and make growth a destination for all of our customers wellness needs.
Furthermore.
During the quarter, we implemented an improved search browse and store experience on our website and mobile applications that we expect to vastly improve the customer experience. These innovation innovations will make it easier and more seamless for customers to find the right products at the right time. These changes will facilitate more health and wellness.
Jason and set us up well for further cross category adoption.
And while we're talking about customers I also wanted to discuss the new products in Q3, we launched our holiday limited edition collection.
A chance Smith featuring.
Featuring peppermint bark in Boston for Seth.
Delivering the newness that our customers want as well as providing sustainable alternatives for popular seasonal products and we have been pleased with the early interest and results.
Turning our focus to two sustainability research and development remains a top priority for us as we continue our market leadership in sustainable products, especially in our replenishment categories and.
In Q3, 2023, we finalized 2024 plans to make additional packaging updates across select skus to ensure they are made of some of the most sustainable materials available.
While developing a robust innovation pipeline for the new year, we look forward to launching these products in the coming quarters.
Lastly.
We'll turn to profitability.
This is job number one and.
This has been and needs to remain a core focus.
We can't Chase a sustainable mission without a sustainable business, we will continue to make decisions that prioritize the bottom line by one expanding gross margin to focusing on customer experience to drive retention three increasing assortment to grow lifetime value for <unk>.
<unk> advertising efficiency.
Increasing our SG&A leverage through more efficient spend and six seeking efficiencies across our fulfillment ecosystem.
In the long term, we see ourselves as a scalable platform for high performing sustainable products.
On that theme, we continue to explore M&A as a potential strategy to provide a step change opportunities. The bar for action is high and we are deliberate with how we invest time and resources.
To close out our key business updates.
We turn to the cornerstone of our sustainability innovation.
Plastics intensity or pounds of plastic per hundred dollars of net revenue.
We are proud to publish the industry's first plastic intensity metrics are.
Hope is that other brands and retailers will follow suit as we work to reduce plastic in our industry.
This quarter, we adopted an expanded definition of plastic that includes polyvinyl alcohol P V. A N P V O O H.
Silicone and plastic liners, and resins with aluminum packaging to ensure even more transparency in our plastic intensity.
And the industry might debate the definition of plastic, but we are using a more inclusive definition to continue to raise the bar for ourselves and others.
We have updated the following metrics in a quarterly comparison to account for these changes.
Across the growth I'll close site and through retail partners plastic intensity was 1.11 pounds of plastic per $100 in revenue in the third quarter of 2023 down slightly from $1. One four in the third quarter of 2022.
Specifically across all growth brand products plastic intensity was 114 pounds of plastic for $100 in net revenue in the third quarter 2023 in line with 113 pounds in the second quarter of 2023.
From 1.4 pounds in the third quarter of 2022.
Our growth granted 100% recycled plastic trash bags are the primary driver of year over year plastic intensity increases for growth brands.
Excluding this product category growth brand plastic intensity 0.63 in the third quarter of 2023 in line with previous quarters.
Overall, we are encouraged by the growing trend of more customers opting for recycled plastic garbage bags instead of Virgin plastic.
We are continuing to explore ways to reduce plastic in this category, while providing customers with an effective product experience.
I will now turn the call over to Sylvia to review.
Our results in more detail.
Sir.
Please go ahead.
Thank you Jeff.
Similar to previous school, we will provide quarter over quarter comparisons. In addition to the year over year changes because we believe that sequential comparisons reflect the trends in the business on the steps we have taken people season, our sales for the long.
<unk> sustainable and profitable growth.
Net revenue in the third quarter was $61 8 million down six 6% from the second quarter of 2023 and.
26% year over year.
Both comparisons continued to be impacted by the strategic decision to reduce advertising spend.
The company focuses on profitability.
Thanks to a reduce advertising spend.
Total orders were down five 9% quarter over quarter, and 26, 2% year over year $29 million.
And active customers were down 10, 1% quarter over quarter.
And 32% year over year to $1 million on a trailing 12 month basis.
DTC revenue per order.
Up 7% quarter over quarter, and seven 6% year over year to 65, $2, a new record high level, surpassing our previous record of $64 $8 from last quarter.
The year over year improvement continues to be benefited by our net revenue management initiatives.
Including the shift in mix towards existing customer orders, which have a higher DTC net revenue per order as well as introducing introduction of strategic price increases some girl brands.
Third party products taken in Q4 2022 in Q1 2023.
Gross margin was up 290 basis points quarter over quarter, and 470 basis points year over year to 53, 8%.
Another record high for the company.
The year over year improvement is due to reductions in inventory reserves from the sell through of inventory and price increases taken on girlfriends and third party products in Q4 2022 in Q1 2023.
The quarter over quarter improvement was mainly due to a reduction in the inventory reserves.
Gross products as a percentage of net revenue was down 20 basis points quarter over quarter, and 210 basis points year over year to 44, 8%.
The year over year decline.
Decreasing girlfriend products in existing customer orders as we continue to expand our third party product offering, especially our product selection into health and wellness category.
Advertising expenses decreased 12, 8% quarter over quarter, and 53, 1% year over year to $4 1 million.
The year over year decline continues to reflect our strategic pullback in advertising spend and focus on improving marketing and investment efficiency.
The sequential change was due to a reduction in retailer specific advertising as we balance growth and profitability in the channel.
Product development decreased 11, 7% quarter over quarter, and 37, 9% year over year to $3 6 million.
Mainly due to a decrease in personnel expenses, we remain excited by our innovation strategy and look forward to leading the CPG industries they never use it.
<unk> expenses decreased 15, 5% quarter over quarter on 35, 8% year over year to $29 7 million.
Excluding stock based compensation and severance expense in the quarter would have been $27 9 million or seven 6% less than the second quarter of 2023.
Plenty of four 1% less than the same period last year.
The quarter over quarter decline was mainly due to lower fulfillment costs related to fewer orders and other operating expenses, primarily personnel and insurance.
This trend continues to be reflective of our strategy to reduce expenses to focus on profitability.
As a percent of net revenue and G&A expense would have been 45, 3% compared to 45, 7% in the second quarter of 2023 and.
I'm 47, 4% in the third quarter of 2022.
Our adjusted EBITDA improved 2.2 million the first positive quarter for the company compared to a $2 6 million loss in the second quarter of 2023.
And a $9 six loss $9 6 million loss in the third quarter of 2022.
Lower sales from our lower advertising spend strategy.
Our adjusted EBITDA margin improved two 3% an improvement of 420 basis points quarter over quarter, and 1270 basis points year over year.
The quarter over quarter and year over year improvements in adjusted EBITDA.
Due to lower advertising.
On the expenses.
Partially offset by a lower gross profit due to less revenue.
We're extremely proud of these results, reflecting our ability to rapidly transform our bottom line.
When we went public last year, we got the goal of achieving profitability in 2024.
But we have been able to accelerate this timeline through our disciplined approach across the entire company I Echo Jeff's, thanks to our exceptional teams across the country for their hard work to reach this milestone.
Net loss in the quarter was $9 8 million compared to a net loss of $10 9 million in the second quarter of 2023.
Net income of $7 7 million in the third quarter of <unk>.
'twenty two.
Following the large reduction in deferred value of an earn out later.
Turning now to the balance sheet.
We ended the quarter with $994 7 million in cash cash equivalents and restricted cash an increase of 5 million from the previous quarter.
The increase is mainly due you.
So the 10 million investments from volition capital.
The last quarter and $1 2 million of interest income.
I should upset by the $3 2 million interest expense outflow.
8 million capital expenditures.
As noted previously during the quarter, we did receive an embarrassment for ablation catheter also strengthened our balance sheet.
We received gross proceeds of 10 million in exchange for 10000 shares of the company's series a convertible preferred stock with a conversion price of $2 11 per share.
Please refer to our financial statements for the significant provisions of deal for them.
We finished the quarter with uneven toward your balance of $32 7 million down $1 8 million from the end of Q2 2023.
We continue to be pleased with our ability to right size, our inventory base when are striving for further efficiencies as we optimize working capital.
Furthermore, we did not make any draws on our asset based loan facility with them in the third quarter after having taken the minimum draw of $7 5 million in Q1.
This facility has a maximum capacity of 35 million.
Which is calculated from our inventory and accounts receivable balances.
Based on current inventory and accounts receivable balances, we've got 11 5 million of all capacity available.
Lastly.
Assuming a share price of $2.35.
Our year to date average trading price in 2023, we would be able to raise $14 million net of issuance costs under our standby equity purchase agreement.
Taking into account market conditions and business priorities, we will evaluate using capacity strategically to supplement our liquidity.
We still continue to feel good about our current liquidity position and our ability to continue executing on our long term strategy.
Now turning to the outlook.
Factoring in our performance to date and our expectations for the remainder of the year, we are offering the following revised guidance.
For the 12 month period, ending December 31, 2023 we now expect.
Net revenue of $257 five to $262 5 million.
From $260 million to $270 million.
And adjusted EBITDA margin of minus four 5% to minus five 5% an improvement from minus 5% to minus 7% piece.
Our ability to rapidly transform our P&L gives me confidence to further increase our adjusted EBITDA margin guidance for the rest of the year.
However, due to our refined fourthquarter of other advertising strategy, we are marginally lower in revenue guidance.
Moreover, as mentioned previously we do not expect to be profitable every quarter going forward.
The fourth quarter of easier is expected to turn back to an adjusted EBITDA loss.
As we look forward to 'twenty 'twenty four will.
We remain confident that our programs this year will allow us to achieve profitable growth in the later part of 2024.
We will provide additional commentary for full year 'twenty for guidance as part of our Q4 earnings.
I would like to turn the call back over to Jeff for some closing remarks.
Thank you Seth.
I'm truly proud of our accomplishments in our first year as a public company, including the incredible milestone of positive adjusted EBITDA for the first time.
And continued progress on our mission.
Our team deserves credit for the difficult decisions that have been made to get us to this point, but we must continue to transforming ourselves pushing ourselves to be more profitable, while better serving our customer.
Fantastic order economics more than 1 million active customers.
Trusted brand that delivers trustworthy products and a mission that unites us.
And moving forward, we will continue to be ruthlessly focused on our customer and prove the core shopping experience expand selection and deliver new innovation.
With our incredibly strong foundation and Reno renewed focus on the core of our business and confident about our future and excited about what's in store for growth.
Thank you all for listening to our prepared remarks, we are now happy to answer any questions you have.
Operator, please open the line for questions.
Yeah.
Certainly at this time, if you would like to ask a question. Please press the star and one on your telephone keypad.
You may withdraw yourself from the queue at any time by pressing star two.
And once more that is star and one for your questions.
First to Dana Telsey with Telsey Advisory group your.
Your line is open.
Thank you good afternoon, everyone welcome, Jeff and nice to see the part the progress in the adjusted EBITDA.
You think about the balancing act investing and the path to profitability. How are you planning going forward. What do you think or how are you planning marketing spend going forward, what you're looking at and when you think about new customers and existing customers.
Given the pull down in the active customers what are you looking for to show continued.
With the awareness and market share gains and lastly, as you think about the balancing act with adjusted EBITDA.
Should this be a as you think about qualitatively for next year is it breakeven adjusted EBITDA more for the back half of the year or is it more in 2025. Thank you.
Thank you so much Dana I appreciate the question I'm going to break this up into a few parts first.
Yes, we are prioritizing profitability, but we are still investing in marketing and new customers I think compared to our previous levels, which were unsustainable. We have pulled back and for those that study cohort curves and her deep into cohort modeling.
You realize that the subsequent quarters right after that type of pullback in advertising are the hardest comps and the greatest challenges to grow so.
So we see those kind of curves bottoming out in the back half of next year and so when we think about where growth will come from there'll be just a natural benefit of our cohort curves, but also we feel real path.
Drops of of driving innovation and in initiatives that both improve profitability, while still improving our.
Revenue. So first thing that jumps out is we're really going to obsess over this customer experience that I believe will do great things from a retention perspective. The second thing we're going to do that we referenced was increasing assortment to grow lifetime value of customers. The third thing that.
You referenced in your question was this trade off between new customers and some of these existing customers.
What I love about this business is there 5 million customers, who try growth and when you go speak to those that are inactive.
Still love Us.
And so we see a big opportunity as we improve that core customer experience for us to go back reintroduce ourselves to those customers and to continue to drive growth. There I think from a profitability perspective as you go down the P&L I see opportunities at the gross margin level.
He mentioned efficiencies across our fulfillment ecosystem I still think in terms of advertising, we can keep getting more and more efficient and those are some of the big areas, where we see both this balance of.
Dry focusing on profitability first but still with high confidence of being able to deliver growth sequential growth ultimately.
Year over year growth towards the end of the year.
The last question I think you have a specific to profitability.
Some of these changes that we're talking about where we see opportunities we will take some time.
The flow through the P&L.
But we are expecting to be EBITDA positive for the full year 2024 period.
Thank you.
Okay.
Thank you.
Okay.
And once more for your questions that is star N. One well move next to Susan Anderson with Canaccord Genuity. Your line is open.
Hi, Good evening, Thanks for taking my question and nice to see the profitability and welcome Jeff on Board.
I guess, just looking at fourth quarter I'm curious, so you're talking about it moving kind of back to the non profitable range. I guess is that because marketing spend will be higher in fourth quarter than what it had been in third quarter. We're just curious you know the different levers there that youre going to have for fourth quarter versus what we saw in third quarter. Thanks.
Great question, Yes, primarily marketing spend you will see a.
Continued investment marketing as a percentage of revenue we.
We will stay there, but I think what we see is we just see new pads to find leverage in the P&L that may take more than the next 90 days.
For us to unlock and that's why we're much more confident about 2024 and then there's also just a seasonal arcs to our business when you think about the quarter.
That will have a little pressure on our profitability.
Profitability in Q4.
And then just I'm curious the performance that you saw on the quarter between your wholesale business, which I think it's still pretty small and DTC and then how you're thinking about those two as we look out over the next three to five years.
Alright, I appreciate it so look I see us as both a platform and an omnichannel player.
When you work backwards from our mission.
We want to relentlessly create carry high performance planet first products.
But like we also aspire to transform the industry and what that means is we have to meet customers, where they are and so what I'm proud of on the retail side on this omni channel side are we we are making progress.
It's been a big learning experience, but we are gaining distribution as we mentioned on the call with P and wegmans.
Side of that I've personally looked at our product lineup for 2024 and like target I think we are I am personally excited about what we'll be showing up on the shelves in 2024, So we've seen retail still like that retail channel as.
A clear growth arm.
But.
I still see opportunity in D C.
With such a large Tam and we are the leading sustainable products player. We have 5 million customers, which is this tremendous asset yes. Some of them are inactive, but just give us a chance to get back in front of them tell our story.
And as we keep innovating on our core customer experience I, just see big opportunity on D. C. So as we look forward.
Yes, we see growth and the retail channel on an ongoing basis going forward I see our D to C L.
Also a bit limitless.
Great and then if I could just ask one more question I'm curious just how you're seeing that consumer handle the macro environment if you've seen.
Any pullback I guess, some purchases or if you think there's any trade down going on right now that's impacting growth.
Well you know I think.
Consumers consumers still feel pressure, but I actually believe our tailwind.
Far greater than any headwinds.
We are really well positioned as this D to C company Who's made the hard decision to US, yes, comping some of that advertising spend and pulled back but Ah I think unlike some of those other companies that have kind of had a similar experience they haven't.
<unk> made the hard decisions on the cost structure that we have so in terms of the macro environment. We're just not seeing that many headwinds compared to what our cohort curves would suggest this is really a story around.
Where we're positioned today and in terms of the next 12 months, how we can really drive improvement in the core customer experience, while still winning with sustainability and doing that all in a profitable manner.
Great that sounds good. Thanks, so much for all the details and good luck the rest of the year. Although of course, thank you I appreciate it.
Okay.
And it does appear that there are no further questions. At this time I will now turn it back to the speakers for any closing remarks.
Okay.
Thank you very much for joining us today and.
We look forward to.
<unk> future results going forward. Thank you so much.
Yeah.
This does conclude today's program. Thank you for your participation you may disconnect at any time and have a wonderful afternoon.
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