• Revenue: $67.8 million, up 31.3% year-over-year and 43.5% sequentially.
• Gross Margin: 80.5%, an improvement of 190 basis points from the prior year.
• Adjusted EBITDA: $6.5 million, representing 9.6% of revenue.
• Adjusted Non-GAAP Net Income: $3 million or $0.22 per fully diluted share.
• Cash Position: $21.6 million with no debt.
• Capital Expenditures: $500,000 in the second quarter.
• Americas Revenue: $57.2 million, a 46.3% increase.
• Asia Pacific and Europe Revenue: $10.6 million, a decrease of 15.5%.
• Active Accounts in Americas: Increased by 25% sequentially.
• Adjusted Non-GAAP Operating Income: $3.9 million.
• Dividend: $0.04 per share, totaling approximately $500,000.
• Fiscal 2025 Revenue Guidance: $235 million to $245 million.
• Fiscal 2025 Adjusted EBITDA Guidance: $21 million to $24 million.

• Warning! GuruFocus has detected 7 Warning Signs with LFVN.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lifevantage Corp (NASDAQ:LFVN) reported a significant revenue increase of 31% year-over-year and 44% sequentially, reaching $67.8 million in Q2.
• The launch of the MindBody GLP-1 system in the US was highly successful, with initial inventory selling out in just 13 days.
• Gross margins improved by 190 basis points compared to the previous year, indicating strong profitability.
• Active accounts in the Americas increased by 25% sequentially, with a notable rise in both independent consultants and customers.
• The company has secured sufficient manufacturing capacity to meet the strong demand for its products, ensuring future supply stability.

Negative Points

• Revenue in the Asia Pacific and Europe regions decreased by 15.5%, primarily due to a decline in active accounts and foreign currency fluctuations.
• Commissions and incentive expenses increased to 48% of revenue, up from 42.1% in the prior year, impacting overall profitability.
• The company faced inventory challenges, with stockouts affecting sales momentum in November and early December.
• Despite strong revenue growth, the company anticipates continued elevated costs related to incentives and commissions in the near term.
• Foreign currency fluctuations negatively impacted revenue by $300,000 in the second quarter.

Q & A Highlights

Q: With the recent focus on attracting more social sellers and micro-influencers, how do you plan to continue scaling and building off the solid growth in active accounts? What efforts are being made around brand awareness? A: Steven Fife, President and CEO, explained that LifeVantage is expanding brand awareness and product offerings beyond the traditional independent consultant model. The company is initiating proactive advertising outreach to drive higher awareness, particularly targeting key products like MindBody, collagen, and Protandim. The success with social sellers is growing, as they attract followers who join LifeVantage, seeing the benefits of MindBody and other products.

Q: Are there any material expenses we should anticipate post the initial launch phase in the next quarter or two? A: Carl Aure, CFO, noted that while there will be some continued elevated costs related to incentives in Q3, these will gradually decrease and normalize by Q4. Most launch-related costs are behind them, and they expect commission and incentive expenses to stabilize.

Q: Can you explain the margin dynamics and why the flow-through to EBITDA might be lower in the back half of the fiscal year? A: Carl Aure, CFO, stated that while there are some elevated incentive and commission expenses expected in Q3 and Q4, the flow-through should remain consistent or slightly better. They anticipate seeing incremental leverage benefiting adjusted EBITDA and EPS in FY26.

Q: How did revenues for MindBody trend month-to-month throughout the quarter, considering the stockouts? A: Steven Fife, President and CEO, shared that October was the biggest revenue month in the company's history. However, due to inventory stockouts, November and part of December saw no shipments. Despite this, they managed to fulfill all backorders by the end of December, ending the quarter with no backlog.

Q: How are MindBody subscriptions performing compared to expectations? A: Steven Fife, President and CEO, reported that MindBody subscriptions are tracking above average, with over 50% of new customers joining on a subscription. This is higher than previous product launches, indicating strong positioning as a lifestyle and weight management product.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.