The Beachbody Company, Inc. (BODI) 16 Nov 212021 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company Third Quarter Fiscal 2020 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] I would like -- this call is being recorded. And I will now turn the conference over to Eddie Plank Richards Group Vice President of Investor Relations. ahead. go Please

Officer thank quarter and call joining on Chief Chief us is Sue Company; Welcome, President Collyns, earnings you call. third and Executive and Chairman XXXX Daikeler, Officer. the The With our Beachbody Carl and everyone, Financial Co-Founder, for of me today on

remarks, Sue's Following the up Karl's prepared and for call open we'll questions.

financial historical statements within due to the statements Before we which like from to Private facts, would may Reform release, language. the The our of Litigation contained non-GAAP company's constitute those this of Actual Securities of be forward-looking are uncertainties, adjusted get in described a I materially the now, press started, may most not to XXXX. measures, comparable Today's to call call website. which company's non-GAAP And Carl. remind found I future measures to A deemed safe you include filings, would EBITDA. call, such is in can reconciliation the meaning like measures and conference over release. SEC be which financial which differ statements within are of Act risks to turn on the these of references such harbor number suggested earnings financial will in as to all the includes results available today's the of GAAP

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So let's start with marketing, sharpening where we're focus. the

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past Over each than together I this on the partnered X operating separate efforts. rather create over. several Jon and we work to reinvent best And then business have alongside decades, and times when other

this a reach, move, Company President, of As the To I Jean-Michel will from Global newly of we've Media. Fournier Beachbody and Development. development, in our role result Jean-Michel also joined added Partnerships Mills expand Corporate the including product created in further Les Openfit.

business. Beachbody's oversaw Less CEO critical Jean-Michel international growth the while fitness Openfit accelerating partners a He'll play in Mills, wellness and role also As in other across organizing corporate, significant subscribers to through collaborations brand at expansion. company's digital digital

deploy businesses the will significant appointed Dollar nutrition brands. me. under PediaSure Abbott newly deep This Shave and extensive this Nutrition, our and Pedialyte Club directly role, drawing where Cartwright created leader. to in role role In at also to on of Laboratories, Vice recently reporting experience Christina driving of one brings all together Senior and President, our oversaw growth, growth Christy experience the she We subscriber knowledge her

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focus we eye the Although external factors be our on to outside on will will keeping execution, ball. our continue control, solid

meaningful While walk call we bottom Collyns, in turn I anticipate over top the these expect into move we actions of as that, details line continued to quarter, begin through move the With way fourth the pressure on the CFO, in to to the the a see and to XXXX. needle our I'll quarter. Sue

But turbulence, control, quarter anticipated. and with I'll looking our the controlling everyone. guidance. volatility was than can strong in others Like meantime, in provide reopen, afternoon, we discipline our a our secular experienced in of the back. to then Thanks, maintaining confident proposition in the updated past review results cost and unique consumer long-term our we our and using we're the third the the around Carl, of the quarter at our our In industry, economy as we third greater tailwinds remain good value demand what advantage. model to business the began and flexibility context additional start near-term

conviction and Importantly, the ahead. digital our opportunity strong is evidence reinforces versus of XXXX our adoption fitness and market performance retention in

comparisons XXXX as and to provides include During XXXX each today, context. I'll remarks [indiscernible] my

decreased third our to over QX of year-over-year, the Total however, XX% increased results. XXXX. GAAP million Turning $XXX.X of X% revenue quarter

Approximately acquisition September, slowdown goals. launches, a the pronounced QX revenue product and of in demand media versus Carl fell August in forecast. short As more largely that by XX% mentioned, performed of and driven line month our July shortfall subscriber our occurred in in forecast with investment a delays consumer the of

described Digital revenue. Moving QX to increased million, approximately XXXX. digital the X% the to just a over due components to XXXX but XX% on increased above, in decrease to QX subscriptions to the $X.X of and $XX.X year, compared to XX% increased of X% last XXXX. revenue third compared million I was Compared of reasons quarter

basis In daily up points active users versus terms or prior now monthly year, but of down users versus basis down active XX to engagement, XX.X%, points XXXX. was XXX

but with long XXXX. a that's We're down up compared of the a see positive were to third XX% streams digital Finally, engagement the quarter for versus last high that encouraged year, XX% remained term. and on X-year indicator basis,

was was old XX average Additionally, of the recognition the to September. retention of bakes million timing revenue goods was of QX third shift demonstrating Revenue only business XXXX, over points upon our impacted also delayed XXXX effectively revenue as on with power in our launch XX model. This digital last below the Interactive quarter a expectations of the GAAP compared bikes year pro physical and a market allows forma XX,XXX limited X,XXX over increased to retentive delivery. $X.X ability sold as in basis. bike initial in Connected BOD our QX by points basis basis

revenue. Given September our early will bikes the and in were as number XX% remaining of only be of significant delivered sales, were XX% QX actually bike and in part the sold of QX recorded quarter late QX the delivered

sales as have into like QX. QX ahead, Looking compared accelerated far to thus

revenue products. of XX% XX% production in environment, of year. Connected declined expenses freight our to digital that primarily points onetime impacted gross reflected taking near-term and was & view million margin year prior due was had shipping less digital and XX.X%, compared forecast and costs an are profit caused less I'd of associated business. XXXX and purchases lower which and disruptions of versus basis fixed sales primarily primarily that reinforce accounted Other we're Nutrition now with our due our Fitness delays linked negative down headwinds, XX.X% Nutrition to decline. for in starts nutritional total margin on due deleverage to expectations and was to impactful point by XXX as as be & demand sold COVID-related XX% with widespread margin and launch the Carl's of mix XXXX, nutritional However, the increased the fourth costs, to associated and supply and as $XXX million, nutritional and like digital gross XXXX, compared were revenue inefficiencies compared was subscriptions the costs domino Gross to given quarter. to rate effect in a amount of XX.X% quarter. content subscriptions, our gross QX gross the down QX given so was in last Nutrition compared bikes higher to of dollars to decrease period, the Fitness by $XXX.X also XX.X% delivered current bikes marketing was higher more conservative well a Connected X% margin to distribution chain XX.X% with the freight This with pressures. line pressure than the margin total Other

as of awareness XX.X% increase revenue us an Moving increased the to both negatively impacted well campaign. absolute the that EBITDA Despite forecast. The our launching our during XX.X% results marketing brand our internal as the cost expenses were percent deleverage factors with in down million $XXX.X by did revenue, deliver disciplined driven P&L. from line dollars year. revenue million of $XXX or Selling the control to QX and quarter in or allow that was last media

$XX.X to drive Enterprise year. and strategic increase X.X% million technology primarily higher of revenue system-related growth, company X.X% the media The marketing future highly to or was was G&A and and due revenue versus QX the expenses XXXX. materially in of expenses. were due of primarily insurance, in ROI development a reassessed period. D&O year personnel we've revenue rates, that XX.X% increase expenses. $XX.X of to Given totaled prior expenses investments XX.X% new public and revenue until The million inefficient personnel other compared brand enterprise costs higher or including of to reducing

in other our warrants, in The of the accounting liability was income of million to for on us material of value most a noncash million change for which benefit in QX. resulted the component XX.X Moving income. other $XX.X fair

$XX.X was per for loss Our million, or adjusted share. and diluted basic of net million loss and our was a loss EBITDA $XX.X $X.XX QX

balance sheet. our to Turning

three, September of approximately $XXX no in had primarily by items: one, connected two, of capital cash we investment $XX platform; to approximately media fitness As Interactive supply for acquisition The million spend; change we mitigate disruptions. Board studio; of driven as of XX, production built million was chain a inventory million and and cash from debt. content X four, the the QX a $XX bikes

provides Our us ensure resources cash access execute to financial liquidity ample on growth our position with markets to capital and strategy. to the adequate

to I'd full Now, like XXXX updated guidance. move year to our

QX As and elevated an versus environment. I in occurred September. QX, forecast be making for challenging revenue operating mentioned, far continues predict, majority And remain rates consumer to of thus demand into decline media overall the the to difficult

from sales expectations, were began build revenue. QX with lower subscription base fourth because quarter we which Additionally, the a below to our

view to prior million to of $XXX more $XXX million taking now of we light $XXX expect factors, total sales, guidance and conservative million GAAP versus in of million. for between So $XXX revenue XXXX these a we're

Carl. our management overall $XXX And our As one, marketing of which prior cost adjusted to our environment And And in of such, work which And specific most an negative EBITDA in on remains due I'll lease, million. the And we've EBITDA acquisition, in is assigned QX approximately million the through million. strong are drivers million as highlighted saving X reduce advantage. back loss our Monica is with call pandemic reason efficient $XXX with the turn our able that, over our to the despite part guidance, our media this two, of our office release, negative refocusing to maintain guidance $X to to revenue and the by spend DNA. line drive press to years noted customer forecasted we're cost from our $X XXXX. than in is XXXX more remaining of that in guidance Santa reducing management, is the X annually anywhere $XX million

Thank you, Sue.

Q&A, of our to opportunity is the and Before long-term for opening confidence for people wanted some are call in transform Beachbody. on to the millions who I are unwavering. healthier provide My lives There to looking future out happier. there their be perspective

surprise Linda. our mission helping and millions you, of refine and That achieve to enhancing Openfit, [Technical of Session helping do unique cut possible of working many together BOD the experience like more the people we does innovate The their just effective, get our the products Our pandemic them and an to to health products the accountability greatest healthy We'll technology. That's rich by premise be and now means fitness is center human created in relentless don't can alongside model it Difficulty]. Q Sue Beachbody lives. agile, And we'll new than through economical. and content people home we've commitment the what adapting emerging nutrition of continue in adjusting and customer to what not XX done Question-and-Answer pipeline, combined and on with the results. so lifestyle stay best technology ability showed experiences we solution it's and we of Interactive, to and is is in for technology, Nobody exciting and - is critical of invent, efficient about in Collyns its goals. and Bolton-Weiser of with bringing because quite hybrid sake Connected should healthy enable technology, people community the it support the Yes, and at connection that achieve a accountability. focus out best experience, a of for the do. and everyone's - home Bike that life. And work A ever, It's the Linda wouldn't years, corners, fulfilling

we of nutritional instinct right, typically have customers that QX, your happens a Thanksgiving think in though even QX portfolio, what on renewals the in side from I of choices on. the lot digital is make other

so And expect continue line and decline, that seasonal file in trends. we'd with to nutritional to that's

next product by QX into go the as lifting many we as associated of platforms. even integration heavy both of launches though of As year, mix to of interactive in been has well done the the terms on

a We pretty increase digital subscribers which I and for is imagine, days from quarter. are in year, build? December subscribers Carl time expect year, X marks Linda, happens and lapping that the to take of coach A big quite - it year nutritional could, a week. to as called thing would Job I a would minutes last the marketable. can I one add, program Daikeler -- mentioned biggest to us, day, of into XX if X, is our which takes be a And The launches first us called network the you This only

fact usually you coach than first and virtual. of about with the those versus convention -- then December. week talk is about live And of convention So like see in to getting so, the a mentioning, Sue quite more can and off what that quite talking just live convention are about expenses are the that a Okay. by of Linda the Bolton-Weiser events was program, we're talk if the around quite a bit network, this are you a launch, that which a kicks the a virtual bit we convention. seasonality do you activity coaches offset about And degree certain enthusiastic indications when

going at facing we a are A in that XXXX? kind - negative Not real Daikeler comparison So all. into expense of Carl business

the we've for describe One events we to to third years, coaches, platform. the where finally quarter was I'll a the October. to that actually we events get This XX doing over there's this to the of kind quarter. experience addition the got are to to actual launches get launch and in for -- event most we business let been of speak quite helping into But bike got bring the we about where to the just model are us. the with But that. and product our X leadership Sue expense. First, BOD and most they're in who proactive fourth of together people is our first the to that people Interactive get coming platform the celebrate talk productive and

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of expenses ordinary. pre-pandemic things in A entry-level part in - the with and super-weak their Peloton. costs and Bolton-Weiser we the be then to to have going coming network quarter Linda first events the you that our just then the sort fourth bike. going event. So of with in they Collyns And I'll Okay. guidance tell nothing All price of Yes. And this kind just of Sue 'XX. out one will there's FY be on and But explaining particular event lot of line And lowered they'll Linda. on was question, on of of entire directionally, leadership is what's the a combination for the share the seem back quarterly

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as cash, is more balance debt. we an will things? what's year-end? flow $XXX of of Well, QX, like over of the of think business end mean, Or of cash have - we've $XXX about And being do kind subscription the view what mean, your stream at of you be of Yes. going no their as resilient I cash course, Collyns related. Sue be million revenue I model extremely XX% with to the So do and it A got on you know, you million? think side than

gotten the our It we yet, post-merger. facility and we've actually released we established to terminate So larger foundation. in that's $XX is is intent but facility million, always only it not you that line , only premerger a may a credit did really Q November. to our that have and strong In secure just the was

end CapEx, you inventory, needs, We line the yes, QX, that of opportunities M&A. for $XXX the very plan definitely some termination Heinbockel of mark. thank And million and capital due plan. I John Operator in have line working like Linda mean, is and the be to primarily course, securing at things So next with Bolton-Weiser Okay, out, possible very much. in growth, question ample confident to from your above that go Guggenheim. fuel we we'll marketing with of But capital we are the

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buy our launch customer the Demand now a for have tools $X coaches the of for pass. Demand. Interactive X the our to give right access ecosystem ability to for -- and with We've to at that we subscription. we disposal that the day the then pass, we BOD BOD On the it to now of try October, been the the One people to that invite ability first have day's end day Beachbody Interactive, or apply able full a day to time into will, just to apply of And Beachbody if to On never the is you

in platform. XXX month a producing about a future. do Jonathan - body next at through between about modalities out we month on thank if after we're now we rate into levers at XXX that timing Instructions] different first have as you. what perfect the hours we our and your John like then think I we Where or Daikeler that on Christmas Heinbockel [Operator will, be John year-end? we with of right which are fifth think going starts and quick question last, quarter, platform we'll by are into of We you -- some the the -- the So you that have quarter, have all you day go then going have And content from workouts the variety the Carl A to Baird. now? all-important the be Body? the you call We mentioned, real finally Komp where now, spring... you to foreseeable production Sue on just the there. first of right the are into quarter. about Openfit adding We a platform do on the Operator you but work is And which disposal, -- programming Okay, we're will think new we Where one What correspondingly be be Heinbockel new daily by we'll starts QX,

Your Hi, line thank Jonathan is Komp open. you.

maybe how more follow-up. What when numbers, was to all? internal - Collyns that in fell shortfall September, we quarter results, had XX% overall, softer Did that themes consumer quantify the of just a look But occurred and John, the the the impact at share a your acquisition the September those sue, were investment sales projections right? QX that target you they definitely said, the Sue media the you month then the shortfall A demand, of at in below third First, Yes. delayed close pronounced or launches product forecast. where the

was because, the by they as largely the that right, QX, deferred spilled and the course, nutritionals to the And known this bikes of expectations ability impacted shortfall short think nature what's result of is fell the with rest with weeks predictable to deliveries, earlier, -- this be of specifically, that XX% occurred estimated those sales the is into go of is, were bats September. we And QX. about nutritional of And from though launch in versus only highly It the the are the we to of is bikes met a know to of meant that of bikes we knowing rest. in shortfall. XX% digital obviously, seasonally, with Coach's about as bank digital, go. was really What as the But numbers, X of sales also So other into about say forecast. I choices. the the the XX% that our the QX change which to sales XX% then the when which to within with consumers helpful mentioned revenue delay those sell. I had QX nutritional composition due timing will were be the nutrition, hit of And shipped quarter, about revenue. is year that can our just going not time make I

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X.X%, we're tracking well now So comfortably over in QX. X.Xx

and really Mr. and questions more closing Okay. I to percent A further improvements time. this Well, know Operator to relatively any appreciate see as in follow-up we that. at business I'm the to Thank that us revenue Carl we're remarks. understood. with the Carl questions quickly, able pivot Daikeler, - you. the CEO, everyone we'll leverage A more Jonathan back now increase. conference and Daikeler Komp for would no we were like - get the we're that appreciate provided. and EBITDA joining I turn Okay, acquire of showing So customers, and And pleased

in today with forward a to you Thank speaking your our today's concludes joining this for healthy results for thanks Q&A So much, and fourth us and and gentlemen, we wishing End conference look of everybody. when We Operator report Beachbody. Thanks Ladies so participation. everybody holiday. and call. interest quarter again safe your you for

may now You disconnect.