Q1 2024 Laird Superfood Inc Earnings Call
Kate: Good afternoon, and thank you for joining the Laird Superfood first quarter 2024 financial results call. My name is Kate, and I will be the moderator for today's call. At this time, all lines are in a listen-only mode, and will remain so until the question and answer portion of the call. I would now like to turn the call over to Trevor Russo. You may proceed, Trevor. Thank you, and good afternoon.
Good afternoon, and thank you for joining de layered superfood first quarter 'twenty 'twenty four financial results. My name is Kate and I will be the moderator for today's call.
Kate: At this time all lines are in a listen only mode and will be until the question and answer portion of the call.
Trevor Russo: I would now like to turn the call over to Trevor ERISA you May proceed Trevor.
Trevor Russo: Thank you and good afternoon.
Trevor Russo: Welcome to Laird Superfood's first quarter 2024 earnings conference call and webcast. On today's call are Jason Vieth, Laird Superfood's President and Chief Executive Officer, and Anya Hamill, our Chief Financial Officer. By now, everyone should have access to the company's first quarter earnings release filed today after market close. It is available in the Investor Relations section of Laird Superfood's website at www.lairdsuperfood.com. Before we begin, please note that during the course of this call, management may make forward-looking statements within the context of federal securities laws.
Speaker Change: Welcome to Liberty cubic foods first quarter 2024 earnings conference call and webcast.
Anya Kochetova Hamill: On today's call are Jason be cheaper Foods', President and Chief Executive Officer, and Arnie handle our Chief Financial Officer.
Trevor Russo: By now everyone should have access to the company's first quarter earnings release filed today after market close.
Trevor Russo: Available on the Investor Relations section of <unk> website at Www Dot typically dot com.
Trevor Russo: Before we begin please note that during the course of this call management may make forward looking statements within the context of the federal Securities laws.
Trevor Russo: These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these four open statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of these risks and answers. With that, I'll turn the call over to Jason.
Trevor Russo: These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.
Jason: Please refer to today's press release and other filings with the SEC for a detailed discussion of these risks and uncertainties.
Trevor Russo: I'll turn the call over to Jason.
Jason D. Vieth: Trevor, good afternoon, and another big thank you to everyone who has joined us again. Today, I am excited to share that the Laird Superfood turnaround story has officially become a growth story once more. During the first quarter, we grew the net sales of our business by an impressive 22% versus the same period one year ago. Our sales growth during this period was led by our e-commerce segment, which grew 33% year over year, despite another sizable decrease in marketing spend across those periods.
Jason: Thanks Trevor.
Jason: Good afternoon, and another big Thank you to everyone, who has joined us again.
Jason D. Vieth: Today I am excited to share that the layered supersede turnaround story is officially become a growth story once again.
Jason D. Vieth: During the first quarter, we grew the net sales of our business by an impressive 22% versus the same period one year ago.
Jason D. Vieth: Our sales growth. During this period was led by our E Commerce segment, which grew 33% year over year. Despite another sizeable decrease in marketing spend across those periods.
Jason D. Vieth: Amazon led the way this quarter with an astounding 48% growth rate, driven by our continued improvement in product availability, marketing effectiveness, and inventory management. We have continued to own our execution, driving out unauthorized resellers of our products, and winning the buy box to ensure that our brand sales on the Amazon platform are being fulfilled by our Laird Superfood team. Perhaps the biggest surprise to DTC industry observers will be our impressive 25% growth in our own DTC business, where we continue to demonstrate our ability to convert viewers into buyers, buyers into repeat buyers, and repeat buyers into subscribers.
Jason D. Vieth: <unk> led the way this quarter with an astounding, 48% growth rate driven by our continued improvement in product availability marketing effectiveness and inventory management.
Jason D. Vieth: We have continued to hone our execution driving out unauthorized resellers of our products and winning the buy box to ensure that our brand sales on the Amazon platform are being filled by our <unk> Super food team.
Jason D. Vieth: Perhaps the biggest surprise to DTC industry observers will be our impressive 25% growth in our own DTC business, where we continue to demonstrate our ability to convert viewers into buyers.
Jason D. Vieth: Here's into repeat buyers and repeat buyers into subscribers.
Jason D. Vieth: Approximately half of our DTC business is now made up of subscription sales. Over the past months, our team has focused on creating a website and an email platform where we can share health and wellness, nutrition, and lifestyle tips and stories with our consumer base, thereby giving them a reason to continually interact with our brand and website. And by continuing to leverage Laird Hamilton and his wife, Gabby Reese, we have been able to create highly relevant, authentic, and original content that provides a competitive advantage for our brand.
Jason D. Vieth: Approximately half of our DTC business is now made up of subscription sales.
Jason D. Vieth: Over the past months, our team is focused on creating a website and E mail platform, where we can share health and wellness nutrition and lifestyle tips and stories with our consumer base, thereby giving them a reason to continually interact with our brand and website.
Jason D. Vieth: And by continuing to leverage layered Hamilton and his wife Gabby Reece, we have been able to create highly relevant authentic and original content that provides a competitive advantage for our brand.
Jason D. Vieth: In addition, our customer service and net promoter scores remain best in class, and our consumers clearly recognize and appreciate the care with which we handle their orders, from their website interaction to arrival at their door. On the wholesale side of our business, we grew net sales by 10% year over year during Q1, which is even more impressive since it was done without the benefit of a price increase during the last 12 months.
Jason D. Vieth: Further our customer service and net promoter scores remain best in class and our consumers clearly recognize and appreciate the care with which we handle their orders from their website interaction to arrival at their door.
Jason D. Vieth: On the wholesale side of our business. We grew net sales by 10% year over year during Q1, which is even more impressive since it was done without the benefit of a price increase during the last 12 months.
Jason D. Vieth: Even more encouraging is that retail scanner sales for our Laird Superfood brand were up significantly more than our net sales during this quarter, reported as plus 30% across U.S. food for the 12-week period ending March 24. Given the growth rate discrepancy between retailer scanner data and our LSS internal sales, there was clearly a deloading of inventory across our two large distribution partners.
Jason D. Vieth: Even more encouraging is that retail scanner sales for our layered Super food brand were up significantly more than our net sales. During this quarter reported is plus 30% across U S. Food for the 12 week period ending March 24th.
Jason D. Vieth: Given the growth rate discrepancy between retailers scanner data and our L. S. S. Internal sales there was clearly a de loading of inventory across our two large distribution partners and so we expect to see continued strength in this channel of business as we move forward.
Jason D. Vieth: And so we expect to see continued strength in this channel of business as we move forward. Within Wholesale, our business grew during Q1 across all our measured categories, in terms of both units and dollars, led by our coffee and instant latte products, which now combine to be our largest category at retail. Our club business also remains extremely healthy.
Jason D. Vieth: Within wholesale our business grew during Q1 across all of our measured categories in terms of both units and dollars led by our coffee and instant lottery products, which now combined to be our largest category at retail.
Jason D. Vieth: Our club business also remains extremely healthy and we continue to see growth in our sales velocities behind our improved product following last year's quality of that.
Jason D. Vieth: And we continue to see growth in our sales velocities behind our improved product following last year's quality event. On the operations side, our team continues to demonstrate strong results driven by supply chain execution across procurement, production, and distribution, as well as favorability in our trade spend. Our gross margin was 40% during Q1, which was several points ahead of our own internal projections, despite a planned write-down in the value of our coconut milk powder.
Jason D. Vieth: On the operation side, our team continues to demonstrate strong results driven by supply chain execution across procurement production and distribution as well as favorability in our trade spend.
Jason D. Vieth: Our gross margin was 40% during Q1, which was several points ahead of our own internal projections. Despite a planned write down in the value of our coconut milk powder.
Jason D. Vieth: That planned write-down was actually a positive result for us, as it was driven by the recognition that we are now able to procure our largest commodity ingredient at a significantly better rate than we had previously been able to. With our supply chain team executing at a high level, we have been able to effectively offset various cost increases, and at this point, we expect to be able to do so throughout 2024. As we shared previously, the first quarter is a strategic investment quarter for us, as the marketing activities that we fund early in the year are able to be leveraged during subsequent quarters.
Jason D. Vieth: That planned write down was actually a positive result for us as it was driven by the recognition that we are now able to procure our largest commodity ingredient at a significantly better rate than we had previously been able to.
Jason D. Vieth: With our supply chain team executing at a high level, we have been able to effectively offset various cost increases and at this point expect to be able to do so throughout 2024.
Jason D. Vieth: As we shared previously the first quarter as a strategic investment quarter for us as the marketing activities that we fund early in the year are able to be leveraged during subsequent quarters.
Jason D. Vieth: That said, we were able to once again reduce our year-over-year marketing expense during Q1 behind better execution and more efficient activation. Our marketing expense for the quarter was just over 20% of net sales, which obviously represents a dramatic decrease from prior years.
Jason D. Vieth: That said, we were able to once again reduce our year over year marketing expense during Q1 behind better execution and more efficient activations.
Jason D. Vieth: Our marketing expense for the quarter was just over 20% of net sales, which obviously represents a dramatic decrease from prior years.
Jason D. Vieth: As we move forward, our midterm goal is to continue to press this down into the low T's and eventually into the high single digits. But with the opportunities in front of us and a return to solid brand growth in the first quarter, we're quite pleased with where this currently stands. In fact, we are very pleased with the first quarter results, where we exceeded our internal plan and are now on pace to exceed our stated goals for 2024.
Jason D. Vieth: As we move forward our midterm goal is to continue to press this down into the low teens and eventually into the high single digits.
Jason D. Vieth: But with the opportunities in front of us and a return to solid brand growth in the first quarter, we're quite pleased with where Thats currently stands.
Jason D. Vieth: In fact, we are very pleased with our first quarter results, where we over executed our internal plan and are now on pace to exceed our stated goals for 2024.
Jason D. Vieth: With this in mind, I think it's time to change the storyline on Laird Superfood from a turnaround project to a growth story, one in which we are growing our consumer base across our various sales channels and preparing ourselves for the next chapter of expansion. With that, I will now turn it over to Anya to discuss our first quarter 2024 results in more detail.
Jason D. Vieth: With this in mind I think it's time to change the storyline Unlevered Super food from a turnaround project to a growth story.
Anya: One in which we are growing our consumer base across our various sales channels and preparing ourselves for the next chapter of expansion.
Anya: With that I will now turn it over to <unk> to discuss our first quarter 2024 results in more detail.
Anya Kochetova Hamill: Thank you, Jason, and welcome, everyone. Our team's work over the last 18 months has transformed our financial foundation and positioned our business for growth. I am pleased to share with you that our first quarter results have exceeded our operating plan on every key metric. Net sales grew 22% to $9.9 million in the first quarter of 2024, compared to $9.2 million in the prior year period, and were up by $700,000 sequentially versus the fourth quarter of 2023.
Anya: Thank you, Jason and welcome everyone.
Anya: This work over the last 18 months have transformed our financial Foundation.
Anya Kochetova Hamill: And positioned our business for growth I am pleased to share with you that our first quarter results have exceeded our operating plan on every key metric.
Anya Kochetova Hamill: As Jason indicated, both the e-commerce and wholesale channels contributed to Q1 growth. eCommerce sales increased by 33% year over year and accounted for 59% of our total net sales, with our Amazon and VTC platforms delivering impressive growth of 48% and 25%, respectively. Amazon sales growth was fueled by tremendous execution on the platform, where our team was able to improve our inventory positions, increase our buy box win percentage, and drive efficient media spend.
Anya Kochetova Hamill: Net sales grew 22% to $9 9 million in the first quarter of 2024 compared to $9 2 million in the prior year period and were up by 700000 sequentially versus the fourth quarter of 2020 Street.
Anya Kochetova Hamill: Vikram indicated both the e-commerce and wholesale channels contributed to Q1 gross <unk>.
Anya Kochetova Hamill: E Commerce sales increased by 33% year over year and accounted for 59% of our total net sales without Amazon and DTC platforms, delivering impressive growth of 48% and 25% respectively.
Anya Kochetova Hamill: Amazon sales growth was fueled by tremendous execution on the platform, where our team was able to improve our inventory position increased our buy box win percentage and drive efficient media spent Q1 growth in our DTC platform was driven by steady increase and subscribe.
Anya Kochetova Hamill: Q1 growth in our DTC platform was driven by steady increases in subscribers and repeat orders, higher order value, and lower discount rates due to strategic shifts in promotional spend. Wholesale net sales increased by 10% year over year and contributed 41% of total net sales, reflecting continued growth in clubs, velocity improvements, and distribution expansion in grocery, as well as more efficient promotional spend.
Anya Kochetova Hamill: Bruce and repeat orders.
Anya Kochetova Hamill: I order value and lower discount rates due to strategic shifts in promotional spend.
Anya Kochetova Hamill: Wholesale net sales increased by 10% year over year and contributed 41% of total net sales, reflecting continued growth in club velocity improvements and distribution expansion in grocery as well as more efficient promotional expense.
Anya Kochetova Hamill: Gross margin was 40% in the first quarter, which is a 17 point improvement on a year over year basis and was driven by the continuous benefit of transitioning to a third party co-manufacturing and distribution model and lapping expenses related to the product quality event in the first quarter of last year. This is the second quarter in a row with gross margins of at least 40%, which supports our expectation of sustainably achieving gross margins in or above the upper 30s in the coming quarter.
Anya Kochetova Hamill: Gross margin was 40% in the first quarter, which is a 17 point improvement on a year over year basis and was driven by the continued benefit of transition into third party co manufacturing and distribution model and lap and expenses related to the product quality event in the first quarter of last year.
Anya Kochetova Hamill: Yeah.
Anya Kochetova Hamill: This is the second quarter in a row of gross margin of at least 40%, which supports our expectation for sustainably achieving gross margins in or above the upper 30 in the coming quarters.
Anya Kochetova Hamill: Operating expense decreased $1.1 million in the first quarter compared to the same period last year. This reduction was primarily driven by lower people costs, lower marketing, and a broad strategic reduction in spend. Net loss for the first quarter was $1.0 million, which is 75% better versus the prior year period, driven by higher net sales and expanded growth margin, as well as continued discipline around GNA spending. However, versus the fourth quarter of 2023, our Q1 net loss was $1.2 million higher due to stepped-up planned marketing investments and timing of GNA spend. Now turning to the balance.
Anya Kochetova Hamill: Operating expense decreased $1 1 million in the first quarter compared to the same period last year.
Anya Kochetova Hamill: This reduction was primarily driven by lower people costs, lower marketing and the broad strategic reduction in spend.
Anya Kochetova Hamill: Net loss for the first quarter was 1.0, a million, which is 75% better versus the prior year period.
Anya Kochetova Hamill: Driven by higher net sales.
Anya Kochetova Hamill: And expanded gross margin as well as continued discipline around G&A spending.
Anya Kochetova Hamill: Versus the fourth quarter of 2023, our Q1 net loss was $1 2 million higher due to stepped up planned marketing investments and <unk>.
Anya Kochetova Hamill: Timing of G&A expense.
Anya Kochetova Hamill: Now turning to the balance sheet, we ended the quarter with $7 3 million cost gas and no debt as we continue to conservatively manage our balance sheet. Our cash burn in Q1 was 400000, which is obviously significantly better than our historical burn rate, but higher than the last quarter.
Anya Kochetova Hamill: We ended the quarter with $7.3 million of cash and no debt as we continue to conservatively manage our balance sheet. Our cash burn in Q1 was $400,000, which is obviously significantly better than our historical burn rate but higher than the last quarter due to stepped-up marketing investment and payout of our company bonus, which had been fully expensed during 2023. Our cash consumption rate is steadily improving due to our continued discipline in managing operating expenses and working capital, including significant reductions in inventory.
Anya Kochetova Hamill: Or do you just stepped up marketing investment and pay out of our company bonus which had been fully expense during 2023.
Anya Kochetova Hamill: Our cash consumption rate is steadily improving due to our continued discipline in managing operating expenses and working capital, including significant reductions in inventory in the first quarter inventory was reduced by $700000 or 11% compared to the year end of 2020.
Anya Kochetova Hamill: In the first quarter, inventory was reduced by $700,000, or 11% compared to the year end of 2023, while also supporting 22% revenue growth. Also, we just entered into a credit facility agreement that allows us to access up to $2 million in cash as backed by the sale of our cab receipts. This will create additional liquidity should we choose to utilize it. We continue to project that we have enough cash to fund our operations into at least 2026 as we continue to grow our business and make operating improvements that drive us towards breakeven and profitability.
Anya Kochetova Hamill: While also supporting 22% revenue growth.
Anya Kochetova Hamill: Also we just entered into a credit facility agreement that allows us to access up to 2 million in cash.
Anya Kochetova Hamill: By the sale of our accounts receivables.
Anya Kochetova Hamill: This will create additional liquidity source should we choose to utilize it.
Anya Kochetova Hamill: We continue to project that we have enough cash to fund our operations into at least 2026 as we continue to grow our business and make operating improvements that drive us towards breakeven and profitability.
Anya Kochetova Hamill: Overall, these results strengthen our confidence that the strategic initiatives our team has been implementing during the last 18 months are achieving our intended results. At this point, we are increasing the upper end of our guidance for full year 2024. We now expect net sales of $38 to $42 million, which represents 11 to 22 points of growth versus the prior year. And we are now projecting gross margin of 38 to 41%, representing a 7 to 11 point improvement versus 2023. And now, I will turn the discussion back over to Jason for any closing remarks.
Anya Kochetova Hamill: Overall these results strengthen our confidence that the strategic initiatives. Our team has been implemented during the last 18 months are achieving our intended results at this point, we are increasing the upper end of our guidance for full year 2024.
Jason: We now expect net sales of <unk>.
Anya Kochetova Hamill: $38 million to $42 million, which represents 11% to 22 points of growth versus prior year.
Jason: And we are now projecting gross margin of 38% to 41% representing a seven to 11 point improvement versus 2023.
Anya Kochetova Hamill: And now I will turn the discussion back over to Jason for any closing remarks.
Jason D. Vieth: Thank you, Anya, and thank you to everyone who has been listening to and supporting us during the past two years. I hope you'll agree that we've made good on the expectations that we outlined during those quarters, and while it's been extremely satisfying for our LSF team to achieve these results so far, we are even more excited and motivated for what is yet to come. This concludes our prepared remarks. Operator, we are now ready to open the call to questions.
Jason: Thank you Ron Yes, and thank you to everyone, who has been listening to and supporting us during the past two years.
Jason D. Vieth: I hope you'll agree that we've made good on the expectations that we outlined during those quarters and while it's been extremely satisfying for our L. S. F team to achieve these results. So far we are even more excited and motivated for what is yet to come.
Jason D. Vieth: This concludes our prepared remarks, operator, we're now ready to open the call to questions.
Speaker Change: Thank you.
Kate: We will now begin the question and answer portion of the call. If you would like to ask a question, you may do so by pressing star followed by a one on your telephone keypad. If for any reason you would like to remove your question, you may do so by pressing the star followed by a two. As a reminder, if you are using a speaker phone, please remember to pick up your handset before asking your question. Again, to ask a question, it is star followed by a one on your telephone keypad. The first question comes from the line of Bobby Burleson with Canaccord Genuity. Bobby, your line is now open.
Speaker Change: We'll now begin the question and answer portion of the call.
Speaker Change: If he would like to ask a question you may do so by pressing star followed by a one on your telephone keypad.
Kate: If for any reason you would like to remove your question you may do so by pressing star followed by H L.
Kate: As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
Robert Joseph Burleson: Again to ask a question. It is star followed by a one on your telephone keypad.
Kate: The first question comes from the line of Bobby Burleson with Canaccord Genuity Bobby Your line is now open.
Robert Joseph Burleson: Great, thanks for taking my questions. Congratulations. Sounds like things are definitely shifting to this growth phase. And I guess, you know, my first question is just trying to understand this Olympic kind of, dynamic, you know, food is medicine and food is health, and whether or not there's a bigger role for Laird to play within that, you know, growth.
Robert Joseph Burleson: Great. Thanks for taking my questions.
Kate: Congratulations.
Robert Joseph Burleson: Sounds like things are definitely shifting through this growth phase.
Robert Joseph Burleson: And I guess my.
Robert Joseph Burleson: My first question is just trying to understand.
Robert Joseph Burleson: This xanthic kind of.
Robert Joseph Burleson:
Robert Joseph Burleson: Dynamic here of food as medicine, and food is health and whether or not there's a.
Robert Joseph Burleson: Bigger role for Blair to play within that.
Robert Joseph Burleson: Growth.
Robert Joseph Burleson: Growth story.
Robert Joseph Burleson: Okay.
Jason D. Vieth: Hey, Bobby, Jason. Hey, thanks for doing all of this today.
Robert Joseph Burleson: Hey, Bob It's Jason Hey, Thanks for jumping on all of this today, yes.
Jason D. Vieth: The Olympics.
Jason D. Vieth: Yeah, you know what? The Ozempe kind of exotic craze that's taken the nation. I would say it's largely not impactful on us, and that's because the consumers that are seeking us out truly are. Food has medicine, you know, and it's always going to be a smaller-than-mainstream niche. We still think it's a very sizable and growing niche, but certainly it's not the mainstream eat-whatever-you-want, take a pill afterwards to cure what you just did to yourself. We are very much focused on... Superfood, and our direct competitors are really coming at it from a different direction.
Jason D. Vieth: Kennedy is epic craze.
Jason D. Vieth: <unk> taken the nation.
Jason D. Vieth: I would say it's largely.
Jason D. Vieth: Not impactful to us and that's because the consumers that are seeking us out they truly are food.
Jason D. Vieth: Food is medicine.
Jason D. Vieth: It's always.
Jason D. Vieth: It's going to be a smaller than mainstream niche we still think it's.
Jason D. Vieth: A very sizable and growing.
Jason D. Vieth: Niche, but certainly it's not the mainstream eat whatever you want to take a pill afterwards secure what you just did to yourself.
Jason D. Vieth: We are very much focused on.
Jason D. Vieth: They consume or I would say very relevant to the consumer that is that's.
Jason D. Vieth: It's going the opposite direction that says what I put into my body is ultimately going to be what determines my my future fate.
Jason D. Vieth: As opposed to trying to solve the problems they create so.
Jason D. Vieth: We watch what's going on we're interested in it but frankly very detached from it with regards to our own food and portfolio because the consumers that are interested in and layered superfood and our direct competitors are really coming at it from a different direction.
Robert Joseph Burleson: Yeah, fair enough. I guess, you know, I probably asked the question in too narrow of a sense. I think, you know, what I was getting at was, you know, is there a greater awareness on the part of consumers? As a result of, you know, a lot of the things we're starting to see within CPG where there's, maybe, a Food is Medicine dynamic where people are paying attention to ingredients, and you guys have kind of a vanguard there where maybe you're not fixing mistakes people are making, but you can.
Speaker Change: Yes fair enough I guess.
Jason D. Vieth: I probably asked the question so narrow of a sense here I think you know what I was getting at was is there a greater awareness on the part of consumers.
Robert Joseph Burleson: As a result of a lot of a lot of the things, we're starting to see within the CPG where there's.
Robert Joseph Burleson: Maybe.
Robert Joseph Burleson: Our food as medicine dynamic where people are paying attention to ingredients and you guys have kind of a vanguard there.
Robert Joseph Burleson: We're maybe not fixing mistakes people are making but.
Robert Joseph Burleson: You can promote health outcomes to a greater degree to a more receptive audience because of these these are yes.
Robert Joseph Burleson: The trends driving greater awareness in that connection.
Jason D. Vieth: Yeah, Bobby, I appreciate that twist. I love this question.
Speaker Change: Yes, Bobby I appreciate.
Robert Joseph Burleson: Right that twists I love this question and I can frankly.
Jason D. Vieth: Frankly talk for hours on it but not as eloquently as either Leonard or Gabby, who really have been at the forefront of this for a long time.
Jason D. Vieth: And I could, frankly, talk for hours about it, but not as eloquently as either Laird or Gabby, who really have been at the forefront of this for a long time. You know, it's really interesting. I'll give you an analogy, and then I'll use that to expand a little bit.
Jason D. Vieth: Interesting I'll give you I'll give you an analog and then I'll I'll use that to expand a little bit when I came I came in from the food industry I didn't come from big food, but I came from from lightweight boot.
Jason D. Vieth: When I came in, I came from the food industry; I didn't come from big food. But I came from, you know, from whiteweight food, then at the forefront of bigger companies leading the charge to change food, you know, the way people eat for the better. But I would say I came in, you know, and I've been at a couple of other brands after that, and I came in, not really understanding, if I'm honest, not really understanding Laird Superfood and some of the guardrails that have been placed on us.
Jason D. Vieth: It had been at the forefront of bigger companies, leading the charge to change the way people eat for the better.
Jason D. Vieth: But I would say I came in and had been in a couple of other brands after that and the human not really understanding.
Jason D. Vieth: I'm honest not really interesting alerts super food and some of the guardrails that have been placed on us and so when I got here Oh man, we can really make this food taste a lot better by using natural flavors. As an example, why are we using natural flavors and we started to go down that path.
Jason D. Vieth: And so when I got here, I said, Oh, man, you know, we can really make this food taste a lot better by using natural flavors. As an example, why aren't we using natural flavors? And we started to go down the bad, you know, bad path; we're gonna make food taste a little bit better.
Jason D. Vieth: And the reality is, our food tastes like food is supposed to taste, and natural flavors are not actually natural. You know, that's one of the dirty secrets among many in the food space, especially amongst big food, and the poison that, frankly, they have put into our bodies over decades now. And so you know, you're really hitting a vein and hitting a nerve with me here.
Jason D. Vieth: Absolutely.
Jason D. Vieth: Takes a little bit better.
Jason D. Vieth: And the reality is that it seems like food as opposed to taste and natural flavors are not actually natural.
Jason D. Vieth: That's one of the Dirty secret among many.
Jason D. Vieth: Food space, especially amongst big food poison that frankly that they have put into in our bodies over.
Jason D. Vieth: Over decades now and.
Jason D. Vieth: You're really hitting hitting a vein hitting a nerve with me here and there.
Jason D. Vieth: The reality is and I'll just give you. This example, natural flavors yeah their drink their they are derived from our natural products, but they're chemically extracted in almost all cases, maybe al.
Jason D. Vieth: And the reality is, and I'll just give you this example, natural flavors. Yeah, they're direct, you know, they are derived from a natural product, but they're chemically extracted in almost all cases, maybe all of them. And that chemical residue is passed on to the food that they go into. You might naturally extract a bit of tomato flavor, but you quote unquote, and you can call it a natural flavor. But it's got a chemical residue that comes because it was a chemical that was derived, you know, and was able to extract that flavor from the tomato.
Jason D. Vieth: That chemical residue is passed on to the food that they go into you might you might naturally extracted bit of tomato flavor, but you quote unquote and you can call. It a natural flavor, but it's got a chemical residue that comes because it was a chemical that the derived and was able to extract that flavor from from the tomato.
Jason D. Vieth: And as Larry Hamilton will be several times as we had those discussions early on.
Jason D. Vieth: And as Laird Hamilton told me, several times, you know, as we had those discussions early on, you take these products that you put in your body every day, and a little bit of a small amount of chemicals, but used many times during the day, over many days of your week, over many weeks of your month, your year. Suddenly, you know, decades down the road, you have health problems, and you can't explain why, and there is an increasing recognition and understanding and awareness of that specific issue around natural flavors.
Jason D. Vieth: You take these products that you put in your body every day in a little bit of a small amount a small amount of chemical but used many times during the day over many days of your weak for many weeks of your months of your year to year life.
Jason D. Vieth: Suddenly decades down the road you had health problems and you can't explain why and there is there is an increasing recognition and understanding and awareness.
Jason D. Vieth: It's starting to grow, but certainly more broadly across the other ingredients that you look at on the back of packs and you don't understand. And we're really marketing that now. If you look at what we're doing with our greens relative to competitors, we talk about the fact that we are, we're not a supplement, we're a food. When you turn over the pack, you recognize all of the ingredients that are in our greens, and it starts with fruits and vegetables, as you would expect, you know, and you look at competitors, and that's not always the case. So we're using that head to head marketing. You have to be careful.
Jason D. Vieth: In that spin.
Jason D. Vieth: Specific issue around natural flavor, that's starting to grow but more certainly more broadly across the other ingredients that you look out on the back of packing you don't understand and we're really marketing that now if you look at what we're doing with our Greens relative to competitors. We talk about the fact that we are we're not a supplement where food when you turn over to pack you recognized in our green color.
Jason D. Vieth: The ingredients that are there and it starts with fruits and vegetables.
Jason D. Vieth: As you would expect you know you look at competitors and that's not always the case. So we're using that head to head marketing you have to be careful people don't always like you preach to with regards to in fact, they usually don't with regards to their diet.
Jason D. Vieth: People don't always like to be preached to with regard to, in fact, they usually don't with regard to their diet and the products that they're consuming. So we're doing that in a nuanced fashion, but we're finding more and more people receptive to it. More and more people are searching and, and researching their foods. And, you know, you see a number of podcasters such as Joe Rogan and neuroscientists and dietitians and others that are really becoming vocal about these issues.
Jason D. Vieth: And the products that they're consuming so we're doing that in a nuanced fashion, but we're finding more and more people receptive to it more and more people are searching and researching their foods and U C.
Jason D. Vieth: A podcast, there's such as Joe Rogan, and Neuroscientists and dietitians and others that are really getting vocal about these issues and I think we're just at the beginning of a revolution in this space Bobby in your question is a great. One there is certainly more recognition of the the hills.
Jason D. Vieth: And I think we're just at the beginning of a revolution in this space, Bobby, and, you know, your question's a great one. There is certainly more recognition of the ills that people are receiving from the food that they've been eating, uh, and the secret, you know, you go, do the research. There are a whole lot of secrets hidden in the food industry about what you're putting into your body that people are starting to become aware of.
Jason D. Vieth: That people are receiving from the food that they have been eating oh.
Jason D. Vieth: The secret you can go to the research there's a whole lot of secrets hidden in the food industry, if what you're putting into your body that people are starting to become aware of.
Robert Joseph Burleson: That's fantastic. I just wanted to ask a quick follow-up question on wholesale. You know, obviously, you guys have a lot of momentum in e-commerce and, you know, Amazon's picked up in a big way. But at what point do we see kind of the growth baton maybe get handed to the conventional grocery channel? I know you're doing some work there on expanding distribution and maybe growing your shelf space there, but curious, like, when do you see a potential inflection in that particular channel?
Speaker Change: That's fantastic.
Speaker Change: I just wanted to ask a quick follow up on wholesale.
Robert Joseph Burleson: Obviously, you guys have a lot of momentum in ecommerce and.
Robert Joseph Burleson: You know Amazon has picked up in a big way.
Robert Joseph Burleson: At what point do we see kind of the growth baton maybe get handed to conventional <unk>.
Robert Joseph Burleson: Conventional grocery channel I know you're doing some work there on expanding distribution and.
Robert Joseph Burleson: Maybe on your shelf space, there, but curious like when you see a potential inflection in that particular channel.
Jason D. Vieth: Yeah, that's a great, great follow-on question. You know, the way that we're looking at this, where we've been looking at this strategically is conventional as kind of our last destination because we really, you know, it's expensive to play, your turns need to come quickly, there's a lot of competition. And obviously, there are margin challenges for smaller companies. So we've tiptoed into that space over the last couple of years, Bobby, we've, you know, you, as you know, the natural channel has been very good to us; our consumers identify us quickly and shop that space with the kind of attributes that we have as a product in mind.
Speaker Change: Yeah, that's a great great follow on question.
Robert Joseph Burleson: The way that we're looking at this.
Jason D. Vieth: We've been looking at this strategically as conventional as kind of our last destination, because we really you know it's expensive to play your turns need to come quickly. There's a lot of competition in there obviously our margin challenges for smaller companies. So we've tiptoed into that space over the last couple of years body weeks.
Jason D. Vieth: Yes, you know.
Jason D. Vieth: The natural channel has been very good to us our consumers identify as quickly and shop.
Jason D. Vieth: Space with that kind of attributes that we have as product in mind and so.
Jason D. Vieth: And so you're exactly right, you're seeing tremendous growth on Amazon DTC. DTC has put up a couple of really nice quarters and really turned strategic turn that corner with the initiatives we've implemented there. The natural channel is still doing incredibly well for us and expanding rapidly. And we do recognize, you know, the big, big piece of the pie sitting out there in conventional space. But I'd say we're still a year away from really being ready to go.
Jason D. Vieth: Youre exactly right Youre, what Youre seeing is a tremendous growth on Amazon DTC has put up a couple of really nice quarters, and really turned strategically turned that corner with the initiatives that we've implemented there.
Jason D. Vieth: The natural channel, so doing incredibly well for us in expanding rapidly and we do recognize.
Jason D. Vieth: The big piece of the pie sitting out there in the conventional space, but I'd say, we're still a year away from really being ready ready to go.
Jason D. Vieth: You know, at if not even full throttle, at least at an increased rate in that space. Because we do want to let consumers catch up to us a little bit on that exact trend you asked about in your last question, we want to allow more mainstream consumers to begin to identify the food as medicine type of mentality that you asked about and can come to us there. So I would say we're still a year out from really starting to make major headway in that particular channel.
Jason D. Vieth: And may if not even full throttle at least at a increase throttle in that space because we we do want to let consumers catch up to us a little bit on that exact trend you asked about in your last question. You know we went to allow more of those mainstream consumers to begin to identify.
Jason D. Vieth: The.
Jason D. Vieth: Food is medicine type of mentality that you asked about and and come to us there.
Jason D. Vieth: I would say, we're still a year out from really starting to make major headway in that particular channel.
Speaker Change: Great. Thank you.
Unknown Executive: Great, thank you. Thanks, Bobbie. Thank you. The next question comes from the line of George Kelly with Roth Capital Partners. George, your line is now open.
Speaker Change: Thanks, Bobby Thank you.
Jason D. Vieth: The next question comes from the line of George Kelly with Roth Capital Partners. George Your line is now open.
Unknown Executive: Everyone, thanks for taking my questions and congrats on another really nice quarter. So maybe if we could start, I'm still a little confused about Amazon. I was curious if you could just, Um, maybe expand a bit on what's been driving growth there and and has inventory fill been a component of that really rapid growth that you just reported in one cue?
Unknown Executive: Hi, everyone and thanks for taking my questions and congrats on another really nice quarter.
Unknown Executive: So maybe if we could start I'm still a little confused on Amazon.
Unknown Executive: I was curious if you could just.
Unknown Executive: Maybe expand a bit on what's been driving growth there.
Unknown Executive: And as inventory still been a component of that really rapid growth that you just reported in <unk>.
Jason D. Vieth: Yeah, hey, George. Thanks for your question. Good to hear from you. Yeah, you know, we're really excited about Amazon. We expected to have strong growth in Amazon, but honestly, we planned it at about half of this growth rate. And we knew that there was an opportunity in the channel for the first half of the year relative to the quality event that we had last year, where we had to pull inventory. And I know you all know, we talked about that last year.
Speaker Change: Yeah, Hey, George Thanks for the question.
Speaker Change: Good to hear from you.
Jason D. Vieth: Yeah, you know what we're really excited about Amazon, we expected to have strong growth in Amazon honestly, we planned it at about half of this growth rate.
Jason D. Vieth: And we knew that there was an opportunity in the channel for the first half of the year relative to the quality event that we had last year, where we had to pull inventory and I know you. All know we talked about that AD nauseum last year, so I'm only going to so much detail, but we ended up having to pull our inventory out as a slow slope hole on the creamer products only.
Jason D. Vieth: So I won't go into so much detail, but we ended up having to pull our inventory out as a slow, slow pull on the creamer products, only creamer products. So we knew there was an opportunity as we lapped it this year, but we are well in excess of our expectations on that platform. In this quarter, we saw really strong growth across a number of different segments. So not only the creamer products that did really well, but our coffee, our performance mushrooms, our greens, our bars, everything is really doing well on Amazon right now. And Then a couple of things happened.
Jason D. Vieth: Cream of products. So we knew there was an opportunity as we lap that this year, but we are well in excess of our expectations are on that platform and it's in.
Jason D. Vieth: In this quarter.
Jason D. Vieth: What we saw is really strong growth across a number of different segments. So not only the creamer products that did really well, but our coffee. Our performance mushrooms are greens are bars. Everything is is it's really doing well on Amazon right now and a couple of things happened.
Jason D. Vieth: One was we got inventory back into place, just as you asked. So we've done, I would say our team has done an exceptional job of reselling and managing, especially in light of, you know, the surging demand because there's a little bit of a lag to restock into their micro DCs. The team has done an excellent job in that space, but they've also gone out and won back the buy box for our products where we had resellers. You know, you're always fighting resellers.
Jason D. Vieth: One was we got inventory back into place just as you asked about so we've done I would say our team has done an exceptional job of reselling in managing especially in light of the surging demand because there was a little bit of a lag to restock into their micro Dcs team has done an excellent job in that space, but they've also gone out and won back to buy box.
Jason D. Vieth: For our products, where we had resellers you know you're always fighting resellers, it's a little bit of a game of whack a mole.
Jason D. Vieth: It's a little bit of a game of whack-a-mole, honestly; as one, you know, you knock one down, and then another one pops up with your product at a discounted price where they happen to pick up two or three, you know, products at their local grocery store on sale.
Jason D. Vieth: Honestly is one you knock one down and then another one pops up with your product at a discounted price where they happen to pick up two or three products at their local grocery on sale. So we've been doing a really nice job of knocking that down we've hired an agency to help with some of that and we I would say that we've just been executing that channel.
Jason D. Vieth: So we've been doing a really nice job of knocking that down. We've hired an agency to help with some of that. And we, I would say that we've just been executing that channel really well operationally. And at the same time, we did invest, and we found that we got some really strong returns on some of the ads that we created in the search that we've been able to execute. And so we've had really great commercial and operational execution there for the last quarter.
Unknown Executive: That's that's helpful. Thank you.
Unknown Executive: Really well operationally and at the same time, we did invest we found we've we've had some really strong returns on some of the ads that we've created and the search that we've been able to execute and so we've had just really great commercial and operational execution.
Unknown Executive: Execution, there for the last quarter.
Unknown Executive: And then the next question I wanted to ask you about your hydration business, which grew a lot year over year. My sense is maybe that's driven by the greens product. Correct me if I'm wrong. If that's the case, I'm just wondering how you're gonna keep sort of pushing, like what's the plan behind your expectation to continue growing that product, and like how are you gonna continue to kind of broaden it? So anything there would be helpful.
Speaker Change: That's that's helpful. Thank you and then next question I wanted to ask about.
Unknown Executive: Your hydration business.
Unknown Executive: <unk> grew a lot year over year my sense is maybe that's driven from the Greens product correct me if I'm wrong.
Unknown Executive: If that's the case I'm, just I'm wondering how youre going to keep pushing like whats the plan behind you know you're right.
Unknown Executive: Expectation to continue growing that product and like.
Unknown Executive: How are you going to continue to to kind of broaden it.
Unknown Executive: Yes.
Unknown Executive: So yes, there would be helpful.
Unknown Executive: Yes.
Jason D. Vieth: Your intuition is exactly right, George. It is largely the Greens product that has been providing that growth. And I would say the Greens and the Reds. We launched a sister product to our Greens called the Daily Reds, which is a kind of a heart health ancillary product. And similar to the Greens, both of those are made exclusively from fruits and vegetables. They are the cleanest products on the market.
Speaker Change: Your intuition is exactly right George it is largely at Greens product that has been providing that growth and I would say the greens and the Reds are we launched a sister product to our Greens called called the Daily Reds are which is a kind of a heart health.
Jason D. Vieth: Ancillary product and are similar to the Greens each of that both of those.
Jason D. Vieth: <unk> made exclusively from fruits and vegetables are they are the cleanest products on the market, we're marketing them as such and what we're finding is that there's been a there is a significant market that's been created in the country for a daily.
Jason D. Vieth: We're marketing them as such, and what we're finding is that there's a significant market that has been created in the country for a daily Greens product. And I'll stay with that for a moment, because that's probably 95 percent of the category, if not more.
Jason D. Vieth: Green's product.
Jason D. Vieth: And what we're finding is that, based on our cost structure, we can have the best tasting, best efficacy product on the market at a lower price than some of our competitors. And that's turning out to be a tremendous opportunity for us. And I think we're just getting started in this space. We have some really strong marketing that's coming behind it, some really great activations that we're doing. And what we're finding is that once consumers flip over to become subscribers to that product, they really stick with us on a daily basis. That turns into a great long-term relationship with them. And is that product sold exclusively online?
Jason D. Vieth: I'll just stay with that for a moment because that's the the.
Jason D. Vieth: The 95, two to five probably the category if not more.
Jason D. Vieth: And what we're finding is that based on our cost structure, we can have the best tasting.
Jason D. Vieth: Best efficacy.
Jason D. Vieth: Product on the market at a lower cost than our lower priced than some of our competitors.
Jason D. Vieth: Letters and that's turning out to be a tremendous opportunity for us and I think we're just getting started in this space. We have some really strong marketing that's coming.
Jason D. Vieth: Behind it some some really great activations that we're doing and.
Jason D. Vieth: What we're finding is that once consumers slip over to become subscribers on that product they really stick with us on a daily basis that it turns into a great long term relationship with them.
Jason D. Vieth: And as that product sold exclusively online.
Jason D. Vieth: It's not. It's where we started. We launched, and I would say this is generally our launch pattern. It's the launch first on our own website, our Laird Superfood PTC website. We take all the learnings behind that and use that also as a way by offering those early exclusivities to consumers as a reward for shopping on our site, but then we broaden it from there. We've launched it on Amazon. In fact, we have it out now in a growing number of retailers in the natural food space.
Jason D. Vieth: It's not it's where we started.
Jason D. Vieth: We launched and it is.
Jason D. Vieth: This is generally our launch pattern is to launch first in our own website or Super food PTC website.
Jason D. Vieth: We take all the learnings behind that and use that also as a way by offering those are early exclusivity to consumers as a reward for shopping on our site, but then we broaden it from there. So we've launched it into Amazon and in fact, we have it out now in a number of retailers.
Jason D. Vieth: A growing number of retailers in the natural food space.
Unknown Executive: Okay, great. And then last question for me.
Speaker Change: Okay, Great and then last question for me.
Jason D. Vieth: I'm, just trying to sort of map out your year when it comes to <unk>.
Speaker Change: Getting to your annual revenue guidance and how that should look quarterly.
Unknown Executive: I'm just trying to sort of map out your year when it comes to, you know, getting to your annual revenue guidance and how that should look quarterly. Is there much seasonality? You know, the business has been kind of in flux for a little while now, and so I'm just trying to figure out, like, what's normal seasonality? Maybe there's still isn't any kind of normal seasonality now that you're sort of back in growth mode, but any help on mapping out the year would be great.
Speaker Change: Is there much seasonality in the business has been kind of in flux for a little while now and so I'm just trying to map out like what's normal seasonality, maybe theres still still isn't any kind of normal seasonality now that you're sort of back in growth mode, but any any help on wrapping up the year would be appreciated.
Unknown Executive: Yeah.
Jason D. Vieth: Yeah, George, I'm going to give that to Anya. She's been dying for someone to ask a question she could answer. So this is going to go to Anya. Hi George.
Speaker Change: Yes, George somebody get the Onvia she's been dying for someone asked the question. She can answer so this is.
Speaker Change: Okay got it.
Jason D. Vieth: George.
Anya: Yeah. So yeah, there is some seasonality to our business. So all with the Pumpkin Creamers and then also holiday season with the Peppermint Dreamers, a big season for us. So those shipments happen ahead of those.
Anya Kochetova Hamill: Yeah, so yeah, there is some seasonality to our business. So fall with the pumpkin creamers and then also the holiday season with the peppermint creamers are big seasons for us, so those shipments happen ahead of those times. So in Q3, that's where we expect to see our seasonality most pronounced.
Anya Kochetova Hamill: So in Q3.
Anya Kochetova Hamill: So that's where we expect to see our seasonality and most pronounced in the quarter.
Anya Kochetova Hamill: Yeah.
Unknown Executive: Okay, that's helpful. That's helpful. That's helpful.
Speaker Change: Okay, that's fair.
Anya Kochetova Hamill: Yeah.
Unknown Executive: Yeah.
unknown: I just interrupted.
Unknown Executive: Go ahead go ahead.
unknown: No, I was going to say that it's from the wholesale side.
Speaker Change: No I was going to say what that was going to say.
unknown: Right.
unknown: Yeah.
unknown: Go ahead, you go.
Speaker Change: Go ahead you go.
Anya Kochetova Hamill: There must be a delay or something happening. And e-commerce, of course, with the prime date happening, or actually maybe two prime dates in the second half, we expect higher seasonality driven by that. Okay.
unknown: There must be a delay or something happening and E. Commerce of course was the prime day happening Oh excellent maybe two prime day in the second half. That's also we expect higher seasonality.
Anya Kochetova Hamill: Driven by that.
Unknown Executive: Okay, that's helpful. That's all I had for you. Thank you.
Speaker Change: Okay. That's helpful. That's all I had for you. Thank you.
Speaker Change: Thank you.
Speaker Change: Thanks George.
Alex Joseph Fuhrman: The next question comes from the line of Alex Fuhrman with Craig Halem. Alex, your line is now open.
Unknown Executive: The next question comes from the line of Alex Fuhrman with Craig Hallum. Alex Your line is now open.
Alex Joseph Fuhrman: Hey guys, thanks for taking my question and congratulations on another really good quarter here. I wanted to ask about your promotions and discounts. Notice that for most of this year now, there's been substantially less discounting activity on your direct-to-consumer site. Really, any sales you've done look like they've been pretty targeted either to specific items or very, very limited-time type sales. Just wondering if you've had any meaningful customer churn as a result of this, or if maybe some of your customers have been ordering less as these discounts have come down.
Alex Joseph Fuhrman: Hey, guys. Thanks for taking my question and congratulations on another really good quarter here.
Alex Joseph Fuhrman: Wanted to ask about your promotions and discounts noticed for most of this year now theres been substantially less discounting activity on your direct to consumer site. You don't really any sales you've done look like they've been pretty targeted either to specific items or very very limited tie.
Alex Joseph Fuhrman: <unk> type sales. So just wondering if you've had any meaningful customer churn as a result of this or if maybe some of your customers have been ordering less as these discounts have come down obviously customers of yours arent pulling back too much considering youre raising your revenue guidance for the year, but if you.
Alex Joseph Fuhrman: Obviously, customers of yours aren't pulling back too much considering you're raising your revenue guidance for the year, but if you could just talk to us at all about how customer behavior may have changed as you've become a lot less promotional and whether it has been a little bit harder to go out there and get new customers without these periodic sales.
Alex Joseph Fuhrman: Can just talk to us at all about how customer behavior.
Alex Joseph Fuhrman: They have changed as you've become a lot less promotional and has it been a little bit harder to go out there and get new customers without without these periodic sales.
Jason D. Vieth: Hey Alex, good to hear from you. And a good question. Yeah, you know, we just had this discussion; we had a lot of discussions recently because this really was the result of a big strategic shift that we had on the DTC site. A couple of years ago, when I came in, our DTC site was essentially a big sales platform. We had a bunch of products listed, but not really any content.
Speaker Change: Hey, Alex good to hear from you and good question. Yeah. You know we just had this discussion we havent got some quite a lot recently, because that's really what this was.
Jason D. Vieth: This is the result of a big strategic shift that we had on the DTC side, a couple of years ago when I came in.
Jason D. Vieth: Our DTC site was essentially a big sales platform and a bunch of products listed not really any content and we ran it increasingly after the Iowa changes plus the Facebook.
Jason D. Vieth: We're in more and deeper sales and order to consumers.
Jason D. Vieth: And we ran increasingly after the IOS changes that busted Facebook; we ran more and deeper sales in order to draw consumers in. And what we found, you know, I came in and took a look at this, is that we had really taken our brand down to the market.
Jason D. Vieth: Consumers in.
Jason D. Vieth: And so what we found.
Jason D. Vieth: Excellent and took a look at this is we had really taken our brands down market and so there has been a strategic shift underway for the last 18 months of your you're really seeing now what you're seeing now is the manifestation of that were.
Speaker Change: We now have to go.
Jason D. Vieth: You say you're going to.
Jason D. Vieth: And into our emails what you'll see is we have an enhanced content strategy. So we're really bringing new news cultivating some of the stories that are that are out there that we're aware of that.
Jason D. Vieth: I want to make sure our consumers are aware of with regards to health and wellness and fitness and nutrition and lifestyle.
Jason D. Vieth: You know in overall wellness around it.
Jason D. Vieth: And until we cultivate those we bring in similarity and Gabby specific content. We include other content that we're able.
Jason D. Vieth: So linked to that it would feel it is advantageous to our consumers.
Jason D. Vieth: Give them a reason to be there and.
Jason D. Vieth: In doing that we've also pulled back on the level of promotion, we did take price up on the channel a while back we've pulled back promotion.
Jason D. Vieth: And so there's been a strategic shift underway for the last 18 months that you're really seeing now, and this is the manifestation of that where we now have to go to the DTC site, you're going to scan into our emails, and what you'll see is that we have an enhanced content strategy. So we're really bringing new news, and we have also pulled back on the level of promotion; we did take prices up on the channel a while back, but we have pulled back promotion. But we left a really nice subscription benefit.
Jason D. Vieth: But we left a really nice subscription benefit for what this has done behaviorally to your question is it's allowed us to pick up a much larger set of subscribers. So I mentioned in that pre record that we've turned consumers into buyers and buyers.
Jason D. Vieth: Pete buyers and repeat buyers and subscribers and that's the funnel kind of that virtuous cycle that we're really trying to pull people through and as we do that they improve their health and we are able to lock in a consumer for a longer period of time obviously.
Jason D. Vieth: And what this has done behaviorally, to answer your question, is it's allowed us to pick up a much larger set of subscribers. So I mentioned in, you know, in that pre-record that we turned consumers into buyers and buyers into repeat buyers and repeat buyers and subscribers. And that's the funnel, kind of that virtuous cycle that we're really trying to pull people through. And as we do that, they improve their health, and we are able to lock in a consumer for a longer period of time, obviously, and usually into more products. And so it's really a win-win for the consumer and for us when we're able to do that.
Jason D. Vieth: And usually into more products and so it's really a harmonious.
Jason D. Vieth: Win win for the consumer and for US when we're able to do that so about right around 50% of our total DTC sales are now subscription.
Jason D. Vieth: So about, you know, right around 50% of our total DTC sales are now subscriptions. All those subscriptions are coming at a discount. So you're getting essentially our best, most popular sales. Typically, our best sale that we run is going to be that, you know, free shipping plus 20% off that subscribers receive. We do now just a couple of events through the year with very few sales, but what we do, it's a very big event. So Black Friday is one of those, and we try to execute it very minimally so that we're able to really retain that premium brand image that we're seeking to have.
Jason D. Vieth: All of those subscriptions are coming at a discount so you're getting essentially our beds.
Jason D. Vieth: S sales typically our best sale that we run is going to be that free shipping plus 20% off that subscribers receive.
Jason D. Vieth: You know a couple of.
Jason D. Vieth: Just a couple of events through the year with very few sales, but when we do a very big events. So black Friday is one of those.
Jason D. Vieth: And we try to execute those very minimally so that we're able to really retain.
Jason D. Vieth: That premium brand image that we're seeking to have.
Alex Joseph Fuhrman: Okay, that's really helpful. Thanks for that, Jason.
Speaker Change: Okay, that's really helpful.
Speaker Change: Thanks for that Jason and then.
Speaker Change: Just one on the numbers here your returns and discounts.
Anya Kochetova Hamill: And then just one on the numbers here, your returns and discounts, you know, as you report your sales by category, looks like the lowest rate of returns and discounts you've had in about a year and a half, kind of continuing on that trend moving in the right direction last quarter. You know, is there anything in particular that's really driven that improvement? And, you know, should we expect to see the improved results sustained throughout this year?
Speaker Change: As you report your sales by category.
Anya Kochetova Hamill: It looks like the lowest rate of returns of discounts you've had in about a year and a half kind of continuing on.
Anya Kochetova Hamill: That that trend moving in the right direction last quarter.
Anya Kochetova Hamill: Is there anything in particular, that's that's really driven that improvement and should we expect to see the improved results sustained throughout this year.
Anya Kochetova Hamill: Yeah, Alex, this is Anya. Thanks for the question. I'll take this on. And yeah, so I'd say that was also the outcome of our strategic shift and how we think about trade and promotional strategies. So GCC that you just talked about is certainly contributing to that trend, but also our wholesale business with retail and club business specifically. We have reinvented our promotional approach there to really try to cut out any inefficient trade and really focus on programs that directly impact consumers and drive our velocity itself. Okay, that's really helpful, Anya. Yeah, and we expect this to continue throughout the rest of the year. Terrific. Thank you.
Anya Kochetova Hamill: Yeah. Alex This is Daniel Thanks for the question I'll take the fun and yeah. So I'd say that was also the outcome of our strategic shift.
Anya Kochetova Hamill: And how we think about trade and promotional.
Anya Kochetova Hamill: Strategy.
Anya Kochetova Hamill: So D. C that you just asked about it's certainly contributing to that strength, but also our wholesale business with retail and club business, specifically and we have a brief invented our promotional approach there to really try to cut out any inefficient trade.
Anya Kochetova Hamill: And really focus on programs that directly impact consumers and drive all the lost base itself.
Anya Kochetova Hamill: So okay. That's really helpful on ethane that's tough.
Anya Kochetova Hamill: Yeah, and we expect that to continue throughout the rest of the year.
Alex Joseph Fuhrman: Terrific. Thank you very much. Thank you.
Speaker Change: Terrific. Thank you very much.
Speaker Change: Thank you.
unknown: At this time, there are no further questions registered in the queue. As a final reminder, if you would like to ask a question that is star followed by a one on your telephone keypad, we'll pause here briefly to allow any remaining questions to be registered. We do not have any further questions registered in the queue, so I will turn the call back over to you for any final concluding remarks.
Alex Joseph Fuhrman: At this time there are no further questions registered in the Q as a final reminder, if you would like to ask a question. It is star followed by a one on your telephone keypad.
unknown: Real pause here briefly to allow any remaining questions to be ready to start.
unknown: Right certainly did not have any further questions registered in the queue. So I will turn the call back over for any final concluding remarks.
Jason D. Vieth: Thanks to all of you for once again joining us on the call. You know, for us, this has gotten more and more exciting each quarter. This is clearly a story that, over the last six quarters or so, has been a turnaround. It's nice to be coming through that and be able to indicate that we're on the cusp of really putting some big growth numbers against this business. And in this quarter, I think it was the first to really bear that out, but it's still very much in line with the guidance that we had previously given. So I feel like we're doing what we said we were aiming to do, and I'm really excited to bring the next quarters in and continue that same story. So, thanks everybody for joining us.
Speaker Change: Okay. Thanks to all of you for once again, joining us on the call.
unknown: For us this has gotten more and more exciting each quarter.
Jason D. Vieth: There's clearly been a story that.
Jason D. Vieth: Over the last six quarters, or so has been a turnaround and.
Jason D. Vieth: It's nice to be coming through that and be able to indicate that.
Jason D. Vieth: We're on the cusp of really takes a big growth numbers against this business and in this quarter I think it was the first to really bear that out, but it's still very much in line with the guidance that we had previous previously.
Jason D. Vieth: So given so.
Jason D. Vieth: I feel like we're doing what we said we were aiming to do and I'm really excited to bring the next quarters in and continue that same story. So thanks to everybody for joining.
unknown: That concludes today's call. Thank you all for your participation, and you may now disconnect your lines.
Speaker Change: That concludes today's call. Thank you all for your participation and you may now disconnect your lines.
unknown: Yeah.
unknown: [music].