NU SKIN ENTERPRISES, INC.

Previous wording

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent our current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of management’s expectations regarding our performance, initiatives, strategies, product introductions and offerings, acquisitions, and the integration of acquired companies, growth, opportunities and risks; statements of projections regarding future sales, expenses, operating results, taxes and duties, capital expenditures, sources and uses of cash, foreign-currency fluctuations or devaluations, repatriation of undistributed earnings, and other financial items; statements of management’s expectations and beliefs regarding our markets and global economic conditions; statements regarding the payment of future dividends and stock repurchases; statements regarding the outcome of litigation, audits, investigations or other regulatory actions; statements regarding government policies and regulations relating to our industry, including government policies and regulations in or related to the United States and Mainland China; statements regarding tariffs and trade policies; accounting estimates and assumptions; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “optimistic,” “project,” “anticipate,” “determine,” “estimate,” “intend,” “plan,” “goal,” “objective,” “targets,” “become,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution and advise readers that these statements are based on assumptions that may not be realized and involve important risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. For a summary of these risks, see the risk factors included in our Annual Report on Form 10-K for the 2024 fiscal year and in any of our subsequent Securities and Exchange Commission filings, including this Quarterly Report.

Current wording

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent our current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of management’s expectations regarding our performance, initiatives, strategies, product introductions and offerings, acquisitions, and the integration of acquired companies, growth, opportunities and risks; statements of projections regarding future sales, expenses, operating results, taxes and duties, capital expenditures, sources and uses of cash, foreign-currency fluctuations or devaluations, repatriation of undistributed earnings, and other financial items; statements of management’s expectations and beliefs regarding global economic conditions and our markets, including India; statements regarding the payment of future dividends and stock repurchases; statements regarding the outcome of litigation, audits, investigations or other regulatory actions; statements regarding government policies and regulations relating to our industry, including government policies and regulations in or related to the United States and Mainland China; statements regarding tariffs and trade policies; accounting estimates and assumptions; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “optimistic,” “project,” “anticipate,” “determine,” “estimate,” “intend,” “plan,” “goal,” “objective,” “targets,” “become,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution and advise readers that these statements are based on assumptions that may not be realized and involve important risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. For a summary of these risks, see the risk factors included in our Annual Report on Form 10-K for the 2024 fiscal year and in any of our subsequent Securities and Exchange Commission filings, including this Quarterly Report.

Previous wording

Revenue for the three-month period ended June 30, 2025 decreased 12% to $386.1 million, compared to $439.1 million in the prior-year period, and revenue for the six-month period ended June 30, 2025 decreased 12% to $750.6 million, compared to $856.4 million in the prior-year period. Our revenue in the second quarter and first six months of 2025 benefited 0.3% and was negatively impacted 1.2%, respectively, from foreign-currency fluctuations. Our Customers, Paid Affiliates and Sales Leaders declined 14%, 16% and 23%, respectively, on a year-over-year basis.

Current wording

Revenue for the three-month period ended September 30, 2025 decreased 15% to $364.2 million, compared to $430.1 million in the prior-year period, and revenue for the nine-month period ended September 30, 2025 decreased 13% to $1,114.8 million, compared to $1,286.5 million in the prior-year period. Our revenue in the third quarter and first nine months of 2025 was negatively impacted 0.4% and 0.9%, respectively, from foreign-currency fluctuations. Our Customers, Paid Affiliates and Sales Leaders declined 10%, 13% and 19%, respectively, on a year-over-year basis.

Previous wording

The declines for the second quarter and first six months of 2025 were largely driven by the continued macroeconomic challenges we have been facing in our markets, which have negatively impacted consumer spending and customer acquisition. In addition, while we continue to make progress on our long-term vision, we have experienced headwinds from the transformation process. Our priorities for 2025 focus on business model optimization, driven by the continued rollout of enhancements to our sales performance plan, a limited preview of our next connected device Prysm iO and business expansion into India. Due to the timing of the limited leader preview we are not anticipating material revenue from the Prysm iO device sales in 2025. We are currently anticipating nominal revenue from our fourth quarter India market pre-opening, as we are preparing for the formal launch in mid-2026.

Current wording

The declines for the third quarter and first nine months of 2025 were largely driven by the continued macroeconomic challenges we have been facing in our markets, which have negatively impacted consumer spending and customer acquisition. In addition, while we believe we continue to make progress on our long-term vision, we have experienced headwinds from the transformation process. Our priorities for 2025 focus on business model optimization, driven by the continued rollout of enhancements to our sales performance plan, a limited preview of our Prysm iO intelligent wellness platform and business expansion into India. Due to the timing of the limited leader preview, we are not anticipating material revenue from the Prysm iO device sales in 2025. We are currently anticipating nominal revenue from our fourth quarter India market pre-opening, as we are preparing for the formal launch in the second half of 2026.

Previous wording

Earnings per share for the second quarter of 2025 increased to $0.43, compared to $(2.38) in the prior-year period. Earnings per share for the first six months of 2025 increased to $2.59, compared to $(2.39) in the prior-year period. In the second quarter of 2024 we recorded restructuring and impairment charges of $149.4 million. In addition, our earnings per share for the first six months of 2025 increased due to the sale of our Mavely business, which generated a pre-tax gain of approximately $176.2 million, partially offset by the associated taxes, a $25.1 million impairment of the BeautyBio asset group, a non-cash loss on investment of $28.1 million and the decline in revenue.

Current wording

Earnings per share for the third quarter of 2025 increased to $0.34, compared to $0.17 in the prior-year period. Earnings per share for the first nine months of 2025 increased to $2.91, compared to $(2.23) in the prior-year period. The increase in earnings per share for the third quarter of 2025 was primarily attributable to a decline in our income tax rate from additional research and development credits recognized during the quarter, as well as a decline in general and administrative expenses from continued expense management. In addition, our earnings per share for the first nine months of 2025 increased due to the sale of our Mavely business, which generated a pre-tax gain of approximately $176.2 million, partially offset by the associated taxes, an intangible asset group impairment of $25.1 million in our Rhyz Other segment, a non-cash loss on investment of $28.1 million and the decline in revenue. The improvement in earnings per share for the nine-month period also reflects restructuring and impairment charges of $149.4 million in the second quarter of 2024, which did not repeat in 2025.

Previous wording

The following table sets forth revenue for the three- and six-month periods ended June 30, 2025 and 2024 for each of our reportable segments (U.S. dollars in thousands):

Current wording

The following table sets forth revenue for the three- and nine-month periods ended September 30, 2025 and 2024 for each of our reportable segments (U.S. dollars in thousands):

Previous wording

The tables below set forth summarized financial information for each of our reportable segments for the three- and six-month periods ended June 30, 2025 and 2024 (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for their respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 11 to the consolidated financial statements contained in this report.

Current wording

The tables below set forth summarized financial information for each of our reportable segments for the three- and nine-month periods ended September 30, 2025 and 2024 (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for their respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 11 to the consolidated financial statements contained in this report.

Previous wording

Americas. The results in our Americas segment reflect a continued decline in our North America markets, while our Latin America markets grew year-over-year. We also introduced enhancements to the sales performance plan in North America starting in November 2024, which has caused disruption as our sales force adapts to the enhancements. In addition, our reported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 5.9% and 6.2% for the second quarter and first half of 2025, respectively.

Current wording

Americas. The results in our Americas segment reflect a continued decline in our North America markets, while our Latin America markets grew year-over-year. Our North America markets continued to be challenged, where in November 2024 we introduced enhancements to the sales performance plan to address the macro environmental landscape. These enhancements have caused disruption as our sales force adapts to the changes. In addition, our reported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 6.4% and 6.3% for the third quarter and first nine months of 2025, respectively.

Previous wording

In the second quarter of 2024, we launched our developing market strategy in Argentina, with a revised operating model with a focused product portfolio and modified business model that has enabled us to reach a broader demographic. During early 2025, we continued to roll out this strategy in additional Latin America markets. For the second quarter of 2025, our Latin America markets revenue increased from $11.9 million to $24.7 million, a 107% year-over-year increase; in addition, Latin America Customers increased 112%, Paid Affiliates increased 52%, and Sales Leaders increased 121%.

Current wording

In the second quarter of 2024, we launched our developing market strategy in Argentina, with a revised operating model with a focused product portfolio and modified business model that has enabled us to reach a broader demographic. During early 2025, we continued to roll out this strategy in additional Latin America markets. For the third quarter of 2025, our Latin America markets revenue increased from $16.0 million to $24.4 million, a 52.5% year-over-year increase; in addition, Latin America Customers increased 87%, Paid Affiliates increased 56%, and Sales Leaders increased 53%.

Previous wording

The year-over-year increase in segment contribution for the first half of 2025 primarily reflects increased profitability in Latin America, partially offset by the overall decline in revenue.

Current wording

The year-over-year decrease in segment contribution for the first nine months of 2025 primarily reflects the overall decline in revenue, partially offset by increased profitability in Latin America.

Previous wording

Southeast Asia/Pacific. The decline in revenue, Customers, Paid Affiliates and Sales Leaders for the second quarter and first half of 2025 is partially attributable to slowing momentum from the general macroeconomic factors in the markets. In response to these challenges, we are leveraging learnings from our developing market strategy, including with the launch of products specifically aimed at expanding our customer base.

Current wording

Southeast Asia/Pacific. The decline in revenue, Customers, Paid Affiliates and Sales Leaders for the third quarter and first nine months of 2025 is partially attributable to slowing momentum from the general macroeconomic factors in the markets. In response to these challenges, in 2025 we began leveraging our learnings from the developing market strategy, including with the launch of products specifically aimed at expanding our customer base.

Previous wording

The year-over-year increases in segment contribution for the second quarter and first half of 2025 are primarily attributable to a 3.6 percentage point and 2.0 percentage point increase to gross margin, from product mix and a 1.9 percentage point and 2.2 percentage point decrease in selling expenses as a percentage of revenue from a sales force event that was held in the second quarter of 2024, partially offset by declines in revenue.

Current wording

The year-over-year increases in segment contribution for the third quarter and first nine months of 2025 are primarily attributable to a 3.7 percentage point and 2.5 percentage point increase to gross margin due to a shift in product mix, and a 1.4 percentage point and 1.9 percentage point decrease in selling expenses as a percentage of revenue primarily from a lower amount of local sales force incentives during the period as well as less qualifiers for the success trips.

Previous wording

Mainland China. Our Mainland China market continued to be challenged during the first half of 2025, with ongoing macroeconomic factors, the associated decrease in consumer spending and a negative sentiment towards U.S. brands leading to declines in revenue.

Current wording

Mainland China. Our Mainland China market continued to be challenged during the first nine months of 2025, with ongoing macroeconomic factors, the associated decrease in consumer spending and a continued shift of market consumer awareness and demand to online product marketplaces. During the third quarter of 2025, we had a limited preview of our relaunched Tru Face line, which generated approximately $7.2 million of revenue, compared to $4.1 million from the prior Tru Face line in the comparable period. The full launch is expected to occur in December 2025.

Previous wording

The increase in segment contribution for the second quarter of 2025 primarily reflects a 6.2 percentage point decrease in selling expenses as a percent of revenue, partially offset by the decline in revenue. The year-over-year decrease in segment contribution for the first half of 2025 primarily reflects lower revenue, partially offset by a 4.6 percentage point decrease in selling expense as a percent of revenue. The salaries and service fees of our Sales Leaders in Mainland China are fixed until they are adjusted in a quarterly evaluation process. As a result, we have variations in our selling expenses as a percentage of revenue, particularly when there is a sequential change in revenue.

Current wording

The decrease in segment contribution for the third quarter of 2025 primarily reflects the decline in revenue, partially offset by a 3.2 percentage point decrease in selling expenses as a percent of revenue, a 2.2 percentage point increase in gross margin. The year-over-year decrease in segment contribution for the first nine months of 2025 primarily reflects lower revenue, partially offset by a 4.2 percentage point decrease in selling expense as a percent of revenue. The salaries and service fees of our Sales Leaders in Mainland China are fixed until they are adjusted in a quarterly evaluation process. As a result, we have variations in our selling expenses as a percentage of revenue, particularly when there is a sequential change in revenue.

Previous wording

The year-over-year increase in segment contribution is primarily attributable to increased revenue.

Current wording

The year-over-year decrease in segment contribution is primarily attributable to the decreased revenue.

Previous wording

Europe & Africa. The reduction in revenue, Customers, Paid Affiliates and Sales Leaders reflects continued softness in these markets, as well as the macroeconomic factors that have led to a decline in the purchasing power of our customers. We introduced enhancements to the sales performance plan in Europe & Africa starting in March 2025.

Current wording

Europe & Africa. The reduction in revenue, Customers, Paid Affiliates and Sales Leaders reflects continued softness in these markets, as well as the macroeconomic factors that have led to a decline in the purchasing power of our customers. We introduced enhancements to the sales performance plan in Europe & Africa starting in March 2025. In addition, our reported revenue reflects benefits from favorable foreign currency fluctuations of 5.9% and 2.6% for the third quarter and first nine months of 2025, respectively.

Previous wording

The year-over-year increase in segment contribution was primarily driven by a 2.1 percentage point and a 2.7 percentage point decline in selling expenses as a percent of revenue for the second quarter and first half of 2025, respectively, primarily from elevated sales force events costs in the prior-year periods, partially offset by the decline in revenue.

Current wording

The year-over-year increase in segment contribution was primarily driven by a 1.2 percentage point and a 2.2 percentage point decline in selling expenses as a percent of revenue for the third quarter and first nine months of 2025, respectively, primarily from elevated sales force events costs in the prior-year periods, partially offset by the decline in revenue.

Previous wording

South Korea. Our South Korea market was challenged by difficult macroeconomic trends, including inflationary pressures, political instability, and our associated price increases which negatively impacted our revenue, Customers, Paid Affiliates and Sales Leaders for the three- and six-month periods ended June 30, 2025.

Current wording

South Korea. Our South Korea market was challenged by difficult macroeconomic trends, including inflationary pressures, political instability, and our associated price increases which negatively impacted our revenue, Customers, Paid Affiliates and Sales Leaders for the three- and nine-month periods ended September 30, 2025. In addition, our reported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 1.9% and 3.5% for the third quarter and first nine months of 2025, respectively.

Previous wording

The year-over-year decline in segment contribution primarily reflects the decline in revenue.

Current wording

The year-over-year decline in segment contribution primarily reflects the decline in revenue, as well as a 8.3 and 3.3 percentage point increase in selling expenses associated with incremental cost pressure from the enhancements to the sales performance plan, which we introduced in this segment during the fourth quarter of 2024.

Previous wording

Hong Kong/Taiwan. The declines in our Hong Kong/Taiwan segment for the second quarter and first half of 2025 are attributable to macroeconomic issues, which are resulting in less purchasing power for our consumers.

Current wording

Hong Kong/Taiwan. The declines in our Hong Kong/Taiwan segment for the third quarter and first nine months of 2025 are attributable to macroeconomic issues, which are resulting in less purchasing power for our consumers. Our reported revenue reflects benefits from favorable foreign currency fluctuations of 4.3% and 1.5% for the third quarter and first nine months of 2025, respectively.

Previous wording

The decline in segment contribution for the second quarter was primarily driven by the decline in revenue, partially offset by a 2.5 percentage point improvement in gross margin and a 2.9 percentage point decrease in selling expenses. For the first half of 2025, the increase in segment contribution was primarily driven by a 3.4 percentage point decrease in selling expenses and a 2.6 percentage point decrease in general and administrative, from our recent cost saving efforts, partially offset by the decline in revenue.

Current wording

The increase in segment contribution for the third quarter was primarily driven by a 3.1 percentage point improvement in gross margin due to sales mix with higher shift of sales to higher margin products, partially offset by the decline in revenue. For the first nine months of 2025, the increase in segment contribution was primarily driven by a 2.2 percentage point increase in gross margin due to sales mix, a 2.4 percentage point decrease in selling expenses and a 1.9 percentage point decrease in general and administrative, from our recent cost saving efforts, partially offset by the decline in revenue.

Previous wording

The increase in segment contribution for the second quarter and first half of 2025 is primarily from the revenue mix amongst our manufacturing entities as well as product mix, which resulted in more profitability for the periods presented.

Current wording

The increase in segment contribution for the third quarter and first nine months of 2025 is primarily from the revenue mix amongst our manufacturing entities as well as product mix, which resulted in more profitability for the periods presented.

Previous wording

Rhyz Other. The decrease in revenue of our Rhyz Other segment is primarily driven by the January 2, 2025 sale of Mavely. Mavely recognized $12.0 million and $19.0 million of revenue in the second quarter and first half of 2024. In addition, our BeautyBio entity continues to be challenged, with a 40.0% and a 58.0% decline in revenue for the second quarter and first half of 2025, as we continue to implement our strategy to minimize future losses and better position the brand.

Current wording

Rhyz Other. The decrease in revenue of our Rhyz Other segment is primarily driven by the January 2, 2025 sale of Mavely. Mavely recognized $18.4 million and $37.4 million of revenue in the third quarter and first nine months of 2024. In addition, our BeautyBio entity continues to be challenged, with a 65.1% and a 59.4% decline in revenue for the third quarter and first nine months of 2025, as we continue to implement our strategy to minimize future losses and better position the brand.

Previous wording

The increase in segment contribution is primarily from the sale of Mavely, which operated at a loss during the first half of 2024, as well as our cost saving efforts at BeautyBio, which had smaller losses for the second quarter and first half of 2025.

Current wording

The increase in segment contribution is primarily from the sale of Mavely, which operated at a loss during the first half of 2024 and turned profitable in the third quarter of 2024, as well as our cost saving efforts at BeautyBio, which had smaller losses for the third quarter and first nine months of 2025.

Previous wording

Revenue for the three-month period ended June 30, 2025 decreased 12% to $386.1 million, compared to $439.1 million in the prior-year period. Revenue for the six-month period ended June 30, 2025 decreased 12% to $750.6 million compared to $856.4 million. Our revenue in the second quarter and first six months of 2025 benefited 0.3% and was negatively impacted 1.2%, respectively, from foreign-currency fluctuations. For a discussion and analysis of these decreases in revenue, see “Overview” and “Segment Results,” above.

Current wording

Revenue for the three-month period ended September 30, 2025 decreased 15% to $364.2 million, compared to $430.1 million in the prior-year period. Revenue for the nine-month period ended September 30, 2025 decreased 13% to $1,114.8 million compared to $1,286.5 million. Our revenue in the third quarter and first nine months of 2025 was negatively impacted 0.4% and 0.9%, respectively, from foreign-currency fluctuations. For a discussion and analysis of these decreases in revenue, see “Overview” and “Segment Results,” above.

Previous wording

Gross profit as a percentage of revenue was 68.8% for the second quarter of 2025, compared to 70.0% for the prior-year period, and 68.3% for the first six months of 2025, compared to 70.2% for the prior-year period. Gross profit as a percentage of revenue for our Nu Skin business increased 1.4 percentage points to 77.5% for the second quarter of 2025 and increased 0.6 percentage points to 77.1% for the first six months of 2025. Our gross margin was also impacted by the gross margin of our owned manufacturing entities, which as previously disclosed, is significantly lower than the gross margin of our core Nu Skin business. With the year-over-year growth within our Manufacturing segment, its revenue represented a higher proportion of our overall consolidated revenue for the quarter.

Current wording

Gross profit as a percentage of revenue was 70.5% for the third quarter of 2025, compared to 70.1% for the prior-year period, and 69.0% for the first nine months of 2025, compared to 70.2% for the prior-year period. Gross profit as a percentage of revenue for our Nu Skin business increased 1.2 percentage points to 77.7% for the third quarter of 2025 and increased 0.7 percentage points to 77.3% for the first nine months of 2025. Our Nu Skin gross margin continues to benefit from our strategic portfolio optimization as well as a favorable product mix shift.

Previous wording

We continue to monitor macroeconomic trends and uncertainties related to international trade relations and trade policy, including those related to tariffs. Incremental tariffs did not have a significant impact on our financial results for the first half of 2025 but could adversely impact our results in the future. While we remain focused on mitigating the impact of the tariffs, we currently estimate up to $5 million of incremental cost pressure for the remainder of 2025. We continue to monitor and plan to take proactive measures to minimize the potential impact.

Current wording

We continue to monitor macroeconomic trends and uncertainties related to international trade relations and trade policy, including those related to tariffs. Incremental tariffs did not have a significant impact on our financial results for the third quarter or the first nine months of 2025 but could adversely impact our results in the future. While we remain focused on mitigating the impacts of the tariffs, we currently estimate approximately $2 million of incremental cost pressure for the full year 2025. We continue to monitor and plan to take proactive measures to minimize the potential impact.

Previous wording

Selling expenses as a percentage of revenue decreased to 33.2% for the second quarter of 2025, compared to 37.7% for the prior-year period, and decreased to 32.9% for the first six months of 2025, compared to 37.3% for the prior-year period. Core Nu Skin selling expenses as a percentage of revenue decreased 2.2 percentage points to 40.0% for the second quarter of 2025 and decreased 2.7 percentage points to 39.3% for the first six months of 2025. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders. Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuate plus or minus approximately 100 basis points from period to period. Our second quarter and first half of 2025 core Nu Skin selling expenses decrease is partially attributable to the sequential decline in revenue and Sales Leaders, which resulted in a decline in those qualifying for increased sales compensation. In addition, approximately 2.0 percentage points and 1.7 percentage points of the decline in selling expenses as a percentage of revenue in our consolidated results are attributable to the January 2, 2025 sale of Mavely.

Current wording

Selling expenses as a percentage of revenue decreased to 35.8% for the third quarter of 2025, compared to 39.0% for the prior-year period, and decreased to 33.8% for the first nine months of 2025, compared to 37.8% for the prior-year period. Core Nu Skin selling expenses as a percentage of revenue decreased 1.8 percentage points to 41.7% for the third quarter of 2025 and decreased 2.4 percentage points to 40.1% for the first nine months of 2025. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders. Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuate plus or minus approximately 100 basis points from period to period. Our third quarter and first nine months of 2025 core Nu Skin selling expenses decrease is partially attributable to our third quarter of 2024 global Nu Skin L!VE events, which drove approximately $10.2 million of incremental expenditures, that did not repeat in 2025. In addition, approximately 1.3 percentage points and 1.0 percentage points of the decline in selling expenses as a percentage of revenue in our consolidated results are attributable to the January 2, 2025 sale of Mavely.

Previous wording

General and administrative expenses decreased to $106.7 million in the second quarter of 2025, compared to $117.9 million in the prior-year period and decreased to $219.9 million in the first six months of 2025, compared to $242.5 million in the prior-year period. The $11.2 million decline for the second quarter is from contraction in labor expenses, $2.9 million from the first quarter of 2025 sale of Mavely, a decline in professional fees and a decrease in promotional expenses in connection with our prior-year product launches. The $22.6 million decline for the first half of 2025 is primarily from a $6.8 million contraction in labor expenses, $5.3 million from the sale of Mavely and a decrease in promotional expenses in connection with our prior-year product launches. General and administrative expenses as a percentage of revenue increased to 27.6% for the second quarter of 2025, from 26.9% for the prior-year period, and increased to 29.3% for the first six months of 2025, from 28.3% for the prior-year period.

Current wording

General and administrative expenses decreased to $104.8 million in the third quarter of 2025, compared to $115.6 million in the prior-year period and decreased to $324.7 million in the first nine months of 2025, compared to $358.1 million in the prior-year period. The $10.8 million decline for the third quarter is from contraction in labor expenses, $2.9 million of 2024 expenses from Mavely, which was sold in the first quarter of 2025, a decline in professional fees and a decrease in promotional expenses in connection with our prior-year product launches. The $33.4 million decline for the first nine months of 2025 is primarily from $9.1 million contraction in labor expenses, $9.1 million of 2024 expenses from Mavely, which was sold in the first quarter of 2025 and a decrease in promotional expenses in connection with our prior-year product launches. General and administrative expenses as a percentage of revenue increased to 28.8% for the third quarter of 2025, from 26.9% for the prior-year period, and increased to 29.1% for the first nine months of 2025, from 27.8% for the prior-year period.

Previous wording

2023 restructuring plan. In the fourth quarter of 2023, we adopted a strategic plan to focus resources on our global priorities and optimize future growth and profitability. The global program includes workforce reductions and fixed asset impairments associated with our consolidation of technology assets. Total charges under the program included approximately $27.9 million in cash charges of severance, approximately $1.1 million in other cash charges and approximately $38.8 million in non-cash charges, including approximately $36.6 million in fixed asset impairments. We have incurred all expected charges under the 2023 plan and anticipate making the remaining payments in the back half of 2025. During the fourth quarter of 2023, we incurred charges to be settled in cash of $10.0 million in severance charges. During the first quarter of 2024, we incurred charges to be settled in cash of $4.1 million in severance charges and $2.0 million in other associated cost, and non-cash charges of $1.0 million in write-down of assets. During the second quarter of 2024, we incurred charges to be settled in cash of $1.0 million in severance charges and $0.1 million in other cash charges, and non-cash charges of $6.4 million in fixed asset impairments and $0.8 million in other write-downs. In the fourth quarter of 2024, we incurred charges to be settled in cash of $12.8 million in severance charges and $(1.1) million in other cash charges, and non-cash charges of $30.2 million of fixed asset impairments and $0.4 million of other non-cash charges. During the second quarter and first half of 2025, we incurred no further charges.

Current wording

2023 restructuring plan. In the fourth quarter of 2023, we adopted a strategic plan to focus resources on our global priorities and optimize future growth and profitability. The global program includes workforce reductions and fixed asset impairments associated with our consolidation of technology assets. Total charges under the program included approximately $27.9 million in cash charges of severance, approximately $1.1 million in other cash charges and approximately $38.8 million in non-cash charges, including approximately $36.6 million in fixed asset impairments. We have incurred all expected charges under the 2023 plan and anticipate making the remaining payments in the fourth quarter of 2025. During the fourth quarter of 2023, we incurred charges to be settled in cash of $10.0 million in severance charges. During the first quarter of 2024, we incurred charges to be settled in cash of $4.1 million in severance charges and $2.0 million in other associated costs, and non-cash charges of $1.0 million in write-down of assets. During the second quarter of 2024, we incurred charges to be settled in cash of $1.0 million in severance charges and $0.1 million in other cash charges, and non-cash charges of $6.4 million in fixed asset impairments and $0.8 million in other write-downs. In the fourth quarter of 2024, we incurred charges to be settled in cash of $12.8 million in severance charges and $(1.1) million in other cash charges, and non-cash charges of $30.2 million of fixed asset impairments and $0.4 million of other non-cash charges. During the third quarter and first nine months of 2025, we incurred no further charges.

Previous wording

Interest expense decreased to $2.5 million in the second quarter of 2025, compared to $6.7 million in the prior-year period. Interest expense for the first six months of 2025 decreased to $5.8 million compared to $14.0 million for the prior-year period. The decrease in interest expense was primarily due to the debt payments made in the first quarter of 2025 using a portion of the proceeds from the Mavely sale. Our interest rate swap arrangements that we entered into in 2020 have a maturity date of July 31, 2025, at which time our effective interest rate will increase.

Current wording

Interest expense decreased to $4.1 million in the third quarter of 2025, compared to $6.5 million in the prior-year period. Interest expense for the first nine months of 2025 decreased to $10.0 million compared to $20.5 million for the prior-year period. The decrease in interest expense was primarily due to the debt payments made in the first quarter of 2025 using a portion of the proceeds from the Mavely sale. Our interest rate swap arrangements that we entered into in 2020 matured on July 31, 2025, at which time our effective interest rate increased.

Previous wording

In January 2025, we completed the sale of our Mavely entity for $230 million in cash and shares of the purchaser’s common stock, subject to certain adjustments as set forth in the purchase agreement, including post-closing determination of net working capital and other elements of purchase price. Following the completion of certain payments to other equity holders in Mavely and the payment of certain transaction expenses, we received $193.7 million of cash and equity interest with an estimated fair value of $6.1 million. In the second quarter of 2025, we received an additional payment of $2.7 million with an additional $1.7 million expected to be received in the third quarter of 2025, following the finalization of net working capital. In the first quarter of 2025, we recorded a pre-tax gain on disposition of $176.2 million.

Current wording

In January 2025, we completed the sale of our Mavely entity for $230 million in cash and shares of the purchaser’s common stock, subject to certain adjustments as set forth in the purchase agreement, including post-closing determination of net working capital and other elements of purchase price. Following the completion of certain payments to other equity holders in Mavely and the payment of certain transaction expenses, we received $193.7 million of cash and equity interest with an estimated fair value of $6.1 million. Following the finalization of net working capital, we received additional cash payments of $2.7 million and $1.7 million in the second and third quarter of 2025, respectively. In the first quarter of 2025, we recorded a pre-tax gain on disposition of $176.2 million.

Previous wording

Other income (expense), net was $(0.8) million for the second quarter of 2025 compared to $0.6 million for the prior-year period and $(29.2) million for the first six months of 2025 compared to $0.2 million for the prior-year period. The increase in other expense for the first half of 2025 is primarily from a $28.1 million unrealized loss on investment. See Note 8 to the consolidated financial statements contained in this report for more information on the unrealized equity investment and the associated loss.

Current wording

Other income (expense), net was $(1.5) million for the third quarter of 2025 compared to $1.6 million for the prior-year period and $(30.7) million for the first nine months of 2025 compared to $1.8 million for the prior-year period. The increase in other expense for the first nine months of 2025 is primarily from a $28.1 million unrealized loss on investment. See Note 8 to the consolidated financial statements contained in this report for more information on the unrealized equity investment and the associated loss.

Previous wording

Provision (benefit) for income taxes for the three- and six-month periods ended June 30, 2025 was $6.3 million and $33.4 million, respectively, compared to $(13.4) million and $(11.8) million for the prior-year periods. The effective tax rates for the three- and six-month periods ended June 30, 2025 were 23.0% and 20.6% of pre-tax income, respectively, compared to 10.2% and 9.0% in the prior-year periods. Our effective tax rate for the three-month period ended June 30, 2025 benefited by the release of uncertain tax positions. Our effective tax rate for the six-month period ended June 30, 2025 was impacted by the following items recorded discretely in the period ended March 31, 2025: the sale of our Mavely entity, the impairment of the BeautyBio asset group, and the impairment of an equity investment. Our effective tax rates for the three- and six-month periods ended June 30, 2024 were impacted by the second quarter of 2024 goodwill impairment.

Current wording

Provision (benefit) for income taxes for the three- and nine-month periods ended September 30, 2025 was $(1.1) million and $32.3 million, respectively, compared to $5.0 million and $(6.8) million for the prior-year periods. The effective tax rates for the three- and nine-month periods ended September 30, 2025 were (6.8)% and 18.1% of pre-tax income compared, respectively, compared to 37.6% and 5.8% in the prior-year periods. Our effective tax rates for the third quarter and first nine months of 2025 benefited from $8.1 million of additional research and development credits determined creditable during the quarter. Our effective tax rate for the first nine months of 2025 was additionally impacted by the following items recorded discretely in the first quarter of 2025: the sale of Mavely, the impairment of the BeautyBio asset group and the unrealized loss on investment. Our effective tax rate for the nine-month period ended September 30, 2024 was impacted by the second quarter of 2024 goodwill impairment.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements in the third quarter of 2025. The enactment of the OBBBA did not have a material impact to our income tax benefit for the three and nine months ended September 30, 2025. We will continue to evaluate the impacts of OBBBA and do not expect the OBBBA to have a material impact to our total tax provision.

Previous wording

As a result of the foregoing factors, net income (loss) for the second quarter of 2025 was $21.1 million, compared to $(118.3) million in the prior-year period. Net income (loss) for the first six months of 2025 was $128.6 million, compared to $(118.8) million for the first six months of 2024.

Current wording

As a result of the foregoing factors, net income (loss) for the third quarter of 2025 was $17.1 million, compared to $8.3 million in the prior-year period. Net income (loss) for the first nine months of 2025 was $145.7 million, compared to $(110.5) million for the first nine months of 2024.

Previous wording

Historically, our principal uses of cash have included operating expenses (particularly selling expenses) and working capital (principally inventory purchases), as well as capital expenditures, stock repurchases, dividends, and debt repayment. We have at times incurred long-term debt, or drawn on our revolving line of credit, to fund strategic transactions, stock repurchases, capital investments and short-term operating needs. We typically generate positive cash flow from operations due to favorable margins and have generally relied on cash from operations to fund operating activities. In the first six months of 2025, we generated $36.2 million in cash from operations, compared to $54.5 million during the prior-year period. The decrease in cash flow from operations primarily reflects cash payments made in the first quarter of 2025 related to expenses accrued as of year-end, which included restructuring and other accrued expenses, partially offset by a decline in prepaid expenses associated with the utilization of prepaid income taxes. Cash and cash equivalents, including current investments, as of June 30, 2025 and December 31, 2024 were $265.4 million and $198.0 million, respectively, with the increase being driven by the proceeds from the sale of Mavely and cash generated from operations as described above, partially offset by $145.0 million in debt payments, which was comprised of $125.0 million toward our term loan and $20.0 million toward our revolving credit facility.

Current wording

Historically, our principal uses of cash have included operating expenses (particularly selling expenses) and working capital (principally inventory purchases), as well as capital expenditures, stock repurchases, dividends, and debt repayment. We have at times incurred long-term debt, or drawn on our revolving line of credit, to fund strategic transactions, stock repurchases, capital investments and short-term operating needs. We typically generate positive cash flow from operations due to favorable margins and have generally relied on cash from operations to fund operating activities. In the first nine months of 2025, we generated $63.7 million in cash from operations, compared to $86.0 million during the prior-year period. The decrease in cash flow from operations primarily reflects cash payments made in the first quarter of 2025 related to expenses accrued as of year-end, which included restructuring and other accrued expenses, partially offset by a decline in prepaid expenses associated with the utilization of prepaid income taxes. Cash and cash equivalents, including current investments, as of September 30, 2025 and December 31, 2024 were $253.0 million and $198.0 million, respectively, with the increase being driven by the proceeds from the sale of Mavely and cash generated from operations as described above, partially offset by $165.0 million in net debt payments, which was comprised of $130.0 million toward our term loan and $35.0 million toward our revolving credit facility.

Previous wording

Working capital. As of June 30, 2025, working capital was $287.6 million, compared to $242.0 million as of December 31, 2024. Our increase in working capital is primarily attributable to changes in our cash balance as explained above.

Current wording

Working capital. As of September 30, 2025, working capital was $293.7 million, compared to $242.0 million as of December 31, 2024. Our increase in working capital is primarily attributable to changes in our cash balance as explained above.

Previous wording

Capital expenditures. Capital expenditures for the six months ended June 30, 2025 were $13.6 million. We expect that our capital expenditures in 2025 will be primarily related to:

Current wording

Capital expenditures. Capital expenditures for the nine months ended September 30, 2025 were $23.5 million. We expect that our capital expenditures in 2025 will be primarily related to:

Previous wording

We estimate that capital expenditures for the uses listed above will total approximately $35–55 million for 2025.

Current wording

We estimate that capital expenditures for the uses listed above will total approximately $30–35 million for 2025.

Previous wording

Credit Agreement. On June 14, 2022, we entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with various financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400.0 million term loan facility and a $500.0 million revolving credit facility, each with a term of five years. We used the proceeds of the term loan and the draw on the revolving facility to pay off the previous credit agreement. Both facilities bear interest at the SOFR, plus a margin based on our consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 2.5% during the first year and 5.0% during the subsequent years after the closing date of the Credit Agreement, with the remainder payable at final maturity. As of June 30, 2025 and December 31, 2024, we had $15.0 million and $35.0 million of outstanding borrowings under our revolving credit facility, and $235.0 million and $360.0 million on our term loan facility. The carrying value of the debt also reflects debt issuance costs of $1.1 million and $1.4 million as of June 30, 2025 and December 31, 2024, respectively, related to the Credit Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.75 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of June 30, 2025, we were in compliance with all debt covenants under the Credit Agreement.

Current wording

Credit Agreement. On June 14, 2022, we entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with various financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400.0 million term loan facility and a $500.0 million revolving credit facility, each with a term of five years. We used the proceeds of the term loan and the draw on the revolving facility to pay off the previous credit agreement. Both facilities bear interest at the SOFR, plus a margin based on our consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 2.5% during the first year and 5.0% during the subsequent years after the closing date of the Credit Agreement, with the remainder payable at final maturity. As of September 30, 2025 and December 31, 2024, we had $0 and $35.0 million of outstanding borrowings under our revolving credit facility, and $230.0 million and $360.0 million on our term loan facility. The carrying value of the debt also reflects debt issuance costs of $1.0 million and $1.4 million as of September 30, 2025 and December 31, 2024, respectively, related to the Credit Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.75 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of September 30, 2025, we were in compliance with all debt covenants under the Credit Agreement.