Q3 2025 LifeVantage Corp Earnings Call
Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference called to discuss LifeVantage's third quarter of fiscal 2025 results.
At this time, all participants are in a listen only mode. Following the formal remarks, we will conduct a question and answer session. Instructions will be provided at that time for you to key up.
Speaker Change: Hosting today's conference will be Reed Anderson with ICR. As a reminder, today's conference is being recorded, and now I will lead to turn the conference over to Mr. Anderson. Please go ahead, sir.
Speaker Change: Thank you. Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the third quarter of fiscal 2025. On the call today from LifeVantage, with prepared remarks, our Steve Fife, President and Chief Executive Officer, and Carl Aure, Chief Financial Officer.
Speaker Change: By now, everyone should have access to the earnings release, which went out this afternoon at approximately 405 PM eastern time.
Speaker Change: If you have not received the release, it is available on the Invest Relations portion of LifeVantage's website at www.LifeVantage.com. This call is being broadcast and a replay will be available on the company's website as well.
Speaker Change: Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions.
Speaker Change: These statements do not guarantee future performance, and therefore under-reliance should not be placed upon them.
Speaker Change: These statements are based on current expectations of the company's management, and involvement at risk and uncertainties, including those identified in the risk factor section of LifeVantage's most recently filed forms 10K and 10Q.
Speaker Change: Please note that during today's call, we will discuss non-GAAP financial measures, including results on an adjusted basis.
Speaker Change: Management believes these financial measures can facilitate a more complete analysis and greater transparency in the LifeVantage's ongoing results of operations, particularly when comparing underlying operating results from period to period.
Speaker Change: We've included a reconciliation of these non-GAAP measures with today's release.
Speaker Change: This call also contains time-sensitive information that is accurate only as of the date of this live broadcast May 6, 2025. LifeVantage assumes no obligation to update any forward-looking projections that may be made in today's release or call.
Speaker Change: Now, I will turn the call over to Steve Fife, the President and Chief Executive Officer of LifeVantage.
Steve Fife: Thanks for eating, good afternoon everyone, thank you for joining us today.
Steve Fife: Third-quarter results were strong with revenues of $58.4 million, up 21% year-over-year.
Steve Fife: Demand for our MindBody GLP1 system served as the primary growth drivers in Q3. Revenues in the U.S. grew 31%, offset by a decline of 7% in our international markets year-over-year.
Steve Fife: are declined internationally, remain a significant area focused for us.
Steve Fife: We expect the international launch of our MB system will help turn the declines, but there are also other opportunities we are focused on to reverse this trend.
Steve Fife: I'm also pleased to report stability in our supply chain of line body and the disruption of our out-of-stock and logistic issues has been resolved and is now behind us.
Steve Fife: In mid-March, we began the International Expansion of Mindbodies, starting in Japan to both consultants and customers.
Steve Fife: and a consultant in Australian New Zealand, Mexico, the UK, Europe , and Thailand.
Steve Fife: These launches had minimal impact in our third quarter results, but momentum is building in these markets with customers in these regions gaining access on April 25th.
Steve Fife: We continue to be excited by the results people are experiencing with the mind-body system, as well as the advancing science, helping us understand the important role the natural hormone has on overall health.
Steve Fife: Adjusted EBITDA, increased 27% year-over-year to $6.4 million, and adjusted EBITDA margin, improved
Steve Fife: Active account metrics showed strong year-over-year growth, and we continue to benefit from increased levels of new enrollments.
Steve Fife: For the third quarter year, over a year, the number of active accounts increased by 17 percent in the America's region, including a 13 percent increase in the number of independent consultants and a 19 percent increase in the number of customers. [inaudible]
Steve Fife: Subscriptions also showed strong year-over-year growth with global active templates increasing by over 10,000, with subscription orders also demonstrating positive trends in purchasing
Steve Fife: On March 1st, we launched the Evolve Compensation Plan along with other LV360 initiatives into the Philippines, Taiwan, Hong Kong, and Singapore.
Steve Fife: This followed the launch into Canada, Mexico, in Europe , in February of 2024, and the launch in the U.S., Australia, New Zealand, and Japan, in March of 2023.
Steve Fife: The launch of the LV360 initiative into these markets is a pivotal milestone for LifeVantage.
Steve Fife: As a reminder, the vision driving LV360 was to ensure our business and LifeVantage can open.
Steve Fife: had the tools, compensation, products, programs, and incentives to thrive in an ever-changing market, setting their business up for success against the headwinds other direct-selling businesses currently are facing.
Steve Fife: The broad success of our LB360 efforts reflect the strength and position we find ourselves in today. We have a clear vision for our future and our consultants have a proven pathway for building and shaping businesses that are fully aligned with the future of the direct selling industry.
Steve Fife: The Evolve Compensation Plan is designed to provide consultants opportunities for multiple income streams tied to business building and product sales initiatives with a clear path to success.
Steve Fife: It supports both entrepreneurs focused on sharing and selling products within their networks and those looking to build strong collaborative teams.
Steve Fife: With early income bonuses that encourage smart business strategies from day one, along with performance and mentorship rewards that recognize leadership and achievement, consultants and foreign power to grow at every stage.
Steve Fife: Our product strategy is aligned to a heightened focus globally on holistic wellness, metabolic balance and overall vitality.
Steve Fife: Our activation differentiation offers consumers a superior approach to supplementation in powering the body to work as designed.
Steve Fife: We are proud with what we've accomplished with LV360 in the position it has put us in as a company. On April 24th, we held our annual Global Convention in Salt Lake City.
Steve Fife: and thousands of independent LifeVantage consultants from around the world gathered to participate in the multi-day event.
Steve Fife: Attendees heard from LifeVantage executives, members of our board, and consultant leader speakers, on key business updates. Exciting product announcements.
Steve Fife: exclusive business and compensation plan and product trainings, and initiatives designed to help consultants go further with their life-damaged businesses.
Steve Fife: As part of the celebration, the results of the company's latest clinical study on the
The Clinical Study completed in early April .
Steve Fife: revealed that both systems increased GLP-1 levels in the body by over 200% on average.
Steve Fife: increasing the US number from 140% and validating the increase of GLP1 naturally for international markets.
Steve Fife: Attendees also learn more about drive-era calendar Q2 sales incentives we rolled out in April .
Steve Fife: that doubles the bonus regularly offered to those who reach the rank of senior consultant within their first three months.
Steve Fife: in business, and offers the chance for their enrolling sponsors to earn custom life-and-it shoes. This incentive reinforces the company's commitment to rewarding consultant fast-product sales growth and team-building efforts.
Steve Fife: Looking forward, we remain focused on many of the same initiatives that have been propelling our business and financial performance, including one, continuing to enhance our digital
Steve Fife: to building greater brand awareness as we reach new customer segments.
Free, maintaining our strong profitability metrics while funding growth initiatives.
Steve Fife: and for continuing to ramp growth of the M.B. system in international markets.
Steve Fife: In early summer and later this year we plan to launch the MD system in our remaining markets, completing the global rollout and reinforcing our commitment to providing natural activation solutions worldwide.
Steve Fife: The incremental growth we are seeing in revenue, as well as consulting and customers during the initial rollout period, as well above what we've experienced historically with other HERO products like Liquid Collagen.
Steve Fife: In addition, the total addressable market is significantly larger, which is helping us attract a much broader audience and should open up many new potential avenues for growth in the future.
Steve Fife: We remain well positioned for significant growth and revenue, improving profitability, and driving shareholder value. Now, let me turn the call over to Carl to review our third quarter financial results in detail.
Carl Aure: Third quarter revenue was 58.4 million, up 21.1% on a year-over-year basis.
Carl Aure: Form currency negatively impacted revenue by $500,000 in the third quarter. Excluding the negative impact of foreign currency fluctuations, third quarter revenue was up approximately 22.1% compared to the prior year period.
Carl Aure: Revenue in the America's region increased 29.5% to 48.2 million in the quarter, primarily driven by the continued success of our mine-body GLP1 system, which launched in the US market in October of 2024.
Carl Aure: Total active accounts increased 17.2% in the Americas in comparison to the prior year period. Total average revenue per consultant was also up approximately 15% in the Americas in the current quarter.
Carl Aure: Revenue in our Asia-Pacific and Europe region decreased 7.2% to 10.2 million in the quarter, primarily driven by an 8.8% decrease in total active accounts, and the negative impacts from foreign currency exchange rate fluctuations.
Carl Aure: Excluding the negative impact from foreign currency fluctuations, which are primarily attributable to Japan, third-quarter revenue in our Asia-Pacific and Europe region was down approximately 4.7% as compared to the prior year period.
Carl Aure: On a constant currency basis, revenue in Japan increased 2.7% in the third quarter, reflecting the launch of our MindBody GLP-1 system in that market starting in March of 2025.
Carl Aure: The increased and gross margin was primarily due to product mix factors, including strong sales of mine body, as well as lower inventory obsolescence and lower inventory-related variance expenses, as well as lower shipping and warehouse expenses.
Carl Aure: Commissions and incentive expense, as a percentage of revenue, was 44.8% up from 40.9% in the prior year period, but was down 320 basis points sequentially from Q2.
Carl Aure: The year-over-year increase was due to higher qualifications within existing promotional incentive programs and changes in sales mix within our active accounts between our independent consultants and customers.
Carl Aure: non-GAAP adjusted SGNA expense was $17 million, compared with $15 million in the prior year
Carl Aure: The year-over-year increase was primarily due to the higher variable portion of employee compensation and stock-based compensation expenses.
Carl Aure: Adjusted non-GAAP operating income was $4.1 million, compared with adjusted non-GAAP operating income of $3.4 million in the prior year period.
Carl Aure: Adjusted non-GAAP net income was 3.5 million or 26 cents per fully diluted share in the third quarter compared to adjusted non-GAAP income of 2.8 million or 21 cents per fully diluted share in the prior year period.
Carl Aure: We recorded income tax expense of $700,000 in the third quarter which translates to an effective tax rate of approximately 17% compared to income tax expense of $300,000 in the prior year period in an effective rate of 14%.
Carl Aure: The increase in our effective rate was primarily due to the impact of discrete items. We continue to expect our full-year FY 2025 income tax rate to be approximately 22 to 24 percent.
Carl Aure: Adjust the EBIT off for the third quarter with $6.4 million or 11% of revenues compared to $5.1 million and 10.5% in the same period a year ago.
Carl Aure: Please note that all of the adjustments from gap to non-GAAP that I discussed today are reconciled in our earnings press release issue this afternoon.
Carl Aure: Capital expenditures totaled $300,000 in the third quarter compared to $300,000 in the same period a year ago. We anticipate total capital expenditures to be approximately $1.5 million in fiscal 2025.
Carl Aure: Turning to capital allocation, we did not repurchase any shares during the third quarter ended March 31st, 2025. Through the first nine months of fiscal 2025, we've repurchased 140,000 common shares for an aggregate purchase price of 1.1 million.
Carl Aure: As of March 31, 2025, there is still 19.3 million remaining under our existing share repurchase authorization.
Carl Aure: We also announced a quarterly cash dividend of 4.5 cents per share of common stock, or approximately $600,000 in the aggregate. This dividend will be paid on June 13, 2025 to stockholders of record as of May 30, 2025.
Carl Aure: Since the beginning of fiscal 2024, we have returned over $16 million in total value to our stockholders through stock repurchases and dividends. We will continue to focus on our balance capital allocation strategy in order to drive value for our stockholders.
Carl Aure: Turning to our outlook for Fiscal 2025, we anticipate our Fiscal 2025 revenue will be $228 million to $235 million, representing a 16% increase year-over-year at the midpoint of the range versus Fiscal 2024.
Carl Aure: We are reiterating our profitability guidance despite lower revenues and expect adjusted EBITDA to be $21 million to $24 million and adjusted non-GAAP earnings per share of $0.72 to $0.88.
Carl Aure: We are pleased with the continued improvement in our profitability metrics and remade committed to continuing to improve our adjustity but our margins, and we believe we are well on track to reach our long-term goals of low double digits in the near future. And with that, let me turn the call back over to the operator for questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.
Speaker Change: The first question is from Brooks O'Neill from Lake Street Capital Markets. Please go ahead.
Speaker Change: Take it afternoon, guys. This is Aaron on the Line for Brooks. Thanks for taking our questions.
Speaker Change: So, as far as new customers, do you have a rough percentage of people coming on via subscription? You know, we know to stay...
Speaker Change: A slight down draft and total active accounts quarter over quarter, although granted there were some nice girls on an annual basis. I'm assuming you like to see that subscription percentage higher over time, you know, just curious on some of those recent trends and that that had any sort of weight into your top line assumptions.
Speaker Change: but actually the subscription rate increased and which was encouraging to us.
Speaker Change: About 70% of our revenue has been fulfilled on a subscription.
Speaker Change: and what we're seeing, and specifically around my body, that during the quarter of about 85 percent
Speaker Change: of the people coming in on my body during the quarter were on a subscription.
Speaker Change: So, you know, I think that lends itself to the nature of the product, how we've positioned it, that, you know, it's not a...
Speaker Change: And so far the data is is supporting that that's how are the new customers are coming to us.
Speaker Change: Yeah.
Steve Fife: Got it got it appreciate that color, Steve and then.
Speaker Change: Are you guys seeing more purchases and stacks versus Standalone, maybe you can pay the last quarter. You know I'm just curious how that dynamic has sort of played out over the last few months as well.
Speaker Change: Yeah, I think that that's also positive and true.
Speaker Change: When we when we look specifically at mind body about 55% or so of the revenue during the quarter was mined bodies standalone.
Speaker Change: The remaining 45% on the purchases were occurring with another product.
Speaker Change: And.
Speaker Change: The most common.
Speaker Change: Additional product would be either our pro tandem and RF to or our liquid college.
Speaker Change: And in part again, it's the positioning that we have as a company and our consultants sharing kind of the synergistic benefits of taking those three products together. So again, we're encouraged with with the amount of stack revenue obviously that.
Speaker Change: Helps our our ARPA.
Speaker Change: And it helps our stickiness as as new consumers.
Arent, just coming in and learning about mind body, but they're also being exposed to other products in our product portfolio.
Speaker Change: Absolutely I agree.
Speaker Change: I appreciate the color I'll hop back in the queue. Thanks, guys.
Speaker Change: Awesome. Thanks, Thanks Darren.
Speaker Change: The next question is from Doug Lane from water Tower Research. Please go ahead.
Doug Lane: Yes, hi, good afternoon everybody.
Doug Lane: Sticking on the top line.
Doug Lane: And the outlook there.
Doug Lane: We brought it down by what maybe.
$7 million to $8 million at the midpoint.
Doug Lane: Yeah.
Doug Lane: The third quarter revenue number wasn't that far off of what I had in my models. I know you don't give quarterly guidance, but I guess my question is is there.
Doug Lane: The revenue reduction mostly due to the results in the March quarter or anticipated results in the June quarter.
Doug Lane: Yeah.
Doug Lane: I'd say theres, a little of both there Doug.
Speaker Change: I think in our last call and in a number of subsequent follow up calls we talked about the challenges.
Doug Lane: After our launch.
Doug Lane: October when we launched the product.
Doug Lane: It was a massive success.
Doug Lane: To the point, where we were out of inventory for <unk>. After a couple of weeks so virtually.
Doug Lane: For six weeks, we were in and out of stock position you got inventory back in the middle of December and we were able to fulfill all of those back orders.
Doug Lane: Which which left a lot of our customers and consultants with in certain cases multiple sets of Mb.
Doug Lane: Product.
Doug Lane: And that progressed.
Doug Lane: Into our fiscal Q3, I think what's really.
Doug Lane: Positive right now is the one we have resolved all of the supply chain issues, the logistic issues around that out of stock.
Doug Lane: And we were able to do that kind of in the January February timeframe, and what we saw during the quarter was kind of a leveling of.
Doug Lane: New orders coming in so are our bookings if you will during the quarter.
Doug Lane: Really stabilized.
Doug Lane: And so I really believe that all of the noise around the initial launch is behind us.
Doug Lane: And the change to our range than it is to really take into account.
Doug Lane: We've we still have a lot of chop and uncertainty within our international markets.
Doug Lane: We launched the product towards the very end of the quarter.
Doug Lane: And really to customers fully just a few weeks ago, so how much upside in growth.
Doug Lane: Comes out of our international markets with with MD is a bit of an unknown right now obviously.
Doug Lane: And so we're hedging a little bit on that but we do believe that you know.
Doug Lane: The noise from the FERC, our fiscal Q2 is behind US and are looking forward now to build going forward.
Doug Lane: Okay that makes sense another number.
Doug Lane: Active accounts in the Americas was $1 15 in the December quarter dropped to 109 in March which I might not have anticipated I think I had it at least holding steady. So I wonder is that fall out from the stock out or is there something else going on.
Doug Lane: Yes, I think it's I think it is primarily attributable to the stock out there Doug and it's really is if you look at the lines that are in more detail, it's really coming from our customer base in the Americas.
Doug Lane: If you were to look at the total active accounts or the consultant portion of those active accounts, we were really flat sequentially, we're still up significantly year over year, but sequentially on the consultant side were flat, but we feel that the elevated attrition associated with customers. There was just due to a lot of the noise that we experienced with <unk>.
Doug Lane: <unk> be in the quarter and we think the majority of that is behind US now so we're looking to to build from this point going forward.
Speaker Change: Okay, Okay, I get that and then now.
Speaker Change: Launched MB in October here, we are in May what have you learned about the MV product because it is a novel idea the idea of using nutrigenomics to generate your own G. L. P. One is not like taking a shot that you see on TV. So what have you learned about educating new salesforce on the G. L. P. One product.
Yes, it has been a learning experience and.
Speaker Change: I will just tell you you know during during this last quarter in the January February March I guess, all throughout the quarter really.
Speaker Change: We looked at.
Speaker Change: Just how our consultant base.
Speaker Change: <unk> positioning the product how they were selling that messaging they were creating around it.
Speaker Change: And I'd say there were two different camps. One one was taking I'd say a much more long term sustainable approach, where this is a highly differentiated product.
Speaker Change: 100% natural that is focused on long term weight management as well as other.
Speaker Change: Health benefits.
Speaker Change: And not a magic pill.
Speaker Change: And then another camp of consultants, we're much more focused on the weight loss story.
Speaker Change: And I think with.
As we sit here now six months post launch.
Speaker Change: That first group has had much more although maybe slower but more sustainable month over month over month growth their retention is higher there.
Speaker Change: Enrollments are more consistent than the group that really launched hard and leading with the weight loss and comparisons to the synthetic alternatives out there. So.
Speaker Change: As I've thought about it it's a little bit of.
The rabbit in the toward US I think that we're experiencing in and we really invested quite significantly during the quarter. We held what we referred to as a town Hall meeting.
Speaker Change: And really we had almost 1000 consultants on that call to reiterate really the message.
Speaker Change: Around.
Speaker Change: The benefits of this product now we've got an updated study that both for the U S Formula and our international Formula.
Speaker Change: Independent studies support a claim of around 200% increase in average of the GOP one production.
Speaker Change: And what that really means and it doesn't necessarily just.
Speaker Change: <unk> weight loss.
Speaker Change: Does.
Speaker Change: Over a period of time, but at the end of the day.
Speaker Change: It's still a caloric story and if you're <unk>.
Speaker Change: <unk> more than your.
Speaker Change: You can still out eat.
Speaker Change: G L P, one synthetics or our products and so we added to our story.
Speaker Change: Mindful.
Speaker Change: Activation.
Speaker Change: Lifestyle changes things that are very common sense around exercise.
Speaker Change: <unk>.
Speaker Change: Reducing sugar intake increasing water consumption.
Speaker Change: Taking taking the product with protein some very very common types of things that reiterate that again. This isn't a quick magic pill. This is a lifestyle. This is a long term health alternative and one of the benefits.
Speaker Change: Can be losing weight and insurance.
Speaker Change: And that really.
Speaker Change: Again, I think resonated with our consultant group than we've seen kind of a pivot in terms of how people are talking about it which I think bodes very well for long term growth with this product for Lifevantage. It is still a highly innovate of alt.
Speaker Change: Current natural alternative to the drugs that are out there. We're pleased as can be with our positioning as that alternative.
Speaker Change: And really it's on us on our consultant base to continue to evangelize to get the word out about the benefits of having this alternative solution.
Speaker Change: The market has created a massive awareness for us.
Speaker Change: And it's up for US now to take advantage of it.
Steve Fife: That's good color thanks, Steve.
Doug Lane: Yes, thanks, Doug Thanks, Doug.
Speaker Change: This concludes the question and answer session I will now turn the floor back over to Steve Weisz for closing remarks.
Steve Weisz: Thanks, operator, and thank you everyone for joining us on the call today as we conclude I really want to extend my appreciation to all of our employees who do so much.
Steve Weisz: Our of course, our our outstanding independent consultants, who who sell our products.
Steve Weisz: Our stockholders and are very committed customer base.
Steve Weisz: We're excited about where we are as a company and our future and we look forward to updating you.
Steve Weisz: And our next quarter, Thanks, a lot.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Steve Weisz: Yeah.
Steve Weisz: [music].
Steve Weisz: Yes.
Steve Weisz: [music].
Steve Weisz: Oh.
Steve Weisz: [music].
Steve Weisz: Okay.
Steve Weisz: Yeah.
Steve Weisz: [music].
Steve Weisz: Yeah.