GROV - NYSE

Good afternoon, and thank you for standing by. Welcome to Grove Collaborative Holdings, Inc.'s Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Hosting today's call are Grove's CEO, Jeff Yurcisin; and CFO, Sergio Cervantes. Before they begin their prepared remarks, I will review the forward-looking statements, safe harbor. Some of the statements made today about future prospects, financial results, business strategies, industry trends and Grove's ability to successfully respond to business risks may be considered forward-looking. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All of these statements are based on Grove's view of the world and their business as they see it today. As described in the SEC filings, the underlying facts and assumptions for these statements can change as the world and their business changes. For more information, please refer to the risk factors discussed on their most recent filings with the SEC, which are available on Grove's Investor Relations website at investors.grove.co. During today's call, they will also discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in the earnings release, which is also available on our Investor Relations website. I would now like to turn the call over to Jeff Yurcisin to begin.

Thank you, operator. Hello, everyone, and thank you for joining the call today. I want to start this call by saying how honored and excited I am to be joining Grove as CEO. I'd like to thank my predecessor and our Executive Chairman of the Board Stuart Landesberg, the Board of Directors, the Grove leadership team and all of our employees who have put their trust in me to lead the next chapter. We have all been incredibly supportive during my transition. I joined Grove because, fundamentally, I believe that every individual can make a positive impact and drive change beyond themselves. What unites growth team is that we are all committed to a singular purpose, one that is bigger than ourselves. We create and curate high-performing Planet First products and aspire to transform the consumer product industry into a force for human and environmental good. Having followed Grove for some years before joining, I have made a number of assumptions about the business. And after 75 days into the role, I am reaffirmed by 4 core themes. First, we have an incredible brand. Grove is the leading platform for natural shoppers and is well positioned with our customers, including both active customers and those that haven't made a recent purchase will continue to come back to us because they believe in our mission. When you listen to these "inactive customers", you realize they too love our product and brand. With the home and personal care market amounting to roughly $180 billion, we know there is room for our trucked brand to grow. Second, we are the leaders in sustainable home care and have strong potential to expand beyond that category. Our formidable foothold in home care is an entry point and a springboard for growth to expand our presence, deliver innovations and launch wholesale into other categories that are relevant to natural shoppers. We can do this because of the trust we've built in our core products and offerings. We said we would expand into health and wellness, and we are doing it week by week. More customers continue to trust us for their broader sustainable needs. Third, we have best-in-class talent. The Grove's team is one that has made difficult decisions, endured cost-cutting measures and work through unfortunate but necessary reductions. And yet, our employees, teams and the broader culture are incredibly strong, resilient and united around our mission. I am deeply impressed by the team and energized by what we can accomplish together. Fourth and lastly, we have a strong business foundation with great unit economics and are well positioned for profitable growth. This won't happen overnight. For the longer-term goals seem reasonable given secular trends around natural shoppers and convenient digital experiences, both of which will benefit us as we go forward. Our brand, leadership, talent and strong foundation or would have gotten us to today. I'm proud of the team's results to achieve positive adjusted EBITDA for the first time this quarter. It demonstrates that we do what we say. This focus on profitability remains priority #1 for the company. We will maintain this focus while we reshape our customer experience and culture, and our culture will start with the customer at the center of every decision. We will systematically listen to customer needs and innovate to unlock new growth paths in the next year. I have succeeded 2 founders, grown D2C businesses to $1 billion-plus and know how to profitably scale a business-like growth. I have seen firsthand a number of positive things in my first 75 days that have made me confident that we have what it takes. And while I remain focused on profitability in the near term, I did not join Grove just to ensure it is profitable. We have a lot of work ahead of us. But I see a clear path for profitable, sustainable growth. I plan to prioritize profitability and to ramp up growth behind and improved the margin structure and customer experience that we will build in the coming months. As a result, I'm comfortable with 2024 revenue below 2023 because I'm confident by the end of 2024, Grove will be growing sequentially with positive adjusted EBITDA, and we'll exit the year with ongoing profitable growth for the quarters to come. And I know how to get us there. First, it starts with becoming even more meaningful in the lives of our customers. This will be through systematic, consistent data-driven decisions to serve natural shoppers and expanding our role as the trusted brand and platform that helps customers make the right sustainable decisions for themselves, their families and their homes. Second, we will win with sustainability at our point of differentiation. This means leaning into our mission, being even more focused on our environmental impact through plastic, carbon and deforestation offset and customer education on the sustainable alternatives that exist today and that are coming tomorrow. These inputs will lead to results. In the long term, we are well positioned to be the trusted brand and platform for high-performing planet-first products for natural shoppers and their homes. And now we'll turn to the results. I am incredibly pleased to share the current third quarter results, which represents cumulative quarters of great work, difficult decisions and smart planning by the team. To start. This quarter marks the first quarter of positive adjusted EBITDA in the company's history, a massive step in our journey towards becoming a growing profitable organization. We are in the midst of a transformation area. And today's results proved that point. While it's not the finish line, it is a notable accomplishment worth highlighting. And one was far sooner than we had previously thought possible. We do not expect a positive adjusted EBITDA every quarter going forward, but this result highlights the massive improvement growth has made over the last 2 years. Again, I want to give kudos to the team for the incredible work that went into driving this result. Adjusted EBITDA in the third quarter of 2023 was positive $0.2 million, up from a loss of $2.6 million in the second quarter of 2023 and a loss of $9.6 million in the third quarter of last year. While not a competitive period, it's worth highlighting that our Q1 2022 adjusted EBITDA, which was just 7 quarters ago, was negative $40 million. The holistic P&L transformation has been truly incredible and rare among our industry. This improvement was achieved despite revenue declining in the third quarter, which was down 6.6% sequentially and 20.6% year-over-year. The revenue decline continues to be impacted by the advertising spend reduction, which was down 53.1% in the current quarter when compared to Q3 2022. As we eliminate our lowest performing marketing spend, maximize our return on investment and continue our aggressive push to sustain profitability. Even at lower levels of spend, we are pleased with the results and continue to see strong performance in unpaid channels. Contributing to current quarter performance and continuing the trend from prior quarters were new records for net revenue per order and gross margin. Net revenue per order improved to $65.24, increasing from $64.82 in Q2 of 2023, our previous record high. Furthermore, gross margin increased 190 basis points from last quarter to 53.8% and was 180 basis points higher than our prior record in Q1 2023. We're excited to continue moving the needle on these important metrics. We will remain focused on profitability, finding leverage across the P&L. We've already discussed our marketing efficiency and net revenue improvement. So now I want to highlight our progress on omnichannel expansion and operating expense discipline. Meeting our customers where they shop is critical to our objective of making planet-friendly household essentials as accessible as possible. We continue to balance growth in the retail channel with our overall profitability objectives, ensuring our growth strategy is capital efficient. During the quarter, we are excited to share that we expanded our retail distribution to include KeHe investments. We have over 420 KeHe points of distribution and are in approximately 50 Wegmans stores with the expectation of being rolled out to 100 locations by year-end. These additions take our retail footprint to over 7,500 brick-and-mortar locations. Our business in retail has been a learning experience. I'm energized by the partnerships that we have with critical retailers and can see the progress in both product and in the numbers. I believe many other brands be envious of our current shelf positioning. We also continue to make progress on Amazon, where we increase our SKU assortment to include laundry, room spray and other product categories, expanding on the product lines launched in the prior 2 quarters. In the 6 months, since we've launched our flagship brand, Grove Co on Amazon, we have over 900 positive customer reviews. Again, our business is effective because customers love our products. We are not only focused on improving operating efficiency in the retail channel, but across the entire P&L, even with the massive improvement in operating expenses over the last 7 quarters, which are down 58.5% from Q1 2022. We continue to make progress. with my own fresh eyes, I see additional opportunities for the organization. Current quarter operating expenses are down 38.5% year-over-year and 14.9% quarter-over-quarter. While a portion of the reduction is due to lower variable costs from fewer orders, we are seeing the benefits of our outbound carrier mix optimization, driving down shipping costs. We also see it in the elimination of duplicative or unnecessary vendor spend, the optimization of advertising channel allocation to ensure the highest return on our investment and smaller teams, allowing for more rapid decision making. I've been impressed by the entire organization's relentless work and difficult decisions to streamline our expense structure. This focus needs to and will persist. We continue to see opportunities across the P&L to find points of leverage that will improve our economics and will enable us to be both profitable and growing in the near future. As we look to the future, I want to share my vision for growth and how we will focus our overall efforts to grow and scale the business. Today and moving forward, we will remain focused on one, customers; two, sustainability; and three, profitability. We are in business because of our customers. We are here to serve them and be their trusted destination to find high-performing planet first products. Sustainability is our foundation and our differentiation. It's why we are unique in the industry, and profitability is a necessity. I'm going to start most discussions with our customer in mind, and you will hear us talking more and more about our customers on earnings calls. It's through increasing value to customers that businesses create sustainable growth. We are excited about the VIP program. And during the third quarter of this year, we launched the VIP HUB. This new feature provides our VIPs with exclusive benefits, including samples, earned dips, discount and early access to limited edition collections. We are thrilled to provide our best customers for more value, particularly in the current economic environment and reward them with newness through a dedicated program. While it is a recent launch, we are excited by the early trends. Additionally, our customers told us they want more selection. The tenants guiding our category expansion are high, including strict ingredient standards and providing transparency and education to customers to help them on their sustainability journey. The expansion into the health and wellness category has proven that customers continue to place high trust in growth and are open to growth recommendations and selection beyond cleaning products. Since Q2 2022, we have nearly doubled the percent of orders containing our wellness SKU. Those health and wellness products continue to make up a small percentage of our total sales, expanding our assortment continues to be a focus. Our initial launch was focused on multi-item and other daily regimen products to drive repeat orders. We look to expand into other subcategories to round out our selection and make growth our destination for all of our customers' wellness needs. Furthermore, during the quarter, we implemented an improved search, browse and sort of experience on our website and mobile application that we expect to vastly improve the customer experience. These innovations will make it easier and more seamless for customers to find the right products at the right time. These changes will facilitate more health and wellness penetration and set us up well for further cross-category adoption. And while we're talking about customers, I also want to discuss some new products. In Q3, we launched our holiday limited edition collection, Eves of Enchantment, featuring Peppermint Bark and Balsam for scents. Delivering the newness that our customers want as well as providing sustainable alternatives for popular seasonal products, and we have been pleased with the early interest and results. Turning our focus to sustainability. Research and development remains a top priority for us as we continue our market leadership and sustainable products, especially in our replenishment categories. In Q3 2023, we finalized 2024 plans to make additional packaging updates across select SKUs to ensure they are made of some of the most sustainable materials available while developing a robust innovation pipeline for the new year. We look forward to launching these products in the coming quarters. Lastly, we'll turn to profitability. This is job #1 in my eyes. It has been and needs to remain a core focus. We can't chase a sustainable mission without a sustainable business. We will continue to make decisions that prioritize the bottom line by, one, expanding gross margin; two, focusing on customer experience to drive retention; three, increasing assortment to grow lifetime value; four, improving advertising efficiency; five, increasing our SG&A leverage through more efficient spend and fix seeking efficiencies across our fulfillment ecosystem. In the long term, we see ourselves as a scalable platform for high-performing sustainable products. On that theme, we continue to explore M&A as a potential strategy to provide step-change opportunities. The bar for action is high, and we are deliberate with how we invest time and resources. To close out our key business updates, we turned to the cornerstone of our sustainability innovation, plastic intensity or pounds of plastic per $100 of net revenue. We are proud to publish the industry's first plastic intensity metric. Our hope is that other brands and retailers will follow suit as we work to reduce plastic in our industry. This quarter, we adopted an expanded definition of plastic that includes polyvinyl alcohol, PVA and PVOH, silicone and plastic liners and resins with aluminum packaging to ensure even more transparency in our plastic intensity. Some in the industry might debate the definition of plastic, but we are using a more inclusive definition to continue to raise the bar for ourselves and others. We have updated the following metrics in our quarterly comparisons to account for these changes. Across the Grove.co site and through retail partners, plastic intensity was 1 .11 pounds of plastic per $100 in revenue in the third quarter of 2023, down slightly from 1.14% in the third quarter of 2022. Specifically, across all Grove Brands products, plastic intensity was 1.14 pounds a profit per $100 in net revenue in the third quarter of 2023, in line with 1.13 pounds in the second quarter of 2023, but up from 1.04 pounds in the third quarter of 2022. Our Grove's Branded 100% recycled plastic trash bags are the primary driver of year-over-year plastic intensity increases for Grove Brands. Excluding this product category, Grove brands plastic intensity was $0.63 in the third quarter of 2023, in line with previous quarters. Overall, we are encouraged by the growing trend of more customers opting for recycled plastic garbage bag instead of [virgin] plastic. We are continuing to explore ways to reduce plastic in this category while providing customers with an effective product experience. I will now turn the call over to Sergio to review our results in more detail. Sergio? Please go ahead.

Thank you, Jeff. Similar to previous calls, we will provide quarter-over-quarter comparisons in addition to the year-over-year changes as we believe the sequential comparisons reflect the trends in the business and the steps we have taken to position ourselves for long-term sustainable and profitable growth. Net revenue in the third quarter was $61.8 million, down 6.6% from the second quarter of 2023 and 20.6% year-over-year. Both comparisons continue to be impacted by the strategic decision to reduce advertising spend as the company focuses on profitability. Due to our reduced advertising spend, total orders were down 5.9% quarter-over-quarter and 26.2% year-over-year to $0.9 million, and active customers were down 10.1% quarter-over-quarter and 30.2% year-over-year to $1 million on a trailing 12-month basis. DTC net revenue per order was up 0.7% quarter-over-quarter and 7.6% year-over-year to $65.2, a new record high level surpassing our previous record of $64.8 from last quarter. The year-over-year improvement continues to be benefited by our net revenue management initiatives, including a shift in mix towards existing customer orders, which have a higher DTC net revenue per order as well as introduction of strategic price increases on growth brands and third-party products taken in Q4 2022 and Q1 2023. Gross margin was up 190 basis points quarter-over-quarter and 470 basis points year-over-year to 53.8%, another record high for the company. The year-over-year improvement is due to reductions in inventory reserves from the sell-through of inventory and price increases taken on growth brands and third-party products in Q4 2022 and Q1 2023. Similarly, the quarter-over-quarter improvement was mainly due to a reduction in the inventory reserves. Gross products as a percentage of net revenue was down 20 basis points quarter-over-quarter and 210 basis points year-over-year to 44.8%. The year-over-year decline is due to a decrease in growth brand products in existing customer orders as we continue to expand our third-party product offering, especially our product selection in the health and wellness category. Advertising expenses decreased 12.8% quarter-over-quarter and 53.1% year-over-year to $4.1 million. The year-over-year decline continues to reflect our strategic pullback in advertising spend and focus on improving marketing investment efficiency. Wherever the sequential change was due to a reduction in retail specific advertising as we balance growth and profitability in the channel. Product development decreased 11.7% quarter-over-quarter and 37.9% year-over-year to $3.6 million, mainly due to a decrease in personnel expenses. We remain excited by our innovation strategy and look forward to leading the CPG industry sustainability. SG&A expenses decreased 15.5% quarter-over-quarter and 35.8% year-over-year to $29.7 million. Excluding stock-based compensation and severance, SG&A expense in the quarter would have been $27.9 million or 7.6% less than the second quarter of 2023 and 24.1% less than the same period last year. The quarter-over-quarter decline was mainly due to lower fulfillment costs related to fewer orders and other operating expenses, primarily personnel and insurance. This trend continues to be reflective of our strategy to reduce expenses to focus on profitability. As a percent of net revenue, SG&A expense would have been 45.3% compared to 45.7% in the second quarter of 2023 and 47.4% in the third quarter of 2022. Our adjusted EBITDA improved to $0.2 million, the first positive quarter for the company as compared to a $2.6 million loss in the second quarter of 2023 and $9.6 million loss -- $9.6 million loss in the third quarter of 2022 despite lower sales from our lower advertising spend strategy. Our adjusted EBITDA margin improved to 0.3%, an improvement of 420 basis points quarter-over-quarter and 1,270 basis points year-over-year. The quarter-over-quarter and year-over-year improvements in adjusted EBITDA are due to lower advertising and SG&A expenses, partially offset by a lower gross profit due to less revenue. We're extremely proud of these results, reflecting our ability to rapidly transform our bottom line. When we went public last year, we had the goal of achieving profitability during 2024. But we have been able to accelerate this timeline through our disciplined approach across the entire company. I echo just thanks to our exceptional teams across the country for the hard work to reach this milestone. Net loss in the quarter was $9.8 million compared to a net loss of $10.9 million in the second quarter of 2023, and net income of $7.7 million in the third quarter of 2022, following a large reduction in fair value of an earn-out liability. Turning now to the balance sheet. We ended the quarter with $94.7 million in cash, cash equivalents and restricted cash, an increase of $5 million from the previous quarter. The increase is mainly due to the $10 million investment from Volition Capital, as noted last quarter and $1.2 million of interest income, partially offset by the $3.2 million interest expense outflow and $0.8 million capital expenditures. As noted previously, during the quarter, we received an investment from Volition Capital to strengthen our balance sheet. We received gross proceeds of $10 million in exchange for 10,000 shares of the company's Series A convertible preferred stock with a conversion price of $2.11 per share. Please refer to our financial statements for the significant provisions of the offer. We finished the quarter with an inventory balance of $32.7 million, down $1.8 million from the end of Q2 2023 -- we continue to be pleased with our ability to reprice size our inventory base while striving for further efficiencies as we optimize our working capital. Furthermore, we did not make any draw on our asset-based loan facility during the third quarter after having taken the minimum draw of $7.5 million in Q1. This facility has a maximum capacity of $35 million, which is calculated from our inventory and accounts receivable balances. Based on current inventory and accounts receivable balances, we have $11.5 million of capacity available. Lastly, assuming a share price of $2.35, our year-to-date average trading price in 2023, we will be able to raise $14 million net of insurance costs under our standby equity purchase agreement. Taking into account market conditions and business priorities, we will evaluate using this capacity strategically to supplement our liquidity. We still continue to feel good about our current liquidity position and our ability to continue executing on our long-term strategy. Now turning to the outlook. Factoring in our performance to date and our expectations for the remainder of the year, we are offering the following revised guidance. For the 12-month period ending December 31, 2023, we now expect net revenue of $257.5 million to $262.5 million, down from $260 million to $270 million and adjusted EBITDA margin of minus 4.5% to minus 5.5%, an improvement from minus 5% to minus 7% [fees]. Our ability to rapidly transform our P&L gives me confidence to further increase our adjusted EBITDA margin guidance for the rest of the year. However, due to our refined fourth quarter advertising strategy, we are marginally lowering revenue guidance. Moreover, as mentioned previously, we do not expect to be profitable every quarter going forward. The fourth quarter of this year is expected to turn back to an adjusted EBITDA loss. As we look forward to 2024, we remain confident that our progress this year will allow us to achieve profitable growth in the later part of 2024. We will provide additional commentary for full year '24 guidance as part of our Q4 earnings. I would like to turn the call back over to Jeff for some closing remarks.

Thank you, Sergio I'm truly proud of our accomplishments in our first year as a public company, including the incredible milestone of positive adjusted EBITDA for the first time and continued progress on our mission. Our team deserves credit for the difficult decisions that have been made to get us to this point, but we must continue transforming ourselves, pushing ourselves to be more profitable while better serving our customers. We have fantastic order economics, more than 1 million active customers, a trusted brand that delivers trustworthy products and a mission that unites us. And moving forward, we will continue to be ruthlessly focused on our customer, improve the core shopping experience, expand selection and deliver new innovation. With our incredibly strong foundation and renewed focus on the core of our business, I am confident about our future and excited about what's in store for growth -- thank you all for listening to our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions.

[Operator Instructions] We'll move first to Dana Telsey with Telsey Advisory Group.

Welcome, Jeff, and nice to see the progress on the adjusted EBITDA. As you think about the balancing act, investing and the path to profitability, how are you planning going forward? What do you think of how you're planning marketing spend going forward, what you're looking at? And when you think about new customers and existing customers, given the pull down in the active customers, what are you looking for to show continued growth, awareness and market share gains? And lastly, as you think about the balancing act with adjusted EBITDA, should this be a -- as you think about qualitatively for next year, is it breakeven adjusted EBITDA more for the back half of the year? Or is it more in 2025?

I appreciate the question. I'm going to break this up into a few kind of parts. First, yes, we are prioritizing profitability, but we are still investing in marketing and new customers. I think compared to our previous levels that which were unsustainable, we have pulled back. And for those that study cohort curves and are deep into cohort modeling, you realize that the subsequent quarters right after that type of pullback in advertising are the hardest comps and the greatest challenge is to Grove. So we see those kind of curves bottoming out in the back half of next year. And so when we think about where Grove will come from, there will be just a natural benefit of our cohort curves. But also, we see a real path of drop of driving innovation and an initiative that both improve profitability while still improving revenue. So first thing that jumped out is we're really going to obsess over this customer experience that I believe will do great things from a retention perspective. The second thing we're going to do that we referenced was increasing assortment to grow lifetime value of customers. The third thing that you referenced in your question was this trade-off between new customers and some of these existing customers. What I love about this business is the 5 million customers who try Grove And when you go speak to those that are "inactive", there's still a lot of. And so we see a big opportunity as we improve that core customer experience for us to go back, reintroduce ourselves to those customers and to continue to drive [growth] there. I think from a profitability perspective, as you go down the P&L, I see opportunities at the gross margin level, we mentioned efficiencies across our fulfillment ecosystem. I still think in terms of advertising, we can keep getting more and more efficient. And those are some of the big areas where we see both this balance of dry focusing on profitability first, but still with high confidence of being able to deliver growth -- sequential growth and ultimately, year-over-year growth towards the end of the year. And the last question I think you had is specific to profitability. Some of these changes that we're talking about where we see opportunities will take some time to flow through the P&L, but we are expecting to be EBITDA positive for the full year 2024 period.

[Operator Instructions] We'll move next to Susan Anderson with Canaccord Genuity. Your line is open.

Nice to see the profitability and welcome, Jeff on board. I guess just looking at fourth quarter, I'm curious that you talked about it moving kind of back to the nonprofitable range. I guess, is that because marketing spend will be higher in fourth quarter than what it had been in the third quarter. We're just curious the different levers there that you're going to have for fourth quarter versus what we saw in third quarter?

Great question. Yes, primarily marketing spend, you will see continued investment marketing as a percentage of revenue. We will stay there. And then I think what we see is we just see new paths to find leverage in the P&L that may take more than the next 90 days for us to unlock. And that's why we're much more confident about 2024. And then there's also just a seasonal arc to our business when you think about the quarter that will have a little pressure on profitability in Q4.

Great. And then just I'm curious the performance that you saw in the quarter between your wholesale business, which I think is still pretty small in DTC. And then how you're thinking about those 2 as we look out over the next 3 to 5 years?

All right, I appreciate it. So look, I see us as both a platform and an omnichannel player. I think when you work backwards from our mission, we want to relentlessly create carry high performance, Planet First products. But like we also aspire to transform the industry. And what that means is you have to meet customers where they are. And so what I'm proud of on the retail side on this omnichannel side, we are making progress. It's been a big learning experience, but we are gaining distribution, as we mentioned on the call, with KeHE and Wegmans. Outside of that, I've personally looked at our product lineup for 2024. And like Target, I think -- I am personally excited about what we'll be showing up on the shelves in 2024. So we've seen retail still -- like that retail channel as a clear growth arm. But I still see opportunity in DTC. There is just such a large TAM and we are the leading sustainable products player. We have 5 million customers, which is this tremendous asset. Yes, some of them are inactive, but just give us a chance to get back in front of them, tell our story and as we keep innovating on the core customer experience, I just see big opportunity on DTC. So as we look forward, yes, we see growth in the retail channel on an ongoing basis going forward, but I see DTC as also a [bit limitless].

Great. And then if I could just ask one more question. I'm curious just how you're seeing the consumer handle the macro environment, if you've seen any pullback, I guess, in purchases? Or if you think there's any trade down going on right now that's impacting growth?

Well, I think consumers still feel pressure, but I actually believe our tailwinds are greater than any headwinds. I mean we are really well positioned as this DTC companies has made the hard decision to yes, comping some of that advertising spend and pull back. But I think unlike some of these other companies that have kind of had a similar experience, they haven't made the hard decisions on the cost structure that we have. So in terms of the macro environment, we're just not seeing that many headwinds compared to what our cohort curves would suggest. This is really a story around where we're positioned today and in terms of the next 12 months, how we can really drive improvement in the core customer experience while still winning with sustainability and doing that all in a profitable manner.

Great. That sounds good. And good luck for the rest of the year.

Of course. Thank you. Appreciate it.

And it does appear that there are no further questions at this time. I will now turn it back to the speakers for any closing remarks.

Thank you very much for joining us today, and we look forward to future results going forward. Thank you so much.