WW International's Slimmed-Down Profits: Cost Cuts Help, But Subscriber Losses Weigh On Q3 Results

WW International, Inc. WW shares are trading lower after the company reported mixed third-quarter results.

Net revenues for the quarter declined 10.2% year-over-year to $192.9 million, missing the consensus of $193.439 million. Subscription revenues were down 6% YoY, while other revenues fell 85.6%.

Adjusted gross profit was $133.3 million, down from $142.2 million a year ago. The adjusted gross margin stood at 69.1%, up from 66.2% YoY, reflecting cost reductions and discontinuation of lower-margin consumer products.

The company’s third-quarter adjusted operating income was $35.7 million, excluding major impairment, restructuring, and CEO separation costs, compared to $36.6 million a year ago.

Adjusted EPS was $0.24, down from $0.60 in the prior year’s quarter and above the consensus of $0.06.

End of period subscribers fell 8.8% overall, with Digital segments declining, but Clinical subscribers rose 71.5% to 78,000. Total Paid Weeks dropped 7.4%, offset slightly by growth in Clinical Paid Weeks.

Net cash used in operating activities for the nine months totaled $21.447 million, compared to $1.153 million used in 2023. As of September 28, 2024, the company’s cash balance was $57.18 million.

“The execution of our cost reduction initiatives continues to yield results, including another quarter of record adjusted gross margin. We remain on track to deliver on our 2024 adjusted operating income guidance and deliver on our overall cost savings targets. Our current actions are driving improved profitability and liquidity as we work to turn around the business,” commented Heather Stark, the Company’s CFO.

2024 Outlook reaffirmed: WW International expects revenue of at least $770 million 775 and year-end total subscribers of at least 3.1 million.

WW sees Adjusted operating income of $100 million+, Adjusted EBITDAS of $150 million+, and operating loss capped at $240.4 million after charges.

Price Action: WW shares are trading lower by 6.04% at $1.09 at the last check Wednesday.