The Beachbody Company, Inc. (BODI) 2 Mar 222021 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company’s Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. And I will now turn the conference over to Eddie Plank, Beachbody’s Group VP of Investor Relations. ahead. go Please

Officer thank quarter and call joining for Chief Chief us is Sue Company; Welcome, President Collyns, earnings you call. fourth 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.

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

would like Carl. to I Now, to turn over the call

everyone. Thank you, afternoon, and Eddie, good

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that's I'd now turn Collyns overview our like to the And to an financial over details activities. Sue the business to cover So, quarter. of it of

results Thanks with I'll context start of good a outlook provide and then our and around afternoon. Carl quarter XXXX. review our for fourth

As adapted in a spend these navigate to taking dynamic support we're return accelerate growth effective quarter, ensure the realities Carl profitability a mentioned of in now the optimizing to efforts XXXX. and action marketplace. to cost quickly to to We're we

more point declining Total quarter. previously Connected fourth X.X% largely year-over-year, a a period, subscriptions to saw the million $XX.X up And guided a on the Fitness of Digital bundles and full XX% a were versus to turning higher pandemic the XXXX. Digital increase Now, were quarter. XX% nutritional XXX of stronger revenue year-over-year, XXXX. revenue engagement revenue These while XXXX, ahead million, elevated decline year results but compared compared X% on bikes of improvement of compared and as was the driven increasing two-year basis the expectations this our lower details we by quarter but but $XXX.X than delivered XX% the in we the was versus was XX% basis. prior to year to XXXX. represented levels decreased

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the hand, approximately successfully XX be bikes time. on XXX%. on to indicated This million, more in to inventory bikes XXXX QX, achieving XX% ratio the compares $XX.X down navigated being than compared and we other guidance. Additionally, to in delivered launch delivery strong optimized. our immediately QX environment to XXXX. the a of XX,XXX chain enabled with in and QX, of revenue our of sales logistics sales X% following when delivery QX of to bike we bike XX,XXX logistics compared in QX Nutrition challenging supply are to This Overall, to were reduce and and earlier XX% ratio sales was delivery stages delivered down the November delivery

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releases, network with nutritional to by coach focused we driven new believe to strong acquisitions new support digital improved will as both of and been has XXXX product looking as a and effectively well demand which plan supplements a cadence more over historically bundle clear new performance time. motivated And launches. a Now,

Turning to gross margin.

shipping profit $XX.X year-end in to income and to to million. added revenue realizable of calculation in our increases. this Our inventory balance fourth impact $XX.X chain well pandemic-related Fitness which quarter profit our included of the EBITDA. gross million has accordance as been $XX.X and and Fitness supply GAAP Connected of cost as adjusted of was a million, gross bike with net non-cash the Connected impacted negative was margin applied the charge value in was gross was negative in by This back year-end significantly cost net charge

in margin pressured from by COVID bike challenging that million chain $X QX environment. persisted higher freight Additionally, was an costs supply approximately

the we to $XX AUV sell-through, cost bike this on positioned as bike over we'll normalize we deliver gross margins Now million from inventory well believe a of on time. will hand positive and sales be higher

successful to through view retentive the primarily products cross-sell on gross content the an margin continue declined the margin basis business high by our cost margin of XX.X%, BODi. gross by and most decline change are Digital tablet. and and COVID-related valuable more revenue, to add-backs production a costs, and costs. shipping XXXX, Nutrition points driven calculation our XXXX of ability versus point XXX product, driven freight were drive income we which incremental extremely These LTV along was of to with nutritional Fitness the subscription in basis Importantly, launch other of freight as net Connected to higher from increased unique XX.X% EBITDA. the was directly with shipping our adjusted XXX due

expenses. operating to Turning

an and investments mix public that a operating approximately I'll $XX from in engagement charge program and legal $XX by X% of releases was increased power and one, the Excluding which of or technology impairment costs. integration accounting higher customer retention; higher change expenses expenses and total support company to acquisition, by our by including year-over-year The our driven expenses discuss operating G&A year-over-year. two, moment approximately million insurance million new

to impairment. on Moving

strategy, consolidation and review sheet balance and annual goodwill sheet. to we our our the intangibles the on of balance part review As One Brand

value and than This $XX.X carrying intangibles charge fourth less goodwill is the our of fair income to net also EBITDA. quarter. of recorded of impairment we back value a estimated added the charge noncash in in million was calculation As adjusted the

Finally, million our diluted share. negative net our million $XXX per QX or $X.XX and loss adjusted loss was EBITDA basic and $XX.X was

future can effectively and the a on balance XXXX from needed a cash operations markets ended the with and business confidence quarters. This lower improved that line flow cash than $XXX quarter in gives we'll balance as and of no CapEx us year strong to million capital debt. We manage share access that Now on EBITDA more and to sight profile last and the we significantly turning sheet. a the from of cash balance

turn an I Before on outlook update provide to our our I'd views to like demand. around

and a our platform. opportunity and revenue investments substantial systems increase different of by very Fitness ago strong and a in at-home and product acquired years digital Since throughout We've we we've today making an more with look customers' And our our outset Our retention we've company to the and as and digital incredibly did by business and also higher it of employees basis results XX XX% as digital pandemic. while points driving at engagement, basis lives. processes subscriptions in XX% we believe and two And continue streams fitness higher forward, see offering Connected achieved of looks inventory. XXX XXXX, integrated these we've in health consumers than prioritize become significant the respectively. increased experiences points across wellness XX% embedded the

focus with near-term, as and streaming environment That's patterns, we Now to capital quickly. pandemic and a the business dynamic remain on on the flow in we're the digital that's profit swiftly this generation will gain a moving we're positioned that and a and why demand cash the across with maximization to subscriptions, said, consolidate platforms to clearer environment. new in view human and a demand our fitness of do variety it exit variability well we nutrition do normal. powered by believe With

of and year. this As we to actions, We'll towards operating the XXXX our these improvements of a the back actions. expect activities series achieve through $XXX weighted of million half cash result approximately use focus by reduce a to immediate significant with in from

cash near a in accretive focus three by marketing clear the highly result new we in two headcount media Specifically: one of XX% by flow. Myx performance opportunities as our return optimizing taken costs that integration the generating a XXXX expenditure highest a operating reducing and focus capital the lap spend strategy as January; opportunities; on One in including by and as as efficiencies investments as Brand reduction are in well platform in-year we on

increase $XXX revenue $XXX of total adjusted as quarter mind later challenging of to between of between to and we're expect the the $XX million in that a and the to year, most keeping XX% achieve QX million over QX terms most materialize of won't quarter million first EBITDA loss we XXXX, through as is Brand our In in million the GAAP an until the strategy One of of comparison cost expect savings XXXX, $XX we lapping year.

market our total our revenue of providing we're year full belief ongoing in Now EBITDA XXXX and both the in I'll gives said, with time. outlook, of the given this and not back the terms growth that that, over AlixPartners, strong. full and convenience, specific call on confidence That guidance And at adjusted Beachbody's unique remains opportunity with work market our Carl. or product simplicity quality us addressable exceptional fit potential hand very to year the

Thanks, we've pandemic move at industry The this in recovery. time. and behind of near-term before like our I XX quickly the moments strongest nutrition We're we and of no market of my and to There believe moving demand doubt category. to ahead Sue. facing every experience the total we've come align return business Beachbody, remains this within our I tell out some in addressable and fitness years profitability challenging through can significant our fundamentals is is year. for as headwinds, elements a But seen in products you, firmly the next

growth deliver opportunity for largest please on company's As long-term that our the to stockholder, would operator, questions? open the call more you in drive up With help customers. the millions and sustainable, mission to I'm confident profitable

Baird. first Instructions] question The Jonathan Komp from Certainly. the of is with [Operator line

proceed. may You

one expenses piece the XXXX does that EBITDA? first, thank that? any Sue, just missed I clarification into from adjusted carry-forward that. shipping you. And Are Yeah, on there I you're clarify? go excluding of back Maybe and that could hi,

shipping we didn't was we about from related for the in something because given $X.X have year. than general. bikes. add-back was We We total incremental forecast costs didn't previous and it did And the the team wasn't Myx, on were nutrition. the basis we experienced. management higher And the a that in COVID-related a on It QX, but shipping to in shipping pre-merger million by incremental that that of add-back

reconciliation overall to but it net for the COVID-related didn't ended in loss costs to totaled in EBITDA. XX. of million added-back the adjusted the So months The $XX.X XX total we wanted December highlight we script,

COVID-related then XXXX? projection, forward And going of on forward piece the the you shipping just are some for costs or excluding

We No. EBITDA. adjustments that don't adjusted any have in

would I think that might enforced. add-backs the only ultimately associated occur the reduction be thing with

to in see the should maybe Great. in and One Carl, shift ask Okay. about specifically of of a and going that the you business clarifying. I'm move? drivers forward terms drivers importantly, or for that Thanks more the impacts the And the curious benefits then Brand the more in see strategy. want what reasons, from the little we I more the

Yes. Thanks Jonathan.

this net capital So, Openfit environment it's obviously, and about massive less to casting environment, we to prospect of excited platforms. much fitness. a available as a as much to on attract allocate the platforms two the But were wider to and newer TAM really health difficult in

and us has redundancies, focus So it much value. acquisition made which the efficiencies mature reduce much on for particularly more content into Beachbody more to brand, sense and technology lifetime brand better one cost marketing and stronger and of

that by frankly, cumulative get also of together that this we think been So all decades. treating developing because subscribers access we've all over we're that better content bringing two to the they all

opposed of pick up this the we taking much advantage we in strategically, really strengths to sacrificing don't that the think by we're Beachbody environment brand. So particularly as flagship

on months sheet just current comment? later we you. know cash me sheet. don't be fund number of balance quarters the about can any other around at I that plans or one able comment on the your think if you in said or hear with it on will business? current And for Thank to balance context know maybe a But Great. last how date. long the I we may more Okay. the Sue you can a

needs the the XX we us the at working what mean, we're accessing months markets. starting $XXX a data fact at is obviously year-end, budget for got capital that position. without strong capital no cash that next really we've service the projections really for Yes, confidence it's I our least And that gives obviously at debt of point is the at sure. can XXXX looking million other

it need the So on to. part got for won't year. and CapEx mean that, course, inventory just doesn't we markets, of and means is And our media ability access the don't balance, reason the we an capital flex it to incredibly strong of we've in

that So of the levers that those confidence. are level us giving big are

Thank Understood. you.

no Komp. at Mr. pass waiting like to are I questions any remarks. There over for this time. the additional -- you Thank would back to Daikeler over Carl closing conference

I No, in forward Company, today. much I just Take care covered to appreciate pretty months. speaking so think you're Beachbody joining few busy, the we've know with us I everyone again look it. interest in we appreciate the next you everybody. your and

rest concludes your the hope conference fourth year That Company's Beachbody call. earnings all the and full I you enjoy day. quarter XXXX of

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