Hims & Hers Health, Inc. (NYSE:HIMS) Q3 2022 Earnings Call Transcript

We’re not necessarily guiding to specifics around gross margin in Q4 or even next year. We’ll provide more clarity around the top and bottom line what we expect. But largely, we have seen these trends continue over the last couple of quarters. So as a result, we’re constantly assessing whether there are opportunities to make the customer experience potentially even better, which will drive stickiness or potentially to push through elements down to market — to the gross margin.

Korinne Wolfmeyer: That’s very helpful. And then just on average order value, we did see a slight bump up this quarter. Can you just talk about some of your confidence in this level of value kind of continuing throughout Q4 and then even 2023? I mean you did mention a part of it is due to duration of the orders. So how much of that do you think is likely to continue?

Yemi Okupe: Yes. So I think what I would say is our objective function really is more around the revenue per user, and that is to some degree correlated with the — really good things that generally drive revenue per user are the duration of the subscription. So the longer-duration subscriptions generally will drive more revenue upfront per user. The overall engagement of users, how many products are they engaging us with, that won’t necessarily show up in AOV. And then product mix is the third element. It’s really what we’ve seen is we have seen substantial success as we’ve invested in our brand and also just the overall experience on the platform. We started to see the revenue per user expand. And as a result of that, what comes with two of those elements, the product mix and the duration is also AOV expansion.

And so I think as a result of that, we wouldn’t necessarily guide to a specific AOV threshold in 2023, but we are confident that these dynamics that are in the business, given the focus on the consumer and the consumer centricity of the platform that, that will enable us to continue to generate and drive more or at least a stable amount of revenue per user.

Operator: from Truist Securities has the next question.

Unidentified Analyst: Congrats on a strong quarter. Following up on the last question around AOV, is it possible for you guys to give us a breakdown on the big step-up you’re seeing sequentially in AOV? Like how much of that is driven by increasing my time on subscription? How much is product mix is like evenly split? And I’m trying to understand like — you guys have talked about how customer retention rate or churn rate continues to improve. And one of the drivers there is the multi-month subscription increases. Just give us an update like what kind of improvement have you seen over the past 12 months on retention because of this trend.

Yemi Okupe: Yes, I think I can take the first part first of that question. And maybe, Andrew, if you can take the second part on the retention. I think what we do see around it is more and more users are opting for the multi-month duration. I think the last time that we disclosed it is roughly around 35% or 36% towards the towards the tail end of last year. We have seen sequential gains since then. And I think, to some degree, the elements are correlated, meaning that, as we’ve also started to expand the offerings within certain product mixes, whether that’s rolling out a multi-month offering in mental health or additional options in the Her business, we’ve seen with the investments alongside our brand more and more consumers opting to take that.