Last week, WW International (formerly Weight Watchers) reported they finished the second quarter of fiscal year 2021 with 4.9 million subscribers, down slightly from 5.0 million as of June 27, 2020. Of the current 4.9 million subscribers at the end of Q2 2021, 4.1 million were digital subscribers, an all-time second quarter high, and a 6% increase year-over-year.
“The strong digital year-over-year growth momentum in Q1 slowed in the second quarter as we cycled against strong digital performance in 2020,” said Mindy Grossman, WW International president and CEO, in an August 10 news release. “We continue to see strong member retention trends, momentum in Digital 360, and expansion of adjusted gross margins. We have a comprehensive plan to optimize performance in the second half of the year and position us well for growth in 2022.”
“We are excited to launch our new food program innovation later this year, making weight loss and wellness even more simple, livable, efficacious and sustainable, which we are confident will drive year-over-year growth in member recruitment,” added Grossman.
Other highlights from the quarter, which ended July 3, 2021, include the following:
- Total revenue for the second quarter was $311.4 million, including $272.9 million from subscriptions and $38.5 million product sales and other revenue. Total revenue was down 6.7% year-over-year.
- Subscription revenue represents 87.6% of total revenue; product sales and other revenue make up the remaining 12.4%.
- Total Paid Weeks for the quarter were up 0.7% due to increases in Digital Paid Weeks in all major geographic markets, though this was partially offset by declines in the Workshops + Digital Paid Weeks category.
- Adjusted gross profit was $191.0 million, down 5.1% compared to the second quarter of fiscal year 2020.
- Adjusted gross margin for the quarter was 61.3%, an increase from 60.3% in the prior year period.
- Net income for the quarter was $8.9 million, or $0.12 earnings per share, compared to $14.0 million, or $0.20 earnings per share, in the second quarter of fiscal year 2020.
- As of July 3, the company had a cash balance of $125.6 million.
“Subscriber trends in Q2 followed a more typical seasonal pattern than we expected, and our guidance reflects this trend. Our gross margin performance remains strong and reflective of the ongoing benefits of our flexible, subscription-based digital model. Looking ahead, we have a comprehensive plan to optimize financial performance in the second half of the year and deliver growth and value creation over the long-term,” said Amy O’Keefe, chief financial officer for WW International.
Full year 2021 guidance
For the full fiscal year 2021, WW International provided the following guidance:
- Revenue will be in the $1.3 billion range.
- GAAP earnings per share will range between $1.10 and $1.25.
Partnership with Zoom for Wellness That Works™
The company’s financial report comes just a few weeks after WW International announced its partnership with Zoom Video Communications for the launch of WW’s Wellness That Works™ program. This is a new app for Zoom that helps users adopt healthy habits in all aspects of their lives, including their professional and screen lives. Wellness That Works™ sends push notifications to users to remind them to move more, eat right, stay hydrated, breathe properly and shift their mindset to keep wellness in mind at all times. The program also provides dinner and work-from-home snack and meal ideas.
“At WW, we’re on a mission to democratize wellness for all, and we’re excited to extend our collaboration with Zoom to help push our mission forward,” said Gail Tifford, chief brand officer for WW. “Regardless of where employees are working now and in the future, they will continue to spend many hours sitting, behind their computers and on Zoom, and we see a great opportunity to inspire healthy habits during these moments and more.”
“We’re thrilled to have WW’s Wellness that Works app for Zoom as part of our new offering to help keep our customers focused and in the right mindset as they head into their meetings,” said Ross Mayfield, product lead of Zoom apps & integrations. “We’re excited that this integration will provide Zoom users with helpful tools to adopt healthy habits on and off the platform to enhance overall productivity.”
Over the last 18 months, health and wellness have been on the minds of virtually everyone. Millions of people subscribed to or continued their wellness journeys using WW apps. Though the subscriber total is down year-over-year, WW has a solid path moving forward. Their restructuring has helped them cut costs and their innovations and partnerships have helped them continue to move forward while increasing their gross margin. Under their current leadership, WW has a solid path mapped out to finish the second half of 2021 strong.