WW Earnings: Will Its Digital-First Strategy Work Out?

WW International (formerly Weight Watchers) reports its Q4 and full-year earnings on Feb. 25 after markets close.

Ahead of the print, WW shares are flat on a three-month basis. Last quarter, the global wellness company reported mixed results with a revenue miss. WW cited declines in workshop fees and overall product sales as a result of COVID-19 pressures. Investors are also anxious about up-and-coming players like weight-loss app Noom and food-tracking monitor Lifesum.

But despite the revenue shortfall, analysts praised WW’s pivot to a digital-first world. That included WW shutting down studios and ramping up digital health and wellness services (which boast higher profit margins). Plus WW’s total subscribers rose 5% in Q3 to a record 4.7M. Most impressively, digital subscribers soared 23.5% year-over-year (YoY), with eCommerce sales rising 300%. 

According to CEO Mindy Grossman, “All of WW’s 4.7 million members utilize our digital platforms, with over 80% of our members being digital-only and 20% having both digital and workshop, whether virtual or physical access.” So did this strategy continues to pay off in the fourth quarter? 

Using Similarweb’s powerful investment analytics we can track WW’s key digital data trends. Let’s take a closer look now.

Key Takeaways 

Our data suggests that:

• WW experienced a significant pullback in YoY traffic growth to its website in the fourth quarter vs. the third quarter. While global unique visitor numbers increased 18% in Q4, this represents a notable deceleration from Q3’s 27% YoY growth. 
• Taking a closer look at ww.com monthly traffic, unique visitors to the website dropped 1% YoY in December, vs. 38% growth in October. Given the re-imposition of lockdowns at the end of 2020, it’s not surprising that there was less of an urge to begin dieting vs. the usual holiday season buildup.
• Note that this trend also carried through into January (usually WW’s best-performing month as new year diet resolutions drive a subscription surge). Monthly unique visitors in January 2021 came in at 12% below January 2020. 

• The same pattern can be seen if we focus on just the U.S. and Germany (two of WW’s largest markets). The U.S. remains WW’s most successful market- and accounts for 66% of weightwatchers.com’s desktop traffic share, followed by France at 9%, then Germany at 8%. While Germany experienced a far greater YoY surge in Q3 than the U.S., it also saw YoY website traffic growth plunge in the fourth quarter.

• While Q4 bounce rate has stayed steady at 43% (vs. Q3), other key metrics of audience engagement have dropped dramatically over the course of 2020. In particular, average pages per visit fell 32% YoY in the fourth quarter,  while average visit time was down 29% YoY. You can see the monthly trends in the chart below. 

• However, our data does show that both average session duration and pages per visit improved in January (to -9% YoY and -14% YoY, respectively). That marks a notable step-up from December’s 27% YoY pullback in visit time and 30% drop for pages viewed. 

Net-net Q4 was not an easy quarter for WW, but could this create an opportunity ahead of a potential post-pandemic boom? According to Grossman, COVID has really prompted people to carry out ‘an overall reappraisal of their health.”  She believes WW’s new app-based membership plan Digital 360, launched in January, will help WW boost its subscriber numbers going forward – so watch this space. 

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by Harriet Lefton

Investor Insights Manager

Harriet, a Cambridge graduate and qualified U.K. lawyer, transitioned from metal market journalism to financial blogging, using digital data for investment insights.