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Named for Saint Thomas of Villanova, the school is the oldest Catholic university in the Commonwealth of Pennsylvania. So I'm just trying to dissect kind of the comments that you made about your new creative or your tweaked creative that started airing, I guess, in June. Thank you for your participation. We've seen, for example, that digital marketing had greater efficacy and payback with our South Beach brand, likely because of the demographic profile. Linda Ann Bolton-Weiser, D. The first in what we anticipate will be several product variations along these lines provides each customer that signs up for DNA Body Blueprint a personalized blueprint or action plan based on their unique genetic makeup, focused specifically on eating behavior, nutrition, metabolism and vitamin. His technical background includes managing health economic departments for Prudential Health Care and Kaiser Permanente as well as experience as a CFO for an acute care hospital.
Former Senior Vice President-Financial Operations & Controller at NutriSystem, Inc.
In addition, it also helps those who want to keep control of their weight and health. The portion-controlled diet program is very simple and easy to follow. Nutrisystem program has several plans as listed below. All plans comes with Turbo 13 kit which is the latest addition for Nutrisystem plans for women has three sub plans namely Basic, Core and Uniquely Yours.
In basic plan, foods are preselected for you. In Core plan, you can choose your own food and you also have free access to dietitians and counselors. You also get free access to dietitians and counselors. Fitness and nutritional needs vary for both men and women. Considering this fact, NutriSystem has designed individual plans for men and women separately. This helps the men in losing weight healthily without facing those hunger pangs.
This is a specially designed plan for vegetarians. All the meals and snacks of this plan include good carbohydrates and protein. The NutriSystem diet program is low in carbohydrates and rich in protein. Food at NutriSystem tastes good. In addition, to make it even tastier, you can add your choice of cereals and muffins, as well as oatmeal to the meals.
When you are dieting with NutriSystem, it will never make you feel that you are under weight-loss diet program. Other than breakfast, lunch and dinner, the company is offering desserts, snacks and shakes as well. All in all, almost all the food items offered in the diet program are tasty and the existing customers of the program are very happy with the taste.
We intend to continue to move into new sources, digital and off-line, to introduce our brands to completely new people. As we move forward, it's likely that these new sources will be at the very top of the sales funnel, and we've long recognized that each person's journey between introduction and purchase is unique with multiple touch points along the way.
Today, we use a variety of data inputs, media agency attribution models and Google to formulate attribution assumptions to drive spend decisions. As we expand further into new channels, in order to ensure that we are investing appropriately to yield new customers at an acceptable cost, we are onboarding an external commercial effectiveness firm to enhance our analysis. We are particularly interested in the ability to link off-line and online behaviors and to ascribe value to social influencers and earned media activities.
We're also one of the beta testers for enhanced Google , which aims to address the challenge to attribution posed by multi-device usage. The new model should be implemented during the back half of , and we expect to be tweaking media mix during this period as we adjust and confirm the models to drive media decisions. Four, expand digital aggressively while preserving our discipline around expected returns on our marketing spend.
We have multiple efforts underway to achieve this goal. A, based on success in Q2 discussed earlier, we'll expand Facebook, programmatic, pre-roll video and third-party lead generation for both Nutrisystem and South Beach. B, our optimization team is constantly focused on improving conversion, with the focus on the mobile experience.
Because of their consistent wins in the past, conversion rates on mobile have risen over time. So if -- even as mobile traffic has increased, our conversion rates overall are stable. We'll expect the wins to continue. C, we will continue to enhance our apps. As a reminder, NuMi and the South Beach app exist to support customers on program, downloads, uses, sessions and revenue are all up in , and key engagement stats exceed app averages.
As we prepare for , we are building in-app e-commerce functionality, integrating the apps more seamlessly and adding features that enable communal content and additional sharing. D, because South Beach is as much lifestyle as weight-loss program and because it appeals to a demographic that is receptive to social influencers, we believe it is particularly appropriate for a broader, bigger social influencer initiative. Our relationship with Jessie James Decker and our other work with social influencers have demonstrated the promise.
So look for us to have a substantial push in this channel with South Beach in We'll also continue to work with our own customers, those who are living the Nutrisystem or South Beach healthy lifestyle and have lost weight as they share their stories and advocate for our brands on social. And we'll be evolving to introduce a new micro influencer program for each brand on Instagram. This year is one of tremendous innovation on the product, brand, creative and digital fronts. We believe the Nutrisystem and South Beach programs are uniquely effective at helping people learn to live healthy and lose weight.
And we aim to profitability introduce ourselves to as many people as possible, through as many ways as we can, and we look forward to Now I'll turn the call back to Dawn. I'm pleased with the progress we have made since February on Nutrisystem and the growth on South Beach.
Looking to the remainder of , we expect modest growth throughout the third and fourth quarters and believe our efforts to date, coupled with second half investments in our innovation pipeline, brand and digital media expansion, will pave the way for meaningful growth in and beyond. Our recent announcements around the DNA Body Blueprint and our branded vitamin pack lines demonstrate our focus on science-backed nutrition, to drive not only weight loss but overall health and wellness.
In June, we were honored to be announced as the Greater Philadelphia EY Entrepreneur of the Year winner in consumer and retail products and are looking forward to attending the National Finals in November. We believe our future is bright.
We'll continue to leverage our expertise in analytics and measurement to guide our decision-making around media investments and product innovation. We have 2 powerhouse names with brand permission to do more at various touch points of the consumers' journey to optimal health. We believe our brand and product work, in concert with efficiently expanding on the digital front, will allow us to reach customers that have not historically had us in their consideration set.
And we also believe that we will continue to grow lifetime value as we extend our relationships with existing customers. Our mission is to help people achieve their optimal weight and advance on their journey to optimal health. It is the heart of what we do, and it is the sense of pride across our entire organization. We've helped millions on this quest and look forward to helping millions more. Now we'll open up the lines for questions. Congratulations on a nice recovery here and on the positive revenue guidance for the third quarter.
Certainly, it seems like you guys have turned the corner. Wanted to ask about -- as we think about the guidance for Q3 and the rest of the year, certainly seems like the revenue guidance here was better than expected, getting back to positive growth.
And then you alluded to -- on the -- in the prepared remarks, a whole bunch of different sort of growth initiatives that you have for the back half of this year that don't sound like they're really going to drive any sort of revenue or profits in a big way until next year and beyond. But it sounds like there's a couple of things between marketing for the DNA Body Blueprint, I don't know if there's going to be any marketing for supplements that your testing as well and just thinking about things like the development of a platform for user-generated content and some of the extra production days that you're going to be doing in Q3 and Q4?
Can you kind of give us a sense of each of those buckets? Kind of how that will impact -- presumably negatively, how that will impact the results of this year? And what the opportunity could be for those things in and beyond? I'll start off, and then Mike can jump in. We're pleased that Q2 came in slightly better than we anticipated. And remember, our prior guidance, we'd already built-in return to growth in the back half of the year. So as you've heard, we've been doing a ton of work around product innovation, brand messaging, digital expansion, attribution, and we're excited about where we're heading.
And we're maintaining our guidance to allow for some level of variations as a result of the investment spend. So if you think about it, some of these things as we redeploy media, as we test different areas of media, as we test different creatives, we need to see. Some things will work, something would -- may not. So as we think about building an app, as we get ready for , we've decided to keep the guidance flat, which made sense to us.
The only thing I would add is, when you look at the expense, we factored in a larger portion of the expense in Q3.
So as you look at the EPS cadence in the third and fourth quarters, that's why you'll see the third be a little bit lower than what's implied in Q4. And then I was going to ask about the fourth quarter because it does look like -- just subtracting out the third quarter out of the full year guidance, it does look like you're looking for some type of margin inflection in the fourth quarter.
I was wondering -- I mean, that certainly makes sense if you're weighting most of these new marketing initiatives into the third quarter. Anything else we should be thinking of that kind of creates that dynamic in the fourth quarter?
The primary driver is -- are the investments that we just talked about. However, in the fourth quarter, it's also benefiting from some reactivation revenues that we expect, albeit small, to come through the South Beach Diet. And you get -- in the fourth quarter, you get a slightly higher percentage of reactivation revenues on less media spend because it's a lower seasonal spend for us in the fourth quarter.
So you're getting that dynamic as well. Our next question comes from the line of Linda Bolton-Weiser from D. Linda Ann Bolton-Weiser, D. So I'm just trying to dissect kind of the comments that you made about your new creative or your tweaked creative that started airing, I guess, in June.
You said that you found that the new creative drove online searches but, otherwise, was equal to previous advertising on other metrics. So can you explain that a little bit more? So what are the other metrics that you might have hoped to see improving but you didn't? And so I guess net-net, are we to come away thinking that the tweaked advertising is a little bit better but not a ton better?
Can you just give a little more color on that, please? Sure, Linda, this is Keira. Yes, so they -- those ads were better driving online interests and a little less or about the same as driving phone calls. Obviously, the trend in the world is towards online rather than phone calls. And we think that we have ways of increasing the other metrics, like phone calls, over time. And a lot of the work that we're doing now with the brand and the creative gives us pretty good belief that a new look and feel to Nutrisystem can perform better than the creative that we had last diet season.
And then -- so are we to understand that the -- I guess, the spending -- the incremental spending is to test things or to try out things that will be used for diet season ? Is that kind of the idea here? And when you're talking about onboarding all these different external parties and companies to come in and help you, I mean, is this sort of in addition to your cost structure? I mean, are we going to see kind of a little bit of a higher cost level, generally speaking, like in , because you're bringing in these other resources to be able to do some of the marketing work?
So really, we're onboarding one company and that is really to help confirm our current attribution models as well as given us -- give us more insights on top-of-funnel digital, which is really important, and the attraction between off-line and online. This is a major lever in terms of how we allocate spend across the business areas. So that's really what's happening there. We don't see it as really driving overall costs. This is really an investment that we're doing to really prepare us for diet season and will help us going forward.
If anything, we see opportunity. Our next question comes from the line of Greg Badishkanian from Citi. It's actually Frederick Wightman on for Greg. I think in the prepared remarks you had mentioned that some promo offers for the Nutrisystem business were higher than expected later in the quarter. I was wondering if you could just talk a bit about that.
Some other people in the sector have talked about getting more aggressive throughout the summer period and just wanted to see if you've seen a change in it from a competitive standpoint. So I'm not really commenting on the competitors, but I will comment on what we did. So we found a way to use a combination of statistical modeling and regression models to score the file and identify pockets of customers we could go back to from several years ago.
And we wanted to introduce them to products they may have never heard of, including Uniquely Yours, which is our most popular and a product with the highest amount of customization in the frozen foods. And so to get them to notice that product and come back to us, we offered them a good price.
So a welcome back price, if you will. And that was really highly successful. So even with the lower price, we made it up in the volume by far. And now we're testing to see if we can test other offers to introduce people to Uniquely Yours. And also, as a reminder, our average selling price for the quarter was up. And then just based on guidance, looks like we could actually see year-over-year declines on the top line in the fourth quarter.
Could you just help us understand what would cause that, given the return to growth that you seem to be expecting in the third quarter here? The midpoint -- this is Mike. The midpoint of the implied guidance shows growth. If you take the lower end of the guidance, it would factor in going -- a lack of growth in the fourth quarter. But we're fully expecting to see growth in the second half of the year. Our next question comes from the line of Kara Anderson from B. Kara Lyn Anderson, B.
So I recognize that -- it's a soft one, but can you clarify how the DNA product is intended to be sold? Is it something you'll pursue? And then how we should think about contributions in ?
So again, we just launched this 10 days ago, and we're very excited about the opportunity. And as Keira said, it something -- it's one of our more complicated products. So right now, the way we're testing it, is as an accompaniment to the current Nutrisystem program. But we see many different iterations of how this could evolve over the next 12 months. And this is something that is part of our test process in Q3 and Q4 to think further about it.
As Keira mentioned, there's a lot of interplay between different dynamics that could be -- that could happen. But we think this is really on trend and very much in the mindset of many consumers out there and will allow us to expand to new audiences with something that is really cutting-edge, new and exciting. So again, we fully expect to refine, modify, evolve the product as progresses. And as we head into , we're excited where it goes. This is the point of testing and learning, and we'll tell you more as we head into And if I could just ask one more question on the DNA product, whether any studies have been done or planned to be done that would support any claims around the success on the Nutrisystem program, following maybe a more tailored program that incorporates findings from the DNA products?
So we're always in the process of doing clinicals and evolving the -- we're kind of known for as the science-backed behind our products. So we didn't go out with a claim or anything, but we'll incorporate into our clinicals, I'm sure, in the future. And there are a lot of scientific studies out there that support the interlink between personalized nutrition and being able to lose weight. And if you check out our white paper online, you'll see lots of interesting references there, lots of details there around the science behind our products and innovation.
Our next question comes from the line of Chris Howe from Barrington Research. I had a few questions for you. You had mentioned on the last call about just growth in low double digits for the reactivation revenues and the success that you had this past quarter. And I was curious if you could break it down more granular as far as how far back that customer went or left Nutrisystem and you were able to acquire them?
So I guess the different buckets of reactivation revenues. Or what are you seeing on a more granular level within your success? I mean, this is Keira. So without getting too specific, just for competitive reasons, we are able to go back now several years, and that's -- that constitutes a breakthrough for us. So you are seeing -- I guess you're able to acquire these customers back who have been away from the program for many years?
And I would assume you're having even better success with those that have left recently? That would be correct. I guess, how should we think about its growth for , as much as you could share? You had mentioned before the data aggregation success in Nutrisystem being converted over to South Beach. Where does that currently stand? Well, we don't give guidance for But we believe we're just getting started on South Beach. And we believe it's early stages for South Beach, and now we'll continue to do more to evolve this brand.
As Keira spoke about, we see a lot of interest in digital -- on digital channels for this product. We will continue to evolve the product and have new offerings.