Nu Skin Enterprises, Inc. Class A Aktie

Good day, and thank you for standing by. Welcome to the Q1 2026 Nu Skin Enterprises Earnings Conference Call.[Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, B.G. Hunt, Vice President, Treasurer and Investor Relations. Please go ahead.

Thanks, Kelly, and good afternoon, everyone. I'm joined by Ryan Napierski, President and CEO; and by our Interim CFO, Chelsea Lantz. I worked closely with Chelsea for the past 15 years and can say with confidence that she brings both strong financial discipline and thoughtful proven leadership.

Today, we'll be sharing Nu Skin's Q1 2026 results and providing guidance for the remainder of the year. Before I turn time over to Ryan, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve important 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 numbers assist in comparing period-to-period results in a more consistent manner.

Please refer to our investor website, ir.nuskin.com for any required reconciliation of these non-GAAP numbers. And with that, I'd like to now turn the call over to Ryan.

Thanks, BG. Good afternoon, everyone. Thanks for joining us. I'm pleased to report our first quarter results, which were in line with expectations for both revenue and adjusted earnings, reflecting continued progress towards our vision of becoming the world's leading intelligent Beauty and Wellness platform. Powered by our talented global sales leaders.

We made meaningful progress in Q1 with the sales leader introduction of Prysm iO and continue to build the foundation for growth in emerging markets in spite of uncertain macro environmental pressures that are impacting consumers and supply chains around the globe.

From a regional perspective, we were pleased to see the hard work and dedication of our talented sales leaders across Latin America who delivered sustained growth, and we saw continued improvement in Mainland China with growing leader engagement around our Tru Face anti-aging product rollout. At the same time, a few of our reporting segments remained pressured by broader macroeconomic and industry dynamics.

We were pleased with growing brand affiliate confidence and improving trends across several regions as well as year-over-year growth in new sales leaders exiting the quarter, both the which, both of which are indicators of improving energy around Nu Skin's entrepreneurial opportunity associated with our new product innovations. As I've discussed previously, our enterprise strategy is centered around 2 key growth drivers: first, advancing our intelligent wellness platform with our next disruptive innovation, Prysm iO; and second, further expansion in developing and emerging markets, including Latin America, Southeast Asia, China and India. Let me start with Prysm iO.

We are seeing encouraging signs in new sales leader development across several markets as our leaders increasingly engage with Prysm iO and continue to build on our leading anti-aging Tru Face brand. These 2 initiatives are providing fuel for our sales force and our efforts to improve channel activation in the first half of the year as we work towards our return to growth in the back half.

For more than 40 years, Nu Skin is focused on helping people look, feel and live better grounded in science-based innovation, our leadership-driven opportunity and our force for good culture and community. We have established a strong position in integrated anti-aging science and product innovation led by our ageLOC brand, which has generated more than $15 billion in revenue since its inception.

This proprietary gene-based approach to anti-aging remains highly differentiated, and we believe this category will expand further as younger generations increasingly seek youth preservation, integrated solutions across beauty, wellness and lifestyle. As we move into the next chapter of our anti-aging journey, we believe the future will be increasingly defined by intelligent technologies that provide people with personalized insights to help them live better longer.

As consumers better understand and look to close the gap between their health span and their lifespan, the need for personalization and biomarker-driven insights continues to grow, aligning directly with our Intelligent Beauty and Wellness platform vision. While nutritional health is widely recognized as critical, the ability to measure it has historically been limited to invasive, complex and slow processes such as blood or serum sampling.

As we've learned with other biomarker devices, changing consumer behavior requires simple, fast and easy assessments and real data collection paired with meaningful insights and personalized product solutions.

Prysm iO enables consumers to assess a critical indicator of their nutritional health through a simple 15-second fingertip scan to receive a real-time personalized wellness assessment across 4 key domains of health: nutrition, fitness, lifestyle and supplementation. Since our initial introduction of Prysm last December, we've generated nearly 2 million scans from more than 30,000 Prysm iO devices around the globe. Combined with more than 20 million historical scans from our biophotonics scanner, this rapidly expanding data set is strengthening our ability to refine our wellness algorithms, improve assessment accuracy and enhance product recommendations.

As Prysm iO adoption increases and more people are scanned, we expect subscriptions to increase, which historically drives significantly higher customer lifetime value. In fact, we're already beginning to see early indicators of this dynamic.

On a year-over-year basis, subscription volume is up 5% and the percent of subscribers to total customers is up 14%. We're also seeing continued strength in our broader nutritional ecosystem.

Sales of products certified to raise someone's Prysm iO score are outperforming total product sales and our flagship LifePak brand grew more than 10% year-over-year, reinforcing the value of measurement-based wellness and targeted supplementation. We are in the early stages of Prysm iO and as with any new platform, adoption requires training, behavior change and broader market education. We're actively supporting our sales leaders as they shift from using Prysm primarily as a product demonstration tool to positioning it as a household wellness device, one that enables ongoing engagement through personalized insights and recommendations.

We believe that every household can benefit from the access to this personal and family wellness assessment tool, and it is our ambition to do just this. This business model transition does create near-term switching costs as our leaders build new capabilities, integrate new tools and shift how they engage customers as they transition from social sellers to Beauty and Wellness consultants.

Nevertheless, we believe that this is the right direction to provide wellness consumers what they are looking for as we unlock a more scalable, higher-value model over time. We are encouraged by early feedback, particularly among wellness-oriented communities such as fitness groups, physicians, clinicians and leaders who are positioning Prysm iO as a consultative wellness assessment platform. We're also continuing to integrate artificial intelligence into the Prysm iO experience. Today, AI supports scoring, data comparisons and personalized product recommendations. Future introductions of the platform are expected to provide deeper, more intuitive insights into individual wellness journeys, create a more actionable and data-driven experience over time. Prysm iO is not simply another product launch.

It's a foundational platform that connects our anti-aging science product ecosystem, data capabilities, AI insights into our leadership opportunity. While adoption will take time, we believe it will become a defining part of Nu Skin's future.

The incorporation of AI across our Intelligent Wellness platform will lead to improving unit economics as we leverage critical insights from data across the business to drive deeper and more meaningful engagement with our customers, affiliates and sales leaders around the globe.

Now I'll turn quickly to talk about our second growth driver of expanding further into developing and emerging markets. Nu Skin has historically performed best in developed markets given our premium positioning. However, as consumers and entrepreneurs around the world become more sophisticated, we see a compelling opportunity to broaden our reach across more, a greater diverse set of markets. Latin America continues to be an important and growing region where we are providing our Nu Skin opportunity within reach, maintaining our commitment to science-backed innovation while offering localized product solutions to meet various consumer lifestyles and budgets.

This includes refining our sales compensation structure to better align with local entrepreneurial segments by providing earlier compelling rewards for selling products and building their sales teams. We see additional opportunities to scale this model across Southeast Asia and throughout more areas of China, which contain hundreds of millions of emerging consumer segments seeking to look, feel and live better.

And our next anticipated major market, India, holds tremendous potential in the future as we apply key learnings in this pre-market entry phase of operations to better understand the need of entrepreneurs and customers in the world's most populous market.

We're working to solidify our operations, infrastructure and such ahead of plan -- our planned formal launch by the end of this year. Evolving a premium global brand to a broader market is challenging and requires thoughtful execution. However, finding the right balance that remains true to our core brand promise while helping more people around the world look, feel and live better can unlock meaningful long-term growth.

What remains constant throughout all of this is the central role of our independent sales leaders. We are a leadership-driven company, and our long-term success depends on our ability to inspire, equip and align our leaders around these compelling opportunities. Next week, we'll be in South Africa with our top global sales leaders for our Team Elite trip.

This will provide an important opportunity to closely engage with them as we share learnings, strengthen alignment and continue building confidence in the future we are all creating together. Now throughout all of this, operating efficiency remains a critical focus for us.

We're working tirelessly to sustain growth in gross margin in spite of the headwinds associated with uncertain trade practices, which have placed significant pressures over the past many years. We're pleased with progress to date and are committed to continuing improvements in gross margin through localized manufacturing, portfolio optimization and strategic pricing actions. We will also work to optimize selling expense to reward leadership for growth and maintain disciplined controls on our G&A.

This discipline allows us to invest in our strategic growth priorities while ensuring our cost structure remains aligned with revenue. So with that, let me turn some time over to Chelsea Lantz, who's been a key leader for us over the past several years, a valuable contributor to our finance organization.

Chelsea has been instrumental in driving cost reductions throughout our organization, and she is now leading us as interim CFO. It's also Chelsea's birthday tomorrow, so we've intentionally synced these 2 things up. So Chelsea, take it away.

Thank you, Ryan, and good afternoon, everyone. Before I begin, I'll briefly introduce myself. I'm currently serving as Interim Chief Financial Officer and have been with Nu Skin for 15 years, most recently as Corporate Controller. In that role, I partnered closely with the executive team on operational efficiency and gross margin initiatives while overseeing the company's global financial operations and financial reporting.

I'm excited to continue supporting the business as we focus on disciplined execution and long-term value creation. Today, I'll walk through our first quarter results, provide our outlook for the second quarter and share an update on our expectations for the full year.

Additional details can be found on our Investor Relations website. As a reminder, I will be discussing adjusted non-GAAP measures. Reconciliations to the most directly comparable GAAP measures are available on our website.

For the first quarter, we delivered revenue of $320.6 million, within the guidance range, including a 1% favorable foreign currency impact. GAAP earnings per share were $0.04, while adjusted earnings per share were $0.14, excluding costs related to our decision to wind down our separate BeautyBio business and other charges.

Adjusted EPS was in line with our guidance range. These results reflect continued investment in our key strategic priorities, including the expansion of our intelligent Beauty and Wellness platform through Prysm iO as well as ongoing investment in emerging markets. We believe these investments are important for our future growth, and we're encouraged by our ability to advance these initiatives while maintaining a disciplined focus on operational execution and margin improvement.

From a margin perspective, adjusted gross margin was 67.9% compared to 67.8% in the prior year, reflecting a relatively stable revenue mix between the Nu Skin core and RISE entities. Within our core Nu Skin business, gross margin improved to 76.9%, up 20 basis points from the prior year, reflecting continued progress in our operational efficiency initiatives and product mix optimization, consistent with our focus on margin improvement.

Consolidated selling expense was 34.3% of revenue compared to 32.5% in the prior year. Within the core Nu Skin business, selling expense was 40.5%, up from 38.7% in the prior year, consistent with our expectations as we continue to focus on rewarding sales leaders' productivity through compensation plan enhancements. Looking ahead, we expect selling expense in the core business to remain around 40% as we continue to prioritize investment in initiatives that support top line revenue growth and sales leader engagement.

General and administrative expenses declined by $9 million year-over-year on an adjusted basis, reflecting continued cost discipline while focusing on future investments. As a percentage of revenue, G&A was 29.9%, up from 28.9% in the prior year, reflecting our ongoing investments in technology and emerging market expansion, including India.

As a result, adjusted operating margin for the quarter was 3.6%, down from 6.4% in the prior year. We remain focused on improving operating efficiency and aligning our cost structure with the current operating environment while continuing to invest in future growth initiatives. Now I'll turn to the balance sheet.

Over the past several years, we have focused on paying down debt to strengthen our balance sheet and improve our liquidity position. During the quarter, we completed a refinancing of our credit facilities, extending maturities through 2031 and improving our overall cost of borrowing. This transaction provides appropriate financial flexibility to support our operating and strategic priorities.

Proceeds from the refinance were used to repay existing indebtedness. Consistent with our disciplined capital allocation strategy, we returned approximately $8 million to shareholders during the quarter, comprised of $3 million in dividends and $5 million in share repurchases.

At quarter end, we had $137.3 million remaining under our current share repurchase authorization. Looking ahead, we remain in the early stages of our key growth initiatives and are encouraged by early signs of stabilization, including improved brand affiliate and new sales leader trends across several markets.

At the same time, we are mindful of potential inflationary pressures impacting consumer sentiment related to macro factors such as tariffs, recent fuel price increases and broader geopolitical dynamics. As a result, we are taking a measured approach as we evaluate the remainder of the year.

We are maintaining our annual guidance and expect to provide more clarity following the second quarter. For the second quarter, we expect revenue in the range of $330 million to $360 million, assuming relatively neutral foreign currency impact, reflecting sequential improvement from the first quarter. We expect earnings per share in the range of $0.15 to $0.25, also reflecting sequential improvement. In closing, we were pleased to deliver results in line with expectations while continuing to invest in our strategic priorities. While the near-term environment remains challenging and the financial impact of these initiatives will take time to scale, we are focused on disciplined execution through managing costs, improving efficiencies and positioning the business for long-term growth.

We appreciate your continued support and look forward to updating you on our progress next quarter. And with that, operator, we'll now open the call for questions.

[Operator Instructions] Our first question comes from the line of Dave Storms of Stonegate.

Just kind of wanted to start with Prysm. I know, obviously, this is still very early innings. We're still in the training process for a lot of it. Just maybe any thoughts on what the qualities of a successful leader is having in Prysm? I know you mentioned the more wellness orientation, but is there anything that you're doing or tailoring your training that is going to help them hit the ground running?

Yes. I think that's a great question, Dave. To the point, we're seeing different leaders around the world utilizing it differently so far kind of 3 to 4 months in. As I mentioned, the groups that tend to do that tend to convert best are those who are utilizing it as well as a wellness consultative or wellness assessment tool.

So part of a bigger assessment, that seems to be a prevailing approach that seems to work really well. For us, it's mostly about providing them with the knowledge of what Prysm is truly measuring from a carotenoid measurement perspective and how carotenoid or antioxidants benefit the body, what sort of against oxidative stress.

So there's kind of the product knowledge or the device knowledge. There's the consumer journey knowledge that's necessary to scan themselves to then learn about that scan and then ultimately lead to a subscription of products that work well.

And so it's a lot of that is the product training, the behavior training. And then there's kind of the CRM side or the follow-up and kind of the persistency of being with those customers and the like.

And so I'd say those are probably the 3 elements on the consumer side. On the business side, because each of these sales leaders, of course, leads the team, and it's important for that team to understand how to do the business with Prysm as well.

So there's also a train the trainer approach. So we have certifications in multiple markets today, primarily in Asia, for example, in Japan, Korea, China. We don't have those certifications in place, but we are working on in other markets around the world, but we're working to bring those together based upon best practices out of these other markets.

That's super helpful. I appreciate all that color. I wanted to -- the other big growth driver here is obviously India. You mentioned that you are having a change of some things on incentives and the like, maybe get some traction there. Just curious as to how maybe aggressive you're being with really trying to grow India. Is it pretty paramount to get off on the right foot here? Or maybe how are you thinking of the growth potential there?

Yes. No, I think, in fact, we talk a lot about this because we as we said kind of from the beginning, India is, for us, a very important mid- to long-term market. The direct selling industry in India is still relatively small.

It's just over USD 3.5 billion. So it places it in pale comparison to some of the other markets, but it's also the fastest growing. And so we understand that there's a lot of potential there. We also understand there's a lot of room for growth and development, I would say, in that market before it really will see kind of an explosive level of growth, at least for our business model and our product categories that we play in from an intelligent Beauty and Wellness perspective. So I would say it's very important for us to get it right.

The reason we really looked at the market in this unique way of a premarket entry for about a year before we actually open doors for formal launch is precisely for us to learn about how to approach the Indian consumer and the Indian entrepreneur, highly educated, highly ambitious fairly conservative on discretionary spend and disposable income still, especially in the premium spaces.

We have a lot to learn on our side as well about how to target them at the right level of spend and benefit. By the way, there's a whole host of learnings that we're gathering out of that.

So we want to get it right. I think these 12 months or so have been really important for us to dial in manufacturing, quality, logistics and distribution and even product formulas to ensure that they meet the consumer properly, the business model itself aligning that.

So I would say, as we look forward, we still anticipate a low, we're not forecasting a lot of revenue into our guide. It's really more learning in 2026. And of course, being so late in the year, we don't have much in the model. And then we'll begin to really ramp up year-by-year as we learn and grow.

I think that makes a lot of sense. Maybe just zooming out a little bit. You mentioned in your prepared remarks, just some of the macro headwinds. I know Chelsea, you mentioned them as well.

I guess trying to think about where the most leverage is here, the consumers that you're catering to, are they most impacted by gas prices, diesel prices? Is there more leverage to the consumer sentiment number? I guess how are you thinking about where we could get the most leverage if we get some clarity over the next 3 to 6 months?

Yes. In fact, I just came from this event called Crossroads of the World and listen to some of the leading economic experts around all of this tariff pressure since 2018 and even more recently, obviously, with the conflicts in the Middle East. And it's interesting how, it's a bit of the boiling the frog where we've all been in this hot water for, geez, nearly a decade now, going all the way back to 2018 in the first tariff round. When I step back and realize the impact that has happened over time on our gross margins, on raw materials and how that transfers through to the consumer, we were looking at just general consumer goods post-COVID.

And you're talking about average of 16% to 30% inflationary pressures on consumers. I mean that's enormous when we think about that up to 30%, that's 1/3 of paying 1/3 as much again on products. And so we've seen this enormous pressure on consumers.

Then you add to that fuel cost, growing fuel costs that impact every good and every part of the wallet of consumers. I think consumers are highly, highly strained around the globe.

I think we're still waiting to see the effects of this, and Chelsea mentioned that we're trying to forecast out. Our view is very much we need to continue to innovate our way through, providing greater value to our consumers. largely in the digital space, but also continue to deliver highly efficacious formulas in our Beauty and Wellness. And we're leaning heavily into that side of it to ensure that consumers do feel that they're getting enormous value or at least as great a value as we can provide. But there is that macro pressure that I think just really does hurt margins over time as we know.

Yes. And I'd just add and Ryan talked about this, and I mentioned it earlier as well. As far as our guidance model, we're not currently anticipating a significant impact. But as the increase in oil prices and other macroeconomic pressures are prolonged, then we're monitoring that as well.

And we're continuing to look for ways that we can optimize our gross margin to offset and navigate these uncertain times. So not currently anticipating a significant impact, but we're very aware and we're working on plans to mitigate the risk.

That's great color. I appreciate that. Maybe just one more. And Chelsea, I think you mentioned this in some of your prepared remarks as well, given some of the share buybacks, the dividends, the repayments, balance sheet looks like it's in a good spot, and we obviously push you guys to continue to perform here.

How do you think about prioritizing your capital allocation? Is it more of the same where it will be maybe a smattering of everything? Or is debt paydown going to be the primary? Or are you going to look to M&A markets? Just any thoughts there would be very helpful.

Yes. Yes. Thanks for the question, Dave. I would say it remains unchanged at this point. Our priorities are to continue to fund the business, prioritize investment in strategic opportunities to provide value for our customers and our sales leaders. We do maintain a strong liquidity profile, and we did recently refinance our debt, which extended our liquidity through 2031, which we're happy about. So we do continue to look for opportunities to return value to shareholders through dividends and repurchasing shares as appropriate. But as you mentioned, prioritizing our liquidity profile has been important to us. So we will look to pay down the debt, especially with this new facility that we have.

This concludes the question-and-answer session. I would now like to turn it back to Ryan Napierski, President and CEO, for closing remarks.

Yes. Thank you. So in summary, we're making meaningful progress on our vision around our intelligent Beauty and Wellness platform, building that out with Prysm iO and expanding further into our emerging markets, both existing and new.

Nu Skin's heritage has always been one that's based upon innovation and transformation, and we'll continue to do so as we navigate these uncertain times. We're very encouraged by these green shoots that we're beginning to see with our sales leaders and again, exiting the quarter with new sales leader growth on a year-on-year basis, gives us some more encouragement towards our plans of returning to growth in the second half of this year as we align and engage our leaders. And with that, we'll plan to keep you all updated in the months to come. So thank you for tuning in, and we'll speak with you in the next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Q4 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Nu Skin's President, Treasurer and Investor Relations, B.G. Hunt. Please go ahead.

Thanks, Tanya, and good afternoon, everyone. I'm joined by Ryan Napierski, President and CEO; and James Thomas, CFO. We are excited to share Nu Skin's 2025 results and provide guidance for 2026.

Before I turn the time over to Ryan, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve important 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 numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website, ir.nuskin.com for any required reconciliation of these non-GAAP numbers.

And with that, I'd like now to turn the call over to Ryan.

Thanks, B.G. Good afternoon, everyone. Thanks for joining the call. I'm pleased to report that we delivered fourth quarter and 2025 results within our guidance range with a strong improvement in earnings, which resulted in a 40% increase in stock price for the year as we continue to focus on improving shareholder value amidst our strategic transformation.

This past year was very important for the company as we work to realign our business following the successful transaction of Mavely, which further strengthened our balance sheet and has enabled us to more assertively pursue our vision of becoming the world's leading intelligent beauty, wellness and lifestyle leadership opportunity platform.

We've worked hard towards this by investing in the build-out of our intelligent wellness platform in preparation for the introduction of Prysm iO to the world, which is now underway. We also initiated premarket operations in India this past November in preparations for a formal market opening anticipated in late 2026 as we work towards expanding our footprint into this and other future growth opportunities in emerging markets.

While transitioning our business to enable these strategic priorities has come with some inherent switching costs in '25 and into early 2026, as our company and channel realign business practices, we believe these shifts are critical to our mid- to long-term success to enable our return to growth by end of 2026.

2026 represents a pivotal year for Nu Skin as we accelerate our transformation towards our vision. We're entering this new chapter with 3 strategic priorities: one, to focus our business on the burgeoning $6.8 trillion wellness revolution currently underway with the launch of our Prysm iO intelligent Wellness platform; two, expanding our global reach into India and other critical emerging markets in years to come; and three, improving our operational performance and efficiencies.

We are clearly defining the future growth trajectory of the company, which we believe will lead to a stronger core business and a return to meaningful long-term growth.

First, let me dive into Prysm iO, our truly intelligent wellness platform. Building on our Euromonitor acclaimed position as the world's leading beauty and wellness device systems brand, we've developed a revolutionary technology, which we believe will play a vital role in the rapidly expanding intelligent wellness market, empowering people around the world to more accurately measure, track and improve their nutritional health.

Prysm iO represents the culmination of decades of nutraceutical-grade science and research and development across the integrated beauty and wellness industries. We've been working towards establishing ourselves as the intelligent beauty leader for the past several years with the introduction of ageLOC LumiSpa iO, WellSpa iO and RenuSpa iO.

We're now taking these IoT-derived learnings and combining them with the proprietary science and technology behind our BioPhotonic Scanner. This enables a much greater scale and depth of intelligent wellness in the introduction of Prysm iO, a noninvasive carotenoid measurement device that provides intelligent insights into nutritional health across 4 critical domains of diet, fitness, lifestyle and nutritional supplementation.

We've now amassed a nutritional health database already containing nearly 400 million intelligent wellness data points from 21 million scans of more than 10 million people in 50 countries around the globe. These data points are repeatable signals tied to real consumer behaviors that indicate profile and context, behavior and habits and repeatable engagements and activations over time. All of this data compiled into a single source represents what we believe to be the world's largest database on carotenoid health.

In combination with our other beauty and wellness IoT connected devices where we've gathered more than 1 billion data points and insights, this trove of data will better inform consumer decisions and purchasing habits. It also provides us with far deeper aggregated insights into the needs of our customers in order to empower their personalized wellness journeys, improve customer engagement and lead to greater customer lifetime value.

Our next chapter is now underway as we power these data insights with AI in our proprietary new intelligence database to inform 3 distinct applications. First, intelligent scoring, which will leverage AI to compare personal results against our database of 21 million scans. Second, intelligent insights, which will provide customers with personalized recommendations for their diet, fitness, lifestyle nutritional supplementation; and third, intelligent product recommendations, which will be based upon a customer's intelligent insights through which we provide nutritional supplementation options to help them in their wellness journey.

All of these insights culminate in Nu Skin developing a proprietary wellness biomarker based on skin carotenoid levels that we're calling the nutritional health score, a universal score that gives customers insights into their nutritional health. We have long understood the importance of eating a healthy balanced diet, including fruits and vegetables, avoiding harmful pollution and making critical lifestyle choices.

But until now, consumers have been unable to noninvasively measure at scale the impact of these choices. This revolutionary biomarker offered through Prysm iO provides critical nutritional health insights to consumers, something that has been missing in the wellness space until now. You deserve to know with Prysm iO.

From a business perspective, the unit economics are compelling. Prysm iO serves as a powerful customer acquisition tool for our sales force, combined with subscription-based revenue that provides more than 6x greater customer lifetime value. For 2026, we are aiming to place more than 100,000 Prysm iO devices by the end of this year since the introduction in late '25.

Looking further into the future, we envision Prysm iO becoming the leading platform for consumers to gather deeper, more intelligent insights into their personal and family's health. We have set an internal aspiration with our global sales force of bringing this cutting-edge wellness platform to 10 million healthy households by 2030 as we partner with our dedicated sales force in nearly 50 markets around the world to accomplish this goal.

Our go-to-market rollout strategy is deliberately designed to maximize long-term success. We're currently engaging, aligning and activating our sales force in the first half of 2026 as they acquire and place Prysm iO devices, followed by consumer launches around the world beginning in the second half. This approach prepares and aligns our dedicated channel as we scale the full consumer availability throughout the year.

This is only the beginning for Prysm iO as we delve deeper into the vast dimensions of intelligent wellness, including its impact on beauty, which we all understand begins from the inside out.

Our second strategic priority focuses on broadening our emerging market footprint with our formal opening of India anticipated in late 2026. With more than 1.4 billion people and a rapidly growing middle class, India represents one of our most significant long-term geographic growth opportunities. Our ongoing growth in Latin America, where we've built our emerging market model is providing greater insights into how we will expand our global footprint into new emerging markets.

This refined operating model for India includes a localized product portfolio priced for India's growing middle class, a modified compensation plan and a digital-first infrastructure through our partnership with Infosys. We began premarket entry operations in mid-November and are currently focused on 3 key areas: first, establishing operational infrastructure, including high-quality local manufacturing and effective market-wide logistics partnerships.

Second, building robust digital-first infrastructure across the market to enable fast, simple and scalable business processes; and third, acquiring customers and brand affiliates to begin building brand awareness and demand generation ahead of the formal market opening.

Early learnings to date indicate that the market is advancing quickly towards a more developing status with strong digital-first aspirations, the local infrastructure still has room to improve. Also, India consumers and micro entrepreneurs are highly aspirational, but financially conservative with beauty and wellness being more aspirational categories for the broader market, leading to typically longer sales and activation cycles.

Nevertheless, we see great mid- to long-term potential as we scale investment and operations along the way of our formal market opening later this year.

So in summary, in 2026, it is all about accelerating our evolution towards our intelligent beauty and wellness platform vision as we launch Prysm iO around the globe and expand our emerging market footprint by continuing growth in Latin America and expanding into India.

In late 2026, as we pursue these strategic growth priorities, we will continue to drive our third critical priority of improving operational performance and efficiency to return value to shareholders, which James will discuss in just a moment.

Together, these initiatives advance our vision of becoming the world's leading intelligent beauty, wellness and lifestyle leadership opportunity platform and create a powerful foundation for sustainable growth.

Our dedicated global sales force plays a crucial role in our strategic transformation as awareness generators, intelligent wellness consultants and community and network builders. We are empowering them with greater intelligence consisting of data and insights into their business as we transform into a technology-enabled intelligent beauty and wellness platform.

Our near-term focus remains on engaging, aligning and activating our sales force around these transformational opportunities, while maintaining disciplined execution and financial performance as we seek to return to growth by year's end. So with that, I'll turn the time over to James to discuss our 2025 financial performance and outlook for '26 in greater detail. James?

Thank you, Ryan, and thanks to everyone for joining us today. Before I walk through the quarter, I want to begin with the full year story because it best reflects our execution in 2025. On an adjusted basis, we delivered $1.27 in earnings per share, up from $0.84 last year, representing about 51% growth. That improvement was driven by gross margin expansion throughout the year, ongoing selling expense optimization and disciplined G&A management.

Importantly, we achieved this while also strengthening our balance sheet and generating free cash flow to provide meaningful returns to our shareholders. I'll now cover fourth quarter results, then come back to a few full year highlights and conclude with our outlook for the first quarter and full year 2026.

I'll be speaking to adjusted non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found on our Investor Relations website. For the fourth quarter, we delivered revenue inside our guidance range at $370 million, with approximately $1 million headwind from foreign currency.

Earnings per share was $0.29, in line with expectations, which closed out our annual performance near the high end of our original guidance range. Our gross margin for the quarter was 70.7% compared to 71.4% in the prior year. The decrease was primarily due to revenue mix of Rhyz entities and Nu Skin segments.

Within our core Nu Skin business, gross margin was 77.6%, up 100 basis points from the prior year. Selling expense was 35.5% for the quarter, down from 37.1% in the prior year, primarily reflecting mix between our core business and Rhyz as well as the prior year period, including Mavely.

Within the core Nu Skin business, selling expense was 40.8%, consistent with our compensation plan alignment and continued progress in leader engagement. General and administrative expenses remain well managed and aligned with our efficiency initiatives and operating margin for the quarter was 6.3%. With that view on Q4, let me step back to the full year results.

For the full year, we generated $1.49 billion in revenue, landing within our original guidance with a foreign currency headwind of approximately $13.4 million. Within our core Nu Skin business, gross margin finished at 77.4%, an 80 basis point improvement over the prior year. We delivered sequential improvement through the first 3 quarters. And as expected, gross margin was modestly lower by 10 basis points in the fourth quarter due to a higher promotional period.

Overall, we're seeing the benefits of portfolio optimization and product mix improvements, and we believe with our current inventory levels, there remains opportunity to expand gross margin further in 2026.

Core Nu Skin selling expense for the year was 40.3%. Looking ahead, we expect selling expense in the core business to remain around 40% as we continue to drive adoption of our enhanced compensation plan and focus investments on initiatives with the greatest impact on supporting top line growth.

On G&A, we remain committed to managing overhead in line with revenue while maintaining an appropriately scaled cost structure. These actions drove 26% growth in operating margin compared to the prior year. Adjusted operating margin was 6.7%, up 140 basis points from 5.3% in the prior year. Below the line, we benefited from an R&D tax credit, which reduced tax expense by approximately $8.1 million, resulting in a reported effective tax rate of 18.8%.

Finally, adjusted earnings per share was $1.27, excluding the Mavely gain and other items compared to $0.84 last year, excluding restructuring and other charges.

Stepping back, the actions we've taken have strengthened our foundation and improved the flexibility of our cost structure. We're better aligned to our revenue base, and we'll continue to rightsize expenses and prioritize investments as trends evolve. With that foundation in place, we're focused on execution and building long-term value.

Now turning to the balance sheet and cash flow. We continue to strengthen liquidity and improve flexibility through disciplined capital management. We ended the quarter with approximately $240 million in cash and reduced outstanding debt to $224 million, resulting in an expanded net cash position.

For the full year, cash flow from operations was $80.3 million, reflecting disciplined working capital management and improved profitability. We also returned capital to shareholders, including approximately $11.8 million in dividends and $20 million of share repurchases during the year. We have $142.3 million remaining under our current share repurchase authorization.

Our capital allocation priorities remain consistent, investing in innovation and growth, maintaining a strong balance sheet while continuing to delever and returning capital to shareholders where appropriate.

Looking ahead, we remain focused on executing on our strategic priorities to drive growth by the end of 2026. The launch of our Prysm iO Intelligent Wellness device remains on track for full consumer launch in the back half of the year, representing a major milestone in our transformation towards personalized AI-powered wellness.

We're also encouraged by continued momentum in developing markets, particularly Latin America, which remains a strong performer and by our upcoming full market opening in India, where we're laying the groundwork for an expansive opportunity for our brand affiliates.

For our Rhyz segments, we are projecting year-over-year growth supported by expanding capabilities and capacity for manufacturing. We are also evaluating opportunities with LifeDNA to maximize our return on investment.

With those priorities in mind, let me share our expectations for the full year and first quarter of 2026. For 2026, we project revenue in the range of $1.35 billion to $1.5 billion, including an estimated foreign exchange headwind of $13 million to $15 million or approximately 1%.

We anticipate earnings per share between $0.80 and $1.20, reflecting an expected tax rate of 35%. We project first quarter revenue between $320 million and $340 million, factoring in an expected foreign currency headwind of approximately 1%. Reported earnings per share is anticipated to be in the range of $0.10 to $0.20.

As a reminder, Q1 is historically our lowest quarter due to the seasonality of our business. So to wrap up, 2025 demonstrated the strength of our execution. We delivered meaningful earnings and operating margin improvement, generated solid cash flow, strengthened the balance sheet and returned capital to shareholders, all while continuing to invest in the initiatives that position Nu Skin for the future.

As we look to 2026, we're focused on advancing our strategic priorities, driving continued profitability, scaling our momentum in developing markets and progressing our innovation pipeline, including the Prysm iO launch, which we believe will meaningfully strengthen our affiliate value proposition and enhance their ability to attract and retain customers.

While we remain mindful of ongoing top line pressures in certain markets, we believe the operating foundation we've built gives us the flexibility to invest where we see the best returns can deliver long-term value. And with that, operator, we'll now open up the call for questions.

[Operator Instructions] And our first question will be coming from Dave Storms of Stonegate.

I wanted to start maybe with diving into Prysm a little bit more. Very excited for that to kind of come online towards the end of the year. I would love to get a little more color around maybe a revenue guide or any of your thoughts on what Prysm can really contribute to the top line? It sounds like there could be a lot of recurring revenue there. And I just love to hear more thoughts around that.

Yes. Yes. The -- as I was discussing, we're looking from -- the key to Prysm as we envision it, is the placement of these devices that will lead to subscriptions from customers over time. And so that really is the unit economic model that we're driving here. And so as I mentioned, we have the 100,000 estimate that we anticipate placing through year's end.

And of that subscription uptake, which we're still really learning, David, I mean, it's so early. We're only a month into this, what that will actually be. So we're not really yet at the point of saying exactly what the revenue conversion will be. I think one way to look at this over time is that we've -- historically on a revenue split basis, half -- our business has been roughly half beauty and half wellness with wellness leading much more towards subscription revenue.

And so we see Prysm really leading us more and more into the subscription realm for the wellness side. And then, of course, as we apply it into beauty later on, we see it playing there. So we're not giving direct revenue guidance on it yet for Prysm, although I think the math for just the device is pretty simple. I think the market value right now per device is around USD 300, and we anticipate 100,000 units. So that would be like $30 million in devices. But how we then monetize that through subscriptions, we'll be learning that. James, anything you'd add to that?

Yes, Dave, I appreciate the question. I think as you're thinking about it from a modeling perspective going forward, it's going to be centered around like the timing of the full consumer launch where we would start to begin to see scale with the placement of units through our leaders in the first half and then full consumer launch towards the back half of 2026 is how we see that coming in. And so we're looking at a stronger back half forecast in Q3 and Q4 of 2026.

That's great. I really appreciate that. I have a second question here in the similar vein around India. Maybe just a little more around your thoughts of what a bull case or a bear case could be there. It sounds like if you get the infrastructure set up, there could be a lot of room to run early there. Maybe just how quickly you could get that set up, what the key hurdles could be? Anything like that would be very helpful.

Yes. Yes. India, for us, we do see very good long-term potential or mid- to long term. I think for -- as we mentioned, we're really focused on getting all of the local infrastructure set up properly. I mean local manufacturing is one of our top priorities there because the -- obviously, import duties are so high, and we want to ensure high quality, great products at the right price there. And so that's our big focus now.

Logistics throughout a pretty diverse market are critical. And then, of course, the digital infrastructure. So '26 is very much about that. We don't anticipate the formal launch being until late in '26. So we're being pretty -- very conservative from a revenue input perspective on the actual impact for the year. James, any more detail?

No. I mean, India for us is an exciting opportunity for our sales leaders. It's an opportunity to go in and expand in a region that we have not been a part of. And so for us -- for the year, I mean, we're being a little bit cautious in how much we're actually forecasting in India. So we've tailored that back, but we believe in the high long-term potential of that market and our ability to go in with a developing market strategy to go in and penetrate into India and look forward to that even beyond '26 into '27 to see how far we can go.

Understood. I appreciate that commentary. James, I did have maybe another question here for you. I would love to get your thoughts on maybe some of the puts and takes in the guidance and where you see maybe key spots of leverage, whether that's the G&A or just kind of your thoughts around guidance.

Yes. I appreciate that, Dave. Looking forward to 2026, we are modeling -- as per our guide in the release, we are 1% growth on the high end of our guidance and down 9% on the low end of guidance as we look due to the weighting of -- or the timing of the launch of the new product introductions towards the back half of the year.

So looking to exit 2026 with growth towards the Q3 -- year-over-year growth, the Q3 to Q4 time frame against our compares in '25. So starting at the top line of revenue, when we come down, we look at gross margin, we -- this last year, even starting in '24, we started to see expansion in our gross margin. We had 5 consecutive quarters of gross margin expansion and growth until this last quarter in Q4, which is a higher promotional period.

We believe with the way we're stacked in inventory and some of the moves that we can make around the globe around our distribution and supply chain, we believe that we can continue to expand that. So from a modeling perspective, I would look at what the gross margin expansion was in 2025 and replicate that into '26 is a good barometer for how to treat gross margin.

Selling expense, we go between 40% and 42% on given years where we have certain events associated with our sales leader base, but we try to target that around 40% to 41% on any given year. So that will stay somewhat consistent.

And then our G&A, we're working to bring our costs in line with revenue. So as we go throughout the quarters in 2026, we'll continue to work on our overhead, and we're continuing to refine that to get that into levels that are in line with our top line.

And then the one last thing that I would call out from year-over-year is 2025, we did have -- we did benefit from an R&D tax credit, which created a lower tax rate in '25 than we believe that we'll see in '26. So you have to -- when you're looking at earnings per share, the guide on earnings per share, you have to take into consideration a 35% tax rate that we're kind of looking at right now as we forecast and project out the year.

So that creates that -- from $1.27 in '25 to where we model out at $1.20, we're actually showing in '26 an operating margin improvement but a slightly lower earnings per share just because of below-the-line items on tax. So that's how I would look at it forward in your model.

I appreciate all that color there. One last for me. There's a lot of excitement around Prysm here for obvious reasons. But I don't want to lose track of the rest of your portfolio. I know mainland China, the U.S. had nice quarter-over-quarter revenue growth. Any other storylines that we should be keeping an eye on as we start 2026, any geographies or thoughts around that?

Yes. No, I'm glad you mentioned the other portfolio. One thing that we didn't discuss here is the restaging and rollout of Tru Face, which is our premium skin care line that has really been reformulated and restate with sustainable packaging. It's doing really well, getting very good reception as it rolls out around the globe in different geographies.

I think areas where we continue to be interested in seeing improvement, obviously, Latin America continues to do really well. And looking forward, we're excited to see what will happen there as we're just continuing to learn about this emerging market, broader segment of emerging markets around the globe, improvements in China, improvements across Europe, markets within Southeast Asia, happy to see those things improving.

Japan and Korea, I think our focus is right now are ensuring we've got China, Japan and Korea and then North America improving through Prysm iO and the adoption of that as well as the Tru Face line from the beauty side of the business continue to perform better as we move forward.

Congrats on the quarter and good luck on 2026.

[Operator Instructions] And I'm showing no further questions. I would now like to turn the conference back to Ryan Napierski for closing remarks.

Yes. Well, thank you very much for joining the call. Our road map is very clear for us as we move forward towards our vision of becoming the world's leading intelligent beauty and wellness platform powered by our committed and dedicated global sales force.

With the launching of Prysm iO in 2026, we believe that the world will continue to learn more and more about their nutritional health and that we will be the proprietary company providing that capability to them. We'll continue to focus and update you on India and our progress throughout the year as we prepare for our launch towards the end of this year.

And with that, we'll end this call and look forward to chatting with you in the next quarter update. Thank you.

And this concludes today's program. Thank you for participating. You may now disconnect your Q4 2025 Nu Skin Enterprises Earnings conference call.

Good day, and thank you for standing by. Welcome to the Q3 2025 Nu Skin Enterprises Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand over the conference to your first speaker today, B.G. Hunt, Vice President, Treasurer and Investor Relations. Please go ahead.

Thanks, Dania, and good afternoon, everyone. I'm joined by Ryan Napierski, President and CEO; and James Thomas, CFO. We're excited to share Nu Skin's results from Q3 of 2025.

Before I turn time over to Ryan, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve important 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 numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website, ir.nuskin.com for any required reconciliation of these non-GAAP numbers.

And with that, I'd like to now turn the call over to Ryan.

Thanks, B.G. Thanks, everybody, for joining the call today. I'm pleased to report that we delivered third quarter revenue of $364 million, which was within our guidance range. We also delivered EPS of $0.34 at the higher end of our guidance range, and I'm encouraged by our ability to maintain disciplined execution amidst ongoing macro environmental pressures that are impacting the industry.

With 3 quarters behind us, we are now focused on Q4 as we further our vision of becoming the world's leading intelligent beauty, wellness and lifestyle leadership opportunity platform by preparing for our next big opportunities with the introduction of Prysm iO, our truly intelligent wellness platform and the premarket opening of India, which I'll come back to in just a few minutes.

Latin America continued its exceptional growth trajectory, up 53% year-over-year. This is demonstrating the potential of our emerging market strategy, which is enabling us to reach a broader aspiring middle target market of entrepreneurs and customers. This growth was offset by continued challenges in North America, where we have been transforming our business model to address macro environmental landscape matters. However, I'm pleased to report sequential growth in Europe and Africa, South Korea, Southeast Asia Pacific and Hong Kong and Taiwan.

In Mainland China, we're seeing improving trends as well across our KPIs as we introduced our Tru Face clinically backed skin care line and our Rhyz segment performed as anticipated with LifeDNA exceeding expectations.

Now I'll return to our strategic priorities that we outlined for the year. Our top priority for the core Nu Skin business is to ignite the passion and energy of our highly committed and dedicated sales leaders with our next big opportunities. First, the introduction of Prysm iO, our truly intelligent wellness platform; and second, the expansion of our emerging market strategy into India as we seek to extend the Nu Skin opportunity to this exciting market.

Our teams and sales leaders around the globe have been laying the groundwork for these 2 key introductions over the past few years, and we're excited to initiate both of them in a limited fashion this quarter with full-scale launches in 2026.

Let me first share some updates on Prysm iO that include our proprietary health assessment device paired with our AI-powered intelligent insights app that helps consumers navigate their personal wellness journey. While premium beauty continues to be under pressure, the wellness industry and specifically the intelligent wellness market is expanding dramatically, and new entrants are rapidly expanding awareness about the importance of intelligent health and measuring biomarkers.

According to Grand View Research, the intelligent wellness wearables market has been growing by double digits and reached $84 billion in 2024 as consumers desire greater insights into their overall well-being by measuring and tracking their internal biomarkers. And the total addressable market for nutritional supplements reached nearly $500 billion in 2024 and is expected to grow to over $700 billion by 2030 with very little ability to know whether these supplements actually work.

Nu Skin is already regarded as the world's #1 beauty device systems brand according to Euromonitor, which is becoming an even greater strategic advantage within the beauty and wellness industries. Additionally, we hold more than 40 years of science-backed research and development in this space and more than 20 years of intelligent wellness research contained in our biophotonics scanner, including insights and trends from the aggregate of 21 million scans for more than 10 million people across more than 50 countries around the world. Combined, these competitive advantages place us in a very unique position to introduce Prysm iO, an entirely new noninvasive device that measures one skin carotenoids levels, providing people with valuable insights into their antioxidant status and nutritional health.

With the rapid acceleration of Agentic AI, we're training our own proprietary language model, which will enable us to drive deep, actionable insights about our consumers' overall wellness and expand our ability to service customers as they navigate their personal wellness journey. Prysm iO and our intelligent wellness app provide personalized nutritional insights across the broader wellness journey, covering one's diet, fitness, oxidative stress and sleep and nutritional supplementation and generates personalized product solution recommendations.

From a scalability perspective, this more portable form factor, ability to scan quickly and a more accessible price point for Prysm iO will enable us to place significantly more devices around the globe. We currently have approximately 1,500 biophotonics scanners in the field today, and we anticipate placing more than 10,000 Prysm iO units in Q4, with tens of thousands of units placed per quarter throughout 2026.

From a business building perspective, the unit economics of Prysm iO are also incredibly compelling as our experience has shown that more customers being scanned leads directly to more subscriptions. Subscribed customers produce approximately 7x greater lifetime value than nonsubscribed customers, and we have more than 300,000 subscribed customers in any given month on our platform. We believe that Prysm iO will enable us to significantly expand our subscribed customer base in the coming years, which will further strengthen our sales force productivity as they lean in to drive this truly intelligent wellness movement around the world.

Q4 sets the foundation for limited Prysm iO brand representative previews. And in early 2026, we will begin opening up sales via our sales leaders to their affiliates and customers. Full consumer launches are currently scheduled for the second half of the year.

Our second strategic priority focuses on expanding our emerging market business model into India. With 1.4 billion people, India is one of the largest future opportunities for us globally, where there is a rapidly growing middle class segment of the market who need what we offer, to look, feel and live more empowered lives.

We are entering India with a more focused and scalable business model based on our learnings in Latin America, which include a localized product portfolio priced for India's growing middle class, a refined compensation plan and a digital-first infrastructure with our India-based Infosys partners. We recently hired a dynamic local management team, and I'm excited to be kicking off our qualified premarket opening beginning next week with a multicity tour across India, working towards our full-scale opening anticipated in the back half of next year.

I'm excited about the potential for India and our other emerging markets, which we anticipate will become a much larger part of our core business revenue in the coming years.

Paired with these 2 exciting top line growth drivers, we remain focused on continuing to strengthen our financial performance and profitability across the business as we sustainably grow gross margin by optimizing our product portfolio, manage selling expense to ensure optimal rewards for our hard-working sales force and drive overall profitability across our business segments around the globe. We believe these initiatives will continue to strengthen our overall financial position and improve shareholder value in the quarters and years to come.

So with that, I'll turn the time over to James to dive deeper into our financial performance and outlook for the remainder of the year. James?

Thank you, Ryan. Good afternoon, and thank you for joining us today.

I'm pleased to provide an overview of our performance for the quarter, including key financial highlights, recent developments and our outlook for the remainder of 2025. I'll walk through our results, key business dynamics and how we continue to navigate the current macroeconomic environment with discipline and focus. I'll be speaking to adjusted non-GAAP financial measures as it pertains to our financial results. Reconciliations to the most directly comparable GAAP measures can be found on our Investor Relations website.

For the third quarter, we delivered results consistent with our guidance range, reflecting continued operational discipline and financial resilience. Revenue came in at $364.2 million, with a 40 basis point headwind from foreign currency. Earnings per share was $0.34 at the high end of our guidance range, benefited by gross margin improvements and ongoing cost efficiency initiatives.

Our gross margin for the quarter was 70.5% compared to 70.1% in the prior year, primarily due to the revenue mix between Rhyz entities and the Nu Skin core. Within our Nu Skin core business, gross margin was 77.7%, up 120 basis points from the prior year. We are continuing to see the benefits of our strategic portfolio optimization and product mix improvements within the core business. I want to highlight that this is our fifth consecutive quarter of adjusted gross margin improvement.

Selling expense as a percentage of revenue was 35.8% for the quarter, a decline from 39% in the prior year, primarily reflecting the inclusion of our live conventions in the prior year compare. Within the core Nu Skin business, selling expense was 41.7%, consistent with our compensation plan alignment and leader engagement progress. Looking ahead, we expect selling expense in the core business to remain around 40% as we continue driving adoption of our enhanced compensation plan and focus our investments on initiatives that have the greatest impact on driving towards top line growth.

General and administrative expenses remain well managed and aligned with our efficiency initiatives, market streamlining and technology optimization efforts. We remain committed to managing overhead expenses in line with revenue while maintaining an appropriately scaled cost structure given the fixed nature of these costs.

Operating margin for the quarter was 5.9%, up from 4.2% in the prior year, which marks another quarter of year-over-year improvement as we execute against our long-term profitability objectives. We continue to strengthen our balance sheet and maintain a solid liquidity position.

We closed the quarter with $252 million in cash and reduced total debt by $20 million, resulting in an expanded positive net cash position. Cash flow from operations was $27.7 million, reflecting disciplined working capital management and profitability.

We returned approximately $3 million to shareholders through dividends during the quarter, repurchased $5 million in shares and have $152.4 million remaining under our current share repurchase authorization.

Our capital allocation priorities remain consistent, investing in innovation and growth, maintaining a strong balance sheet while further delevering the business and returning capital to shareholders where appropriate. Looking ahead, we remain focused on executing our strategic priorities, driving profitability, advancing key innovations and setting the stage for growth acceleration in 2026.

Our upcoming limited release of Prysm iO intelligent wellness device remains on track for Q4, representing a major milestone in our transformation toward personalized AI-powered wellness. We're also encouraged by the continued momentum in developing markets, particularly Latin America, which remains strong and by our premarket opening in India, where we're laying the groundwork for long-term success.

Following the sale of Mavely, Rhyz continues to perform in line with expectations. Our Rhyz Manufacturing segment is on track for year-over-year growth, supported by strong partner demand and expanding capabilities. We are also evaluating opportunities with LifeDNA to maximize our return on investment.

For the fourth quarter, we project revenue between $365 million to $400 million and earnings per share between $0.25 and $0.35 for the full year 2025 -- sorry, for the full year 2025, we narrowed our guidance range of revenue between $1.48 billion to $1.51 billion, while maintaining the high end of our earnings per share of $3.15 to $3.25 with adjusted earnings per share between $1.25 and $1.35. In conclusion, we remain confident in our strategic direction focused on disciplined execution, innovation-driven growth and creating long-term shareholder value.

And with that, operator, we'll now open up the call for questions.

[Operator Instructions] Our first question comes from the line of Dave Storms of Stonegate.

I wanted to start with the full year guidance. It looks like since last quarter, you brought down the top end of revenue but brought up the low end of EPS kind of tightening that range, which makes sense relative to how your 3Q results came in relative to guidance for that. I guess I'd really like to ask what are the puts and takes here? What's really been working between the price versus volume mix, operational efficiencies? I was hoping to just spend a little more time there.

Yes. I'm happy to talk, Dave, more kind of strategy to plan and James can pitch in as well here. Yes, so definitely just trying to narrow the range kind of based upon Q3 results and what we're seeing in Q4. I think the 2 biggest considerations for us on the front end of the plan are how will the adoption of Prysm iO into the business really impact our driving KPIs, really sales leaders and customers as it comes to market kind of mid- to late Q4. And so we obviously are timing these introductions region by region. And so based upon the ability to get the devices into the market and all of that. So that's probably some of the level of question there that we're evaluating.

And then, of course, India, as we're going out and really starting to acquire revenue there late next week. So this is kind of real-time activity. I'll be there with James and our team kind of doing this premarket opening tour. So we're really just getting going. And India just is one of those markets that has enormous potential, but it's also a new market for us that we're going to have to learn in the emerging middle space. And so I think those are the 2 kind of big considerations on the front end that we're evaluating there.

I would just mention on profitability. I'm really pleased with James and our organization around the globe to really manage costs. I mean, growing that gross margin 5 quarters in a row, managing selling expense in that optimal level and then improving profitability during a more difficult time has been a big undertaking. And so -- but I think that earnings opportunity there continues to be good for us. But those are from my point of view. James, anything else you'd add on? Puts and takes?

Yes. Dave, I'd just echo Ryan's comments on where we're really succeeding in that gross margin improvement. A lot of the -- it's been a long turn in terms of all the moves that have been made, and it's been consistently across the 50 different markets that we -- approximately 50 different markets that we operate in. And so it's been a strategic design around going after and doing that. It's also been around strategic product positioning around the world in terms of what we're pushing forward to help with product mix and what our sales force is ready to push forward. And so it's that. It's also -- some improvements in selling expense, working to push those towards our highest returning initiatives.

And then obviously, in our G&A, we're down dollars year-over-year. We continue to look at that. Those are fixed cost in nature. And so we're always continuing to evaluate ways to find greater efficiencies, and that's led to us expanding our earnings guidance last quarter, and we did move up the low end on our earnings in the Q4 guide for Q3 performance and feel really good about our performance to date in terms of profitability.

That's great color. I appreciate that. Sticking maybe, Ryan, going back to India. I know you mentioned you guys are going to be over there shortly with the soft opening. Kind of can you help us get a more clear picture on what the final launch logistics are like there? I'm sure you might not know this at this time, but India is an enormous market opportunity for you guys just by population alone. I got to imagine there's going to be markets within markets over there. How are you guys thinking about maybe segmenting that opportunity?

Yes, Dave, this, I think, is a really important question because the way we're opening India is unlike anything we've opened before in our other 40-plus markets. We really have been deliberate in learning the local market, both with our partners as well as our local team there. And so we're initiating this -- what we're calling a pre-market opening period where we will actually begin to acquire revenues and build our sales force out there. And so that's very different from what we've historically done where we wait until a launch and then actually go full scale. So -- and the intent behind that is exactly what you described.

The markets within markets in India and within India, when we're dealing with Mumbai and Delhi alone or Coimbatore when you go further northwest, they're all somewhat -- versus the South, Southeast, they're all fairly unique in nature. And so our plan, as we go over for the multi-city tour, we begin to acquire -- conduct business and learn the market, it will be -- it will give us the insights that we'll then be able to understand how to go -- how and where to go more aggressively. Because we are going forward with a digital-first model, meaning that we're really minimizing bricks and mortar, we're locally manufacturing, but we're using our Infosys partnership and Infosys is one of the largest digital firms based out of India. They've been very helpful to us.

We're able to really scale the operation in a pretty variable manner and put the focus where it needs to be based upon the business that we're introducing there. One other differentiation, I would say is that we're going in -- historically, we've only gone in with skin care. That's been our opening model.

And we are actually going into India with skin care, including a local line of product called Serenu, which is a professional line built for salon like use, which is very important in beauty as well as the nutrition side of our business. So we'll be bringing Prysm iO in with some of our Pharmanex, locally adjusted Pharmanex products on the nutrition line. So there are several interesting factors there. We have very little built into the model for Q4 just because we really want to learn our way. And so that's kind of how we're looking at it.

Sounds like a really full-scale operation. Thinking about domestic markets here in North America. You mentioned you're doing a little bit of restructuring here. Any correlation to that with the current government shutdown. I guess kind of what inning are we in with some of that revamp? And have you seen any of that be impacted by the shutdown in the United States?

Yes. Yes, North America has been less impacted by the shutdown itself at the government level. But I would say that from an industry point of view, ongoing regulatory work within direct selling has been something that we look at pretty closely. We want to make sure that our model is always highly compliant.

What I'm referring to or what I referred to from a macro perspective is more related to direct selling continuing to evolve kind of post COVID. During COVID, everyone was really locked down in our homes, a lot of spare time and online shopping, of course, went crazy because people couldn't get into stores. And that was really good for not only Nu Skin, but the direct selling world as well as just generally social commerce.

I think over the last 3 years, beauty has gotten very crowded in the social space. If you think about the number of influencer-based social beauty brands that have -- and down, frankly, most that go up are going down pretty quickly thereafter. That's kind of created a lot of noise in the social marketplace, where Nu Skin in North America has been quite heavy. And so for us, as we look to North America and refining our business model there, we're really looking into, of course, beauty will continue to be very important for us.

Social commerce, very important. It's primary outlet for our awareness and engagement business here. But we are leaning more into this intelligent wellness market. And I'm sure as you do as well, intelligent wellness is just really blowing up. Over the last 3 years, a lot of wearable business is coming out of the woodworks it seems, a lot of social brands there that are blowing up podcasters like the Peter Attia, the Andrew Huberman, they're spending a lot of time on biomarkers and the importance of understanding these elements for longevity. And so for us, where we have historically been an integrated beauty and wellness business, meaning roughly half of our business was beauty, half of it was wellness.

In the U.S., over the last 4 or 5 years, it's skewed heavily towards beauty because of the social commerce surge. We now see moving forward, a rebalancing of our business, and we see the intelligent wellness side with Prysm iO, with our AI-powered app, just really hitting the sweet spot in the intelligent -- that $84 billion intelligent wellness market. I think it's going to play really well in North America and around the world.

What I equally as interested in is many of our social -- our female social leaders who drove our social brand over the course of the last 5 to 7 years are finding a lot of interest in this intelligent wellness device because of the health tracking or wellness tracking that this Prysm iO can do for their families. And so we're seeing this Prysm iO in our test marketing being utilized as kind of almost like a scale at the home where we have children scanning, couples or partner scanning. And so it's becoming more of a family based effort, not only an individual wearable effort. So I think those things combined are going to put us in a position to be able to level this market and then really grow it because long term, we see North America is continuing to lead both premium beauty and wellness.

That makes a lot of sense. One more, if I could just sneak one in here. Southeast Asia saw strong sequential growth. It's kind of a sequential standout here at a revenue level. Would just love to get your thoughts maybe a little more about what drove that and if there's any more to that story.

Yes. Southeast Asia has been interesting for us because it is such a diverse marketplace of individual countries. And so you have markets like the Pacific that has done extremely well over the last several months, great growth coming out of Pacific, which is Australia, New Zealand and the islands around that area. So they've done really well. We have a new business sales performance plan that has really worked well there. And then they have some very international tentacles from the Pacific that reach into other parts of the world.

Other parts like Indonesia, which is our largest market in Southeast Asia and probably holds the greatest potential with such a large population where we're continuing to find and find our way through to local populations there, and we see some ebbs and flows in that business. Other markets like Malaysia doing very well, Singapore doing well. And then you have Thailand and Philippines that are kind of holding back a little bit. So it is a little bit of a mix in the markets.

I think what you're seeing on the sequential data is a lot of growth from Pacific that's helping out and then South -- Singapore doing well, Malaysia doing better and the like. So again, we look forward to what will Prysm iO do in that business. We have a very strong TR90 business, which is our body transformation or body shaping system. That's done really well in Southeast Asia and is very complementary towards our Prysm iO and the wellness side of the business that we think this will further strengthen as well.

I am now showing no further questions at this time. I would now like to turn it back to Ryan Napierski, CEO, for closing remarks.

No, that's great. Thank you very much for joining our call today. We here are charging forward into a new era of potential for Nu Skin as we further progress our vision of becoming the world's leading intelligent beauty, wellness and lifestyle leadership opportunity platform, beginning with the introduction of Prysm iO and our Truly Intelligent Wellness initiative this quarter and leading into 2026.

As we look forward to extending Nu Skin's reach into India in the coming year, we're excited about this and the enormous potential that India holds for us as we learn how to benefit the people of India with what we have to offer. So while the broader beauty industry remains somewhat lost in the macroeconomic uncertainties, we are very clear on the pathway forward for us in leading this truly intelligent wellness movement based upon our 40-year history in the beauty and wellness space.

And in a very distracted world of affiliate marketing where it seems that every other brand is seeking to capture the attention of influencers on social media, our dedicated to committed global sales force is our greatest strength, and we'll be leveraging them to achieve our vision moving forward. The rest of this year and into early '26 is all about aligning our teams around the world, building support, connectivity and excitement to set the stage for a return to growth and improved profitability. So with that, we'll keep you updated along the way as we go through this dynamic journey, and thanks for joining our call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Q2 2025 Nu Skin Enterprises Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, B.G. Hunt, Vice President of Treasury and Investor Relations. Please go ahead.

Thanks, James, and good afternoon, everyone. I'm joined by Ryan Napierski, President and CEO; and James D. Thomas, CFO. We are excited to share Nu Skin's results from Q2 of 2025.

Before I turn the time over to Ryan, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve important 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 on 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 numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website, ir.nuskin.com for any required reconciliation of these non-GAAP numbers.

And with that, I'd like to now turn the call over to Ryan.

Thanks, B.G. Thanks, everyone, for joining the call. We spent some time this past quarter with our amazing and talented top leaders in our annual Team Elite incentive trip in Greece, where we aligned around our vision, strategy and plans for our next big opportunities, which I'll get to in just a moment. But before I get to the strategy, I'll begin with an overview of our Q2 performance, then provide an update on our key strategic priorities for the remainder of 2025 as we continue pursuing our mission of being a global force for good by empowering people to look, feel and live better lives.

I'm pleased to report that we delivered revenue at the high end of our guidance range and significantly exceeded our earnings per share forecast for the second quarter. We achieved revenue of $386.1 million. More notably, we delivered earnings per share of $0.43, well above our guidance range of $0.20 to $0.30. This strong earnings performance reflects our disciplined approach to cost management and operational efficiency improvements that we've been implementing across the organization.

As we review our reporting segments, we're seeing encouraging signs in several parts of the business as we navigate the macro environmental uncertainties impacting consumers around the world. We continue to drive strong year-over-year growth in Latin America as our developing market strategy takes hold in the region. This was offset by declines in North America, which has faced increasing macro pressures on the business. Japan reported growth in the quarter and continues to benefit from a strong subscription-based wellness business. While revenue in South Korea and China was down due to persistent economic challenges, we're seeing signs of sequential improvement. We experienced growth in the Pacific, while the rest of Southeast Asia remained sluggish. Europe and Africa also experienced improving trends in customer and new sales leader engagement with our enhanced sales performance plan. And our Rhyz segments performed well with manufacturing reporting 17% up year-over-year in the quarter.

Now let me update you on our strategic priorities for 2025 as we made significant progress in preparing our sales leaders for these next opportunities. First, we're making good progress in bringing to market our next big innovation, Prysm iO, our truly intelligent wellness platform. As I mentioned in Q1, Prysm iO was built upon more than 20 years of selective scientific research and development and our extensive antioxidant database that contains more than 20 million scans from 10 million participants across more than 50 countries. By utilizing AI capabilities to interpret this data through our own proprietary new intelligent platform, we'll be able to provide our customers with truly intelligent healthy lifestyle insights as well as personalized product recommendations to improve their antioxidant score and support their wellness journey. In just 15 seconds, this palm-sized device will accurately and noninvasively measure carotenoid levels in the skin via the fingertip.

As we educate consumers on 4 primary dimensions of health, diet, fitness, oxidative stress and supplementation, their Prysm iO score can provide insights to motivate them to implement lifestyle changes aimed at improving their overall health span. We'll begin rolling out Prysm iO in limited quantities for qualified sales leaders during the fourth quarter of this year, followed by broader leader launches around the globe in the first half of 2026 and consumer launches anticipated to the back half of the year.

The Prysm iO launch will be accompanied by enhanced and expanded line of geographically customized LifePak product solutions as well as other targeted wellness products via our subscription-based retention model. We will be reformulating our leading line of nutritional supplements, leveraging the latest metadata and scientific research to meet geographic dietary needs at various pricing tiers. For example, studies show that Vitamin E is often underconsumed in many parts of the world, which can negatively affect immune and cardiovascular health. Adjusting Vitamin E levels for these areas provide customized product solutions to better meet the needs of diverse consumer segments around the world. As consumers are growing increasingly more conscientious about their overall well-being, we're excited about the potential impact of Prysm iO and our revolutionary intelligent wellness platform. And with our unique ability to provide customized subscription-based product solutions that support one's overall health and well-being, we are uniquely positioned to play in this rapidly growing wellness movement.

Our second key priority is our developing market strategy, which continues to deliver remarkable results in Latin America, which reported up more than 100% year-over-year in revenue, customers and sales leaders. Nu Skin has historically been known for a premium market positioning in the beauty and wellness space. And as we envision a more expansive future for our company, it is imperative that we broaden our positioning to appeal to emerging segments in both existing and new markets. We continue to learn and gain insights that help us expand the strategy into other markets, including India, which represents an enormous opportunity given the 1.4 billion population and rapidly growing beauty and wellness industries. As we prepare for India, we're following the simplified and scalable business model, including a localized product portfolio containing a new masstige brand called [indiscernible] that is priced for India's growing middle class. This targeted product offering, combined with a refined compensation plan and a digital-first operating infrastructure will enable a more focused and scalable path to growth for this emerging market. We're on track with our plans in India for a Q4 premarket opening for qualified India eligible sales leaders and are building towards a formal launch anticipated in mid-2026. We remain excited about the prospects for India and our other developing markets, which we anticipate will become a much larger portion of our revenue moving forward.

And thirdly, we're pleased to see overall margin expansion through Project Accelerate, our ongoing initiative to improve operational efficiencies to strengthen our bottom line. We're focused on 3 key drivers: improving gross margin in the core Nu Skin business to 78% through product portfolio optimization, selling expense alignment to better reward growth in our sales force and G&A prudence around the globe. Overall, our efforts led to significant improvements in our Q2 operating margin to 8%. We have also strengthened our balance sheet to become a cash to debt positive, which provides us with greater flexibility amid market fluctuations and an improved ability to invest in growth initiatives and return value to shareholders.

One last point I'd like to mention is about Rhyz, our innovation incubator. As we experienced with our recently transacted Mavely business, which generated approximately $200 million in value to the balance sheet, Rhyz plays a strategically significant role for our enterprise. Notably, Rhyz manufacturing, which grew 17% year-over-year, enables us to gain speed to market for new cutting-edge beauty and wellness innovations. For example, our U.S. business recently introduced M-Smart, a drink mix in that helps support a healthy blood glucose response after meals and brought it to market in less than 2 months. Another Rhyz business, LifeDNA, a genetic wellness assessment business, continues to perform ahead of expectations, and we anticipate will support our broader intelligent wellness platform vision in the future.

So with that, I'll turn the time over to James, who will provide more financial details, including our updated guidance for the remainder of 2025. James?

Thank you, Ryan. Good afternoon, and thank you for joining us today for our Q2 earnings call. I'm pleased to provide an overview of our performance for the second quarter of the year, including key highlights, challenges and our outlook for the rest of 2025. As always, I'll walk through the financial results, touch on some key business dynamics, discuss our outlook for Q3 and the rest of the year as well as provide an update on how we're navigating the current macroeconomic environment.

Turning to our financial results for the quarter. I'm pleased to report solid performance in several key areas. For the second quarter, we delivered revenue near the top end of the range at $386 million, with neutral foreign currency impact. Earnings per share came in at $0.43. This surpassed our guidance by $0.13 and demonstrated significant improvement over the prior year $0.21 adjusted earnings per share due to our cost efficiency efforts deployed over the [ last 2 years ]. Our Q2 gross margin was 68.8% compared to 70% in the prior year, primarily due to the revenue mix between Rhyz entities and the Nu Skin core following the sale of Mavely. Within our core Nu Skin business, gross margin was 77.5%, up 140 basis points from the prior year, resulting in 4 quarters of sequential adjusted gross margin improvement. We're continuing to see the benefits of our portfolio optimization and operational refinement efforts.

Selling expense as a percentage of revenue was 33.2% for the quarter, a decline from the prior year, primarily reflecting the impact of the Mavely sale on the overall revenue mix between our core Nu Skin business and Rhyz. Within the core Nu Skin segment, selling expense was 40%, down from 42.2% in the prior year. The decline was largely driven by lower sales performance in the U.S., China and Southeast Asia Pacific markets compared to the prior year. For the core, we anticipate selling expense to remain around 40% as the enhanced compensation plan continues to gain adoption.

General and administrative expenses were down $11.2 million compared to Q2 of 2024, reflecting cost reduction efforts in labor and a migration to a shared service model for technology. It did increase on a percentage basis due to the overall declines in revenue.

Operating margin for the quarter was 8%, up 260 basis points from adjusted operating margin of 5.4% in the prior year due to our disciplined approach to operational efficiencies. Improving our operating margin remains a long-term priority, which positions us to reinvest in the business through growth initiatives like Prysm iO and new market expansion into India. We will remain disciplined and adaptable, especially when navigating the continued top line pressures and evolving market conditions and are very pleased with our operating income results year-to-date.

I'd now like to turn to our balance sheet and liquidity position. We generated strong cash flow from operations in the quarter of $35.8 million, which enabled us to achieve our goal of becoming net cash positive ahead of schedule, the first time we've been in this position in more than 4 years. This net cash position provides us with strong financial flexibility, enabling us to navigate economic uncertainties more confidently, invest strategically in growth and return value to shareholders. We ended the quarter with $264 million in cash. In line with our capital allocation strategy, we returned approximately $3 million to shareholders in the form of a dividend. We did not repurchase any stock and have $157.4 million remaining under our current share repurchase authorization.

Looking ahead to the remainder of 2025, we're encouraged with the performance of the business through the second quarter. At the same time, we remain mindful of ongoing global uncertainties, including potential tariff impacts and evolving geopolitical conditions. Given these factors and continued uncertainty around consumer durability in our key markets, we're taking a disciplined and measured approach by narrowing our revenue outlook for the back half of 2025 and increasing our earnings per share as we've proven our ability to deliver profitability, notwithstanding market headwinds and pressures on the business.

We project third quarter revenue between $360 million and $390 million, factoring in an expected foreign currency headwind of approximately 1%. Q3 earnings per share is anticipated to be in the range of $0.25 to $0.35. For 2025, we project revenue of $1.48 billion to $1.55 billion and earnings per share of $3.05 to $3.25 with adjusted earnings per share of $1.15 to $1.35.

To conclude, we are pleased with our Q2 performance and continue to stay focused on driving our strategy forward despite ongoing global challenges. We remain confident in our ability to adapt and are committed to driving operational performance, managing costs, accelerating growth in key regions and maintaining a strong financial position. We look forward to updating you on our progress as we move through the third quarter of 2025.

And with that, operator, we'll now open up the call for questions.

[Operator Instructions] Our first question comes from the line of Dave Storms from Stonegate.

Just want to start at the top here maybe with -- maybe just some thoughts around the puts and takes on your guidance. Great to see you guys narrow that range. But are there any initiatives or geographies that can maybe have an outsized impact that will put you on the higher end or lower end of that guidance?

Dave, yes, just -- maybe I'll share my thoughts and then obviously, James, can dive into it a little bit better. But I think as I mentioned through first half performance, we continue to see Latin America overperforming expectations, a little bit offset through North America, which is a key market, and we're working to improve there. Again, puts and takes, as you said, it's Korea and China. Korea, we're seeing improving trends there. China is always a big question mark, especially with the macro uncertainty there economically and just geopolitically.

So those are probably for me the ones that are like top of mind would be those North America, China, Korea, whereas Europe, Southeast Asia and Japan and LatAm, I think are going to are going to do better. But James, any additional color from you?

No. As we look across the landscape across the first 2 quarters of the year, there was a lot of shifts between geographies and the performance between the outcomes of our reported numbers through Q2. When we looked in the back half and we're forecasting out forward and Ryan touched on the ones where we see -- we've rolled through that overperformance and then also adjusted those other markets that have underperformed through the first half and looked at the energy maps and the programs that we have running in each of those regions. He touched on the highlights for us. Latin America continues to perform well. Japan continues to hold steady. And the other markets and regions, we're looking forward to our Q4 launch of our Prysm iO as well as getting ready and staging for the opening of India.

That's great color. I appreciate that. And then maybe just double-clicking on the strength seen in Latin America there. Are you able to highlight what's really working there? And how much runway is left? Does Prysm iO turn into -- is that pouring gas on the fire for Latin America? Or just kind of how you see that playing out in the near term?

Yes. Latin America has been an interesting journey for us. Obviously, at the macro level, it's always been a region that has enormous potential in direct selling. But for us, has maybe been underrepresented. What we're pleased with there, we took a different approach there about 2 years ago, aligning with our leaders there around how we would simplify the model to really get a focus that would enable us to scale more profitably. And what we ended up finding out is the more we focused and simplified the model from an operational efficiency perspective, the better the sales force aligned and focused.

And so to true extent, less was more and from there, that was borne into kind of a 3-pronged strategy from the product side, the business model side and then the operational side. So at the product level, really retuning the portfolio to hit at the right price points with a good retail profit from a sales leader perspective. So working through margins there, and that was important.

On the business model side, as I mentioned, it's critical in those markets that there's a healthy and reliable retail profit that's made to the seller in addition to the incentives that we align around growing the channel. And so striking the right balance between that selling and referring together with our new sales performance plan is working really well.

And then that last prong of scalable infrastructure there. So really focusing much more on the technical and technology-based support rather than hard cost infrastructure has proven to be helpful there, being able to get to the needs of the consumers and affiliates down there. So I think those are really the elements of when we talk about the developing market strategy, even in India, same 3 types of elements will be focused on the portfolio, the business model and the flexible digital-first infrastructure.

Prysm, I think, will be an additional help there. Latin America historically has been a beauty origin market. The majority of our business down there is that, but we have some good nutritional products like our Collagen line down there that kind of spans the two. Our sales leaders are really excited about Prysm and think there's a great opportunity moving forward with this expanded LifePak line, which is our premium nutritional supplement that works really hand-in-hand with Prysm. And we have a new formula called LifePak Elements that we'll be introducing down there next year that we anticipate will further strengthen the offering down there.

That's great. I really appreciate that. Turning to -- at the consolidated level, the cost optimization that you've been kind of driving here, it seems to really be making some strong progress. When you're thinking about it going forward, how many levers do you still see to pull there? Is there any low-hanging fruit that could continue to drive margin improvement year-over-year like we saw this quarter?

Yes, I'll take that question, Dave. For us, we talked about earlier about 4 consecutive quarters of sequential growth in gross margin. That is the result of cumulative efforts across the [ last 2 years ] mainly and working through the inventory and the turns to get that flow through our cost of sales, so the lower overhead will roll through. We still believe that there's still opportunity there as we've lowered our inventory levels and manage that to be really in line with our overall revenue.

Selling expense, we continue to optimize for us. That's something that helps the field and generates the top line. And so we're really focused on spending efficiently where we can to make sure that we're optimizing performance. And then G&A, we're going to continue to focus on our operational footprint, like the developing market strategy that Ryan talked about in Latin America. We're looking across the scope of all of our markets and continue to look and find opportunities where we can use technology in place of physical presence or labor and continue to find opportunities where we can deliver more dollars to the bottom line. So we're going to continue our efforts, and we feel confident in our ability to navigate our forward.

That's great. I really appreciate that commentary. Maybe just one more for me. You ended the quarter with a strong balance sheet, and you mentioned that it gives you a lot of flexibility. Just if you could help us maybe prioritize what your capital allocation priorities are going to be in the back half of the year given that flexibility?

Yes. And maybe I could -- I'll have James kind of go into the detail on capital allocation. But I mean, obviously, for us, investing in growth of the business is critical and kind of doubling down on our 2 growth opportunities, Dave, for us that are always front and center. First, from an innovation standpoint, Prysm iO, as we're building upon the extensive database that we've created over the last 20 years to now take that forward in a new device that is -- really literally can fit in anyone's pocket anywhere. This device, coupled with our database, extensive database and then the app, the intelligent wellness app coming along is a major -- for us, it's a major focus and source of investment as we lead out into this new world. And then, of course, leaning into developing markets.

Again, we have a scalable model. We're taking a very different approach, digital first there. So we're not talking about massive fixed cost infrastructure investments, rather, we're really building it out to be scalable. And so as we go into India, that's a priority and making certain that we're really allocating our investment into growth first. But James, maybe you can talk more about capital allocation.

Yes. Our capital allocation strategy has been consistent. We fund the business. We look for opportunities where we can find the growth, like Ryan mentioned, right now, Prysm iO, India and then other several initiatives inside the business, we're heavily funding. The second one is making sure that we're able to service our debt, that we can manage our obligations going forward with where we're in a really healthy position.

And the third is to continue to pay a strong dividend, return value to shareholders through both our dividend and then when opportunity permits to be able to be in the market to repurchase shares. And so that's really what we have and we're looking forward. And we also look for other opportunities where we can take advantage of potential opportunity that may arise to go after growth.

I am showing no further questions at this time. I would like to turn it back to Ryan Napierski for closing remarks.

Well, we really appreciate everyone joining the call. If you have additional questions, please reach out to B.G., James, myself to answer those. We're very, very excited about the future as it's unfolding. We were pleased with our first half results and are now very focused on second half in preparations for 2026. We're going to be driving these 3 priorities across the business of accelerating innovation with Prysm iO and our intelligent wellness platform, strengthening our core business with developing and emerging markets beginning with India and then driving operational performance and efficiency, all with an end game of strengthening shareholder value as we provide greater opportunities for our empowered sales force, affiliates and powerful leaders around the world, where we provide them opportunities to grow and empowerment initiatives is where we find success in our business. So that's what we're acutely focused on. We'll look forward to updating you in coming quarters. And so please join the calls and reach out with any questions. Thank you.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.