Arpine Kocharyan

Arpine Kocharyan asked for an update on gross additions trajectory for the year, given better-than-expected churn in Q2 and reiterated flat churn guidance. She also inquired about the hardware product roadmap for the next 12-18 months, specifically regarding a separate strength SKU and a more affordable Tread product.

Answer

CFO Liz Coddington reiterated that Q2 churn was lower than expected, leading to updated Q3 subscriber guidance of 2.65-2.675 million paid Connected Fitness subs and an expectation of flat churn year-over-year. CEO Peter Stern added that Q2 equipment sales to new members met expectations, but activations were delayed, impacting Q2 gross adds which are expected to flow into Q3. Regarding hardware, Stern stated that major product announcements are not made on earnings calls but expressed confidence in meaningful announcements within the next 12-18 months, emphasizing the time and care required for testing fitness equipment.

Arpine Kocharyan asked for an update on the trajectory of gross additions for the year, given better-than-expected churn in Q2 and the reiteration of flattish churn guidance post-price increase.

Answer

CFO Liz Coddington stated that Peloton does not provide full-year guidance on subscribers or gross additions but noted Q2 churn was better than expected, leading to updated subscription expectations. She highlighted Q3 as seasonally low for churn and strong for new additions, expecting churn to improve year-over-year in Q3 and be relatively flat for the full year. CEO Peter Stern added that Q2 gross additions were impacted by delayed activations due to delivery times and holiday timing, which should flow into Q3.

Arpine Kocharyan inquired about the observed impact of a broader consumer slowdown on the business, the macroeconomic scenarios factored into the updated Q4 guidance, and for an expansion on the strategic pillar of pricing.

Answer

CFO Liz Coddington acknowledged a brief period of sales softness in late March/early April that has since rebounded, emphasizing the resilience of the high-retention subscription business. She noted that while hardware sales are a larger ticket purchase, Peloton offers lower-priced options and financing. CEO Peter Stern added that regarding pricing, the company is taking a 'really hard look' at both equipment and subscription prices, noting it has been nearly three years since the last subscription price increase in the U.S. and that one has never occurred internationally.

Arpine Kocharyan asked about the potential for subscription price increases in light of improving churn and sought to identify the lowest-hanging fruit for further cost optimization.

Answer

CEO Peter Stern acknowledged that pricing is a powerful lever under review but stated the company would not act lightly on subscription pricing, sharing no specific plans. Regarding costs, he noted the company is on track for its $200 million savings plan and identified further opportunities in IT efficiency and reducing corporate real estate, though the latter will take time to materialize.

Arpine Kocharyan asked about the implications of the raised comparable center revenue guidance for Q4 and how Life Time Group Holdings Inc. plans to maximize revenue without over-relying on per-center membership growth, given investor concerns about macro conditions and pricing power. She followed up by asking what factors might influence whether the company opens at the lower or higher end of its 12-14 new club range for next year, particularly regarding construction timelines or sale-leaseback cadence.

Answer

Bahram Akradi, Founder, Chairman, and CEO, explained that the company's focus is on brand and member experience, optimizing membership mix to achieve higher revenue per membership, often by prioritizing full-blown family memberships and restricting discounted third-party programs. Erik Weaver, Executive Vice President and CFO, added that increased utilization and an improving mix (more couples and families) mean fewer memberships are needed to reach desired utilization, with new clubs being planned for 3,500-4,000 units. Akradi clarified that 13 of the 14 clubs for 2026 are firmly in the pipeline, making it highly likely they will open within the year, with only minor timing variations possible for one club.

Arpine Kocharyan inquired about the implications of the raised comparable center revenue guide for Q4, the relationship between average member per center growth and revenue same-store growth, and how Life Time maximizes revenue without over-relying on per-center membership. She also asked about the factors influencing the 12-14 club opening range for next year, specifically construction timelines versus lease-back cadence.

Answer

CEO Bahram Akradi explained the company's focus on brand and member experience, managing membership optimization to increase revenue per membership by focusing on full-blown family memberships and restricting discounted programs, rather than solely on membership units. EVP and CFO Erik Weaver added that new clubs are being business-planned with fewer units (3,500-4,000) due to increased utilization and an improving mix of couples and families. Akradi confirmed that 13 of the 14 clubs for 2026 are firmly in the pipeline, with minimal risk of delay.

Arpine Kocharyan asked for more color on consumer base weakness or resilience, trends in destination versus regional resorts, and specific pass sales trends like the lower renewal rate for less tenured passholders. She also inquired what factors would need to align for the company to achieve the upper end of its EBITDA guidance range.

Answer

CEO Rob Katz noted broad-based results across various guest demographics, geographies, and pass types, suggesting either market maturation or broad marketing approach issues. He referenced NSAA data showing recent declines in pass visits and increases in lift ticket visits. CFO Angela Korch added that there's no change in net migration behavior (trade-up vs. trade-down) among renewing passholders. For hitting the upper end of EBITDA guidance, Korch emphasized that visitation is the biggest driver, impacting all ancillary revenues. Katz added that outperformance in pass or lift ticket visitation, or strategies working sooner than anticipated, could lead to the higher end of the range.

Arpine Kocharyan asked for more detail on the updated EBITDA guidance, specifically why the top end of the range was lowered by more than the stated foreign exchange impact. She also inquired about the incremental pressure from recent labor agreements on current and future cost structures.

Answer

CFO Angela Korch explained that the guidance range was narrowed, as is typical in March, and the FX impact was applied to the midpoint. CEO Kirsten Lynch stated that the impact from recently negotiated labor contracts is not material and is factored into their planning, noting that only a small number of their resort teams are unionized and that tools like workforce management provide significant labor efficiencies.

Arpine Kocharyan from UBS asked about the strategy for growing pass penetration beyond the current 75% of visitation, focusing on the price differential between passes and lift tickets. She also requested directional guidance on the operating expenses associated with the My Epic Gear launch.

Answer

CEO Kirsten Lynch identified converting remaining lift ticket guests, penetrating new destination markets, and leveraging the 25-million-person database as key growth opportunities. She affirmed the strategy of pricing lift tickets to incentivize advance commitment to passes. Regarding My Epic Gear, CFO Angela Korch and Lynch stated that while there are incremental costs, the company is leveraging substantial existing rental/retail infrastructure and did not provide specific OpEx guidance for the new initiative.

Arpiné Kocharyan from UBS Group AG asked why the full-year guidance wasn't raised more significantly given strong first-half results, and questioned how the success of third-party IPs has changed the long-term growth outlook for the Wizards of the Coast business.

Answer

CFO & COO Gina Goetter explained the guidance reflects the fact that tariff impacts have not yet hit the P&L and will be a drag in the second half. CEO Chris Cocks stated that the 'Universes Beyond' strategy has been more successful than anticipated in expanding the player base, which provides enduring business success and significant upside for the games segment, helping to offset consumer product headwinds.

Arpine Kocharyan from UBS asked for details on tariff mitigation efforts, specifically regarding the timeline for reducing China sourcing exposure and the breakdown of mitigating factors like cost savings versus pricing.

Answer

CFO & COO Gina Goetter stated that Hasbro is accelerating plans to bring U.S. sourcing from China below 40% faster than the original 2026 target. She detailed three main mitigation levers: 1) supply chain shifts and inventory management, 2) product portfolio and SKU rationalization, and 3) commercial actions including pricing and managing retailer allowances.

Arpine Kocharyan asked if the new 'Playing to Win' strategy is a recap of existing plans or based on new developments. She also presented her own calculations for 2026 EBITDA and EPS based on the company's leverage targets and asked for management's feedback.

Answer

CEO Chris Cocks described the strategy as a formal articulation of their ongoing thinking, positioning Hasbro as a unique company focused on games, licensing, and toys. CFO and COO Gina Goetter confirmed the analyst's EBITDA math was 'not far off' but noted the EPS calculation was likely high due to a normalizing tax rate and higher net interest expense expected in 2025 and 2026.

Arpine Kocharyan questioned the full-year operating margin guidance, noting that strong year-to-date results imply a very weak Q4. She also requested an update on year-to-date POS performance and the outlook for the toy industry.

Answer

CFO Gina Goetter explained the implied Q4 margin pullback is due to a business mix shift heavier towards toys and the deleverage impact from lower Wizards revenue. CEO Chris Cocks stated that year-to-date POS is down high-single-digits (ex-divested brands) but is expected to improve in Q4. He noted the broader toy industry (ex-building blocks) is expected to be down low-single to low-mid-single digits for the holiday season.

Arpine Kocharyan questioned the confidence in maintaining full-year guidance given the softer-than-expected April results, even after accounting for calendar shifts and weather. She asked for early indicators supporting this confidence and for perspective on the potential proceeds from asset sales.

Answer

CEO Richard Zimmerman expressed confidence, citing strong demand indicators like high attendance at Cedar Point's opening despite poor weather, robust e-commerce trends (up 1% in volume, mid-single digits in price year-to-date), and outstanding results from renovated food and beverage locations. He also highlighted the plan to reduce operating costs by over 3%. Regarding asset sales, CFO Brian Witherow suggested that gross proceeds from the Maryland and Richmond land sales could exceed a couple of hundred million dollars.

Arpine Kocharyan inquired about the timeline for fully offsetting tariff impacts, the estimated dollar exposure for the year, and the flexibility of Mattel's supply chain to shift production out of China.

Answer

CFO Anthony DiSilvestro stated the potential incremental cost from tariffs is roughly $270 million before mitigation, which the company aims to fully offset in 2025 through supply chain diversification, product mix optimization, pricing, and cost savings. CEO Ynon Kreiz added that Mattel has been diversifying its supply chain for seven years, with a goal to reduce U.S. imports from China to below 10% by 2027, highlighting this as a key competitive advantage.

Arpine Kocharyan inquired about potential shifts in FOB shipments due to tariffs, the drivers behind Hot Wheels' sustained growth, including movie updates, and the extent of any planned pricing actions for 2025.

Answer

CEO Ynon Kreiz attributed Hot Wheels' record performance to broad product innovation, new partnerships like F1, and brand extensions such as the 'Let's Race' TV show. He confirmed the J.J. Abrams-produced movie is developing well. CFO Anthony DiSilvestro stated it was too early to comment on FOB shifts and reiterated that the company would not disclose specifics on pricing actions.

Arpine Kocharyan inquired about Mattel's confidence in its Q4 growth guidance given macro concerns like tariffs and inflation, and also asked about the drivers behind the implied Q4 margin pressure.

Answer

CEO Ynon Kreiz affirmed confidence in Q4 growth, citing positive retail forecasts and internal research showing strong consumer intent for toys. CFO Anthony DiSilvestro explained that the implied Q4 margin pressure stems from a shift to minor cost inflation from deflation, wrapping the final third of prior-year Barbie movie benefits, and a strategic shift of advertising expenses into Q4.