Q4 2024 SharkNinja Inc Earnings Call
Good morning, and welcome to shock than just fourth quarter of 2024 earnings call. My name is Harry and I'll be your operator.
All lines are currently in listen only mode and there'll be an opportunity for Q&A after managers bad remarks, if you'd like to enter the queue for questions. Please all staff led by one on your telephone keypad.
Speaker Change: I'd now like to hand, the conference Arvin Bhatia Senior Vice President Investor Relations. Thank you. Please go ahead.
Arvin Bhatia: Good morning, and welcome to sharpening does fourth quarter 2024 earnings conference call.
Speaker Change: Earlier today, we issued our Q4 earnings release.
Speaker Change: Which is available on the company's website at IR Dot sharpening dot com.
Speaker Change: A replay of today's webcast will also be available on the site shortly after the call.
Speaker Change: Before we begin let me.
Speaker Change: We remind you that today's discussion will include forward looking statements based on our current perspective of the business environment.
Speaker Change: These statements involve risks uncertainties and actual results may differ materially.
Speaker Change: For more detail please refer to our earnings release and the company's most recent SEC filings.
Speaker Change: Outline factors that could impact these statements.
Speaker Change: The company assumes no obligation to update or revise forward looking statements in the future.
Speaker Change: Additionally, during the call we will reference non-GAAP financial measures, which we believe provide valuable insight into the underlying growth trends of our business.
Speaker Change: You can find a full reconciliation of these measures to their most directly comparable GAAP measures in the earnings release.
Speaker Change: A quick reminder.
Speaker Change: We divested our APAC business in Q3 of last year.
Speaker Change: It's no longer included in our year over year comparisons this quarter.
Speaker Change: Joining me today are <unk>.
Speaker Change: <unk> Chief Executive Officer of Barco, Okay.
Speaker Change: And Chief Financial Officer topic rigor.
Speaker Change: Mark will start by providing a business update.
Patrick: All of those by Patrick.
Speaker Change: I'll review, our Q4 and full year 2024, but actual result.
Patrick: And share our outlook for 2025.
Patrick: Mark will then offer some closing remarks before we open the call to questions.
Patrick: With that I had.
Mark: I'll now turn it over to Mark.
Mark: Thank you Arvind and good morning, everyone and thank you for joining us today.
Mark: Our fourth quarter results were exceptionally strong.
Mark: Once again, our global teams knocked it out of the park with incredible top and bottom line performance net sales grew an impressive 30%.
Mark: Adjusted EBITDA was up 32% building on the 71% growth we delivered in Q4 of last year.
Mark: We're delivering rapid and highly profitable organic growth at scale.
Mark: What excites me, even more than our strong Q4 result.
Mark: Rest of our performance.
Mark: Across each of our four key categories cleaning cooking food prep and the newly branded beauty and home environment.
Mark: We've delivered very strong double digit growth.
Mark: In North America, net sales increased 22% year over year.
Our international business continues to be a standout.
Mark: Adjusted net sales grew 49% on top of last year's impressive 62% growth in the fourth quarter.
Mark: It's been an amazing quarter and I'm. So proud of how our teams continue to consistently deliver and drive sustainable growth.
Mark: Looking at full year results 2024 was a remarkably strong year.
Mark: We grew adjusted net sales 32%.
Mark: That's on top of 16% growth last year.
Mark: We drove adjusted EBITDA growth of 32% building on 39% growth last year.
Mark: This means over the past two years, we've achieved a compounded annual growth rate of 24% in adjusted net sales and 35% and adjusted EBITDA extending our long track record of success.
Mark: We have also expanded adjusted EBITDA margins by nearly 300 basis points over the past few years, while strategically investing in fueling the next wave of innovation and geographic expansion.
Mark: We're building a strong foundation for scalable organic growth.
Mark: We added over one $3 million and adjusted net sales growth this year, bringing our total to five $5 billion.
Mark: We increased adjusted EBITDA by more than $230 million surpassing.
Mark: Surpassing $950 million.
Mark: This strong performance highlights the power of our profitable growth flywheel as our healthy revenue growth.
Mark: <unk> gross margin and productive reinvestment into our business to you our market share gains new category expansion and geographic growth.
Mark: Our performance also speaks to the strength of our team and a cultural mindset that recognizes and reinforces our desire to learn and grow.
Mark: And a share drive to be the very best at what we do.
Mark: Together as a team we embraced the shared mindset that all success is only temporary.
Mark: We're driven by a deep seeded confidence in our problem solving abilities and a desire to achieve the extraordinary.
Mark: With this powerful shared mindset at the core of our company, we're strengthening our competitive edge and accelerating our progress in a large and rapidly expanding market.
Mark: 2024 has been our best year, yet, but I believe this is just the beginning.
Mark: Looking ahead, the first quarter of 'twenty five is off to a solid start.
Mark: We're not just managing uncertainty we're on the offense executing against a well defined strategy of consumer focused innovation strong demand creation, and our highly diversified portfolio of products geographies and channels.
Mark: As a result, we're in a great position to drive strong double digit growth for the full year.
Mark: Our three pillar growth strategy is the foundation of our organic growth engine.
Mark: This strategy focuses on expanding into new and adjacent categories.
Mark: Increasing market share in existing categories and driving international growth.
Mark: Disruptive consumer problem solving innovation is which shark ninja sells that.
Mark: Our investments in R&D in the past two years have built a pipeline with exciting new idea.
Mark: We plan to launch 25, new products this year across both new and existing categories.
Mark: We'll be bringing to market a steady flow of new products each quarter, some of which have already launched in 2025.
Mark: The first pillar of our growth strategy expanding into new and adjacent categories continues to be a key driver of success.
Mark: Sharp mention now participate in 36, new subcategories, both inside and outside the home.
Mark: All of which have been developed internally.
Mark: We're committed to entering at least two new subcategories each year.
Mark: In 2024, we exceeded this goal by launching into four new subcategories coolers fans frozen drink appliances and skincare we.
Mark: We believe each of these subcategories has strong growth potential for us in 2025 and beyond.
Mark: Maybe just flush.
Mark: Our professional graves frozen drink maker has been a hit with consumers.
Mark: Fueled by its viral popularity slushy has already generated more than a half a billion social media impressions to date.
Mark: Consumer engagement continues to grow.
Mark: We secured multiple branded partnerships for slushy. These.
Mark: These collaborations are helping us reach new audiences, creating unique experiences and sustaining social box.
Mark: Slushy will start rolling out in the UK in other international markets later this year.
With Ninja creamy leading the ice cream category and slushy, gaining momentum we are on track to become the global destination and frozen treats.
Mark: With sharp flex freeze, we created an entirely new category with our first indoor outdoor cooling system.
Mark: Its debut season was a tremendous success and established a solid foundation for us to build upon.
Mark: Looking ahead to 2025, we have exciting innovation plan for this new category.
Mark: We're gearing up to launch several new Skus and we will be expanding this category into additional international markets.
Mark: With the launch of our first FDA cleared product sharp cryo grow, we're bringing net spot quality skin care into the home.
Mark: <unk> dermatologist optimize treatments for acne fine lines and wrinkles.
Mark: Volume for broad audience across all age groups cryo glow, leverages red and Blue OLED infrared technology, and underwrite cryo cooling to rejuvenate and refresh the skin.
Mark: Developed with Sciences, dermatologists and wellness experts.
Mark: As the first of a kind solution offering high performance clinically tested results at an accessible price point.
Mark: <unk> has already outperformed sales expectation and its initial launch markets, the UK and Mexico.
Mark: And just last week, we introduced cryo below in the U S through our direct to consumer platform with a planned rollout to key beauty retailers in Q2.
Mark: Press and Influencer feedback for the product has been great.
Mark: We're excited by the innovation roadmap opportunities that the skin care category affords us moving forward.
Mark: Our 2020 for entry into the cooler category with Ninja Frost vault was a resounding success, despite limited supply and distribution.
Mark: <unk> thousand 25, we are poised to further disrupt and expand the category.
We plan to broaden our SKU lineup scaled distribution and enter international markets, enabling greater product availability during the pivotal spring and summer selling season.
Mark: Our second growth pillar focuses on increasing market share within existing categories.
Mark: A key strength of our business continues to be our ability to innovate and reinvent our core foundation.
Mark: It is important to emphasize that our base business remained strong with healthy revenue stable average selling prices and solid gross margin.
Growth in new categories and international expansion is critical but it's equally important that our core business remains robust.
Mark: This strength is not incidental it's.
Mark: It's the result of continuous investment in innovation and re imagination.
Mark: Within cleaning our engineering and product teams have brought fresh ideas to the category to spark new growth.
Mark: Our sharp powered the tax lines showcases our most advanced cleaning technology, yet across robots cordless and quoted back years. These.
Mark: These products deliver exceptional cleaning performance and raise the bar for automation in the industry.
Mark: We've also broadened our hard floor cleaning lineup with the launch of the Sharks E pickup and the shark hybrid dual hard floor cleaners.
Mark: <unk> segment represents an exciting growth opportunity for us and adds further diversity to our overall cleaning business.
Mark: All of this innovation is paying off as we delivered another strong quarter of nearly 20% growth in the cleaning category.
Mark: Last September we took another big step in innovating, the cooking and beverage category with the launch of the major Christie.
Mark: This portable cooking system re imagined cooking by putting the power of a full size air fryer into the palm of your hand.
Mark: It has delivered consistently Christy results with incredible versatility and a compact design.
Mark: Chris <unk> is all about meeting consumers' growing demand for convenience, while we early lead the air Fryer market Christy, let's us rethink.
Mark: Redefine and reinvent the category.
Mark: It opens up new opportunities positions us for continued growth and strengthens our market share in the air Fryer space.
Mark: Crispy is already performing well in the U S and we're gearing up to launch it in additional markets later this year.
Mark: Just at a time for grilling season, we're launching Ninja flex swim.
Mark: Our first large format outdoor cooking system with unmatched versatility.
Mark: Until now consumers have to choose between a grill, a smoker, a roaster, a griddle or a pizza oven.
Mark: <unk> eliminate that trade off seamlessly transforming between all five.
Mark: Powered by our proprietary cyclonic heat IQ technology precision Heath distributions and wood fired capabilities it delivers faster more flavor full results.
Mark: But we're not just entering the large format outdoor cooking market, we're redefining it.
Mark: This is a big definable global category with significant upside.
Mark: We're confident this flex flame will excite consumers in an industry that has seen soft demand post COVID-19.
Mark: We identified a significant global white space in coffee and espresso.
Mark: With neutral Lux Cafe, we became the first to introduce a product designed not just to capture market share but to expand the entire category.
Mark: In the U S. Our spreads our household penetration remains very low.
Mark: We took a consumer first approach recognizing that American coffee drinkers want more than just a single shot of espresso.
Mark: I want large format drip coffee.
Mark: Cold Brew ice coffee and versatility in their at home brewing experience.
Mark: By addressing these preferences, we're giving consumers what they want rather than asking them to compromise.
Mark: And we're doing it at a much more accessible price point.
Mark: In Europe.
Mark: <unk> expressed our market is highly competitive and mature consumer preferences are shifting drip.
Mark: Drip coffee iced beverages and globally inspired drinks are becoming more popular.
Mark: Our strategy is tailored to these evolving trends, allowing us to disrupt the category differently across region.
Mark: By leveraging these insights we've created a product that meets distinct regional needs, while driving category growth and market share expansion.
Mark: This is a standout example of how we identify white space opportunities and capitalize on them with highly differentiated consumer centric innovation.
Mark: While ninja creamy continues to expand globally with its first holiday season in Germany, the Nordics and Brazil, we're not slowing down.
Mark: Strategically advancing thats, winning category with breakthrough innovation.
Mark: Thrilled to introduce numerous world.
Mark: The next evolution in at home frozen treats.
Mark: The Ninja creamy allows consumers to turn just about anything into ice cream and Ninja swirled takes it a step further bringing the full ice cream shop experience to the home with scooping and swirling capabilities.
Mark: We listen closely to the passionate creamy community and develop the swirl incorporating real user feedback we introduced the fifth button to cater to the growing demand for high protein frozen desserts and a soft serve function to deliver an even more versatile experience all at the.
Mark: Touch of a button.
Mark: This is a prime example of how we innovate with our consumers not just for that.
Mark: With a waitlist of over 90000 and more than 60 million social media impressions, it's clear that consumer anticipation for swirl is already high.
Mark: Our innovation strategy isn't about incremental launches.
Mark: It's about creating new categories, disrupting mature categories and continuously reinventing our foundational categories.
Mark: Our performance in the beauty and home environment category reflects our commitment to disruptive innovation.
Mark: Flex style had another very strong quarter in Q4, we soft launched flex fusion, our next generation Air Styler flip.
Mark: <unk> fusion is designed to tackle our major consumer concern achieving hot tools styles without the damage caused by heat.
Mark: Q2, this year, we will rollout flex fusion into major beauty retailers, bringing this breakthrough technology to a wider audience.
Mark: The full impact of this innovation is yet to be realized and we're confident it will redefine expectations in the beauty space.
Mark: We're tapping into the growing demand for multi functional beauty tools.
Mark: Strengthening our presence in the beauty category and setting the stage for even more growth.
Mark: Innovation is sharp easing just about launching new products, it's about reshaping industries and setting new consumer expectation.
Mark: We create entirely new categories like creamy slushy, cryo, Guo and flex routes.
Mark: We disrupted expand major markets with game changing solutions like carpet expert Lux cafe, thoughtful and flex plan and.
Mark: And we never stop improving building on our successes year after year with advancements like powered detects flex fusion crispy and swirl.
Mark: This relentless drive for innovation keeps us ahead and fuels our long term growth.
Mark: Next I'll focus on our third growth pillar expanding into international markets are.
Mark: Our international business has achieved significant scale generating $1 $7 billion in net sales outside of North America in 2024.
Mark: A key strategic focus in Q4 was to win at Christmas, particularly in Continental Europe, and Latin America.
Mark: Based on retailer feedback we delivered on that goal securing major wins in these markets.
Mark: European retailers saw substantial growth from shark Ninja this past holiday season positioning us for continued expansion in 2025.
Mark: Our international strategy can be viewed in three key segments.
Mark: First the U K remains our largest international market.
Mark: And our strategy here is focused on diversification.
Mark: While Q4 was and we expect Q1 will continue to be impacted by an intentional shift in our innovation cycle prioritizing North America, new product launches in Q2 should drive a strong rebound.
Mark: The fundamentals of our UK business remained solid with significant untapped product categories and continued expansion into new retail channels underscoring our confidence in long term market potential.
Mark: Second while we have made significant strides we are still in the early stages of expansion across Continental Europe.
Mark: Germany, and France are scaling rapidly, but our strategy extends far beyond these core markets we.
Mark: We see tremendous opportunities in Spain, Poland, Benelux, and the Nordics, where consumer demand and retail support continue to strengthen.
Mark: Our brands are gaining traction across social media and retail partnerships validating our momentum.
Mark: The engagement from top European retailers underscores their confidence in our future trajectory not just our past performance.
Speaker Change: Third Latin America.
Speaker Change: Building on our Q4 success, we continue to gain market share and solidify retailer partnerships in Latin America.
Speaker Change: These regions present long term opportunities and we remain focused on measured investments in sustainable growth.
Speaker Change: Overall, our international business is thriving with a 50% increase in adjusted net sales in 2024, we're executing the strategic vision that balances short term wins with long term scalability and expansion.
Speaker Change: As we move through 2025, we remain committed to driving sustained growth across all key categories.
Speaker Change: Product innovation is a critical pillar of our business, but equally important is great storytelling and creating consumer demand.
Speaker Change: We've executed exceptionally well on this front establishing ourselves as one of the largest brands on social media.
Speaker Change: Our strategic investments in talent partnerships experiential events and multichannel advertising have forge authentic connections with consumers driving excitement and activating the user generated content flywheel.
Speaker Change: This combination of best in class product innovation and World Class brand storytelling is not easily replicable.
Speaker Change: It's not just about launching a great product, it's about creating an ecosystem of demand that compels consumers to seek out our products at their preferred destination.
Speaker Change: Our marketing investments are delivering significant returns to you.
Speaker Change: <unk> global momentum in brand affinity.
Speaker Change: Before our products even launch in new markets, we often see substantial prelaunch demand.
Speaker Change: This underscores the strength of our global consumer demand and the border risk nature of our brand appeal, which is also accelerating in international markets.
Speaker Change: I'll now hand, it over to Patrick who will walk you through our fourth quarter and full year financials and share our 2025 outlook Patrick.
Patrick: Thank you Mark and good morning, everyone.
Patrick: I'm thrilled to share our outstanding 2024 results and outlook for 2025.
Patrick: As Mark said in Q4, we achieved nearly $1 8 billion in net sales up 30% year over year.
Patrick: Adjusted EBITDA increased 32% to 291 billion.
Patrick: We delivered a 30 basis points increase in our adjusted EBITDA margin, all while making substantial investments to fuel our growth.
Patrick: <unk> driving international expansion and advancing our supply chain diversification initiatives.
Patrick: Net sales in North America were up 22% to nearly $1 2 billion.
Patrick: International net sales grew 49% to more than $600 million driven by triple digit growth in Germany and France.
Patrick: For the full year, adjusted net sales and adjusted EBITDA increased 32%.
Patrick: Adjusted EBITDA margin was 17, 2% consistent with prior year.
Patrick: This was supported by a 220 basis point improvement in adjusted gross margin and a comparable rise in operating expenses as we continue to reinvest in our growth initiatives.
Patrick: Looking at performance by category, all four of our major product categories achieved strong double digit growth during the fourth quarter.
Patrick: Net sales in the cleaning category increased 20% to $648 million.
Patrick: <unk> the strong momentum we have seen in this category throughout the year.
Patrick: We saw broad based strength across cordless courted hard floor deep carpet cleaning and robots.
Patrick: Net sales in the cooking and beverage category increased 19% to $597 million.
Patrick: Driven by the ongoing strength of heated cookie, particularly in the international markets and impressive growth in the espresso category.
Patrick: Net sales in the food prep category accelerated increasing 89% to $342 million.
Patrick: This growth was fueled by the continued success of our premium ice cream makers and the remarkable performance of our newly launched slushy frozen drink maker, which has become a viral hit.
Patrick: Finally, our beauty and home environment category, which we used to call. Other saw an impressive 31% growth in sales climbed to $200 million.
Patrick: This growth was fueled by continued strong demand for our hair care products, including Flex style air Purifiers and the early success of cryo below our new skincare products.
Now, let's move to gross profit.
Patrick: In the fourth quarter, adjusted gross profit increased 31% to $855 million or <unk> 47, 8% of net sales as we drove 40 basis points of adjusted gross margin expansion over the prior year. This expansion was primarily driven by our cost optimization efforts.
Patrick: Partially offset by unfavorable impact of tariffs and geography mix.
Patrick: Thanks to our strategic focus on supplier diversification competitive bidding and value engineering, we've successfully delivered more than 200 basis points of adjusted gross margin improvement. This year on top of nearly 700 basis points improvement in the previous year.
Patrick: In terms of operating expenses for the quarter, we continue to be on the offense as we expand into new countries categories and diversify our manufacturing base.
Patrick: These investments impact profitability in the short term, we view them as critical long term investments that enable us to put more distance between shark Ninja and our competition and to position us exceptionally well for 2025 and beyond.
Patrick: R&D expenses increased 26% to 87 million or four 9% of sales compared to $69 million or 5% of net sales in Q4 of last year.
Patrick: We continue to invest in head count to drive new product and category innovation support geographic expansion into January global consumer insights.
Patrick: Our new product pipeline for 2025 is well set and we have a strong line of sight to products for 2026 and beyond.
Patrick: Sales and marketing expenses increased 29% to $425 million or 23, 8% of net sales compared to $330 million or 23, 9% of net sales in the year ago period.
Patrick: As with previous quarters. This increase was driven in part by our strategic investment in advertising and personnel to support our exceptionally strong new product rollouts and our expansion into new markets.
Patrick: This year over year increase was also driven by higher delivery and distribution costs from increased order volumes, mainly in our direct to consumer business.
Patrick: General and administrative expenses declined to $123 million, representing six 9% of net sales compared to $124 million or 9% of net sales in the same period last year.
Patrick: This reduction was primarily driven by a legal settlement and lower transaction related costs associated with our separation and distributions from J S. Global in 2023.
Patrick: These savings were partially offset by increased legal fees technology investments and other expenses.
Patrick: Our GAAP effective tax rate was 22% in the fourth quarter compared to 45, 4% in the prior year and in line with our expectations.
Patrick: Adjusted net income for the fourth quarter was $198 million or $1 40 per share compared to $132 million or <unk> 94 per share in the prior year, reflecting growth of 48% on a per share basis.
Patrick: Adjusted EBITDA for the quarter increased more than 32% to $291 million or 16, 3% of net sales compared to $219 million or 15, 9% of net sales in the prior year.
Patrick: I now want to turn our attention to the balance sheet and cash flow.
Patrick: While our industry, leading strength in product innovation supply chain and marketing set us apart from our competitors are robust margins sustained profitability and strong balance sheet further widened our competitive moat.
Patrick: With low relative debt and strong cash flow, we were able to act with world class speed, ensuring we can swiftly capitalize on opportunities in turn challenges into competitive advantages.
Patrick: Recent examples include our strategic pre build of inventory and the rapid diversification of our manufacturing base.
Patrick: We move fast and our financial strength is a key competitive advantage.
Patrick: As of the end of fourth quarter, we held a cash balance of $364 million with total debt outstanding was $780 million, resulting in a net leverage ratio of four times the lowest since our public listing.
Patrick: Over the past year, we generated nearly $450 million in operating cash flow and maintained nearly $500 million and available credit ensuring ample liquidity.
Patrick: At quarter end, our inventory totaled $900 million, reflecting a 29% increase compared to Q4 the prior year.
Patrick: We continue to strategically leverage our balance sheet proactively build inventory, helping to mitigate potential P&L impact from new tariffs.
Patrick: As a result, we expect inventory levels to remain elevated through the first half of the year before normalizing in Q3.
Patrick: Importantly, we remain confident in both the quality and the composition of our inventory.
Patrick: I want to emphasize that our efforts to diversify production outside of China remain on track with nearly all U S volume expected to shift outside of China by the end of 2025 and approaching 90% completed by the end of Q2.
Patrick: This has been a deliberate and proactive decision that we took fully aware of the complexities involved it has been a challenging journey, but we are proud of the progress we've made.
Patrick: This was not the easy path.
Patrick: The road less traveled and we took it with a long term strategic vision in mind.
Patrick: We committed to diversifying our supply chain early making difficult yet necessary decisions that are now delivering tangible results.
Patrick: The proactive steps we took in response to tariff challenges underscore our ability to navigate complexity and execute with resilience, we chose to move decisively and the progress we are seeing today validates that decision.
Patrick: We remain confident in our approach and committed to ensuring a more agile resilient and diversified supply chain moving forward.
Patrick: Next I'll turn to our outlook for 2025.
Patrick: Our 2025 guidance highlights our strong momentum continued investments in key growth initiatives, while managing ongoing macroeconomic uncertainties as a global company.
Patrick: The tariff situation of course remains dynamic.
Patrick: However, it is important to note we have proactively accounted for the impact of the recently announced 10% China tariffs in our full year guidance.
Patrick: For the full year 2025, we expect net sales to increase between 10 and 12%.
Patrick: Adjusted net income per diluted share to be in the range of $4 80.
Patrick: The $4 90.
Patrick: An increase of 12% 15% year over year.
Patrick: Adjusted EBITDA to be in the range of 1.17 to $1 <unk> 9 billion, representing growth of 13% to 15% year over year.
Patrick: Net interest expense to be flat to 2024.
Patrick: Our GAAP effective tax rate to be approximately 24% to 25%.
Patrick: And capital expenditures to be between 180 to 200 million for the year.
Patrick: For some additional context as you know, we typically do not provide quarterly guidance.
Patrick: Do though want to offer key directional insights on how we see the year shaping up.
Patrick: We expect revenue seasonality this year to be relatively consistent with historical trends.
Patrick: We also expect the first half profit contribution to full year results to be consistent with prior years. However.
Patrick: However, we anticipate stronger profitability in Q2 than in Q1 due to three factors.
Patrick: First we continue to make targeted investments in both marketing and supply chain diversification.
Patrick: In our supply chain as we continue to strategically shift U S production outside of China, We anticipate elevated spending through Q1 and lessening as we move through the balance of the year.
Patrick: Second as we transition in Mexico from a distributor model to a direct market.
Patrick: We are repurchasing distributor inventory, which triggers a onetime revenue reversal.
Patrick: Q2, we expect this shift will drive both strong revenue growth and enhanced margins further strengthening our business in the region.
Speaker Change: Third UK market dynamics.
Speaker Change: The shift of Easter related shipments into Q2 will create a Q1 timing issue.
Speaker Change: Also we intentionally prioritize North America demand for key launches like Kristy Slushy in Lux Cafe in Q4 2024 in Q1 2025 as.
Speaker Change: As we turn into Q2, these new product launches will accelerate growth reinforcing our position of strength in the UK market.
Speaker Change: We wrapped up 2024 with outstanding results and strong execution across our three growth pillars.
Speaker Change: Looking ahead to 2025 and beyond we remain highly confident in the trajectory of our business.
Speaker Change: Our focus on consumer driven innovation is stronger than ever and we're excited about our market position and the amazing products we're launching.
Speaker Change: All of this sets us up for impressive growth both on the top and bottom line next year and beyond.
Mark: Now I'll hand, it back to Mark.
Speaker Change: Thanks, Patrick.
Speaker Change: Sharpening his amazing fourth quarter and full year results really show, how far we've come and driving sustainable profitable organic growth with our innovative high performance products.
Speaker Change: As we look towards 2025 and beyond we've never been more confident.
Speaker Change: Our commitment to consumer driven innovation is thriving and it's fueling incredible growth potential.
Speaker Change: We have built a resilient world class team with a proven ability to pivot seamlessly iterate rapidly and drive disruptive consumer problem solving innovation, regardless of external challenges.
Speaker Change: Thrilled about our strong market position and the fantastic products, we're bringing to the table.
Speaker Change: With our 120 billion dollar addressable market growing we're seeing so many exciting opportunities whether it's entering new categories are strengthening our global brand presence.
Speaker Change: We believe the future continues to be incredibly bright for shark Ninja and we can't wait to keep delivering innovative solutions that continue to positively impact our consumers' lives.
Speaker Change: This concludes our prepared remarks, and I'll now turn it over to the operator to kick off Q&A.
Speaker Change: Operator.
Speaker Change: Thank you if you would like to ask a question. Please dial star followed by one on your telephone keypad now if you change your mind I would like to exit the cute placed all star followed by <unk>.
Speaker Change: When preparing to ask your question. Please ensure that your devices and muted locally and finally the company respectfully ask you to please limit yourselves to one question and then reenter the queue for any follow ups.
Speaker Change: Our first question today will be from the line of Brian Mcnamara with Canaccord. Please go ahead. Your line is open.
Brian McNamara: Hey, good morning, guys. Congrats on the excellent results and thanks for taking the question.
Brian McNamara: One thing I think the market grapples with is what does a quote unquote normal growth year look like for you guys. I know you have grown at a very impressive 20% CAGR for I think 17 years now, but that seems like a high bar on a $5 5 billion dollar sales based on the slow growth industry.
Brian McNamara: This time last year I believe you guided 8% sales growth at the midpoint and just finished that plus 32, which is tremendous so what drove that large delta outside of extreme conservatism from the outset and how should we rank order the buckets of growth this year, whether it be 2025 innovation scaling 2020 for innovation like the Frost fall.
Brian McNamara: New distribution international et cetera. Thank you.
Brian McNamara: Yes.
Brian McNamara: Thanks for the question Brian.
Brian McNamara: Look in terms of answering your first question what is durable growth, but Brian.
Brian: And then you tell me.
Brian: As you said, we've historically grown at 21% a year.
Brian: We've said that we believe that we are long term double digit growth company.
Brian: We guided initially for 2025% to 12%.
Brian: When you look at the growth has been 24 came.
Brian: Came up across all three major pillars that we gained share in existing categories, we drove tremendous innovation in those existing categories.
Brian: We expanded into lots of new categories as I pointed out and we delivered.
Brian: 50% growth in our international business and we came out of for the fourth quarter, mainly in the fourth quarter was 49% and our international business. So it's not as do for growth internationally as kind of scaled down through 2024, and actually held fairly constant so as we look.
Brian: The 25, it would be much start with international as I said in my prepared remarks.
Brian: I think we are still very much in the early innings regarding our expansion in Europe.
Brian: I'd agree Christmas selling season.
Brian: Two weeks ago I was in Europe, I met with the CEO of Euro Onyx I met with the CEO of generics already in France, and it was the CEO of Sainsbury.
Brian: These retailers are putting big bets behind us in 'twenty five.
Brian: One is to aggressively expand into more of their markets across Europe is.
Brian: It's not just Germany, and France, but as I pointed out the speed, it's the Nordics, it's been launched since Poland.
Brian: We're expanding in Turkey, we're expanding in the middle East or Latin America.
Brian: As we get into Q2 will really start accelerating once we get through the transition of the distributor market in Mexico. So.
Brian: Number one is I think we expect to see continued strong growth out of out of the international business.
Brian: On the new category front, we expect to launch at.
Brian: At least two new categories in 2045.
Brian: You are you worried about that as we go through the quarters.
Brian: When you think about 2024, new product launches or new category launches, we generated quite a small amount of revenue and 24 on many of those products.
Brian: Products like the crispy and slushy in the Lux Cafe in our power to detect robust mainly only launched in the United States and Canada.
Brian: So there will really be a significant full year rollout of the <unk>.
Brian: 24 innovation.
Brian: We've got a great pipeline of new products and 25.
Brian: Just launched in the U S last week, the sharp trial blow after we received FDA approval for the product.
Can see the excitement on social media and PR from places like Cosmopolitan and lower <unk>.
Brian: <unk> product launched two days ago.
Brian: Amazing response and feedback from that product.
Brian: Youll start to see a big rollout as we get into next month.
Brian: With our Ninja flight, explaining the first large format outdoor cooking product that we're bringing to market. So.
Speaker Change: I think that when you get through the year. This year youre going to look back and say Wow I mean, a lot of really interesting new categories and products did shortly would you expand that into.
Brian: And then as I said in my prepared remarks.
Brian: <unk> is underscored by a strong base business, assuming our beef business is healthy our quarter cleaning business, our core lending business.
Brian: Kind of a long video creation that has come in 24 in the core that we will have a full year impact. This year. We've got 125, new products that will drive business in the core. So I think you should expect as you saw in 'twenty, three and 'twenty four from us that threep.
Brian: Pillar growth strategy, we might target based on where the growth is coming from across those three but.
Brian: But in general I think we've got some very strong exciting pathways for organic growth for our business and 25.
Speaker Change: Great I appreciate the color. Thanks Pam.
Brian: Yes.
Speaker Change: Our next question today will be from the line of Randy <unk> with Jefferies. Please go ahead. Your line is open.
Randy: Yes, thanks, so much and good morning, everybody.
Speaker Change: I guess mark maybe.
Mark: Just kind of dig a little deeper into the DTC I got the cryo glow on that I guess.
Speaker Change: That channel.
Speaker Change: And it seems as if the brands of sharp in Ninja and getting more and more.
Speaker Change: Awareness and there's just more of a.
Speaker Change: One by the consumer to shop.
Speaker Change: The website directly.
Speaker Change: So maybe give us some perspective over the long term kind of what are your hopes around giving the consumer the opportunity to kind of shop everywhere, obviously, you're doing a great job on the wholesale side, how much of your partners around the world maybe give us some perspective that was kind of your hopes and how do you kind of want to expand that direct channel distribution any <unk>.
Speaker Change: <unk> kind of changing up the website or not across sharp and then Joe just give us some kind of flavor that would be very helpful. Thanks.
Brandon: Yes, yes, sure Brandon so.
Brandon: David C grew faster than the rest of the business in 'twenty four we expect the PUC will grow faster than the rest of the business and 25 cents.
Brandon: We still hold true to our model, which is we want to be relevant wherever the consumer chooses to shop for our products. So that is paramount and that's an unwavering in our business now that said.
Brandon: I think Randy ill give you. The example of slow going I think is so interesting.
Brandon: Before we launched the product we had 17 billion impressions on social media as we seeded the promenade to a select group of Influencers, we added with the.
Brandon: The 90000 people for the product.
Brandon: And so we do feel that kind of launching our products on direct to consumer allows us to kind of control. The distribution early on it allows us to get immediate feedback from consumers as they start using the product.
Brandon: So I think you should expect to see the first 30 to 45 days of many of these big viral product launches to be done moving direct to consumer and then to expand out into our into our retail partners now that said.
Brandon: I think what we're also recognizing that there's a real opportunity for us to have a broader merchandising assortment and direct to consumer.
Brandon: Colors there.
Brandon: Eligible to us on our direct to consumer site special configurations, we've got to make direct to consumer a unique destination for the consumer to buy our products by having something unique and special for them in terms of the upgrade.
Brandon: We've announced that we are going to be transitioning to salesforce in the end of the third quarter of this year.
Brandon: We're going to go live in North America with that at the end of the third quarter will go live in Europe with that might be in the first quarter of next year, we think it's going to provide incredibly better shopping experience.
Brandon: Research experience service experience for the consumer.
Brandon: We're partnering tremendously with Salesforce.
Brandon: And their agent force technology to be able to bring that we've got relationships all the way up to.
Brandon: Market and sales force the CEO and.
Brandon: So we're excited about what that's going to bring to our direct to consumer business, but the goal is still to keep a balance.
Brandon: Omnichannel strategy, but to really make sure the direct to consumer creates a unique destination for the consumer.
Brandon: Yeah.
Speaker Change: Super helpful. Thanks, guys.
Brandon: Okay.
Speaker Change: Our next question will be from the line of Brooke Roach with Goldman Sachs. Please go ahead shoreline is open.
Brooke Roach: Good morning, and thank you for taking our question.
I was hoping you could speak to the most important areas of operating expense reinvestment in 2025, and your philosophy of potential flow through of any outperformance that you might see as we can.
Brooke Roach: Get through the supply chain diversification Mcgee are what level of cost reduction might we see and can that enable a faster rate of operating margin expansion in the back half.
Brooke Roach: Secondly is just a follow up Patrick we appreciate the color regarding some of the timing shifts and onetime items that are impacting the first half could you help us quantify the Mexico distributor inventory impact to revenue and the rough size of what you expect the Easter timing shift to be thank you.
Speaker Change: Yes, so I'll take the first part and then turn it over to Patrick.
Brooke Roach: Hello.
Speaker Change: The supply chain costs are going to be elevated.
Brooke Roach: Through the first half of the year.
Brooke Roach: With sizeable investment in the first quarter I mean, we are.
Brooke Roach: Working very very hard to try to move as much product out of China.
Brooke Roach: Quickly as we possibly can and we remain on track.
Brooke Roach: For 90% of our U S production to be able to be produced outside of China by the end of Q2.
Brooke Roach: From a leverage standpoint, as we go through the year growth I think theres two pieces, one youre going to see the supply chain year on year expense the decrease versus prior year.
I think youre going to see us be able to leverage some of our sales and marketing expenses and I think youre going to see some leverage on the G&A side as well.
Brooke Roach: A lot of investment in people and infrastructure in 'twenty four.
Brooke Roach: As we get into the second half of the year Youll start to see us anniversary a lot of those.
Brooke Roach: And not seeing.
Brooke Roach: The growth.
Brooke Roach: We have seen in 2020 four from an expense side now.
Now as it relates to our ability to be able to put that into.
Brooke Roach: EBITDA margins I think.
Brooke Roach: We want to look at kind of what happens on the tower side, what happens on the global side related to trade and I think we'll have more information on that as we get through Q1 and into Q2 for right now.
Brooke Roach: We're winning a conservative.
Brooke Roach: EBITDA will slightly grow faster than revenue, but.
Brooke Roach: I think theres a lot of uncertainty out there in the market right now and I think it's prudent for us.
Brooke Roach: And with what we have right now and update you with more information as we get further on in the year.
Brooke Roach: Yes.
Brooke Roach: Brook on the question around Mexico.
Brooke Roach: Mexico. Thanks, Thanks for asking that one so I think first of all and frame it up.
Brooke Roach: As you know, we always kind of lead with the consumer first in terms of doing what's best for the consumer.
Brooke Roach: And as you heard me say in some of the prepared remarks as well.
Brooke Roach: We're very adept at making.
Brooke Roach: The hard decisions and so Mexico was one of those it's the right thing from consumer, but it's like what time do you do that and so what we decided in terms of the timing of that was Q1 of this year was that was the best time to actually execute on that and so the reasons for that is number one.
Brooke Roach: We get the marketplace through the holiday selling season in Q4, which is the most important and then we set ourselves up to be a direct business as we get into Q2, three four and beyond and then we're off to the races. So if we look at it through that experience.
Brooke Roach: Improving the consumer experience, it's why we've taken the decision when we did.
Brooke Roach: As far as quantifying it and I'm not going to give you the exact quantification, but how you can think of it is and why it's headwinds is one we're reversing out revenues we've already sold in so that's number one.
Brooke Roach: Two is we're not showing you an additional revenue during the quarter and then three we're not capturing the upside of going from a.
Brooke Roach: Distributor business to a direct business, but as we get into Q2, Q3, Q4, and you'll see the acceleration happened in Mexico, which is an exceptionally important market for us as we enter Latin America, and then from a long term standpoint, we see our opportunity in <unk>.
Brooke Roach: Mexico to be at least $400 million.
Brooke Roach: Over the course of the next few years or so.
Brooke Roach: Great. Thank you so much I'll pass it on.
Speaker Change: Thank you and as a reminder, please limit yourself to one question and then reenter the queue for any follow ups. The next question today will be from the line of Andrea Teixeira with J P. Morgan. Please go ahead. Your line is open.
Andrea Teixeira: Thank you for the question and congrats to the whole team on the results a question on sales and then a follow up on margins first on the topline Mark you gave some changing for the U K.
Speaker Change: And you and Patrick on them.
Speaker Change: Mexico side.
Speaker Change: Can you also talk about the phasing in the lab.
Speaker Change: And overall, if I put all the pieces together what would you say.
Speaker Change: Q1, assuming all of it is within your guide Jason So perhaps more on a high.
Jim: Jim on mutant and clarification of the size of Mexico as soon as I understand desecration destination.
Jim: Understand it correctly is $400 million, but obviously, it's running much lower than that.
Ken: Ken perhaps towers Watson, which did this shift and then the clarification on margins. Obviously, you have had any passive number for even if by 2025, if you take everything together for the backend of the year.
Can you help us in terms of like gross margin phasing in EBITDA.
Ken: <unk> the tariff impact and then we need to appreciate that.
Ken: Is that included in there.
How we should be thinking there for the underlying margin.
Ken: That is the business is running at this point. Thank you.
Ken: Yes.
Speaker Change: Thanks, Andrea I think Thats about 15 questions into one so good work.
Speaker Change: From a topline standpoint.
Speaker Change: Start with with the full year and so from a full year standpoint.
Speaker Change: Domestic business, we're thinking in the guidance in the high single digit range from an international standpoint, roughly high teens. So you can kind of think through the lens of our two X growth international versus domestic as it relates to Q1, particularly were in the high single digit range overall.
Speaker Change: From a shark Ninja, Inc. Standpoint, so I think contextually through that lens as it gets into gross margin phasing.
Speaker Change: No.
Speaker Change: Another great question, so the best way I can kind of.
Speaker Change: Through this is that in Q1 Q1 would be the low point in terms of margin expansion.
Speaker Change: Better said contraction through the year.
Speaker Change: As we go through Q2, Q3, Q4, we'll see margin accretion building as we continue to move.
Speaker Change: Production out of China.
Speaker Change: Put into some other.
Speaker Change: The initiatives that we've been we've been doing around as it relates to improving margins.
Speaker Change: In the face of our growing business so.
Speaker Change: But you can think of it as kind of low point in Q1 progressing.
Speaker Change: Through the balance of the year.
Speaker Change: And if I can squeeze the size of Mexico.
Speaker Change: Appreciate all that.
Speaker Change: Sanchez.
Speaker Change: Andres I think is a center broke earlier, we're not going to we're not going to provide exact guidance in terms of what the impact of Mexico is but I would just say.
Speaker Change: Of course, the long term, we think it is at least $400 million market for us.
Speaker Change: Great. Thank you so much I'll pass it on and congrats again.
Speaker Change: Our next question today will be from the line of Alex Perry with Bank of America. Please go ahead. Your line is open.
Alex Perry: Hi, Thanks for taking my question here and congrats again on a strong quarter I guess just on the new product roadmap for 2025, Mark what products are you. Most excited about what could a new product like chiro Ghosh for all add to the top line if they're successful and then as you think about sort of the typical water.
Alex Perry: Fall of new launches like how much do they sort of scale year two versus year, one and then just quickly on on channels and.
Alex Perry: Any color on how youre thinking about adding new wholesale channels in particular going deeper in our sporting goods. Thanks.
Alex Perry: Yes so.
Alex Perry: Take the last one first.
Alex Perry: I think.
Alex Perry: That.
Alex Perry: We will expand more into sporting goods in the U S. We will have more skus to sell them and 25, we're going to be expanding our cooler lineup.
Alex Perry: We're going to be expanding our outdoor fan lineup outdoor cooking.
Alex Perry: Sporting goods is something that youll see more skewed placement more expansion in the beauty retailers.
Alex Perry: You'll see here expansion in 'twenty, five youll see SKU expansion and $25. So I think those are two.
Alex Perry: <unk> I think grocery is something that we think there is expansion opportunity with selected products for us as.
Alex Perry: As we start to move through the year.
Alex Perry: We're starting to get a lot of.
Alex Perry: Inquiries for example.
Alex Perry: A walmart wants to double expose the slush <unk> from us.
Alex Perry: And put it in both the appliance section as well as the grocery section we're.
Alex Perry: We're getting similar type of feedback from other types of grocery retailers. So so that gives you just a little bit of a snapshot from the from the retailer landscape, it's hard to generalize and give you like a set algorithm or how much could it generating theres 25, new products, what I can say is that.
Alex Perry: A lot of our new products last year launch.
Alex Perry: Late in the year.
Alex Perry: So obviously, you'll get the full year impact this year. It will generally take on some of these new products about 12 months before we scale them globally. So as an example, the slush <unk> launch in Europe, and the U K until Q2, you probably won't have a full roll out until we get into Q.
Alex Perry: Three.
Alex Perry: With the European retailers that we wanted to place so.
Alex Perry: It could take a year to kind of roll out one of those big products.
Alex Perry: Something like a <unk> world.
Alex Perry: As a huge growth potential for us this year.
Speaker Change: Cryo Glo has huge.
Speaker Change: Huge growth potential if we just look at what we did in eight weeks in the holiday season in the UK and Mexico.
Speaker Change: Cryo low presents.
Speaker Change: What is the opportunity for us this year. So I think again, it's hard to kind of generalize it across the line, but I would say that.
Speaker Change: We're entering some big definable categories, we're getting great retailer support.
Speaker Change: It's taking some time for our supply chain to scale up and for distribution to scale up globally, but I think as you start to get into Q3, Youll really start to see the impact of the 24 products.
Speaker Change: Then the 25 products you are going to start to see.
Speaker Change: Growing those now a little bit quarter by quarter. So.
Speaker Change: There'll be some other rollouts as we get later into Q1 now there will be more rollouts as we get into Q2. So I think you should just expect this kind of continuous flow of new products and what to me is exciting about it is that.
Speaker Change: Consumers really getting behind it I mean, when we achieve some of this.
Speaker Change: Signing up for the weakness, they're engaging with us on social media.
Speaker Change: And we've got kind of this.
Speaker Change: Global consumer fan base that is really excited to hear about what's new with some shorter ninja.
Speaker Change: Thank you just one quick follow up I think there's a little confusion on the <unk> sort of commentary that you gave Patrick did you say that <unk> revenue should be high single digit percent just wanted to clarify that for people.
Speaker Change: Yes, that's that's what we're guiding to.
Speaker Change: Perfect very helpful Best of luck going forward.
Speaker Change: Okay.
Speaker Change: Our next question today will be from the line of refresh Curry with Oppenheimer. Please go ahead. Your line is open.
Speaker Change: Good morning, and thanks for taking my question and congrats on a great quarter, just from a I guess a high level perspective, if you look at your business. This year from a category and consumer perspective globally are you planning for similar backed up to what you saw in 2024 or maybe improvements or it may be a more difficult backdrop. So just some high level thoughts on consumer category dynamics globally.
Speaker Change: It will pass youre, referring to the overall market.
Speaker Change: Yeah, that's correct yes.
Speaker Change: Yeah, Yeah look I mean, I think we're assuming kind of a base case that market is flat.
Speaker Change: That's going to obviously vary kind of country to country, but I think on the whole as we go into kind of thinking about the year and planning the year, we kind of look at it and say market's flat now how do we go out and grow how do we go out and enlarged the size of the market.
Speaker Change: So in general I don't know that were kind of planning.
Speaker Change: Any type of either big market be bound or market decline I think what we're seeing so far in Q1.
Speaker Change: I think flat is about.
Speaker Change: Overall, what the market is seeing.
Speaker Change: So thats kind of our base case of what were looking at.
Speaker Change: Great and then maybe just one quick follow up question on the tower front. When you do see these 10% type China tariffs typically when do they flow through because I know, there's a lag in terms of when that when that when that sell throughs. So just any color there. Thank you.
Speaker Change: Yes.
Speaker Change: It varies I mean, as Patrick talked about I mean, we built some tariff prebuilt inventory.
Speaker Change: <unk>.
Speaker Change: Every month more and more product moving out of China.
Speaker Change: If you have a product that is running at very low weeks of supply.
Speaker Change: The recent additional 10% basically went into effect 48 hours after Trump announcement so.
Speaker Change: Back to be going in very quickly and then you've got another product that we might have tariff rebuild then you've got four or five months of inventory, but it won't go through so I think it varies I think if you were to look across the.
Speaker Change: The inventory spectrum.
Speaker Change: You're probably looking at maybe 60% to 75 days.
Speaker Change: But again I think it was important for us for your cash.
Speaker Change: Provide guidance that included the latest information that we have.
Speaker Change: From the day, the third tariffs were announced I mean.
Speaker Change: We immediately went into action to work on understanding the impact and initial steps of how to mitigate those and so I think we're just trying to provide the right color to say based on the latest information that we have.
We still feel good about guiding our business with 13% to 15% EBIT.
Speaker Change: EBITDA growth number in 'twenty, five, yes, and reverse just winding up on that one.
Speaker Change: How you can kind of categorize it as we've been on this offense for quite some time, obviously adjusting in the moment.
Speaker Change: And what we view as our responsibility is engineering, a soft landing and so that's why you saw us take the hard decisions over the course of the last 12 to 18 months or so in terms of investing heavily to get production out of China. It's why we've invested in working capital from pre build of inventory standpoint, and it's why we continue.
Speaker Change: Got it.
Speaker Change: Invest as we get into this year in terms of continuing to move advantaged, China. So we've got.
Speaker Change: Select.
Speaker Change: Inventory, that's prebuilt it should help us.
We're doing everything we can.
Speaker Change: All across our P&L and balance sheet to make sure that we mitigate mitigate tariffs as much as we can and Thats why we felt confident in terms of building that into our guidance that we shared with you today.
Speaker Change: Great. Thank you for all the color best of luck.
Speaker Change: Our next question will be from the line of Steven Forbes with Guggenheim Partners. Please go ahead. Your line is open.
Steven Forbes: Good morning, Mark Patrick.
Steven Forbes: Mark I wanted to focus on sales and marketing given two years here of 40% growth. So curious if you could help us better understand how much of this year's spend.
Steven Forbes: Is associated with future growth opportunities because it looks like a key area of our reinvestment for you.
Steven Forbes: And then any way to deconstruct, the almost $600 million of advertising spend into the various channels right. As we think about Brad or performance just like Reframing the advertising spend for us as we enter 2005.
Speaker Change: Yeah look Steve.
Speaker Change: I mean, you have to understand that.
Speaker Change: We've entered a lot of new categories that.
Speaker Change: Require.
Speaker Change: Men.
Speaker Change: All of which that doesn't pay off immediately we've entered a lot of new countries that we're starting from scratch that require investment and it doesn't pay off and kind of compounds on itself. So I would say that yes.
Speaker Change: Yeah over the last two years, we've done a lot of investing to kind of build a solid foundation in business to grow off of.
Speaker Change: You look at it if you look at what we did in Europe. This holiday season, we drove big growth for these European retailers I mean, they believe in shark Ninja now they believe in sharp in July like U S. Retailers believe in short manager of the U K retailers Bill even short vintages. So.
Speaker Change: Does that work I mean that that is no easy task to do and by the way it's not just about how much money you spend I mean, it's about this.
Speaker Change: This combination of having the right product innovation.
Speaker Change: Investing the money to create awareness and great storytelling, and then having satisfied raving consumers that are pushing the brand. So I mean I think there is a massive investment that's been made over the last two years that the benefits of it we've yet to see in 2024.
Speaker Change: And we will pay dividends as we go into 'twenty five in 2006, and we kind of keep compounds. The building on ourselves. So that's that's one piece I think secondly is.
Speaker Change: Look we've been in a flat market.
Speaker Change: We've been in a market, where we have to do the heavy lifting to grow the overall market and grow the business and we feel like that's our responsibility to be able to grow and that is what also continues to in gear.
Speaker Change: Retailers to us that we're driving people into their stores were creating excitement through these categories. Because there's not a lot of other people who don't have a lot of other brands that are doing that.
Speaker Change: Especially to the degree of scale that we're doing it now when you look across the $600 million floods in advertising.
Speaker Change: I mean, there's a lot of different components to this I mean, our direct to consumer business is growing I mean, theres a lot of lower funnel direct to consumer marketing thats going into it.
Speaker Change: We want to kind of capture that consumer to our direct to consumer channels. So let's put that in one bucket. There is a large amount Doug.
Speaker Change: On the funnel awareness, that's being driven.
Speaker Change: As we enter some of these new categories in these new markets, we try not to drive the brands, Steve I mean, I trying I'm not a believer that we want to go out there and just kind of market. The shark Ninja brand I think we have to do that under the halo of some sort of product I mean, even if you saw.
Speaker Change: Sure David Beckham.
Speaker Change: Christmas commercial.
Speaker Change: <unk> tried to make that still very product centric I mean that he was using a different products to be able to Macy's Christmas dinner. So I would say that there is a big chunk of lower funnel. There is a big chunk of upper funnel and there is a big chunk.
Speaker Change: How did we start to create the user generated flywheel I mean, it's very easily Steve like the rule of thumb that I had a year ago was we need to get 50 to 100000 units out in the market before we were able to get this kind of user.
Speaker Change: Generated flywheel going.
Speaker Change: Premium squirrels showed you and more cryo growth showed you is we could do that before we even launched the product we can do that by seating 100.
Speaker Change: Influencers and building great brands and content that.
Speaker Change: That was already starting to start the flywheel I mean, we had influenced series, but we sent the previous world too.
Speaker Change: Committed to us that they would do one tick tock.
Speaker Change: <unk> Instagram posts Youtube short.
Speaker Change: And they came back and we did 15 or 16 of them.
Speaker Change: These influencers are recognizing that they are able to build their follower base using our products like our products are engaging their follower base or building their follower base for them. So we've created this really incredible kind of symbiotic relationship where these influencers are not just.
Speaker Change: Thinking about that.
Speaker Change: <unk> thats going to invest in them.
Speaker Change: Should we in some cases, not investing monetarily, but we're giving them a head start and we're giving them a sneak peak when we're giving them a behind the scenes view and that is very very valuable to them in terms of being able to develop content that engages their communities.
Speaker Change: That was great. Thank you Mark.
Speaker Change: Thanks.
Speaker Change: Unfortunately, we have run out of time for any further questions. So I will now hand, the call back to brokerage book some closing remarks.
Speaker Change: Okay.
Speaker Change: Yes. So thank you so much for joining us and we look forward to speaking with you again soon.
Speaker Change: Wonderful day.
Speaker Change: Thank you this will conclude shortly and just both quarter 2024 earnings call. Thank you for your participation you may now disconnect your lines.
Speaker Change: [music].