Nu Skin Enterprises, Inc. (NUS) Q1 2022 Earnings Report, Transcript and Summary

Good day, and welcome to the First Quarter 2022 Nu Skin Enterprises Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Scott Pond, Vice President of IR. Please go ahead.

Thanks Betty, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO; Connie Tang, Chief Global Growth Officer; and Mark Lawrence, CFO. On today's call, comments will be made that includes some forward-looking statements. These statements involve risks and uncertainties and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks. Also, during the call certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP financial numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website for any required reconciliation of non-GAAP numbers. And with that, I'll turn the call over to Ryan.

Hey, thanks Scott. Good afternoon, everybody. Thanks for joining the call today. We remain acutely focused on Nu Vision 2025 and our strategic transformation that we laid out with each of you at our Investor Day in February. This evolution of our business is vital to our long-term success as we lean into the rapidly evolving commercial landscape, and we take advantage of emerging market trends such as product personalization, social commerce in the gig economy in order to rejuvenate sustained growth in the coming years. All in spite of these near-term disruptions we're seeing in the market. For the first quarter, we were pleased to report strong results, including revenue of $604.9 million, which exceeded the high end of our prior guidance by approximately $15 million. First quarter earnings per share also came in slightly above our prior guidance at $0.76 due in large part to the revenue beat. Our outperformance was driven by solid gains in the U.S., Taiwan and Southeast Asia and continued effective product rollouts including ageLOC Meta and Beauty Focus Collagen+, which both performed well in the quarter. These two product introductions helped to further strengthen the wellness side of our business, improving from 35% of revenue to 44% year-over-year. We're particularly encouraged with our results considering the continued global pandemic disruptions, including increasing lockdowns in China, the conflict in Europe and global economic challenges. Now let me give you some brief thoughts on a couple of our key regions. Unforeseen global factors have heightened uncertainty in both EMEA and China were deeply saddened by the unfortunate situation in Ukraine and recognized the profound impact that these events are having on many people around the world. On March 4, we announced suspension of our limited operations in Russia and Ukraine, and are experiencing some softness in EMEA due to the broader distractions associated with the war in this part of the world. In Mainland China, we remain optimistic in our long-term view of this market, substantial potential for our unique beauty and wellness products. However, operations in the latter part of first quarter were impacted by COVID related lockdowns and other factors. And we anticipate these disruptions and the loss of momentum to impact our Q2 and annual results. In other regions, the roll out of Meta and Collagen+ and other new products coupled with the continuing advancement of our social commerce initiatives remain encouraging, contributing to return to growth in Southeast Asia and continued growth in the U.S. and Taiwan. Connie will provide a bit more context in just a few minutes. Nevertheless, given the global uncertainties in China, EMEA and the broader economy, we're lowering our outlook for 2022 by approximately $150 million. Now, in spite of this and the short-term challenges, we remain focused on the transformation of our business with Nu Vision 2025. Let me provide just a bit more context on that. While still in the early stages, we are fully engaged in this major strategic transformation to capitalize upon the commercial shifts of product personalization in beauty and wellness, social commerce, and the gig economy. Our transformation from traditional direct selling to becoming the world’s leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform is all about defining a new framework for our company to win in this evolving landscape. For the first time in three years, we are preparing to meet with our team elites in London to align with our top global sales leaders around Nu Vision 2025 and our three strategic imperatives, Empower Me, affiliate powered social commerce and our digital ecosystem. Let me just briefly talk about progress on each of the three. Our Empower Me personalization, beauty and wellness strategy is intended to provide consumers with deeper insights into their individual skin care and body care needs, IoT connected devices will be a key aspect of Empower Me beginning with the launch of LumiSpa iO in early Q3 followed by some limited previews of Body iO, beginning in Q4. Now these unique input/output devices will enhance the consumer experience and forge even stronger connections with the company to enhance personalization of product and content curation, improving customer loyalty and lifetime value. Next, affiliate powered social commerce builds on our roots of person-to-person marketing, to amplify messaging around authentic personal recommendations from our roughly 250,000 paid affiliates by leveraging social media scale and reach. In 2022, we are leveraging key learnings from our Western markets as we refine our product promotions cadence in, introduce a new global pricing model, beginning with LumiSpa iO and further train our sales force around the globe to embrace this new social commerce model. And thirdly, we continue to build out our digital-first ecosystem with the introduction of Vera and Stella apps towards the end of the first quarter. The Vera app leverages AI and machine learning to guide consumers through their personalized beauty and wellness journeys. While the Stella app enables brand affiliates to easily access key information and tools to better manage and build their businesses, all from their mobile devices. Both apps were introduced in English at the end of the quarter and other languages and capabilities will be added throughout 2022. Now to help you better understand our transformation and measure progress along the way, we committed in February to providing greater transparency into additional key drivers. Our first notable change is to begin reporting the number of paid affiliates, which is a broader segment of our sales force, who actively share products with customers on a much more flexible basis. And who act as a pipeline for future sales leaders. Connie will describe that a bit in just a couple of minutes with. I'm also pleased to report our ongoing ESG efforts as we seek to improve people's lives and the world in which we all live. We recently released our fourth annual sustainability report where we highlighted our progress in several key areas, including the reduction of 131 tons of plastic and more than 34 tons of paper in 2021, due to packaging changes to more than 60 products and other related initiatives. In addition, the two Communitas Awards we recently received further reflect our tremendous commitment to our entire organization towards corporate social responsibility. Nu Skin also continues to lean into diversity, equity and inclusion as we're pleased to be named to Forbes list of the world's top female-friendly companies for 2021, as well as their list of America's best employers for 2022, where we rank number two within packaged goods and number 57 out of 500 midsize companies overall. So in summary, while there are near-term uncertainties with China, Europe and the broader economy, there are also new opportunities arising as our world continues to evolve. I’m optimistic about the future as we work towards Nu Vision 2025. Our agile model is built on a strong foundation and is globally diversified, which helps to mitigate risks and enables us to continually find new pathways for growth. In the early phases of Nu Vision 2025, I really am as confident and as ever in our future as we leverage our capabilities and resources to transform, to becoming the world’s leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform. So with that, I’ll turn it over to Connie to provide some additional insight on market performance. Connie?

Thank you so much, Ryan. Before I share more information about our market performance by segment, I’d like to provide detail on the addition Paid Affiliates to our earnings report that Ryan mentioned earlier. As we continue to focus on customer acquisition, our Brand Affiliates, who primarily share products are a bridge to attracting new customers and nurturing relationships and community. Brand Affiliates power are social commerce model. And this is an important indicator of consumer purchasing activity in our business. The number of Paid Affiliates that we report includes any Brand Affiliates, as well as sales employees [Technical Difficulty] compensation during the quarter. It’s also important to note lightship in how we are reporting our sales leader number going forward. Instead of just reporting the number of sales leaders who achieved certain qualification requirements in the last month of the quarter, we will be providing an average of all three months more accurately reflectivity for the entire quarter. Our registered customer number has not changed and includes those who purchase directly to Nu Skin during the quarter. Just this before this does not include customers who buy directly from the member of our sales force. Collectively, we believe reporting this information each quarter provides a more complete picture [Technical Difficulty] participating in our business opportunity at current levels, whether it be through sharing products within a team, or leading a sales organization. Now when we look at our results by segment for the quarter, our multiyear growth in the Americas, specifically the U.S. continued in quarter one, coupled with solid Southeast Asia Pacific results, we continue to progress in our efforts to balance our global revenue distribution. In the Americas, growth in the U.S. market continues to be offset by macroeconomic factors in Latin America. The U.S. market grew 15% as we carry forward momentum from last year’s Collagen+ launch and building our subscription base. We also continue to drive further adoption of our social commerce model in the U.S. Now, Latin America continues to face macro pressure, we have [Technical Difficulty] leaders who continue to provide them with training to support the adoption of social commerce. In addition, we are adapting the Collagen+ Playbook, which generated strong results in the U.S. and we believe can do the same in Latin America. As EMEA is in the midst of conflict this segment is down 25% in constant currency. The war in the Ukraine has created major disruptions in Eastern Europe, and the impact is greatly across the entire region. Our team’s throughout EMEA has spent much of their time and resources to support those directly impacted. And our hearts really do truly go out to all those whose lives have been thrown into turmoil during this difficult time. From a business perspective, as Ryan mentioned, we have suspended operations in Russia and Ukraine. Our leaders are identifying opportunities to read those business momentums in the EMEA region, despite the ongoing conflict. As Ryan mentioned, our Mainland, China business has been disrupted due to severe COVID-related lockdowns and other factors. Yet the team was able to deliver better than anticipated results in the market during the quarter due in part to effective online product promotion. Shanghai and other areas continue to be under strict lockdown, furthering the disruptions of sales events and promotional activities and requiring frequent pivots. As we stated last quarter, we anticipate challenging headwinds to continue in Mainland, China, but we are looking forward to the launch of ageLOC, LumiSpa IO [Technical Difficulty] to help shift the momentum. The 6% constant currency revenue growth in Hong Kong and Taiwan has been led by strong performance in our Taiwan market. Taiwan teams success with new customer acquisition through our Enjoy customer loyalty program with 4% growth in customers for the Taiwan, Hong Kong segment. Hong Kong was one of the markets hit hardest by strict COVID shutdowns during the quarter, but we were able to mitigate some of the impact of the lockdown with a live shopping broadcast event. We are taking the learnings from this virtual shopping event to inform how we organize future events and help drive social commerce growth in this market. While Japan was down slightly, the market was able to regain some momentum in the second half of the quarter, after a slow start due to strict COVID lockdowns. The launch of ageLOC Meta was a catalyst for this and with sales that significantly exceeded expectations. South Korea also experienced the slow start to the quarter and ended down 4% in local currency. We created positive momentum later in the quarter with a successful ageLOC Meta launch. And we are highly encouraged by a 200% increase in new subscriptions. In the second quarter, we will continue to focus on signing up subscribers and we will run a TR90 challenge, which is typically driven sales and customer acquisitions market. Finally, in Southeast Asian Pacific, we grew revenue 11% in constant currency. One of the key drivers of this was our ability to energize our sales leaders during our ageLOC Meta previews ahead of the launch. Combined with some loosening of long lasting COVID restrictions throughout the region, this preview has built some energy ahead of the full launches of ageLOC Meta and LumiSpa IO later in the year. Now, looking ahead, we are building energy among our affiliates with continued launches of ageLOC Meta and Collagen+ across our global markets and the upcoming empowerment launch with our first connected beauty device, the LumiSpa IO in the third quarter. We also continue to train and focus our leaders on social commerce adoption and the digital tools we are making available to them to address and nurture customers to build their businesses. We anticipate some ups and downs in the midst of [Technical Difficulty] we remain confident in our execution and the ongoing transformation of our business to support our Nu Vision 2025. Now I’ll turn it over to Mark to review some more details on our financial performance. Mark?

Connie, let me just summarize. We had a difficult connection on our side, and so I want to make sure that the analyst heard. So let me just quickly highlight a couple of things on that. And then we’re happy during Q&A to answer any additional questions. So first Connie just described our monthly paid affiliate number, we can talk more in Q&A about that. But again, this is a new indicator that sits really between customer and sales leaders. It’s a key pipeline metric as we transition more to social commerce in it and so you’ll be seeing that data happy to talk more about that. On the geographic front real quickly, as she just summarized there Americas growth really continues to be somewhat of a bifurcated path where we have strong growth in the U.S., which was up 15%, but Latin America continues to be pulled down by the macroeconomic environment as we all understand. EMEA was down 25% in the quarter predominantly related to the conflict and really the distractions across the rest of the markets. She talked about Mainland, China, obviously that continues to be a major focus for us, but these extreme lockdowns in Shanghai and now extending through Beijing, Guangzhou, which are the major parts of their business. We’re taking the guide down as a result of that as we continue to struggle. Hong Kong and Taiwan were up 6%, which we were pleased with related to new product introductions and some good promotional activity there. Japan was down slightly on a year-over-year basis. But we continue to be optimistic about momentum there. Korea was down 4%, still struggling with some lockdowns, but we are seeing some encouraging signs with subscriptions with TR90 business and the like. I think a key bright spot for us was in the South Asia Pacific, which grew 11% predominantly related to Meta previews and also the market opening up a little bit more, although there are some continued lockdowns there. So that’s just a brief summary on the markets. And again, during Q&A happy to go a little bit deeper if you had any questions on that. But Mark with that, why don’t you summarize?

Sure. Thanks, Ryan. And thanks, Connie. And thanks to all of you for joining our call today. I’ll provide a brief Q1 financial review and then give initial Q2 projections and update full year 2022 guidance. For additional detail, please visit our Investor Relations website. For the first quarter, our results beat expectations with revenue of $604.9 million with a negative foreign currency impact of 3%. We were down 8% in constant currency compared to Q1 2021, which was our largest first quarter in company history. In Q1 2022, revenue benefited in part by sales late in the quarter prior to an April 1 price increase. Earnings per share for the quarter was $0.76. Our gross margin was 73.3%. This Q1 result was below our expectations largely impacted by increased sales and promotions of LumiSpa devices as we prepare for the launch of the new connected LumiSpa IO device planned for Q3. Gross margin for the core Nu Skin business was 76.5% compared to 77.8% in the prior year quarter. We anticipate gross margin improvement throughout the year with global price increases largely implemented in Q2 as well as planned new product introductions. Selling expenses as a percent of revenue was 40.1%, 70 basis points below the prior year period. For the Nu Skin core business, selling expense was 43% compared to 43.7%. General and administrative expenses as a percent of revenue were 24.6% compared to 24.8% in the prior year. For the quarter, G&A declined $19 million year-over-year, as we remain focused on carefully managing expenses. Operating margin for the quarter was 8.6% compared to 9.3% in the prior year period. We anticipate operating margin gains over the course of the year as we work towards our midterm stated goal of 13%. The other income expense line reflects a $1.5 million expense, compared to a $1.6 million gain in the prior year. Cash from operation was $7.5 million, compared to a negative $18.9 million in the prior year. And as a reminder, Q1 is seasonally our lowest cash quarter. We are pleased with the inventory decline of $17 million during the quarter, and remain committed to strategically invest in inventory to support our supply chain and plan to further reduce inventory levels as global supply chain constraints ease. We paid $19.3 million in dividends and repurchased $10 million of our stock with $235.4 million remaining in authorization. Our tax rate for the quarter was 23.6% compared to 26.5% in the prior year period, and was within our guidance range of 21% to 25%. Our Rhyz segment, which includes our manufacturing partners declined 12% in the quarter. Remember that revenue reflected in our Rhyz segments only represents sales to third-party customers. Rhyz revenue can fluctuate significantly depending on the available production capacity allocated to Nu Skin versus those external customers. The short-term demand for external customer products was soft in the quarter as many of our large customers were long on inventory and were impacted by continued supply chain constraints. Our manufacturing entities continue to benefit our core Nu Skin business by helping shore up our supply chain and generate U.S. profit that lowers the overall tax rate. We continue to carefully seek investment opportunities in this segment to further enhance our capabilities. Given the continued economic uncertainty, increasing COVID-related factors, foreign exchange pressure and geopolitical conflict, we are adjusting our annual guidance. We are reducing revenue by $150 million consisting of a $100 million reduction in China, a $25 million reduction in EMEA, and a $25 million reduction due to increased FX headwind as the dollar continues to strengthen. We are now expecting 2022 revenue of $2.51 billion to $2.62 billion. We anticipate earnings per share of $3.60 to $3.90. This guidance assumes a negative foreign currency impact of 3% to 4% and a tax rate of 25% to 28%. We are projecting second quarter revenue of $590 million to $620 million, assuming a foreign currency headwind of 3% to 4% and a tax rate of 25% to 28%. Q2 earnings per share guidance is $0.75 to $0.85. So while we face near-term headwinds, we remain focus on making the right operational decisions and investments to resource the transformation of our business to new vision 2025 and becoming the world’s leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform. And with that operator, we will now open up the call for your questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Steph Wissink with Jefferies. Please go ahead.

Thank you. Good afternoon, everyone. Ryan, thanks for recapping seasons [ph] comments that was helpful. I want to just focus in on that affiliate class as part of your overall business model. Can you just help think through what tools are available to them today, maybe how broad spread those tools have been deployed. And then as you think about that group specifically, what are their biggest advantages to your model, whether that’s connectivity to the end consumer data intelligence feedback loops. If you could just talk a little bit about that cohort. That would be great. Thank you.

Yes. You bet, Steph, and yes, thanks for the question. So, yes, the paid affiliate class is a really important one for us and will be for you as the transformation continues to evolve. They are a more flexible group. Whereas sales leaders have qualifications that they’re required to maintain sales volume requirements. Affiliates are really more of what I would define is kind of the gig economy type shares, they participate much more flexibly. It is a fairly, it’s a newer classification, or I guess, focus for the company, although we’ve had affiliates for a long time, but with social commerce and the social sharing aspect, it’s important that we really place more focus on them. And so the tools so far as I mentioned, the Stella app and the Vera app, or specifically the Stella app that we just introduced literally, I think of the last day of Q1. So we’re just starting to roll that out is a predominant tool for them that will help them to effectively share products, manage their connections through various tools that we have some CRM activity and the like. And so that’s a really critical tool that we offer to them. And it’s in the very nascent stage of that. We’re really still developing that. We call it an MLP, a minimum lovable product. Now we really expect by the end of this year, that that tool will be much, much more robustly developed. I think advantage wise, what we like about this group, again, plays into the gig economy, where there’re far more people interested in kind of flexibly working Uber driving, et cetera. And so this affiliate position coupled with our velocity compensation structure gives that much more flexible approach to the business see it today.

All right, that’s great. And then my second one is on your innovation. I’m really curious about what a connected device can afford you in terms of more iterative innovation in the future, versus I think what we’ve known of you in the past, these big launches, and then you kind of manage the post-launch cycle. Seems like you could actually have a bit more of an iterative approach. So maybe talk a little bit about whether it’s through IOT or through some of your other digital technologies, how you feel like you’re shifting a bit in your innovation approach?

Yes, I – and I’m glad you asked the question, I’ll comment. I’d actually like Mark to maybe share a few thoughts from his Amazon days on this, because it really is an important part. I mean, we really see this shift step from a customer integration standpoint between the company and our customer to be very important from a strategic shift. And I kind of liken it to almost Netflix shipping DVDs versus having persona driven content curation. In our case, it’s persona driven product curation. For us, what will be very important with these IOT connected devices and coupled with the Vera app is the personalized product experience that will – that we will be able to offer through both the app and the connected device will be based more upon their personal needs and desires as a customer. And so you can imagine from a preferential perspective will have preference data through the app where they fill out a personal product recommendation that gives them, helps them profile their personal beauty and wellness needs that then moves into their purchase history. So what products they’re buying and then using AI and ML, we can feed recommendations through that process. So I would see again at the very early stages, it will be somewhat basic, so to speak in terms of how that experience goes. But just as we’ve seen with Netflix over the last decade, the degree of personalization through persona driven management is going to increase significantly. And a lot of this for me is why we’re so focused on new vision 2025, and taking us a couple of years to build these personas out and continue to advance them. We’ll start this with the Lumi IO device, and it will continue, but Mark, maybe talk about the journey on the digital product side?

Sure. Thank you, Ryan. And thank you for the question Steph. This is probably what I’m most excited about for our company going forward is really this deeper understanding of our customers with the data that we should be able to gather with [Technical Difficult] we’ll know our customers better than ever. And those – that information will help us facilitate what our products become going forward. I think back to my times at Amazon, so think seven years back when the Alexa device and the Echo devices came out, they didn’t do very much. They were a voice activated alarm clock. They could maybe play your favorite music. They could tell you a joke. And then now fast forward today what the Alexa enablement offers. And it’s so broad. Think about that from a device perspective. If we find, our customers are spending 65% of the time on the right side of their face versus the left side of their face, maybe there’s something we can do in the design of the next generation product that makes that better for that customer. If we find that they’re using it three times a week versus five, there’s so many things that we can learn about the customer that will help us make our next generation of product that much better and a better [Technical Difficult] along with all of the personalization that I had mentioned.

And this is Connie, hopefully technology will be friendly to me right now. And I – you’ll be able to hear this, but I think what’s really exciting for me about the iterative process is that it translates from the data into how we operationalize and how we as a company put forth programs and iterate on our own programs, based on the data that’s collected, meaning we can improve the programs that are designed for customer acquisition, for retention, as well as for loyalty development. The more we learn about behaviors and the more we learn about preferences, as well as consumption of the content that is both company created and user generated, the more we can more personalize as well as deftly execute and implement programs that are relevant and key to customer retention.

All right. Thanks Connie. Thanks, everybody.

Thanks, Steph.

The next question comes from Doug Lane with Lane Research. Please go ahead.

All right. Good afternoon, everybody. Mark, can you elaborate on what the magnitude is or the pricing that's going to affect this quarter and where it is geographically and then what plans may be as the year progresses?

Yes, so we instituted a global price increase this year about 5%. Most of the markets around the world have implemented that in the start of Q2. There are a couple of markets that will implement that in the early summer, even later in the year.

Okay. Thank you. And then most of your peers have reported already, and there seems to be a thread of very difficult April in the channel. I just wanted to see if you could just qualitatively give us your characterization of how April was?

Yes, so I mean, so far we – as we were watching the quarter unfolded, it is probably unfair to look at a single month simply because our product launches and introductions and our promotion schedule varies market-to-market. Again, I think what we're probably most focused on right now, Doug, is China and the broad media that we're hearing as well from our teams where these lockdowns are going from Shanghai, we're now hearing them they're in Beijing and in Guangdong, or which is the Guangzhou area, so the three major metropolitan areas of China. So, we're watching with significant focus to understand what the government there is going to do and how severe it's going to be. But, it's hard to comment as of now, other than to say that, there's a lot of uncertainty and that's why our guide is where it is a large reason why.

No, that makes sense to me. Can we talk about live meetings? You mentioned a team elite meeting coming up in London. How big is that? And is this the first meeting really globally since the pandemic started of any size?

No. So yes, yes. Great question, Doug. And I want to reiterate our view of the future. Doug is very digital-first. We do not see ourselves moving back towards that more traditional network marketing type of style. We're investing heavily on the digital front. We believe that's the wave of the future from a scale standpoint. And so, I want to just be clear. I mean, while we certainly believe that in-person activities are important such as this team elite trip where we get to align, it's been three years since we've met with our top leadership. So that's very important for us. Success trips as well in half the world, those have been able to resume predominantly in the west, again in Asia, there's still pretty severe lockdowns on travel in many parts of the geography. But so those have been going on predominantly in the west. And that those are helpful from a kind of a motivation and alignment, because those are qualified trips that motivate sales leaders to do it, as far as the broader larger meetings, the convention type meetings, we really haven't turned those back on. And I would imagine in the future, as we think about it, there's a place for that at a limited basis, but it's not going to be the extent that we were in the past. We believe that that model has had its stay and is played it out and we need to be investing in our digital-first approach.

Okay. That’s helpful. Thanks Ryan.

If I may, I think there will be a new version of a hybridized world of how the balance and the shift I think is a lot more agile between virtual, digital and in-person. And I think it's going to be a really exciting opportunity for us to scale and reach even more people going forward beyond what the walls or halls of one location may hold for us. So we are leaning into that. And we've seen some interesting, not only interesting, but encouraging success across our markets who have been limited due to external factors.

Okay. Thanks, Connie. That's helpful.

The next question comes from Mark Astrachan with Stifel. Please go ahead.

Yes, thanks. Afternoon everyone, can you hear me all right?

Yes. Mark.

Perfect. I guess, Mark, first for you. What was the impact from the sell and the head of the pricing that you had called out in the press release? And I'm also curious, was pricing contemplated in the original guidance, I guess I'm just trying to get a sense of how to think about, I know you don't talk about volumes, but how would we think about kind of the underlying volumes relative to the revenue guidance that was updated, inclusive of the benefit of 5% pricing, but also obviously by some impact of not just the pricing and volume impact, but just everything else that's going on in the world.

Yes. Thanks Mark. We were trending towards the high end of our range all the way up until the last couple of weeks of the quarter. And then we saw a surge of revenue the last couple of the weeks of the quarter that kind of pushed us to that $15 million over the high end of the range. It's why you can't quantify exactly how much of that revenue beat was due to the price increase. You can argue that maybe somewhere – it was in somewhere or the range of $10 million to $15 million based on where we were trending up until the last couple weeks of the quarter,

And then the price increase?

Yes. And in our original guide, we decided on the price increase, post our original guide. But it is contemplated in the updated guidance that we gave today.

Got it. Okay. Yes, it did makes sense. And then just the broader strokes too, on the guidance reduction from a revenue standpoint by geography number seem like pretty rounded numbers, I guess. I'm just curious how you got there, how you're sort of thinking about the impact from what's going on given what you're expecting now.

Yes, for sure. So starting with the easiest one, FX is about one point worse than what we had originally guided. So that works out to be about $25 million and, and again, the breakout of the 150 is intended to be somewhat rounded, right. We do have ranges on each side of those numbers. We are seeing a significant impact to our EMEA business and we contemplated that. And when we looked at that, it was about $25 million. And then as we looked at what we were seeing in China, it was about $100 million. So, all those numbers are plus or minus $2 million to $5 million depending on the size of them, but the overall impact about $150 million.

Got it. Okay. Great. I appreciate it. Thanks all.

Thanks, Mark.

[Operator Instructions] The next question comes from Linda Bolton Weiser with D.A. Davidson. Please go ahead.

Hi, how are you?

Hi, Linda.

Hi. Sorry, I missed it. But when you were talking about margin performance, I think you said something about something, something that impacted growth margin in the quarter. Can you just kind of repeat what that was? And then you had given like a growth margin guidance range for the year of 75% to 76%. Is that still what you’re thinking? Thanks.

Yes. Linda, thank you for that question. Yes. So we did have increased sales and promotions of the LumiSpa’s that are currently shipping. And that those – the performance of those promotions performed above our expectations. And that did drag down gross margin in the quarter. There’s a plus to that in that we’re reducing inventory of those original LumiSpa’s in anticipation of the launch of the new LumiSpa connected IO device. And then as far as our guidance for the year with the 73.3% in the quarter, we believe that our model still gets us to – I originally guided 75% to 76%. We can still get into that range, but it would be towards the bottom end of that range.

Okay. Thanks. And then can you just comment on another company today that reported definitely said what you did about the dampening of things in EMEA because of the Ukraine war. Is there anything at all you can do? I know it’s like a hard thing, but is there anything you can do to improve the morale or the sales activity? I mean, is there any type of promotion maybe that you used in the past? It just strikes me that this could be sort of a dampening thing because the Ukraine war could continue for some time. So can you just talk about your past experiences with this type of thing?

Yes. No, it’s a great question. I think as we evaluate, we certainly are mindful and sensitive towards the neighboring countries in particular, if you think of the likes of Poland or Romania, Hungary, we need to be mindful of their mindset today. But what we look at Linda are just, as you said, number one, what promotions are we able to do that excite and ignite activity at the customer level? And can we do more of that? Yes. Are there additional product introductions we can bring in the market? And the answer is yes. And so we do have a series for the remainder of the year, as this conflict is now entering, I think day 72 or 74, we’re getting further and further away. And unfortunately it’s normalizing the current state of affairs. And so we do – we would anticipate that we’ll be able to utilize those levers to ignite more energy into the market. But we want to do it in a very responsible manner, given the mindset and the framing of many people in the country. But we will leverage those throughout the remainder of the year to help improve the morale generally.

And Linda, I might add is, while the Q1 results are negative 25% year-over-year on a two year look back that market is still up 50%. And so we’re still pleased with the leaders who have joined the business. We’re pleased with the way the business is operating and the fact that even with all this going on in the world, we’re still maintaining much on 2021.

Okay. And just kind of ask something about your apps that you’ve been talking about. Can you just clarify whether the consumer-facing one is like, does that actually enable the consumer to order the products through the app? Or do they still kind of have to go through a rep or some other website or can they order through right on the app?

Yes. I love that you asked that. It’s a really cool, if you haven’t downloaded, I’d encourage you to download it. It does allow you to buy directly from the app. It also, it allows you – you go in and you fill out a skin – a personal skin consultation. It allows you to take a selfie and to measure progress and like find pores, wrinkles, et cetera. And then it provides you some recommendations that also allows you to buy right there from the app. So it’s a pretty good experience. And again, what we call a minimum lovable product right now, we’re building upon it, but it has that good feature and functionality in it.

The whole point of this app is to – sorry for that. The whole point of this app is also to allow for it really, I call it democratizing the consumer experience. It allows for every customer to have access to information and to kind of discover and journey through what the app offers in terms of product information, coupled with your personal preferences and needs that are both taken into account through questionnaire format, as well as visually through a camera that will take a picture of your skin. So I think it’s really number one, super fun and at the same time we hope it’s part of every consumer’s journey as they engage with us.

Okay. So sounds good. Thank you.

Thanks, Linda.

Thank you.

It looks like, and I apologize the call went a little bit longer. We know you’re very busy covering too many companies out there. But I do want to just say thank you to you from the analysts point of view. We laid out a multi-year transformation in Nu Vision 2025 in February. And I just want you to know we are acutely focused on that vision. We understand that the near-term headwinds within direct selling within just the broader economic landscape. And I want you to know as a management team, we’re committed to this vision and to the transformation. It’s not always easy, and there’s a lot of puts and takes along the way. That’s why we tried to be really conservative. We don’t foresee everything as we go. But we do commit to be as transparent as possible. And so, again, thanks for your time. Thanks for participating in the call. If you have any additional calls or would like to reach out, feel free to reach to Scott Pond or to Mark, myself. We’re happy to answer any questions as we go, but again, just wanted to thank you for your time. And with that, I think we’ll end.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.