Nutrisystem, Inc. (NASDAQ:NTRI) Q1 2015 Earnings Conference Call - Final Transcript
Apr 30, 2015 • 05:00 pm ET
Greetings and welcome to the NutriSystem First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. It's now my pleasure to introduce your host, John Mills, Partner in ICR. Thank you, Mr. Mills. You may now begin.
Thank you. Good afternoon, everyone, and thank you for joining us to discuss NutriSystem's first quarter 2015 financial results. Today, Dawn Zier, President and CEO, will provide an overview of our quarterly achievements and an initial diet season results; Mike Monahan, CFO, will review the 2015 first quarter financial results and provide second quarter and updated full year 2015 financial guidance. And finally Keira Krausz, CMO, will review and provide insights into the Company's marketing initiatives.
(Forward-Looking Cautionary Measures)
With that, I'll now turn the call over to Dawn Zier.
Thanks John, and good afternoon. I'm pleased that we are able to deliver double-digit revenue growth for the second diet season in a row. Additionally, we delivered our seventh consecutive quarter of year-over-year revenue growth underscoring the soundness of our plan and our ability to execute. We are off to a strong start in 2015 and saw momentum build in the second half of the quarter as we optimized our multi-channel marketing campaign. Our first quarter exceeds both our top and bottom line expectation. It's clear that our marketing, product development and engagement initiatives are resonating with consumers.
First quarter revenues grew 12% year-over-year and that coupled with improved gross margins resulted in adjusted EBITDA more than doubling year-over-year. As a result of our better than anticipated performance and continued momentum into Q2, we are raising our full year guidance and based on our midpoint expect to deliver another year of double-digit revenue growth.
I will now highlight some of the areas which contributed to our success in the first quarter and which we believe will continue to drive growth throughout 2015. First, we had an effective acquisition marketing campaign with increased pricing and reduced promotional incentives as compared to last year's diet season. This drove increases in customer activation, average selling price, paid length of stay and gross margin. We believe in the value of our products and we are carefully evaluating the opportunity for future price increases.
We also put changes in place to shift product mix towards our premium offering which fuels increased customer satisfaction and paid length of stay. And finally, our reactivation revenue showed year-over-year growth based on our projected higher volumes from last year's success and in this quarter revamping of our digital marketing efforts to past customers. In our retail channel, we continue to have strong traction at Wal-Mart. We are beginning to expand into other channels as is part of our forecasted plan. Our expansion into Sam's Club for diet season was successful and we expect to be back there again in diet season 2016.
We also tested our diet products