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The Beachbody Company, Inc. Announces Second Quarter 2023 Financial Results

Delivered Second Quarter Revenue Ahead of the Midpoint of Guidance

Net Loss and Adjusted EBITDA Ahead of Guidance

Improved Second Quarter Operating Expenses by 19% YoY

Amended Blue Torch Capital Financing Agreement

The Beachbody Company, Inc. (NYSE: BODY) (“BODi” or the “Company”), a leading subscription health and wellness company, today announced financial results for its second quarter ended June 30, 2023.

"We are encouraged by our performance in the second quarter and the progress made towards our company transformation. To that end, I am pleased that Mark Goldston has joined the company as Executive Chairman to work with us to execute on the significant opportunities in front of us. Mark has been running public companies for decades with a focus on turnarounds and we have already benefited from his expertise,” said Carl Daikeler, BODi’s Co-Founder and Chief Executive Officer. “ We have restructured the financial covenants in our financing agreement and paid down our debt level by $15 million to approximately $35 million, which reduces our interest expense and gives additional flexibility to execute on our strategies and to develop profitable revenue streams that generate healthy cash-flows. Also, from a cash standpoint, given our third quarter guidance range, we plan on using less than $5 million in cash from operations as we continue to improve our margins and cost structure. We are excited about the trajectory of BODi’s transformation and are proud of our team’s hard work to get us where we are today. ”

Second Quarter 2023 Results

  • Total revenue was $134.9 million compared to $179.1 million in the prior year period.
    • Digital revenue was $65.2 million compared to $78.0 million in the prior year period and digital subscriptions totaled 1.53 million in the second quarter.
    • Nutrition and Other revenue was $64.6 million compared to $90.5 million in the prior year period and nutritional subscriptions totaled 0.20 million in the second quarter.
    • Connected Fitness revenue was $5.1 million compared to $10.6 million in the prior year period and approximately 5,500 bikes were delivered in the second quarter.
  • Total operating expenses was $106.9 million compared to $131.7 million in the prior year period.
  • Operating loss improved by $20.2 million to $24.2 million compared to an operating loss of $44.4 million in the prior year period.
  • Net loss was $25.7 million compared to a net loss of $41.9 million in the prior year period.
  • Adjusted EBITDA1 was $(4.8) million compared to $(1.5) million in the prior year period.
  • Cash used in operating activities for the six months ended June 30, 2023 was $14.4 million compared to $33.3 million in the prior year period, and cash used in investing activities was $5.0 million compared to $19.2 million in the prior year period. Total cash used in operating and investing activities was $19.4 million compared to $52.5 million in the prior year period.

Key Operational and Business Metrics

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

 

2023

 

2022

 

Change v 2022

 

 

2023

 

2022

 

Change v 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital Subscriptions (in millions)

 

 

1.53

 

 

2.28

 

 

(32.9

%)

 

 

1.53

 

 

2.28

 

 

(32.9

%)

 

Nutritional Subscriptions (in millions)

 

 

0.20

 

 

0.28

 

 

(28.6

%)

 

 

0.20

 

 

0.28

 

 

(28.6

%)

 

Total Subscriptions

 

 

1.73

 

 

2.56

 

 

(32.4

%)

 

 

1.73

 

 

2.56

 

 

(32.4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Digital Retention

 

 

95.2

%

 

95.6

%

 

(40bps)

 

 

 

95.5

%

 

95.6

%

 

(10bps)

 

 

Total Streams (in millions)

 

 

25.3

 

 

31.0

 

 

(18.4

%)

 

 

55.0

 

 

69.2

 

 

(20.5

%)

 

DAU/MAU

 

 

31.6

%

 

30.0

%

 

160bps

 

 

 

32.1

%

 

31.6

%

 

50bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Connected Fitness Units Delivered (in thousands)

 

 

5.5

 

 

8.8

 

 

(37.5

%)

 

 

10.2

 

 

25.4

 

 

(59.8

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital

 

$

65.2

 

$

78.0

 

 

(16.4

%)

 

$

130.0

 

$

159.8

 

 

(18.6

%)

 

Nutrition & Other

 

$

64.6

 

$

90.5

 

 

(28.6

%)

 

$

138.7

 

$

188.2

 

 

(26.3

%)

 

Connected Fitness

 

$

5.1

 

$

10.6

 

 

(51.9

%)

 

$

11.1

 

$

30.1

 

 

(63.1

%)

 

Revenue (in millions)

 

$

134.9

 

$

179.1

 

 

(24.7

%)

 

$

279.8

 

$

378.1

 

 

(26.0

%)

 

Net Income/(Loss) (in millions)

 

$

(25.7

)

$

(41.9

)

 

38.7

%

 

$

(54.9

)

$

(115.4

)

 

52.4

%

 

Adjusted EBITDA (in millions)

 

$

(4.8

)

$

(1.5

)

 

(220.0

%)

 

$

(5.7

)

$

(20.6

)

 

72.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outlook for The Third Quarter of 2023

 

 

Outlook For Quarter Ending September 30, 2023

 

(in millions)

 

 

 

 

 

 

Revenue

 

$

120

 

$

130

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(32

)

$

(27

)

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

Depreciation and Amortization

 

$

11

 

$

11

 

 

Amortization of Content Development Assets

 

$

5

 

$

5

 

 

Interest Expense

 

$

2

 

$

2

 

 

Equity-Based Compensation

 

$

4

 

$

4

 

 

Other Adjustment Items

 

$

1

 

$

1

 

 

Total Adjustments

 

$

24

 

$

24

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(8

)

$

(3

)

 

 

 

 

 

 

 

 

1 A definition of Adjusted EBITDA and reconciliation to net loss is at the end of this release.

Conference Call and Webcast Information

BODi will host a conference call at 5:00pm ET on Tuesday, August 8, 2023, to discuss its financial results and matters other than past results, such as guidance. To participate in the live call, please dial (833) 470-1428 (U.S. & Canada), or +1 (404) 975-4839 (all other locations) and provide the conference identification number: 491322. The conference call will also be available to interested parties through a live webcast at https://investors.thebeachbodycompany.com/.

A replay of the call will be available until August 15, 2023, by dialing (866) 813-9403 (U.S & Canada), or +1 (929) 458-6194 (all other locations). The replay passcode is 707956.

After the conference call, a webcast replay will remain available on the investor relations section of the Company’s website for one year.

About BODi and The Beachbody Company, Inc.

Headquartered in Southern California, BODi is a leading digital fitness, nutrition, and mindset subscription company with over two decades of creating innovative content and nutritional supplements designed to support and enrich strong Health Esteem. The Beachbody Company, Inc. is the parent company of BODi. For more information, please visit TheBeachbodyCompany.com.

Safe Harbor Statement

This press release of The Beachbody Company, Inc. (“we,” “us,” “our,” and similar terms) contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are statements other than statements of historical facts and statements in future tense. These statements include but are not limited to, statements regarding our future performance and our market opportunity, including expected financial results for the second quarter and full year, our business strategy, our plans, and our objectives and future operations.

Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date hereof, and are subject to risks and uncertainties. Accordingly, actual results could differ materially due to a variety of factors, including: our ability to effectively compete in the fitness and nutrition industries; our ability to successfully acquire and integrate new operations; our reliance on a few key products; our ability to manage costs with our existing and future operations; market conditions and global and economic factors beyond our control; intense competition and competitive pressures from other companies worldwide in the industries in which we operate; and litigation and the ability to adequately protect our intellectual property rights. You can identify these statements by the use of terminology such as "believe", “plans”, "expect", "will", "should," "could", "estimate", "anticipate" or similar forward-looking terms. You should not rely on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements. For more information regarding the risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements, as well as risks relating to our business in general, we refer you to the "Risk Factors" section of our Securities and Exchange Commission (SEC) filings, including those risks and uncertainties included in the Form 10-K filed with the SEC on March 16, 2023 and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are available on the Investor Relations page of our website at https://investors.thebeachbodycompany.com and on the SEC website at www.sec.gov.

All forward-looking statements contained herein are based on information available to us as of the date hereof and you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this press release or to conform these statements to actual results or revised expectations, except as required by law. Undue reliance should not be placed on forward-looking statements.

The Beachbody Company, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

June 30,

 

December 31,

 

 

2023

 

2022

 

 

(unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

58,686

 

 

$

80,091

 

Inventory, net

 

 

43,364

 

 

 

54,060

 

Prepaid expenses

 

 

8,549

 

 

 

13,055

 

Other current assets

 

 

48,619

 

 

 

39,248

 

Total current assets

 

 

159,218

 

 

 

186,454

 

Property and equipment, net

 

 

58,205

 

 

 

74,147

 

Content assets, net

 

 

29,193

 

 

 

34,888

 

Goodwill

 

 

125,166

 

 

 

125,166

 

Intangible assets, net

 

 

5,648

 

 

 

8,204

 

Right-of-use assets, net

 

 

4,033

 

 

 

5,030

 

Other assets

 

 

9,661

 

 

 

9,506

 

Total assets

 

$

391,124

 

 

$

443,395

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

13,301

 

 

$

17,940

 

Accrued expenses

 

 

49,116

 

 

 

64,430

 

Deferred revenue

 

 

107,378

 

 

 

95,587

 

Current portion of lease liabilities

 

 

2,095

 

 

 

2,150

 

Current portion of Term Loan

 

 

16,250

 

 

 

1,250

 

Other current liabilities

 

 

3,356

 

 

 

3,283

 

Total current liabilities

 

 

191,496

 

 

 

184,640

 

Term Loan

 

 

25,836

 

 

 

39,735

 

Long-term lease liabilities, net

 

 

2,249

 

 

 

3,318

 

Deferred tax liabilities

 

 

137

 

 

 

181

 

Other liabilities

 

 

4,229

 

 

 

3,979

 

Total liabilities

 

 

223,947

 

 

 

231,853

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.0001 par value; 100,000,000 shares

authorized, none issued and outstanding at June 30, 2023

and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value, 1,900,000,000 shares

authorized (1,600,000,000 Class A, 200,000,000 Class X and

100,000,000 Class C);

 

 

 

 

Class A: 176,157,734 and 170,911,819 shares issued and

outstanding at June 30, 2023 and December 31,

2022, respectively;

 

 

18

 

 

 

17

 

Class X: 136,450,256 and 141,250,310 shares issued and outstanding at

June 30, 2023 and December 31, 2022, respectively;

 

 

14

 

 

 

14

 

Class C: no shares issued and outstanding at

June 30, 2023 and December 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

641,649

 

 

 

630,709

 

Accumulated deficit

 

 

(474,171

)

 

 

(419,235

)

Accumulated other comprehensive income (loss)

 

 

(333

)

 

 

37

 

Total stockholders’ equity

 

 

167,177

 

 

 

211,542

 

Total liabilities and stockholders’ equity

 

$

391,124

 

 

$

443,395

 

 

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Digital

 

$

65,214

 

 

$

78,015

 

 

$

129,987

 

 

$

159,760

 

Nutrition and other

 

 

64,628

 

 

 

90,516

 

 

 

138,748

 

 

 

188,180

 

Connected fitness

 

 

5,106

 

 

 

10,605

 

 

 

11,114

 

 

 

30,118

 

Total revenue

 

 

134,948

 

 

 

179,136

 

 

 

279,849

 

 

 

378,058

 

Cost of revenue:

 

 

 

 

 

 

 

 

Digital

 

 

16,336

 

 

 

18,406

 

 

 

31,303

 

 

 

34,831

 

Nutrition and other

 

 

27,202

 

 

 

42,002

 

 

 

58,241

 

 

 

86,776

 

Connected fitness

 

 

8,666

 

 

 

31,459

 

 

 

16,221

 

 

 

76,165

 

Total cost of revenue

 

 

52,204

 

 

 

91,867

 

 

 

105,765

 

 

 

197,772

 

Gross profit

 

 

82,744

 

 

 

87,269

 

 

 

174,084

 

 

 

180,286

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing

 

 

76,492

 

 

 

86,624

 

 

 

153,068

 

 

 

193,068

 

Enterprise technology and development

 

 

18,650

 

 

 

24,133

 

 

 

37,746

 

 

 

57,830

 

General and administrative

 

 

11,887

 

 

 

19,584

 

 

 

29,603

 

 

 

39,657

 

Restructuring

 

 

(107

)

 

 

1,332

 

 

 

5,280

 

 

 

8,555

 

Total operating expenses

 

 

106,922

 

 

 

131,673

 

 

 

225,697

 

 

 

299,110

 

Operating loss

 

 

(24,178

)

 

 

(44,404

)

 

 

(51,613

)

 

 

(118,824

)

Other income (expense):

 

 

 

 

 

 

 

 

Change in fair value of warrant liabilities

 

 

375

 

 

 

2,070

 

 

 

432

 

 

 

2,334

 

Interest expense

 

 

(2,368

)

 

 

(3

)

 

 

(4,699

)

 

 

(22

)

Other income, net

 

 

411

 

 

 

189

 

 

 

980

 

 

 

125

 

Loss before income taxes

 

 

(25,760

)

 

 

(42,148

)

 

 

(54,900

)

 

 

(116,387

)

Income tax (provision) benefit

 

 

12

 

 

 

281

 

 

 

(36

)

 

 

987

 

Net loss

 

$

(25,748

)

 

$

(41,867

)

 

$

(54,936

)

 

$

(115,400

)

 

 

 

 

 

 

 

 

 

Net loss per common share, basic and diluted

 

$

(0.08

)

 

$

(0.14

)

 

$

(0.18

)

 

$

(0.38

)

Weighted-average common shares outstanding, basic and diluted

 

 

314,312

 

 

 

307,205

 

 

 

311,740

 

 

 

306,786

 

 

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Six months ended June 30,

 

 

2023

 

2022

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(54,936

)

 

$

(115,400

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation and amortization expense

 

 

21,632

 

 

 

41,552

 

Amortization of content assets

 

 

11,020

 

 

 

13,180

 

Provision for inventory and inventory purchase commitments

 

 

5,072

 

 

 

32,019

 

Realized (gains) losses on hedging derivative financial instruments

 

 

(26

)

 

 

143

 

Change in fair value of warrant liabilities

 

 

(432

)

 

 

(2,334

)

Equity-based compensation

 

 

12,716

 

 

 

7,565

 

Deferred income taxes

 

 

(121

)

 

 

(1,143

)

Amortization of debt issuance costs

 

 

980

 

 

 

 

Paid-in-kind interest expense

 

 

746

 

 

 

 

Other non-cash items

 

 

 

 

 

311

 

Changes in operating assets and liabilities:

 

 

 

 

Inventory

 

 

6,037

 

 

 

28,400

 

Content assets

 

 

(5,325

)

 

 

(11,940

)

Prepaid expenses

 

 

4,506

 

 

 

5,545

 

Other assets

 

 

(8,912

)

 

 

167

 

Accounts payable

 

 

(4,179

)

 

 

(22,753

)

Accrued expenses

 

 

(14,356

)

 

 

(7,739

)

Deferred revenue

 

 

12,221

 

 

 

1,000

 

Other liabilities

 

 

(1,010

)

 

 

(1,829

)

Net cash used in operating activities

 

 

(14,367

)

 

 

(33,256

)

Cash flows from investing activities:

 

 

 

 

Purchase of property and equipment

 

 

(5,030

)

 

 

(19,222

)

Net cash used in investing activities

 

 

(5,030

)

 

 

(19,222

)

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

2,968

 

Remittance of taxes withheld from employee stock awards

 

 

 

 

 

(308

)

Debt repayments

 

 

(625

)

 

 

 

Proceeds from issuance of common shares in the Employee Stock Purchase Plan

 

 

384

 

 

 

 

Tax withholding payments for vesting of restricted stock

 

 

(2,159

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(2,400

)

 

 

2,660

 

Effect of exchange rates on cash and cash equivalents

 

 

392

 

 

 

(176

)

Net decrease in cash and cash equivalents

 

 

(21,405

)

 

 

(49,994

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

80,091

 

 

 

107,054

 

Cash and cash equivalents, end of period

 

$

58,686

 

 

$

57,060

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid during the period for interest

 

$

2,958

 

 

$

17

 

Cash (received) paid during the period for income taxes, net

 

 

(46

)

 

 

310

 

Supplemental disclosure of noncash investing activities:

 

 

 

 

Property and equipment acquired but not yet paid for

 

$

128

 

 

$

2,330

 

The Beachbody Company, Inc.

Adjusted EBITDA

In addition to our results determined in accordance with accounting principles generally accepted in the United States, or GAAP, we believe the following non-GAAP financial measure of Adjusted EBITDA is useful in evaluating our operating performance.

We define and calculate Adjusted EBITDA as net income (loss) adjusted for depreciation and amortization, amortization of capitalized cloud computing implementation costs, amortization of content assets, interest expense, income taxes, equity-based compensation, inventory net realizable value adjustments, restructuring, change in fair value of warrant liabilities, and other items that are not normal, recurring, operating expenses necessary to operate the Company’s business.

The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure. A reconciliation of our non-GAAP Adjusted EBITDA to GAAP net income (loss) can be found below:

 

 

Three months ended June 30,

 

Six months ended June 30,

(in thousands)

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

Net loss

 

$

(25,748

)

 

$

(41,867

)

 

$

(54,936

)

 

$

(115,400

)

Adjusted for:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

10,919

 

 

 

19,965

 

 

 

21,632

 

 

 

41,552

 

Amortization of capitalized cloud computing implementation costs

 

 

40

 

 

 

168

 

 

 

81

 

 

 

336

 

Amortization of content assets

 

 

5,459

 

 

 

7,016

 

 

 

11,020

 

 

 

13,180

 

Interest expense

 

 

2,368

 

 

 

3

 

 

 

4,699

 

 

 

22

 

Income tax provision (benefit)

 

 

(12

)

 

 

(281

)

 

 

36

 

 

 

(987

)

Equity-based compensation

 

 

3,161

 

 

 

3,001

 

 

 

12,716

 

 

 

7,565

 

Employee incentives, expected to be settled in equity (1)

 

 

 

 

 

 

 

 

(5,466

)

 

 

 

Inventory net realizable value adjustment (2)

 

 

 

 

 

10,502

 

 

 

 

 

 

25,436

 

Restructuring and platform consolidation costs (3)

 

 

(107

)

 

 

2,086

 

 

 

5,952

 

 

 

9,973

 

Change in fair value of warrant liabilities

 

 

(375

)

 

 

(2,070

)

 

 

(432

)

 

 

(2,334

)

Non-operating (4)

 

 

(479

)

 

 

5

 

 

 

(963

)

 

 

78

 

Adjusted EBITDA

 

$

(4,774

)

 

$

(1,472

)

 

$

(5,661

)

 

$

(20,579

)

1 The non-cash charge for employee incentives which were expected to be settled in equity was recorded and included in the Adjusted EBITDA calculation during the year ended December 31, 2022. During the three months ended March 31, 2023, we reclassified the non-cash charge from employee incentives expected to be settled in equity to equity-based compensation because we settled certain employee incentives with RSU awards during the period.

2 Represents a non-cash expense to reduce the carrying value of our connected fitness inventory and related future commitments. This adjustment was included during the three and six months ended June 30, 2022, because of its unusual magnitude due to disruptions in the connected fitness market.

3 Includes restructuring expense and non-recurring personnel costs associated with executing our key growth priorities during the three and six months ended June 30, 2023, and with the consolidation of our digital platforms during the three and six months ended June 30, 2022.

4 Primarily includes interest income.

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