The company increased subscriptions from 312K in Q4 2020 to 391K in Q1 2021, and monthly churn during Q1 2021 was mid-single digits, per management. Assuming 70% of the $27M spent on marketing in Q1 2021 was dedicated to CAC, that implies net new subs of ~123K and CAC / sub of ~$150.
CAC / new sub may have ticked up from $150 in 1Q21 to $165 in 2Q21
Hims increased subs from 391K in 1Q21 to 453K in 2Q21. Assuming 2Q21 churn (company didn't report) was in line with 1Q21 and 70% of marketing continues to be dedicated to CAC, that implies new subs of ~118K and CAC / new sub of ~$165.
I'm upping the start amount for CAC, from $130 to $150
We are exceptionally pleased with the continued performance and scalability of our marketing. What we've been able to accomplish this year with our marketing efforts, I think, has been really special and quite unique. Like many, we've seen ad rates increase throughout the year. Yet in the face of these rate increases, we have kept our acquisition cost per new subscriber effectively flat the entire year. From Q1 to Q3, the variance between our highest CAC quarter and lowest CAC quarter has been less than 3%. Another way of saying this is that CAC has essentially been flat all year. Keeping CAC flat in an environment of increasing rates would be impressive by itself. However, we've done this while also scaling subscriptions and exceeding our revenue targets.
Management hasn't commented specifically on churn or CAC since 1Q21, so I'm tying together past statements to square to $200. Management has said in previous quarters churn in the subs base is msd % and CAC payback is sub-6 months. Back of the envelope, assume 5 month payback x $50 rev/sub/month x 75-80% gross margin gets you $200 CAC. The latest 10Q shows total CAC spend of $67M, so assuming $200 CAC implies 7% monthly churn - roughly in line with past "msd %" churn comments.