LifeVantage Corporation (NASDAQ:LFVN) Q1 2024 Earnings Call Transcript

Page 2 of 2

And then all of the remaining markets in Asia will launch towards the end of our fiscal year. So by the end of our fiscal year, all of the countries that we currently operate on will be operating under the new Evolve plan. Some of them will still be in kind of a transitional period. But I think it’s safe to say if you pass forward a year from now, it will be fully implemented and in full plan operations. So we’ll be through transitions in all of the countries a year from now.

Doug Lane: Okay. Great. That’s helpful. And then I think you mentioned in your comments that liquid collagen is up to a 28.1% penetration rate, and that goes up quarter after quarter here. Where do you think that can ultimately get to when you would consider it to be fully penetrated?

Steve Fife: Yes. I mean — and not to skip over that too quickly, but the 28% penetration rate is really high. So we’re pleased with that. I think it’s 30%, 35% is a very realistic — it’s — it’s our target to where we think that, that can come as again, it’s launching in additional countries now. A few months ago, we announced a new study that we have that articulates the benefits of our liquid collagen when taken with our Protandim Nrf2 synergizers — and that again has — gave a boost to us and especially in this stack or a pack that we call it our healthy Glow stack, which combines those two products together. So we think that there’s still legs to grow on the penetration front both as people get more and more used to it as well as our launch into new countries with it.

Doug Lane: Okay. That’s helpful in putting some perspective on that number. And just one more for me. And that is, Carl, I noticed that commissions and incentives were down as a percent of sales. Is this onetime in the quarter? Or is there going to be a step function down from the new comp plan going in?

Carl Aure: Yes, that’s a good question, Doug. As we — one of the big pieces to that in the quarter is with respect to promotional spend. One of the things that we had and if you look prior to the implementation of Evolve is that we had much higher promotional related spend. And in particular, in the comparable quarter last year, we had a specific promotion running around collagen to help boost the success of collagen. And so that number really is heavily influenced by the level of promotional activities that we have during the course of the quarter. And then the other thing that’s impacting just that as a percentage of revenue is we have some higher non-commissionable revenue in the quarter related to shipping related changes and some of the other price increases that we’ve taken are influencing that percentage.

So overall, the base comp isn’t significantly different, but it’s really the timing and the overall sales mix that is influencing that percentage this quarter.

Doug Lane: Got it. All right. Thank you.

Steve Fife: All right. Thanks, Doug.

Carl Aure: Thanks, Doug.

Operator: Thank you. And there are no further questions at this time. I would like to turn it back to Steve Fife for closing remarks.

Steve Fife: Thanks, operator, and thank you for joining us today. To conclude, I would like to express my gratitude to the dedicated employees, exceptional independent consultants, shareholders and loyal customers. Our recent results underscore the strength of our platform and the competitive edge of our business model in enabling individuals to establish their businesses on their own terms. With our steadfast leadership team, an array of distinctive products and actively engaged consultant community and a robust financial position. We are primed to achieve substantial growth enhance profitability and create substantial value for our shareholders. Thank you.

Operator: Thank you, presenters. And ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.

Follow Lifevantage Corp (NASDAQ:LFVN)

Page 2 of 2