Nov 2, 2020
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Operator
[00:00:01] Good morning and welcome to the metaphase third quarter fiscal twenty twenty earnings conference call all participants will be in. Listen only mode.
Should you need assistance, please signal conference specialists by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions.
Please note this event is being recorded. I would now like to turn the conference over to Scott Van Winkle.
Please go ahead.
Scott Van Winkle
[00:00:26] Good afternoon and welcome to Bedfast third quarter Twenty twenty earnings conference call on the call with me today, or Dan Chard, chief executive officer, and Jim Maloney, chief financial officer. By now, everyone should have access to the earnings release for the period in September 30 Twenty twenty that went out this afternoon and approximately 4:00 or 5:00 p.m.
Eastern time. If you've not received the release, it is available on the investor relations portion of Metaphase website at w w w dot medevacked Inc.com, the call is being webcast and a replay will be available on the company's website.
Before we began, we would like to remind everyone that the prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions. The words believe, expect, anticipate and other similar expressions generally identify forward looking statements.
These statements do not guarantee future performance and therefore underline should not be placed on them. Actual results could never materially from those projected and any forward looking statements, matter of fact, assumes no obligation to update any forward looking projections that may be made in today's release or call all the forward looking statements contained herein speak only as a date of this call.
And with that, I'd like to turn the call over to Chief Executive Officer Dan Charles.
Dan Chard
[00:02:02] Thank you, Scott, and good afternoon to everyone joining us. Thank you for taking time to be with us today on the call.
With me today is Jim Maloney, who is now a little more than three months into his role as our chief financial officer. After I provided some updates on our business performance over the course of the last quarter, Jim will review the Q3 financial results in more detail, will then open up the call to take your questions.
I'm pleased to say that despite the wider issues felt by the retail sector during the global pandemic metatarsus seen strong acceleration in growth during the third quarter, revenue increased forty two point eight percent to two hundred and seventy one point five million, and earnings per diluted share increased one hundred and twenty point five percent to two dollars and ninety one cents. This growth was driven by significant year over year and sequential improvements in the number of active earning coaches which grew to forty two thousand one hundred independent after the coaches in the third quarter, a new record level.
Protective, protective, or any coach also increase sequentially to a record level of six thousand three hundred and twenty nine dollars, driven by an increase in both the number of clients supported by each coach as well as an increase in average client spend versus Q2. This important shift forward in coach productivity comes as a direct consequence of our continued focus on building tools, programs and processes that allow coaches to be as efficient as possible, as well as the relevance of our health and wellness offer in an environment where consumers are looking for lasting solutions to their health and wellness needs.
[00:03:39] While the covid-19 pandemic continues to cause economic and social uncertainty for businesses, we feel confident in our ability to drive long term sustainable growth to deliver on our mission, to offer the world a lifelong transformation. One healthy happens at a time.
That's the end of twenty nineteen, we have taken a number of important steps to accelerate the growth of our business, coupled with some quick responses to the pandemic. These initiatives are now delivering meaningful progress, which is represented in the numbers we have announced today.
Importantly, we feel that the adjustment we've made to our business over the last two quarters has created some important learnings which are now being used to further optimize our ability to deliver against our long term growth vision. The company's focus continues to be on supporting our growing community of optative coaches as they develop and focus on the four competencies that drive our business success, namely attracting new clients, supporting clients on the optimal weight five and one plan, sponsoring new coaches and developing coach leaders.
[00:04:46] The specific adjustments we made to our business during the second and third quarters consisted of supporting coach led training. A compelling incentive structure.
And a refined approach to how our coaches are leveraging social media. With the new programing in place, our community leaders drove sustainable gains in both new clients and new coaches.
A deep dove into this new cohort of clients shows us that we have tapped into a new group of consumers that may not have previously tried our products, but whose behavior is entirely consistent with our existing core client base as measured by retention and lifetime value. We're also very encouraged to see that higher levels of coach conversion from this new client cohort.
We're excited by these trends and are looking forward to build on their success in the coming months ahead. The help and focus of our coaching client community remains strong, with our coaches highly engaged and enthusiastic about the opportunity that lies ahead for us all.
We just returned from our global climate summit in Sundance, Utah, where we met with top leaders to discuss plans for the upcoming year. I believe that the company and the field is more aligned around our mission than at any point in our history, and I'm enthusiastic about the prospects of driving operational and transformational success in twenty twenty one.
With a revised coach, initiated training structure, robust level of client acquisition, strong trends and coach conversion, and new insights around how to leverage new incentives and promotional structure, I believe we are well positioned to drive continued growth. As we look to take advantage of the opportunities to scale over the next few years, it's important that we continue to build our technology, our manufacturing and distribution operational platform in order to give us the infrastructure to power our growth.
With that in mind, we begin taking deliberate steps earlier this year to ensure that we have the necessary runway to continue expansion. Like many similar businesses, we made some proactive moves at the start of the pandemic to ensure that we would be able to handle both changes in demand and changes in working practices.
We prioritize production to our highest volume products, limiting our assortment to ensure that we would be able to meet the product demand across the core items and mitigate the risk of disruption to our supply chain. This approach resulted in an uncharacteristic out of stocks in our less promiscuous while this created some headwinds to our client experience.
This move also accelerated some of our long term efforts to consolidate our metaphase brand and products to create deeper focus around our Opta via brand. And currently, we have been accelerating our long term supply chain initiatives to ensure that we create the bandwidth to handle our anticipated growth over the next several years.
[00:07:44] Specifically, we have bolstered our management capabilities in the space with the addition of Loren Walker as our new head of global supply chain operations. Lauren is a seasoned supply chain executive with critical experience in driving long term sustainable growth, both direct sales and fast moving consumer goods businesses, she most recently served as chief supply chain officer at Young Living Essential Oils, overseeing the company's integrated supply chain as well as engineering enterprise, project management and new market expansion.
Pretty young living, she held several roles with Amway Corporation, most recently serving as vice president in manufacturing and technical support organization. She also has held various positions at industry leading companies, including Church and Dwight Johnson and Johnson and Procter& Gamble.
Warren is an exciting addition to the team, and we are already seeing meaningful benefits from her involvement within the first two months of her tenure. Next, we've made intentional moves to increase our capacity in both powder and bar manufacturing, as well as well as distribution.
We've done this through relationships with an expanding network of coal manufacturers whose facilities have been qualified to manufacture our products. This new manufacturing capability came online in October and will continue to scale as we move into the next year.
Ultimately, more than doubling our current manufacturing capacity by the end of twenty twenty one. We're also scaling our distribution capability to match our manufacturing capacity.
In addition to our supply chain enhancements, we continue to focus on our technology investment and capability. At the beginning of the year, we announced the opening of our new technology center in Utah to further enhance our coach and client support capabilities and strengthen our growth platform.
We have now occupied the new space in our building, out our capabilities amidst the challenges of this pandemic. The key initiatives from our technology team have included the alpha testing of two new apps focused on coaches and clients, the first off to be a coach.
Kinect is an app designed to further increase the productivity of our coaches by giving them access to customized tools to manage their opta the coaching business. Testing is now complete and we will launch the beta version of the app in the United States in the first quarter of twenty twenty one.
The second is the impact of your client app, which is focused on creating easy access to meal planning tools to help improve the client's experience on the optimal weight, five and one plan Alpha test alpha testing is also complete and we will launch the beta version of this app in the United States in the first quarter. [00:10:34] During the quarter, we also completed the deployment of a new cloud based levee system designed to allow us to quickly scale our call center capability around the world to support our growing community of coaches and clients.
As a reminder, we currently contract with a partner to provide call center support through the call centers in the United States, the Philippines and Colombia. Each of these recent technology enhancements followed the successful implementation of our new ERP system during the second quarter of this year.
Whether our supply chain technology programing or people we're consistently investing in future growth, all while driving strong momentum and margin improvement despite the inherent challenges of the covid-19 pandemic. Our team, including our loyal independent coaches and clients, continue to successfully adapt to the ever changing environment, and we're proud to be successfully helping clients achieve lifelong transformation, one healthy habit of the time during this unique period in society as a whole.
Our focus continues to be on growing the number of individuals who are seeking greater health and wellness and providing a holistic approach to achieving greater health in our daily lives. We believe we can effectively and efficiently reach our target audience through our community of the coaches who are increasingly leveraging social media channels to relate their success with the Ottilia habits of health system.
We benefit from increased societal societal focus on the importance of health and wellness and a powerful coach powered system that is clinically proven to drive improved results, our growth vision is to achieve long term sustainable growth in our revenue in the mid teens by penetrating the large addressable market in the United States and then continuing our expansion in Asia Pacific markets and ultimately developing other large markets throughout the world in the years to come. Before I turn the call over to Jim, let me know that our commitment to lifelong transformation is not just in our work with coaches and clients, but also through our active support of the communities in which we live and work.
We recently executed our week of service program supporting living classrooms and their work to help young people achieve their full potential and also continue to support no kid hungry, particularly through an initiative in our recent After Being Together Live event. This is a business that is focused on changing the lives of the many, not the few, and I'm proud of the work that the company, our employees and our coach community are doing to create opportunities for people from all walks of life to deliver the best possible version of themselves in whatever way possible.
Let me now turn the call over to Jim Maloney, who will walk you through the financial results in.
Jim Maloney
[00:13:26] Thank you, ma'am. Good afternoon, everyone.
It's been a pleasure getting to know many of you over the past few months, and I look forward to continuing this dialog. With that, let me walk you through our financial results for the third quarter ended September 30th, Twenty twenty.
Revenue in the third quarter of Twenty twenty increased forty two point eight percent to two hundred and seventy one point five dollars million from one hundred ninety point one dollars million in the third quarter of twenty nineteen. As Dan highlighted.
We hit another record act, active earning coaches, ending the quarter with forty two thousand one hundred. This represents thirty point seven percent growth as compared to thirty two thousand two hundred coaches in the same period last year and a fifteen point three percent increase from the end of the second quarter of Twenty twenty.
Average revenue per active earning coach for the quarter was six thousand three hundred and twenty nine dollars, compared to five thousand seven hundred and fifteen dollars for the third quarter last year and up from five thousand eight hundred and fifty one dollars in the second quarter of Twenty twenty. We have now achieved three consecutive quarters of sequential growth, also of note, after being branded products grew to eighty three percent of our total company consumable consumable units sold in the third quarter, up from seventy eight percent in the prior year period.
[00:15:13] Gross profit for the third quarter of Twenty twenty increased forty two point seven percent to two hundred and four million dollars, compared to one hundred and forty two point nine dollars million in the prior year period. Gross profit as a percentage of revenue was seventy five point two percent, consistent with the third quarter of twenty nineteen.
Aschiana for the third quarter of Twenty twenty increase thirty six point eight dollars million to one hundred and fifty nine point five million dollars, compared to one hundred and twenty two point seven dollars million for the third quarter of twenty nineteen. The increase was primarily a result of higher Opta via commissions expense as a result of increased Octavia's sales and increased salaries and benefits related expenses, partially offset by a decrease in sales and marketing expenses.
Esterina, as a percentage of revenue decreased. Five hundred and eighty basis points year over year to fifty eight point seven percent versus sixty four point five percent in the third quarter of twenty nineteen.
Income from operations increased twenty four point three dollars million to forty four point six dollars million from twenty point three dollars million in the prior year period, primarily as a result of increased gross profit, partially offset by increased and expenses. Income from operations as a percentage of revenue was sixteen point four percent for the quarter, an increase of five hundred and seventy basis points from the year ago period.
Our effective tax rate was twenty two point eight percent from the third quarter of twenty twenty, compared to twenty two point seven percent in the year ago period. Net income in the third quarter of Twenty twenty was thirty four point five million dollars or two dollars and ninety one cents per diluted share, based on approximately eleven point nine million shares outstanding.
This compares to net income of fifteen point nine dollars million or a dollar thirty two per diluted share, based on approximately twelve point one million shares outstanding in the prior period. Our balance sheet remains very strong with cash, cash equivalents and investment securities of one hundred and sixty nine point nine million dollars as of September 30th, Twenty twenty, compared to ninety two point seven dollars million at December thirty first two thousand nineteen.
The company remains free of interest bearing debt in Belize is well positioned in this challenging near-term macroeconomic environment. Our board of directors declared a quarterly cash dividend in the third quarter of thirteen point four million dollars, or a dollar 13 per share, which is payable on November 6th.
[00:18:33] Twenty twenty. This reflected a fifty point seven percent increase in the quarterly dividend over the prior year period and is a direct result of our strong financial position and attractive business model.
There are approximately two million, three hundred and twenty three thousand shares of common stock remaining under our stock repurchase program. Consistent with last quarter and due to the ongoing uncertainties related to covid-19 pandemic.
We are not providing guidance at this time. We would, however, like to provide you with some insight into the first month of the fourth quarter in that October's top line year over year growth trends are performing consistent with the year over year trends we experienced in the third quarter.
As Dan mentioned earlier in Q4, twenty twenty, we intend to further invest in our supply chain technology and coach incentive programing. Which will affect our operating margins in Q4, but will enable our long term growth and operating income objectives.
The clothes we are proud of to report another strong quarter, especially in such a time of uncertainty and challenges. We believe the company is well positioned in a significant position of financial strength.
And we are excited about the opportunities ahead. With that, let me turn the call over for questions.
Operator, thank you.
Operator
[00:20:16] We will now begin the question and answer session to ask a question. You may press star, then one on your touchtone phone.
If you're using a speakerphone, please pick up your handset before pressing the keys to withdraw your question, please. Press star, then two.
At this time, we will pause momentarily to assemble our roster. Our first question comes from Carrie Anderson from B.
Riley FBR. Please go ahead.
Kara Anderson
[00:20:45] Hi, good afternoon. So I just wanted to start by talking about the other stocks, and you mentioned a little bit of a headwind to the client experience, just wondering if you can talk about how that compares to maybe some of the disruption you saw last year in the supply chain and then whether or not we saw any impact from that disruption to the client experience in the quarter, or is that something we would expect to impact future quarters?
Dan Chard
[00:21:18] Sure, you have very different versus what happened last year, last year was a an operational disruption, meaning that we were switching out the structure of our picket lines this year as we as we entered into the second and third quarter and recognize that growth was was was happening more quickly, were growing at an accelerated rate. We deliberately to ensure that we could effectively supply with our top SFUSD pulled about thirty six is the count right now of our Skewes and held on them being produced to allow us to be more efficient in producing the our are our top selling shoes.
So we can say that none of our top selling skews ever went out of stock and no one was without feelings during the quarter. We've now we started in the second quarter and came online in October with several new co manufacturer relationships that effectively takes our manufacturing capacity up.
And by the end of 2010, by the end of the next fiscal year, twenty, twenty one, our our capacity will be roughly double. So accelerating as we move through the year.
So we don't anticipate having manufacturing be a headwind as we move forward.
Kara Anderson
[00:22:47] Ok, great. And then, you know, clearly the promotion you ran and ran in April, May and then the subsequent sentence worked in your favor, just wondering if you can discuss any plans for running some more promotions in the future, what that might look like.
Dan Chard
[00:23:05] Yeah, we feel like we learn a lot through these promotions, they were obviously a reaction to the pandemic environment, but as it turns out, we were able to attract a new group of clients who probably wouldn't have probably wouldn't have tried optimizer previously. So it had to do with both a trainee program that was in place in the field, a specific offer that was both for a coach incentive as well as a client promotion, and then a very specific social media strategy.
So we brought in a large cohort of clients that came in the second quarter. Our big question, as you remember last quarter, was would they act like a traditional client, both in terms of their retention lifetime value and then their coach conversion.
So we were pleased now that we have almost six months behind us for that first cohort to see that they are acting almost identically and in some cases a little bit better than those that came in through traditional means. So to answer your second question, yeah, we do anticipate using the similar type of promotion as we head into the next year.
We think our coaches are it helps them perform at a different level, driving up our our productivity Proactiv earning coach to a new historical high and as well as being highly efficient from a cost standpoint, you know, during the month that it takes place, it's a little bit pressure on gross margin. But subsequent months it comes back as reflected by our significant increase in our operating margin this quarter.
Kara Anderson
[00:24:54] Got it. And then on, I guess, as we approach the holidays and we're seeing a rise in covered cases like how should we think about coach growth over the next quarter or two?
Is there any seasonality or otherwise disruption we should consider when we think about building out our models?
Dan Chard
[00:25:12] Yeah, we don't you know, it's just it's hard for us to project what the the impact of wave to or wave three is going to be. So that's the reason we're not providing guidance.
We believe we're well positioned to to work through the the fourth quarter. You know, in the past, we've been able to lap or able to add sequential improvement from quarter to quarter.
We're not sure if that will be the case this time around because of the changes and promotions that we feel highly confident. As Jim stated, the we what we saw in October was very encouraging in terms of what we expect to see through the last quarter of the year.
Kara Anderson
[00:25:59] I'm just housekeeping question for me. What was the commission rate in the quarter?
Jim Maloney
[00:26:07] Yeah, this is Jim, it was it was approximately forty two percent. Which is pretty consistent with last year.
Kara Anderson
[00:26:17] Yeah, I see that and then what was DNA and stock based compensation?
Jim Maloney
[00:26:25] So the depreciation, no damage. Yep, yep, so the hold on for one second.
So the for the. For the quarter, it was once again.
Usually in the first three quarters to yes, over the first the first three quarters, it was five point three million dollars and the in the share based compensation for the first three quarters was four point two million.
Kara Anderson
[00:27:02] Awesome. Thank you so much.
That's all for me. Thanks.
Operator
[00:27:08] The next question comes from Sebastian Barbiero from Jefferies. Please go ahead.
Sebastian Barbero
[00:27:15] Congrats on good quarter, I repeat questions number one, I was wondering if you could talk to the growth cadence EPS to. EPS easiest talenti quarter or did you see a big boost coming out of this promotion out of the quarter?
Dan Chard
[00:27:36] Yeah, you were a little bit distorted, but I think you are, Sebastian, what are what the what we saw in Q2, Q3, from a gross marketing standpoint, from Q3 specifically, EPS is to be the. Yeah, so what we what we saw in Q3 was a retention rate consistent what with what we would see historically.
So think about that large cohort of new clients that came in in the second quarter, went on to repeat the way our typical cohort of clients would. We also saw a slight improvement on coach conversion.
So, as you know, we we ran what we described as a business builder promotion in August that ran all the way through October. And so we saw not only that this new cohort repeated at the same rate, but they actually converted to coaches at a slightly higher rate, which is why you saw a larger than what would be typical acceleration in our active earning coaches in the quarter.
Sebastian Barbero
[00:28:44] You mentioned a higher standard to climb, and can you give me some more details on that, please?
Dan Chard
[00:28:55] Yeah, so so the promotion of Iran in the second quarter was the offer. So there's training and offer and then a social media strategy.
The offer was for any new client who was or any client who hadn't purchased in the last 12 months could come in and purchase the essential starter kit, which is basically one month's worth of food at a discounted rate. So in the in the second quarter, which where we had an active earning productivity practice of running coach of roughly fifty eight hundred dollars, that number reflected a price discount.
And so as those same clients repeated in the third quarter, they were repeating at full at a full price. So that was the the up side benefit.
Each of those clients was spending more on a non promoted basis than they did when the price was promoted. So they went on to repeat and have, you know, have the same kind of depth of repeat that we typically would see.
Additionally, because of the promotion and some of the other things that we've been that we applied to help coaches be more productive, each client or each coach was also able to support a higher client count.
Sebastian Barbero
[00:30:22] And then talking specifically about the peace talks, is there any risk to the remaining 80 percent so as you say, you're focus on any risk of them going out of stock? Now, as I said, as I said earlier, the we we managed the out-of-stock rich risk by holding production on our slowest moving skewes, and so none of our high moving Skewes ever went out of stock.
Nor do we believe that there is a risk of them going out of stocks. That's how we that's how we managed the the operational risks during the pandemic at a time of accelerated growth.
So in October, we began to to add back manufacturing capacity tied to new relationships with co manufacturers. And so beginning last month, we should we should start to see those slower swings, slower turning Skewes go back into a stock in basis.
And as we move into next year, we have more than adequate manufacturing capacity to supply the growth we anticipate next year to those cases that are coming out of stock until 2021. Should we expect them to come back January 1st or.
Dan Chard
[00:31:53] Some of them will never come back, part of our strategy is to consolidate our brands to just off the beer and so the slowest or any excuse will will will likely not return. Roughly, think of that as 17 skewes.
That won't that won't return. But we don't believe that that will have any type of volume impact because essentially we have for the most part duplicate Skewes and the ought to be aligned.
So we've been running since we transitioned and introduced the OP to be line basically to kind of twenty twenty lines of products. So this is a reflection of us moving away from the Opta via product or excuse me, from the metaphase branded products and consolidating down to one line.
And we're able to do that now because as of last quarter we have we discontinued our franchise structure, so we no longer had a legal obligation to supply those metaphase rescues. So while we do still sell Manifest Skewes through our Opta via coaches, that number and that proportion is has been declining significantly.
And ultimately, as we said, we'll also transition the direct marketing portion of our business to be a client acquisition, a digital client acquisition engine for our coaches. So at that point, we won't have any need for the metaphase brand.
Operator
[00:33:36] The next question comes from Linda Bolton Weiser from D.A. Davidson.
Please go ahead.
Linda Bolton Weiser
[00:33:43] Hi, could you give us an update on your international business, and I guess it's been more than a year now since you've launched it. What is the year over year growth rate of international?
Is it very high growth or is it just modest? Or can you give us a little bit of color on that?
Dan Chard
[00:34:01] Yeah, how are you doing, Linda? As we said before, we we don't plan to report specifically on internationally, we'll give you a couple of highlights, which, as we said once it achieves a meaningful part of our business.
So Asia Pacific continues to grow at a consistent rate. It has been impacted, we think, by both the pandemic, but probably even more so in Hong Kong, the political unrest.
But we continue to add additional support for the business, including native language support and in the form of the Philippines call center and additional other support in terms of translating materials. So we're we're confident that this is going to be a meaningful part of our business long term.
And but at this point, it's not about the 10 percent level.
Linda Bolton Weiser
[00:35:05] Thanks. And I seem to recall that there were some pretty big trip expenses related to your incentive trip in the second half of last year, if I'm remembering correctly and that you've benefited from not having those in the second half of this year, how much of a benefit was that in the third quarter?
And then what would be the number that would be in the prior year period for the fourth quarter?
Dan Chard
[00:35:33] And so, you know, as as I mentioned, you know, our sales and marketing expenses were were lower this year versus last year in Q3. You know, overall for the full six month period.
If you look at the second half of the year, we're talking about five point six million dollars. I would say most of it was accrued in Q3.
And that's why you're seeing some of the benefit in Q3.
Linda Bolton Weiser
[00:36:09] Okay. And can you just you know, one of the questions that we frequently get from investors is trying to gauge the ultimate potential of the number of coaches in the U.S.
Would you suggest we look at other direct sellers, even if they sell other products like an Avon or a Tupperware or a new skin, and kind of gauge your potential in the US for the number of coaches, you know, as being comparable to those companies or why or why? Or would why would that be or not be a good idea to do that sort of thing?
Dan Chard
[00:36:49] Yeah, I think there's some some pretty significant differences between between a coach and a distributor, so I think it would be difficult to compare. We did do both work on addressable market for the business as well as the interest in coaches.
I mean, people who were interested in being coaches for the concept, as we describe it. So we did that last quarter.
And what we found was that it are within our growth vision, which was stated as a 15 percent growth rate that we had. And this was all done pre covered.
But we don't think this is necessarily change that we had what we believe is 10 years worth of growth if we just did exactly what we're doing today. Our intention is to make coaching more and more attractive.
And you heard that a little bit tied to what kinds of tools we offer in the form of more mobile apps and other tools to make coaching more attractive. So I think, you know, when you when you add that together, we believe we have, you know, roughly a decade worth of growth with what we have been doing and ability to expand beyond that, as we as we continue to modify our offer to coaches and make the coaching business more attractive.
Linda Bolton Weiser
[00:38:14] Great, thanks. And then finally, can you just talk about if you think you're getting benefits from the pandemic in terms of people wanting the ease of having the delivery of the food products and also just weight gain during the pandemic, do you think you're benefiting from that?
Dan Chard
[00:38:37] Yeah, we did some modeling, we actually hired a an outside firm to kind of help us understand that included both quantitative analysis and also a qualitative survey, what we believe is a very small benefit tied to the pandemic that has to do with what you stated earlier, maybe some weight gain and also a higher level of awareness and concern about health. We did another survey that suggested that well over 80 percent of Americans are concerned about their health during the pandemic.
So that's those are some of the quantifiable pieces. The part that's been helpful for our coaches is that people are far more available.
I think people are less busy because they're working from home, not traveling as much, not going out as much. And so they have more time to be coached and to focus on their health.
So I think, you know, in some I'd say we were growing in a very healthy way prior to the pandemic. We've been able to figure out some ways to operate very effectively and in ways that will help us not only during the pandemic, but after the pandemic.
And that health in general is of higher concern with Americans and really with people all around the world. So we think that there's a long term benefit that will will help us as well.
Linda Bolton Weiser
[00:40:09] Thanks. And then finally, can I just ask you about your thoughts on use of cash flow, either to raise your dividend, usually in December you announce your dividend increase.
It was very large, 50 percent or so last time around. Are you still leaning heavily toward high dividend or would you think about switching a little bit more towards share repurchase?
Thanks.
Dan Chard
[00:40:38] Yes, so all those discussions are being had at the board level, so as we as we get. You know, more board input over the next quarter or so that those you'll you'll see that those decisions being made, we really don't go into much detail on on the capital allocation until we actually make a decision.
Linda Bolton Weiser
[00:41:15] Ok, thank you very much.
Dan Chard
[00:41:17] Thanks, Linda.
Operator
[00:41:19] The next question comes from Doug Lane from Lane Research. Please go ahead.
Doug Lane
[00:41:25] Yes, hi, good afternoon, everybody. The coach numbers you mentioned was pretty impressive.
Certainly I had what we were looking for. So to your point, that's good evidence that whatever you're putting in place is, is he's been working in developing your new cohort down the line, if you will, into coaching and hopefully in leadership positions.
So you're thinking out hopefully Twenty twenty one. But whenever we get to back to a more normal consumer mobility environment, what learnings have you gathered this year that changes how you go to market once we return to some sort of normalcy?
Dan Chard
[00:42:07] Yeah, we have. I think our primary learning was that there's a group of potential clients who, with the right offer and the right message on social media, are attracted to are off to the program.
And those that the training they offer and the social media program allowed us to attract them in a way that we haven't been able to before. So we had to anticipate repeating a refined version that ties back to to our our learnings from this year.
And our coaches, as well as social leaders are very confident now that they understand how to optimize the promotion. We anticipate that this will be an important part of our our business rhythm as we go forward.
So I think we're very optimistic about what we've learned and its ability to really kind of add to the the way we we partner with our coaches to to penetrate and to accelerate our our you know, our our growth vision moving forward.
Jim Maloney
[00:43:26] That makes sense, but there's no plan to abandon the in-person events, the global conventions, the leadership trips, what have you there, so, you know, going from top line to margins, these 16 percent kind of operating margins that we've already mentioned, that it's probably not going to be that in the fourth quarter, but we should even probably extrapolate that out into twenty, twenty one and beyond where where margins will come back to, you know, maybe not where they were before, but certainly not stay at the 16 percent levels as you begin to reinvest in these in-person events.
Dan Chard
[00:43:58] Yeah, what we've what we've said, and I think, you know, what we've said in the past is that we believe our business will support a 15 percent operating margin as we move forward and that we plan to achieve that around the same time we achieve a billion dollars in revenue. So we think that that stage that will allow us to invest and invest back in the business for the programs that you're describing and at the same time support a the dividend that we pay and the operations of the business and allow us to invest in it, can continue to support a growing infrastructure to support the business.
Linda Bolton Weiser
[00:44:41] Right. I remember those goals, and I think they also included 50000 active coaches.
Have you updated the timetable for that?
Dan Chard
[00:44:50] Now, we we we decided a lot at the end of last year that that would focus really on the long term sustainable growth rate of, you know, in the mid teens that we would described and that, you know, we were kind of confident enough in the kids, the business that we can project that out without trying to tie it to make those specific goals time out.
Doug Lane
[00:45:16] Ok, thanks, Dan.
Dan Chard
[00:45:19] Thank you, Doug.
Operator
[00:45:21] There are no more questions in the queue. This concludes our question and answer session.
I would like to turn the conference back over to Dan Short for any closing remarks.
Dan Chard
[00:45:31] Yes, it's like to say thank you for all of your participation in this conference call and we appreciate your interest in Bedfast and also appreciate you joining us this evening. And look, well, look, look forward to providing you an update in on our upcoming quarter.
And as I said, appreciate all of our all of your interest and a big shout out to all of our coaches across the world at this stage. Thank you again.
Bye bye.
Operator
[00:46:06] The conference is now concluded. Thank you for attending today's presentation, you may now disconnect.