Shares are reacting to the upside following last night’s Q4 earnings of $0.37 per share on revenues which grew almost 17% year-over-year to about $312.5 million. Results in the quarter were aided by an Income Tax benefit of $54.7 million, which reflected a one-time $56.6 million net tax benefit principally due to a remeasurement of net deferred tax liabilities under the new U.S. tax law.
In Q4, End of Period Subscribers were up 22.6% versus the prior year period, driven by growth in all major geographic markets. The breakdown consists of End of Period Meeting Subscribers up 13.4% and End of Period Online Subscribers up 29.3% versus the prior year period.
Weight Watchers Total Paid Weeks in Q4 2017 were up 19.1% versus the prior year period as Q4 2017 Meeting Paid Weeks increased 10.2% and Online Paid Weeks increased 26.4% versus the prior year period.
Service Revenues were up 16.5% on a constant currency basis to $264.0 million and revenues classified as Product Sales and Other were up 2.3% on a constant currency basis to about $48.5 million. Growth in Product Sales and Other was partially offset by declines in licensing.
Gross margins in the quarter were 52.0%, compared to 48.8% a year ago as Weight Watchers is seeing benefits from initiatives such as removing artificial sweeteners in its products, a renewed focus on licensing deals and more investment in digital technology.
Weight Watchers’ FY18 guide was equally as impressive. For the year, the company sees earnings between $2.40-2.70 on revenues approaching $1.55 billion.
WTW’s rally is quite the thing to behold; from this time a year ago, the stock has gained north of 400% ($14.39 close on 2/28/17) with a nearly 50% rally coming since the start of 2018. By all accounts, WTW shows the colors of a Wall Street darling, and with names like Oprah Winfrey and DJ Khaled on board, the health bug seems to be catching on.