The Beachbody Company, Inc. (BODI) 7 Nov 232023 Q3 Earnings call transcript

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

Following the presentation, we will conduct a Q&A session. Instructions will be provided at that time for you to queue up for questions. Instruction]. [Operator to this like being call everyone recorded. remind would conference that is I the your over Managing now conference I'll turn to ICR, Relations. Director Investor host, of Williams, Bruce Please go ahead.

third you call and the are Marc Executive Officer. Carl Mark of Financial us and Daikeler, me Chairman today for Executive Suidan, Beachbody everyone, call. With Chief thank for Welcome, Officer; our the quarter Goldston, Co-Founder earnings on Chief joining Company; and

the for Following remarks, questions. the we'll up call prepared open

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

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Marc identified cost Suidan, lower additional million $ must about talk million our of and an we we the out CFO, taken $ the XXX in We have in savings. previously critically, have cost will breakeven and XX Second, company. that

savings total of bringing And June architected cost the expect realize turnaround have $ arrival implementation after the plan savings additional million these We my aggregate to we of XXXX. XXX in annualized begun since the XXXX. third, in XXXX, we to in

As that our some since aggressively part extremely we'll the of that be XXXX. subscribers ways who pursuing former were win plan, our base to are CRM people added million database qualified to either leads and valuable or back XX of

untapped Growth dynamic organization diversify developed fortified In addition addition, Burchard, to of outside sales This aggressively and additional for pursuing the direct-to-consumer direct channels partnerships we Day. by was our and help the our with beta product the offering of on focus world-renowned Brendon those we're midterm, goal. in near and generation additional quarter, to our deliver that Last the create the from channels. on that is programs revenue main we're investors and developing told I to streams cash designed

to becoming return we Last milestone believe be nutritional importantly, on As the profitable path that including positive, a of a be would turnaround library the spoke believe and, expected cash savings, the of effort. products, with $ capital. digital plan for flow skilled I a key prioritize assets, frame we the elements about. cost invaluable there's a for valuable of growth customers highly over costs all indeed a at drastically We just million in cash the fitness of quarter, reduced current world's most turnaround invested BODi ranging revenue team. a massive extensive to XXX and time developed a and database leadership along possesses what plan result clear which

to we've got here convinced be of really the profitable five those is you products, concern. for the If exists for than much a efficient or months, return scale not profitable our primary see the operating I now that cost-savings we've more major and manner. revised position that of Market the We its girth a at got architected P&L more the potential but leverage company, scale during TAM that the that am the is turnaround and generating ever I've we've the the in Addressable highly course in XXXX look to cost Total believe structure of the and result largely company, can and a created, BODi you the dominant, plan initiatives. one to been size team, as as

and turnaround quarter's plan on there company. taking linear, call, to will In expect meticulously the making positive you should has progress. place good earnings are additional changes the some I road, not see we're be in coming and crafted, the been As purposeful definitely last bumps turnarounds months, stated our but in and

companies Propulsion Athletic a like Converse, this Our Gear, space Reebok, I'm LA in is world-class. got because products experience and are enthusiast, APL. Labs, This I my fitness wheelhouse. this athletic And believe and leading significant with or I've

team profitability. expand that strategies we're focusing cash. our to and in and additional focused on to more driving importantly, way of process our I that revenues CAC implementing sheet Now to that sales I'm and will marketing improving and cash to monetization we're opportunities profitable our balance helping the ecosystem, optimize building the on drive on firmly LTV the believe

just have started. us, and We getting front in we're opportunities of significant

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I'd moment in line and changer, who us be bottom insight XX% Just the a like flowing positive over the transformation. to cash flow in That's X,XXX revenue the this to on take to going in now be turn through into XXXX. to mic future. a should will result game to additional in change. more This it's the you critical helping reduction of reflect to give Carl? basis an company's point Carl,

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Okay.

let's talk So about the quarter. third

subscriber implementing a QX. additional this First, for our Officer, financial revenue XX% X.XX highlights, turnaround results results quarter, made give Suidan, sequentially flow primary our high-level EBITDA QX. on million range. overview overall and where decreased to significant were focus and cash adjusted guidance within while then our operational our will count generation QX plan in by and Marc of $ Chief is guidance Financial progress new on QX opportunities. digital incremental and revenue our creating We've detail And

XX% healthy come and a last of which generated these muscle that we weight including subscribers to health step sustainable, a world. to nutrition. Honestly, And obese quarter, to can broad single users, and where over you've people meaningful nutrition good like create doubt loss and vital the pharmaceutical plus at the mentioned we fitness supplement BOD and end array of a of habits. significant That's exceed metric encouraged considerable amount wasted solution help even but healthier their to they the healthy overweight Americans no chemical our that approach solutions on questions health have improve that by sustaining helps lifestyle digital for functioning towards lifestyle development is the drugs, services as skeletal attention It's of feel choices, recognize we nothing lifestyle of critical the subscription or some change. loss structured, including QX effect premium drugs I, is tools. in demand personal treatment does that actually ours. mindset programs, a also which is to of make mass, about fitness a We're in. of XXX,XXX solution esteem with As is QX. more are in people QX in only for investment and a which XX% can really have and people the heard grew GLP-X And GLP-X weight without emergence lifestyle step-by-step we the BODi's

headwind very brings importance tailwinds. reason we're lifestyle to excited our change on a That's us the capitalize don't just about a market an puts this When as makes result, the and transformation. long-term key these our a these our that turnaround important position component but another to forefront As that how us we obesity and the position unique with in see pillars tailwind started turnaround, it rather as for were reducing decision. three we to in responding to tailwinds, plan of significant aligns treatment GLP-X of industry there a

to cost expect as First, of our scrutinize to cost continue we million capital and savings, had realize annual XXX carefully end efficient we rearchitect cost in structure. we the make XXXX, $ By company as to allocation massively possible. to

initiated BODi of XX% Second, was former Beachbody at we reinvention our our subscription a and of this platform, completed introduction Since year. from subscription subscribers original digital the the digital the to earlier rate, platform, expectations. on-demand premium simplification renew our continue to which new which a exceeds

cash-generating with revenues marketing delivering costs. on need customer sales higher restructure we to and focus a lowering Third, and acquisition

drive revenues. detail that call five let's against, generate new and which third progress we're on initiatives Overall, to pillar. executing this profitable our are will key believe So, there use that we memberships

of is network we're their Restoring step is from at industry, extraordinary plan, and customers Chief for unlock the network of this high-performance The and more of that improvement company's feeling shifts performance achieve Advisor. role central and partner the effective he's momentum of BODi First, achieving and York mindset partners our category help in Times equation. Brendon's strategy. achieving teams good optimal every a To themselves. go-to-market leading partner initiative as so cost the potential to we supplemental of speaker, which of one of designed opportunity transformation, is the partner appointment team. lifestyle habits current of Burchard, positive best-selling to and most to New improve they is assisting Game call health by that team as the people Health's end, Growth and coach the productivity overall results our Growth to adding turnaround high-performance in to and the our author the all Brendon Plan an network being partner help activation. the for our an famous focus their income the that includes motivational largest process to excited the world's coaches, our and at mentality the to Performance initiative potential network

November into a company the X. for off That's and offering. Our relationship on app in with Brendon kicks revenue-sharing a is Brendon's partners, incorporate revenue an our built partnership Growth that opportunity new to few product our around Day just additional days and

recently we compensation that generating addition, we high profitable results-oriented our partners, for incentives revenues. with partners new compensation implementing structure next year, will In new the for especially announced which while early reward are overall performance, aligning

aggressively customer database database special in and prospect progress early update you our minimal We to and offers reactivation. continue database cost in the have process, quarters. e-mail opportunity We'll XX begun massive Second, mining it's of expand started upcoming this We've to refine customer mining August while on database upside. with million our campaign reactivation testing the with initiative activate significant our in and broader addresses. over still the can this

Third, performance that more stronger marketing results. deploying producing efficient tactics direct marketing. been We've are

version I with and Like converting has visitors over impediment been of XX-Day on content behind of previews elaborate a content bringing YouTube, is converting that our how new For this XX% locked we subscribers, we Carter, we're we pilot, BODi shop with affiliate paywall which us for into QX, increase and introduce enabling We're this media they industry approach. our programs, our is. to a distribution paying free us presence will in in and opportunity offering and excited launched X.X% Rakuten QX paying friends significant model, our optimized this we've incentives which more opportunities subscribe placement, us showcase over proven XXX X.X%, said, has preview to Rakuten to of conversion those subscribers. our the powerful to norm. resulting refer Also, when Carter new quarter, launched the preview content rate free fifth, traffic ratio structured most to mid-November. to which structured Amazon. an opportunity free give BODi. in to a our rewards 'Fourth, And earn consumers step-by-step us. instance, the with is on the until attract better to is more launch quarter, preview to believe development prospects We into real to XXX scheduled will subscribers That tier content tier our samples prospects while programs, to results. over to let give visitors plans process structured see new superior our believe attracting higher distinction our which me Last an prospects business Fix like asset, and you plan to we gives on to which industry-standard. nutrition to tier of programs And our people including This get Amazon. people user lifestyle let And experience try currently, imagine, and healthy of the leads plus will our popular transformation. our been tier. an PXXx visibility approach expand and of drive our our even Sandy, The the But a conversion to announced can personal a platform. introduce to new now, real the

Although BODi is the capture will the real treated our significant demand fourth into sold optimizing This partnering us. Amazon, products as Amazon our platform search nutrition offerings, on brands listings with we to as broaden fitness largest go just as been the By on of channel and on the sales have the latent our product previously for well for never Amazon, one as started quarter. expect resellers and we've of getting volume we a platform.

kind XX the specifics we critical of updates quarter content of heard provide I'm now, laser-focused one new this is Marc? our of calls. of profitable our call is this this and to for the expanding fitness potential only over earnings these next all and on that generating we'll demonstrate to as years being the walk we more XX Marc the enthusiastic which turn about our PXXx XX massive years visibility to achieve years. over health But TAM, are future revenues So, proud third as maybe on to of let All the of over are mass initiatives. companies to me with our actually through financials. few

revenue from sequential past lines XX.X the on Digital the our QX. QX QX. and Thank quarterly in you, guidance X% was below in pleased prior met quarter, of in XX% in the in third used quarter. adjusted we and the revenue good I from revenue my and XX%, eighth I and all announce XX% the changes revenue, down everybody. product in will Mark, to in seasonal This revenue we operations. consecutive that decline on the industry. performance. year, afternoon, our The am EBITDA given quarter Carl, sequential results fitness that is was Revenues three with The for the above have will year-over-year of KPIs for achieved XX.X I exceeded in third reflects million or quarter, and each discuss which elaborate provide normal along comments million, on our and and the the was focus now guidance. the XXX.X then will our $ guidance guidance our midpoint quarter. were I X% decline QX $ million, $ down fourth change cash

from Our down X.X quarter. the overall digital second subscriber $ million, $ million X.X count is XX% in

selling that partner flat the of A we X% reminder supported prior the subscription, XX.X our the down XXX revenue revenue remained $ million of ARPU over our quarter-over-quarter $ $ partners was which tens by higher, Given our digital price of Nutrition XX and also the quarter. is in from QX. was annual thousands count, body stable now million, have products.

the down $ XX an down file bundle at X,XXX lever environment We our a $ increase. called macro and without nutrition. decline broadening quarter, X.X XXX,XXX, strong bikes the with channel bikes sales spend sacrificing QX, subscriber $ revenue we profitability. prior price. a value, QX. X% We versus introductory we prior inflationary in new nutrition this X,XXX and offers Fitness from million, will In monthly a This delivered bundle will $ launched believe bundle Nutrition from was this size believe in in million quarter. of the in in Connected X.X the digital distribution competitive is XX% XX% new Our $ consumers XXX,XXX resonate

our a engagement lower see higher by churn. as continue more LTV bike show We bike as driven higher valuable and across to promotion. sales subscriber drive to customers by base volume lever The is

basis below gross We increasing to shift. basis the achieved was quarter, margin. for the decreased prior was quarter. a a which gross XX.X% XXX XX.X% from is decreased minus by from XXX for material Moving margin year points margin margin Digital difference for the last a XX% inventory point XXX promotions And, same and driven to XX points the gross gross margin basis fitness of cost accounting quarter, quarter quarter, quarter, year. Fitness mix which compared which for the the margin gross points period due prior and ago. same The Nutrition year declined to raw Connected quarter, last the for Compared points. to prior minus nutrition and margin is margin period gross lower quarter, basis was connected deleverage. charges margin big point. XX users. XX.X% Compared XXX% the basis the year. same decrease gross gross period XX% versus points margin XXX sales product The basis digital to the a gross last decreased the to less due is is this prior than of

new the to of launching They will existing but We our out a iPhones connect have our inventory. consumers. reduced have and offer Watches. to won't significantly and new The screen, appeal offer in large price-conscious bike are December inventory Apple will

with to bikes generate cash lifetime selling to Our be long-term on and customers strategy value. continues higher focused attract

includes capitalized year, a is cost XXXX fixed reduction Cost XXX overhead on from a million million expenditures, expenses $ for ongoing our which track improvement. to is a of expenses we were XX% representing basis. million reduction XX we XXX standpoint, and same period in take on additional From our million, a a in $ XX out on $ an $ and the Next, pillar structure $ and an million. XXXX evaluate cost took last are our transformation, total continue key in our which operating to XXX

cost significant we As for stated, is have fine structure operating leverage. our

XX.X% the Now revenue line. three XX.X% in OpEx through of was compared and and our walk marketing let to the me Selling prior year prior XX.X% quarter. in

detailed, marketing. restructuring We transformation pillar our selling the norm. is that and recognize key marketing, is is our Carl expense, of third than selling biggest our As industry and which higher

So, launched initiatives a we expenses revenue have our we XX% that to will of from selling of series XX% during XXXX. expect approximately marketing reduce

Let that. of we get three the explain me how main drivers to plan

First, to changes we selling plan. compensation October X on announced direct our

performance referred, lower new are for initiatives in marketing, facilities tax Second, models like we gifting. driving

year in We costs. our customer new drive customer a new points XX XXXX. additional X,XXX subscribers of these savings of three million drives minimal in January. represents Third, On XXX marketing reactivation strategy acquisition that benefit starting cash will a of is drivers This believe and expenses that selling for basis basis, $ additional million database $ lower with our revenue. this hypothetical approximately and flow cash will by

XX.X% expenses. development the XX.X% of Enterprise Moving prior Technology other on prior compared and in to quarter. revenue the to in was XX.X% year operating and

from by but percentage maintained reduced We XX% spend revenue, the as last dollar a our spend year. of have

and technology was new our dollar enabling XX.X% XX% G&A improving year. costs of the the last X.X% streamline spend revenue digital our prior prior functionality. down from while development and was in and compared to approximately continue to XX.X% experience The in quarter. We year simultaneously

a because compensation revenue as QX stock in over charges. increase of QX of increased an G&A Our percentage in noncash

was million prior G&A, in the X.X and XX.X a of savings. $ We Adjusted million compared million continue $ in X.X the Net a cost in a $ net of loss to $ more XX.X loss million loss a year X.X net of looking was a year for prior compared prior the $ our million of EBITDA $ in of XX.X loss prior million loss the and quarter. quarter. aggressively to to manage loss

connected a Our QX million. X.X business adjusted EBITDA reserve of charge $ inventory includes

balance Moving to the cash sheet flow. and

balance XX.X compared $ Our was debt The of largely decrease cash balance million driven $ XX.X in $ by in the million. million prior XX.X to the was cash quarter. repayment

declined $ versus $ Excluding $ the repayment, in million by debt balance and cash in QX X.X million X.X XX.X in QX. our million QX

in cash prior million was quarter X.X operations the versus $ $ used in third the year in and XXX,XXX cash million $ the X.X in Our prior used quarter.

end a $ the by net XX% XX.X $ represents quarter, was reduction quarter, our prior the the of driven at the at inventory which end primarily Our XX.X from down million million bike inventory. of

and additional purchases. successfully our do for allocating have level we eight consecutive We reduced requirements. to to aggressively on look quarters, continue at and inventory We capital net supply not our demand plan bike

million Our year PP&E quarter, the last of X quarter and year. X.X the million reduction of from $ CapEx in this for significant the a million was in quarter this $ third second $ X.X

quarter. $ million second content of improvement CapEx the X.X the $ X.X was in It for million quarter, year. from this prior quarter in Our was million this an $ X.X

So and The that content been X.X technology in production in million, be driven should coming CapEx was streamlining has our stack. $ our total run by approximate QX improvement CapEx our quarter. rate the and

cash manage company generate our focus on needs cash reducing decline and to the are despite cash positioning flow. we to We revenues positive continue use as the in

$ fact, you million. million XXX from activity, at cash use in year-to-date is investment $ last operations in year our XX In That when XX down $ and and look XXXX. was million it

down generate will our reposition this cash cash use free continue to flows. dramatically of improving We company path the as we of

to outlook for fourth Turning quarter. our the

a on stand our transformation As guidance our based reminder, where we in is journey.

slowest seasonally quarter company. is industry for QX and the our know, fitness As for you the

$ result, million. fourth be the quarter million XXX we range to revenues XXX $ a in to expect As of

$ and XX expect the $ million. XX range We X the X million net to loss EBITDA in range $ $ of million to loss of a million adjusted in

to open it questions. the the turn call Now I up over operator back for to will

Instruction] line Darin comes of Research. first the question [Operator you [indiscernible] Tuttle from Our from today Thank

My payment just here. Yes. And quarter great a comes up from the here. question debt

so this use a accelerated an sort latest of repayment one-off that following debt extended going payment, Or quarters there in that a Is have is plan? So plans was schedule? that to the one, be to debt of cash.

down Darin, XX.X The the is the schedule debt we Mark. was the in through XXXX. of this carries million one-off $ debt. now -- of paid That and out We continue a total debt QX. on February regular the

Okay.

Okay. And was a of and was up some the best of strategic of that was allocation returns flow part some more balance debt cash down just up where sheet opening the thought like cleaning Or paying for dollar? for following that the you incremental quarters? the just

filed Listen, relating our we you early lender. And in on. look with if debt modification August, covenant Yes. we to spoke information

that for execute the where that. to them, plans covenants to liquidity we're hand, was managing plan us part and the changed that with debt. on debt. other further we But And revenue with given all our against down of our capital negotiation outlook, pay there's now, and allows we on So got no the the

for you Thank Okay. that.

you. are additional questions time. this at no waiting Thank There

for back pass So to Carl the like to Daikeler I'd closing remarks. over call any

for everybody. Thanks today, us Okay. joining

the As want leave to key four our you we execute I plan, call the from to takeaways turnaround on continue today. with

marketing, revenues our sales Amazon. widening and more we're sales driving of performance aperture the body our tier previews to and First, free through profitable launch the expand channels

with introduction week incentives Bouchard Day are we and Growth the performance aligning Second, we acknowledge throughout our our network overall direct-selling goals. momentum with we're and partnership the of with and development our a environment increasing productivity personal and that but app it's Brendan models, this most financial partner difficult for

believing and be for fast for Third, want tools, all profitable and free revenues, nutrition unique the to all environment with driving we development this And moving loss I generating flow on in a the is this cash to thank company at supporting building and an we're our body believe weight to focus where process. increased cash. consumer. structured personal fitness, approach we're continue beach on vision through focused well our positioned value there and to great fourth, in stakeholders

progress to we'll our Our you that I in Suidan, work and posted reach can is extremely add forward. our meetings Marc CFO, or directly out keep any look Mark you. investors call. Goldston, next everybody. with forward Thanks I'll again, important, on analysts significant with with and management and demonstrating to activities request going Appreciate for our

all concludes participation. conference This call. Thank today's you your for

disconnect lines. now your You may