OneSpaWorld (OSW) Q2 FY26 earnings call: guidance and Q&A

Given strong onboard spend and healthy trends, why is the full-year guidance range still elongated, and what factors could lead to the low vs. high end?

Management feels comfortable with the provided guidance, noting the Q2 beat and full-year guidance increase. They stated that improvements in the environment, innovations, or accelerated activities could lead to results towards the upside.

“As of today, we feel good about the guidance that we've provided and the range. Obviously, as you're aware, revenue, our second quarter beat was $300,000. We've taken the full year up by $4 million on EBITDA. The beat was $400,000, and we've taken the full year up $5 million. So we feel comfortable with where we're guiding to the extent that there are improvements in the environment or innovations or activities that we're working on that accelerate at a faster pace, then you could see the numbers towards the upside.”

asked by Steven Wieczynski · answered by Stephen Lazarus

Are AI benefits primarily revenue-side now, with expense benefits to follow? Can the company quantify the potential margin impact of AI technology?

Stephen confirmed that AI benefits are currently more focused on revenue enhancement, as the organization is already lean. He stated it's too early to quantify the exact margin impact, emphasizing that AI initiatives are ongoing and continuously evolving.

“The response to the first question is correct. And as it relates to the second part of the question, and by the way, for the first part, obviously, as you know, Steve, after all these years, we run a very, very lean organization. And so further reducing costs, et cetera, will happen, but the impact we feel ultimately is more on the revenue side than on the cost side. That is indeed still too early to quantify exactly what that means and what it does to margins.”

asked by Steven Wieczynski · answered by Stephen Lazarus

Why did product revenue decelerate, even after adjusting for reorganization, and what is the impact of product attach rates on ships?

Stephen explained that medi-spa modalities, which have little retail attachment, are growing faster than overall revenue, weighing on product revenue. He also noted that the prior year had more promotional activity to clear older inventory. He is not concerned about attachment issues at this point.

“One of the things to bear in mind is that we continue to see our medi-spa modalities growing overall at a faster rate than we're seeing overall revenue growth. In the second quarter, for example, our medi-spa functionalities grew at a 17% which is exceeding what other things are growing at, although recognizing it's still a small proportion, less than 10% of our service revenue. And those today have virtually no retail attachment to them. And so as you see those portions continue to grow, it does weigh in on the numbers.”

asked by Sharon Zackfia · answered by Stephen Lazarus

Has AI deployment been done with experimental vs. control settings to discern uplift, and could revenue upside accelerate from here?

Stephen confirmed that AI projects are rolled out in smaller groups with continuous monitoring and learning. He expects continued improvement as algorithms learn and new projects like dynamic pricing are implemented, which could further enhance revenue.

“So from a process standpoint, Randy, the way you're describing it is the way we are doing -- have done and continue to do all of these projects, i.e., we roll them out in a smaller group. We make sure that they're working still in the loop, et cetera, et cetera, and then ultimately roll them out further. We do, as these are literally these agents or learning algorithms learn from themselves, we naturally do expect that they will get better over time.”

asked by Randal Konik · answered by Stephen Lazarus

Are prior prebooking targets achievable given recent acceleration, what mix can be achieved, and is the 'bigger spend' holding at a similar rate?

Stephen confirmed that incremental spend from prebooked guests continues to hold at +30% or above, with no degradation. He believes there's significant upside for prebooking percentages, especially with the recent addition of medi-spa and acupuncture to the pre-book platform.

“As it relates to the spend, it generally continues to hold at a plus 30% or above. So we have seen no degradation in the incremental spend from those guests who prebook. We do continue to think that there is still the opportunity for that number to drive significantly higher.”

asked by Maksim Rakhlenko · answered by Stephen Lazarus

What are the company's observations on GLP-1 usage and any resulting changes in service or product usage at the spa?

Leonard stated that GLP-1s have not been introduced onboard yet, but the company is monitoring emerging regulatory controls around peptides. They anticipate being able to offer peptides, potentially including GLP-1s, by 2027, seeing it as a future competitive advantage.

“So we have not introduced GLP-1s on board yet. That's not to say we won't or let's just say, I think the emerging regulatory control around peptides will change favorably such that we'll be able to start offering peptides hopefully, in 2027, if the regulations are such that we can support it, then we'll do it.”

asked by Gregory Miller · answered by Leonard Fluxman