Q3 2024 Deckers Outdoor Corp Earnings Call

Risks and uncertainties. These forward looking statements are intended to qualify for the safe Harbor from liability established by the private Securities Litigation Reform Act of 1995, all statements made on this call today other than statements of historical fact are forward looking statements and include statements regarding our current and long term strategic objectives.

Erinn Kohler Senior Director: These forward-looking statements are intended to qualify for the Safe Harbor from Liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our current and long-term strategic objectives, anticipated impacts from our brand and marketplace management strategies, changes in consumer behavior, strengths of our brands, demand for our products, product and channel distribution strategies, including direct-to-consumer, marketing plans and strategies, disruptions to our supply chain and logistics, our anticipated revenues, brand performance, product mix, margins, expenses, inventory levels, and promotional activity, the impacts of the macroeconomic environment on our operations and performance, including fluctuations in foreign currency exchange rates, and our ability to achieve our financial outlook.

It impacts from our branded marketplace management strategies changes in consumer behavior strength of our brands demand for our products product and channel distribution strategies, including direct to consumer marketing plans and strategies disruptions to our supply chain and logistics are anticipated revenues brand performance product mix margins.

Fences inventory levels and promotional activity the impact of the macroeconomic environment on our operations and performance, including fluctuations in foreign currency exchange rates and our ability to achieve our financial outlook.

Erinn Kohler Senior Director: Forward-looking statements made on today's call also include the expected timing and impact of the company's announced leadership transition and the future composition of the Board of Directors. Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any results predicted, assumed, or implied by the forward-looking statement. The company has discussed some of these risks and uncertainties in its SEC filings, including in the risk factor section of its annual report on Form 10-K and quarterly reports on Form 10-Q. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statements. On this call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including constant currency.

Forward looking statements made on today's call also include the expected timing and impact of the company's announced leadership transition and the future composition of the board of directors.

Forward looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made forward.

Forward looking statements involve numerous known and unknown risks uncertainties and other factors that may cause our actual results to differ materially from any results predicted assumed or implied by the forward looking statements. The company has explained some of these risks and uncertainties in its SEC filings, including in the risk factors section of its annual report on Form 10-K and quarterly reports.

On Form 10-Q, except as required by law or the listing rules of the New York Stock Exchange the company expressly disclaims any intent or obligation to update any forward looking statements.

On this call management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including constant currency and.

Erinn Kohler Senior Director: In addition, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were opened throughout the current and prior reporting period. The company believes that these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to, and may not be indicative of, its core operating results. With that, I'll now turn it over to Dave.

In addition, the company reports comparable direct to consumer sales on a constant currency basis for operations that were opened throughout the current and prior reporting periods. The company believes that these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results.

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With that I'll now turn it over to Dave.

David Powers: Thanks, Erin. Good afternoon, everyone, and thank you for joining today's call. Before we discuss our third quarter results, I'd like to speak to the leadership announcement we made today. After 11 years at Deckers, I have decided to retire as President and Chief Executive Officer, effective August 1st.

Dave: Thanks, Darren good afternoon, everyone and thank you for joining today's call before we discuss our third quarter results I'd like to speak to the leadership announcements we made today.

Dave: After 11 years of Deckers, Ive decided to retire as president and Chief Executive Officer effective August one I.

David Powers: I will continue to serve as a member of the company's board of directors. On a personal note, after 30 years in this industry, I am looking forward to spending more time with my family, pursuing my other life passions, and exploring more ways in which I can make a positive impact on the world. Serving as CEO of Deckers has been a great honor, and it's a privilege to work with some of the best talent this industry has to offer. I am incredibly proud of our accomplishments and our unique culture built on doing good and doing great. Deckers continues to demonstrate exceptional performance, and we have a strong foundation from which to continue driving results. A deep bench of talent, and innovative products that are resonating with consumers globally. I believe this is a good time for us to make this transition.

Dave: We will continue to serve as a member of the company's board of directors.

Speaker Change: On a personal note after 30 years in this industry I am looking forward to spending more time with my family pursuing my other life passions and exploring more ways in which I can make a positive impact on the world.

Speaker Change: Serving as CEO of Deckers has been a great honor and it's a privilege to work with some of the best talent. This industry has to offer I'm incredibly proud of our accomplishments and our unique culture built on doing good and doing great. Deckers continues to demonstrate exceptional performance and we have a strong foundation from which to continue driving results a deep bench of.

Speaker Change: And innovative products that are resonating with consumers globally I believe it's a good time for us to make this transition.

David Powers: We're all thrilled that the Board has selected Stefano Carotti, our Chief Commercial Officer, as Decker's next President and CEO, following a thorough succession planning process. Many of you know him already, but for those of you who don't, Defino has extensive industry knowledge and experience, and he's seamlessly led our Omnichannel, Regional, and Hoka brand operations during some of Decker's most pivotal years. He is passionate about Decker and its values, and he has been a key member of the executive team, helping to craft and progress our consumer-focused marketplace strategy and our inclusive and engaged culture. I know Decker will be in excellent hands with Stefano at the helm. Over the next six months, Stefano and I will continue to execute on Deckers' proven strategy. We are invigorated about this next phase of our work together and for Deckers' bright future. Now, let's turn our attention to our Q3 performance.

Speaker Change: We're all thrilled that the board has selected Stefano Karate, our Chief commercial Officer is Deckers next president and CEO following a thorough succession planning process.

Speaker Change: Many of you know him already but for those of you who don't Stefano has an extensive industry experience and he's seamlessly laid our omnichannel regional and HOKA brand operations. During some of Deckers most pivotal years, he's passionate about deckers and its values and he has been a key member of the executive team, helping to craft and progress our consumer for.

Speaker Change: <unk> marketplace strategy, and our inclusive an engaged culture.

Speaker Change: I know deckers will be in excellent hands with Stefano at the helm.

Speaker Change: Over the next six months Stefano and I will continue to execute on Deckers proven strategy. We're invigorated about this next phase of our work together and for Deckers bright future.

Speaker Change: Now, let's turn our attention to our Q3 performance I.

David Powers: I'm glad to be here today discussing another record-breaking quarter for Deckers Brands as our two leading brands continue bucking industry trends to deliver high-quality growth via full-price consumer demand. Key highlights of our record-breaking third quarter results include total company revenue increasing 16% to $1.56 billion. DTC revenue increased 23%, representing a quarterly record 55% of total company revenue, and total UGG revenue increased 15% to achieve its first ever billion dollar quarter. Total HOKA revenue increased 22% to $429 million, total company gross margins increased over 500 basis points to an all-time quarterly high of 58.7%, and diluted earnings per share increased 44% to $15.11. We believe the success of our brands and company as a whole continues to be the direct result of innovative product that is on trend and resonates with consumers across the globe, as well as decision-making that is guided by our long-term strategic objectives.

Speaker Change: I am glad to be here today discussing another record breaking quarter for Deckers brands as our two leading brands continued bucking industry trends to deliver high quality growth via full price consumer demand.

Speaker Change: Key highlights of our record breaking third quarter results include.

Speaker Change: Total company revenue, increasing 16% to $156 billion.

Speaker Change: DTC revenue, increasing 23%, representing a quarterly record 55% of total company revenue.

Speaker Change: Total <unk> revenue, increasing 15% to achieve its first ever billion dollar quarter.

Speaker Change: Total hooker revenue, increasing 22% to $429 million.

Speaker Change: Total company gross margins, increasing over 500 basis points to an all time quarterly high of 58, 7% and.

Speaker Change: And diluted earnings per share, increasing 44% to $15 11.

Speaker Change: We believe the success of our brands and company as a whole continues to be the direct result of innovative product that is on trend and resonates with consumers across the globe.

Speaker Change: Decision, making that is guided by our long term strategic objectives.

David Powers: Alignment between product creation, marketing, and omni-channel distribution that centers around the consumer and the strong execution of our teams to deliver in real-time while remaining focused on the longer-term vision of our marquee brand. We are thrilled by the success of this quarter, but I feel it's important to reflect on how these results represent a continuation of strong year-to-date performance, as well as many years of careful strategic execution. Our brands are thinking long-term, and while we are happy to produce great quarterly results, we are even more pleased to see the consistency of performance. With the first three quarters of this fiscal year behind us, we believe we are on track to deliver mid-teens revenue growth, which would be the fourth consecutive year of revenue growth in the mid-teens or higher. Highlights from the first nine months include global HOKA revenue growing 25% versus last year, led by a near 50% increase in DDC.

Speaker Change: Alignment between product creation, marketing and Omnichannel distribution that centers around the consumer.

Speaker Change: And the strong execution of our teams to deliver in real time, while remaining focused on the longer term vision of our marquee brands.

Speaker Change: We are thrilled by the success of this quarter, but I feel it's important to reflect on how these results represent a continuation of strong year to date performance as well as many years of careful strategic execution.

Speaker Change: Our brands are thinking long term and while we are happy to produce great quarterly results.

Speaker Change: Even more pleased to see the consistency of performance.

Speaker Change: With the first three quarters of this fiscal year behind US. We believe we are on track to deliver mid teens revenue growth, which would be the fourth consecutive year of revenue growth in the mid teens or higher.

Speaker Change: Highlights from the first nine months include global Hygge revenue growing 25% versus last year led by a near 50% increase in DTC.

David Powers: Global UGG revenue increased 16% versus last year, led by international regions growing close to 30%, and global DTC increasing more than 20%. Total Portfolio DDC revenue increased 28% with robust growth in both consumer acquisition and retention. I'm extremely proud of the collaboration across the Deckers organization to deliver these exceptional results through the first nine months of fiscal year 2024.

Speaker Change: Global <unk> revenue, increasing 16% versus last year led by international regions growing close to 30% and global DTC, increasing more than 20% in.

Speaker Change: In total portfolio DTC revenue, increasing 28% with robust growth in both consumer acquisition and retention.

Speaker Change: I am extremely proud of the collaboration across the Deckers organization to deliver these exceptional results through the first nine months of fiscal year 2024.

David Powers: We are creating remarkably distinct, relevant, and breakthrough product concepts that are deeply rooted in consumer insights and brand DNA. This is distinguishing our brands from the competition. Our strategic execution of brand and marketplace management, combined with our financial discipline, preserves Deckers' position of strength as we focus on closing out fiscal year 2024 and plan for the significant opportunity in the years ahead. Steve will provide additional color on this quarter's financial performance and our related increased outlook for the full fiscal year. But in the meantime, let's dive into the third quarter brand and channel highlights.

We are creating remarkably distinct relevant and breakthrough product concepts that are deeply rooted in consumer insights and brand DNA.

Speaker Change: This is distinguishing iron brands from the competition, our strategic execution of branded marketplace management combined with our financial discipline preserves deckers position of strength as we focus on closing out fiscal year 2024 and plan for the significant opportunity in the years ahead.

Speaker Change: Steve will provide additional color on this quarter's financial performance and our related increased outlook for the full fiscal year, but in the meantime, let's dive into third quarter brand and channel highlights.

David Powers: Starting with a, Global UGG revenue for the third quarter was $1.07 billion, representing a 15% increase versus the prior year. Revenue growth was primarily driven by global GDC, which increased 20% in the quarter to represent 62% of total brand revenue, up from 60% last year, aided by international and domestic consumer acquisition increasing 14% and 8% respectively, and retained consumers increasing 26% and 8% across international and domestic regions respectively. In addition to driving a significant increase to gross margin, the outsized growth from DDC helped deliver a double-digit increase in the brand's consolidated global average selling price. As in general, DDC selling results in a much higher ASP and a favorable gross margin relative to the wholesale channel.

Speaker Change: Starting with <unk>.

Speaker Change: Global <unk> revenue for the third quarter was $1 <unk> 7 billion.

Speaker Change: Representing a 15% increase versus the prior year.

Speaker Change: Revenue growth was primarily driven by global DTC, which increased 20% in the quarter to represent 62% of total brand revenue up from 60% last year.

Speaker Change: <unk> aided by international and domestic consumer acquisition, increasing 14% and 8%, respectively, and retain consumers, increasing 26% and 8% across international and domestic regions respectively.

Speaker Change: In addition to driving a significant increase to gross margin the outsized growth from DTC helped deliver double digit increase in the brand's consolidated global average selling price.

Speaker Change: As in general DTC selling resulted in a much higher ASP.

Speaker Change: And a favorable gross margin relative to the wholesale channel.

David Powers: UGG commended extraordinarily high levels of full-price selling and the brand benefited from select price increases on a few of its most popular styles. The cohesion of product, marketing, and consumer targeting, in addition to a reduced skew count, drove focused energy behind key styles, which has greatly contributed to the success UGG is experiencing this year. Recognizing that there was unmet consumer demand last year, and capitalizing on the continued brand momentum driven by that scarcity, the UGG team invested in additional inventory to support its most popular product. Helping fuel brand heat and further the conversation with target consumers during the third quarter, UGG spearheaded meaningful collaborations, most notably with Palace Skateboards, selling out in minutes across key cities like New York, Los Angeles, London, and Tokyo, hosted pinnacle brand experience Field Houses in New York, Paris, and Seoul, and launched a first-of-its-kind UGG Xtreme capsule that features fashionable performance products capable of handling winter's most brutal conditions.

Speaker Change: I would commend at extraordinarily high levels of full price selling and the brand benefited from select price increases on a few of its most popular styles.

Speaker Change: The cohesion of product marketing and consumer targeting in addition to a reduced SKU count drove focused energy behind key styles, which has greatly contributed to the success of <unk> is experiencing this year.

Speaker Change: <unk> that there was unmet consumer demand last year and capitalizing on the continued brand momentum driven by that scarcity. The UGG team invested in additional inventory to support its most popular product.

Speaker Change: Helping fuel brand heat and further the conversation with target consumers during the third quarter.

Spearheaded meaningful collaborations most notably with palace skateboards selling out in minutes across key cities like New York, Los Angeles, London and Tokyo.

Speaker Change: Posted pinnacle brand experience feel houses in New York, Parison Soul and launched a first of its kind of extreme capsule that features fashionable performance products capable of handling winters most brutal conditions.

David Powers: These top-of-the-funnel brand activations, combined with community building and social listening across digital platforms, help UGG create positive brand buzz and increase opportunities for consumer connections that offer feedback in real time. This year, coordination between DDC Operations and Product Marketing on social channels elevated the launches of new styles or colors and brought greater traffic and attention to the brand when hot products were being restocked. From a regional standpoint, UGG has maintained high levels of brand heat and demand almost universally across the globe to deliver strong year-to-date growth across the U.S., Europe, and Asia. Helping boost their UGG performance in the third quarter, the brand opened a couple of exciting new stores in key markets. Including a Shanghai flagship, which offers one of the most contemporary visual expressions anywhere in the world and the brand's first full price location in Germany with a new Munich store. Both stores are performing extremely well. In Shanghai, we are seeing average transaction values that are approximately 20% above the average of stores in China, as well as a conversion rate more than doubled out of the average.

Speaker Change: These top of the funnel brand Activations combined with community building and social listening across digital platforms help create positive brand buzz and increase opportunities for consumer connections that offer feedback in real time.

Speaker Change: This year's coordination between DTC operations and product marketing on social channels elevated the launches of new styles are colors and brought greater traffic and attention to the brand when hot products were being restocked.

From a regional standpoint, UGG has maintained high levels of brand heat and demand almost universally across the globe to deliver strong year to date growth across the U S Europe and Asia.

Helping bolster outperformance in the third quarter. The brand opened a couple of exciting new stores in key markets.

Speaker Change: Including a Shanghai flagship, which offers one of the most contemporary visual expression above anywhere in the world and the brand's first full price location in Germany, with our new Munich store.

Speaker Change: Both stores are performing extremely well in Shanghai, we're seeing average transaction values that are approximately 20% above the average <unk> store in China as well as the conversion rate more than double that of the average.

David Powers: Though it's early days, the Munich store is experiencing ATVs that are 25% higher than the average European UG store, with a conversion rate well above that of the average UG store in Germany. Similar to what we often see in markets where new stores open, Germany's online business for UGG benefited from this additional consumer touchpoint, boasting both the highest online growth rate and the highest conversion rate of any European country in the third quarter for the brand. We are pleased to see these new consumer touchpoints are helping produce positive results in key international markets, where we continue to see long-term opportunities for the UGG brand. The success UGG is now experiencing among international regions is a direct result of our thoughtful multi-year marketplace management implementation that fostered the alignment of product creation, localized marketing content, and brand-enhancing distribution partners.

Speaker Change: So early days, the Munich stores experiencing atvs that are 25% higher than the average European UGG store with conversion rate well above that of the average of store in Germany.

Speaker Change: Similar to what we often see in markets, where our new stores opened Germany's online business for AG benefited from this additional consumer touch point.

Speaker Change: Hosting both the highest online growth rate and highest conversion rate of any European country, and the third quarter for the brand.

Speaker Change: We are pleased to see these new consumer touch points are helping produce positive results in key international markets, where we continue to see long term opportunities for the UGG brand.

Speaker Change: The success <unk> is now experiencing among international regions as a direct result of our thoughtful multiyear marketplace management implementation that fostered the alignment of product creation localized marketing content and brand enhancing distribution partners.

David Powers: With the momentum and brand heat UGG has created among international markets, we are even more excited about the global opportunities ahead. From a style perspective, UGG has experienced growth and success with key franchises like the Tasman, Ultra Mini, and Classic Mini. The fashion-oriented platform versions of each, as well as new introductions that include the Weather Hybrid Collection, Golden Star Clog, and Lomel sneakers. The Weather Hybrid Collection was positioned as a modern, weatherized update to a few of the UGG brand's most popular styles, including the Tasman, Numel, and Classic boots. Our PRR teams partnered with influential NBA star Jalen Brown to highlight the launch, which helped this all-gender collection drive strong sell-through among all consumers. The Golden Star Clog was somewhat of a surprise hit during the holiday season, as it was created to bolster the shoulder seasons outside of winter, complementing the rising Golden Star Sandal.

Speaker Change: With the momentum and brand heat AGA has created among international markets. We are even more excited about the global opportunities ahead.

Speaker Change: From a style perspective, UGG experienced growth and success with key franchises like the Tasman Ultra mini and classic many including the fashion oriented platform versions of each as well as new introductions that include the weather hybrid collection.

Speaker Change: Olden Star Clog and the low mill sneaker.

Speaker Change: The weather hybrid collection was positioned as a modern weatherized update to a few of the other brands most popular styles, including the Tasman, New mail and classic boot.

Speaker Change: <unk> teams partnered with influential NBA Star Jaylen Brown to highlight the launch which helped US all gender collection drove strong sell through among all consumers.

Speaker Change: The Golden Star Clog with somewhat of a surprise hit during the holiday season as it was created to bolster the shoulder seasons outside of winter complementing the rising Golden Star Sandal.

David Powers: The Lomel, which we see as the first unmistakably UGG sneaker, represented a continuation of our hybrid strategy to redefine categories through UGG DNA. We believe Tasman's adoption of the sneaker, versus previously being purchased primarily as an indoor slipper, has given UGG permission to play in the sneaker category, where the Lomel performed extremely well, selling out quickly across the globe. Both the Golden Star Clog and Lomel have been positioned for expansion into this spring and next fall as the UGG brand continues to build connections with consumers through a cohesive year-round product assortment. Through the first nine months of this fiscal year, UGG has delivered undeniably impressive results. The brand has driven exceptional growth in focus areas, including international regions and global DDC, and has done so by acquiring and retaining target consumers with full-priced products. I'd like to congratulate and thank the entire UG team for their hard work and collaboration that enabled the brand's success in the third quarter and fiscal year to date. Difting Tahoca, Global HOKA revenue in the third quarter was $429 million, representing a 22% increase versus the prior year.

Speaker Change: <unk>, which we see as the first unmistakably oak sneaker represented a continuation of our hybrid strategy to redefine categories through our DNA.

Speaker Change: We believe Tasman adoption of the sneaker versus previously being purchased primarily as an indoor slipper has.

Speaker Change: Given us permission to play in the sneaker category in which the low meld performed extremely well selling out quickly across the globe.

Speaker Change: Both the Golden Star Clog, and low mill have been positioned for expansion into the spring of next fall as the UGG brand continues to build connections with consumers through a cohesive year round product assortment.

Speaker Change: Through the first nine months of this fiscal year <unk> has delivered undeniably impressive results. The brand has driven exceptional growth in focus areas, including international regions and global DTC and has done so by acquiring and retaining target consumers with full priced product.

Speaker Change: I'd like to congratulate and thank the entire <unk> team for their hard work and collaboration that enabled the brand's success in the third quarter and fiscal year to date.

Speaker Change: Shifting to <unk>.

Speaker Change: Global <unk> revenue in the third quarter was $429 million.

Speaker Change: Representing a 22% increase versus the prior year.

David Powers: Boca has continued to deliver consistent year-over-year growth and volume each quarter this year, reflecting the brand's balanced seasonality and year-round demand. Similar to what Hoka experienced in the first half, third quarter growth was primarily driven by gains in the DDC channel, as intended, with Hoka diligently managing the wholesale marketplace to drive market share gains with high levels of full-price sales. More specifically on DDC performance, POCA revenue in the channel increased 38% in Q3, representing over 40% of total brand revenue, which is 5 percentage points higher than last year. DDC growth has been driven by significant increases in consumer acquisition, with international and domestic experience growth of 50% and 27%, respectively, and important gains in retained consumers, which increased 55% internationally and 33% in the U.S.

Speaker Change: <unk> has continued to deliver consistent year over year growth and volume each quarter. This year, reflecting the brands balanced seasonality and year round demand.

Speaker Change: Similar to what <unk> experienced in the first half third quarter growth was primarily driven by gains in the DTC channel as intended with hooker diligently managing the wholesale marketplace to drive market share gains with high levels of full price sell through.

Speaker Change: More specifically on DTC performance poker revenue in the channel increased 38% in Q3, representing over 40% of total brand revenue, which is five percentage points higher than last year.

Speaker Change: DTC growth has been driven by significant increases in consumer acquisition with international and domestic experienced growth of 50% and 27%, respectively and important gains and retain consumers, which increased 55% internationally and 33% in the U S.

David Powers: The Hookah Brand's DDC business has been strong in every single region this year but has been particularly powerful in Europe and China, two regions where we have been emphasizing growth in the channel as brand awareness grows. Both regions have benefited from a greater retail presence. In Europe, Hoka opened its first retail location in Covent Garden, London, during the third quarter, which is performing exceptionally well, and the brand has a location planned to open in Paris in time for the Olympics.

Speaker Change: The Hooker brands DTC business has been strong in every single region. This year, but has been a particularly powerful in Europe and China to regions, where we have been emphasizing growth in the channel as brand awareness grows.

Speaker Change: Both regions have benefited from a greater retail presence.

Speaker Change: And Europe polka opens its first retail location in Covent Garden, London during the third quarter, which is performing exceptionally well and the brand has a location planned to open in Paris in time for the Olympics.

David Powers: In China, POCA has added four new company-owned locations throughout this year, where the consumer experience has continued to improve, particularly with a greater focus on key stories and a new capsule collection of apparel that rounded out a compelling in-store product assortment. Complementing the added stores in China, we continue to see our premiumization efforts online paying off, as HOKA has achieved high levels of full-price sales through online, which is the channel that China generally uses for promotion activities. One example of this during the third quarter was China's annual Double 11 event, better known as Singles Day, which is a countrywide event that features widespread discounts across brands and product categories, known for driving significant consumer traffic online.

Speaker Change: In China <unk> added four new company owned locations throughout this year in which the consumer experience has continued to improve particularly with a greater focus on key stories and a new capsule collection of apparel that rounded out a compelling in store product assortment.

Speaker Change: Complementing the added stores in China, we continue to see our premium innovation efforts online paying off as Hooker has achieved high levels of full price sell through online, which is a channel that China generally uses for promotional activity.

Speaker Change: One example of this during the third quarter was China's annual double 11 event better known as singles day, which is a countrywide event that features widespread discounts across brands and product categories known for driving significant consumer traffic online.

David Powers: This year HOKA benefited from the online traffic despite low levels of promotion and maintained strong full price sales, particularly in comparison to competitor brands. We are very encouraged by the increasing adoption of HOKA across international markets, particularly in the DDC channel, where we have been focusing our growth efforts while managing the wholesale environment to maintain high levels of full price sales. We believe HOKA is still in the early stages of expansion internationally as we continue to build brand awareness in key markets to establish HOKA as a major worldwide player in the performance space. Over in the U.S., where we also see a significant opportunity for growth, I want to take a moment to highlight an amazing event that HOKA had a huge impact on during the third quarter. HOKA was a presenting sponsor of the 44th Annual Foot Locker Cross-Country National Championships, outfitting thousands of elite high school athletes with complimentary footwear and apparel.

Speaker Change: This year <unk> benefited from the online traffic despite low levels of promotion and maintained strong full price selling particularly in comparison of competitive brands.

Speaker Change: We are very encouraged by the increasing adoption of hooker across international markets, particularly in the DTC channel, where we have been focusing our growth efforts, while managing the wholesale environment to maintain our high levels of full price sell through.

Speaker Change: We believe <unk> is still in the early stages of expansion internationally as we continue to build brand awareness in key markets to establish OCA as a major worldwide player in the performance space.

However, in the U S, where we also see a significant opportunity for growth I want to take a moment to highlight an amazing event that hooker had a huge impact on during the third quarter.

Speaker Change: <unk> was the presenting sponsor of the 44th annual foot locker Cross country National Championships outfitting thousands of elite high school athletes with complementary footwear and apparel.

David Powers: This event was the center of the U.S. running world and media for three days, driving significant impressions and some of the highest brand engagement we have ever seen for HOKA. On the product front, Hoka continues to develop and refine a compelling assortment of performance products that enable athletes of all kinds to achieve their goals. This morning, HOKA announced the introduction of the all-new Cielo X1, which sits atop the brand's assortment as the ultimate race day shoe for the most discerning athletes. The Cielo X1 was designed with insights and feedback from the Hoka brand's roster of elite athletes. Incorporating the most advanced geometry, foam compounds, and plate technologies to enable record-setting results, before it was even commercially available, the Cielo X-1 had already made its podium debut as Hoka Naz elite member Kellyn Taylor won the Rock and Roll San Jose Half Marathon wearing the Cielo X-1, qualifying her for the 2024 Olympics Marathon Trials for Team USA.

This event was the center of the U S running world and media for three days driving significant impressions and some of the highest brand engagement, we have ever seen for HOKA.

Speaker Change: On the product front HOKA continues to develop and refine a compelling assortment of performance products that enable athletes of all kinds to achieve their goals.

Speaker Change: This morning, <unk> announced the introduction of the all new CLO X one that sits atop the brand's assortment as the ultimate race day shoe for the most discerning athletes.

Speaker Change: The CLO X one was designed with insights and feedback from the HOKA brand's roster of elite athletes incorporating the most advanced geometry foam compounds and plate technologies to enable record setting results.

Speaker Change: Before it was even commercially available the CLO X. One has already made its podium debut as Hogan as elite member talent Taylor, one the rock'n'roll, San Jose half marathon wearing the CLO X one qualifying her for the 2024 Olympics marathon trials for team USA.

David Powers: Beyond the brand's pinnacle performance product, Hoka is also experiencing success with exciting lifestyle-oriented products. These products feature the same quality and comfort expected from a performance Hoka shoe but are packaged in an everyday wear aesthetic for more versatile wearing occasions. The Hookah Transport has become the brand's go-to casual shoe, now sitting within the brand's top 10 bestsellers. The Hookah Brand's captivating collaborations are also furthering its resonance with the lifestyle consumer. They are designed to reach a new audience by partnering with logical yet unexpected brands. Most recently, Hoka partnered with Satisfye Running, a French running apparel brand, to co-create an exciting new take on the Clifton LS, which sold out almost instantly. Highlighting the partnership's theme of highs and lows, Satisfye created a one-of-a-kind community experience that brought together the skateboard, trail, and running communities to join in a sprint down the steep hills of San Francisco.

Speaker Change: Beyond the brand's pinnacle performance product polka is also experiencing success with exciting lifestyle oriented products.

Speaker Change: These products feature the same quality and comfort expected from a performance issue, but a package in an everyday wear athletic for more versatile wearing occasions.

Speaker Change: The hook of transport has become the brands go to casual shoe now sitting within the brands top 10 best sellers.

Speaker Change: Hooker brands captivating collaborations are also furthering its residents with the lifestyle consumer they are designed to reach a new audience by partnering with logical unexpected brands.

Speaker Change: Most recently hookup partnered with satisfy running our French running apparel brand to co create an exciting new take on the Clifton.

Speaker Change: Which sold out almost instantly.

Speaker Change: Highlighting the partnership theme of highs and lows satisfy created a one of a kind community experience that brought together the skateboard trail and running communities to join in the sprint down this details of San Francisco.

Speaker Change: As we continue building hooker for the long term our focus is to remain a top brand in road running expanding with innovative performance footwear, becoming dominant off road player with disruptive trail and hygiene products.

David Powers: As we continue building Hoka for the long term, our focus is to remain a top brand in road running, expanding with innovative performance footwear, become a dominant off-road player with disruptive trail and hike products, and bring the hockey experience to the lifestyle consumer while keeping the brand rooted in performance. While we are at different stages of this journey across domestic and international markets, we see significant global opportunities ahead with this powerful brand. We are proud of the consistent momentum HOKA is achieving around the world. Our efforts to build brand awareness and drive high full-price sell-through continue to bear fruit and have set the stage for a strong finish to the year with another record quarter. Now moving to our discussion of consolidated channel performance. During the third quarter, performance remained strong across both DDC and wholesale.

Speaker Change: And bringing the hook of experience of the lifestyle consumer while keeping the brand rooted in performance.

Speaker Change: While we are at different stages of this journey across domestic and international markets. We see significant global opportunities ahead with this powerful brand.

We are proud of the consistent momentum hooker is achieving around the world our efforts to build brand awareness and drive high full price sell through continue to bear fruit and have set the stage for a strong finish to the year with another record quarter.

Speaker Change: Now moving to our discussion of consolidated channel performance.

Speaker Change: During the third quarter performance remained strong across both DTC and wholesale.

David Powers: However, in line with our strategic objectives, DDC remained the fastest growing channel, increasing 23% versus last year to represent a record 55% of the quarter's revenue, up from 52% in the prior year. DDC's success continues to be broad-based across brands, with HOKA and UGG DDC increasing 38% and 20% respectively, regions, with international and domestic DDC increasing 40% and 16% respectively, and Consumers with acquired and retained DDC increasing 13% and 16% respectively across all brands. In addition, as discussed, we are also experiencing strong engagement with our brands both online and in-store, reflecting the quality of our omni-channel operations and ability to provide a consistent consumer experience. Furthering the success of DDC, we continue to see a double-digit increase in the average selling price through the third quarter, driven by a greater mix of HOKA, which carries the highest ASP in the portfolio. Higher UGFUL selling prices, including benefits from select price increases and favorable foreign currency exchange rates. With respect to consolidated wholesale performance, third-quarter revenue increased 9% versus last year, with domestic HOCA and UGG contributing the majority of the incremental dollar volume.

Speaker Change: However in line with our strategic objectives DDC remained the fastest growing channel increasing 23% versus last year to represent a record 55% of the quarter's revenue up from 52% in the prior year.

Speaker Change: DDC success continues to be broad based across brands with HOKA, and UGG, DTC, increasing 38, and 20% respectively regions with international and domestic DTC, increasing 40% and 16% respectively.

Speaker Change: Consumers with acquired and retained increasing 13% and 16% respectively across all brands.

Speaker Change: In addition, as discussed we are also experiencing strong engagement with our brands both online and in store, reflecting the quality of our omnichannel operations and ability to provide a consistent consumer experience.

Speaker Change: Furthering the success of DTC, we continue to see a double digit increase in the average selling price through the third quarter driven by a greater mix of HOKA, which carries the highest asps in our portfolio.

Speaker Change: Higher agg full price selling including benefits from select price increases and favorable foreign currency exchange rates.

Speaker Change: With respect to consolidated wholesale performance third quarter revenue increased 9% versus last year with domestic HOKA and are contributing the majority of the incremental dollar volume.

David Powers: We are very pleased with this strong wholesale result, especially considering the tight marketplace management we have been focused on executing during this fiscal year. As a result of these efforts, our brands drove high levels of full-priced sales, entering calendar 2024 with lean channel inventories that have created opportunities for market share gains going forward. Thanks, everyone.

Speaker Change: We are very pleased with this strong wholesale result, especially considering the tight marketplace management, we have been focused on executing during this fiscal year.

Speaker Change: As a result of these efforts our brands drove high levels of full price sell through entering calendar 2024, with lean channel inventories that have created opportunities for market share gains going forward.

Speaker Change: Thanks, everyone and now I'll handle the call over to Steve to provide more specifics on third quarter performance and an update to our fiscal year 2020 for guidance.

Steven J. Fasching Deckers Outdoor Corp: And now I'll hand the call over to Steve to provide more specifics on third quarter performance and an update to our fiscal year 2024 guide. Thanks, Dave, and good afternoon, everyone. Our third quarter performance exceeded expectations and demonstrated the continued strength of our brand. As Dave mentioned, UGG delivered strong growth in the quarter as exceptional brand heat continued to capture consumers globally, and we were able to meet incremental demand through our DTC channel in the quarter with expedited shipments of the brand's most popular styles. HOKA drove another quarter of solid growth, led by the DTC channel, as we continued to diligently manage the wholesale marketplace, all while driving high levels of full-price sales.

Steve: Thanks, Dave and good afternoon, everyone, our third quarter performance exceeded expectations and demonstrated the continued strength of our brands.

Steve: As Steve mentioned <unk> delivered strong growth in the quarter as exceptional brand heat continued to capture consumers globally, and we were able to meet incremental demand through our DTC channel in the quarter with expedited shipments of the brand's most popular styles.

Steve: Okay drove another quarter of solid growth led by the DTC channel as we continue to diligently manage the wholesale marketplace, all while driving high levels of full price sell through.

Steven J. Fasching Deckers Outdoor Corp: These results are a testament to the exceptional demand for our brands, as our compelling and innovative product offerings continue to resonate with consumers globally during the holiday season and well beyond, helping drive phenomenal performance. Our disciplined operating approach and robust financial profile have continued to enable our brands and company to execute a strategy that delivers strong results while keeping us positioned to achieve our commitment to driving success over the long term. Now let's get to the specifics of the third quarter financial performance. Third quarter fiscal 2024 revenue was 1.56 billion dollars, representing an increase of 16% versus the prior year.

Steve: These results are a testament to the exceptional demand for our brands as our compelling and innovative product offerings continue to resonate with consumers globally during the holiday season, and well beyond helping drive phenomenal performance.

Steve: Our disciplined operating approach and robust financial profile have continued to enable our brands and company to execute our strategy to deliver strong results, while keeping us positioned to achieve our commitment to driving success over the long term.

Steve: Now, let's get to the specifics of the third quarter financial performance.

Steve: Third quarter fiscal 2024 revenue was $1 $5 6 billion.

Steve: Representing an increase of 16% versus prior year.

Steven J. Fasching Deckers Outdoor Corp: On a constant currency basis, revenue grew 15% versus last year. Growth in the quarter was primarily driven by broad-based UGG growth across regions and channels, delivering $1.07 billion of revenue, with global DTC increasing 20% as brand heat remains robust, with all DTC regions exhibiting double-digit percentage growth in the period, and continued strong demand across the Hoka ecosystem of access points with particular strength in the DTC channel, which increased 38% versus last year, contributing to the brand's total revenue of $429 million in Notably, HOKA's DTC performance for the quarter was aided by global increases in consumer acquisition, which was up 31% versus last year, and consumer retention, which was up 35% versus last year. Additionally, I would note that this quarter's revenue growth was aided by a higher percentage of full-price selling as well as the UGG brand select price increase, both of which contributed to dollar growth outpacing unit growth. While we will always manage our brands with the intent to deliver high levels of full-price selling, the level we experienced this year, particularly for UGG in its peak season, is one we don't expect will always repeat. This dynamic, combined with a larger-than-expected impact from price increases due to the strength of performance from affected styles, is part of the catalyst for our increased full-year expectations for UGG growth. Gross margins for the quarter were 58.7%, which was up 580 basis points from last year's 53%.

On a constant currency basis revenue grew 15% versus last year.

Steve: In the quarter was primarily driven by broad based growth across regions and channels delivering $1.07 billion of revenue with global DTC, increasing 20% as brand heat remains robust with all DTC regions exhibiting a double digit percentage growth in the period.

Steve: And continued strong demand across the HOKA ecosystem of access points with particular strength in the DTC channel, which increased 38% versus last year contributing to the brands total revenue of $429 million in the quarter.

Steve: Notably <unk> DTC performance for the quarter was aided by global increases in consumer acquisition, which was up 31% versus last year and consumer retention, which was up 35% versus last year. Additionally.

Steve: Additionally, I would note that this quarter's revenue growth was aided by a higher percentage of full price selling as well as the other brands select price increases both of which contributed to dollar growth outpacing unit growth.

Steve: While we will always manage our brands with the intent to deliver high levels of full price selling the level, we experienced this year, particularly for <unk> and its peak season is one we don't expect will always repeat.

Steve: This dynamic combined with a larger than expected impact from price increases due to the strength of performance from affected styles is part of the catalyst for our increased full year expectations for outgrowth.

Steve: Gross margins for the quarter was 58, 7%, which was up 580 basis points from last year's 53%.

Steven J. Fasching Deckers Outdoor Corp: As compared to last year, gross margin in the quarter benefited from a higher mix of UGG full-price selling, freight savings, Select Pricing, Action, and Favorable Brand and Product Mix, favorable channel mix with DTC continuing to grow faster than wholesale, and favorable foreign currency exchange rates. While we are exceptionally proud of these remarkable results, we remain mindful that the outsized margin expansion seen this quarter is above normalized levels and is not something we anticipate will repeat to the same degree. While we do see opportunities to continue to deliver top-tier profitability through our key strategies, items that we anticipate may not repeat in a normalized environment include the extremely low levels of promotional activity achieved for our two major brands, considerable benefits from UGG pricing actions, and very low freight costs that SG&A dollar spend in the third quarter was $429 million, up 23% versus last year's $350 million. As a percent of revenue, SG&A was 150 basis points higher than last year, primarily due to investment in talent to support key functions within our growing organization and higher marketing spend. Our tax rate was 21.9%, which is lower than last year's 23.7%.

As compared to last year gross margin in the quarter benefited from higher mix of full price selling freight savings.

Steve: Select pricing actions and favorable brand and product mix.

Steve: Verbal channel mix with DTC, continuing to grow faster than wholesale and favorable foreign currency exchange rates.

Steve: While we are exceptionally proud of these remarkable results we remain mindful that the outsized margin expansion seen this quarter is above normalized levels and is not something we anticipate will repeat to the same degree.

Steve: While we do see opportunities to continue to deliver top tier profitability through our key strategies items that we anticipate may not repeat in a normalized environment include the extremely low levels of promotional activity achieved for our two major brands.

Steve: <unk> benefits from pricing actions and very low freight costs that are now on the rise as well as other potential macroeconomic factors such as foreign currency exchange rate fluctuations.

Steve: SG&A dollar spend in the third quarter was $429 million up 23% versus last year's $350 million.

Steve: As a percent of revenue SG&A was 150 basis points higher than last year, primarily due to investment in talent to support key functions within our growing organization and higher marketing spend.

Steve: Our tax rate was 21, 9%, which is lower than last year's 23, 7%.

Steven J. Fasching Deckers Outdoor Corp: These results, combined with favorable interest income relative to last year and a lower share count, drove record diluted earnings per share of $15.11, which compares to last year's $10.48 diluted earnings per share, representing EPS growth of 44%. Turning to our balance sheet, as of December 31st, 2023, we ended this fiscal third quarter with $1.65 billion of cash and equivalents. Inventory was $539 million, down 25% versus the same point in time last year, and during the period, we had no outstanding loans.

Steve: These results combined with favorable interest income relative to last year, and a lower share count drove a record diluted earnings per share of $15 11, which.

Steve: Which compares to last year's $10 48 diluted earnings per share representing EPS growth of 44%.

Steve: Turning to our balance sheet at December 31, 2023, we ended this fiscal third quarter with $1 $65 billion of cash and equivalents.

Steve: Inventory was $539 million down 25% versus the same point in time last year and during the period, we had no outstanding borrowings.

Steve: On inventory, specifically I'd note that with the strong levels of selling that we have seen this year. We are now below normal operating levels for the current size of our organization and heading into next year, we expect to see incremental inventory investment to keep up with growth.

Steven J. Fasching Deckers Outdoor Corp: On inventory specifically, I'd note that with the strong levels of selling that we have seen this year, we are now below normal operating levels for the current size of our organization, and heading into next year, we expect to see incremental inventory investment to keep up with growth. Today's inventory position reflects the upside that has already been captured in the quarter just completed, which could have a small impact on sales in the fourth quarter. During the third quarter, we repurchased approximately $100 million worth of shares at an average price of $507.95.

Steve: Days inventory position reflects the upside that has already been captured in the quarter, just completed which could have a small impact on sales in the fourth quarter.

Steve: During the third quarter, we repurchased approximately $100 million worth of shares at an average price of $507 95.

Steven J. Fasching Deckers Outdoor Corp: As of December 31st, 2023, the company had approximately $1.05 billion remaining authorized for share repurchase. Now, moving into our updated guidance for fiscal year 2025. Based on the strong demand experienced in the third quarter, we are increasing our full-year revenue guidance to be approximately $4.15 billion, up from our previous guidance of approximately $4.025 billion. This increase now equates to full-year growth expectations of approximately 14% versus last year.

Steve: As of December 31, 2023, the company had approximately 1.05 billion remaining authorized for share repurchase.

Now moving into our updated guidance for fiscal year 2024 based on the strong demand experienced in the third quarter, we are increasing our full year revenue guidance to be approximately $4 $1 5 billion.

Steve: Up from our previous guidance of approximately $4.0 billion to $5 billion.

Steve: This increase now equates to full year growth expectations of approximately 14% versus last year.

Steven J. Fasching Deckers Outdoor Corp: From a brand perspective, we now expect UGG revenue growth of low double digits, up from our prior expectation of mid-single digits. This full year increase is the result of the strong DTC demand that we experienced and fulfilled in the third quarter. Full-year HOCA revenue growth of approximately 25 percent with strong third-quarter sell-through driving wholesale refill upside in the fourth quarter, reflecting our disciplined marketplace management, in addition to our fiscal year 2024 updated revenue outlook. Gross margin is now expected to be approximately 54.5 percent as UGG experienced high levels of full price selling, including key styles contributing incremental margin from price increases as brand heat continued to drive strong demand.

Steve: From a brand perspective, we now expect revenue growth of low double digits up from our prior expectation of mid single digits.

Steve: This full year increase is the result of the strong DTC demand that we experienced and fulfilled in the third quarter.

Steve: Full year <unk> revenue growth of approximately 25% with strong third quarter sell through driving wholesale refill upside in the fourth quarter, reflecting our disciplined marketplace management.

Steve: In addition to our fiscal year 2024 updated revenue outlook.

Steve: Margin is now expected to be approximately 54, 5% as agg experienced high levels of full price selling including key styles contributing incremental margin from price increases as brand heat continued to drive strong demand.

Steven J. Fasching Deckers Outdoor Corp: SG&A as a percentage of sales is now expected to be approximately 34.5 percent as we have identified areas to accelerate spend in Q4 with revenue growth exceeding expectations for fiscal year 2025. We believe this additional spend, part of which represents top-of-funnel marketing opportunities, gives our brands the opportunity to defend their current positions of strength, setting the foundation for the future. Additionally, I would note that some of the third and fourth quarter spending timing dynamics relate to unrealized FX gains recorded in Q3 that we expect will be offset in Q4 as rates have recently moved in the opposite direction. With these updates, we are increasing our operating margin for the year and now expect it to be approximately 20%, reflecting the improvement in gross margin experience. Our effective tax rate is now projected to be approximately 22%. And finally, with these updates, we are increasing our diluted earnings per share expectations to now be in the range of $26.25 to $26.50. Please note, this guidance excludes any charges that may be considered one-time in nature and does not contemplate any impact from additional share repurchase.

Steve: SG&A as a percentage of sales is now expected to be approximately 34, 5% as we have identified areas to accelerate spend in Q4 with revenue growth exceeding expectations for fiscal year 2024.

Steve: We believe this additional spend part of which represents top of funnel marketing opportunities gives our brands the opportunity to defend their current positions of strength setting the foundation for the future.

Steve: Additionally, I would note that some of the third and fourth quarter spending timing dynamics related to unrealized FX gains recorded in Q3 that we expect will be offset in Q4 as rates have recently moved in the opposite direction.

Steve: With these updates we are increasing our operating margin for the year and now expect it to be approximately 20%, reflecting the improvement in gross margin experience.

Steve: Our effective tax rate is now projected to be approximately 22%.

And finally with these updates we are increasing our diluted earnings per share expectations to now be in the range of $26 25 to.

Steve: To $26 50.

Steve: Please note this guidance excludes any charges that may be considered onetime in nature and does not contemplate any impact from additional share repurchases. Additionally.

Steven J. Fasching Deckers Outdoor Corp: Additionally, our guidance assumes no meaningful deterioration of current risks and uncertainties, which include, but are not limited to, changes in consumer confidence and recessionary pressures, inflationary pressures, geopolitical tensions, supply chain disruptions, and fluctuations in foreign currency exchanges. This guidance update represents a $3.25 increase on the prior top end of our diluted earnings per share guidance range. Based on the success that we've seen this year with strong sell-through and high levels of full price selling, there are a few business dynamics related to the fourth quarter that we would like to highlight, including U.S. wholesale shipments that went out at the tail end of the third quarter this year that have historically occurred in the fourth quarter. Meaningful revenue from UGG closeouts last year that will not repeat this year and low levels of inventory on key styles that have been driving the business this fiscal year.

Steve: Additionally, our guidance assumes no meaningful deterioration of current risks and uncertainties, which include but are not limited to changes in consumer confidence and recessionary pressures.

Steve: Inflationary pressures geopolitical tensions supply chain disruptions and fluctuations in foreign currency exchange rates.

Steve: This guidance update represents a $3 and 25 increase on the prior top end of our diluted earnings per share guidance range.

Steve: Based on the success that we've seen this year with strong sell through and high levels of full price selling there are a few business dynamics related to the fourth quarter that we would like to highlight including U S. Wholesale shipments that went out at the tail end of the third quarter of this year that have historically occurred in the fourth quarter meaningful revenue.

Steve: <unk> from Closeouts last year that will not repeat this year and low levels of inventory on key styles that have been driving the business this fiscal year.

Steven J. Fasching Deckers Outdoor Corp: We, of course, still expect to deliver a strong fourth quarter that is now projected to round out Decker's fourth consecutive year of at least mid-teens top-line revenue growth while also consistently delivering exceptional high levels of operating profitability. We would note that some of the benefits to our operating profitability we're seeing are outsized and may not repeat in future years, but we remain dedicated to delivering operating profitability in the top tier among our peer group, even as we continue to invest in our organization to enable future growth. As we've said in the past, if revenue growth comes faster than our ability to keep pace with investments, some of the related profit expansion may flow through to the bottom line in the near term. However, we continue to recognize the importance of funding our strategic initiatives moving into next year and maintain a focus on the long-term vision for our brand. We will continue to be disciplined in our approach as we enter our final fiscal quarter and begin planning for next fiscal year.

Steve: We of course still expect to deliver a strong fourth quarter that is now projected to round out deckers fourth consecutive year of at least mid teens top line revenue growth, while also consistently delivering exceptional high levels of operating profitability.

Steve: We would note that some of the benefit to our operating profitability, we're seeing our outsized and may not repeat in future years, but we remain dedicated to delivering operating profitability and the top tier among our peer group, even as we continued to invest in our organization to enable future growth.

Steve: As we've said in the past if revenue growth comes faster than our ability to keep pace with investments some of the related profit expansion may flow through to the bottom line near term. However, we continue to recognize the importance of funding our strategic initiatives moving into next year and maintain a focus on the long term vision for our brands.

Steve: We will continue to be disciplined in our approach as we enter our final fiscal quarter and begin planning for next fiscal year.

Steven J. Fasching Deckers Outdoor Corp: Our largest brands are two of the healthiest and most in demand in our industry. With a robust balance sheet and our diligent operating approach, we are well-positioned to drive future success and look forward to providing more details on our year-end call. Thanks, everyone, and now I'll hand the call back to Dave for his final remarks.

Steve: Our largest brands are two of the healthiest and most in demand in our industry.

Steve: With a robust balance sheet and our diligent operating approach, we are well positioned to drive future success and look forward to providing more details on our year end call.

Steve: Thanks, everyone and now I'll hand, the call back to Dave for his final remarks.

Dave: Thanks, Steve we are extremely proud of our brands year to date performance, which have produced record revenue and earnings results.

David Powers: We are extremely proud of our brand's year-to-date performance, which has produced record revenue and earnings results. As we look beyond fiscal year 2024, I believe we have an incredibly strong innovation pipeline for the UGG and HOCA brands, giving us further confidence in our ability to build upon this year's exceptional growth. Thinking into the next few years, we believe HOKA remains our primary growth vehicle with considerable opportunity for both region and category expansion as awareness of the brand's innovative performance products increases further. We will continue to position UGG for growth through the development of category hybrids that celebrate heritage brand codes to resonate with target consumers across global markets.

Dave: As we look beyond fiscal year 2024, I believe we have an incredibly strong innovation pipeline for the Ogden Hooker brands, giving us further confidence in our ability to build upon this year's exceptional growth.

Dave: Thinking into the next few years, we believe HOKA remains our primary growth vehicle with considerable opportunity for both region and category expansion as awareness of the brand's innovative performance product increases further and continue.

Dave: To position <unk> for growth through the development of category hybrids that celebrate heritage brand codes to resonate with target consumers across global markets.

Stefano Carotti: Deckers' strategic focus on marketplace management, omni-channel strategy, and flexible operating model continues to be the driving force behind our sustained success. We remain focused on executing against our long-term objectives while continuing to deliver high levels of profitability and driving shareholder value. Additionally, I'd like to recognize and thank all of our employees across the organization for their consistent and dedicated focus on driving results aligned with our long-term strategic vision. They continue to go above and beyond while upholding Deckers' values. Before we turn to Q&A, I want to give Stefano a moment to say a few words. Okay, Stefano?

Dave: <unk> strategic focus on marketplace management, Omnichannel strategy and flexible operating model continues to be the driving force behind our sustained success we remain.

Dave: Focus on executing against our long term objectives, while continuing to deliver high levels of profitability and driving shareholder value.

Dave: Additionally, I'd like to recognize and thank all of our employees across the organization for their consistent and dedicated focus to driving results aligned with our long term strategic vision.

Dave: Our employees continue to go above and beyond while upholding deckers values.

Dave: Before we turn to Q&A I want to give Stefano a moment to say a few words Stefano.

David Powers: Dave, thank you for the kind introduction and good afternoon everyone. It's a privilege to have been named Decker's next CEO. During my tenure here, I've had the chance to grow with Deckers as we make significant strides building beautiful and innovative brands that resonate with consumers around the world. I understand and appreciate the immense effort it has taken to get us where we are today, and I'm passionate about our people, our organization, and the continuation of our collective. I believe Deckers is well positioned to continue navigating a highly competitive market and take advantage of the many opportunities ahead with the Over the next six months, I look forward to working with Dave, who has become a great mentor, colleague, and friend, to continue executing on our strategy and ensure a smooth transition. Thanks, Dave. Back to you. Thanks, Stefano.

Stefano Karate: Steve Thank you for the accounting production and good afternoon, everyone.

Stefano Karate: It's a privilege to have been named <unk> next CEO.

Stefano Karate: During my tenure here I've had the chance to grow with Deckers as we've made significant strides building beautiful and innovative brands that resonate with consumers around the world.

Stefano Karate: I understand and appreciate demons efforts it has taken to get us where we are today.

Stefano Karate: And I'm passionate about our people our organization and the continuation of our collective success.

Stefano Karate: I believe <unk> is well positioned to continue cutting through a highly competitive marketplace and take advantage of the many opportunities ahead with the support of our dedicated management team and all the good people at Deckers.

Stefano Karate: Over the next six months I look forward to working with Dave was becoming a great mentor colleague and friend to continue executing on our strategy and ensure a smooth transition.

Stefano Karate: Thanks, Dave back to you.

Dave: Thanks, Stephanie and thank you everyone for joining us on the call today, we look forward to sharing more next quarter as we continue to build towards Deckers exciting future.

David Powers: And thank you, everyone, for joining us on the call today. We look forward to sharing more next quarter as we continue to build towards Decker's exciting future. With that, I'll turn the call over to the operator for Q&A.

Speaker Change: With that I'll turn the call over to the operator for Q&A operator.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the 1 on your telephone keypad. Should you wish to cancel your request, please press the star followed by the 2.

Speaker Change: Have a question. Please press the star followed by the one on your target for pad.

Speaker Change: Should you wish to cancel your request. Please press the star followed by the team I would like to advice everyone to please limit your questions to one question and one follow up.

Tom Nikic: I would like to advise everyone to please limit their questions to one question and one follow-up. Your first question comes from the line of Tom Nikic from Redbush Securities. Please go ahead.

Speaker Change: Your first question comes from the line of some Nick <unk> from Wedbush Securities. Please go ahead.

David Powers: Hey guys, thanks for taking my question and Dave, you know, congratulations on a great run, and Stefano, looking forward to working with you. So on Hoka, it kind of sounds like you're embedding a little bit of a re-acceleration, I guess, specifically in the wholesale channel in the fourth quarter. Is that just, you know, inventory levels being really lean? Is it, you know, selling of the new products? Is it, you know, door expansion with, you know, Dicks and Foot Locker?

Nick: Hey, guys.

Taking my question and Dave Congratulations on a great run.

Nick: Stefano.

Nick: It looks like it's a large market.

Stefano Karate: Good morning.

Stefano Karate: So.

Speaker Change: On Hong Kong.

Speaker Change: Sounded like.

Speaker Change: You're embedding a little bit of a reacceleration I guess, specifically in the wholesale channel.

Speaker Change: In the fourth quarter.

Is that just inventory levels being really lean as it is.

Speaker Change: Sell in of the new product is that door expansion with Dick's and foot locker.

David Powers: If I could just, you know, kind of unpack, you know, how to think about the drivers of Hoca Wholesale, that would be greatly appreciated. Yes, I'd be very happy to answer that question. And first, I apologize for my voice being a little rough. I'm fighting a cold at the moment.

Speaker Change: Let me just kind of unpack.

Speaker Change: How to think about the drivers.

Speaker Change: HOKA wholesale that'd be great I appreciate it.

Yes, sure happy to answer that question first of all I apologize my voice and go to a restaurant fighting a cold at the moment, but.

David Powers: But yeah, HOKA, you know, we had a great quarter for HOKA, Q3, as you heard from the results, right on plan, right on strategy. The teams continue to execute at a high level globally. And Q4 is a combination of things.

Speaker Change: Yes, we had a great quarter for <unk> in Q3 as you heard from their results right on plan right on strategy and the teams continue to execute our company level globally.

Q4 is a combination of things Theres a lot of refill orders that will be going into wholesale.

David Powers: There are a lot of refill orders that will be going wholesale, fulfilling that demand and getting back in stock as we head into spring. And then, as we mentioned before, we have some really exciting new product launches that are coming out in Q4 as well as planned. So we continue to have, you know, very strong momentum executing on the strategy. Q4 is looking solid for us. No new doors at the end of the year; no net new doors.

Speaker Change: Filling that demand.

Speaker Change: And getting back in stock as we head into spring and then as we mentioned before we have some really exciting new product launches that are coming out in Q4 as well as plant. So.

Speaker Change: <unk> continued to be very strong momentum executing on our strategy Q4 is looking solid for us.

Speaker Change: No new doors at the end of the year no net new doors, we're continuing to evaluate that based on how the market performs and how in home care sales grew in.

David Powers: We'll continue to evaluate that based on how the market performs and how HOKA sells through. And we're very pleased and optimistic about this quarter ahead. Sounds good.

Speaker Change: We're very pleased and optimistic about this quarter ahead.

Speaker Change: Okay sounds good and just if I could follow up also on the largest one.

David Powers: And just, if I could follow up also, just one on UGG. Obviously, you've had a couple of great holiday seasons in a row. You know, what do you do for an encore next year?

Speaker Change: Obviously, you've had a couple of great holiday seasons in a row.

What do you what do you do for non core next year.

David Powers: Yeah, well, it's a good question, right? I mean, our history has been a little bit volatile. But listen, I think this is a new era for UGG. We have an incredible new leadership team. The innovation pipeline is responding incredibly well with our global consumers. We're expanding categories beyond our core icon styles. And the momentum is real. You know, this is the most exciting quarter I've ever seen for UGG with regard to global brand heat, and global sell-through. Every region, every channel, is performing well with the UGG brand right now.

Speaker Change: Yes, well, it's a good question right I mean, our history has been a little bit volatile, but listen I think this is a new era.

Speaker Change: Incredible new leadership team and.

The innovation pipeline is resonating incredibly well with our global consumers.

Speaker Change: Expanding categories beyond our core icon styles and the momentum is real this is the most exciting quarter ive ever seen drug with regards to global brand heat global sell through.

Speaker Change: Every region every channel is performing well with the UGG brand right now and.

David Powers: And, you know, we were light on inventory. We had an incredible quarter of growth, but there's still opportunity. And we're going into this coming fall with a position of real strength with healthy inventory levels and a clean marketplace. We had some price increases that didn't slow us down. And we still think there's a lot of demand out there to be had across women's fashion, especially a lot of the icons that were successful this year.

Speaker Change: We were light on inventory it was an incredible quarter of growth, but there's still opportunity and we're going into.

Speaker Change: This coming fall with a position of real strength with healthy inventory levels clean marketplace.

Speaker Change: We had some price increases that didnt slow us down.

Speaker Change: We still think there's a lot of demand out there to be had across the women's especially a lot of the icons that we.

Speaker Change: We're successful in this year, but with some new introductions like the low mill the weather hybrids in mens and we think Theres a lot of upside still for this brand and we're going to stay the course and manage this marketplace incredibly tight as we have been and prioritize DTC in that formula continues to pay off major dividends for us.

David Powers: But with some new introductions like the Lomel, the weather hybrids, and men's, we think there's a lot of upside still for this brand. And we're going to stay the course and manage this marketplace incredibly tight as we have been and prioritize DDC. And that formula continues to pay off major dividends for us.

Speaker Change: Tom just to add to that Steve I think as we look at the success that we had in Q3. This is where our marketplace management work, we are containing that wholesale channel.

David Powers: I think as we look at the success that we had in Q3, this is where our marketplace management works. We are containing that wholesale channel. We're flowing some of the demand over to our DDC channel, and this is really where you're seeing the power of that work.

Tom: We're slowly.

Tom: Some of the demand over to our DTC channel and this is really where youre seeing the power of that where you see it with the gross margin expansion and.

David Powers: You see it with the gross margin expansion. And so that's a model that we're going to continue to reinforce next year. And we know we're leaving demand on the table. And that's by design.

Speaker Change: And so that's the model that we're going to continue to reinforce next year and we know receiving demand on the table.

Speaker Change: By design. So we continue to build with these brands and controlling that marketplace distribution.

David Powers: So we continue to build heat with these brands by controlling that marketplace distribution, flowing some of that excess over into DTC, and leaving some demand on the table. Sounds good. Thanks very much, and Dave, best of luck in your future endeavors. Thanks, Tom; I appreciate it. Thank you. And your next question comes from the line of Laurent Veselescu from BNP Paribas. Please go ahead. Good afternoon.

Speaker Change: Following some of that excess over into DTC.

Speaker Change: Some demand on the data.

Speaker Change: Sounds good thanks, very much Dave best of luck in your future endeavors.

Dave: Thanks, John I appreciate it.

Speaker Change: Yes.

Speaker Change: Thank you and your next question comes from the line of Lauren with Alaska from BNP Paribas. Please go ahead.

Laurent Veselescu: Thank you very much for taking my question. And Dave, I wanted to wish you the best for your future endeavors. You will be missed by many.

Lauren: Good afternoon. Thank you very much for taking my question, Dave wanted to wish you. The best for your future endeavors, we will be missed by many and Stefano it's great to have you on the call.

David Powers: And Stefano, it's great to have you on the call. I wanted to just follow up. I wanted to follow up, Dave, on some of the, you know, there's some targets out there long term. There's that $5 to $6 billion target, 50% DTC mix. Is there anything, is there anything that changes over the long term on these targets that you maybe want to update? And then could you maybe also provide, Steve, I think you maybe kind of alluded to, sometimes you'll over earn, you know, with that 20% even margin for fiscal year 24. Is there a right, like, resting heart rate for an even margin for this business long term?

Lauren: I wanted to just follow up I wanted to follow up Dave on some of the there are some targets out there long term.

Speaker Change: Is that $5 billion to $6 billion target.

Lauren: 50% DTC.

Lauren: Is there anything is there anything that changes over.

Stefano Karate: The long term on these targets that maybe you want to update.

Stefano Karate: And then could.

Stefano Karate: Maybe also provide.

Speaker Change: Steve I think you may be kind of alluded to sometimes youll over earn.

Speaker Change: That 20% EBIT margin for fiscal year 'twenty four.

Speaker Change: Is there a right like resting heart rates for EBIT margins for this business long term.

Steve: Yes. Good question, so with regards to long term strategy I think it's important to stress is particularly.

David Powers: Yeah, Laurent, good question. So with regard to long-term strategy, I think it's important to stress, particularly with regard to what is coming up, that we are still focused on what we've talked about before. So, you know, Stephano and I aren't sitting here saying, hey, there's a major change that needs to happen. It's more about continuing the momentum that, quite frankly, Stephano and his team have

Speaker Change: Coming up.

Speaker Change: That we are still focused on what we've talked about before so.

Speaker Change: And I am sitting here, saying, hey, there's a major change that needs to happen.

Speaker Change: More about continuing the momentum that quite frankly, Stefano and his team have helped create so the targets that we spoke about before.

David Powers: So the targets that we spoke about before, those are ranges that we've talked about. We think there's potential to get there. It's not a hard target.

Speaker Change: Those are those are ranges that we've talked about we think there is potential to get there is not a hard target, but the strategy is in place we have.

David Powers: But the strategy is in place. We have a The way we're managing the marketplace and the way they're presenting these brands in the market to our consumers, the way we're connecting with our consumers, just gives us more confidence, especially coming out of a quarter like this, that those targets are achievable. And I think the quarterly results represented great examples of how we're migrating closer to DDC and doing more business through DDC and then building more heat for these brands over time. So, as we get more consumers into the fold, that'll continue. And we remain incredibly excited about the opportunity for Hoka, but also for UGG at the same time. So, stay the course.

Speaker Change: The way, we are managing the marketplace and we're there.

Speaker Change: We are presenting these brands in the market to our consumers, where we're connecting with our consumers just gives us more confidence, especially coming out of a quarter like this that those targets are achievable and I think this.

Speaker Change: Orderly results represented gray.

Speaker Change: Great examples of.

Speaker Change: We're migrating closer to DTC and more business through DTC.

Speaker Change: And then building more heat for these brands over time, so as we get more consumers into the fold.

Speaker Change: That will continue and we remain incredibly excited about the opportunity for hooker, but also drug.

Speaker Change: At the same time so.

Speaker Change: Date of course lots to get after scale, particularly with the strength of the international markets coming on now and we're confident we can get there.

Steven J. Fasching Deckers Outdoor Corp: Lots to get after still, particularly with the strength of the international markets coming on now. And we're confident we can get there. Yeah, then Laurent, kind of on the operating margin, you know, and we've talked about this before on prior calls, you know, the way we look at the business is kind of a high team margin business, you know, and as I've said in the past, when we have an opportunity when the business runs so well and delivers margins above that, like we saw in Q3, we will let some of that margin run through. We're not out just to spend money for the sake of spending money.

Speaker Change: Yes.

Speaker Change: Kind of on the operating margin.

Speaker Change: We've talked about this before on prior calls.

Speaker Change: We look at the business is kind of a high teens margin business.

Speaker Change: And as I've said in the past is when we have an opportunity when the business runs so well and delivers margins above that like we've seen in Q3, we will let some of that margin run through we're not out just to spend money for the sake of spending money.

Steven J. Fasching Deckers Outdoor Corp: We carefully watch where we're placing our investment. And when we see the opportunity to invest, we will take that. And that's the way we approach kind of every year, in a given year where we're seeing such strong full-price selling, like we did this year, where our brands and products are in such demand, it's a perfect case where we can flow through some of that. You've seen that in previous years.

Speaker Change: Carefully watch, where we're placing our investments.

Speaker Change: When we see the opportunities to invest we will take that and Thats. The way we approach kind of every year.

Speaker Change: Given year, where we're seeing such strong full price selling.

Speaker Change: Like we did this year, where our brand and product are in such demand is a perfect case, where we can flow through some of that you've seen that in prior years.

Steven J. Fasching Deckers Outdoor Corp: But at the same time, as we've indicated in our full-year outlook, where we've raised it, we're also looking at where we can continue to invest in our brands because we know the competition is stepping up as well. So this provides us with an opportunity that when we are performing well, we'll pass through some of that. But at the same time, we're looking at the long-term health of the business, and we'll make the right investments to continue to drive this business forward in the long run. So that's our approach. That's not going to change.

Speaker Change: But at the same time as we've indicated in our full year outlook, where we've raised it. We're also looking at where we can continue to invest in our brands because we know the competition is definitely up as well.

Speaker Change: Is this an opportunity that when we are performing well, we will pass through some of that but at the same time, we're looking at the long term health of the business and we will make the right investments to continue to drive this business forward in the long run. So that's our approach that's not going to change is working for us and you can kind of see how thats driving these types of results.

Steven J. Fasching Deckers Outdoor Corp: It's working for us, and you can kind of see how that's driving these types of results. Very clear. And as a follow-up question on the UGG business, Steve, I think you alluded to some timing shifts between 3Q and 4Q. Maybe, for the audience, could you quantify that number?

Speaker Change: Very clear and as a follow up question on the UGG business, Steve I think you alluded to some timing shifts between between <unk> and <unk>, maybe for the audience could you quantify that number and then.

Steven J. Fasching Deckers Outdoor Corp: And then going back to Tom's question about next year's encore, Dave, Steve, Stefano, we are getting that question from investors like, oh, just 15% UGG growth for this year, for this quarter. It's going to be that much harder. I know you're not prepared to guide for next year, but any indication on the order book for next fall would be very helpful. Thank you very much. Yeah, so I'll start. In terms of some of the shifts, what I mentioned in the prepared remarks is, yeah, we are seeing some of the overperformance of Q3, because again, as you know, we haven't guided orders, where we did see some earlier wholesale deliveries in Q3, that's slightly impacting our Q4. In terms of our full year, we have raised our full year outlook, and that's really a reflection of the strength that we've seen in Q3. Because we haven't given quarterly guidance, I know everybody's models may be a little bit different, and so it's hard to say specifically kind of how you're looking at it.

Speaker Change: Going back to Tom's question about next year as encore.

Speaker Change: Steve Stefan how we are getting that question from from investors like Oh, just 15% growth for this year for this quarter is just it's going to be that much harder I know youre not prepared to guide for next year, but any indication on the order book for for next fall would.

Speaker Change: It would be would be very helpful. Thank you very much.

Steven J. Fasching Deckers Outdoor Corp: Yes, so I'll start right in terms of some of the shifts.

Steven J. Fasching Deckers Outdoor Corp: Mentioned in the prepared remarks, yes, we are seeing where some of the over performance in Q3, because again as you know we haven't guided quarters.

Steven J. Fasching Deckers Outdoor Corp: Where we did see some.

Steven J. Fasching Deckers Outdoor Corp: Earlier wholesale deliveries in Q3.

Steven J. Fasching Deckers Outdoor Corp: Slightly impacting our Q4 in terms of our full year, we have raised our full year and thats really a reflection of the strength that we've seen in Q3.

Steven J. Fasching Deckers Outdoor Corp: Because we haven't given quarterly guidance I know everybody's models, maybe a little bit different.

Steven J. Fasching Deckers Outdoor Corp: And so it's hard to say specifically kind of how.

Steven J. Fasching Deckers Outdoor Corp: Youre looking at the way we've looked at it as some of the business that we thought may happen in Q4 did come out in Q3 as the sell through was very strong.

Steven J. Fasching Deckers Outdoor Corp: The way we've looked at it is some of the business that we thought might happen in Q4 did come to us in Q3, as the sell-through was very strong, and so we took advantage of that, and we were able to kind of shift some of that product. Generally speaking, what you're seeing is the business has performed better than we expected. We have flowed that through on our full-year lift, and we're seeing Q4 kind of as we've seen it with a little bit of time shifts. But overall, I think the takeaway is incredible performance in Q3. We've flowed through that. We've lifted our full year.

Steven J. Fasching Deckers Outdoor Corp: And so we took advantage of that.

Steven J. Fasching Deckers Outdoor Corp: We were able to kind of shift some of that Brian generally speaking what you're seeing is the business has performed better than what we expected we flowed that through on our full year lift.

And we're seeing Q4 and as we've seen it with a little bit of timing, but overall I think the takeaway is incredible performance in Q3, we flowed that through we've lifted our full year business is incredibly strong and the demand for our brands with Baird.

Steven J. Fasching Deckers Outdoor Corp: Business is incredibly strong, and the demand for our brands is there. Yeah, and with regard to UGG, you know, coming up into the fall of 24, we're confident we see UGG now as a growth brand within the portfolio. Will it be double-digit 15% like we just experienced?

Speaker Change: Yeah, and with regards to come.

Speaker Change: Coming into your fault.

Speaker Change: 24.

Speaker Change: We're confident we see now as a growth brand within the portfolio will it be double digit 15% like we just experienced we won't be planning for that but we still think there is growth to be had and I think it's important to remind folks that I think is in a very different position than it has been in the past that I talked about this in the last call we used to sell primarily classics classic.

David Powers: You know, we won't be planning for that, but we still think there's growth to be had. And I think it's important to remind folks that UGG is in a very different position than it has been in the past. And I talked about this in the last call. You know, we used to sell primarily classics, classic short, classic tall, different colors, iterations, and a few slippers to go with that. And the distribution was pretty similar across the marketplace.

Speaker Change: Our classic call different colors iterations and a few slippers.

Speaker Change: To go with that and the distribution was pretty similar across the marketplace.

David Powers: UGG is much more diversified now. We're selling boots, we're selling slippers, we're selling new hybrid innovations, and we're starting to sell our version of sneakers. And it's a younger consumer, it's a more diverse consumer, we have segmentation in the marketplace globally, we have a lot of untapped potential in the international markets, and we're going to continue to play this through with the strength of our product innovation pipeline and the strength of our marketing teams to continue to drive this as a growth brand for years to come. Thank you very much for all the color and best of luck, Dave.

Speaker Change: It's much more diversified now we're selling boots, we're selling slippers, we're selling new hybrid innovations and we're starting to sell our version of sneakers and it's a younger consumer it's a more diverse consumer we have segmentation in the marketplace globally, we have a lot of untapped potential in the international markets.

Speaker Change: And we're going to continue to play this through and with the strength of our product innovation pipeline and the strength of our marketing teams to.

Speaker Change: To drive this as a growth brand for years to come.

Speaker Change: Super helpful. Thank you very much for all the color and best of luck.

David Powers: All right, thanks, buddy. Thank you. And your next question comes from the line of J. Sol from UBS. Please go ahead.

Speaker Change: Alright, Thanks, Greg.

Speaker Change: Thank you and your next question comes from the line of Jay sole from UBS. Please go ahead.

Speaker Change: Okay.

J. Sol: Great, thank you so much. Dave, I wanted to follow up on some of those comments you made about OGDIT, and how much more diversified the product line is today. Can you give us a sense of, in the third quarter, what percentage of the business was boots, kind of the classic two, and sort of the derivatives of that, versus sort of the newer stuff, new mail, and, you know, some of the, you know, your versions of sneakers, and some things that are really kind of different over the last couple of years? And if you could sort of compare that to where that was, you know, Yeah, I don't have the exact specifics on that, but I will say, you know, the core classics are really just to maintain business at this point. So, it's not like we're purposely trying to shrink those. Those are still healthy.

Jay Sole: Great. Thank you so much David I wanted to follow up on some comments you made about August how much more diversified the product line is today can you give us a sense of in the third quarter.

Jay Sole: What percentage of the business was boots kind of the classic II and sort of the derivatives of that versus sort of the newer stuff new mall.

Jay Sole: Youre versions of sneakers, and something Thats really kind of different over the last couple of years and then if you could sort of compare that to where that was a couple of years ago that would be helpful.

Yes, I don't have the exact specifics on that but I will say the core classics or really just to maintain business at this point. So it's not like we're purposely trying to shrink those those are still healthy we're just managing them.

David Powers: We're just managing that, you know, that category and that product better in the marketplace. But the growth is coming from some of the newness, you know, the TAS, the platform style, the Ultra Mini, and then, like I said, some of the sneaker versions and the hybrid winter programs. And as you notice, we launched UGG Extreme, which is our first, you know, serious foray into more performance products. So, this is a brand that has really broad shoulders. I've always said that.

Jay Sole: Category in that product better in the marketplace, but the growth is coming from some of the newness.

Taz.

Jay Sole: Platform styles the ultra many.

Jay Sole: And then like I said some of the sneaker versions in the hybrid winter programs.

Jay Sole: As you noticed we launched our get extreme which is our first serious floor oriented more performance products. So.

This is a brand that has really broad shoulders, I've always said that and I think now we're seeing once we get the rate design DNA into these categories that are really innovative and.

David Powers: And I think now we're seeing, once we get the right design DNA into these categories that are really innovative and, you know, distinct, there's really nothing like this product in the marketplace. We have a lot of runway. And so, we're going to continue to innovate, continue to attack these categories with a focused assortment of UGG DNA products and connect with our consumers in a segmented way. And I think there's still, you know, tremendous upside there. So, there's lots to be confident about with the UGG brand.

Jay Sole: There's really nothing like this product in the marketplace.

Jay Sole: A lot of runway and so we're going to continue to innovate continue to attack these categories with a focused assortment of <unk>.

Jay Sole: <unk> DNA product.

Jay Sole: Connect with our consumers in a segmented way and I think there is still tremendous upside there so.

Jay Sole: Lots to be confident with the UGG brand I think this is an indication of the new leadership that <unk> has brought to the team and the discipline in the marketplace as well as our innovation pipeline and we're optimistic this is going to continue.

David Powers: I think this is an indication of, you know, the new leadership that Anne has brought to the team and the discipline in the marketplace, as well as our innovation pipeline. And we're optimistic this is going to continue at a healthy pace going forward.

Jay Sole: At a healthy pace going forward.

Speaker Change: Got it understood I'll try and ask it a different way I hope it is okay, but it's just so fast food what you've accomplished with AGA.

David Powers: Hopefully, this is okay, but it's just so fascinating what you've accomplished with Can you maybe just tell us what, you know, if we just think about the business where it was five years ago, mainly boots, what was the total addressable market for that category? And sort of where do you, how would you size the total addressable market for today, given, you know, the sneakers that you're doing and all the different categories that have emerged? Yeah, it's a good question.

Speaker Change: Can you maybe just tell us what if we just think about the business where it was five years ago, mainly boots, what was the total addressable market for that that category is sort of where do you. How would you size the total addressable market for.

Speaker Change: Today, given the sneakers that you're doing and all the different categories that have emerged.

Speaker Change: I'll, let Steve answer that yes.

Steven J. Fasching Deckers Outdoor Corp: It's a good question and clearly the addressable market has grown and we were five years ago I think.

David Powers: Clearly, the addressable market has grown from where we were five years ago. I think, you know, another way to look at it, and I know what you're trying to kind of get at is, you know, what are the future growth opportunities for us? Right, I think what we've seen, especially in this last year, is how UGG is being adopted for different use cases than it was five years ago.

Steven J. Fasching Deckers Outdoor Corp: Another way to look at it and I know, what youre trying to kind of get at is whats the future growth opportunities for us.

Steven J. Fasching Deckers Outdoor Corp: Alright, I think what we've seen especially in this last year.

Steven J. Fasching Deckers Outdoor Corp: Is how.

Steven J. Fasching Deckers Outdoor Corp: Has been adopted.

Steven J. Fasching Deckers Outdoor Corp: For different use cases than it was five years ago, and so that total addressable market continues to increase as we are seeing greater adoption around our product and so to Dave's point about but we're excited about what we saw in Q3 is we're seeing heritage products resonate with consumers, but iterations of that where we've created new.

Steven J. Fasching Deckers Outdoor Corp: And so that total addressable market continues to increase as we are seeing greater adoption around our product. And so Dave's point about what we're excited about, what we saw in Q3, is that we're seeing heritage products resonate with consumers, but iterations of that where we've created newness in categories that consumers are adopting. And so, you know, we've also talked about some of the demographic reach, and we're seeing, you know, a younger demographic come into the brand with strong excitement. You've really seen that come through in Q3. It's what's driving some of that DTC performance.

Steven J. Fasching Deckers Outdoor Corp: Newness in categories that consumers are adopting.

Speaker Change: We've also talked about some of the demographic reach and we're seeing.

Speaker Change: Younger demographic come into the brand with a strong excitement you've really seen that come through in Q3, it's what's driving some of that DTC performance.

Steven J. Fasching Deckers Outdoor Corp: And then we're seeing it grow internationally. So, as you recall, you know, five years ago, we talked about how we were going to deliver progress in North America and then export that success to the international market. And now, what you're seeing is those international markets growing at a faster rate, albeit smaller dollars, but at a faster rate in percentage terms than we're seeing domestically. And that shows you how the consumer is embracing the UGG brand across the globe in different use cases, you know, and through the last couple of years, what we've learned is through some of this casualization, the adoption of UGG for different use cases. And we're continuing to see that demand grow, and that's what gives us excitement about where we can build this brand.

Speaker Change: And then we're seeing it grow internationally. So as you recall five years ago, we talked about how we were going to deliver that.

Speaker Change: The address in North America, and then export that success to the international market and now what you're seeing is those international market is growing at a faster rate, albeit smaller dollars, but at a faster rate on percentage terms than we're seeing domestic and that shows you. How the consumer is embracing the brand across the globe in different use cases.

Speaker Change: And through the last couple of years, what we've learned is.

Speaker Change: Through some of its casualization the adoption.

Speaker Change: For different use cases, and we're continuing to see that demand grow and that's what gives us excitement about where we can build this brand.

Steven J. Fasching Deckers Outdoor Corp: Yeah, and the last thing I would say to think about this brand five years ago was a boot brand. And that's, you know, we've had that stigma attached to a brand for, you know, We have been doing this for quite some time, and I think that those days are in the past. You know, we have products that are responding in different categories that we've never had before, and I'm really excited about the Lomel. It's our version of a sneaker, and I think that's going to be a best seller for years to come and start, you know, potentially taking share from some of the sneaker brands out there. Got it. All right. That's fascinating.

Speaker Change: And the last thing I would say if you think about this brand five years ago. It was a blueprint and Thats, we've had that stigma attached a brand for.

Speaker Change: Quite some time and I think that those days are in the path. We have product that is resonating in different categories that we've never had before and I'm really excited about the low <unk>.

Speaker Change: Our version of a sneaker and I think that's going to be a best seller for years to come.

Speaker Change: Bart.

Speaker Change: Potentially taking share from some of the sneaker brands out there.

Speaker Change: Got it alright. Thank you so much really appreciate it.

Janine Stitcher: Thank you so much. I really appreciate it. Thank you. And your next question comes from the line of Janine Stitcher from BTIG. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Jimmy <unk> from BPI. Please.

Jimmy: Please go ahead.

David Powers: Hi, congratulations on the results, and Dave, wish you all the best as well. Thank you so much. I want to dig into pricing a little bit. Yeah, and could you elaborate on the price increase there? How big was it? When did you take it?

Jimmy: Hi, Congrats on the results and Dave wish you all the best as well.

Jimmy: Thank you for taking a little bit yeah could you just can you elaborate on the price increase.

Jimmy: When did you take it and maybe how broad is it in terms of the styles and then curious about any future opportunities.

David Powers: And maybe how broad was it in terms of the styles? And then curious about any future opportunities for price increases. And I guess the same question for Hoka. I think you've talked about being pretty happy where the pricing is there, but do you see any opportunities, just as some of your peers potentially look at taking that price? Thank you. Yeah, thanks, Jeanne, and great question.

Jimmy: This increases and I guess the same question for <unk>, I think you've talked about being pretty happy where the pricing is bandwidth do you see any opportunities just as some of your peers and potentially look at taking that price. Thank you.

Speaker Change: Yes, Thanks, Greg.

Speaker Change: Great question.

David Powers: We are, and have been, and will continue to look at prices strategically. And so some of the decisions we made this year were really just on a handful of styles in UGG, but really, you know, some of our best sellers are what proved to be our best sellers. So that's why you saw the exponential impact of revenue on some of those styles as they performed so well at full price, you know, and the added $5 or $10 made a big difference on a lot of units. Going forward, we'll continue to evaluate it. We don't see massive price increases broad-based this fall. We're still evaluating that, but it'll be selected by market and style if we do do that. And then the same approach should be used for HOCA.

Speaker Change: We are it may have been we have been and will do continue to look at pricing strategically and so some of the decisions. We made this year were really just on a handful of styles in agg, but in really some of our best sellers. There were proved to be a best seller. So that's why you saw the action exponential impact of of revenue on some of those styles as they performed so well.

Speaker Change: At full price.

Speaker Change: Five or $10 made a big difference on a lot of units.

Speaker Change: Going forward, we will continue to evaluate it we don't see as a big.

Speaker Change: Price increase in broad based this fall and were still evaluating that but it'll be selective by market and style. If we do do that.

Speaker Change: And then the same approach for HOKA.

Steven J. Fasching Deckers Outdoor Corp: You know, we're comfortable with the prices right now. We think we are providing incredible value for the dollar. There are opportunities to raise prices a little bit here and there as we continue to roll out more innovations. But growth through pricing is not a strategy of ours. It's pricing the product appropriately in the market for the consumer, and that'll drive our decision. Yeah, and Gene, just to add a little bit on that, you know, as Dave said, it was not across the board. It was very surgical in terms of units that we identified as having the potential to absorb a price increase without much consumer resistance to it. And that was significant. And so there were not a lot of styles.

Speaker Change: Comfortable with the prices are right now we think we are after guiding incredible value growth for the dollar.

Speaker Change: There's opportunities to raise prices a little bit here and there as we continue to rollout more innovation.

Speaker Change: Tracing grocery pricing.

It's not a strategy of ours, it's pricing appropriate.

Speaker Change: Product in the market for the consumer and that will drive our decision.

Speaker Change: Yes.

Speaker Change: To add a little bit on that.

Speaker Change: It was not across the board.

Speaker Change: Very surgical in terms of unit we identified the.

Speaker Change: The potential to absorb a price increase without much.

Speaker Change: Consumer resistance.

Speaker Change: And Thats that was significant and so it was not a lot of styles with arm styles that we knew would do well.

Steven J. Fasching Deckers Outdoor Corp: It was on styles that we knew would do well. And so, it was surgical in the sense of, you know, those high-performing styles. And it drove a big portion.

Speaker Change: And so it was surgical and defense.

Those high performing style and it drove a big portion. So just in terms can you quantify a little bit in the quarter. Our gross margin from last year and was up 580 basis points.

Steven J. Fasching Deckers Outdoor Corp: So, you know, just in terms, to quantify it a little bit, in the quarter, our gross margin from last year was about 580 basis points. I think the other thing that was a big contributor, along with price increases, we didn't get any promotional. This was a full, strong price sell-through quarter for us. So, of that 580 basis points, about 340 of it came from not being promotional and the price increases that we experienced in the quarter. So, a big driver of the quarter.

Speaker Change: I think the other thing that was a big contributor along with price increases we didn't get promotional.

Speaker Change: This was a full strong price sell through quarter.

Speaker Change: Quarter for us so that 580 basis points.

Speaker Change: 340 of it came from not being promotional and the price increases that we experienced in the quarter. So a big driver and as Dave said, we're not looking to increases to kind of continue to drive that we're going to be very careful about how we place price increases and how we contemplate that.

Steven J. Fasching Deckers Outdoor Corp: And as Dave said, we're not looking to price increases to kind of continue to drive that. We're going to be very careful about how we place price increases and how we contemplate them. But this year was one year that we benefited from them that we will not necessarily see in future periods. Sky, that's helpful, Culler.

Speaker Change: This year was one year that we benefited from it that we will not necessarily be in future periods.

Speaker Change: Got it that's helpful color and just in terms of the gross margin fair to assume.

Steven J. Fasching Deckers Outdoor Corp: And just in terms of the growth margin, it's fair to assume that there might be some more promotions in the future as that kind of normalizes if the pricing increases stick. So at least a portion of the 580 points remains structural. Yeah. Perfect. Thanks so much and best of luck.

Speaker Change: In that there might be from our promotions in the future at that time normalized pricing disconnect filling the question at this point.

Speaker Change: Sure.

Speaker Change: Yes, yes, yes, yes.

Speaker Change: Perfect. Thanks, so much and best of luck.

Samuel Marc Poser: All right, thank you. Thank you. And your next question comes from the line of Sam Poser from Williams Trading. Please proceed. Well, thank you for taking my questions. So Erin, we already have Ugg and Hoka, so could you give me Teva, Sanuk, and the others, which are my favorite ones? And then I have other questions, because I wish you'd just give us all of them.

Alright, thank you.

Thank you and your next question comes from the line of Sam Poser from Williams trading. Please proceed.

Samuel Marc Poser: Well, thank you for taking my questions.

Sam Poser: Yes.

Samuel Marc Poser: So erinn, we already have good hope so could you give me Teva should look in the other core my favorite question and then I have other question because I wish you'd just give all of it.

Erinn Kohler Senior Director: So real quick for the third quarter, total wholesale and distributor for UGG, as you mentioned, you can count is $403 million, Hoka $252 million, Teva $20 million, Sunup $2 million, and then other largely Kulibara $24.5 million. Thank you. Okay. Based on what we've seen so far in January, it looks as if, well, first of all, Dave, congratulations. It's totally awesome for that. I'm very happy for you, and I hope to get to see you before you, you know, you know, sail out into the sunset off the beach of Galena.

Erinn: Sure Sam So real quick for the third quarter, our total wholesale and distributor floor.

Samuel Marc Poser: Because you mentioned you can count at $403 million.

Samuel Marc Poser: $252 million kind of a $20 million.

Samuel Marc Poser: And then other largely cologuard.

Speaker Change: $4 5 million.

Speaker Change: Yeah.

Thank you.

Speaker Change: Okay.

Speaker Change: Yes.

Yes.

Speaker Change: On what we've seen so far in January it looks as if.

Speaker Change: First of all.

Dave: Dave Congratulations.

Dave: Totally awesome.

Dave: I'm very happy for you and I hope gets to you before you.

Sell out into the Sunset at the beach ability to.

David Powers: Thank you, Sam. I appreciate that. We're seeing a lot of sales in your own retail stores around New York, I'm hearing that retailers are getting, your wholesale accounts are getting small hits, but are you gearing a lot of what's going on in the fourth quarter for UGG to, you know, really, you know, more so than usual, like just pushing it to your DTC, given that a lot of those orders are people are just trying to get whatever they can, so What I would say is that the teams have gotten better at allocating the right amount of inventory for our stores so that we're not missing sales when the customer comes in. And we've been guilty of that in the last few years, not having, you know, protected some of the inventory in this kind of demand.

Dave: Okay.

Dave: Thank you Tim I appreciate that.

Dave: The.

Dave:

Dave: We're seeing a lot of.

Dave: Sales in your own retail stores around New York.

Speaker Change: I'm hearing that like retailers are getting your wholesale accounts are getting small hits, but are you gearing a lot of what's going on in the fourth quarter for two.

Speaker Change: Really more so than usual like just pushing it to your DTC.

Speaker Change: Given that a lot of those orders.

Speaker Change: Our people are just trying to get whatever they can so you're going to feed yourself a lot more.

Speaker Change: I wouldn't say that we're forcing more inventory purposely away from wholesale and DTC. What I would say is I think they've gotten better at allocating the right amount of inventory for our stores. So that we're not missing sales when the customer comes in and we may get to that in the last few years not having.

Speaker Change: Protected some of the inventory and this kind of demand some of that inventory and get sucked up by DTC or wholesale aliens. So we're protecting it better than we have for our stores and just making sure that we're balancing out across wholesale and retail and E. Commerce as best we can for the consumer and how they like to shop.

David Powers: You know, some of that inventory can get sucked up by DDC or wholesale fill-ins. So we're protecting it better than we have for our stores. And just making sure that, you know, we're balancing out across wholesale and retail and e-commerce as best we can for the consumer and how they like to shop. It just so happens, though, that when you have this kind of brand heat and momentum, if there are wholesale partners that are running low on inventory, they're going to go to our stores to find it and our websites to find it. And that's, you know, this is an indication of what happened. But it's also a strong indication of how well our pull model is working. And when you have a pull model like that, it does help generally benefit your DDC business a little bit more.

Speaker Change: It just so happens, though when you have this kind of brand heat momentum.

Speaker Change: Our.

Speaker Change: Wholesale partners that are running lower inventory theyre going to go to our stores to find it in our website you can find it and Thats. This is an indication of what happened, but it's also a strong indication of.

Speaker Change: Well, our pull model is working and we have a full model like that it does help.

Speaker Change: Generally benefit your DTC business, a little bit more.

David Powers: And then lastly, you sort of hinted that it was a new thing coming from Deckers X Labs. I heard that it might be the re-entry, and I've heard from some retailers that they've seen some of the product for fall. And I heard it might be under the Anu Reborn name. Could you give us some color as to what may be going on over there?

Speaker Change: Thanks, and then lastly, you sort of hinted that was a new thing coming from Deca is X labs.

Speaker Change: Heard that it likely to reenter and I've heard from some retailers they've seen some of the product for fall.

Speaker Change: And I've heard it might be under the.

Speaker Change: New reborn could you give us some.

Speaker Change: Color as to what may be going on over there.

David Powers: Yeah, well, I will say it's exciting for us. You know, we established this Deckers Lab Innovation Engine a few years ago with the help of John Luke, who was one of the co-founders of Hoka, and that has been quietly building as a force for our pipeline for all of our brands. So, you know, some of the innovation you're seeing in UGG and Hoka, and we'll soon see some of that in Teva as well, has come from that. And one of the things we uncovered is that there is an opportunity for a new kind of sneaker brand. So, we would put this under the category of a super sneaker brand. It's pretty exciting. It's more sophisticated in styling. It's made for really all-day wear, but it comes with a lot of the technologies that you would find in a performance running brand.

Speaker Change: Yes, well I will say, it's it's exciting for US we established with Deckers lab innovation engine, a few years ago with the help of John Luke who is one of the co founders of <unk>.

Speaker Change: That has been quietly building of the forest through our pipeline for all of our brands. So some of the innovation you are seeing in.

Speaker Change: And hopefully we will soon see.

Speaker Change: Some of that and Teva as well as come from that and one of the things we uncover as there is an opportunity for <unk>.

Speaker Change: New kind of sneaker brand. So we would put this under the category of Super Sneaker brand.

Speaker Change: It's pretty exciting it's more sophisticated styling, it's made for really all day aware, but it comes with a lot of the technologies that you would find in a performance running brand. So.

David Powers: So, carbon plates, different foams, different, you know, more modern materials and cleaner lines, a little bit elevated price point above $200. And obviously, it's early days. We're excited to launch this into the market. I'll let you know the name as soon as I'm allowed to, but stay tuned.

Speaker Change: Carbon plates different phones.

Speaker Change: In a more modern materials and cleaner lines.

Speaker Change: A little bit elevated price point above 200.

Speaker Change: And.

Speaker Change: Obviously, it's early days and we're excited to launch this into the market.

Speaker Change: I'll, let you know the name as soon as if I'm allowed to.

Speaker Change: But stay tuned in the next few weeks Youll hear about the soft launch and then we will head into.

Jonathan Robert Komp: In the next few weeks, you'll hear about the soft launch, and then we'll head into, you know, March and April in a more robust way and build from there. Thanks very much. Congratulations again. Thank you. Thank you. And your last question comes from Jonathan Komp from Baird. Please proceed. Yeah, hi, thanks. Good afternoon.

Speaker Change: March and April and a more robust way and build from there.

Speaker Change: Thanks, very much congratulations again.

Speaker Change: Thank you.

Speaker Change: Thank you and your next question comes from the line of Jonathan Komp from Baird. Please proceed.

Jonathan Robert Komp: Yeah, Hi, Thanks, Good afternoon, one more question on the Argus.

David Powers: One more question on UGG. You know, in a different forum, Dave, I think you recently highlighted the long-term potential for UGG to still double revenue potentially without a timeframe attack. So, Dave or Stefano, could you maybe share any more insights, how you think about, you know, those comments in relation to the long-term opportunity for UGG? And then, separately on HOKA, can you share any retailer feedback on the new styles, thinking about, you know, the CLOX, the SkywardX, the SkyFlow, just what are you hearing, especially on some of the premium products you plan to bring out? And any thoughts on sustaining leadership or still growing and core run specialty while you eventually thoughtfully expand distribution? Yeah, I'm going to let Stefano answer the HOKA question, then I'll come back to the first question.

Jonathan Robert Komp: And then different forum, Dave I think you recently highlight.

Jonathan Robert Komp: Highlighted long term potential for us to still double revenue potentially without a timeframe attached so.

Jonathan Robert Komp: Dave or Stefano could you maybe share any more insights how you think about.

Jonathan Robert Komp: Those comments in relation to the long term opportunity for <unk> and then just separately on <unk> can you share any retailer feedback on the new styles thinking about the CLO skyward oxo Sky flow just what are you hearing, especially on some of the premium product you plan to bring out.

Jonathan Robert Komp: And any any thoughts on sustaining leadership are still growing in core run specialty while you eventually hit thoughtfully expand distribution.

Jonathan Robert Komp: Yes.

Speaker Change: Ill, let Stefano answer the <unk> question, and then I'll come back to the first question.

Stefano Carotti: Yeah, on the CLX launch, we literally launched today, literally, so it's a bit early to say how long it will take or how well it's doing. I'll look at the results. They're quite, quite encouraging, but it's, it's early days. Yeah, and then regarding the UGG brand, I actually don't remember saying doubling the business at some point, but that's okay. I would say, listen, we still think this is, we see this, you know, more than ever as a growth brand, and we think that a healthy growth rate for this brand is mid-single digits, you know, and that's in line with managing our marketplace and growing effectively in a smart way. Does the brand have the potential to be doubled at some point? Hey, I think if we optimize potential in men and we, you know, we start to build our apparel engine a little bit more, anything's possible, but right now, we're taking this one year at a time and really, you know, strategically and methodically building it in line with our marketplace strategy. Okay, thanks for that. Just one more, if I could sneak it in for Steve.

Stefano Karate: Yes on the <unk> launch, we launched today literally so it's a bit early to say, how long and how well it's doing.

Stefano Karate: C results theyre quite quite encouraging.

Speaker Change: It's early days.

Stefano Karate: Yeah, and then regarding the UGG brand.

Stefano Karate: I actually don't remember, saying doubling dividends at some point.

Speaker Change: That's okay.

Speaker Change: I'd say listen we still think this is what we see this more than ever as a growth brand and we think that a healthy growth rate for this brand is mid single digits.

Speaker Change: And that's in line with managing our marketplace and growing effectively in a smart way.

Speaker Change: Does the brand the brand has potential to be doubled at some point I think if you if we optimize the potential and mens.

Speaker Change: You start to build our apparel ended a little bit more anything's possible, but right now we're taking this one year at a time and really strategically and methodically building it in line with our marketplace strategy.

Speaker Change: Okay. Thanks for that just one more if I could sneak it in for Steve any comments on what.

David Powers: Any comments on what bonus or incentive accruals would look like in 2024, given the strong performance, and just how to think about that potentially year-over-year in a more normal year for 2025? Thanks. Yeah, so it's a good question.

Steven J. Fasching Deckers Outdoor Corp: Onus or incentive accruals look like in 2024, given the strong performance in gist.

Steven J. Fasching Deckers Outdoor Corp: To think about that potentially year over year in a more normal year for 2025.

Steven J. Fasching Deckers Outdoor Corp: So good question, so clearly with the performance that we've got going on in FY 'twenty. Four we are accruing for an increase in performance related compensation.

Steven J. Fasching Deckers Outdoor Corp: So clearly, with the performance that we've got going on in FY24, we are accruing for an increase in performance-related compensation that resets back to, you know, approved budget levels. So on percentage terms, we're not quantifying dollars, but on percentage terms, clearly, the expectation is a couple months left, but given everything we've seen so far, very strong performance. So there is an increase in performance-related compensation in FY24, and then we reset that for FY25.

That reset back to approved budget levels, so on percentage terms.

Steven J. Fasching Deckers Outdoor Corp: To find dollar spent on percentage terms clearly.

Steven J. Fasching Deckers Outdoor Corp: The expectations couple of months left but given everything we've seen so far very strong performance. So there is an increase in performance related compensation in FY 'twenty four and then we reset that for.

Steven J. Fasching Deckers Outdoor Corp: For FY 'twenty.

Steven J. Fasching Deckers Outdoor Corp: Okay, thank you all again. All right. Thanks, sir. Thank you. This concludes today's call. Thank you for participating. You may all disconnect.

Steven J. Fasching Deckers Outdoor Corp: Okay.

Speaker Change: Thank you all again.

Speaker Change: Thanks, Alright, thanks, Sir Thanks, John.

Thank you. This concludes today's call. Thank you for participating you may all disconnect.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.