WW International, Inc. Presents at Morgan Stanley Life After Covid Thematic Conference, Nov-12-2020 09 - 00 AM

WW International, Inc.
NasdaqGS:WW
Company Conference
Presentation
Thursday, November 12, 2020 2:00 PM GMT
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Contents
Table of Contents
Call Participants .................................................................................. 3
Presentation .................................................................................. 4
Question and Answer .................................................................................. 5
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WW INTERNATIONAL, INC. COMPANY CONFERENCE PRESENTATION | NOV 12, 2020
Call Participants
EXECUTIVES
Michael Lysaght
Chief Digital Officer
Mindy F. Grossman
President, CEO & Director
ANALYSTS
Lauren Elizabeth Cassel

Morgan Stanley, Research Division
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Presentation
Operator
Thank you for joining us. My name is Lauren Schenk. I'm Morgan Stanley's small and mid-cap internet
analyst. I'm thrilled to be joined this morning by Mindy Grossman, WW's Chief Executive Officer, since July
2017; and Michael Lysaght, WW's Chief Digital Officer since 2019. I want to thank you both for joining us
today.
Before we get started, a quick disclaimer, please note that this webcast is for Morgan Stanley clients and
appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a
member of the press, please disconnect and reach out separately. For important disclosures, please see
the Morgan Stanley research discloser website at www.morganstaley.com/researchdisclosures. If you have
any questions, please reach out to your Morgan Stanley salesperson.
Question and Answer

All right. So with that out of the way, thank you both for joining us. I'm going to start with a few high-level
questions, and then I want to open up to investor questions. [Operator Instructions]
So great. Maybe, Mindy, just starting with you, starting with the theme of the conference, talk to us about
how COVID has changed the business over the past 8 months? And your 2 to 3 key learnings over that
time frame for the business?
Mindy F. Grossman
Sure. Look, there is no question that COVID has changed every aspect of consumers' lives. And what
that's resulted in is everyone having a radical reappraisal of how they live, how they work, how they play,
how they spend. And everyone really has to take that into consideration given their business. As it relates
to WW, what this has really meant is not a wholesale change in our business, but a dramatic acceleration
of what it is that we have been looking to accomplish relative to our transformation over the past number
of years. And this move from certainly being the most efficacious, sustainable weight loss program on the
planet built on community. But what we've done over the past number of years in building a much more
holistic approach to all the areas of wellness. So nutrition, activity, mindset, motivation, all again, built
on community empowered by our incredible weight loss expertise has been more important than ever as
people are really looking to how they are going to take control of their lives.
I'd say the second piece has been the investments we have made in product, in technology to really create
a seamless experience 24/7 for people has accelerated as well. Our ability to really shift all our physical
experiences to virtual experiences overnight has really been because of the expertise and the agility and
what we've been able to build. And if you think about it, what we've been trying to accomplish is how do
you take technology, data and meaning and give people all the tools to live a better connected life. And
that truly is what we're seeing. I think wellness has also gone from having been perceived as a luxury
to a necessity. And in all the qualitative and quantitative data we've done, we've really seen a shift in
consumer behavior where other concerns may have been at a higher level. And now health, being healthy
for myself, being healthy for others has had a significant impact. And if you look, COVID has been the #1
factor -- I mean, I'm sorry, obesity has been the #1 factor, and COVID thus. And I think we really have
recognized that people need the support more than ever. So this move to our digital transformation, our
ability to give people more assets to engage with. Just during this time, we launched our sleep vertical.
We launched e-commerce in our app to be able to support. We launched hydration. We launched more
content. And all of those things are because we had put so much investment and work into the strategy
for moving forward in our transformation pre-COVID.
Great. So I guess on that acceleration, on the earnings call 2 weeks ago, so you announced the launch or
a refresh of 4 new product tiers: myWW+; digital 360, which is the product we've all been referring to as
virtual group coaching; digital plus unlimited workshops; and personal one-on-one coaching. So maybe
just walk us through what's new about each platform, the rollout timing for each and then the marketing
strategy for those new tiers as we head into the prime recruitment season?
Mindy F. Grossman
Sure. So let me clarify the difference between program and membership vertical. So myWW+, which is
launching next week, we are very excited, it is the most personalized AI and data-fueled innovation that
the company has ever launched. And it's also the first time we have a very focused innovation that is not
specifically food-related, but crosses every aspect of wellness. And certainly, because of that, we'll be
efficacious as it relates to weight loss. And that becomes the core fundamental foundation of our app and
our digital assets. So to give you an idea, some of the things, there is a very full robust assessment. If
you remember, myWW had an assessment to marry you with the food plan. Now it's an assessment to
make the entire program more personalized for you. Personalized in your food choices, personalized in
your activity choices, personalized in your 5-minute coaching, personalized in what we're recommending
for you, personalized in your sleep habits. So it's taken to a degree where every single member feels it's
there, myWW+.
And that's very critical right now. We have just seen how personalization and know-me is so important
in how consumers want to engage and what they trust and what they want. So that launches next week,
certainly across all our current members as well as new members. It's also one of the first times we've
had an assessment prepay wall, postpay wall, to really give people an opportunity to experience who WW
really is and why it's for them. So think of that as the significant program innovation launch.
Then what we have done is really defined the specific verticals that you can determine are what you need
for both your support, your accountability and your lifestyle. So our digital membership is the core of
every membership. It's what everyone gets, no matter what. The new membership, which is called digital
360. And what I say, it's built by millennials for millennials, as we look to expand our cohorts, which we
have seen over the course of this pandemic that our new digital consumers coming in are younger and we
have been building to that. But this offering, in addition to having the core platform, is a very coach-led,
content-led, community-oriented experience. These are all new coaches with specific followings of their
own, but that either have expertise in fitness, nutrition, mindset. So it gives someone the ability to have
an on-demand, both live and content-driven experience to be able to choose their coach, their community
and their support. So we've really been excited about that and the feedback and what we're seeing from
our trials have been very exciting. And that will launch in the U.S. and U.K. in December and then roll out
from there.
And then the third tier is digital plus unlimited workshops. Equally excited. Because now we are not bound
by geography. We are not bound by a particular physical location. People can really have the support of
the community based on what's important to them. So it could be a coach, it could be a cohort, it could
be young moms, it could be men who people want to interact with. And so this gives them the ability to
be able to -- and then just to give you a perspective in the U.S., we will be 16 hours a day, 7 days a week
of virtual workshops. And we will still manage our physical environment. Even though we have reduced
our footprint, we still can service about 80% of our members between our studios and the work that we've
been doing to have workshops in hotels, et cetera, but this gives people ultimate choice.
And then finally, in 2021, we will be relaunching our one-on-one personal coaching platform for those
who really want that guided support. So between the programmatic, which is our big marketing vehicle,
which you will see us really focused on in winter, which is exciting news that we will be able to come out
with. And then giving people, through the assessment, a recommendation of what accountability and
membership is going to work for them and then giving them the choice. So if you look at where we think
consumer behavior is going around personalization and, for me, this covers it across all those platforms.
Right. Wonderful. I think that's probably a good transition over to Michael. myWW+ is the first sort of
new tech-driven program innovation we've seen. Could you talk maybe about some of the big technology
investments WW has made over the past 3 to 5 years that laid the groundwork for this sort of innovation?
Michael Lysaght
Absolutely. So look, I would say, first of all, WW's first investment in technology goes back to 2001.
I actually give that team a huge amount of credit for building a dot-com business when a lot of other
dot-com businesses were going bust. I think the problem for us was that in 2014, we were still on
that platform. So -- and that was truly inhibiting our ability to innovate at pace. We were only doing 2
deployments a year. And so we really needed to rebuild everything from the ground up. And we had
to look at many different areas. We started with our people. And at the time we outsourced a lot of
development. We didn't have many mobile engineers, for example. So we really understood that we had
to build that capability ourselves internally.
We started by hiring a lot of people in New York City. We went and acquired 3 start-ups at a time in San
Francisco and since then, had immersed start-up and built out a technology hub there. We opened a
location in Toronto and have been building out the team there. So really attracting world-class talents
that is digital and technology-first and understands how modern technology companies work. And we also
had to look at our technology. So we had to replatform everything. We moved to the cloud. We rebuilt
our back ends. We rebuilt the apps, the websites and so really invest in embracing modern technologies
that would allow us to innovate at a electrical pace. And the third thing that we did was we focused on our
processes. So becoming agile, becoming lean, hyper focus on understanding our members, their needs
and solving for those as well as embracing things like automation. And what that allowed us to do was to
go from doing 2 deployments a year to thousands of deployments a year. And now we actually deploy a
new version of the app every couple of weeks.
And as Mindy said, we've delivered a lot of added value for our members over the last 12 months, and it's
this investment that has allowed that to happen. I think what's interesting more than anything else is the
type of people that we bring. We have a diverse team. They're passionate about our mission, and that is
driving innovation as well. And we layer on top of that the work that Mindy and Gail have done in terms
of leading the brand transformation. The result is that our app today has a 4.8 star app rating with 1.3
million reviews, and we are one of the world's leading health and fitness apps. And like truly have become
a digital subscription business -- direct-to-consumer digital subscription business. And it's because of all
that investment that we've made.
Wonderful. Yes, I mean, I think the digital transformation of the business, not just from a consumer
perspective, but internally as well is one of the more underappreciated aspects of the story. Maybe just
provide us a little bit more color on technology's role throughout WW as an organization?
Michael Lysaght
Yes. I mean, look, so we -- when we look at how we solve problems, our technology and product team, we
look at our customers, try to understand their needs. We took the exact same approach when we looked
at our internal teams and how could they collaborate and work better together. I think back a couple of
years ago and on a snow day, we would have had been challenged to get everybody onto the network and
as we looked around the globe, we had a mishmash of technologies that were all trying to do the same
thing. So we really took a global-first approach. And we wanted to focus on enabling a strong set of tools
that will enable collaboration within the company.
And so we rolled out things like Workplace by Facebook, which allows Mindy and all of us to communicate
in a very rich way with all our team globally. We rolled out things like Zoom, Slack and Google Apps and
many, many more initiatives internally. And I think the biggest testament to the success of that was on
March 13, I think, when we went -- when we left the offices and we went completely virtual. On day 1, we
were completely focused on the members' needs, we weren't trying to figure out how do we get access to
the network. And that allowed us, within 6 to 7 days, to roll out virtual workshops live and move all of that
online as well.
Great. Beyond myWW+, how do you think about the possibilities for personalization in the future? Are
there any functionalities you're particularly excited about from a user experience perspective with the
rollout of these new 4 product tiers?
Michael Lysaght
Yes. I mean, look, so first of all, at its core, when we think of personalization, what we're trying to do is
we're trying to understand every unique member's journey, which is completely different for everybody.
So a couple of years ago, we decided to invest in our data science team. And really, what we're seeing
now with myWW+ is the first real return of investment on that as we really personalize the experience
for the member. What I'm excited about is the more you engage with us, the more you reiterate on the
underlying models and even add further models through which the experience is going to come over time.
And I think that's really exciting. This is truly a platform that's going to allow us to innovate and do more
and more over time. And personalization and data science have become really key strategic drivers for us
as a business.
Look, when you're asking me what are my favorite features, that's almost like asking me who's my
favorite shop. But I think I'm incredibly excited about digital 360, which is going to bring coaching to life
in a very new way for us. A digital-native way that we haven't seen before. And also, when I think of the
launch of unlimited workshops, the ability to find your coach no matter where you are that resonates with
you and your community is incredibly exciting.
Okay. Last question for me before I open it up to the audience. [Operator Instructions] From a competitive
landscape perspective, there are a lot of other digitally native apps in the wellness space that are trying
to go after the same people as WW. So from a data or technology perspective, what do you think WW
does better than wellness competitors today? And maybe what areas do you see the most opportunity to
continue to improve over the next several years?
Michael Lysaght
Yes. Well, look, first off, I think it's incredibly exciting for us to be right in the center at the heart of
this health tech explosion. And we're -- in many ways, we're leading the way in certain areas of that
revolution. So when we think about, and this is one of my favorite quotes from Mindy really is, our
competitive set is not just our competitive landscape, it's your last great experience. So if you've gone
on Uber, and all of a sudden a car shows up outside of the door, that's our competitive landscape. And we
are always pushing as hard as we possibly can to have the most compelling wellness app on the planet.
Period. And if we think about us and our core strengths, we will always say we're a company revered in
science, community and coaching. And I think today, to date, we have done a really good job bringing the
science and community to life within our digital experience. I think digital 360 is now going to bring that
coaching aspect of that in a very digital-native way that our digital-savvy members will expect. That, to
me, is a real compelling aspect for us.
And look, we have a core tenor for us is to meet our members where they are. And so as members
embrace new technologies, you see that we have done things with Alexa, with Google Assistant, et cetera,
our recent collaboration with Amazon Halo. We want to be there for our members wherever they are. And
what I'm really truly most excited about is when we sit down as a team and we think of the opportunities
that lay ahead for us, there is an unlimited number of things that we can do to improve this experience
going forward. And I feel we really have the team and the platform that's going to unlock those and allow
those initiatives to come to life.
Okay. Great. One question from the audience here. What steps is WW taking to develop a holistic
ecosystem around its users' health? Is WW collaborating with vertically dominant players in sleep tracking,
for example, or fitness?
Mindy F. Grossman

So that's a great question. So as we build out this ecosystem, if you think about it, there are certain areas
where the science and what we develop will be built by us. And I would say any of the aspects of nutrition,
you can think about that.
In activity, the science behind smart points is going to be our asset, but we're going to partner with
different aspects. So we have a partnership with Aaptiv for audio, with FitOn and Ovid for video, and
we'll be bringing in other platforms. In mindset, for example, it's a combination. We're developing our
own content and measurement, but we're also partnering with Headspace. So in sleep, for example, we
connect with all the other devices within our sleep tracking, but it's our science that's been telling you
what you need to do to be healthier. So I think the idea of platform that we built, the science behind what
we're providing our members and then partnerships where they're going to bring assets is how we're
looking at this.
Okay. Great. And you touched about on it a little bit in one of the answers to your question. But I think
one of the most exciting pieces of digital 360 is the sort of built-for, made-for millennials. So maybe talk
a little bit about the demographics changes you've seen from a subscriber perspective during COVID? And
then ultimately, your hopes for this new product in terms of the evolution of the WW brand?
Mindy F. Grossman
Yes. From the day, we came out with our new purpose about inspiring healthy habits, real-life
people, families, communities, well, for everyone. We literally put a stake in the ground around the
democratization of wellness and being a brand and a program and a community for everyone. So we've
had a lot of focus on diversification that gender, age, race, ethnicity, life stage, geography, all of those
things really have been very important. And so understanding at different life stages what is going to be
important and how people want to interface is critical. And so if you look at digital 360, that's definitely
geared to a younger, on-demand, content, social audience. Now we've already started seeing shifts
in demographic, primarily along, kind of, let's call it, age and ethnicity perspective. But we have so
much opportunity because for so many years, the company was very focused because from a marketing
perspective, it's an easier ability to attract what was a lapse cohort or a particular segment. And today, we
have a very different perspective on how we brought in audience. So our marketing is very different. It's
not just the one big TV ad.
I mean, the amount of digital assets, social assets, influencers, tastemakers across a realm of
demographics is very significant. And if you look at the coach cohorts that you're going to experience with
digital 360, it's very inspiring and they build community, which is very important.
Absolutely. I guess one final question, I'll let each of you answer. As we head into your sort of Super Bowl
season, you have obviously a lot of new innovation. You have new and exciting partnerships with Amazon,
with CBS, these new core products or program innovations. I guess if you had to pick one, what are you
most excited about for the business over the next 12 months?
Mindy F. Grossman
Just like Michael said, it's hard to pick one because it's like picking your favorite shop. But I would say
what I'm excited about because there's been, what I call the myth that we can't generate the impact
without specific food innovation and nonfood innovation here, and when I look at myWW+ and what we
are bringing to people in a very personalized, intimate, intuitive way, that is going to really help them on
their health and weight loss journey, different than what we've ever done before. I would have to say from
the perspective of what I think will attract people, I'm very excited about that work.
Michael Lysaght
Yes. So it's really -- we talked a little bit about the features, but it's really the platform that we're creating
that's going to allow this innovation to continue year-over-year. We're just going to continue accelerating,
really understanding what our members' needs are, delivering the inspirational support for them to truly
deliver success for them on their journey. That's what I'm incredibly passionate about, and I feel our
teams are really excited about that as well.
Okay. Wonderful. Well, we're coming up on the half hour. We really appreciate both of your time. Thank
you so much, and we look forward to keeping track of your progress over the next few months.
Mindy F. Grossman
Thanks. Great to see you. Great to be here.
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Lauren Elizabeth Cassel

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President, CEO & Director

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