Actual results may differ materially. Please refer to the company's filings with the SEC. Certain figures for July are preliminary and unaudited. The full Q2 2026 shareholder letter and this investor presentation were published this morning and are available at ir.pronetics.com. With that, it is my pleasure to hand the call over to Pronetics CEO, Danny.
Thank you, Shannon. Good morning, everyone. Before anything else, thank you so much for being here. This is actually the first live earnings video webcast we've done in our company's history. And from the numbers that are joining right now, it may be the largest group of our shareholders ever gathered in one place. So whether you manage a fund, hold a single share, or simply here because you drink the sachet every morning, welcome. This is for you.
And here's why we're doing it this way.
You know, our shareholders range from global institutions to people who found IMA as customers and became shareholders. And we believe every one of them deserves the same depth of information at the same moment. This moment, we've opened the book to everyone at once. We can do that for a simple reason. We now have 20 months of data, every cohort, every month, every market measured end to end. Enough history that numbers no longer meet my adjectives. And I will say this plainly. I do not know of another company publicly traded or private that has shown its business in this level of detail in which we are showing you today. I just released a 40-page shareholder letter written to be read, not skimmed, an additional 80-page investor deck that shows you this business the way I see it internally. Every single cohort, every vintage, our full acquisition cost month by month, and even independent cart data measuring our retention against every single brand in our category. In this stream, you hear from us directly, and feel free to ask us anything at the end of this call. And the business compounding this fast deserves to be examined, not summarized. When the numbers are this good, transparency is a weapon. And today, that number is often, someday you'll read it from us first in that letter. And one promise I want to make in the next half hour is I'm not going to be standing here and just reading you that letter. However, hopefully everyone here listening in can read it later today. What I owe you is a part of the document that I cannot do, the story of what actually happened. And how a brand that did not exist two Decembers ago crossed last month a line most consumer companies never reached. But before I talk a single number, I want to show everyone what we're building first. We made this video two minutes. Please enjoy.
A little bit about what IMA is.
We created this supplement for nutrition simple.
IronMate just covers everything in one sachet.
What are you willing to do to be the best?
We're very strategic in the businesses that we go into. I don't know whether any of you know about IronMate, but you should get IronMate because it's got 92 ingredients.
So that's your secret, IronMate?
That's my secret, IronMate. You know, you don't have to take 15 or 18 tablets every single morning. It's just easy, and it's so good for you and the longevity of your life.
I look forward to this every single morning. It's actually my incentive to drink more fluid because I just don't really enjoy it unless I mix that IMAID in it.
It gives me that immunity and strength that I can wake up every morning and feel good and perform well.
And I think for me, not only has my doctor recommended to me, I know IMAID's done so much scientific research and so that makes me feel like I'm in really safe hands with Well, first of all, this guy introduced me to the brand and it's an amazing product.
It's really working. That's why I chose IMAID.
One billion dollar growth financing, we're able to test so much more, go into more channels, test new creatives, test new offline, activations, partnerships. So this growth financing goes beyond just acquisition, but really for everything brand related and marketing related.
The best choose the best.
A highlight for the last 20 months, it was quite amazing what we've been able to achieve, right? So, Brian, if we get to the next slide, in December 24, we launched IM8, our first month. You know, on our first month on the market, we did about $400,000 USD. And I want to tell you what we believed back then because it was written down. It was in our founding moment, you know, before we even shipped a single sachet. We believe if we built the best product in the category, clinical studied, certified, customer wouldn't just buy it. They would stay. And if they stayed, every dollar we spent funding them would come back with profit on top. And if that held, then one day the whole machine would cross the line, the point where growth stops consuming cash and starts producing it. We marked that line in the model on day one. Every decision we've made has pointed to it. Last month, we crossed it. in july our consolidated adjusted free cash flow and i want to be precise here because precision is the whole point of today that measure includes the funding our under our general canvas facility turned positive for the first time in our history it is i believe the single most important fact in the letter in the deck and in this stream and i'll be quite honest with you I did not believe who could get it here so fast. 20 months, most consumer brands take years. Many never arrive at all. Two things that made it possible, and they are connected. Firstly, our cohort came first, customers who stayed, who spent more, who paid back their acquisition costs in months. And these cohorts earned a second ring, $1 billion of a commitment from General Catalyst. Committed after they spent months in our data, capital that now funds our growth. so our cash no longer has support came from. We expect Q3 to be our first positive quarter, and we expect to stay positive from there. And now the quarter itself. I'll just highlight in terms of what we've been able to do in Q2, and I want to frame this only way results should ever frame against what we told you and what we would do earlier. So in May, we got a publicly $46 million to $48 million total revenue, $44 million to $46 million for IME. We reaffirmed those numbers in June. This morning, we reported 46.5 million in total, up 29% from Q1, roughly 3.9X from a year ago, with IM8 at 45 million, up 33% sequentially at a 65% gross margin. Both numbers inside both ranges are sixth consecutive record quarter. We say what we'll do, and then when we do it, I want to own that pattern in front of you. And for the record, because this is the standard, you should hold us to every quarter from here. And then July happened. As you can see from this chart-wise, this shows you our path from basically December of 24 to July last month. Starting at the $400,000 I told you, and look where it ends. Last month, we achieved $20.9 million of revenue in one month, and just strongest month in our history. 4.3x of last July at an annualized running rate of roughly $251 million. And July just wasn't big. It was our largest single-month customer cohort ever. We acquired 47,373 customers. And here's the part that I'm most proud of. We acquired that record cohort at a customer acquisition cost of about $239, Down roughly 21% from our Q2. So we have record customers falling to CAC. Scaling brands never get both. Brian, in a few minutes, will take the whole P&L apart in a few minutes and share all the details on that. And the quarter delivered inside our own guidance with a July like that behind it. Changes like and promise ahead. So today, the 41st time, we are also raising our full-year total revenue guidance to $220 to $230 million, with IMA contributing $215 to $222 million. Understand the nature of that number. The floor of that range is not hope. It's actually underwritten by the subscribers we already have. And we're also initiating something else today, the 2027 figures. As we get close to the end of 26, 27, we're initiating 400 million or more. And there are three numbers that you should be thinking about now because they hold the whole story of this company. Last year, in our first full year of IMA, we achieved 60 million. In our second year, this year, we will achieve 220 million. $400 million plus expects it in its third year. In the letter, we put it in one way, and we'll say it to you straight. We don't treat that trajectory as ambition. We treat it as arithmetic. We'll exit this year above $300 million run rate before a single 27 customer walks into the door. Note roughly 87% of our revenue is recurring. subscribers we already have out on retention curves measure across 20 consecutive cohorts everyone behaving the same way and nothing nothing from the new products you will hear about today is in any of those numbers so every launch is pure upside to every figure i just gave you and that's a promise and now let me show you the machine underneath it and i want to talk to you few minutes about you know the brand that we are building because again in my you know experience as an entrepreneur as an investor you know i haven't seen nothing like this and i'm so grateful i have able to live this every single day um yeah it's something that numbers cannot and something you can only see with your own eyes and as you may know i spend much of the year traveling you know throughout the whole world for im8 and in every country i land in the same thing always happens People come up to me about IM8 and get so happy. It's not because they recognize me. It's because they recognize the cha-cha. I have athletes, surgeons, founders, CEOs, high performers who could buy anything telling me unprompted what this product has done for them. In the time we've been around, we've now launched more than 100 brand events around the world, and the room keeps getting fuller. Now, Dave and I talk about this all the time because it's the thing that we are proudest most of. Somewhere in the last 20 months, this stopped being a product people buy and became something people care of them and ask each other about and hand it to the people they care about the most. And I can tell you this on an earnings call for a hard commercial reason, a brand people trust travels. It travels into new countries ahead of our marketing. is why our acquisition cost is falling while our spend has doubled in Q2. And it travels into new products where an audience that already believes in us is waiting for whatever we make next. And the pipeline as it stands, and again, that's in the brand that we've been able to build and where we're headed next, right? Because everything you have seen is essentially a one product family in one category. Next quarter in Q4, we're going to launch IMA Hydration. into a $37 billion market. In the first quarter of next year, our premium line of gummies into a $25 billion category. And nothing launches without IM8-level clinical validation. In Aridin, we make CARE's NSF certified for sport. And on the science behind that, we have three randomized placebo-controlled clinical trials ongoing as we speak right now, including one at the Mayo Clinic and Dr. Don Mousselin will take you inside them shortly. And I'll say only this, in a category built on marketing claims, we are building one on evidence. And next, and everyone else to kind of understand that, while hydration gummies are coming next, it's not the whole story. Because I think what we've been able to build, this brand is going to be able to do so much more. And look at this slide here. We're talking about, you know, again, sleep, cognition, recovery, women's health, men's health, sports performance. When a customer hands our sachet to someone they love, they're telling us they will trust us in any category where science and quality decide the winner. And that map is most of our consumer health. Now, let me be also equally clear about what this slide is not. It's not a road map. I'm not announcing anything today. But the honest way to think about IM8 is not just as a supplement company. It is a trusted global premium health brand, 20 months old, with most of its categories still ahead of it. And here's the question every operator in this audience is already asking. Entering new categories normally takes armies, new teams, new overhead, margin walking out the door. So let me show you why that math doesn't apply to us. So this is a chart of our AI native organization, and it may be my favorite slide in the depth next to the adjusted cash flow slide. IMA is an AI native organization from day one. We are roughly 70 people delivering this year's guided 220 to 230 million revenue, more revenue per employee than any scaled brand in this category, and the debt widens as we grow. Revenue grew 3.9 times year over year with no proportional hiring. Fixed operating expenses actually fell 21% quarter over quarter. We doubled acquisition spent from Q1 to Q2 with the same number of team numbers. And that's not discipline for its own sake. It's what a company looks like when AI runs through creative marketing operations finance from day one instead of being bolted on later. Most companies our size are hiring their way to scale. We are compounding our way there. And the biggest partnership of this year is the one funding everything I just described. You know, one month ago, General Catalyst committed $1 billion against our cohorts. The deepest diligence I've endured as a founder, every single monthly cohort examined at the transaction level. Now, to walk you through where that number stands today, I'm going to hand it over to Brian, our CFO. And Brian just joined us three months ago after that diligence process began. And I'll say this plainly, you know, Brian, bringing Brian on board is one of the best decisions we made this year. You know, he came to see the machine, and he stayed to run the numbers on it. Brian, the floor is yours.
Quick word on me, since it's probably the first time that some of you are hearing from me or seeing me. I've been a CFO in the CPG space for quite a long time. IMA is actually the eighth brand that I've been a part of in this category or adjacent categories. And so when I was first presented with the opportunity to join this business, I did what any good CFO would do. I diligence it. You kind of take a look at the past, the present, and the future. You start by looking at financial statements. And those will give a good sense as to how the business has performed in the past, kind of near-term trends that have led to where it presents. And really, any given last reported quarter is inherently a little bit in the past anyway, but those quarters are also a byproduct of a lot of the executional effort that's gone into the prior few quarters. And so when you look at a financial statement, it's almost always like looking. Think about this as cohort math and unit economics. you can pretty predictably see where a brand will be in the coming, let's say, three to six quarters. It's a pretty good line of sight as to how much the business is looking to grow, and then it also tells you at the unit economic level where the business – those are always the areas that I'll get next. Third, when you look out into the future, that's more around expansion opportunities, brand equity, brand strength, And where are the opportunities in the form of product, markets? Where can the brand extend and where can it play? Each part of that got more bullish than the last. The financials were strong. The internet economics and the cohort math quite future, obviously, with Danny's vision. It was good line of sight. And I'll let Danny talk more about the future, but I'll touch a decent amount of time here walking down the P&L because it's really important for everyone to level set on the presentation of this view and what we are going to hold ourselves to in the future. For the quarter, in the Q2, so there's about the middle column of this chart, our revenue is $46.5 million. That's 29% quarter over quarter and 3.9 times bigger than a year ago. That leads us down to gross profit. We did $30.2 million for a profit at 65% gross margin, which is about three full points better than the same period of a year ago. Our fixed operating costs are $8.8 million, which is 19% of sales. Note that this is 14% up versus prior quarter, but 2.3 times greater than a year ago. A lot of additional leverage from this line, as you would expect. Katie mentioned the AI nativeness of this business. You would expect it as a business grows or your operating costs decline. And that takes us down to contribution profit. Now, there's a lot of brands that do contribution a little bit differently. I've seen many brands present contribution profit before G&A, before operating expenses, and I've never found that to be a very productive thing to do because when you really think about it, the operating costs are really what's there to drive the business currently. You know, these costs are to drive the fixed base of current customer, current ad spend, current marketing team, and just really a gross profit minus your operating costs, then what's left? $0.4 million, present marketing is one full number. We've gone into a little bit more depth here to show how much our brand royalty is, how much our ambassador partnerships are, and then how much is in just a paid acquisition marketing spend bucket. This acquisition marketing expense of $36.2 million on the quarter is 78% of sales. This is the numerator in what we would consider our cap equation. So whenever we're talking about cap, that is the numerator. Our brand royalty is typically going to be 3.5% of revenue. That's our contracted royalty against the business. Our ambassador contracts, you'll notice, were $2.1 million in the quarter, which is down to 4% of revenue versus in prior year, we were at $1.1 million in the ambassador line at 9% of revenue. So this includes all of our ambassador partnerships with our equity athletes and lifestyle ambassadors as well as our scientific advisory board. So that's what that line is. While marketing, this is really a dial for us as to how much we want to throw a profit today versus how much we want to grow for tomorrow. Every acquisition dollar that we've spent has generated $1.52 of gross profit in our life that are not yet very mature. But for every dollar we've spent, we've gotten back $1.52 of gross profit. The stream return, we're going to go into the unit economics in a little bit. But this spend here is really our choice as to whether or not to. And so our adjusted EBITDA for the quarter of negative 19 million is really just a byproduct of our marketing spends that, as Danny mentioned, we spent double versus prior to the quarter, but our caps have actually gone down. Below adjusted EBITDA, we have adjustments for fair value gains in the quarter of $9.9 million. You have depreciation and amortization that puts you to a net loss of $9 million for the quarter or $0.52 a share. That's down 45% from the same period of a year ago when our loss per share was $0.94. So in a lot of ways, it's a terrific quarter. Last on this slide, you see the July column. Danny showed revenue in July. It was a terrific month for us, and so we wanted to prudently show what July's preliminary results look like because there's some material strengthening of this business in a way that is quite exciting as we added to Q3 in the rest of this year. Revenue is 21.4 for total brunetics. A little bit under that, probably maybe we'll see in a second. Gross margin, 64% on that. Our operating costs have dropped to 15% of revenue from 19% just last quarter, so some good expansion there. So your contribution profit, $10.4 million in just a month, 49% contribution margin. Our spend deal notice versus the Q2 average actually went down. That wasn't necessarily choiceful. We drove a lot more new customers in the quarter, which said our tax improved by so much that our marketing line, or our acquisition marketing line, rather, as the percent of sales dropped to 54%, which puts our adjusted EBITDA for July at $2.4 million loss or just negative 11% adjusted EBITDA margin. You take it down to net loss of a $3.6 million loss in just July, but you can see that July is setting the stage for a really strong Q3. We'll briefly then look at the IMAID-specific segment, or business unit, rather. Same view of the P&L. IMAID is effectively all of Prenetics today. And so, as we start to report into the future, we won't necessarily be breaking out IMAs specifically versus total print, not too much of a need to do so. But same view of the P&L of Q2 on IMA, 45 million of revenues, almost all of it, all the way down to the EBITDA line, which is a negative $18.6 million loss in the period to marketing with almost all IMAs. And so, you're looking at a P&L that's very similar to Pranetics, but then look at the bottom chart. this is what we were speaking to with the customer acquisition metrics and so you see 118,000 new customers were acquired in the quarter it's 98% better than prior quarter so like let that soak in 98% better on the quarter and our tax were flat to slightly down at negative 1% you don't typically see a business able to double down to the bottom right and you'll see that we did 47,000 new customers in July, as Danny mentioned, at a cap of 239. Customer growth business on a cap more in line with what we saw in the first half. Of course, we would hope that our cap efficiency will continue. Everything is looking strong, but we haven't necessarily remodeled any of our guidance to kind of the round out of the next. The first half is really a story of the loss for the period, as we saw, entirely driven by the customer acquisition spend for future growth, is the first major investments in the first half, so you see the operating loss of $27 million. We also then executed a share buyback of $40 million, which reflected a $36.1 million cash investment by us, net of proceeds, side, and then 30 of proceeds. General catalyst funding will fund 70% of that acquisition marketing line. So, our biggest line in our P&L is now funded at 70% of it on the way in. Net of our repayments to them, the free cash flow into future quarters I started with. If you take a quick look at the balance sheet next, we have a really strong balance sheet to have consistently, which allows for us to make the types of investments into the Q2 quarter that we saw. We can really invest for the future in a way that not a lot of brands have the ability to do, and further they don't have the extra. But taking a quick look at the balance sheet, we have $109.4 million of cash and current financial assets. Our inventory levels have risen within the other assets section. We also have prepayments on inventory that get us ready for the back half of the year. It gets ready for our new product, and so we put a lot of the form of inventory to fuel our growth. As we move down to the liabilities section, the warrant liabilities here is the fair market valuation against the warrants that are currently on the cap table that we'll look at in a second. We have $18 strike price on 2.36 million warrants. Then we have about $300,000 at some higher strike prices as well. But if the stock goes above $21.60 per share for 10 consecutive days, we have a call option to bring in those warrants, which would generate us another $42.5 million of additional cash should that happen and so this is kind of the fair market value of the warrant liabilities on the books the other liabilities are mostly trade payables so if we move then to the gap table so I think there's been a lot of uncertainty around our cap table what is fully diluted look like and so we've we've done the job of laying this out for everybody very clearly. And so what you see is a outstanding share burden today of 15.2 million shares. That's 13.6 million Class A's and about 1.6 million Class B's. If you look at the fully diluted nature of that, so that includes grants not yet issued but able to be issued in the Class A's, you'll see that that jumped to 14.5 million fully diluted and then down below as you see the warrants as I mentioned you see of that 2.36 million warrants at $18 and then you see the additional 362,000 at strike prices of 24 and 32. These would generate quite a bit of additional cash for us and the total of the fully diluted cap table would then be 19.2 million shares. That includes everything that's been able to be granted today to all of our partners and should be looked at that as kind of we've actually been able to reduce the amount of class days outstanding down to 13.6 million from my 15.3 million at the end of the 25 calendar year and so we returned a bunch of money to shareholders in that line and then we have the the warrant roll down there down below and so this is a flow of the financial statements moving next to the unit economics and the cohort map which is really important because what is that investment in acquisition spending first we're looking at the cap chart that we talked a little bit about this helps put into perspective what we were talking about with the spend levels effectively doubling from Q1 to Q2 yet you see it's doubling the amount of average new customers that we're bringing in and then you see the July month there the largest cohort we ever have a cap that has gone down to 239 and I also should mention that there's been no mixed shift within any of that July number. That's the same mix of quarterly versus monthly as we have seen in the past in terms of subscription duration and all that. Now, no change. So, really, a true Apple-to-Apples point Q3. And then we'll look at the return next. The return was $1.00. As far as today, we've updated just through that pink Q1 vintage group. It's gone up from $1.44 to $1.52 a month. We've gained 8 cents just in one month of return. Again, the expense of this business through Q1 cohorts has generated 1.52 times the dollar that we put over time. You'll see that the Q1 cohort is quite large, the Q4 cohort is quite large, and you're talking about cohorts that have not had very much time to mature. So that $1.52 will end up. All right, this is a great chart that shows some panel data from a partner of ours in Negari. They do credit card panel data within the U.S., and so they represents anywhere from six to eight percent of all U.S. card transactions online and so effectively this is the direct-to-consumer business on brands with in the U.S. specifically and 8% and so we stack ourselves only 20 months old other big names in this 20 our retention is still at 14.2 percent much higher than Thorne, AG1 and Bruins on this chart we have a lot of work to do as a business we're still quite young we've got a lot of room to run but this number on the surface of it is really powerful I mean a brand that has has done what we've done this early on and to tension number at that stage higher driver base this is a hundred and forty thousand active subscribers you'll see that we've grown fairly steadily throughout this whole period but we really started to accelerate during the 26 so this is active subscribers and then towards the bottom you'll see the current base by tenure if you have some of those percentages you'll see that 50% of our subscribers have been with the business at least for three months which is meaningful given that a lot of our subscribers especially from a number of cohorts coming into the business standpoint are still relatively the cohort economics in the unit as far as the unit economics in the core math that we talked about will help guide us really predictably into the next thing repeat revenue of this business which is how we guide, we can pretty easily see where the next several quarters are going to land. So when you look at our Q3 guidance, we are guiding at $61.5 to $62.5 million on the IM8 revenue, or $63 million to $64 million on the Krenetics, which would then imply, based on Danny's guidance metrics, of $220 to $230 million for full business, an $81.2 million dollars just to the top of our guidance guiding on EBITDA to improve quite substantially whereas in the first half we saw a negative twenty four point six million dollar EBITDA loss. In the second half we expect that adjusted EBITDA loss to drop to negative eight to negative. We expect to take the form of a couple different things on our P&L. We expect to see additional leverage in most areas. We expect to see the fixed operating costs show nice leverage gains. We expect to see some potential further gains on gross margin as we continue to move into the subscription duration of longer quarterlies, favorable margin. And we also expect to see further leverage, especially on our ambassador costs of percentage sales, as well as the acquisition spend line. We expect that to also get more efficient as a percentage of sales. And so, you have a lot of different areas of the P&L that are driving towards the suggested EBITDA improvement. to be a more mature business to show better versions of guidance in the P&L so that we can really break this down. But we feel very confident about our guidance here and a great improvement on the adjusted EBITDA line, which, as you can see on the revenue side, is not sacrificing growth at all. We expect a 38% revenue increase in Q3 versus Q2 and another sequential 30%. And then moving on to the next slide. So this is the Q3 specifically. As mentioned, our guidance is $61.5 to $62.5 million on IMA specifically, or $63 million to $64 million on the parents. We are seeing great momentum in Q3, so we're excited about this quarter, not only on the acquisition fronts, but also on the adjusted free. Q4, this is the 81.2% implied revenue guidance for the year, should we hit the top end of our range. This will be three times better than fourth quarter of 2025, which, if you'll note, was in 2025, it's a holiday quarter, it's typically very strong seasonally. We did 59% sequential growth last year, that's sequential, deliverable in terms of a number. And then also, as Danny mentioned, these numbers do not include the hydration launch within Q4, so that would all be up. So Danny has touched on this slide briefly. We expect to exit the 26th calendar year at a $300 million annualized revenue run rate. which would put us at $25 million per month. And then we are guiding to at least $400 million in 2027. I would say that if you look at the exit points of December 2025 of just over $100 million, we've now, you know, delivered a year of $220 to $230 million. And so for us to say we're going to exit 26 with a $300 million annualized revenue run rate and deliver at least $400 million next year, you know, that ratio is quite achievable relative to what we just saw in this period. And so we're quite excited about the business. Kind of to round it back to our future with general catalyst $1 billion financing and a strong balance sheet.
Great. Thank you, Brian, for that detailed walkthrough of the P&L-wise, right? Before we turn into science, I want to really give a big welcome to Caroline Levy. You know, Caroline, she's on the screen right now. I see the Golden Gate Bridge in the background there. That's where I grew up, spent a lot of my early years there. And Caroline, you know, I've actually met Caroline for over two years. I met Caroline in March of 24. And Los Angeles, I remember the first meeting I've had. I actually really wanted, you know, Caroline to join the board, you know, at that time. And this was pre-IM8. Yeah, but, you know, she respectfully denied me or rejected me at that time, which, you know, she was like, hey, I need to watch a little bit more of what you guys are up to, see if you can actually deliver on everything you say we would. And then I would say maybe about, you know, three, four months, we got reconnected again. And I'm so very, very happy and honored to officially welcome Caroline. Yesterday she joined the Prenetics board as well as the auditing committee. and a governance and nominating committee. Since we just announced Caroline, that would be great for her to spend a few minutes on Caroline. You have so many options when it comes to joining boards, and you've been on Wall Street for the last 30 years as an amazing consumer analyst. Maybe in your own words, maybe just come share with us why you decided to join us.
Thank you, Danny. Good morning, everybody. I'm so excited to be part of the IMH team. For more than 30 years, my job was professional skepticism. As an analyst, I was paid to look beyond the story, test the numbers, the strength of the brand, the discipline behind the growth. And after doing that across hundreds of consumer companies, big and small, you develop a fairly high bar for what genuinely impresses you. So there are three things that impressed me about Queenetics and IMH. First, as Danny said, I met him more than two years ago, and what has stood out to me is his ability to execute. Over my career, I've heard hundreds of CEOs describe what they intend to build. What matters, of course, is what actually gets done, and Danny laid out a clear ambition, and step by step, he has delivered it. I place enormous value on that combination of ambition, focus, and follow-through. Second, the brand. I spent my career studying consumer brands, including some of the fastest growing brands of the past decade. And the connection I made built with consumers in a relatively short period is unusual. Strong consumer affinity is difficult to create. It's difficult to sustain. And when it's genuine, it's enormously valuable. And I believe there's something quite special here. And third, the role Danny has asked me to play. He didn't ask me to join the board simply to agree with him. He asked me to bring the same rigor and willingness to ask difficult questions that I have brought to companies throughout my career as an analyst, and that is important to me. I'm joining the board with real enthusiasm for what Prenetics is building, and a clear sense of my responsibility to shareholders and to the long-term success of the company. I'm so delighted to be here, Danny. Back to you.
Thank you, Caroline, again, really, really glad to welcome you to the board. And also, I'm very excited to also welcome Dr. Dawn Musalem, which she's actually going to be talking to everyone about the science. And again, that's the one thing that we're really proud of is when I go around the world, people are telling us, hey, basically, we love the science. We love everything that you guys stand from from day one. And Dr. Dawn, you know, again, she's been with us before we launched the brand. And so she was a founding, she's our founding scientific advisory board member. And, you know, again, the amazing thing about Dawn, I mean, when you meet her in person, she's just full of hope, full of life. And she also has a very interesting story is that, you know, when she went to medical school, you know, she actually was diagnosed with stage four cancer, given three months to survive. She survived that. And about, I think, in 2021, about five years ago, she actually underwent a heart transplant due to her cancer from 20-plus years ago. And one year to the anniversary of her heart transplant, she became the first woman in the world, I believe, to run a full marathon. And while at the same time, she was a founder at Mayo Clinic for the Breast Oncology Center. So, Dr. Dawn, thank you so much for being here with us on day one. And, yeah, Dawn's going to talk to us about, yeah, the science, the background, and what makes IM8 so special.
Thank you so much, Danny. And I'm so excited to be alive to celebrate this time with IM8. And as you said, 20 years as a physician at Mayo Clinic, everything you do is rooted in the deepest of science. And, you know, I had frequently been approached by other supplement brands, and truly I would just delete each email because it was never something that Mayo Clinic would allow me to participate in until I received that email and that call from Danny. And, you know, I remember that in that first call, there was nothing about marketing. The only thing we talked about is how could we create the best scientifically backed nutraceutical solution in the world. And that's exactly what we have done. So, you know, this is a conversation I have been waiting for for truly, you know, my entire career because I was an exercise physiologist actually before I went to medical school with a special interest in ergogenic aids or nutraceuticals that can help to enhance an individual's overall health span. So for two decades, though, at Mayo Clinic, I was just emerged in the sick care environment. I watched patients try to assemble their nutrition from shelves, bottles. They would take 16 to 18 supplements, and they were all inconsistent with quality. And some would do harm. Some patients would actually come in, be admitted to the hospital because these supplements would actually. Supplement essentials is basically replacing everything in those 16, 18 bottles that people would take with over 90 ingredients. in that tasty little daily sachet. So if any of you on this call haven't tried it, this is my invitation to go out there and make sure you try it because the biggest investment you can make is actually in your health. So let's start with that Ionate daily sachet. And it's at a clinical dose, over 74% of Americans have nutrient gaps. And that's exactly what the Daily Ultimate Essentials is setting out to do, is to close those nutrient gaps and more. And what I was sharing with you about having safety at the cornerstone of every single thing we do, it's just not one hero product that's doing it. It's every single SKU that Ionate sets forward is NSF certified for sport, meaning that there's no banned substances in it, and it's third-party batch tested, meaning that every single ingredient on that label in the dose is exactly what you're getting. And when you go to that IM8 website, there's transparency, so you can see that actual certificate of what each batch has for you. Very, very important. And then it's also checking for things that can harm people, like heavy metals and microplastics. So there was not a shortcut made when it came to IM8 Daily Essentials, and I knew that was going to be the product. I wanted to be at the foundation of helping to create right alongside that awesome scientific advisory board. It's not just me. I'm the voice of those other faces you saw up there, and we're a great team. And in truth, we literally talk every single day among the scientific advisory board of how we can do things better. Now, I want to talk to you about how do we prove this because, you know, it sounds great. It sounds like I'm selling something, but it's because I have such belief in it. And we saw this in our first 12-week randomized controlled study where 95% of participants reported improved energy, You know, improve vitality. That's the number one thing we want to set out to do. There was other reports. We saw 85% improvement in gut health. We saw 80% improvement in the ability for people to sleep. 85% of individuals felt they had more clarity of thought. They felt a difference. This is why people keep on coming back for more, and we have that high retention rate. So we're going to continue to hold ourselves to this high bar, and that's why we're continuing research right at my, we can say alma mater, because essentially I did all my training at Mayo Clinic. And we have an ongoing randomized controlled study right now at Mayo Clinic among healthcare workers. And there's a hundred individuals that are being enrolled into this study. And the study is designed, one that is really rooted in rigorous science. And basically what we're doing with the IMA study at Mayo Clinic that is being run by a former colleague of mine, Dr. George Paholte, he is looking at these 100 healthcare workers. These are healthcare workers at the world's number one research hospital. So they are definitely critical when it comes to taking supplements, but it's being randomized. So half of the 100 individuals unknowingly will get IM8, and the other half will have a matched placebo, and it's matched for taste. And in fact, We even step out onto a ledge a little bit because the placebo still has some beetroot extract. So even within the placebo, people may feel better. As part of the study, every single study participant has to have a four-week washout, meaning if they're taking any other supplement, they have to hold that supplement, and then they will start IM8 from day one when the study starts. They have baseline laboratory studies, and those laboratory studies will be completed at the completion of the study. We're going to be checking different vitamin levels, mineral levels, inflammatory markers, cardiometabolic markers, as well as doing functional tests, like a six-minute walk test with an equivalent to VO2 calculation, body composition with an in-body, grip strength, as well as, of course, as you can imagine, health-related quality of life surveys. Research like this is not inexpensive. Studies like this cost on par to what they cost for pharmaceutical companies, And this is a huge shout-out to Danny, and why that first conversation with Danny was so meaningful to me as a clinician who is a research scientist as well as a physician is because he wanted to invest in the research, in the science, and that matters. So we expect to have results from that Mayo Clinic study by quarter two of 2027, if not sooner. Next, I want to share with you about the longevity randomized controlled study. This is a large study with 180 participants, and it is randomized among four different arms. So, there's going to be a placebo arm where they're not getting anything. There's going to be a single dose of the longevity, a double dose of the longevity, and then the full Beckham stack, which is going to be a sachet of the longevity and a sachet of the daily essentials. And what we're going to look at is inflammatory markers as well as metabolic markers. These are one of the two most important markers when it comes to the hallmarks of aging. And we know that about 88% to 92% of Americans have metabolic disease, basically. And so this is a really critical study that can help to inform us how we can help Americans, basically, be healthier. So I'm really, really excited to see what these results show us. And we're expecting results from this study, quarter one of 2027. Next to the gut health study, I mean, it's estimated that 66% of Americans struggle with GI issues, and over 70 million Americans actually have diagnosed digestive diseases. So, this study has 135 participants, and there's three arms that we're going to be testing with a different dose response. But what's unique in this study, for many studies, you know, for supplement companies, they just look at quality of life surveys. That, indeed, is what we did with our first study that I shared with you, those results. but this one is going a step deeper. We are actually sequencing the gut microbiome with shotgun metagenomics. This is huge and this is super exciting because when we look at the gut microbiome, this is actually our window for bio-individualized optimization of pretty much every bodily function. So, really excited with Suzanne Devakoda and the team to see what these results show us. So, we're not going to just stop there. As Danny shared with you, come the end of this year into quarter one quarter two we have some new exciting products on the market starting with the hydration which is going to have well i don't know if i'm allowed to go into detail but two forms of hydration so we can help people who are athletes as well as people who are more just home who need hydration solutions thinking of patients and people with complex health issues and that's so exciting because we can help children to be healthier making sure that they have a tasty gummy that has favorable fibers, also for their gut microbiome, no sugar, no artificial colorings, but we're also going to have this product NSF certified and third label tested. So this means that there's not going to be any of those heavy metals and that what's on the label is actually the dose that that child is getting.
So as a physician and as a patient myself, you know, I've owed my life to the world's best medicine, and now we have a nutraceutical solution that is done with the same rigorous methodology so i can tell you this imate's doing it right and again remember the biggest investment is when you're making your health so danny's back over to you great thank you so much don um yeah so let me wrap it up here you know one more minute here again um you know let me bring everything that you heard this morning onto one page so brian showed you all the numbers south of john show you the science here's what all adds up you know we have eight advantages each one making the other better and stronger the science uh three trials underway including at the Mayo Clinic, the brand, you know, the one people, you know, the one people hand to other people. We also have, you know, general catalyst, you know, again, under $1 billion after a month inside our cohorts, a subscription engine across 140,000 active subscribers, and again, growing very, very fast. July, we had our best month ever, an AI native organization, 70 people delivering over three million of revenue each a footprint of 46 countries and again we started with 31 countries from day one our largest largest market only 0.15 penetrated and you know founders who own the outcome in my own capital our athletes equity all of it in the stock that you hold and now any one of those a competitor can copy right money can buy the certifications money can even by the trials but the eight together and compounding through the same subscribers the same data the same brand month after month for 20 months that is something really really rare that nobody has been able to copy and that's why we call ourselves im8 and here's what i want to sit with you as you go into your questions everything you saw today is just from two products okay the flywheel is just beginning to turn and you know we're not that's why we're just beginning to turn that's what i'm so excited every day to wake up to and so grateful for the opportunity and what we're able to do because again we have you know tens and thousands of positive reviews around the world um now and then with that uh we're right on time one hour i know we've done a lot of talking i think you everyone on this stream have learned a lot uh but we're not done yet so i think the
point of this format that allows everyone especially our research analyst to ask those questions so um please feel free to ask you know brian myself or dr donna any questions thank you danny we'll now open the line to our research analyst to ask those questions if you'd like to ask a question please raise your hand and you will be moved into the call as a panelist or you could also drop your question in the chat function of this call it looks like we'll take our first from Ryan Myers of Lake Street.
Hey, guys. Thanks for taking my questions. Appreciate the really extensive overview here. You know, first question for me with the general catalyst sort of removing the cash constraints on marketing, you know, how should we be thinking about the spend in the second half of the year, especially as we sort of bridge that gap to the updated adjusted EBITDA loss?
Yeah, Brian, you want to take that?
Yeah, Ryan, thanks for the question. So what we're looking at for the second half is a percentage of revenue that's likely more in line with the second quarter in terms of percentages, maybe a slightly more favorable number than that, but not materially different. And so we would expect to continue to invest in the business at roughly the same percentage of revenue, probably not as low as July had come in, but that's also for not necessarily a bit more leverage gained on the marketing line, but not not too much versus Q2.
Got it. And then, you know, as the quarterly subscriptions become a larger share of the business and the, you know, volumes continue to increase, you know, where do you see the sustainable gross margins going forward from here? Obviously, two sort of consecutive quarters of 65% gross margins, just, you know, how we should think about that going forward as the mix changes a little bit.
Yeah, it's a good question. So, on the gross margin side, the quarterly duration definitely is more favorable. And so, if the mix continues to shift even more heavily course quarterly, which you would expect as those cohorts continue to grow and to build in. I would expect to see at least a few points of additional margin just come from that portion of the mix improvement. And then there's also then economies of scale to come, which we have not yet modeled or forecasted or guided to. But as we continue to scale this business, there's definite efficiency to be economies of scale and not just the supply chain piece of the people and production side of it, but also on the third-party logistics side, on the cost of product, the gross margin level.
Got it. And then lastly, maybe one for Don, because I don't know if I've ever spoken with you and really appreciate hearing the sort of science background of this stuff. But, you know, as you guys go through some of these more clinical trials, which are obviously super extensive, and to my knowledge, there's no one else in the supplement space doing that, I mean, what do you think that that brings to the brand? Let's say you have successful outcomes for each of those three. I mean, what sort of benefit do you think that provides you guys with?
Well, you know, our consumers nowadays are becoming much smarter. Thank you for this question, Ryan. And more importantly, we're seeing that physician. This is becoming the trusted product for physicians. It's in full script. I'm now Chief Medical Officer of Fountain Life, which is the world's number one longevity program. And essentially all of our physicians are now switching over our members who were taking 16, 18-plus bottles You know, I had a patient once come into Mayo Clinic really with a suitcase of supplements. And so it's so nice to have one trusted supplement in a solution that is able to check the box in all of these areas. And then you continue that pipeline down through knowing where the ask is with different products on the pipeline.
Okay. That's helpful. Thank you, guys.
In fact, we are actually, you know, Mayo Clinic even has this in their pharmacy. They have it in the Mayo Clinic online store even to sell to patients. So, you know, if you have it in the world's number one hospital, that speaks volumes.
And just to add to that, that's one thing that we're really proud of. We have so many physicians recommending this product, you know, to their patients, which is really rare in the supplement space, right? I mean, we know, for example, you know, the New York Yankees physician is recommended to all their team players, right? I mean, Jay Shetty found out about this through his physician. You know, Irina Sabalenka found out this through her nutrition coach. And so it's really rare that happens. And again, every time the doctors are recommending this, they're going through the labels. They're going through the NSF certifications. They're going everything before they're recommending this. So I think that's something we're really proud of.
That's great to hear. Thank you, guys.
We'll go next to Tom Forte of Maxim.
Great. So first off, Danny and Brian, congrats on the quarter, the general catalyst deal. and thanks for taking the time this morning to tell the story so well and thoughtfully and then dr don and carolyn thanks for joining the call i have three questions i'll go one at a time so danny in general how long does it take you from deciding to enter a new category to having a product available for consumers um the answer is here you know we're very deliberate and strategic about when we have a new product um again because we want to understand you know if we can create the best product in that category as well and so as you've seen earlier when i showed you in those two slides right again right now we've only honed in on basically two new categories hydration and
gummies and because part of the reason we chose hydration is we see a lot of gaps in the current market they're either with too much sugar you know like liquid id right or too much sodium and then so we saw that say you know why can't we make something much better and then again you know through discussions with Dawn as well as some of our SAD, then we have to look at all the clinical evidence to create a very comprehensive product before it even goes into the manufacturing and tests, etc. And then we also have to spend time on the NSF certification on the clinical part, right? So I would say, going back to your original question, you know, when we first thought about hydration it was already yeah end of last year i would say and so it's easily will be 12 to i would say 12 to 18 months if not longer when we bring a product into market i think we're not we don't rush into any new products and that's why again 20 months you've only seen us with two skills right um and to be fair if we wanted to we could launch a dozen new skills i can tell you though we won't have a dozen good good skills right so i think for us it's not the number of skills but every skill that we do launch and always challenge everyone hey put into clot put into chat gbt is this the best compared to whatever is out there and so i would be very confident to know again i tested like 50 different hydration products i tested like you know 30 plus gummies i know for a fact that we won't come out with it we'll have the best ingredients and we'll also have the best notifications around those excellent my second question is how should we think about your build versus buy strategy when entering a new category um i think right now yeah our yeah our strategy right now is this building right uh again we've been able to build a very very strong brand and we're very strategic and with the categories that we're looking into. However, with that being said, if there is always a strategic opportunity and we have the capability to do so, we will take a look at it. I think our primary focus right now and all of my focus right now is actually on product development, working with the teams for clinical validation, as well as continuing to discuss with our SAB in terms of what that pipeline could look like.
Excellent. And lastly, so Dr. Don and Carolyn, while we have you, I'd appreciate your thoughts on consumers' increasing interest in health and wellness and if you think this is a multigenerational interest versus just baby boomers.
It's definitely a multigenerational. Oh, Caroline, do you want me to go and take this one first? Oh, you're on mute.
Danny, I've been on your board one day. Do you want me to take a step at that?
No, feel free to. I mean, this is a general question, I think.
It's a general question, yes. I'll just say that 25 years ago, I think, I wrote a report called The Absolute Risk of Obesity and talked about the problem with sugar in the American diet and the risk to the stock valuations on Coke and Pepsi and stuff like that. So I've been thinking about health and wellness for years and years and years. It was identified as a trend many years ago. We wrote a futures report on it and it felt like stating the obvious. but what I've noticed about trends is that they sort of hop along slowly being picked up by early adapters and then they just enter an acceleration curve that is incredible and I feel we're at that point and I think we haven't even touched on what GLP-1s are going to do to people's health. I think that it's literally going to change the sizing of American clothing and furniture and all sorts of repercussions because people feel so much better and the health outcomes are so much better. But it also means we have to think more about bone health and other aspects of our health. And people don't just want to live long lives. They want to live great lives. And we've got a very powerful cohort in us older people. There are a lot of us. And we're not going quietly into the dark night. We are finding new careers and want to contribute greatly to society. And so I think we are at the cusp of something really enormous in health and wellness.
I agree, Carolyn. And, you know, the baby boomer population is one that the biggest rise actually in wellness prioritization is spending among millennials and Gen Z. And these younger cohorts are actually driving over 41% of total wellness spending. It is incredible. And this is the first generation that they're not actually drinking alcohol. They want to drink their mocktails. So whenever we have our events, and we're really focusing a lot on connection and sense of belonging and community, you'll see that in all the ads, which that gives me chills to say that this is more than just a product. This is really a relationship, as you said, Caroline, with health and wellness and vitality and sending forward that message of just being fully alive. So, no, it's a lot of fun to be in this space for pretty much people of all ages and now including stepping into the children and keeping children safe. And, again, it's that safety first, which a lot – the majority of companies just aren't putting that into perspective. So, really proud to be behind this product.
Great. Thank you, everyone, for taking my questions. I appreciate it. Thank you.
Thank you, Tom. Our next question will be from Patrick Budistini from UBS. Patrick, please go ahead.
Speaker 0
Hey, thanks for taking the question. First of all, Danny and Brian, congrats on the great quarter. It's awesome to see the continued momentum. Kind of two questions around competitive landscape. If you could just start by speaking a bit on how the competitive landscape has evolved over the last few months. And related to that is, you know, when you guys are acquiring new customers, are customers typically coming from a competing product or kind of new entrance into the category?
Yeah, so I think Patrick, I can answer that, right? So we actually published some interesting stats from a competitive perspective in the investor deck, where, again, this is third-party independent data. And then so if you look at even the last 20 months of when we launched the brand, you know, basically December 24, et cetera, right? So if you look at the last year, we grew, of course, we're new to 2,500%. But then in the same period of time, you know, AG1 went down 36%, right? I think, you know, Groon's went down about 50%. Dorne went up 50% in this period of time, right? So we have been taking quite significant market share from the top players. And, you know, rightfully so, we believe we have the best product in the market. And so, again, at the premium price point, right now also I think that's key. And we also published this data, too. the inventory data is that on average wise at least in the whole supplement category we have the highest average order value of any supplement brand so on average wise is 180 usd so if you look at age one door i think they're about 80 to 100 and then yeah gruins is like 50 and so what this means is that our clientele customer clientele and again it's also published in this third-party data is that more than 50% of our current customers have a household income above $150,000 USD or more, right? So if you think about that for a second, that's one of the reasons why after month 20, customers stay with us. And again, the product works, and we have really engaged customers. Yeah, so I think – I hope that answers your question about the competitive landscape. And we're growing every month, right? So last month in July, we added 47,000 new customers. From our data, I believe, you know, 20 to 30 percent of new customers are from another customer and other ones, you know, they, again, a lot of our customers, like Dr. Don mentioned, you know, they may be taking five, six, seven different types of supplements. And for us-wise, we've been able to condense and make it easy where, again, you don't have to spend $200 to $300 on a monthly basis. You're spending, you know, an essential $9 a month or on the Beckham stack $180, right? So I think we've been able to help people save money, in fact.
Speaker 0
Super helpful. Thank you, Jenna.
Thank you, Patrick. We'll go next to Alex Hantman of Sedoti. Please go ahead, Alex.
Thanks for taking questions, and congrats on the quarter. The customer acquisition cost improvements, you know, throughout spend growth have been very impressive from my perspective. could you talk a little bit more about TikTok Shop and some of the social commerce efforts you have and how you're thinking about their effects on CAC and AOV and sort of prioritizing revenue through your store, you know, versus off-store as you scale those efforts?
Yeah, so I think, great, and from day one-wise, you know, we've been able to build IMA, again, direct-to-consumer, and the majority of transactions are transacted on our own website. You know, it's roughly about 95%, another 5% from Amazon, right? And that was by design. You know, because, again, when individuals transact on our own website across 40-plus countries, we get to create a much greater experience for them. We also get their email information, and so when we launch new products, we can easily offer it to our existing customer base. Again, so we are now experimenting now or doing more testing on TikTok, AppLovin, but majority, I was 90-plus percent of our customers are transacted on our own website. Again, we're still seeing significant growth opportunities on a DDC perspective, so I think we'll continue to scale that way.
Very helpful. And I was also excited to hear about, you know, the science and the ongoing research. So beyond getting on physician radars, which we just talked about, Can you also talk about your plans to leverage the science to develop future products or partnerships and also share what we might expect readouts from those studies?
Yeah, so I think, again, day one-wise, science has been the core to our foundation, right? Even when me and David Beckham met like three years ago, we're like, hey, we need to make this a science-backed brand. And this is where, again, even the early question, this is not a trend. I think at the end of the day, consumers, they want to understand what ingredients we have, right? They want to see the results. They want to see the third-party testing. And, again, for us-wise, you know, we publish Eurofins on our website. We also publish NSF content for certified, NSF for sport. So we're going well beyond the norm in terms of what you expect from a supplements brand. So I think with the two trials that are underway for the longevity as well as gut, But, you know, we expect to have results of those by Q1. And Mayo Clinic, just given the academic institutions, you know, will likely take a little bit longer. But we expect those, I would say, by Q2 of Q3. Again, that's something that, you know, these trials, like Don said, are expensive, right? But these are, you know, multimillion-dollar trials that were undertaken. But we do believe, you know, this is going to be part of our moat in terms of science where, you know, the rallies we don't know what the results are going to garner but we're confident you know just based upon how many customers we have our scientific advisory board the level of quality ingredients that we have in our product that will be able to get some good results from it great i appreciate that and you know beyond the long history of science um with carolyn's addition to the board I know she has a background in beverages, but I was curious if there's any thoughts around, you know, form factor expansions and potential retail sales, particularly for the upcoming
Yeah, so, you know, great question. You know, that's definitely, I would say, a possibility. Yeah, but I think right now we're focused on the stick powders, stick packs first, for hydration. But again, I think, you know, everything is possible in the future. right and think um but again we want to be very deliberate um and we don't want to rush into anything right now our main focus is launching our two new categories in the stick powders for hydration as well as gummies and then we'll see after that understood thanks for all the context to george kelly of roth george please go ahead thank you can you all hear me yes hey george okay hey danny uh thanks for taking my questions and for doing this uh presentation today so I had a few questions for you first I wanted to start with your July
performance curious if you could give us more detail about what drove the acceleration to revenue and the improved CAC I don't know if it was a certain marketing channel or partner or anything worth flagging and then secondly I know your second half EBITDA guide does not bake in a continuation of the CAC that you saw in july um so i was wondering if you've seen some kind of uh normalization in august or just i guess comments on what you've seen so far in august with respect to to cac got it i will say the first question in terms of july and i was thinking of july wise i mean our our tech went
down by about 20 percent over q2 right so in q2 we made a big investment in terms of you know And we made big investment in terms of overall spending, nearly double from Q1. So I think we've had some spillover from that aspect. And then to be fair, I mean, the brand, as I mentioned, again, I've written in my shareholder letter and where I talked about earlier, I mean, it's getting very strong, right, across international, right? When I'm in U.S., when I'm in Europe, when I'm in Hong Kong, I think there's a lot more word of mouth. So we're not just depending on paid. And so we're getting a lot of organic word-of-mouth sharing. I think that's been very strong, right? So I think we're also seeing like a halo effect of, you know, a lot of our ambassadors. Again, it's not just like we have one. We have like an elite roster. Again, in Q2, we signed up, you know, Giannis, right? Then we had Inter Miami. And then, again, we had lots of offline events as well, which is very rare in the supplement category because everyone's online. while we're 100% through DC online, but we also have 100-plus events that we've been a part of in the last 20 months. So I think the combination of all these little things added together really created a lot of word of mouth in the past few months. And I mean, that's the same thing for Q2. Q2, our CAC in Q1 was 301. Our CAC in Q1 was 305. CAC in Q2 was 301. So it went down by $4, even though we raised, I mean, we doubled our spend. So that rarely happens. And, again, you know my background is in e-commerce and Groupon, right? I haven't seen that. That only happens when the brand is getting stronger, right? And that's just where I think we're seeing that. And then, so, again, we have the great thing is that we're going to be doing more stuff on streaming, podcasts, YouTube.
And so these are all going to be incremental new channels. um so i think for august wise it's still a bit too early now but we are still seeing you know continued momentum i don't have i don't want it's too early to come out in the capital i don't have a full month yet of august figures okay turn up that's helpful can you still hear me am i still i wasn't sure yes i can okay great um and then second question for me on your new products i understand you didn't bake them into your targets for this year or next year um and i understand they're huge categories and uh you know it seems to make sense with your um subscriber base but do you have any i'm just trying to sort of dig into what the attach could be with your current
subscriber base do you have any kind of survey data that shows you know x amount of our subs already use hydration or just anything to help me uh as i've you know try to layer in what what these new new products could yeah so we've we've done actually to have a great question george so we've actually done surveys for my existing customer base post-purchase survey questions in terms of what are the key products that you would like you know i made to come out with and then when we did that survey you know hydration and gummies was the actual answer at least on our customer base right So that's why we feel very strongly that we'll be successful in these two categories, even though it's highly competitive, because at the end of the day, we also believe we've been able to build a much better product than what's into the market that's available, right? So in terms of tax rates, again, the reason why we haven't been given – we haven't provided a guidance because, again, for our new skill, it's just very difficult to have – it's very difficult to provide good forecasts. And we don't want to provide anything that we are – we don't have a good database of already. But I can tell you from at least our customers, for both of the hydration and gummies, more than 20% of our existing customers have asked for this. Okay.
And maybe a follow-up to that question. Are you thinking, are these more attached products, or are they sort of lower customer acquisition costs, you know, lower priced products? And then hopefully you can do both.
So there was, it wouldn't come, oh, go ahead, sorry. Nope, nope, I cut you off. Okay. Yeah, so I would say there was, it's twofold, right? So, I mean, it doesn't compete with our existing products for sure, right? So, I think it's going to be only complementary. So, there will be some individuals, again, that will want to have a hydration product because, again, they are already taking a separate brand hydration today, right? And so, we believe they would be able to switch to ours. And then there is a big subset around the world that are just drinking hydration, which we believe we'd be able to have them on board. And then we can also cross and upsell them, you know, the standard IMA essentials on longevity. So I think we'll work to our advantage. And the same thing, same way for the gummies. Also, again, we're looking at kids' gummies, and then it doesn't compete with our current product, right? And, you know, 20%, 30% of our current customers are already parents. So naturally that, you know, this could be a really great product for the kids. And, again, that we can identify, you know, new customers coming in from the kids' segment, And that ultimately will come in, you know, to our, you know, here we'll probably have some essentials on longevity. Okay.
And then last one for me, your guided adjusted free cash flow and adjusted EBITDA, do they both add back the general catalyst funding?
Just to clarify that, on the cash flow statement, it'll be presented as cash from financing. But since it's real cash into the business, we'll present the view.
And your second half adjusted EBITDA guide handles it similarly?
So the cash flow from general accounts wouldn't impact EBITDA at all, except for below. It'd be interest effectively as interest expense in terms of the repayment rates, but it wouldn't impact the actual EBITDA guidance. It would just impact cash flow.
And now we have a written submitted question, our last from the analyst community, from Susan Anderson of Canaccord. i'm curious how they are thinking about the distribution channels right now they are all dtc so do they think that retail will be a part of the strategy at some point then where is the opportunity internationally what countries are they not in and looking to be in and finally how do they think about the competitive landscape and the moat imate has why would another brand copy what you are doing uh all right thank you i'll take that i'm starting the first question with the retail and etc model right so as you can see you know we just had our best quarter ever
continue momentum in july we're 100 direct to consumer and then we're not seeing any slowdowns at all yeah in terms of our growth online and as against the division i want to always keep the business operations simplified simple as much as we like and then if you get into retail So it's a completely different business model, right? And so we believe we are able to scale and scale well, at least for the next, you know, 24 or 36 months without the need for retail presence. And we've been able to build a very strong, you know, online presence. Again, even in the last 20 months, you know, we have, you know, 350,000 followers on Instagram. Last year we had one social ad that generated 233 million views on Instagram. And there's no way you can generate that type of figures on a retail basis. So, again, if we're able to still have such strong unit economics and so short payback periods, you know, there's no reason for us to get into retail. I mean, the only reason why we would not go into retail now, I would say, and I said this before, is that we wanted to sell the brand, right?
But, yeah, we have zero interest in selling the brand, so there's no reason for us to get into retail. right now we're not in China we're not in India as kind of the two larger countries China obviously we have a good way in to China and that'll be we have not explored India at this time and those are kind of the only countries that we're not yet covering and I'll take a question from our retail
community Danny PNG just paid nearly six times revenue for Thorne you trade well below that would the board entertain an offer and if not how do you close the have um no great question again i think this sector has been you know very hot i would say the last six months right you know the known acquired heel uh you know you'll never acquired gruens and then of course you know png acquired uh dawn i think in total it was about six billion dollars worth for acquisitions over the course of the last six months yeah so as i meant as i just mentioned i mean we're building imate not to get acquired right i mean that's not the goal of building this company and when me and david started this company this brand it wasn't like hey well how do we exit the next three to four years like how do we build a generational health company over the course of the next five ten to fifteen years that's why we're impacting clinical trials because these things take a long time so we're trying to you know sell the company that we wouldn't do this from day one right you know with that being said we are a public company we have an independent board as well yeah so there are offers that come in we have to entertain it but again when you're my focus has always been about building this into a generational health company and you know regardless of what's happening out there our role you know my role and brian's well to continue to deliver quarter over quarter and as long as we do that and the more data that we have and now the reason why we've done this live stream and ensuring the investors that the show like so now i have 20 months of data yeah six months ago nine months ago i didn't have that data so there's not much for us to show but now we are able to do that so i think again we'll continue to deliver uh yeah i think people that have followed our journey again i was just looking at it yesterday it's quite crazy we've you know we're a 350 million 400 million dollar company approximately today but one year ago you know we were about yeah 100 million dollar company and, you know, we were trading like 5,000 shares on a daily basis. Now, yesterday we got, you know, $3, $4 million of trading bonds. So just alone in the last 12 months for people that have been following us, we've already made significant leap ways. And we're going to continue to deliver quarter over quarter. And again, I'm having so much fun. I think everyone that knows me knows this, right? It's a lot of work, but I don't call it work because it's so fun. and we have a very unique opportunity given how much momentum we have with this brand, right? Yeah, so, yeah, so I think to answer your question, we'll just deliver quarter of quarter, and I think that will close the gap in time.
That's it for our Q&A session today. Daniel, turn the side back to you.
Great. So thank you, everyone. We're well over time, so I think that's a good sign, as always, right? So we air marked 60 minutes, and now we're in, yeah, 92 minutes. So, again, you know, thank you, everyone, for joining today, yeah, and for following I think it's been a very, very exciting time. Yeah, thank you, you know, Dawn and Caroline for coming on board. Yeah, follow our journey. I think you guys will be all surprised.
