Industry Overview - The health and fitness industry has transformed into a significant market, driven by a cultural shift towards healthier living, with consumers actively seeking better nutrition and structured fitness plans [2] - The global health and wellness market is projected to reach $11 trillion by 2034, growing at a compound annual growth rate (CAGR) of 5.4% from 2025 [4] - Major tech companies like Apple and Amazon are reshaping consumer engagement in wellness through innovative products and services [3] Company Highlights Peloton Interactive - Peloton has developed a connected fitness platform that combines advanced equipment with immersive digital content, creating an interactive fitness experience [7] - The company has shifted its business model to a balanced mix of product and subscription revenues, with subscription services becoming a key driver of recurring income [8] - Peloton continues to innovate and expand its market reach through partnerships and international expansion, positioning itself for long-term growth in the fitness sector [10] Sprouts Farmers Market - Sprouts operates as a health-focused grocery retailer, offering a wide selection of fresh, natural, and organic products, with its private-label brand representing about 24% of total sales [11][12] - The company has embraced digital transformation, with online sales accounting for roughly 15% of total revenues, and has invested in community well-being initiatives [13] - Sprouts has expanded its store locations and created a proprietary distribution network to enhance product freshness and supply chain efficiency [12] SunOpta - SunOpta focuses on plant-based and fruit-based products, catering to the growing demand for health and wellness options [14] - The company has evolved into a high-growth platform centered on scalable, high-margin categories, particularly in oat-based beverages and fruit-based foods [15] - SunOpta integrates sustainability into its product development, enhancing its alignment with health and fitness values [16] The Beachbody Company - Beachbody has built a comprehensive health and fitness ecosystem that combines digital workouts, nutrition, and mindset coaching through its BODi platform [17] - The company has shifted its business model to a direct-to-consumer sales approach, enhancing flexibility in content access and reducing operating expenses [19] - Beachbody is expanding into physical retail and innovating with targeted wellness solutions, aligning with evolving health trends [20]

Summary of The Beachbody Company (BODI) FY Conference Call - August 12, 2025 Company Overview - The Beachbody Company has been a significant player in the fitness industry for over 25 years, known for popular programs like P90X and Insanity [2][3] - The company underwent a financial turnaround after going public in 2021, transitioning from a multi-level marketing (MLM) model to a direct-to-consumer approach [4][7] Financial Performance - The breakeven revenue requirement was reduced from $900 million to $200 million, indicating a significant improvement in financial health [4][5] - Gross margin increased by over 1,000 basis points, with seven consecutive quarters of positive adjusted EBITDA totaling nearly $40 million [5][32] - The company has a market cap of $30 million with $25 million in debt and $25 million in cash, positioning it for future growth [32][25] Growth Strategy - The company plans to launch a retail line in 2026, introducing products like P90X and Shakeology into mainstream retail channels [8][9] - New fitness programs are being developed to coincide with retail product launches, enhancing the overall offering [9][15] - The company aims to leverage its existing subscriber base to cross-sell nutritional products, with a focus on health and longevity rather than just aesthetics [17][19] Market Position and Opportunities - The fitness market is seen as counter-cyclical, with the subscription cost being less than $0.50 a day, making it an attractive option even in weaker economic conditions [43][44] - The company is positioned to address broader health issues, targeting a large total addressable market (TAM) of overweight and obese individuals [56][67] - The introduction of new nutritional products is expected to capitalize on existing brand awareness, with over 60% recognition of the P90X supplement line before its launch [23][24] Competitive Landscape - The company differentiates itself by offering a vast library of high-quality fitness content, which is not easily replicable by competitors [55][67] - The shift from equipment-based fitness solutions to content-driven offerings provides agility and flexibility in responding to market trends [64][66] Future Outlook - The company anticipates significant growth in 2026 and 2027, with a focus on expanding its market presence and improving financial performance [25][32] - The management emphasizes the importance of communicating the company's value proposition to potential investors and consumers [25][52] Additional Insights - The impact of GLP-1 medications on weight loss is seen as an opportunity for the company, as users will need to maintain muscle mass through exercise [59][60] - The company is exploring partnerships with health insurance companies to promote at-home fitness solutions as an alternative to gym memberships [70][71]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to limited upside or downside risks [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify potential candidates [3] Group 2: The Beachbody Company, Inc. (BODI) - BODI has shown a price increase of 15% over the past four weeks, indicating growing investor interest [4] - The stock has gained 17.9% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [5] - BODI has a beta of 1.2, suggesting it moves 20% higher than the market in either direction, indicating fast-paced momentum [5] - The stock has a Momentum Score of A, suggesting it is an opportune time to invest [6] - BODI has a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investors [7] - The stock is trading at a Price-to-Sales ratio of 0.10, indicating it is relatively cheap at present [7] Group 3: Investment Opportunities - BODI appears to have significant potential for growth, and there are other stocks that meet the criteria of fast-paced momentum at a bargain [8] - Various Zacks Premium Screens are available to help identify winning stock picks based on different investing styles [9]

Core Viewpoint - The Beachbody Company, Inc. (BODI) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [2]. - The Zacks rating upgrade for The Beachbody Company signifies an improved earnings outlook, likely to positively affect its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in a company's future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to significant price movements based on their buying or selling activities [5]. Earnings Estimate Revisions for The Beachbody Company - For the fiscal year ending December 2025, The Beachbody Company is expected to earn -$2.52 per share, unchanged from the previous year [9]. - Over the past three months, the Zacks Consensus Estimate for The Beachbody Company has increased by 51.3%, indicating a positive trend in earnings estimates [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [8]. - The Beachbody Company's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10][11].

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents The Beachbody Company, Inc.'s unaudited condensed consolidated financial statements for the quarter and six months ended June 30, 2025, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue disaggregation, fair value measurements, inventory, debt, equity, and restructuring activities [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | $145,894 | $174,556 | $(28,662) | -16.4% | | Total Liabilities | $125,736 | $146,386 | $(20,650) | -14.1% | | Total Stockholders' Equity | $20,158 | $28,170 | $(8,012) | -28.4% | - Current assets decreased by **$21.39 million (27.2%)** from $78.685 million at December 31, 2024, to $57.295 million at June 30, 2025, primarily driven by decreases in other current assets and inventory[10](index=10&type=chunk) - Current liabilities decreased by **$31.504 million (24.7%)** from $127.638 million at December 31, 2024, to $96.134 million at June 30, 2025, largely due to a decrease in deferred revenue and the current portion of the Term Loan[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Unaudited Condensed Consolidated Statements of Operations – Three Months Ended June 30 (in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Total Revenue | $63,941 | $110,183 | $(46,242) | -42.0% | | Gross Profit | $46,238 | $76,376 | $(30,138) | -39.5% | | Operating Loss | $(3,964) | $(9,482) | $5,518 | -58.2% | | Net Loss | $(5,900) | $(10,865) | $4,965 | -45.7% | | Net Loss per Share | $(0.85) | $(1.59) | $0.74 | -46.5% | Unaudited Condensed Consolidated Statements of Operations – Six Months Ended June 30 (in thousands) | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total Revenue | $136,304 | $230,229 | $(93,925) | -40.8% | | Gross Profit | $97,787 | $157,658 | $(59,871) | -38.0% | | Operating Loss | $(7,638) | $(20,305) | $12,667 | -62.4% | | Net Loss | $(11,648) | $(25,081) | $13,433 | -53.6% | | Net Loss per Share | $(1.68) | $(3.70) | $2.02 | -54.6% | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Unaudited Condensed Consolidated Statements of Comprehensive Loss – Three Months Ended June 30 (in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Net Loss | $(5,900) | $(10,865) | | Total Other Comprehensive Loss | $(6) | $(4) | | Total Comprehensive Loss | $(5,906) | $(10,869) | Unaudited Condensed Consolidated Statements of Comprehensive Loss – Six Months Ended June 30 (in thousands) | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(11,648) | $(25,081) | | Total Other Comprehensive Income (Loss) | $(15) | $34 | | Total Comprehensive Loss | $(11,663) | $(25,047) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Unaudited Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balances at Dec 31, 2024 | Net Loss | Other Comprehensive Loss | Equity-based Compensation | Options Exercised, net | Tax Withholdings | ESPP Issuance | Balances at Jun 30, 2025 | | :-------------------- | :----------------------- | :------- | :----------------------- | :------------------------ | :--------------------- | :--------------- | :-------------- | :----------------------- | | Additional Paid-In Capital | $671,735 | — | — | $3,741 | $47 | $(215) | $78 | $675,386 | | Accumulated Deficit | $(643,518) | $(11,648) | — | — | — | — | — | $(655,166) | | Total Stockholders' Equity | $28,170 | $(11,648) | $(15) | $3,741 | $47 | $(215) | $78 | $20,158 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $6,580 | $8,209 | | Net cash (used in) provided by investing activities | $(2,511) | $2,655 | | Net cash provided by (used in) financing activities | $785 | $(11,504) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $5,374 | $(1,082) | | Cash, cash equivalents and restricted cash, end of period | $25,561 | $32,327 | - Operating cash flow decreased by **$1.629 million**, primarily due to increased cash used by deferred revenue and accounts payable, partially offset by a decrease in net loss and increased cash from other assets and inventory[21](index=21&type=chunk)[198](index=198&type=chunk) - Investing activities shifted from a net cash inflow of **$2.655 million** in 2024 to a net cash outflow of **$2.511 million** in 2025, mainly due to the absence of proceeds from the sale of the Van Nuys facility in the current period[21](index=21&type=chunk)[199](index=199&type=chunk) - Financing activities significantly improved from a net cash outflow of **$11.504 million** in 2024 to a net cash inflow of **$0.785 million** in 2025, driven by new debt borrowings from the ABL Facility and the repayment of the Term Loan[21](index=21&type=chunk)[200](index=200&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of Business and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) - The Beachbody Company, Inc. (BODi) is a fitness and nutrition company offering streaming fitness programs and nutritional products, which announced a strategic 'Pivot' on September 30, 2024, transitioning its network business from a Multi-Level Marketing (MLM) model to a single-level affiliate model[24](index=24&type=chunk) - The company adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) retrospectively on January 1, 2024, with no material effect on financial statements[28](index=28&type=chunk) - The company is evaluating the potential impact of ASU 2023-09 (Improvements to Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2. Revenue](index=11&type=section&id=Note%202.%20Revenue) Revenue by Geographic Region (in thousands) | Geographic Region (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $58,997 | $99,423 | $125,849 | $206,173 | | Rest of world | $4,944 | $10,760 | $10,455 | $24,056 | | Total Revenue | $63,941 | $110,183 | $136,304 | $230,229 | - Approximately **95%** of remaining deferred revenue performance obligations are expected to be recognized in the next 12 months[33](index=33&type=chunk) - The company recognized **$21.5 million** and **$57.8 million** of revenue from deferred revenue balances as of December 31, 2024, for the three and six months ended June 30, 2025, respectively[33](index=33&type=chunk) [Note 3. Fair Value Measurements](index=11&type=section&id=Note%203.%20Fair%20Value%20Measurements) Fair Value of Financial Instruments (in thousands) | Financial Instrument (in thousands) | June 30, 2025 (Level 3) | December 31, 2024 (Level 3) | | :---------------------------------- | :---------------------- | :-------------------------- | | Term Loan Warrants | $239 | $390 | | Common Stock Warrants | $1,065 | $1,783 | | Total Liabilities | $1,304 | $2,173 | - Private Placement Warrants and Public Warrants had a fair value of **zero** at June 30, 2025, and December 31, 2024, due to their high exercise price (**$575.00**) compared to the company's stock price (**$4.12** at June 30, 2025)[37](index=37&type=chunk)[40](index=40&type=chunk) - The fair value of Term Loan Warrants decreased by **$265 thousand** for the three months ended June 30, 2025, and by **$151 thousand** for the six months ended June 30, 2025, primarily due to changes in the Class A Common Stock price, contractual term, and risk-free rate[44](index=44&type=chunk) - The fair value of Common Stock Warrants decreased by **$1.293 million** for the three months ended June 30, 2025, and by **$718 thousand** for the six months ended June 30, 2025, driven by similar factors[46](index=46&type=chunk) [Note 4. Inventory](index=16&type=section&id=Note%204.%20Inventory) Inventory Breakdown (in thousands) | Inventory (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Raw materials and work in process | $5,767 | $7,650 | | Finished goods | $5,639 | $8,653 | | Total inventory | $11,406 | $16,303 | - Inventory decreased by **$4.897 million (30.0%)** from December 31, 2024, to June 30, 2025[47](index=47&type=chunk) - Adjustments to inventory carrying value were **$0.4 million** and **$0.6 million** for the three and six months ended June 30, 2025, respectively, primarily recorded in nutrition and other cost of revenue[47](index=47&type=chunk) [Note 5. Other Current Assets](index=17&type=section&id=Note%205.%20Other%20Current%20Assets) Other Current Assets (in thousands) | Other Current Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Deferred Partner costs | $7,736 | $25,578 | | Accounts receivable, net | $1,851 | $1,449 | | Deferred Affiliate costs | $512 | $152 | | Other | $1,292 | $1,732 | | Total other current assets | $11,391 | $28,911 | - Total other current assets decreased by **$17.52 million (60.6%)** from December 31, 2024, to June 30, 2025, primarily due to a significant reduction in deferred Partner costs[48](index=48&type=chunk) [Note 6. Property and Equipment, Net](index=17&type=section&id=Note%206.%20Property%20and%20Equipment,%20Net) Property and Equipment, Net (in thousands) | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Property and equipment, gross | $138,296 | $141,897 | | Less: Accumulated depreciation | $(127,690) | $(129,148) | | Total property and equipment, net | $10,606 | $12,749 | - Net property and equipment decreased by **$2.143 million (16.8%)** from December 31, 2024, to June 30, 2025[49](index=49&type=chunk) - The company recognized a **$0.8 million** gain on the sale of its Van Nuys production facility on February 29, 2024, recorded as a reduction in general and administrative expenses[49](index=49&type=chunk) Depreciation Expense (in thousands) | Depreciation Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $775 | $2,225 | $2,333 | $4,283 | | Enterprise technology and development | $1,247 | $3,186 | $2,577 | $6,506 | | Total depreciation | $2,022 | $5,411 | $4,910 | $10,789 | [Note 7. Accrued Expenses and Other Current Liabilities](index=18&type=section&id=Note%207.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses (in thousands) | Accrued Expenses (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Employee compensation and benefits | $5,868 | $5,180 | | Sales and other taxes | $2,759 | $3,125 | | Outside professional services | $2,496 | $1,997 | | Advertising | $2,010 | $2,208 | | Information technology | $1,720 | $2,211 | | Inventory, shipping and fulfillment | $1,158 | $2,925 | | Partner costs | $459 | $3,272 | | Other accrued expenses | $4,132 | $4,064 | | Total accrued expenses | $20,602 | $24,982 | - Accrued expenses decreased by **$4.38 million (17.5%)** from December 31, 2024, to June 30, 2025, primarily due to reductions in Partner costs and inventory, shipping, and fulfillment expenses[51](index=51&type=chunk) - Advertising costs were **$10.5 million** and **$22.1 million** for the three and six months ended June 30, 2025, respectively, an increase from $8.2 million and $17.3 million in the prior year periods[52](index=52&type=chunk) - The company financed **$2.2 million** in annual insurance premiums with AFCO Acceptance Corporation and **$2.2 million** with First Insurance Funding in October 2024, with outstanding balances of **$0.4 million** and **$0.2 million**, respectively, as of June 30, 2025[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 8. Commitments and Contingencies](index=18&type=section&id=Note%208.%20Commitments%20and%20Contingencies) Future Minimum Payments for Noncancelable Agreements (in thousands) | Future Minimum Payments (in thousands) | Amount | | :------------------------------------- | :----- | | Six months ending December 31, 2025 | $10,852 | | Year ending December 31, 2026 | $2,299 | | Year ending December 31, 2027 | $730 | | Year ending December 31, 2028 | $75 | | Total | $13,956 | - The company has noncancelable inventory purchase and service agreements totaling **$13.956 million** through 2028, with **$10.852 million** due in the second half of 2025[56](index=56&type=chunk) - Lease obligations require payments of approximately **$0.7 million** during the six months ending December 31, 2025, **$1.5 million** for 2026, and **$0.9 million** thereafter through 2029[58](index=58&type=chunk) - The company is involved in several legal proceedings, including a class action alleging misclassification of Partners as contractors, a class action related to the 2021 merger, and arbitration demands alleging Video Privacy Protection Act violations, with the company denying the allegations and intending to vigorously defend itself[60](index=60&type=chunk)[61](index=61&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [Note 9. Debt](index=22&type=section&id=Note%209.%20Debt) - On May 13, 2025, the company entered into a new **$35.0 million** Asset-Based Lending (ABL) Facility, borrowing **$25.0 million**, which matures on May 13, 2028, and bears interest at SOFR + **9.00%** (with a potential reduction to SOFR + **7.75%**), and has a SOFR floor of **3.5%**[66](index=66&type=chunk) - The ABL Facility proceeds were used to repay the existing Term Loan in full on May 13, 2025, resulting in a **$2.2 million** loss on debt extinguishment for the three and six months ended June 30, 2025[72](index=72&type=chunk) - The Term Loan, initially **$50.0 million**, bore interest at SOFR + **7.15%** plus **3.00%** paid-in-kind interest, with an effective interest rate of **28.00%** from January 1, 2025, to May 13, 2025[74](index=74&type=chunk) - The company had one irrevocable standby letter of credit outstanding for **$0.1 million** at June 30, 2025, collateralized by **$0.1 million** in restricted cash[83](index=83&type=chunk) [Note 10. Segment](index=26&type=section&id=Note%2010.%20Segment) - The company operates as a single reporting segment, with the Chief Operating Decision Maker (CODM) assessing performance based on net loss and reviewing budget-to-actual variances quarterly[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk) Selected Expenses (in thousands) | Expense (in thousands) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--------------------- | :------------------------------- | :----------------------------- | | Depreciation expense | $2,022 | $4,910 | | Content amortization expense | $2,289 | $5,018 | | Interest income, net | $300 | $500 | [Note 11. Stockholders' Equity](index=26&type=section&id=Note%2011.%20Stockholders'%20Equity) - As of June 30, 2025, the company had **2,000,000,000** authorized shares, including Class A, Class X, Class C common stock, and preferred stock, where Class A holders get one vote, Class X ten votes, and Class C no votes[88](index=88&type=chunk)[89](index=89&type=chunk) - In December 2023, the company completed an Equity Offering, issuing **420,769** shares of Class A common stock, pre-funded warrants for **122,821** shares (exercised in January 2024), and **543,590** Common Stock Warrants[90](index=90&type=chunk) Accumulated Other Comprehensive Income (Loss) (in thousands) | Accumulated Other Comprehensive Income (Loss) (in thousands) | Balances at March 31, 2025 | Other comprehensive loss before reclassifications | Balances at June 30, 2025 | | :----------------------------------------------------------- | :------------------------- | :------------------------------------------------ | :------------------------ | | Total | $(58) | $(6) | $(64) | [Note 12. Equity-Based Compensation](index=27&type=section&id=Note%2012.%20Equity-Based%20Compensation) Equity Options Activity | Equity Options Activity | Outstanding at Dec 31, 2024 | Exercised | Forfeited | Expired | Outstanding at Jun 30, 2025 | | :---------------------- | :-------------------------- | :-------- | :-------- | :------ | :-------------------------- | | Number of Options | 1,008,017 | (7,233) | (79,426) | (60,858) | 860,500 | | Weighted Average Exercise Price | $18.64 | $6.43 | $14.32 | $15.76 | $20.04 | RSU Activity | RSU Activity | Outstanding at Dec 31, 2024 | Granted | Vested | Forfeited | Outstanding at Jun 30, 2025 | | :------------- | :-------------------------- | :------ | :----- | :-------- | :-------------------------- | | Number of RSUs | 326,226 | 414,560 | (123,613) | (62,407) | 554,766 | | Weighted-Average Fair Value (per RSU) | $17.42 | $6.30 | $15.40 | $7.59 | $9.78 | - The fair value of RSUs vested was **$0.8 million** and **$1.9 million** for the three and six months ended June 30, 2025, respectively[95](index=95&type=chunk) Equity-Based Compensation Expense (in thousands) | Equity-Based Compensation Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $195 | $355 | $396 | $731 | | Selling and marketing | $235 | $1,891 | $505 | $3,393 | | Enterprise technology and development | $114 | $244 | $275 | $484 | | General and administrative | $1,471 | $2,249 | $2,565 | $4,496 | | Total equity-based compensation | $2,015 | $4,739 | $3,741 | $9,104 | [Note 13. Restructuring](index=30&type=section&id=Note%2013.%20Restructuring) - On June 26, 2025, the company initiated a post-Pivot restructuring, reducing headcount by approximately **70 employees (22% of the workforce)**, which is expected to incur **$2.6 million** in costs, with **$2.5 million** recorded in Q2 2025[102](index=102&type=chunk) - The 2024 restructuring charges totaled **$1.6 million** for the six months ended June 30, 2024, primarily for termination benefits[104](index=104&type=chunk) Restructuring-Related Liability (in thousands) | Restructuring-Related Liability (in thousands) | Balance at Dec 31, 2024 | Restructuring Charges | Payments / Utilizations | Liability at Jun 30, 2025 | | :--------------------------------------------- | :---------------------- | :-------------------- | :---------------------- | :------------------------ | | Employee-related costs | $938 | $2,492 | $(831) | $2,599 | [Note 14. Income Taxes](index=32&type=section&id=Note%2014.%20Income%20Taxes) Income Tax Provision (in thousands) | Income Tax Provision (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax provision | $(101) | $(67) | $(146) | $(129) | | Effective tax rate | -1.7% | -0.6% | -1.3% | -0.5% | - The effective tax rate differs from the U.S. statutory rate primarily due to changes in valuation allowances on deferred tax assets[108](index=108&type=chunk) [Note 15. Loss per Share](index=32&type=section&id=Note%2015.%20Loss%20per%20Share) Loss per Share (in thousands, except per share data) | Loss per Share (in thousands, except per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(5,900) | $(10,865) | $(11,648) | $(25,081) | | Weighted-average common shares outstanding | 6,950,761 | 6,812,750 | 6,917,062 | 6,786,761 | | Net loss per common share, basic and diluted | $(0.85) | $(1.59) | $(1.68) | $(3.70) | - Basic and diluted net loss per common share are the same because the inclusion of potential common shares would have been antidilutive[111](index=111&type=chunk) Antidilutive Common Shares Excluded | Antidilutive Common Shares Excluded | June 30, 2025 | June 30, 2024 | | :---------------------------------- | :------------ | :------------ | | Time-vesting options | 860,500 | 809,765 | | Performance-vesting options | — | 318,440 | | RSUs | 554,766 | 450,528 | | Compensation warrants | 79,612 | 79,612 | | Public and Private Placement Warrants | 306,667 | 306,667 | | Term Loan Warrants | 97,482 | 97,482 | | Common Stock Warrants | 543,590 | 543,590 | | Forest Road Earn-out Shares | 75,000 | 75,000 | | Total | 2,517,617 | 2,681,084 | [Item 2. Management's Discussion and Analysis of Financial Condition and Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting the impact of the 'Pivot' to an affiliate model, recent debt restructuring, and a detailed analysis of revenue, costs, and operating expenses, also discussing key operational metrics, non-GAAP financial measures like Adjusted EBITDA, liquidity, and capital resources [Overview](index=36&type=section&id=Overview) - BODi is a fitness and nutrition company focused on digital content, supplements, and consumer health, known for programs like P90X® and Shakeology®[118](index=118&type=chunk)[119](index=119&type=chunk) - On September 30, 2024, the company initiated a 'Pivot' to transition from a multi-level marketing (MLM) model to a single-level affiliate model, reducing headcount by approximately **170 employees (33% of the workforce)**[121](index=121&type=chunk) Key Financial Metrics – Three Months Ended June 30 (in millions) | Metric (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change (%) | | :------------------- | :------------------------------- | :------------------------------- | :--------- | | Total Revenue | $63.9 | $110.2 | -42% | | Digital Revenue | $39.7 | $58.8 | -32% | | Nutrition and other Revenue | $24.2 | $50.1 | -52% | | Connected Fitness Revenue | $0.1 | $1.3 | -94% | | Operating Expenses | $50.2 | $85.9 | -41.5% | | Net Loss | $(5.9) | $(10.9) | -45.9% | | Adjusted EBITDA | $4.6 | $4.9 | -6.1% | Key Financial Metrics – Six Months Ended June 30 (in millions) | Metric (in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change (%) | | :------------------- | :----------------------------- | :----------------------------- | :--------- | | Total Revenue | $136.3 | $230.2 | -41% | | Digital Revenue | $82.6 | $120.3 | -31% | | Nutrition and other Revenue | $52.8 | $105.6 | -50% | | Connected Fitness Revenue | $0.9 | $4.3 | -80% | | Operating Expenses | $105.4 | $178.0 | -40.8% | | Net Loss | $(11.6) | $(25.1) | -53.8% | | Adjusted EBITDA | $8.3 | $9.5 | -12.6% | [Recent Developments](index=37&type=section&id=Recent%20Developments) - On May 13, 2025, the company secured a new **$35.0 million** Asset-Based Lending (ABL) Facility, borrowing **$25.0 million**, which matures on May 13, 2028, and bears interest at SOFR + **9.00%**[124](index=124&type=chunk) - Proceeds from the ABL Facility were used to fully repay the existing Term Loan (**$17.3 million** outstanding principal) on May 13, 2025, resulting in a **$2.2 million** loss on debt extinguishment[125](index=125&type=chunk) - On June 26, 2025, the company initiated a post-Pivot restructuring, reducing headcount by approximately **70 employees (22% of the workforce)**, with expected costs of **$2.6 million**, of which **$2.5 million** was recorded in Q2 2025[127](index=127&type=chunk) [Key Operational and Business Metrics](index=37&type=section&id=Key%20Operational%20and%20Business%20Metrics) Subscriptions (in millions) | Metric (in millions) | As of June 30, 2025 | As of June 30, 2024 | Change (%) | | :------------------- | :------------------ | :------------------ | :--------- | | Digital subscriptions | 0.94 | 1.15 | -18.3% | | Nutritional subscriptions | 0.07 | 0.14 | -50.0% | Operational Metrics | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Average digital retention | 96.7% | 96.5% | 96.8% | 96.1% | | Total streams (millions) | 18.0 | 22.7 | 38.8 | 48.3 | | DAU/MAU | 31.4% | 31.9% | 32.0% | 32.6% | - Digital subscriptions decreased by **18%** and nutritional subscriptions by **50%** year-over-year, indicating lower demand[130](index=130&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Average digital retention slightly increased to **96.7%** (Q2 2025) and **96.8%** (YTD Q2 2025) compared to prior year periods, while total streams and DAU/MAU decreased, suggesting reduced customer engagement despite improved retention rates[131](index=131&type=chunk) [Non-GAAP Information](index=38&type=section&id=Non-GAAP%20Information) - Adjusted EBITDA is a non-GAAP measure used by management to evaluate core operating performance, excluding non-cash expenses (depreciation, amortization, equity-based compensation) and non-recurring items (restructuring costs, interest income/expense)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Net Loss and Adjusted EBITDA (in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(5,900) | $(10,865) | $(11,648) | $(25,081) | | Adjusted EBITDA | $4,632 | $4,928 | $8,345 | $9,482 | - Adjusted EBITDA decreased by **6.1%** for the three months and **12.6%** for the six months ended June 30, 2025, compared to the prior year, despite a reduction in net loss, indicating ongoing operational challenges[140](index=140&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) [Revenue](index=41&type=section&id=Revenue) Revenue by Category – Three Months Ended June 30 (in thousands) | Revenue Category (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :------------------------------ | :------------------------------- | :------------------------------- | :------- | :------- | | Digital | $39,693 | $58,771 | $(19,078) | -32% | | Nutrition and other | $24,172 | $50,101 | $(25,929) | -52% | | Connected fitness | $76 | $1,311 | $(1,235) | -94% | | Total revenue | $63,941 | $110,183 | $(46,242) | -42% | Revenue by Category – Six Months Ended June 30 (in thousands) | Revenue Category (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :------------------------------ | :----------------------------- | :----------------------------- | :------- | :------- | | Digital | $82,604 | $120,277 | $(37,673) | -31% | | Nutrition and other | $52,825 | $105,613 | $(52,788) | -50% | | Connected fitness | $875 | $4,339 | $(3,464) | -80% | | Total revenue | $136,304 | $230,229 | $(93,925) | -41% | - Digital revenue decreased due to **18% fewer subscriptions** and a **$2.9 million** decrease in Partner fees (due to the Pivot) for the three months ended June 30, 2025[145](index=145&type=chunk) - Nutrition and other revenue declined significantly due to **49% fewer nutritional subscriptions**, a **$4.1 million** decrease in preferred customer fees (due to the Pivot), and reduced shipping revenue, partially offset by increased Amazon sales[146](index=146&type=chunk) - Connected fitness revenue decreased by **94%** (three months) and **80%** (six months) as management ceased bike inventory sales in Q1 2025[147](index=147&type=chunk)[150](index=150&type=chunk) [Cost of Revenue](index=41&type=section&id=Cost%20of%20Revenue) Cost of Revenue by Category – Three Months Ended June 30 (in thousands) | Cost of Revenue (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :----------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Digital | $4,893 | $11,476 | $(6,583) | -57% | | Nutrition and other | $11,740 | $19,621 | $(7,881) | -40% | | Connected fitness | $1,070 | $2,710 | $(1,640) | -61% | | Total cost of revenue | $17,703 | $33,807 | $(16,104) | -48% | Gross Margin by Category | Gross Margin | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | | Digital | 87.7% | 80.5% | | Nutrition and other | 51.4% | 60.8% | | Connected fitness | NM | (106.7%) | | Total gross margin | 72.3% | 69.3% | - Digital cost of revenue decreased by **57%** (three months) and **54%** (six months) due to lower content amortization, reduced personnel expenses from restructuring, and decreased depreciation, leading to an increase in digital gross margin[156](index=156&type=chunk)[160](index=160&type=chunk) - Nutrition and other cost of revenue decreased by **40%** (three and six months) due to lower product costs and reduced fulfillment/shipping expenses; however, gross margin decreased due to the elimination of preferred customer fees and higher promotional offerings[157](index=157&type=chunk)[158](index=158&type=chunk)[161](index=161&type=chunk) - Connected fitness cost of revenue decreased by **61%** (three months) and **65%** (six months) due to the cessation of bike inventory sales, resulting in lower freight, shipping, and product costs[159](index=159&type=chunk)[162](index=162&type=chunk) [Operating Expenses](index=45&type=section&id=Operating%20Expenses) [Selling and Marketing](index=45&type=section&id=Selling%20and%20Marketing) Selling and Marketing Expenses – Three Months Ended June 30 (in thousands) | Selling and Marketing (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Selling and marketing | $25,528 | $56,308 | $(30,780) | -55% | | As a percentage of total revenue | 39.9% | 51.1% | | -11.2% | Selling and Marketing Expenses – Six Months Ended June 30 (in thousands) | Selling and Marketing (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Selling and marketing | $56,498 | $115,569 | $(59,071) | -51% | | As a percentage of total revenue | 41.4% | 50.2% | | -8.8% | - Selling and marketing expenses decreased significantly (**55%** for three months, **51%** for six months) primarily due to a **$24.4 million** (three months) and **$46.3 million** (six months) decrease in Partner compensation following the Pivot, and reduced personnel and event expenses[164](index=164&type=chunk)[166](index=166&type=chunk) - The decrease was partially offset by increased media expense (**$3.4 million** for three months, **$7.2 million** for six months) and affiliated compensation (**$0.7 million** for three months, **$1.6 million** for six months) related to the Pivot transition[164](index=164&type=chunk)[166](index=166&type=chunk) - Selling and marketing expense as a percentage of total revenue decreased by **1,120 basis points** (three months) and **880 basis points** (six months) due to the significant reduction in Partner compensation[165](index=165&type=chunk)[167](index=167&type=chunk) [Enterprise Technology and Development](index=45&type=section&id=Enterprise%20Technology%20and%20Development) Enterprise Technology and Development Expenses – Three Months Ended June 30 (in thousands) | Enterprise Technology and Development (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :--------------------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Expense | $10,611 | $17,162 | $(6,551) | -38% | | As a percentage of total revenue | 16.6% | 15.6% | | 1.0% | Enterprise Technology and Development Expenses – Six Months Ended June 30 (in thousands) | Enterprise Technology and Development (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :--------------------------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Expense | $23,207 | $34,879 | $(11,672) | -33% | | As a percentage of total revenue | 17.0% | 15.1% | | 1.9% | - Expenses decreased by **38%** (three months) and **33%** (six months) due to lower personnel-related expenses from restructuring and a decrease in depreciation expense as certain long-lived assets were fully depreciated by December 31, 2024, following the Pivot[170](index=170&type=chunk)[172](index=172&type=chunk) - As a percentage of total revenue, these expenses increased by **100 basis points** (three months) and **190 basis points** (six months) because revenue decreased at a faster pace than the expense reductions[171](index=171&type=chunk)[173](index=173&type=chunk) [General and Administrative](index=48&type=section&id=General%20and%20Administrative) General and Administrative Expenses – Three Months Ended June 30 (in thousands) | General and Administrative (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Expense | $11,571 | $12,388 | $(817) | -7% | | As a percentage of total revenue | 18.1% | 11.2% | | 6.9% | General and Administrative Expenses – Six Months Ended June 30 (in thousands) | General and Administrative (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :---------------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Expense | $23,228 | $25,871 | $(2,643) | -10% | | As a percentage of total revenue | 17.0% | 11.2% | | 5.8% | - Expenses decreased by **7%** (three months) and **10%** (six months) primarily due to lower personnel-related expenses from restructuring activities and a **$0.8 million** gain on the sale of the Van Nuys facility in 2024[176](index=176&type=chunk)[178](index=178&type=chunk) - As a percentage of total revenue, these expenses increased by **690 basis points** (three months) and **580 basis points** (six months) due to revenue declining faster than expense reductions[177](index=177&type=chunk)[179](index=179&type=chunk) [Restructuring](index=48&type=section&id=Restructuring) Restructuring Charges – Three Months Ended June 30 (in thousands) | Restructuring Charges (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Restructuring | $2,492 | $0 | $2,492 | NM | Restructuring Charges – Six Months Ended June 30 (in thousands) | Restructuring Charges (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Restructuring | $2,492 | $1,644 | $848 | 52% | - Restructuring charges in 2025 primarily relate to additional post-Pivot headcount reductions, totaling **$2.492 million** for both the three and six months ended June 30, 2025[180](index=180&type=chunk)[181](index=181&type=chunk) - In 2024, restructuring charges were **$1.644 million** for the six months ended June 30, primarily for employee termination costs related to key initiatives[180](index=180&type=chunk)[181](index=181&type=chunk) [Other Income (Expense)](index=48&type=section&id=Other%20Income%20(Expense)) Other Income (Expense) – Three Months Ended June 30 (in thousands) | Other Income (Expense) (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :------------------------------------ | :------------------------------- | :------------------------------- | :------- | :------- | | Loss on debt extinguishment | $(2,166) | $(719) | $(1,447) | NM | | Change in fair value of warrant liabilities | $1,558 | $647 | $911 | NM | | Interest expense | $(1,268) | $(1,652) | $384 | -23% | | Other income, net | $41 | $408 | $(367) | -90% | Other Income (Expense) – Six Months Ended June 30 (in thousands) | Other Income (Expense) (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :------- | :------- | | Loss on debt extinguishment | $(2,166) | $(1,928) | $(238) | 12% | | Change in fair value of warrant liabilities | $869 | $(77) | $946 | NM | | Interest expense | $(2,833) | $(3,527) | $694 | -20% | | Other income, net | $266 | $885 | $(619) | -70% | - Loss on debt extinguishment increased due to the full repayment of the Term Loan in May 2025, compared to partial prepayments in 2024[184](index=184&type=chunk)[185](index=185&type=chunk) - The change in fair value of warrant liabilities shifted from a loss to a gain, primarily driven by a **45%** decline in the company's stock price in Q2 2025, compared to a **12%** decrease in Q2 2024[184](index=184&type=chunk)[185](index=185&type=chunk) - Interest expense decreased by **23%** (three months) and **20%** (six months) due to a lower average principal debt balance and a reduced effective interest rate on the new ABL Facility (**15.4%**) compared to the Term Loan (**28.0%**)[184](index=184&type=chunk)[185](index=185&type=chunk) [Income Tax Provision](index=50&type=section&id=Income%20Tax%20Provision) Income Tax Provision – Three Months Ended June 30 (in thousands) | Income Tax Provision (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | $ Change | % Change | | :---------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Income tax provision | $(101) | $(67) | $(34) | 51% | Income Tax Provision – Six Months Ended June 30 (in thousands) | Income Tax Provision (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :---------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Income tax provision | $(146) | $(129) | $(17) | 13% | - The income tax provision increased by **51%** (three months) and **13%** (six months) primarily due to changes in the valuation allowance and an increase in net expense from discrete events[187](index=187&type=chunk)[188](index=188&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) - The company secured a new **$35.0 million** ABL Facility on May 13, 2025, borrowing **$25.0 million**, and used the proceeds to fully repay its existing Term Loan, providing approximately **$5 million** in additional capital[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - The ABL Facility includes financial covenants such as minimum billings targets, minimum digital subscriptions targets, capital expenditure limits, and a minimum liquidity requirement of **$12 million**[193](index=193&type=chunk)[195](index=195&type=chunk) - As of June 30, 2025, the company had **$25.6 million** in cash and cash equivalents and was in compliance with its financial covenants[194](index=194&type=chunk)[197](index=197&type=chunk) - Management believes existing cash, cash equivalents, and cost control initiatives will provide sufficient liquidity for the next twelve months and longer-term, but may explore additional debt or equity financing[203](index=203&type=chunk)[204](index=204&type=chunk) [Critical Accounting Policies and Estimates](index=54&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material changes to the company's critical accounting estimates discussed in the 2024 Annual Report on Form 10-K[206](index=206&type=chunk) [Recent Accounting Pronouncements](index=54&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 1, 'Description of Business and Summary of Significant Accounting Policies,' for information on recently adopted accounting pronouncements[207](index=207&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to foreign currency exchange risk, noting that approximately 8% of revenue for the six months ended June 30, 2025, was in foreign currencies, and the company has ceased entering into foreign exchange options and is exiting the sale of physical products in the UK and France - Approximately **8%** of the company's revenue for the six months ended June 30, 2025, was in foreign currencies, primarily Canadian dollars and British pounds[208](index=208&type=chunk) - The company has ceased entering into foreign exchange options and is exiting the sale of nutritional and other physical products in the United Kingdom and France as part of the Pivot[210](index=210&type=chunk) - A hypothetical **10%** change in exchange rates would result in an approximate **$1.5 million** increase or decrease in cost of revenue and operating expenses[212](index=212&type=chunk) - The aggregate notional amount of foreign exchange derivative instruments was **zero** at June 30, 2025, and December 31, 2024[213](index=213&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Interim CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the most recent fiscal quarter - The Chief Executive Officer and Interim Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[214](index=214&type=chunk) - There have been no material changes in internal control over financial reporting during the most recent fiscal quarter[216](index=216&type=chunk) - Management acknowledges that any control system has inherent limitations and cannot provide absolute assurance of achieving its objectives[217](index=217&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section updates on ongoing legal proceedings, including a class action lawsuit alleging misclassification of Partners as employees, a class action related to the 2021 merger, and arbitration demands concerning Video Privacy Protection Act violations, with the company denying the allegations and vigorously defending these matters - A class action complaint filed May 22, 2023, alleges misclassification of Partners as contractors rather than employees and other California Labor Code violations; the company is defending against this, with **13 arbitrations settled for nominal fees**[219](index=219&type=chunk) - A class action filed June 14, 2024 (Reilly Action) alleges breach of fiduciary duty related to the 2021 merger; aiding and abetting claims against the company were dismissed without prejudice on December 5, 2024, but indemnification obligations remain[220](index=220&type=chunk)[221](index=221&type=chunk) - On October 14, 2024, **10 arbitration demands** were filed, alleging Video Privacy Protection Act violations, with intentions to file similar demands for approximately **6,239 additional subscribers**; the company denies these allegations[223](index=223&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material developments regarding the risk factors previously reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material developments with respect to the risk factors previously reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024[224](index=224&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities or use of proceeds to report[226](index=226&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[227](index=227&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[228](index=228&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) This section reports that no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[229](index=229&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, warrant forms, credit agreements, and certifications - The exhibits include the Second Amended and Restated Certificate of Incorporation and Bylaws, Form of Third Amended and Restated Warrant to Purchase Stock, and the Credit Agreement dated May 13, 2025[231](index=231&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) are filed herewith[231](index=231&type=chunk) [Signatures](index=60&type=section&id=Signatures) This section contains the official signatures of the registrant's Chief Executive Officer and Interim Chief Financial Officer, certifying the report's submission - The report is signed by Carl Daikeler, Chief Executive Officer, and Brad Ramberg, Interim Chief Financial Officer, on August 6, 2025[237](index=237&type=chunk)

Core Insights - Beachbody reported Q2 2025 revenue of $63.9 million, exceeding analyst expectations by $6.3 million or 10.9% [1] - The company experienced a loss per share of $0.85, which was an improvement from last year's loss of $1.59, but still fell short of analyst projections [1][2] - Year-over-year revenue declined sharply by 42.0%, with significant drops in digital and nutrition subscriptions [1][5] Financial Performance - Revenue for Q2 2025 was $63.9 million, compared to estimates of $57.6 million and $110.2 million in Q2 2024 [2] - Adjusted EBITDA was $4.6 million, down 6.1% from the previous year, marking the seventh consecutive quarter of positive adjusted EBITDA [2][7] - Digital subscriptions decreased by 18.3% year-over-year to 0.94 million, while nutritional subscriptions fell by 52.1% to 0.07 million [2][6] Business Model Transition - Beachbody shifted from a multi-level marketing approach to a single-level affiliate model and e-commerce-first retail strategy [4] - The transition aims to simplify operations and expand product reach, with success dependent on digital subscriber retention and effective product innovation [4][14] - The company plans to roll out retail versions of its nutritional products in late 2025 and into 2026, targeting a broader audience despite lower gross margins [10][14] Engagement and Retention - Despite a high digital subscription retention rate of 96.7%, overall engagement metrics, including total streams and DAU/MAU ratios, have declined [6][9] - Total streaming activity decreased by 20.4% year-over-year to 18.0 million streams [6][9] - The company acknowledges challenges in attracting new subscribers amid a competitive digital fitness landscape [9] Future Outlook - Management projects Q3 FY2025 revenue between $51 million and $58 million, with adjusted EBITDA expected to be between $2 million and $6 million [13] - Key factors to monitor include the pace of digital subscriber declines, effectiveness of new retail and affiliate strategies, and cash flow management [14]

分组1 - The Beachbody Company reported a quarterly loss of $0.57 per share, which was better than the Zacks Consensus Estimate of a loss of $0.93, and an improvement from a loss of $1.59 per share a year ago, resulting in an earnings surprise of +38.71% [1] - The company achieved revenues of $63.94 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 14.59%, although this represents a decline from year-ago revenues of $110.18 million [2] - The Beachbody Company has surpassed consensus EPS estimates four times over the last four quarters and topped consensus revenue estimates three times during the same period [2] 分组2 - The stock has underperformed, losing about 36.6% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is -$1.19 on revenues of $48.5 million, and for the current fiscal year, it is -$4.40 on revenues of $221.8 million [7] 分组3 - The Zacks Industry Rank indicates that the Consumer Services - Miscellaneous sector is in the top 41% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - The estimate revisions trend for The Beachbody Company was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Financial Data and Key Metrics Changes - The company reported revenues of $63.9 million for Q2 2025, exceeding guidance of $51 million to $61 million, but reflecting an 11.6% sequential decline and a 42% year-over-year decline [22][23] - Gross margin improved to 72.3%, a 300 basis point increase year-over-year, exceeding the long-term target of 65% to 70% [5][23] - Adjusted EBITDA was $4.6 million, marking the seventh consecutive quarter of positive adjusted EBITDA [22][28] - The company achieved a cumulative $39.5 million in adjusted EBITDA over the past seven quarters [6] Business Line Data and Key Metrics Changes - Digital revenue decreased by 7.5% sequentially to $39.7 million and declined 32.5% year-over-year, with digital subscribers down 7.8% sequentially to 940,000 [25][26] - Nutrition revenue fell 15.6% sequentially to $24.2 million and decreased 51.8% year-over-year, with nutrition subscriptions down 12.5% sequentially to 70,000 [25][26] - Digital gross margin was 87.7%, an increase from the prior quarter and year, while nutrition gross margin was 51.4%, reflecting a decline due to promotional offerings [26] Market Data and Key Metrics Changes - The company is transitioning from a multilevel marketing (MLM) model to an omnichannel model, which has impacted revenue in the near term [22][23] - The anticipated revenue split moving forward is approximately 63% digital and 37% nutrition [31] Company Strategy and Development Direction - The company plans to launch Shakeology in retail in early 2026, marking its first entry into brick-and-mortar sales [7][45] - A new P90X nutritional line and Insanity branded supplements are also set for retail launch, creating cross-marketing opportunities [8][20] - The strategic focus is on building a diverse product portfolio and leveraging brand equity to drive growth [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that while 2025 may see temporary revenue declines, it is building towards significant growth opportunities [7][10] - The company is focused on disciplined execution and believes it is well-positioned for long-term success [11][21] - Management expressed confidence in achieving positive free cash flow for the full year of 2025 for the first time since 2020 [6][30] Other Important Information - The company reduced its revenue breakeven point from approximately $900 million in 2022 to about $200 million in 2025 [6] - Operating expenses decreased by 9.1% sequentially and 41.5% year-over-year, reflecting the shift away from the MLM model [27] Q&A Session Summary Question: What drove the higher gross margin in the quarter? - The higher gross margin was driven by reduced production spend and fewer fixed costs allocated to production [34] Question: What is the expected level of selling and marketing expenses going forward? - Selling and marketing expenses have decreased significantly since exiting the MLM model, with a goal to reduce them to the mid-thirties percentage of revenue [36][37] Question: Are there plans to roll out new supplements to complement the nutrition business? - Yes, the company plans to launch new nutritional products in retail starting in 2026, including Shakeology and P90X supplements [45][46] Question: What is the status of the nutrition retail launch? - The company is preparing sales presentations for major retailers and expects to begin retail sales in early 2026 [55] Question: Will the Shakeology product have new packaging for retail? - Yes, Shakeology will have a complete packaging refresh designed for retail, highlighting its major brand status [58][59]

Revenue Performance - Total revenue for Q2 2025 was $63.9 million, a decrease of 42.0% compared to $110.2 million in the prior year period[5]. - Digital revenue was $39.7 million, down 32.5% from $58.8 million in the prior year, with digital subscriptions totaling 0.94 million, an 18.3% decline[5][6]. - Nutrition and Other revenue was $24.2 million, a decrease of 51.8% from $50.1 million in the prior year, with nutritional subscriptions totaling 0.07 million, down 52.1%[5][6]. - Total revenue for the three months ended June 30, 2025, was $63,941, a decrease of 42% compared to $110,183 for the same period in 2024[19]. - Digital revenue for the six months ended June 30, 2025, was $82,604, down 31% from $120,277 in 2024[19]. Profitability Metrics - Adjusted EBITDA for Q2 2025 was $4.6 million, a slight decrease of 6.1% from $4.9 million in the prior year[5][6]. - Net loss for Q2 2025 was $5.9 million, an improvement of 45.7% compared to a net loss of $10.9 million in the prior year[5][6]. - Gross profit for the three months ended June 30, 2025, was $46,238, compared to $76,376 in 2024, reflecting a decline of 39%[19]. - Operating loss for the six months ended June 30, 2025, was $(7,638), an improvement from $(20,305) in 2024[19]. - Net loss for the three months ended June 30, 2025, was $(5,900), compared to $(10,865) in 2024, indicating a reduction of 46%[19]. - Adjusted EBITDA for the six months ended June 30, 2025, was $8,345, down from $9,482 in 2024[26]. Operating Expenses and Cash Flow - Total operating expenses decreased to $50.2 million from $85.9 million in the prior year, reflecting improved cost management[5]. - Total operating expenses for the three months ended June 30, 2025, were $50,202, a decrease from $85,858 in 2024[19]. - Cash provided by operating activities for the first half of 2025 was $6.6 million, down from $8.2 million in the prior year[5]. - Net cash provided by operating activities decreased to $6,580,000 in 2025 from $8,209,000 in 2024, reflecting a decline of 19.8%[33]. - Free cash flow for the six months ended June 30, 2025, is $4,069,000, a decrease of 22.7% from $5,264,000 in 2024[33]. - Cash used for the purchase of property and equipment was $2,511,000 in 2025, down from $2,945,000 in 2024, indicating a reduction of 14.7%[33]. Future Guidance and Strategic Initiatives - The company expects Q3 2025 revenue guidance between $51 million and $58 million, with an adjusted EBITDA forecast of $2 million to $6 million[8]. - The company aims to achieve positive free cash flow for the full year 2025 for the first time since 2020, marking a significant milestone[2]. - The company is evolving its marketing and distribution models to broaden market opportunities and optimize its product pipeline[2]. Cash Position - Cash and cash equivalents at the end of the period on June 30, 2025, were $25,561, an increase from $20,187 at the beginning of the period[31]. - The net cash position as of June 30, 2025, was $2,261, up from $1,019 on December 31, 2024[31]. - The company reported a loss on debt extinguishment of $2,166 for the three months ended June 30, 2025[26].

Industry Overview - The health and fitness industry is experiencing significant growth, driven by increasing consumer interest in wellness, technology advancements, and rising concerns about obesity and mental health [2][3] - The global health and wellness market is projected to reach $11 trillion by 2034, with a compound annual growth rate (CAGR) of 5.4% from 2025 [4] Technology Integration - Technology, including wearable devices and digital platforms, is enhancing consumer engagement and health management [2][3] - Major tech companies like Apple and Amazon are entering the health space, with Apple offering real-time health data through its Apple Watch and Amazon acquiring One Medical to integrate AI with virtual care [3] Company Highlights Sprouts Farmers Market - Sprouts Farmers Market focuses on fresh, natural, and organic products, with its private-label brand accounting for 24% of sales [8] - The company operates over 440 stores across 24 states and is building its own distribution network to improve efficiency [8][9] - Online sales represent 15% of total sales, supported by partnerships with delivery services [9] - In 2024, 30% of total sales came from organic products, with plant-based offerings increasing by 27% [9] The Beachbody Company - The Beachbody Company offers a comprehensive health and fitness system, including digital workout programs and nutritional products [11] - The company shifted from a multi-level marketing model to a direct-to-consumer approach, reducing operating costs and improving customer access [11][12] - Plans for physical retail expansion include launching Shakeology products in late 2025 and new digital fitness programs [12] Hims & Hers Health - Hims & Hers Health provides a digital health platform covering various wellness needs, including mental health and weight management [13] - The company has launched weight loss programs and acquired an at-home lab testing provider to enhance its service offerings [14] - Hims & Hers serves nearly 2.4 million subscribers and focuses on preventative wellness through a technology-driven subscription model [15]