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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. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of the company's management, and involve inherent risks and uncertainties, including those identified in the Risk Factors section of LifeVantage's most recently filed Forms 10 ks and 10 Q. Please note that during today's call, we will discuss non GAAP financial measures including results on an adjusted basis. Management believes these financial measures can facilitate a more complete analysis greater transparency into LifeVantage's ongoing results of operations particularly when comparing underlying operating results from period to period. We've included a reconciliation of these non GAAP measures with today's release This call also contains time sensitive information that is accurate only as of the date of this live broadcast, 05/06/2025. LifeVantage assumes no obligation to update any forward looking projections that may be made in today's release or call. Now, I will turn the call over to Steve Fife, the President and Chief Executive Officer of LifeVantage.
11m 8s
Thanks, Reed, and good afternoon, everyone. Thank you for joining us today. Third quarter results were strong with revenues of $58,400,000 up 21% year over year. Demand for our MINDBODY GLP-one 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. Our declines internationally remain a significant area of focus for us. 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. I'm also pleased to report stability in our chain supply chain of line body and the disruption of our out of stock and logistic issues has been resolved and is now behind us. In mid March, we began the expansion of Mind Bodies starting in Japan to both consultants and customers. And to consultants in Australia, New Zealand, Mexico, The UK, Europe, and Thailand. 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 25. We continue to be excited by the results people are experiencing with the mind body system.
12m 37s
As well as the advancing science helping us understand the important role the natural hormone has on overall health. Also delivered another quarter of improving profitability in including a two ten basis point improvement in gross margin versus a year ago. Adjusted EBITDA increased 27% year over year to $6,400,000 and adjusted EBITDA margin improved 50 basis points to 11%. Active account metrics showed strong year over year growth, and we continue to benefit from increased levels of new enrollments. For the third quarter year over year, the number of active accounts increased by 17% in The Americas region, including a 13% increase in the number of independent consultants and a 19% increase in the number of customers. 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 across the broader product portfolio. On March 1, we launched the EVOLVE compensation plan along with other LV-three 60 initiatives into The Philippines, Taiwan, Hong Kong, and Singapore. This followed the launch into Canada, Mexico, and Europe in February 2024 and the launch in The U. S, Australia, New Zealand and Japan in March of twenty twenty three.
14m 12s
The launch of the LB360 initiatives into these markets is a pivotal milestone for LifeVantage. As a reminder, the vision driving LV-three 60 was to ensure our business and life managed consultants 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. 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 path for building and shaping businesses that are fully aligned with the future of the direct selling industry. 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. It supports both entrepreneurs focused on sharing and selling products within their networks and those looking to build strong collaborative teams. With early income bonuses that encourage smart business strategies from day one, along with performance and mentorship rewards that recognize leadership and achievement, consultants are empowered to grow at every stage. Our product strategy is aligned to a heightened focus globally on holistic wellness, metabolic balance, and overall vitality.
15m 52s
Our activation differentiation offers consumers a superior approach to supplementation, empowering the body to work as designed. We are proud with what we've accomplished with LV-three sixty in the position it has put us in as a company. On April 24, we held our annual global convention in Salt Lake City, and thousands of independent LifeVantage consultants from around the world gathered to participate in the multi day event. Attendees heard from LifeVantage executives, members of our board, and consultant leader speakers on key business updates exciting product announcements, exclusive business and compensation plan and product trainings, and initiatives designed to help consultants go further with their LifeVantage businesses. As part of the celebration the celebration, the results of the company's latest clinical study on the MINDBODY GLP-one system an MB system as it's known internationally, were revealed. The clinical study completed in early April revealed that both systems increased GLP-one levels in the body by over 200% on average, increasing The U. S. Number from 140% and validating the increase of GLP-one naturally for international markets. Attendees also learn more about Drive Era calendar Q2 sales incentives we rolled out in April. That doubles the bonus regularly offered to those who reach the rank of Senior Consultant I within their first three months in business and offers the chance for an their enrolling sponsors to earn custom LifeVantage shoes.
17m 44s
This incentive reinforces the company's commitment to rewarding consultants' fast product sales growth and team building efforts. 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 capability and consultant tools Two, building greater brand awareness as we reach new customer segment. Three, maintaining our strong profitability metrics while funding growth initiatives And four, continuing to ramp growth of the MB system in international markets. In early summer and later this year, we plan to launch the MB system in our remaining markets completing the global rollout and reinforcing commitment to providing natural activation solutions worldwide. Despite the significant growth we've experienced with our MINDBODY system over the past six months, we are still in the very early innings, and we continue to believe this product will have an enduring transformational impact on our business. The incremental growth we are seeing in revenue as well as consultant and customers during the initial rollout periods is well above what we've experienced historically with other hero products like liquid collagen. 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.
19m 26s
In summary, third quarter results were strong, and momentum continues to build. Our unique product offerings and robust capabilities combined with our distinctive model that allows individuals to create businesses on their own terms gives us confidence in the future. We remain well positioned for significant growth in revenue improving profitability, driving shareholder value. Now let me turn the call over to Karl to review our third quarter financial results in detail.
19m 58s
Thank you, Steve, and good afternoon, everyone. Let me walk you through our third quarter financial financial results. Please note that I will be discussing our non GAAP adjusted results. You can refer to the GAAP to non reconciliations in today's press release for additional details. Third quarter revenue was 58,400,000.0 up 21.1% on a year over year basis. Foreign 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. Revenue in the Americas region increased 29.5% to $48,200,000 in the quarter, primarily driven by the continued success of our MINDBODY GLP-one system, which launched in The U. S. Market in October of twenty twenty four. Total active accounts increased 17.2 in The Americas in comparison to the prior year period. Total average revenue per consultant was up approximately 15% in The Americas in the current quarter. Revenue in our Asia Pacific and Europe region decreased 7.2% to $10,200,000 in the quarter, primarily driven by an 8.8% decrease in total active accounts and the negative impacts from foreign currency exchange rate fluctuations. 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.
21m 34s
On a constant currency basis, revenue in Japan increased 2.7% in the third quarter reflecting the launch of our MINDBODY GLP-one system in that market starting in March of twenty twenty five. Gross margin was 81% for the third quarter a two ten basis point improvement compared to 78.9% in the prior year period. The increase in gross margin was primarily due to product mix factors, including strong sales of MINDBODY as well as lower inventory obsolescence and lower inventory related variance expenses, as well as lower shipping and warehouse expenses.
22m 10s
Commissions and incentive expense as a percentage of revenue was 44.8%, up from 40.9% in the prior year period, but was down three twenty basis points sequentially from Q2. 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. Non GAAP adjusted SG and A expense was $17,000,000 compared with $15,000,000 in the prior year period. The year over year increase was primarily due to the higher variable portion of employee compensation and stock based compensation expenses. Adjusted non GAAP operating income was $4,100,000 compared with adjusted non GAAP operating income of $3,400,000 in the prior year period. Adjusted non GAAP net income was 3,500,000.0 or $0.26 per fully diluted share in the third quarter, compared to adjusted non GAAP income of 2,800,000.0 or $0.21 per fully diluted share in the prior year period. 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 and an effective rate of 14%. The increase in our effective rate was primarily due to the impact of discrete items.
23m 38s
We continue to expect our full year FY 2025 income tax rate to be approximately 22% to 24%. Adjusted EBITDA for the third quarter was 6,400,000.0 or 11% of revenues compared to $5,100,000 in 10.5% in the same period a year ago. Please note that all of the adjustments from GAAP to non GAAP that I discuss today are reconciled in our earnings press release issued this afternoon. Our financial position remains strong with $22,500,000 of cash and no debt at the end of the third quarter. We also have access to a $5,000,000 revolving line of credit. 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 $1,500,000 in fiscal twenty twenty five. Turning to capital allocation, we did not repurchase any shares during the third quarter ended 03/31/2025. Through the first nine months of fiscal twenty twenty five, we repurchased 140,000 common shares for an aggregate purchase price of 1,100,000.0 As of 03/31/2025, there is still $19,300,000 remaining under our existing share repurchase authorization. We also announced a quarterly cash dividend of $0.45 per share of common stock or approximately $600,000 in the aggregate.
25m 7s
This dividend will be paid on 06/13/2025, to stockholders of record as of 05/30/2025. Since the beginning of fiscal twenty twenty four, we have returned over $16,000,000 in total value to our stockholders through stock repurchases and dividends. We will continue to focus on our balanced capital allocation strategy in order to drive value for our stockholders. Turning to our outlook for fiscal twenty twenty five, we anticipate our fiscal twenty twenty five revenue will be $228,000,000 to $235,000,000 representing a 16% increase year over year at the midpoint of the range versus fiscal twenty twenty four. We are reiterating our profitability guidance despite lower revenues, and expect adjusted EBITDA to be $21,000,000 to 24,000,000 and adjusted non GAAP earnings per share of $0.72 to $0.88 We are pleased with the continued improvement in our profitability metrics and remain committed to continuing to improve our adjusted EBITDA 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. Operator?
26m 20s
Thank you. We will now be conducting a question and answer session. The first question is from Brooks O'Neil from Lake Street Capital Markets. Please go ahead.
26m 53s
Hey, good afternoon, guys. This is Aaron on the line for Brooks. Thanks for taking our questions.
26m 58s
So as far as new customers, do you have a rough percentage of people coming on via subscription? We noticed a slight downdraft in total active accounts quarter over quarter, although granted there some nice growth on an annual basis. I'm assuming you like to see that subscription percentage higher over time. Just curious on some of those recent trends and if that had any sort of weight into your top line assumptions.
27m 27s
Yeah. Thanks, Aaron. This is Steve. And we did see a slight decline in active accounts sequentially but actually, the subscription rate increased. And which was encouraging to us.
27m 46s
Historically, about 70% of our revenue has been fulfilled on a subscription. And what we're seeing and specifically around mind body, that during the quarter about 85% of the people coming in on Mindbody during the quarter on a subscription. So that I think that lends itself to the nature of the product, how we've positioned it, that it's not a a magic pill that you take once or for a month or period of time, but it is a lifestyle thing that really to get the full benefits you need to be on a for multiple months. And so far, the data is supporting that that's how our the new customers are coming in.
28m 50s
Got it. Got it. Appreciate that color, Steve. And then are you guys seeing more purchases in stacks versus standalone, maybe compared to last quarter? I'm just curious how that dynamic has sort of played out over the last few months as well.
29m 5s
Yeah, I think that that's also positive and true. This When we look specifically at MINDBODY, about 55% or so of the revenue during the quarter was Mind Body standalone And the remaining 45%, the purchases were occurring with another product. And the most common additional product would be either our Protandim NRF2 or our liquid collagen. 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 helps our our ARPA and it helps our stickiness as as new consumers aren't just coming in and learning about MINDBODY, but they're also being exposed to other products in our product portfolio.
30m 26s
Absolutely. I agree, Steve. Appreciate the color. I'll hop back in the queue. Thanks, guys.
30m 32s
Awesome.
30m 32s
Thanks, Aaron.
30m 35s
The next question is from Doug Lane from Water Tower Research. Please go ahead.
30m 41s
Yes, hi. Good afternoon, everybody. Speaking on the top line, the change in the outlook there, brought it down by what maybe 7,000,000 or $8,000,000 at the midpoint. [indiscernible] the third quarter revenue number wasn't that far off of what I had in my model. So I know you don't give quarterly guidance, but I guess my question is, is the revenue reduction mostly due to results in the March or anticipated results in the June.
31m 13s
Yeah. I would say there's a little [indiscernible] both there, Doug. I think in our last call and in a number of subsequent follow-up calls, we talked about the challenges after our launch. In October, when we launched the product, it was a massive success. To the point where we were out of inventory for a after a couple of weeks. So virtually, for six weeks, were in an out of stock position. Got inventory back in the December and we were able to fulfill all of those back orders which left a lot of our customers and consultants with in certain cases multiple sets of MD product. And that progressed into our fiscal Q3 I think what's really positive right now is that, one, we've resolved all of the supply chain issues the logistic issues, around that out of stock. 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 new orders coming in. So our our bookings, if you will, during the quarter really stabilized. And so I really believe that all of the noise around the initial launch is behind us.
33m 3s
And the change to our our range then is to really take into account we still have a lot of chop and uncertainty within our international market. Now launched the product towards the very end of the quarter. And really to customers fully just a few weeks ago. So how much upside and growth comes out of our international markets [indiscernible] is a bit of an unknown right now. Obviously, And so we're hedging a little bit on that. But we do believe that the noise from our fiscal Q2 is behind us and are looking forward now to to build going forward.
34m 3s
Okay, that makes sense. Another number, the active accounts in The Americas. Was 115 in the December and 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 fallout from the stock out or is there something else going on? Yes, think it is primarily attributable to the stock out there, Doug. It really is, if you look at the lines there and more detail, it's really coming from our customer base in The Americas.
34m 35s
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, we're 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 MB 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.
35m 3s
Okay. Okay, I get that. And then now, you launched MB in October, here we are in May. What have you learned about the MB product? Because it is a novel idea, the idea of using Nutrigenomics to generate your own GLP-one is not like taking a shot that you see on TV. So what have you learned about educating your sales force on the GLP one product?
35m 29s
Yes. It has been a learning experience. And I'll just tell you, during this last quarter in the January February, March, I guess all throughout the quarter really, we looked at just how our consultant base was positioning the product, how they were selling it, the messaging they were creating around it, 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 100% natural, that is focused on long term weight management as well as other health benefits. And not a magic pill. And then another camp of consultants were much more focused on the weight loss story. And I think as we sit here now, six months post launch, that first group has had much more, although maybe slower, but more sustainable month over month over month growth. Their retention is higher. Their 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 as I thought about it, it's a little bit of the rabbit and the tortoise, I think, we're experiencing. We really invested quite significantly during the quarter.
37m 33s
We held what we referred to as a town hall meeting And really, we had almost 1,000 consultants on that call. To reiterate really the message around A, the benefits of this product. Now we've got enough updated study that both for The U. S. Formula and our international formula [indiscernible] a claim around 200% increase in average of the GLP-one production. And what that really means. And it it doesn't necessarily just equal weight loss. It does over a period of time, But at the end of the day, it's still a caloric story. And if you're eating more than you're you can still out eat GLP-one, either synthetics or our product. And so we added to our story just mindful, activation lifestyle changes. Things that are very common sense around exercise, sleep, reducing sugar intake, increasing water consumption, taking the product with protein, some very common sense types of things that reiterates 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 can be losing weight in inches. And that really, again, I think resonated with our consultant group and we've seen kind of a pivot in terms of how people are talking about it.
39m 43s
Which I think bodes very well for long term growth with this product for LifeVantage. It is still a highly innovative natural alternative to the drugs that are out there. We're pleased as can be with our positioning as that alternative And really, on us, it's on our consultant base to continue to evangelize to get the word out about the benefits of having this alternative solution. The market has created a massive awareness for us And it's up for us now to take advantage of it.
40m 31s
That's good color. Thanks, Steve. Yeah.
40m 34s
Thanks, Doug. Thanks, Doug.
40m 38s
This concludes the question and answer session. I will now turn the floor back over to Steve Pfeiffer for closing remarks.
40m 46s
Thanks, operator, and thank you, everyone, for joining us on the call today. As we conclude, I really want to extend my appreciation all of our employees who do so much of course, outstanding independent consultants who who sell our products. Our stockholders and our very committed customer base. We're excited about where we are as a company and our our future and look forward to updating you in our next quarter. Thanks a lot.
41m 23s
This concludes today's teleconference. You may disconnect your lines at this time. You for your participation.
Key Insights
Third quarter revenue was $58.4 million, up 21% year-over-year, driven primarily by strong demand for the MINDBODY GLP-one system in the U.S., which saw 31% revenue growth; international revenue declined 7% but is expected to improve with new product launches.
Gross margin improved by 210 basis points to 81% due to favorable product mix and lower inventory and shipping costs; adjusted EBITDA increased 27% to $6.4 million (11% margin), and adjusted non-GAAP EPS was $0.26 versus $0.21 last year.
Active accounts in the Americas grew 17% year-over-year, with a 13% increase in independent consultants and a 19% increase in customers; about 85% of new MINDBODY customers are on subscription, and 45% of MINDBODY sales are bundled with other products.
The company resolved prior supply chain disruptions and is rolling out the MINDBODY system internationally, with full global launch expected by year-end; management is focused on enhancing digital tools, brand awareness, profitability, and international growth.
FY2025 guidance: revenue of $228–$235 million (16% growth at midpoint), adjusted EBITDA of $21–$24 million, and adjusted non-GAAP EPS of $0.72–$0.88; effective tax rate expected at 22–24%, with continued focus on capital allocation, including dividends and share repurchases.
