The Beachbody Company, Inc. (BODI) 10 May 222022 Q1 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company’s First Quarter 2022 Earnings Call. At this time, all participants are in listen-only mode.

Following the presentation, we will conduct a question-and-answer session. Instructions will be provide at that time for you to queue up for questions. like recorded. everyone would call this I being is Instructions] to that remind conference [Operator will turn Relations. I Group And now Vice Plank, to President Beachbody’s Eddie of Investor the conference over

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

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

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

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

of or us they're regardless our profits XXXX more to afternoon, environment, free business good to whether March make and Eddie, we allowing headwinds. outlined of tailwinds every flow full in and and earnings you, When strategy efficient, deliver productive type cash on Thank demand reported year Xst, we everyone. for the

with first and remains environment results our strategy EBITDA initial solid the While progress adjusted ahead on that expectations. quarter XXXX of revenue for reflect challenging,

return new enhance we customer subscriber focused on response we lifetime saw highest quarter, product positive the remain tightly expenses. while to the managing During and value, we launches, acquisition a opportunities, continued to

an This course quickly While step; to through particularly new of performance we'll more as the our on of to our build is first ability our important launches launch. community demonstrates in response new to quarter continue first there's as one create the still synergistic Beachbody's Nutrition, we strategy combines program demand quarter. do, XXXX. the I'm advance compelling well digital to the about and excited first the over in the unique content, approach each that the in fitness, benefit as

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this muscle, has follow back from losing build to to reducing health for XXXX unique people gut entire our gateway so for much calendar from track. with offerings themselves to that wellbeing, will easy just launch to subscribers growing Our on innovation weight anxiety Beachbody serve an on giving building that solutions demand that get

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or our and leveraging quarter, last refined demand for programming viewership. continued on as our tier Beachbody premium body learnings we body helping call scale to also interactive initial the are by to We've those launch it. live drive refinements This from we year,

popular improving month. a of new We're most of our support an of Fat a body this on content Monday initiating challenges special and seen other With XX attractive reengaged every events Burns subscribers Fitness by we've performing is very lot presentations incorporated workouts started live most and existing this coaches, live the getting to special customers us several from content of these tear live Meltdown advantage feature Nutrition. live For programs on tier program fitness also popular first up the incredible format which premieres mash offering Morning week gives like three fun. our set Fix, competitive a we've from our trainers trainers new that to is together. They're in with a the that titles, and body instance, program versions program response on XXX, along the real to their of program. in of space And Muscle Day and

Beachbody talk on experience Okay, indoor own Home now Connected is but space, let's about category. competitive in a its is demand Fitness. cycling really the

recipes customers guidance, the and and Our meal content plans fitness delivered the proven a it's value directly in commercial see bike combining Nutrition bike on engaging all immersive grade our and with screen.

and it's priced superior value We But ensure experience the and holistic content proposition. digital ultimately, subscription is that continue Beachbody to bike that competitively. the defines our

brand digital the value is has an driving pleased acquisitions, of the approximately demand bike lever While X.X base we is which the Connected momentum for super our the with for defined lifetime subscriptions. We're users. for refer with category. customer and user our new in spear quarter to across as for important the Fitness million first to always how cohort Beachbody tip we the a subscriptions remain our entire build continue

to marketing. on Moving

marketing organization. been from the has our recent extremely the towards and ratio the Our The our back focus media actions acquisition. marketing to customer marketing and immediately CAC profitable efforts for spend are benefits at solely LTV drive most on continuing opportunities to to to We're managing that to seeing disciplined levels. accretive streamline our focus channels already efficient team on cashflow are historic

also We our evolve our to subscriber capabilities engagement lifecycle management to existing base. continue deepen with

launches, to we're upsells to to purchase addition our friction progressing funnel. we also strategy the as positive drive In the on response in product reduce new

place at For to accessories time. for instance, within we're the ability to complete business. Nutrition in go to their With mind will the purchase later pipeline the them. very innovation, month, in of moment from the same out product to of to when top the confident they a the strong return this app momentum customers and and roll supplements our allow first capabilities, transact This we'll merchandising ability very workouts it's for enhanced

the Our demonstrate results the and consistency of in agility our are content-driven business. and encouraging quarter first

we bound is unique most test sure an Then done and dynamic it be roll effective last the the are that's outperform it We year. technology results, And make results. especially help and a over advantage. content. the class we've get out customers industry. get to equipment expectations. to promotional world to or results customer We decades. That over who important when customers' two seen coach environment the it channel the in that One delivers it for even as We've the let creates create

summarize. drive me further remain environment. customer acquisition, customers, our but let for creating executing cashflow generate expect our long-term and on Combined focused a strategy Okay, We profits employees, and value revenue, focus focus on efficient not with demand disciplined any enhanced and on we in to marketing a on to laser shareholders. only profitability also with

to So turn with that, you. Sue, over it I'll

Thanks afternoon, good Carl and everyone.

power profitable to of to Let to the we position see two fitness for growth Beachbody me unique decades our in just plus what leadership. adding long-term opportunity by we assets, our remain levels continue capitalize marketplace, unlock our confident upon we as build Carl deliver and the in said, begin and the of on significant

QX program Week qX and year, in by ahead last the was reflecting rollout the on Protocol the fitness impressive of than for results, were they started Job our of with We turning of March these new XXth. launches. our driven million momentum $XXX.X strong One revenue and guidance, results by December, our innovative X Now, lower Gut followed total although were

business Nutrition and was was decline customers which And revenue $X.X at decline due service digital million, and the revenue. was from a other to two-thirds of digital year. from preferred Our prior out of XX% into reclassification of fees a

subscriptions this revenue a the comp X%. increase challenging have our from geographic shift, for XX% digital year-over-year adjusting against quarter declined would first of by So, only Digital XXXX. decreased

Quarterly However, retaining the content Engagement retention digital of QX to basis solid XXXX, [indiscernible] both of digital was continued our XXXX. our versus through compared year, subscriptions XXX pre-pandemic but in to baseline. subscribers levels first throughout adoption or compared our demonstrating reflecting and points last year quarter remained innovation. XXXX, XX%, to fitness compared consistency increased prior increased down solid

$XX.X to delivered of on pre-merger revenue quarter a delivered Our million, basis. Connected with first compared was in XX,XXX the XXXX Fitness bikes XX,XXX bikes

LTV. bike who demonstrates was to this together, revenue product enhances another our don't resonating $XX.X that Importantly, was our been of digital a quarter serve versus engagement proposition in XXXX. subscribers and with And with for own higher innovation amongst taken base, Historically, multiple who million, Nutrition compared value acquisitions bike. first is the down subscribers which own first subscriber a And fitness business, that drivers our states. needs XX% Nutrition digital new quarter have the key launches along further

new positive additional Given the launch and Nutrition a reads the that releases launches will from we're of growth set robust confident time. our to early over portfolio return pipeline recent year, to throughout

million gross was Connected turning higher Now, additional the gross margin costs the XX% was the production content XX% first remaining year. Fitness. reduction to of related supply due $XX of year-over-year COVID-related chain or XX% revenue last in the surcharges. our versus and quarter Over margin, The XX% in to profit negative was

touchscreen, as margin the due upsells so well the time, to made revenue products with we'll over targeted improve capture of Now, high-margin QX nutritional to of on as directly this more subscription sales attentive enhanced which we and on Connected do cross total increase and expect sell as Fitness are bikes' LTV in launch the we year.

Fitness $XX.X was gross key profit million three Connected negative was impacted by and Our drivers.

non-cash a million to added inventory quarter of income accordance charge This incurred charge. back $XX.X our adjusted to with we end balance open and NRB GAAP in EBITDA. is net PO bike a in is Firstly, calculation applied our

which lower remain he shipping leveraged And impacted highly Fitness third ARV our operating highest was Connected freight driver the profit. environment were costs, gross competitive. and by the margin our as Secondly,

of of declined versus are merger, now revenue. Our and year due points by Library, were BOD amortized costs. within basis last gross part cost Interactive content acquired of higher XX.X%, Content primarily And XXX these launch as which costs to predominantly Mixed being was production costs related the those as digital the margin digital the XXXX, to

XX.X%, additional mix. was The our margin XXX Our Nutrition the change XXXX. other point and change margin basis gross from which in supply surcharges evenly was product and split were chain a decline in between

expenses. operating to turning Now,

million. reduction $XXX.X a acquisition expenses were releases XX% lowest addition year-over-year partially million, to expenses targeted the operating approximately the total decreased retention, support the or as well notice P&L. change selling Net technology can of that public only million increase opportunities. and items marketing, new on in selling expense, acquisition, to you'll higher Brand. customer by and In related drive in costs, development lower, but One This to focused seen an from and realignment as line a and Our totaling four company return extremely $XX be offset risk costs $X.X marketing the accounting highest in legal to line G&A and and our engagement strategic in restructuring insurance program

per net and $XX.X million, Finally, diluted our $XX.X first basic or loss was EBIT and our loss quarter negative adjusted share. was $X.XX million

since unrestricted debt. an of working reflects cash Now, of cash ended no end is the of And timing not balance million quarter the capital and $X. balance quarterly of with we X indicative an in and cash ongoing turning the QX rate. outflows burn change the to sheet, the

first peak of preserve to we for from represented also XXXX cash And the the given expect we which investments remain Specifically, efforts inventory of can we year. and to increased from the to confident the quarter significantly cash, flow operations. and continue costs over remainder business manage projects, our decline the control that purchases capital technology

to move like I'd outlook. Now, to

will As flow maximization on we emphasis generation. look our and forward, cash remain profit

impact the launches. lower second digital quarter and between we the to seasonality to $XXX historical versus GAAP of we're QX, For $XXX which million, revenue trends, more product the XXXX, as timing prior reflects the subscriptions year of million total guiding new of exited of return

we million Additionally, loss in Brand $XX other an and from we as that terms efficiency quarter. adjusted organizational expect million cost QX of first the of from EBITDA guidance, we in the savings in initiatives EBITDA to benefit strategy between $X deployed One

a improvement realize than combined costs EBITDA year organization the our more guided, year. to as For versus previously we to adjusted the expect full efficiencies $XX CapEx drive million year, identify last a across regarding reduce of outlook. This to $XXX XXXX we reduction the and and approximately continue full we million opportunities

we're like directional color. not specific issuing some to I'd provide While guidance,

seasonality, significantly launches, and weighted be our Nutrition to XXXX, revenue the and total revenue quarter quarter expect half than to in slightly historical We back third to with to the our higher fourth XXXX be revenue expect of Also, versus our adjusted of not our linear cadence lower EBITDA drive we year full revenue improvements and forecasting we're loss flywheel. fitness which while deliver a quarter-to-quarter. line

half expect However, back be overall, our to of of year materially we the in adjusted than year. the loss lower the half EBITDA the first

it and work strong to has has for Carl, we've of Beachbody. Now, hand CFO to half what growth and privilege of a Marc the accomplished and and take every to a years couldn't Marc and to really seven passionate dedicated, Beachbody. Suidan. a for technology moment I'd many President before transformations, been I team's capabilities and like a what back competence together the turning past alongside talented, reins the the especially say background, so individuals ahead serve as in prouder over be I as in to

So Carl. I'll with to it that, turn back

Thanks partnership extremely with and your throughout grateful Sue. I'm your the for company. leadership time

I'd milestones. many most some a contributions made and new tomorrow and CFO. in have starts welcome Marc of our a half officially to Beachbody's role also important the seven such who You've key Suidan, past played years as over like

leadership confident exciting Beyond deep also a joining great technology and in addition at in with high time. he'll to experience us be various space, an Marc finance is his expertise Marc brings our team. the functions, growth we're him

productive to model. remains profitable create we're lean, operating a and subscribers efficient While with executing focus dynamic, environment the

than For company to conditions evaluate business our XX willingness discipline current commitment of been a our lens reality the the of more to has years, adjust a evolve. our through as with

First to quarter testament are that. results a

And throughout a when and products it Network positions healthy customers builds with lives. of questions circle Beachbody are and on open the new for that, with the and Connected Coach creates with Our that, a we And proprietary unique year. like flywheel momentum powerful have new with releases of brand, pipeline united our all resonating under time, Fitness mission solid shareholders, over you delivering our Nutrition, combine to help it that to please. I'd fulfilling to operator, value create virtuous our millions while and lead us and for up people

Thank you.

of of will Bank We question-and-answer America. session. Joanna the The now Zhao begin from the question line is Instructions] with [Operator first

You may proceed.

I segment question. questions business. my taking for you X, bike is mixed two if thank the one the I on have of Hello, may.

as you on understand, color bike? And the the curious Do could margin what my the like half then decline margin. the margin the expectation do the needs three the And you need preferred there year, raise, And you. if that? acquisition in mixed for second debt mix so, have would long-term or provide on is through quarter-over-quarter be prior on Just question the are some was to cashflow reasons causing to on the second are it the the of if Thank equity? this capital a raise what plans you capital? foresee

Okay, flow feel and to for in. Joanna, questions. very then much take hi bike free there Happy to then those Carl, cash jump and thanks the

from by we with business see in we've starting bike ultimately those value the more know cohorts we're that terms the of drove enhancing customers recently, So, the seen bike, trends. to LTV, and returning

price participate model cost is that but we're two now and to in industry to because the through like challenging long-term give we time, factors. is an it the AOV definitely So, AOV digital is right gross by we be operates us to in feel the resolved gives positive but deliver to been pressured business is and One advantage. offerings we our and needs bottom has AOV by supply. the well-positioned margin over which the excess an because differentiated nutritional need works has race fortunately don't one been

also supply and in that Connected shipping our the factors $XX of one as Fitness In terms will freight non-cash normalizes, help QX, But negative margin. charge. NRB costs chain the and our was that will us of cost, for impacted the to reduce the million start margin

So, million. longer. margin we're cohorts Joanna, $XX back the been retaining if negative would where on mentioned, negative pro up have sign you the basis, I gross $XX encouraging on forma million, that And seeing as not around bike a

though, expect closer And the to QX, So, for year, as breakeven the my bike from late improved digital gap if back tablet, breakeven. holistic on margin our the will the we to will view of improve to basically take that the to economics on margin of reduces bike now the which through increasing nutrition in the rest be unfortunately, live considerably. focus nutritional end is you upsells see from on scheduled go upsells will year for the QX the which a

I too I'll could. just there add

I then we bikes their to releases, content driven it to in one to a can decades, an that the subscription, see where difference experience is the of nutritional of And bike. the contribution turn if business they just business can expected business balance a now of subscriptions, have to lead demand for models But really the the and by our has this end also content to two purchase. it's be So, they we super bike the -- our don't It's been add really that to creating content, subscriptions. sales LTV purchase and want self-select just to become through back that, users have to for to -- these start visibility bike sell who always the our flywheel. tool, important but no, as people a acquisition

we quarter, it's responding a that at So, price was to bike inventory first did the move environment. in the

delivering flywheel, and drive they calm that really content to see on they value participate. at can then buy want we're the to those this sales Now, transactions subscribers profitable if we've content that focusing down appropriate bike and the when into

have goal breakeven, about before margin I I negative XX%. I XX%, said, us bike for will think be to it below It as think also you asked the we the that, the help negative year, the was that tablet, and to QX still the Right, But that. sales where was acquisition. are upsell together and now that consumers close gap digital the rest streaming we between of bike to with us do nutritional the

your there. profile answering cash question talking neat and related Just -- to flow

got the because on flow business So, of focused and release million no see with flow We December, comfortably several our operations. this $XX.X fund since actually you QX profitability, to can initiatives we've manage and no ended the to earnings we return came which reduction those initiatives going that QX, our debt. we three in And we've platform can cash deploying with basically from with enable One cash that cash know that significant capital do strategy And forward. a in in are included. from us the manage judiciously. drivers. was saving in key There flow consolidation and to Brand is personnel, cash that working QX that One the

The ROI on year second activities. reprioritization to in savings was capex AlixPartners that really in media focused to third the payback. those And year actioning, was the the investment

And in for those good so burn now year. inventory. so the high, it various technology, what in commitments relatively than a and now rest actually we media because the that place included were in cash of And still we're investments higher expect was QX, very

manage the environment, give to efficiency. also But profitability we're to we're evaluating us liquidity macroeconomic enhance adequate the have same at we time, levers additional to additional looking efficiency business, at the given liquidity while and constantly So, flexibilities. alternatives other and

angles. think we're approaching I all on appropriately So,

you. Thank Okay.

Ms. The with of Thank is Zhao. John question Partners. from the Guggenheim line you, next Heinbockel

You may proceed.

is predominantly wanted I opposed the break as that coming ARPU basically sequential out Nutrition right, subscribers, to on reduction that? XQ, of revenue, is bulk if curious coming thoughts segment? your from or And maybe Nutrition, of from plan that then in so Hey, versus million terms XQ $XX is it to that in start

mix Fitness. high current rank the sales historical and general guidance I we dynamics than competitive doesn't seasonality high return Nutrition market that QX the more and reflects will highest the AOV race that immediately that really John merit to marketing Connected return some think and Digital mentioned. the of sales maintain and Fitness a in QX gave on chasing Connected the expenses bottom I low the and us to But being focus

So our isn't Connected model business reliant those Fitness sales. -- because on

fulfill to demand Nutritional created awareness weighted sales as So, the more QX and we Digital Fitness, towards which bike year expect be will to versus that from in per improve basically as QX, well QX, plan margins. also in last Connected se but

could your to guess Okay. business, bikes content, providers XX%. ready get be back the in was on Can does margin Fitness and done may right, the I do more that. bikes, EBITDA think be is right? treadmills, before secondly, so Fitness hardware to in of you basically strength there or matter? business? right, to right, COVID, Connected that? anything. I'm Connected long-term, X% then else's is Can an do content, you bike someone secondly, opportunity there that you about business, And And is get hardware somehow Your that maybe deliver partner you're if to partner with to somebody out with the the

So, I the part. to of part on that we've issues, answer which that think supply getting business, The in some short of first now by the of Fitness terms the we reacted to inventory, ahead Connected is connected chain last the inventory. got of

having great a an we're that bikes, with where the the it. entire experience the to in not customers we're support infrastructure got bike, bikes, a produce we've So, forced we and to position delivered

sort rate-based that we're with is integrated experience the and content that creating. training that into that However, of screen heart

experience, think bike. while is other commercial-grade we've that sourced it's our that So, fitness equipment will stream experience mixed the best content on do through on really with providers to possible that we quite their devices, the screen, bike this purchase we partner the big proprietary

get the really benefit as we now of demand follows. purchasing inventory additional So just

of tail have will of as first the don't as part we quarter think I So half as the think the to XXXX. it -- be always Fitness or won't wag back the be I of really much Connected dog business, did on a And the it it's ahead XXXX much. but

to starts the get then Now subscriptions. of appreciate in that and indoor that stationary subscribers returning of really to comes quality launches, come along admire their or with will content we this of the nutrition that or cycling content who that of benefit leveraging those content cadence drive recognize the genre

think do we business and don't margins a will absolutely I that that Connected be to drag kind expect scale So, business we've and continue performance. seen as historically overall return to on to the the Fitness the of better I

Okay. Thank you.

you, Heinbockel. Mr. question Jonathan Baird. with Thank next the line The from is Komp of

You may proceed.

go first more light Good Thank afternoon. any many mentioned of Hi. are subscribers, Yeah. the that the on you want of bad I you. super million. Can that the to share how Carl, ask many then are digital $X.X interactive And just subscribers? sort multiple how on across users those platforms? you premium

And significant then XX-day subscribers subscription obviously, of take those subscriptions percentage And users, pool a the people a trial the free and Jonathan. segment is such get that we them, don't through track on-boarding discussions and is these primary in we we become Nutrition on subscribers. BOD of those those free subscriber. break We then our in is of digital as offer Yeah. cohorts that also don't live to that bike business content, calls. sales. break we're then believe the out in super say significant And, will the we those both files out, this the I'm will also, sorry, but trial terms I people but do model what the I a

to how some thoughts live time the and with has look you've now been at a on content uptake in the just spend you content But any when it? few made as quarters the had some to adjustments

that of the though two where last good a very unit in count itself that without subscriptions in if itself, quality of feel subscriber in on I experience up out or screen we to significant we unto taken now is maintain that efficient. really certain three bit distinction, I that as its trainer. of cost a would And or produce last the did environment. gets since unto just But the the subscriber to more with some fall little our done would production that that so to was months incredible differentiation business get this this success just pull actually, Yeah, business, of we marketplace. one will relationship frankly the sort a we've what about it. that out now the say costs it's to in we expenses and terms say, launch the consider sacrificing a things there I be the that is just And the get finesse

integrating a we're the in terms decrease get our to we to-platform this has that single moving that producing a we're footprint company platforms, content, live Beachbody reduce of significant and how as to cost. in instance, platform, For from on-demand one

we're right feel structure direction, the to demand those cost relative I So overall, live the the workouts. for about and in good moving

broader much expect major then Thank path when to of any any the the get from and back helpful. there? pieces, moving that sort to Okay. maybe coming And That's mix wondering, color how to from helpful. the to when if And major provide rest would on one of profitable moving positive you growth look you get the outlook just from flow. get business? And is the be I'm then question there and comments the on the pieces to could bridge you free business on at cash versus how you. the point, today much

break. X, launch for just last which launch just do technical new content this the four we've the network, of protocol is the turn up, half healthy our get program back the Sue, stuff. The And said primary as environment was an with call, is just enormous driver our gradually for -- Job is the then what that turns post-pandemic And And launches. week quite Well, and this now the like to in we seen the does of of the of We I'll influencer successful. this spring business XXXX, start coaches. social and flywheel us. wanted was success you it it

point productivity XXXX, only to health we're snowball a more catalog. generates people now new half to a them they Those productive. This mindset who mindset productivity. some well-being, more the one results, launches. And wanting And of plus we given way more the back launch within of are XXXX. of our in social post-pandemic the productive, media that programs return effect. launching promoting effectively environment people more seven their And has coaches back specific here. launches Nutrition As of get in to our is in more the get a bring make have had a of I normal also that seeing year, on they're to they program take and want additional We care this

So productive. to never flywheel coaches more keep we've fuel the to and work had the

on this what has our bike the us two and So business LTV it our so the is gets force an is -- so been to right? profitable normal selling again, that the to is is And make for of normal, accretive tool. end the decades of back versus many this This acquisition years. trying that bike

really we it perspective, our business don't business add the way want Sue, that to to made a and this cost we've that? from you what that to correction know since we're I feels XXXX. back like grew the knitting Now stabilized

Yeah, just the in XXXX, you XX macro I even the believe if And that crisis over environment, the bubble would global back or XXXX in so last will between is of say, we because we or I tell look XXXX. we're conservatively financial or prudent. dot-com COVID John, years modeling the in which

versus paying variable a has we've model coaches, only for Carl lever been sale because it's has new and example, business content, just that's meant are than made. core most faster sales variable business actually been why because light costs the cost is realign Our that when we driving revenue. to and can as had with structure. And that And costs quite our CapEx fundamental and our resilient pivot primary fixed rule costs is said,

profitability, important one said, are and with brand media we've critical we've comment, of that clearly a to initiatives getting I also of two for faster, mentioned on launches obviously think Carl taken various were only just the diligently, lineup and then terms but way. help Connected as quarter deployed with QX consolidated I achieve now focusing about and requirements levers that one us in time XXXX. I'd partner conservative but that working the network to path focusing the and even guidance, initiatives make platform good, profitable and executed our to really guiding our on and despite very definitely accelerated profitability the efficiencies will those XXXX, at we're prerequisites and CapEx there and we've we that profitability those for the just are we well we're And associated feel and demand that the but savings, returning very the are a modeling, path or the in second Fitness with all

to And the know clarify, just I more increased XXXX $XXX that expense million a from than follow-up XXXX. by to advertising

do at it? I not could way With progress lot getting back lower you obviously, level? to than to of you the think a think that look point, that XXXX a expected is make is one at sales fair Or

right, $XXX marketing the think XXXX million of and I in QX about million, to compared expenses selling were $XXX quarter. this

million and about $XXX in just relates media what's the revenue million also coaches. just So $XX but commission QX we roughly spent to that is think pay relatively interesting over that similar not I that out we the

LTV really investing targeting the curated via strong we channel, So immediate media might to are and a continue CAC we with sizable But fact marketing, has I now. which make payback because payback initiatives through highest with a marketing the those selling payback again, in ROI media pulled right, longer-term that despite have in been that commission coach the and direct in. investments and mentioned to

priority flywheel managing we will continuing I but profitability, it's the that of that getting the engage flex see that drive back on as ultimately and products us is So launch as opportunity to and cash, right to now think item something customers -- -- something and for is we line business.

Okay. you. Understood. Thank

Thank is with from you, Cantor Ben Sherlund Mr. next Komp. Fitzgerald. line The of question the

proceed. may You

click bit flow free burn. Hi, question. of guys. kind my cash to just for little double a the on wanted I taking Thanks

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Sue, that, I could. I'll think with I start if

the the big. business would change built, really way is the the I believe don't model Just sort perspective, I betting of we're

launches on our what profitable only think I those investing a on immediately accretive frankly, opportunities reasonable a media is based conservatively done outcomes product we've more of return on in predictable model to media that are expectation against from based cash or flow.

expense will just that maximized and tightened allowable. call made. our marketing to media only our of training what promotional generates sale and coach network that you mobilize we've team an we So we've programs time, At if continue force and powerful the is incredibly would this the with if efficiency incentives same productivity a and

skis, it, cleaned last predictability of the our that outcome very haven't up sight those the because those So made something or is a those. launches investments cleaned our of back that we're we advantage to into on the that balance time still have that of because digesting line year burn, we not good launches. the to cash At tempo we're XXXX we've take up expenses, same we've for to pulled have of over CapEx of leaned we we've

we're content the nutrition turn to company to using appropriate its revenue and EBITDA. the and relationship of to Now, flywheel return

is is it, the XX looking I through years more the program lens new at the in we our terms of way that the think quarters, experience of the in returns quarters hoping a ecosystem. I this the launch actually that's into is, don't So final outcome when really look of bet what that demand

Okay.

we you just also would we to which with if model we to have confused Carl inventory cash are to in of gone absolutely that. the from to QX, in CapEx, you at million isn't And of go reduced and $XX QX back conservatively, reduction, would but you position That's cash used I had especially impairment through cash QX. when reap and profitability million CapEx that the modeling as benefits, Yes, to foundation from can that say OpEx mentioned. business. $XX -- now flow run QX increase, the is to and go we faster, QX, of consolidation Openfit that the in fact not QX a get but million demand Ben be enjoying see BOD in with has $XX just about look percent if OpEx And from if even is that you in We're to burn XX%. if XX% sales and significantly would reduced to provided

highest quarter with of this QX So you're going continue to will spent be and year. our the

what continue our up, if we're were upside but And year, that's you see again, back they'd the to in will to conservative that, So using not demand of model. pick from end improvements the forecasting. be

Okay. gross marketing profit peak, of nutritional. loss, -- variable. of it's and not sales it's it's excluding And XQ, come And then at maybe down it's covering expense the the How looking gross the a of Connected follow-up and is kind even barely digital of on the off kind OpEx much from lines. really Fitness

look that's to the had to to and expense guys the price marketing a cut soon was of noticed let you Peloton, down me guys to and are burn. is that kind was that market something Google still demand modeling trying on cash of free says, So, There the you on sales back mean, what of and you that coming keywords the Google, on I or like? trying bidding compare that flow dramatically the not. -- I would in sense get bike just Peloton I and are see

Obviously, disciplined difficult ecosystem. question the about about orders quite is most the the media thing particular media. we to approach whole on I'll the we’re attributing bidding, Well, answer way purchasing

fact, three years. awareness term last we've that And team seen and frankly, network, program, job most become on will the announcing media of the media searches side trending in up so has hours of it coach flow a And to the incredible significant appropriate And which an mix, creative, cash term launches. of really a ratio launching XX click particular a the these a a XX really done the program that they advantage is or our spend come social variable coaches the managing word. searchable in and value, new in pulled of will last term of new to it delivers create new profitable top for taking within and in media media. near And

sales breakout happen. I'm until the but that note. if -- expense marketing So not don’t you or you have as anything sure I asking sales was expense, and not, cost Ben to us if Sue actually doesn't want that know

is And total our total as coach coaches media right made. I Yes. think sale our said, is line yes, expense – QX. Carl a and without on million And we pay the and QX, expenses when in exactly P&L. biggest that a item for about amount they is only was $XX commission Carl our I mean, variable doubt coach We -- the completely are a

a optimize a other of million QX. and this in is again, $XX -- year, of continue line we number then that's the and that And but for materially technology XXXX it's but reasonably than it CapEx key So and is marketing And majority full that line shared we impacts for versus two-thirds, line XXXX. development administrative, item it was was it the CapEx. In million items XXXX, other cash XXXX, burn that for the material. certainly still about What significantly high. again, XXXX. that's I number example, quite And haven't about year, in think and general lower selling that $XXX to each

guys. Thanks, Okay.

over the Carl That remarks. Sherlund. for turn you, concludes Thank I'll to closing call back now Daikeler session. the Q&A

Thank as with also us shareholder you hopefully Sue, and news Suidan, live appreciate we lives. results And Thanks call. deliver and you, work need fulfilling hard really everybody have we and healthy We'll Marc encouraging right. an look our to again. to people introduce expect next on to the so value I that the All that incredible tenure for us to forward jumping for much. earnings

for joining today. your thanks And faith your mission. So us, in us thanks belief for our in

That concludes today's your joining of for day. rest the and conference enjoy call. Thank you

you. Thank