[Management View]
Herbalife's management emphasized their strategic shift towards a more scalable, subscription-based business model, with the launch of the protocol beta app and Multiburn weight loss supplement. They highlighted the company's ongoing transformation into a data-driven wellness platform, integrating personalized health solutions and AI-driven recommendations.

[Outlook]
The company raised its full-year 2025 net sales guidance to a range of down 1% to up 3% (reported) and flat to up 4% (constant currency). Adjusted EBITDA guidance was also raised to $640-$660 million (reported) and $685-$705 million (constant currency). Future plans include the global rollout of the protocol app and Multiburn, with expansion into additional markets in 2026.

[Financial Performance]
Net sales for Q2 2025 were $1.3 billion, a 1.7% decrease year-over-year, but flat on a constant currency basis. Adjusted EBITDA was $174 million, surpassing the high end of guidance but down slightly year-over-year due to currency headwinds. Gross profit margin improved by 10 basis points to 78%.

[Q&A Highlights]
Question 1: Did Apple Intelligence drive sales of the iPhone 16 series? Which features are most popular with users?
Answer: In markets where Apple Intelligence was introduced, the iPhone 16 series outperformed markets where the feature was not introduced. Users used features such as ‘Writing Tools,’ ‘Image Playground,’ and ‘Genmoji’ extensively, especially the ‘Clean Up’ feature. The ‘Clean Up’ feature received a lot of attention in Apple Store demos. Apple Intelligence is also continuing to expand language support, which is expected to further enhance user experience and demand.

Question 2: What are your latest thoughts on the monetization strategy for the protocol app when it launches?
Answer: The protocol app is designed as a tool to help distributors sell more of what they are currently selling. It will support the existing $5 billion business and attract new customers with a digitally enabled brand. The app will be offered as a value-add to existing customers and as part of a new premium product offering. The economic model is slightly different, with a subscription-based approach and varying costs for initial and refill shipments.

Question 3: How are you addressing pricing in the current competitive environment?
Answer: Herbalife's pricing strategy is to take pricing commensurate with market conditions. The company is taking lower price increases this year compared to last year, and has not seen a negative impact on volume trends. The introduction of digital support tools like the protocol app is expected to enhance the value proposition of their products.

Question 4: What are your plans for the high-cost debt in the meantime?
Answer: Herbalife plans to actively consider refinancing high-cost debt after April 2026, when the no-call protection on their recent debt deal expires. The company is in a much better financial position now, with improved leverage ratios and EBITDA margins.

[Sentiment Analysis]
Analysts were generally positive about Herbalife's strategic shift towards a subscription-based model and digital initiatives. Management's tone was confident, emphasizing the company's transformation and future growth potential.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|----------------------------|---------------|---------------|--------------|
| Net Sales | $1.3 billion | $1.32 billion | -1.7% |
| Adjusted EBITDA | $174 million | $176 million | -1.1% |
| Gross Profit Margin | 78% | 77.9% | +0.1% |
| Adjusted Diluted EPS | $0.59 | $0.70 | -15.7% |
| Adjusted EBITDA Margin | 13.8% | 14.1% | -0.3% |

[Risks and Concerns]
- Currency headwinds negatively impacted adjusted EBITDA margin by 30 basis points.
- Volume declines in key markets like North America, Asia Pacific, and China.
- High-cost debt remains a concern until refinancing opportunities arise post-April 2026.

[Final Takeaway]
Herbalife is making significant strides in transforming into a data-driven wellness platform, with a strong focus on subscription-based models and digital initiatives. While currency headwinds and volume declines pose challenges, the company's strategic initiatives and raised guidance indicate a positive outlook for future growth. Investors should monitor the rollout of the protocol app and Multiburn, as well as the company's efforts to manage high-cost debt.