Christina Tan

Christina Tan of Mizuho Financial Group questioned why the midpoint of the full-year constant currency sales guidance was slightly reduced despite expected benefits from the Protocol launch. She also asked for clarification on why the EBITDA guidance raise wasn't more significant, given the Q2 beat and favorable currency tailwinds.

Answer

CFO John DeSimone explained that the full-year constant currency guidance was adjusted primarily because Q2 results were below the midpoint of the guidance for that quarter, though he reiterated that growth is still projected for Q3 and Q4. Regarding EBITDA, DeSimone detailed that currency tailwinds on the top line do not immediately benefit the bottom line due to a lag in inventory accounting. The positive impact on cost of goods sold is expected to materialize in subsequent quarters, primarily in early 2026.

Christina Tan asked for clarification on the updated full-year guidance, questioning why the constant currency sales guidance midpoint was slightly reduced and why the EBITDA guidance raise wasn't larger given the Q2 beat and favorable currency trends.

Answer

CFO John DeSimone explained the constant currency sales guidance was adjusted because Q2 results came in below the midpoint of the company's expectations for the quarter. Regarding EBITDA, he detailed that there is a lag effect for currency benefits to impact the bottom line due to inventory turn cycles, meaning the positive impact of a weaker dollar on gross profit won't be fully realized until future quarters.

Christina Tan from Mizuho questioned why the midpoint of the full-year constant currency sales guidance was slightly reduced despite positive trends and the upcoming Protocol launch. She also asked why the EBITDA guidance raise wasn't larger, considering the Q2 beat and expected currency tailwinds.

Answer

CFO John DeSimone explained that the constant currency guidance midpoint was lowered primarily because Q2 results came in below the midpoint of the guidance for that quarter. Regarding EBITDA, he detailed the lag effect of currency on the bottom line. While currency impacts top-line sales immediately through translation, the benefit to cost of goods sold (COGS) and EBITDA takes about one inventory turn to materialize. Therefore, the full positive impact of the weaker dollar is not expected to be reflected in the bottom line until early 2026.

Christina Tan asked for clarification on why the full-year constant currency guidance midpoint was slightly reduced despite the anticipated benefits from Protocol. She also questioned why the EBITDA guidance raise wasn't larger, considering the Q2 beat and favorable currency tailwinds.

Answer

CFO John DeSimone explained that the constant currency guidance was adjusted primarily because Q2 results came in below the midpoint of the guidance for that quarter. Regarding EBITDA, he detailed that there is a lag between when currency movements impact top-line revenue and when they flow through to the bottom line due to inventory accounting. The cost of goods sold reflects exchange rates at the time of inventory purchase, delaying the full positive impact of a weaker dollar to future quarters.

Christina Tan questioned why the midpoint of the full-year constant currency sales guidance was slightly reduced despite expected benefits from Protocol. She also asked why the EBITDA guidance increase wasn't larger, given the Q2 beat and favorable currency movements.

Answer

CFO John DeSimone explained the slight reduction in full-year sales guidance was primarily because Q2 constant currency results were below the midpoint, though he affirmed growth is still projected for Q3 and Q4. Regarding EBITDA, he detailed that currency tailwinds have a lagged impact on the bottom line due to inventory accounting, with the cost of goods sold reflecting exchange rates from when inventory was purchased. The full benefit is expected in future quarters.