All right. Get the boring stuff out of the way. My name is Dylan Carden. I'm the consumer analyst here at William Blair. Great to have Mike Karanikolas here, Co-CEO, Co-Founder of Revolve, who's gonna walk us through the business. So take it away.
Great, thank you.
Oh, sorry, Mike. Our disclosures can be found on williamblair.com. I always forget that part.
Okay. So yeah, standard looking disclosures, make sure you read them. So to kick it off, so Revolve, we're an online fashion retailer. We're digitally native. We target what we call next generation consumers. You know, we view ourselves as a newer, next-gen retailer versus traditional players. And we've been competing for over 20 years in this market, premium space, and there's a lot of differences between us and traditional players. I think one of the biggest things is our founding DNA is very different than a lot of retailers. We're founded by myself, an engineer, and my co-founder, business analyst, so we approach fashion from a very different way, very data-driven, a lot of proprietary tech systems, and we think that's given us a big advantage in the marketplace versus these legacy players.
You know, I'd say some of the comparables from a merchandise standpoint might be like a Nordstrom or a Bloomingdale's, to give you an idea, and of course, there's tens of billions of share there, and we've been taking share from those guys for a number of years, and we think there's billions more share to take. And I think the proprietary tech manifests itself in a number of different ways, competitive advantage-wise. I think one of the key metrics that we like to point to is just full price sales percentage. We typically operate around 80% full price sales. These legacy players are closer to around 60%. So on the merchandising and buying side of things, that's one area it gives us a big advantage.
But we think the advantage is much broader than that, and we'll get into that later. The next thing, the brand itself, we think that's a big differentiator with us versus these traditional players. We've been an innovator and a pioneer in social media marketing. Those of you that follow the space more closely may have heard a lot about us on that side. Of course, it's more commonplace these days, but a lot of the legacy players still don't have the strength that we do. We think that's a big advantage for us. In general, just our ability to speak to next generation consumers, we think really outclasses the competition and is a big reason why we've done so well historically. Then kind of going back to the historic results, we've been very profitable historically, very consistent revenue growth.
And so we've actually been profitable every single year except one in our history, which is over 20 years at this point, which we think is very different from a lot of other online players out there. And it's a very different mindset. You know, we're a founder-led, investor-first mindset. You know, we historically have had the ability to grow the business while investing into it and generating cash at the same time, and we believe we can continue to do that going forward. And then, very consistent growth. We've grown in nearly every single year of our operation, and again, I think it's because we have a better model, a better brand, and there's a really large share for the taking. And then the last thing, you know, for us, I just you know, global reach.
So we're primarily domestic, 80% domestic at this point, but international is a big opportunity as well, and we'll get into that in a bit. So just breaking down our business, 85% of our business is our namesake, Revolve. That's our core business. It's what we'd call contemporary price points, AOV is close to $300, about two items per order, so the typical item might be $140, $150. And then we also have a luxury segment FWRD, which is more comparable to, like, say, a Neiman Marcus or a Mytheresa, for those of you that follow that company. Much higher AOVs, closer to $700. And we think it's a very nice synergistic overlap with Revolve.
You know, we think the Revolve customer can graduate up and start purchasing FWRD at some point in her life and journey. And then also, we think in certain product categories, like handbags and shoes in particular, there's very synergistic overlap with the Revolve customer. So a big part of the FWRD strategy is to cross-sell those, and we'll get into that later. And then just give you a flavor of some of the brands that we carry. So we listed some of the bigger brands on Revolve, but a key thing of Revolve is we're not necessarily known for carrying really big brand names. Yes, we have some big brand names, but consumers really come to Revolve because we're Revolve, and we have interesting emerging brands that they haven't really heard of before.
We know from the way our consumers shop our site and also various navigation data, data that we look at, she's not really shopping by brand. She doesn't care so much about the brand that she buys. She just cares that it's Revolve, and she trusts us that we're gonna have something cool, we're gonna have something very high quality that's gonna make her look and feel great. And then FWRD is definitely more brand driven. You can see a lot of those big luxury names out there, some of which have billions of dollars in revenue. So there's a number of key drivers and philosophy to our success historically. Customer centricity is really important to us. It's something that, from the very beginning, we focused on, and we always had an underdog mentality. We started the company out of a house with no funding.
We didn't have any funding for the first nine years, so we always tried to be the best in every area that we could be. We believe in the area of premium merchandise. Service is very important, and so there's a number of key concepts. So first and foremost, the home is the customer's dressing room. That was our credo from day one. Along with Zappos, I'd say we were essentially the innovators of that concept. Zappos was around the same time. We had no idea they existed, but we realized it would be very key to apparel success, particularly at premium price points. Make shipping fast, free, easy. Make returns fast, free, and easy. And so that's been a huge focus for us.
And, you know, we're really proud of the service levels we offer, and we're continuing to try to drive them higher. So this slide here doesn't provide context, but some context for the level of services that we have. On Revolve, our NPS scores are typically around the mid-80s. So as you know, that's quite high. This metric here kind of relates to NPS. It's a little more service-related customer satisfaction score. Despite those really high levels, we continue to try to get better every year, and I'm a big believer that ultimately, if you create a good engine and a good mousetrap, if your core is strong, if your brand is strong, if your offering is strong, good things happen over time.
And of course, there's all the tactical things that you'll do alongside, but it's really important to make sure that core is strong, and no matter how strong our core is, we're constantly looking to get better. And then, so some other things here, in terms of why consumers come to Revolve, it's a combination of things. You know, one is the service and the convenience, but even more important is the brand and the trust in the Revolve brand, that we're gonna make her look and feel great, that she's gonna be fashionable, that, you know, she's gonna be on trend, and everyone is gonna love the way that she looks and look up to her style.
And then the last thing to talk about here, we've historically had really great revenue retention metrics, and that's, again, I think that goes back to the core being strong. So with online retailers, typically after the first purchase within cohorts, there is a bit of a drop-off, right? 'Cause you have lots of one-and-dones through random marketing channels. They buy one thing that they needed. They buy it, they had a fine experience, but they forget about you. But for those that do stay, the cohort retention is extremely sticky historically. So historically, we have close to 100% revenue retention. You know, some years it'll be over 100%, some years a bit under 100%.
But that's really been a huge key to our success, 'cause when you can have that sticky, consistent revenue, then every year, the new initiatives that you do increase in awareness, gaining new customers tend to build and stack over time, and that's how we've been able to grow so consistently and so profitably for so long. You know, finally, right here, just highlighting, it's a large and growing market. You know, obviously, apparel, footwear, accessories, quite large in the U.S., even larger globally, and we do have a big global opportunity as well. And there's been a lot of favorable dynamics, you know, behind our success. You know, certainly, the rise of e-commerce. Now, the past 18 months, you know, that dynamic has shifted a little bit, and we'll talk about that a little bit.
We still think the long term for e-commerce is quite bullish. Then actually, you know, I think the other thing, which is something that we haven't talked a lot about historically, we've built an incredible brand. We think we have an incredible offering. We do think physical retail is a big opportunity, and we'll talk about some exciting data points there in a bit. So moving on, just to give you a very quick overview of our history. So 2003 to 2019, you know, long track record of consistent growth and profitability. There's definitely some lumps in between that that chart doesn't show, but we don't have time to go into those stories of 2008 and the great financial recession. 2020, when COVID hit, it was interesting.
Online retail was really on fire. We were not, and I think that goes back to what our brand represents and stands for, where it's about living your best life, looking and feeling your best, and also some categories that we index more strongly in. Certainly a lot of merchandise that you wear out, like, to a party or an event where you're trying to look your best. And that's something that we've excelled at historically, but there's also a big opportunity to expand beyond that. But for investors that weren't familiar with us, they were scratching their heads in 2020. "Online retail's on fire. Why are you guys not?" But it was really because of what the Revolve brand stands for and represents.
And then fast-forward to 2021 and 2022, incredible surge in demand to where, you know, we could hardly keep up, and I think we did a great job keeping up with service levels in, in general. But I, I told the teams at that time, "Don't focus on some of these other initiatives. Your only goal at this point is to keep up with growth," because we had periods where we were growing 50%, 60% in certain quarters, right? And just, you know, the strain of keeping up with that kind of growth and keeping everything together can be quite difficult. And so those were tremendous years for us, generated tremendous revenue growth and profit. But in retrospect, they represented somewhat of an overshooting, right?
You had this pent-up demand, a lot of people that hadn't purchased the type of merchandise that we offer in 2020, and then all of a sudden, flushed with cash, with stimulus money, and also having not purchased this kind of merchandise for many years, demand really overshot in those years, and it's producing a little bit of an overhang in the current period, particularly as it relates to, to growth and, and some other factors. So more recently, we haven't demonstrated the level of growth the past 18 months that we have historically. We did, and we'll talk about it shortly, get back to growth in, in, March and April of this year, and so we're pleased with getting back to growth.
But of course, you know, our, our goal is to gain substantial gains in market share year by year, and that's something that we have not gotten in the past 18 months. So, so here's, you know, kind of some more numbers behind our, our track record of growth. So you can see we're around $1 billion of sales. Very consistent growth. 2023 was one of the few years we've had where we didn't grow. We had, a, a bit of an, overhang of inventory, built up from the excess demand that we were seeing in 2021 and 2022.
And again, the consumer really overshot, and, you know, we see that in our data in terms of customers making the most aspirational purchases, pulled back the most there, in just in terms of wardrobe refresh cycles and things of that nature. Net income, really nice-looking chart up until 2021. I'm not as proud of the chart the past couple years. You know, dealing with some factors, inventory overhang, increased cost pressures on selling distribution, pressures on return rates. But the good news is, we're doing a lot of good things to reverse those headwinds, and we're starting to make progress. Q1, actually, we saw the first year-over-year decrease in selling distribution costs in many years.
We also saw in Q1, within our full price sales, essentially a normalization of return rates, where return rates had been growing by roughly 200 basis points year-over-year for some time post-COVID. We saw in full price, it was essentially flat. It still ticked up a little bit, but we have a lot of great initiatives that have already shown success there, and then a lot of great stuff in the pipeline that, you know, we may not have time to get into here, but we can get into in the Q&A session. Okay, let's see. Looking here, again, kind of just highlighting the market share gains over the years, close to a 20% CAGR, 2016 to 2023. Huge market. Department stores are shrinking. We're growing.
We think we have a better offering. We think we'll continue to take share at substantial rates. Cash flow generation. One thing we're really proud of is our ability to generate cash flow historically, so not just be profitable, but generate cash flow. Prior to IPO, we only raised $15 million ever historically. That was about nine years into the business. At IPO, we only raised another $25 million, and we didn't even need it. We quadrupled our cash position since then, but you have to raise money as part of the IPO process. That's part of, part of what's expected there. So we're able to generate growth while generating cash at the same time, and so we're quite proud of that. Zero debt as well.
Looking at e-commerce and kind of going back to this track record of growth and profitability, very few have been able to do it, in terms of GAAP profitable and positive Free Cash Flow in the last 12 months, only Revolve and Zalando. And of course, our level of profitability is not where we want and expect it to be at. We will get it higher, but we're also still in quite rarefied air, even with the current levels that, that we're seeing. And on the right-hand side, you can see all of the brands that are either GAAP unprofitable or negative Free Cash Flow. The current macro environment, a lot of disruption. I don't know how closely everyone follows the space.
You know, Farfetch, you know, certainly a bigger stock at its peak, essentially sold for, you know, the value of it, of its, you know, for next to nothing, from an enterprise value standpoint. They operate in more of the luxury zone, similar to FWRD. And then MatchesFashion, private company, billion-dollar valuation at its peak, sold for $66 million and then was put through bankruptcy several months later. Key metrics driving our performance. So despite the difficult macro, we've continued to grow active customers in a fairly substantial way. So really nice progress there. Active customers doubling in five years. Our net sales, of course, increasing a similar amount.
Net sales at full price shows you some of the historicals, 79% in 2023, but we're dealing with an inventory overhang in that year from the overshooting in demand and corresponding overshooting in inventory position. We expect this year to be well into the 80s, and I expect going forward in most years us to be well into the 80s, as our model generally allows for that. And then average order value, you can see this is combined, Revolve and FWRD, but you know, quite healthy average order values, which is part of what allows us to make the home the dressing room. We can afford and support those economics. So looking at our customer retention, I touched on it earlier.
We historically have had great customer retention, and even looking at pre-COVID, and there's a lot of noise and choppiness in between, like 2021 and parts of 2022 were off the charts, way over 100% retention. And then we had, you know, the, revenue retention, then we had the drop-off as that sort of overshoot renormalized. But even looking to pre-COVID, and kind of going back to how we're constantly trying to get better, we're continuing to improve these metrics, right? 8% higher orders per active customer, net sales per active customer continue to be higher, 4% higher, and then better, net sales retention as well. Looking at new versus existing customers, and this is on a per customer level from a revenue standpoint, a much larger portion of our revenue comes from those existing customers.
But new versus existing, you can see the proportion of existing customers continues to grow over time. I think key to long-term success is having a great offering and sticky retention and all that. At the same time, all these new customers represent huge opportunities, and you can see a huge portion of the revenue continues to be new customers that we can use to grow. All right, and then finally, you know, talking about things that we're currently investing in right now, I shouldn't say, you know, finally, but kind of leading up, you know, sort of this section. You know, we're able to invest in new things at the same time as generating profits and growth.
And I think in this tricky, you know, kind of macro position, tricky for internet retailers, that's, that's a little bit of an exception, you know, having such a healthy, cash position. So some different areas that we're investing in, you know, brand marketing in general, we mentioned Revolve Festival. Some of you may have heard of that. That's kind of one of our marquee marketing events. Continuing to come up with impactful events like that, that consumers are going to really notice and help us gain our awareness. You know, we still have very little penetration in our target market. We're about 3% penetrated in our target market. Again, billions of dollars at share. So continue to make investments there.
AI, certainly a hot buzzword for right now, but you know, maybe a couple really important, like, key points I'd like to leave you with. One, we've been doing AI for a number of years. My background is engineering. We have incredible team of engineers and data scientists. So pre this generative boom, when it came on everyone's map, we'd already been doing it. One thing we've been doing for a number of years, for example, is using AI to visually analyze images to extract product attributes. So it would actually interpret the picture to understand what are the key attributes, how does that make it similar to other attributes, and we'd use it in our product recommendation algorithms and other algorithms with, with products, and again, a whole host of other things that I don't have time to get into here.
Another really interesting thing, what we'll touch on, physical store in Aspen. I think physical could be a huge opportunity for us. And then again, a number of key areas across the board, and we'll touch on some of them. Category expansion, I think, could be quite huge for us as well. All right, capital allocation, investor-first mindset. So yeah, I mentioned earlier, since we IPO'd, we've quadrupled our cash position. I think that's fairly rare for an internet retailer. We IPO'd about five years ago. And then, you know, really investor-first mindset. My co-founder and I are the largest shareholders of the stock. We own nearly 50% of the stock.
So everything we do, we're aligned with investors in terms of trying to figure out what is the best way to use this cash, how can we generate the best ROI, including, in some cases, how much cash does it make sense to return to investors? You know, we, we like cash being returned to, to us as well, and so, we recently done a stock buyback program to help return some cash to shareholders as we continue to invest in a number of opportunities. Key growth drivers going forward, you know, I think most importantly, the market is huge. We're positioned really well, a huge room for upside. I mentioned Nordstrom's and, like, a Bloomingdale's as comparables in terms of product offering.
You can see as an example that, you know, Nordstrom has 10-15x the number of active customers as we do, and we think over time, we can continue to gain share from players like that. Another really key thing is category expansion. We do offer a wide range of categories, but we don't excel in a wide range of categories. So, you know, I mentioned those kind of categories and items where you're going out and trying to look your best, Revolve does really well in, and a lot of our marketing has been around that, and a lot of our product offering has been around that. Where we don't excel in is areas like everyday luxury essentials. You know, beauty is something that we're starting to make nice inroads on.
It's 5% of the business, growing at 30%+. It could easily be in the mid-teens. You know, men's is actually an area, we have a small men's offering, but we think the Revolve brand should translate men and women, and that's another really long-term opportunity. Workwear, Revolve, not known for workwear at all. Activewear, we have some activewear, but big area for penetration. I think that can help us sell not only more to our existing consumers, but I think will also be quite helpful in getting in additional new customers that we can cross-sell all categories on. And here's more of the same with that, and I guess one other thing I mentioned earlier, you know, FWRD and Revolve, very complementary. A lot of cross-sell opportunities to upsell the Revolve customer to FWRD.
Now, that tends to be a more aspirational purchase for the Revolve customer, so we had a lot of success in 2021 and 2022 doing that when consumers were flush and really reaching with their spend. The current environment, with consumer sentiment still at fairly low points, you know, compared to historicals, the cross-selling is less of a driver, but we're confident once that sentiment returns, we can continue the upswing there and grow revenue in that way. And then one really exciting thing, we have a physical store in Aspen, and it's very recent. It started as a marketing pop-up activation, approximately mid-December. The entire original intent of it was as a marketing event. That's how it was pitched to me, but our previous marketing pop-up had done fairly well from a retail standpoint.
It hadn't hit quite the metrics that I'd like from an ongoing retail operation, but it was close. And so we went into it with the mindset of not only are we gonna optimize for the marketing aspects, but we're gonna optimize for physical, and we're gonna see where it gets us. And the early read is, the metrics are looking incredible. Now, Aspen is quite a unique market, so we're gonna have to, one, give it time to let the seasonality play out. We're also gonna have to see how physical does for us in other locations. But at the end of the day, physical is still the majority of apparel purchases among our target demo, and we've built what we think is an incredible brand, and we think our brand can translate to physical well.
With the metrics checking so hard in Aspen, you know, looking at metrics like sales per square foot, rent as a percentage of sales, and all that, it looks quite healthy, and so this is potentially a big driver for us going forward. We need additional data to validate, and I want to see how some other markets do for us. And then one also really exciting thing, a very large portion of those customers were new, which I think highlights, you know, not just the physical opportunity, but just another way to reach new customers, and can help online grow as well as we potentially build out more physical stores. And then, of course, we did all the VIP events that those of you that are more familiar with us are known for.
I see there's a shot of Rihanna in the store, and then someone else famous that I don't recognize, right there—but I'm sure she, she's, she's quite big. All right, and then international sales, you know, I mentioned international being a big opportunity for us. It's currently around 20% of the business. You know, we've done somewhat well there, but we think there's a lot of room for opportunity and upside and growth. It's a combination of continuing to increase service levels. Our service levels are still not comparable to the U.S. in international markets, especially the number of key markets, and then expanding our brand awareness. We've gotten some decent brand awareness, just naturally, organically in international markets, but we think dedicated efforts can really grow that international share.
Own brands, so one thing I didn't mention is that around 20% of our sales are from our own brands. We think that's a big opportunity. We've been spending a lot of time in the past couple of years really trying to dial in that area of the division, build real strength that can allow us to expand it in a big way. And some really important wins the past 12-18 months, so our partnership with Elsa Hosk. Helsa is just an incredible collection in terms of performance, you know, really off-the-charts metrics for us. And then what's really exciting, too, it does touch more into the sort of everyday luxury essentials than what we're typically known for.
Yes, there's still fashion components, but it's a little less flashy, a little more, essential-oriented than what we're typically known for, and I think it's a great proof point in our ability to expand into that. Marianna Hewitt at L'Academie, again, similar, very nice metrics, also more in that essentials category that we really think is a big opportunity for upside. And then looking at... Sorry, can I get a time check? Oh, it's over there. All right, six minutes. Okay, and then looking at, you know, highlights from Q1 earnings, some really nice momentum there. So, really strong gross margin expansion in Q1, and if you look back, it's actually, higher than even 2019, even though our own brand is a lower percentage than it was in 2019.
And then expansion year-over-year of 250 basis points. Logistics cost efficiencies, you know, I mentioned a lot of the pressure there. The team has really been rallying to get those costs down. A lot of, I think, really important things to make that area more efficient, and we have a lot more lined up on selling distribution, return rates in general. I think return rates can really be a win-win for us, where we do the right things, it improves the customer experience and also really helps with those selling distribution costs. One aspect of 2021 that really helped profitability return rates were still suppressed from sort of like the COVID era environment. So things that we can do to improve return rate have a really big impact on the margin of the business.
Then finally, the return to top line that I mentioned. The past 18 months have been more lackluster for us from a revenue growth standpoint, but we returned to top line growth in March and then April, which we were really pleased to see. All right.
Yeah, so we have five minutes, give or take, right?
Yeah.
We can open up to Q&A for those that can't make the breakout. But yeah, I can sort of kick us off, I guess. I was curious; you kind of mentioned the landscape there, and it's positive in particular, sort of the luxury online market. It's positive that you're doing better than others, but sort of the counter to that would be: Why is it so difficult, and what is the opportunity sort of opens up as you see some of this consolidation, bankruptcy, and acquisitions?
Yeah. So, so in the luxury market specifically, which is more relevant to the FWRD business, you know, I have to think disruption is good over the long term as players either go out of business or in most cases, get, you know, acquired again, but in sort of a more crippled state, and new ownership takes a more conservative approach to growing those businesses. It should make things less competitive and allow some of our core strengths to shine. So I think it's quite good there. I think there's also opportunity in the current zone to potentially pick off those some of those luxury brands clients, and that's something that we're focusing on building up more. So on the FWRD side of the business, we don't have a big focus on personal shoppers and sort of private client services, and that's something that our competitors do.
And so that's an area we're actively investing in that we think we can be opportunistic on. Then the final thing is, you know, certainly with the healthy cash position, we are looking at M&A opportunities. You know, obviously, those decisions can be complex, whether to make any kind of move there, and, you know, we want to be prudent in sort of assessing opportunity versus risk on those things.
Thank you, Roland. I was curious, I don't know how much you can sort of give here, but you mentioned the metrics that you're kind of assessing on the retail side-
Mm-hmm.
and that Aspen is sort of hitting those.
Yeah.
Right? And just anything you can share about kind of what you're looking for profitability-wise or revenue-wise as far as what your, the internal metric. And Aspen's sort of a unique market.
Yeah.
How you apply that to, like, a New York store or something like that?
Yeah, that, that's quite fair. I mean, Aspen is certainly unique, and any market you're in, you get what you pay for, right? To the extent that there's nice attributes to it, that's also gonna affect the costs in rent and all of that. But it is unique in a number of ways. And so as we think of our physical retail strategy, I think there's a lot of other, or maybe I shouldn't say a lot, but there's certainly a number of other Aspen-like markets, right? Of these sort of luxury destinations for people that are well off and jet-setting, that we can expand stores to, that are hopefully likely to behave like Aspen. But I think for me, an important proof point is: How well does a store in New York City do?
How well does a store in Los Angeles do? How well does a store in Miami do? So in our view, right now, you know, when, whenever I have something within the business that's working, I want to figure out, okay, how can I do more of it relatively quickly, obviously, taking risk into account, because, you know, time and opportunity cost is money. And so, you know, we're focused on, you know, strengthening that area of the organization, bringing in the right pieces that we think we need to succeed at the highest level there, and then also getting additional data points, which would mean other test markets to understand how well does this model replicate. Because obviously, the upside is huge if you think about, you know, what the potential revenue share is offline versus online, if we can continue to be successful there.
In terms of metrics, you know, the most key metrics that I look at, I mentioned, right? Okay, what are your sales per square foot? How does that compare to your rent costs? You know, 'cause the other metrics, I think, you know, particularly, you know, certainly they can be important, right? The cost of operating the store and all that. But, you know, I think they're a bit more straightforward in terms of how they stack up in the overall four-wall profitability. Our goal for stores would be, you know, we wanna invest in things that have high ROI investment, right? And the initial look is that this store seems like it likely will.
You know, we want stores to be profitable in their own right, have quick payback, and then, of course, hopefully, a lot of really nice ancillary benefits to online as well, and we've certainly heard that from others in the business, that offline stores tend to act as a billboard and help online as well, and so we're hopeful that'll happen. You know, other metrics, and it's certainly to be expected for a store's return rate, extremely low return rates with physical stores versus online. But I think also it can be very synergistic with our home is the dressing room model, right? Because right now, when the home is the dressing room, someone has to package it up and ship it back off to us, and, you know, there's logistics costs. There's also sales opportunity costs.
If we can have physical stores, right, then that provides a location where a customer can come in, return it in person. We have the opportunity to sell them something else. Generally, our consumers wanna shop, they wanna find nice things, and so, you know, we would expect with those consumers coming into store to return, there would be really nice revenue lift opportunities there.
I was just curious, I know we might be out of time, but whatever time we have left, the engagement model is changing pretty dramatically, right? Whatever happens to TikTok, I guess, is to be determined, but even just sort of Instagram and sort of how your target customer-
Right
... is interacting with the web and sort of the events, you're even kind of moving away from certain events-
Yeah
and sort of change the assortment. You've historically said that those types of transitions are actually a net benefit to the company. Can you just kind of walk through how you're thinking about the engagement strategy and sort of-
Yeah, yeah, yeah, yeah, definitely. Yeah, in general, we think transitions tend to be a net benefit, you know, 'cause they tend to reward those that can execute quickly and fast, and in a nimble way, figure out how to take advantage of the new ecosystem. In general, our philosophy is: wherever our consumers are, that's where we're gonna be. Whatever we can do that's interesting to grab attention and is sending the right brand messages, that's what we're gonna do, regardless of the platform. And that's one of the reasons we were so early on social media and had such a leadership position there for a number of years. As we recognized quickly, this is no different from all these other historical ways of marketing. You've got target consumers there.
You've got the ability to send messages to them that are important, and it's a rapidly growing space. And so, you know, we take the same mindset to everything we do, and there's a number of really interesting things we're working on from a marketing standpoint that I think should provide great opportunity for growth and expansion going forward.
Breakout to Richardson, I think is that back corner on the second floor. Okay.
Great. Thank you.