Release Date: May 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record subscriber growth with 172,000 new subscribers added in Q1, bringing the total to 1.7 million.
- Revenue increased by 46% year-over-year to $278 million, demonstrating strong financial performance.
- Adjusted EBITDA of $32 million in Q1, indicating efficient operational management and profitability.
- Expansion of personalized subscription services, with personalized subscribers tripling over the last year to over 600,000.
- Continued investment in technology and infrastructure to support scalability and enhance customer experience.
Negative Points
- The need for substantial capital investment in affiliated pharmacies to expand capacity and capabilities, indicating significant upcoming expenditures.
- Potential fluctuations in marketing expenses as the company uses marketing as a discretionary lever, which could impact consistency in spending.
- Challenges in maintaining a high growth rate as the company scales, which could pressure resources and operational focus.
- Dependence on the continued adoption of personalized products to drive future growth and retention.
- Legal and regulatory risks associated with forward-looking statements and market uncertainties that could affect future performance.
Q & A Highlights
Q: Good afternoon and thanks for taking the question. Andrew, you mentioned that consumers are seeking out Hims and the way that you framed it and made. It seem like this is really the first time that you're seeing such significant efficiency gains. I guess as we think about this in the context of the 2024 guidance, did this come to a surprise to you in the quarter. What do you think is driving this? And then why is it happening now? And I guess as we think about the marketing as a percent of revenue. Clearly there was a nice step down there. Just trying to think through if what we saw in the first quarter is sustainable.
A: Thanks, Allen. Great question. Maybe I'll take the first part and let Yemi hit the second. I think what's been happening in the past quarter is a continuation of the last couple of quarters, which is as we've expanded the suite and portfolio of personalized products across the categories, both historical core categories and some of the newer ones like weight loss and women's Dermatology and that's just bringing a much more diverse set of customers to the company, right? We are getting better at segmenting the types of people that live within each of these categories and offering products that are maybe of countering concerns they otherwise had and otherwise were barriers for them adopting treatment. And so I think as we continue to increase the breadth of choices, you're going to see a continuation of people coming to the platform. I think on top of that, which has added extra leverage, we continue to increasing increase the accessibility of those personalized products right we're dropping prices strategically, these are very mass-market, attractive products and attractive prices that are often compared to the traditional generic treatments, price essentially side, the sell side to side and so the combination of the personalization and the attractive price point, I think is something that's just been growing. And from a continuation standpoint, I think generally those trends are to be expected Alan, because we continue to expand the portfolio. But I think there are also dynamics from a marketing leverage standpoint that Jimmy can speak to with regard to when we push a little bit heavier and when we pull back.
Q: Great. Thanks so much. For taking my questions and congrats on the strong quarter. But first, I just wanted to ask about your pricing philosophy or it's been about a year since you sort of introduced lower prices. Can you maybe give us a little bit more color on your sort of near term approach to refining pricing from here? And are there any sort of specialties or maybe products where you've seen particularly higher sort of price elasticity?
A: Yes. Thanks for the question, Maria. I think just our fundamental approach is as we continue to see benefits for scale we're consistently running experiments. Yes, with respect to how do we pass forward some of that value back to consumers, which we feel will increase the longevity on the platform. I think with respect to on some of the pricing dynamics, we've had a lot, many of those on the Q2 in the Q2 quarter. And so we expect to see the benefit from that in the second quarter. But that said, I think that's the way that we'll pass value to consumers is not just in the form of price. You can expect additional features or other other creative solutions that we're experimenting. And so I think over the course of the year, embedded in our guidance is the flexibility to do that. Whether it's with respect to pricing or incremental features that consumers debt really with an eye towards addressing their needs and keeping on the platform for longer.
Q: Hey, good afternoon, guys. Congrats on the quarter and thanks for the question. To touch on the churn question, kind of in a different way. I mean, I think what were also arguments that hasn't been quantified very clearly of what's changing with retention and churn levels. So I guess is there any way you can give us better color on like how many of your are multi-month subscribers, our ending up doing reorders after their first initial order and how many are falling off and then any other detail you can give us there. Thank you.
A: Yes, I think what I'd point to credit, and it's a great question, I think are too few data points. One is just like the previous guidance we've given around long-term retention levels, north of 85%, I think the whole pull through. And if anything, I think the hope for us would be the fact that drug gets stronger. We did see across Q1 really is just a record level of additions of net new subscribers. And that's a function of the efficiency on acquisition, but also just some of the benefits and longevity as we continue to pass value back to consumers in the form of pricing experiments or other value added ads to consumers. We do expect the retention to improve and improve in the coming quarters, but it's very difficult to give exactly no quantification numbers around that.
Q: Thanks for taking my question and just wanted to get a better understanding of sort of what changed in terms of the full year, but full year guidance in the first quarter versus how you got it in the fourth quarter and just curious which areas deliver upside versus your original expectations? And also what changed in terms of your second half expectations?
A: And maybe I can start the first part of the question on the guide, and then you can turn it over to Andrew for a broader clarity around what we're seeing with the consumer. I think really, John. I think what we did see in the first quarter is just record level of momentum, both in terms of the magnitude of consumers that were coming onto the platform relative to what we were expecting as well as the frequency, which was they're opting for personalized products. As we mentioned, they typically do carry higher, higher retention levels. And so really what's embedded in our guidance is just the strong momentum that we've seen. And we're seeing that across pretty much all of our specialties, given the fact that we've innovated the suite of products, whether it's actual, how dermatology or the new category. We're seeing continued strength across each of our specialties, and we expect to continue to innovate with a very attractive pipeline on each of those specialties. And so really that's what's embedded in the guide is a very strong pipeline of things to come with the strong uptick in consumer acquisition in the first quarter and then just the adoption of personalized products.
Q: Thank you, and thanks for taking my questions and congrats on a strong quarter for a couple of quick clarification questions. On the subscribers using personalized solution. When you had 35%, what was the figure among the new members you added in 1Q in terms of using a personal solution? And second part of the question is like what is your outlook reflecting in terms of this figure by end of the year?
A: Yes. Maybe I can start with some of the more granular details and then Tom can add
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
