Herbalife Ltd. (HLF) Earnings Call Transcript & Summary

All right. Welcome back and good afternoon. My name is Christopher Barnes, and I cover U.S. Consumer Packaged Goods here at Deutsche Bank. For our next session, I'm delighted to welcome Herbalife. Here with us today in person are Chief Executive Officer; Dr. John Agwunobi; and Chief Financial Officer, Alex Amezquita. The format for this session will be a presentation and with any Q&A left over. And with that, let me hand it over to you, John.

Thank you so much. Thank you. Okay. Let me welcome all of you. Thank you for coming. We're going to spend the next 30 minutes or so, if you'll allow us, giving an overview of who we are as a company and what we see for the future, and then we'll save some time at the end for questions and answers. Just very quickly, you might want to put your glasses on for this. This is our required disclosure statement, and I'll give you a moment to read through every detail. The moment is done, moving on. So we're -- as I give you kind of the very top line here. We're a premier global nutrition company. We've been in the business of selling nutrition into our communities around the world now since 1980, 42 years. We operate in 95 different markets, and for context, the largest market is the United States. It sits at about 24%, 25% of our sales. The #2 market and one of our fastest-growing markets is India, actually, believe it or not today. We have about almost 1,100, I think, 1,800 -- sorry, 10,800 employees, more than half of which are in Los Angeles. The rest are in country offices around the world. We're in 3 broad categories of business. The first would be Weight Management. The second would be Sports Nutrition. And the third, a category we call Targeted Nutrition, would be a category that contains more wellness-related products like vitamins, fish oils, digestives like aloe and many other SKUs and products. Just to add to that a little bit. We -- our main kind of ingredients tend to be protein, many different kinds of protein including soy protein, vegetable proteins and so forth. And we manufacture more than 60%, I think somewhere around 63% or 64% of our products are manufactured by our company, by our employees in our own manufacturing facilities around the world. The rest of our products are manufactured by long-term, high-quality third-party manufacturers. Net sales, $5.8 billion in 2021, with an adjusted EBITDA, as you can see there, $873 million in that same year. We are recognized by Euromonitor as being #1 globally in a number of core kind of spaces. I smile as I say this, but it's important, the #1 health shake in the world. The #1 meal replacement in the world. And in many markets, the #1 supplement brand in many of our markets around the world. Let's move on. Just very quickly to give you a sense of why we're so proud of where we are and where we're going, I want to give you a few top line kind of highlights here. First, well, we're a growth company. And if you think about it, we're -- the business that we're in is aligned with long-term trends. The obesity epidemic, the trend towards entrepreneurship and, of course, aging, healthy aging, and a number of other core macro trends out there in the world are at the very center of what we do. We compete with others in this marketplace, and we're proud of the fact that our principal method of competition, our principal moat is the quality of our products. We've been in this business for 42 years, and we recognize that as people seek health solutions, wellness solutions, that the principal thing they are looking for in this space is quality. We have 10 quality and R&D labs around the world, and we've long made quality a focus of our business. Science is what drives our results. And we're very clear on that, very focused on that as we generate new products for the future. I want to take a moment to describe something that makes us quite unique, our distribution channel. It's also a competitive advantage, a moat that is very hard for others to match up with, and that would be the fact that we sell exclusively through independent distributors. These distributors -- this network of distributors that we've built up over the last 42 years has been something that we've learned to do extraordinarily well. It's about bringing people in that have a passion for nutrition, people that have a passion for helping others but individuals that are driven by a desire to build a business, a desire -- they're entrepreneurs at their very center. They bring not only a very service-oriented person-to-person relationship with each of our customers, they help build these unique one-on-one relationships but they also help build communities that these customers and other distributors can become a part of. Communities that generate not just value for the individual but help extend out for the business the relationship with customers and turn them into long-term value propositions. The other thing I would just state on our distribution channel is that our distributors are an amazing source of innovation. Unlike our competition that sometimes has a very static model of going to -- that they used to go to market, we rely heavily on the daily innovation, the insights, the entrepreneurial spirit that our distributors bring to us in each of our markets around the world. They are a great source of some of the most important winning propositions that our businesses had. Whether it be Nutrition Clubs, which I'll talk about in a moment, or others. Can't see what that last one says there. May be not much there. So the next part of our presentation we'd kind of focus on. Why we're so proud of the future. I talked a little bit about the fact that there are macro trends that are driving consumer demand for the products that we're in. I think it's also safe to say that on the business opportunity side, this entrepreneurial spirit, this trend towards gig economy jobs, this trend towards whether it be part-time income or full-time income plays strongly into where we are and where we're going. We're in functional foods, and very clearly helping sports and fitness-oriented individuals achieve peak performance. Has also this emerging kind of fitness economy, the emerging awareness of the importance of self-care and of fitness have helped us dramatically, but it offers even more growth in the future. I mentioned that we're in 95 countries, and I would just state that even though there are some big markets for us in that 95, there are lots of emerging markets that we think are very important to us. Some of the activities that we're seeing in countries like -- some of the growth that we're seeing in countries like Vietnam, for example, or others, Chile in South America and many of our European markets lead us to believe that we're still just getting started and that there's so much more ahead of us. That diversity, with one caveat, the pandemic synchronized a lot of our markets for a moment in time. Everybody locked down at the same time, everybody came out of the pandemic at the same time. But beyond that, the diversity that is inherently built into being strong players in 95 different markets allows us an advantage over some that rely heavily on one versus the other market. I'll let my colleague in a moment just kind of go a little deeper into our financials, but our cash flow has been impressive. Our adjusted cash flow from operations over the last 10 years totaled $6 billion. We're averaging $600 million a year, which is not insignificant. Just very quickly on the 3 areas I described, giving you an overview of why we think there's such a big market opportunity here. If you look at the -- to my left, your right, the first circle there, that represents Weight Management. And it's a big business, a big category around the world. We have an 18% share, and in many markets, if not globally, I think it's safe to say we are one of the biggest, if not the #1. Euromonitor would say we're the #1 in many regions, we're the #1 in weight -- in meal replacements, which is a core proposition in Weight Management. But if you look at it, it's a $20 billion market with an impressive CAGR there of 5%. Of course, Sports Nutrition is our fastest-growing business. It's a relatively newer category for us as a company, our newest. We've been in it for a decade or more. But we're still only 1.9% of that global marketplace. We think it offers us a significant opportunity to grow not only in that category, but because of its halo impact on the other categories in which we play, we think it has the opportunity to help raise our positions in the other 2 categories, Sports Nutrition and in -- I'm sorry, I'm reading the wrong one. I have something in front of me on the slide. So let's talk about Sports Nutrition, it's where we are. $23.5 billion, 1% share, not 1.9%. 1% share of Sports Nutrition, but we believe it's an important part of our future. It's -- it offers credibility and authority. When you're good in that marketplace, you tend to have a halo impact across all of your nutrition offers. When you have someone like Ronaldo or other premier athletes of the world using your products as sporting experts, that lends weight to just about everything else that you do. The other thing, of course, I would point to would be the one in the middle, Targeted Nutrition, which is a catch-all category that I mentioned before. We are 1.9% of that space. It's vitamins, it's fish oils, it's aloe and a number of other products, as I've mentioned, and it's big, $125 billion, $126 billion. Might I ask, can I move that clock there? It's blocking my view. I don't know if I can. If it doesn't move, I'll live with that. Perfect. Thank you so much. So the distribution channel that I mentioned a little earlier, it offers -- and I want to go just one level deeper to kind of explain why it's so valuable. Well, first of all, it takes a while to build a network of distributors, in our case, 42 years. It's an opportunity for an individual to add value to the proposition that's in the product. Nutrition is, by definition, a very complex space. And when you're trying to achieve your goals, whether they be health-related goals or sports-related goals and you're using nutrition to get there, it takes a lot of work, A lot of knowledge, a lot of education, a lot of training and candidly, a lot of inspiration along the way. And our distributors in that -- in our distribution channel serve as coaches. They offer that incremental value. They help you achieve your results, they help celebrate those results. They introduce you to a community that's on the same journey that you were on, and therefore, help you stick to it over time. The other thing, of course, is being in your community, as our distributors are, allows them the ability to not only be there with you every day on your journey. It's not just a transaction that occurs at the beginning of the month when you buy the product. In many cases, in our business, it's a daily interaction with our customers. It's very local. It understands what local issues are and local needs are. These communities that they build, whether they be in Nutrition Clubs or in social media, tend to relate to the communities in which they serve. I want to talk just for a moment here about our Nutrition Clubs, because we're unique in -- even in multilevel marketing, we are absolutely unique when it comes to the fact that we actually -- our distributors have locations. Many of our distributors around the world, 73,000 Nutrition Clubs around the world. 12,000 in the U.S., which, by the way, is a significant -- actually, I think it's doubling in just the last 6 years from 6,000 to 12,000 in the U.S. It's become such an important part of our model. The ability to have an actual physical location where your customers can gather every day, can consume the products, can celebrate their successes. It's made a big difference in our business, and it's one of the reasons many of our customers stay with us not just for months or years, but sometimes for decades. It's also a great training opportunity for new distributors. They come into these locations almost like apprentices and they're given an opportunity to learn the business hands on from their upline while they serve customers. Consumption is an important part of every Nutrition Club model. And these -- it allows us to not only service individuals who want to buy multi-serving containers of our product. But for individuals that are price-sensitive, it also gives them the ability to just interact with us at the level of a shake rather than having to buy a full can or a full product. I'm almost done with my monotony here, but give me a second. I do want to hit a few important things. First of all, starting in the U.S., but now increasingly around the world, if I'm not mistaken, 80% of our sales are done in markets that are what we call a segmented. We've separated the customer ad they -- and what they need, and we approach them quite differently from what the distributors need. In these markets, we have distributors who sign up. to resell the product, and we have customers that sign up to obtain a discount. Not -- it is similar to what you might do at a Costco or a Sam's Club, where you would sign up to get a card and then having that card gives you access to the products at some discount. We've done that in the majority of our markets around the world, and it allows us the ability to not only document the growth of our customers in a given market but it allows us to customize our messaging. Product quality is, as I've mentioned earlier, that's our leading competitive advantages. How we go to market in many of our markets, it is what the customer is looking for. First and foremost, are these products high-quality? Are the claims on the products backed by science? And we're proud of the fact that we are a gold standard in most of the markets in which we work. As our strategy evolves, we've begun to focus our categories in a very kind of thoughtful way. As I've said, Sports Nutrition has the advantage of not only being a great growth business for us, but it offers and lends credibility and authority to the broader nutrition profile that we present in our brand. As we push forward, we also recognize that there's a purpose behind our company. Whether it's on the nutrition front or on helping people build businesses, we've begun to really articulate the notion that our purpose is what pulls it all together. Helping kind of drive and nourish the potential in individuals, whether it be as they pursue their health-related or wellness-related results, or in the aspirations of our young entrepreneurs who want to build businesses. The frequency of our interactions, as I mentioned earlier, that daily interaction with customers is quite unique for us. Most other companies, perhaps even at retail, interact with their customers on a relatively infrequent basis. Ours is a business that has daily interaction with the customers as they pursue their results and with other distributors as they build their businesses, and we think it's made a big difference in our company. One of the things that we're noting, and we think it's an important kind of harbinger of the future, is we're seeing the demographics of both our distributors and our customers get younger and younger with time. 60% of our new distributors are Millennial or Gen Z. And the reason why it's important is because there's an emerging fitness trend, as I mentioned earlier, that is kind of leaned strongly towards the younger generations. And entrepreneurship and the gig economy are increasingly being identified as being highly attractive to a younger demographic, and candidly, we get our innovation and our entrepreneurial spirit from our distributors all too often. So having us trend younger, we think, is an important and positive trend. Let's talk strategy for a minute. Yes, we've had an amazing run, 42 years of growth and success. The last few years, let's put aside the pandemic for a moment, we'll talk about that I'm sure, if not in our presentation in the question-and-answer session. But we've laid down a company that over the last 42 years, as I've said, grown into 95 markets. We've done it in a very manual way, distributors reaching out and talking to others, and that's always going to be an important part of our business. The relationship side of our business is critical. But what we've learned during the pandemic and what I think we always knew was going to be an important part of our future and what's absolutely explicitly prioritized within our long-term strategy is that a full-fledged global transformation changes us in a dramatic way. It allows us to take that high-touch proposition that we're so proud of, and candidly, exploded in a way that I think is going to be critically important. Whether it be social media or e-commerce or many of the other tools that we can use to help accelerate and expand the reach of our distributors, we believe the digital transformation is a critical part of our future. I'll take a moment and just share because I have a few minutes here to share a quick vignette. Over the years, we've used technology in a very transactional way. We've used technology to kind of support specific functions, specific interactions, for example, buying a product or delivering a product, the interaction has been very transactional. But we recognize now that it's time to -- I've used this analogy with our distributors. Kind of tear down that old house, which has been patched and kind of incrementally added to start over with a new view on what the distributor looks at, what the distributor needs. A forward-looking look at what the distributor is going to need in the future to reach more people more effectively, more efficiently, but with an emphasis on the experience. Making it so that our digital interaction enhances what the distributor brings to the relationship with their customers as opposed to today, all too often, it's actually been a hindrance. Product innovation is at the center of who we are. We're very proud of the unique products that we sell today, Formula 1 being our core product, but many others are even -- are as impressive as that product. We're increasingly moving product innovation and ideation into the regions. We used to do it all very centrally in Los Angeles, our home office. But as we move forward in our strategy, we're building out the capabilities in each of our regions so that they can innovate and develop products for their local markets. Great examples would be the new ayurvedic line of products that has just launched in India. The [ Acai Berry ] line of products that is beginning, we've launched 1 SKU and more will follow in Brazil, using local ingredients for a local marketplace. We're increasingly moving down the road of having unique regional flavors of even our core products whether that be red bean flavor, a red bean flavor meal replacement in India, or a number of other kind of very local product flavors that are being launched. So product innovation and our ability to move that into the regions is a big part of our strategic plan. Almost done here. Distributor enabling technology, as I mentioned in the digital conversation there a few seconds ago, relates more to improving their reach their ability to manage more customers at the same time, their ability to manage their sponsorship of more downline distributors in a more rich and kind of engaging way. And ultimately, our ability to kind of better connect distributors with customers and the overall customer experience. These are all kind of the goals of our investment, which is coming, which has actually started already this year and it's going to accelerate over the next few years, our investment in building out this new distributor, this transformation of our distributors by -- with digital technology. As I mentioned in product innovation, it's about, number one, local product development. But I also want to kind of note that our hope is that not only will it make for better products, more relatable products in particular markets, but it will also enhance speed to market as each market is working not to wait on the next kind of things being passed region to region, but actually developing products that they need. I want to get quickly, as our focus on categories, we're launching a vegan line. We expect that to be in the first half of next year. We're very excited about it. It's not just a vegan SKU as we've done periodically around the world, but an entire new line of products that will be vegan. Sports Nutrition, as I mentioned, is a category that we're going to grow. We're actually #17, if you look at some of the Euromonitor metrics today, and our goal ultimately is to get to #10 and then on to #1 at some point over the next few -- in the next 5 years or longer. Dayparts is a specific part of our strategy. We've been very focused on products that cluster around the breakfast experience, but our hope is now that we can start to move into lunch and into dinner with things like soups and other baking products that are all functional nutrition products. High protein or designed to promote health. Protein -- high-protein coffee is a good example. And then lastly, I'll focus on the Millennial and Gen Z. As I said, they're 60% of our distributors. They are a growing part of our consumer base, and there are specific product lines that makes sense for them. High-protein snacks as we've shown on this slide. We've also gotten into, in this case, a CBD skin care line or skin support line called Essentials that I think is going to do really well. It's in the U.S. now, and we're kind of working through to see what the next extension of that product line might look like as we go forward. Just quickly going one level deeper. Energy, Sports and Fitness, our fastest-growing category, has shown a 26% growth in net sales between 2020 and 2021. But when you look at it from the standpoint of the demographics of our distributors, much faster growth amongst our Gen Z distributors and customers. And with that, I'll stop there. We'll get to some questions on adding, I've no doubt, the Chief Financial Officer, Alex Amezquita.

Thank you, John. So just in summary, I'm going to hit on a few things. I'm going to hit on just where are we as a company from a top line perspective and where we've been and where we're going. I'm going to hit a little bit about the underlying KPIs that give you a sense of the health of the business and why we still feel confident that we are a growth company, as John laid out as part of our investment thesis. And then I'm going to hit in on cash flow generation and cash flow capital allocation more broadly in terms of reemphasizing our commitment on what we do with our cash as a business. So first, going to the top line. So as you can see, we have some growth going into '18 and '19, and John mentioned the explosive growth. By the way, unexpected when the pandemic, this is April of 2020 hit, we weren't quite sure what was going to happen. At our knitting, at the core of it, we are an in-person business. It's those personal relationships that distributors have with their customers that really provide that core competitive advantage in selling nutrition products around the world. And we weren't sure how things were going to go in a world that was predominantly locking down. What we saw was the results in 2020, where we achieved a then record for the company as we saw global demand as people were making a connection between what they put in their body and how to best navigate the world with the pandemic environment around them. Not only that, but then 2020, '21, was a record year beyond that. And in fact, right now, if you think of the months March through June of 2021, those months are 4 of the largest months, 4 of the 5 largest months in company history. So right now, even though I think largely, we think of the explosive growth in 2020, the surge continued much into the first half of 2021. That situational demand, for all sorts of reasons, started to normalize coming out of the end of 2021 and into the first half -- into the first quarter of 2022, and that's currently where we sit. So if you look at the $5.8 billion of net sales that we did in 2021, that is a little under 20% growth from where we ended 2019. And as we think of the midpoint of guidance of 2022, which is down 7%, we are still netting just over 10% growth going from prepandemic to postpandemic. What does that mean? I guess one other point just to note, in that midpoint of guidance reflects net sales growth as we come out of this year. So really, if we think about how do we navigate through the pandemic, the large situational demand, some of that demand staying in the base of our business, some of that demand churning out for all the right or obvious reasons. What are we left with? We're still left with a company that is significantly larger than going into the pandemic. And if we look at a few of the KPIs that really support why we feel confident about the future, first is this concept of new distributors and preferred customers. During -- what you have here is a chart by quarter, the nominal number of new distributors and preferred members. Preferred members, if you're not familiar with our terminology, it's just a customer that signs up with the company, they get a discount. So effectively, if you think of new people joining Herbalife Nutrition, those numbers, while lower than where they were during much of the heart of the pandemic, are still significantly above where we were pre-pandemic. Further, another metric, active sales leaders. To steal a metaphor from retail, the way that you can think of an active sales leader is effectively an open store front. It is a person that is out in the field that has the opportunity to resell Herbalife Nutrition product. And the nominal numbers you see here are, for that quarter, it's the nominal number of individuals that were making an order and selling product in that particular quarter. And as you can see, yes, the number is down in the first quarter versus where we were sequentially and versus where we were in the same period sort of in the heart of the pandemic. But it's still trajectory -- the trajectory is still significantly above where we were, and it's still at a healthy level that we feel really confident about where we're heading into the future. Now some of that recent quarter weakness has to do with some of the dynamics between the cohort that came in during the pandemic versus prepandemic, and we'll sort through some of those issues. All of these issues, we employ tactics and strategies that we normally have used for the past 42 years of our history. We'll employ some of those tactics to kind of reverse that trend as we go forward. But as you can see, from this chart, the underlying health of the business, the number of folks that are still engaged with the business is still quite attractive. From a diversity standpoint, again, we still have this global diversity that is an asset of the company. About 25% is in each of North America, Asia Pacific and EMEA. Asia Pacific, a big chunk of that is India in of itself, about 10%, and then another 1/3 between China and Latin America. Now, our business generates a lot of cash. We have a highly variable cost structure. We don't have a ton of capital expenditures. And even with our accelerated investment into the digital technology that John mentioned earlier, there are still a significant amount of excess cash that the company has to deal with. So after we service our debt, after we do all of those internal investments to support the long-term growth of the company, after we look at M&A opportunities and anything else that we can support the growth of the company going forward, we return that cash to shareholders. We do this right now with share repurchases as we find that is highly attractive to the long-term value of the shareholders. Yes. We do have a history. Here is the comment about how much cash that we returned, John mentioned earlier. The ebbs and flows that you see here in the cash flow generation, there's sort of an underlying amount of free cash flow conversion that happens. And then the sort of ebbs and flows are more associated with working capital accounts and are manufacturing variances as we go from periods of rapid growth to leveling off. That was the case in 2020 when we had very positive manufacturing variances and a lot of working capital accounts going into our favor as we had explosive growth. As that leveled off at the end of 2021, some of that came back. But underlying, the business is generally throwing off anywhere between $400 million and $600 million of cash per year. If we look at our capital structure, no near-term maturities. We have convertibles that we'll have to deal with in 2024. We have plenty of runway between now and then to either refinance those [ 2024s ] or think about how do we mitigate with reserving cash just to make sure that we're not in a situation where we have to refinance. We'll look at a good economic decision, but there's plenty of runway. We don't have any maturities in 2022. We have no maturities in 2023 to use that excess cash to return to shareholders in the near term. And from a leverage standpoint, we still have a target of 3x gross. We're potentially going to be above that as we move through this next quarter or 2 if you look at where our guidance is. So we'll be above our target, but we have no intention to really make any radical changes to our capital structure. We'll go through this phase of a denominator issue. It's a denominator issue with EBITDA, and there is no immediate need to change our capital structure. We'll just ride through this trough as we get through the end of 2022 and beyond and normalize back to our target leverage ratio. So those are my prepared remarks. With that...

Just take any questions that you might have. I know...

Just wondering on your Weight Management business especially the new generation are now aware of that for losing weight it's better [indiscernible] to know what you could tell us this side of the -- for the youth. So I'm wondering if there is still a lot of room to grow -- well, a lot of those into this prepared dishes and it's better than the traditional technologies that is [indiscernible]. So your product is better, but the trend seems to be more into a total reshape of the food and not fitness regimen.

Yes. And in fact, I would piggyback on your statement by saying the trend is actually not just to reshape the food and what you eat, but reshape your entire lifestyle. And one of the interesting things about our business is, I mentioned it earlier, is these communities that our distributors build, it's not just built around our product. It's built around -- in fact, all too often, if you were to go on one of their social media sites or visit them in a club, all too often, they're actually having cooking classes or they're teaching about how to live a healthier lifestyle, including fitness, better food and eating. And then, of course, using our products to help supplement your journey and to help accelerate your journey towards your goals. We believe strongly in the notion of balance. This -- that you have to eat better, exercise more, live a more healthy active lifestyle and then use our products to help supplement and accelerate your journey. Now, I will say this. In today's age, it's extraordinarily hard to sit in front of a -- in your kitchen and to cook every meal and to hit the right balance of macronutrients and micronutrients every single time. And in many circumstances, meal replacements are a beneficial add-on to you as you pursue your goals. We believe in a lifestyle and a lifelong relationship with our customers. And no one would ever expect that a customer would stay on a meal replacement as a daily intervention for the rest of their lives. This relationship, the need for our products comes and goes on a daily basis and on a monthly basis and on a yearly basis. But because we have a lifelong relationship with many of our customers in these communities, there will be times inevitably, in the course of your journey, where taking a vitamin or using our tea or using a meal replacement becomes an important part of that trend. Come on up and have a chair.

Do you have any data on the satisfaction or repurchases of your product, not making out the -- not the weight management because, again, at some point its done that maybe on the [indiscernible] into Sports Nutrition.

Yes. By the way, I would just say that the other beauty of these communities is that it helps that transition from what happens after you reach your weight management goal with our weight management products, and you now are trying to live and maintain a healthier lifestyle and a healthy weight for the rest of your life. That transition is facilitated by these communities and by the presence of a distributor coach who's helping now say, okay, you've achieved your weight management goal. Let's transition you to a daily regimen of vitamins and perhaps a high protein shake to supplement your protein intake while you live the rest of your life visiting the gym every day. I don't have the -- do you have the numbers on...

No, there's...

There's on customer retention.

Yes, we don't have the -- we're just getting into benchmarking some of the customer retention, so we don't have that data right now. But as we come out of time, again, just to reemphasize what John is saying, we are not a company that has a 30-day program where then there is an end. The intention is for it to be a lifestyle change where a distributor is supporting that lifestyle change presumably indefinitely. So there is no prescribed end in our...

As a proxy -- but we don't have the customer number here. But as a proxy, I would say this. Our distributors, many of them start out as customers, right? They start out in working with our distributors in these communities that they build online or in the Nutrition Club. And then they decide along the way, you know what, I should start selling this product. I have lots of friends that are asking me, how did I achieve these amazing results? And I think I could help my family, my friends and my circle. Distributor retention, as a proxy for your question, I don't have the exact answer here today, but we'll be sure, Eric, sitting behind you, will be sure to have him kind of research and give it to you. This has gone over the last 10 years from numbers in the mid-20% retention to now numbers globally around 70% retention. And our goal ultimately with our customer retention strategy is to take the numbers that we have today and make them so much better in the future. So there's a lot of focus on customer retention, lifelong and lifetime value of our customers. My suspicion is we're probably in the high to mid- to high 30% range globally, but our goal is to try to get that number even higher. I'll try to get more accurate through Eric, he'll get your number. As I recall, 37% seems to ring true in my mind today with a goal ultimately of improving that over time.

Thank you.

Thank you. Now we've run out of time, and I know that this DB conference is very strict on time. So we will end there with a big thank you from me and from Alex, thank you all for attending.