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The Beachbody Company(BODI) - 2023 Q1 - Quarterly Report
2023-05-08 20:39
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO Section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-39735 The Beachbody Company, Inc. (Exact name of registrant as specified in its charter) Delaware 85-3222090 (State or other jurisdiction ...
The Beachbody Company(BODI) - 2022 Q4 - Annual Report
2023-03-16 20:26
PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) The Beachbody Company is a health and wellness platform offering digital subscriptions, nutritional products, and connected fitness [Company Overview and Strategy](index=4&type=section&id=1.1%20Company%20Overview%20and%20Strategy) Overview of the company's health and wellness platform, strategic initiatives, and revenue generation - The Beachbody Company operates as a health and wellness platform, providing fitness, nutrition, and stress-reducing programs, with **2.0 million digital subscriptions** and **0.2 million nutritional subscriptions** as of December 31, 2022[13](index=13&type=chunk) Digital Platform Engagement (2022) | Metric | 2022 | | :----- | :----- | | DAU/MAU | 30.1% | | Total Streams | 121 million | - Strategic initiatives include consolidating Openfit into Beachbody platforms (July 2022), reducing the BOD + BODi annual subscription price to **$179** (from $298) in September 2022, launching BODi Blocks and new mindset content (March 2023), and positioning Shakeology as a healthy dessert[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) - Revenue is primarily generated from digital subscriptions and nutritional products, often bundled, and also includes sales of the Beachbody Bike[20](index=20&type=chunk) [Product Offerings and Economic Model](index=5&type=section&id=1.2%20Product%20Offerings%20and%20Economic%20Model) Details on digital, nutritional, and connected fitness products, and the direct-to-consumer sales model - Digital subscriptions (BOD, BODi) provide unlimited access to an extensive library of over **8,500 fitness, nutrition, mindfulness, and recovery videos**, accessible across various devices[21](index=21&type=chunk)[22](index=22&type=chunk) - Nutritional products include Shakeology (superfood health mix), Beachbody Performance supplements (pre/post-workout), BEACHBARs, and LADDER brand sports nutrition supplements[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Connected fitness offerings feature the Beachbody Bike, equipped with a **21.5" 360-degree swivel screen**, priced at **$1,399** (standard) or **$1,599** (Plus), with a BODi Bike Studio bundle (bike + 3-year BODi subscription + accessories) for **$1,800**, often with **0% APR financing**[28](index=28&type=chunk)[31](index=31&type=chunk)[36](index=36&type=chunk) - The primary economic model is direct-to-consumer sales, with a proprietary network of micro-influencers (Coaches, soon 'Partners') driving the majority of revenue through commissions (typically **25%**) and bonuses[38](index=38&type=chunk)[39](index=39&type=chunk) [Operations and Intellectual Property](index=7&type=section&id=1.3%20Operations%20and%20Intellectual%20Property) Competitive landscape, outsourced manufacturing and distribution, and intellectual property protection - The company operates in a highly competitive and fragmented health and wellness market, facing competition from at-home fitness solutions, digital apps, weight management providers, and other social commerce platforms[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - Manufacturing of nutritional products, bikes, and equipment is outsourced to contract manufacturers, enabling an asset-light business model and adherence to quality standards (QAPs, GMPs)[45](index=45&type=chunk) - Storage and distribution are outsourced to third-party logistics companies with geographically dispersed facilities in the United States, Canada, and Europe to optimize shipping times and reduce costs[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - As of December 31, 2022, the company holds over **3,000 registered trademarks**, over **200 registered copyrights**, and **four patents** (with 17 pending), supported by a robust enforcement program against infringement and counterfeiting[51](index=51&type=chunk) [Regulatory Environment](index=8&type=section&id=1.4%20Regulatory%20Environment) Compliance with diverse and evolving laws, including data privacy and product safety regulations - The company is subject to diverse and evolving laws and regulations in the United States, Canada, United Kingdom, and European Union, covering data privacy, content, food and dietary supplements, e-commerce, multi-level marketing, and advertising[53](index=53&type=chunk) - Compliance with data privacy laws, including GDPR (EU, UK) and California Privacy Laws (CPRA, CCPA), is critical, with potential for stringent operational requirements, mandatory data breach notifications, and significant fines for non-compliance[55](index=55&type=chunk)[57](index=57&type=chunk) - Nutritional products must comply with regulations from federal agencies like the FDA and USDA, as well as similar state, local, and international agencies, regarding manufacturing, labeling, quality, safety, and marketing[58](index=58&type=chunk) [Human Capital](index=9&type=section&id=1.5%20Human%20Capital) Company culture, employee count, and remote-first workforce strategy - The company's culture is driven by its core purpose to help people achieve their goals and lead healthy, fulfilling lives, emphasizing a customer-centered mindset, innovation, teamwork, and diversity of perspective[60](index=60&type=chunk)[61](index=61&type=chunk)[66](index=66&type=chunk) - As of December 31, 2022, the company employed **737 full-time individuals**, primarily working remotely, and offers competitive benefits and compensation packages[63](index=63&type=chunk)[64](index=64&type=chunk) [Item 1A. Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Investing in the company's common stock involves high risks across various operational, financial, and regulatory areas [Summary of Risk Factors](index=11&type=section&id=1.6%20Summary%20of%20Risk%20Factors) Overview of risks related to business, indebtedness, expansion, personnel, data, regulations, and stock ownership - The company faces risks related to its business and industry, indebtedness, expansion, personnel, data and information systems, laws and regulations, and ownership of its common stock[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Risks Related to Our Business and Industry](index=12&type=section&id=1.7%20Risks%20Related%20to%20Our%20Business%20and%20Industry) Risks from changing consumer preferences, brand reputation, pricing, product reliance, and strategic initiatives - The company's success is highly susceptible to changes in consumer preferences for health, fitness, and nutrition, and its inability to anticipate or respond to these shifts could adversely affect its business[72](index=72&type=chunk) - Inability to sustain pricing levels for products and services, including nutritional products, digital services, and connected fitness products, could significantly reduce revenue and gross margins[73](index=73&type=chunk) - Maintaining the value and reputation of its brands is crucial; negative publicity or failure to provide consistent, high-quality products and services could harm its public image and customer base[76](index=76&type=chunk) - The business relies heavily on a few key products: digital platforms (**43% of 2022 revenue**) and Shakeology (**25% of 2022 revenue**); diminished consumer interest in these could materially affect operations[95](index=95&type=chunk) - Strategic alignment initiatives and cost-saving measures, including headcount reductions, may not achieve expected benefits, could be costly and disruptive, and potentially impact employee morale and productivity[84](index=84&type=chunk) [Risks Related to Our Indebtedness](index=22&type=section&id=1.8%20Risks%20Related%20to%20Our%20Indebtedness) Restrictions from financing agreements and challenges in generating cash for debt repayment - The company's financing agreement restricts current and future operations, limiting its ability to incur additional debt/liens, merge, sell assets, pay dividends, make investments/acquisitions, or engage in certain affiliate transactions[125](index=125&type=chunk) - The ability to generate sufficient cash to pay interest and principal on its indebtedness, including the Term Loan maturing in August 2026, depends on factors beyond its control, and refinancing may not be available on favorable terms[128](index=128&type=chunk)[130](index=130&type=chunk) [Risks Related to Expansion](index=23&type=section&id=1.9%20Risks%20Related%20to%20Expansion) Challenges in international market expansion and potential disruptions from mergers and acquisitions - Expanding into international markets exposes the company to significant risks, including difficulties with local laws, regulations, customs, competition, intellectual property enforcement, and currency fluctuations[135](index=135&type=chunk)[137](index=137&type=chunk) - Merger and acquisition activities could require significant management attention, disrupt business operations, lead to unforeseen expenditures, and potentially dilute stockholder value[139](index=139&type=chunk)[140](index=140&type=chunk) [Risks Related to Our Personnel](index=24&type=section&id=1.10%20Risks%20Related%20to%20Our%20Personnel) Impact of labor costs, corporate culture, and reliance on key management and talent - Increases in labor costs, including wages, health insurance, and other benefits, could adversely affect the company's business, financial condition, and results of operations[141](index=141&type=chunk) - Failure to maintain its corporate culture could lead to a loss of innovation, teamwork, and passion, harming its ability to retain and recruit personnel and achieve corporate objectives[142](index=142&type=chunk) - The company's success depends on its senior management team and other key employees, including fitness trainers and nutritionists; the loss of these personnel or inability to attract new talent could severely impact the business[144](index=144&type=chunk) [Risks Related to Data and Information Systems](index=25&type=section&id=1.11%20Risks%20Related%20to%20Data%20and%20Information%20Systems) Data privacy compliance, IT system disruptions, and dependence on mobile operating systems and platforms - The collection, storage, processing, and use of personal and customer data subject the company to legal obligations and data security/privacy laws, with any failure to comply potentially harming its business and reputation through fines, litigation, or adverse publicity[145](index=145&type=chunk)[157](index=157&type=chunk)[162](index=162&type=chunk) - Any major disruption or failure of its information technology systems, websites, or third-party OTT services (e.g., Apple TV, Roku), or inability to implement upgrades effectively, could adversely affect operations, customer access, and revenue[149](index=149&type=chunk)[152](index=152&type=chunk)[197](index=197&type=chunk) - Dependence on mobile operating systems (Android, iOS) and platforms like the Apple App Store means changes in their policies, algorithms, or market position could adversely affect the company's ability to engage customers and distribute its app[155](index=155&type=chunk)[156](index=156&type=chunk)[195](index=195&type=chunk) [Risks Related to Laws and Regulations](index=29&type=section&id=1.12%20Risks%20Related%20to%20Laws%20and%20Regulations) Liability for content, nutritional product compliance, consumer protection, and intellectual property enforcement - The company faces potential liability for negligence, copyright, or trademark infringement related to the content it produces, licenses, and distributes, which could result in costly litigation and harm its business[165](index=165&type=chunk)[166](index=166&type=chunk) - Nutritional products must comply with FDA and other applicable regulations regarding manufacturing, marketing, and labeling; non-compliance, especially by contract manufacturers, could harm the business[167](index=167&type=chunk)[168](index=168&type=chunk) - The Coach network program and automatically renewing subscriptions are subject to consumer protection regulations; non-compliance could lead to regulatory actions, fines, or litigation[172](index=172&type=chunk)[174](index=174&type=chunk) - Inability to protect its valuable intellectual property rights (patents, trademarks, copyrights, trade secrets) or defend against third-party infringement claims could reduce the value of its products and brand, leading to costly litigation[189](index=189&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Risks Related to Ownership of Our Common Stock](index=34&type=section&id=1.13%20Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Founder's voting control, public company costs, impairment charges, and NYSE delisting risk - The company's founder, Carl Daikeler, controls approximately **84.6% of the voting power** through Class X Common Stock, limiting other stockholders' ability to influence corporate matters and potentially allowing him to pursue interests not aligned with all stockholders[116](index=116&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - As a public company, it incurs significant legal, accounting, and compliance costs, which can strain resources, divert management's attention, and make it more difficult to attract and retain qualified personnel[206](index=206&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk) - Declines in financial performance have resulted in significant impairment charges (**$19.9 million in 2022**, **$94.9 million in 2021**) and could lead to future charges, negatively affecting stock price and financing ability[200](index=200&type=chunk) - The company received a NYSE notice in November 2022 for failing to meet the minimum share price criteria (**$1.00/share**) and faces a risk of delisting if compliance is not regained within six months[208](index=208&type=chunk) [General Risk Factors](index=37&type=section&id=1.14%20General%20Risk%20Factors) Fluctuations in operating results, tax law changes, and macroeconomic conditions impacting financial performance - Quarterly operating results and other metrics are subject to significant fluctuations and are difficult to predict due to factors such as market acceptance, customer retention, competition, supply chain disruptions, and macroeconomic conditions[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Changes in tax laws, unanticipated tax liabilities, and the outcomes of income tax audits could adversely affect the company's financial results and cash flows[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 1B. Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved comments from the SEC staff - No unresolved staff comments[229](index=229&type=chunk) [Item 2. Properties](index=40&type=section&id=Item%202.%20Properties) Corporate headquarters in El Segundo, production facility in Van Nuys, and remote-first workforce strategy - Corporate headquarters: El Segundo, California (approx. **42,000 sq ft**, lease expires 2024)[230](index=230&type=chunk) - Production facility: Van Nuys, California (approx. **19,400 sq ft**, owned)[230](index=230&type=chunk) - Strategy: Emphasizes remote-first capabilities to minimize the need for additional space[231](index=231&type=chunk) [Item 3. Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) Delaware Court of Chancery validated the 2021 Class A common stock increase amendment on March 14, 2023 - Legal challenge concerned the approval of a **1.3 billion share increase** in Class A common stock in 2021, with allegations of requiring a separate Class A vote[232](index=232&type=chunk) - On March 14, 2023, the Delaware Court of Chancery granted the company's Section 205 Petition, validating the Company Charter and the 2021 Class A Increase Amendment, and all shares issued based on it[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[236](index=236&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Class A common stock trades on NYSE; no cash dividends expected; no repurchases in Q4 2022 [Common Stock Market and Holders](index=41&type=section&id=2.1%20Common%20Stock%20Market%20and%20Holders) Details on Class A common stock trading on NYSE and registered holders - Class A common stock began trading on the New York Stock Exchange (NYSE) under the symbol "BODY" on June 28, 2021[237](index=237&type=chunk) - As of February 21, 2023, there were **48 registered holders** of Class A common stock and **three registered holders** of Class X common stock; Class C common stock had no registered holders[239](index=239&type=chunk) [Dividend Policy](index=41&type=section&id=2.2%20Dividend%20Policy) The company has never paid cash dividends and does not expect to in the foreseeable future - The company has never declared or paid cash dividends on its capital stock and does not expect to for the foreseeable future, anticipating all earnings will be used for business operations and growth[240](index=240&type=chunk) [Equity Compensation Plans and Performance](index=41&type=section&id=2.3%20Equity%20Compensation%20Plans%20and%20Performance) Information on equity compensation plans and a performance graph comparing stock return - Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[241](index=241&type=chunk) - A performance graph compares the cumulative total stockholder return on Class A common stock with the NYSE Composite Index and the S&P SmallCap 600 Index from June 28, 2021, to December 31, 2022[243](index=243&type=chunk) - There were no repurchases of common stock during the fourth quarter of 2022[247](index=247&type=chunk) [Item 6. Selected Financial Data](index=42&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is reserved and contains no information - This item is reserved[248](index=248&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue decreased 21% in 2022, net loss improved, and Adjusted EBITDA loss significantly decreased [Overview and Recent Developments](index=43&type=section&id=2.4%20Overview%20and%20Recent%20Developments) Company overview, 2022 financial performance, and strategic initiatives for cost reduction and growth - The Beachbody Company is a leading subscription health and wellness company, known for fitness programs (P90X, Insanity) and nutrition programs (Portion Fix, 2B Mindset), offered through BOD and BODi streaming services, nutritional products (Shakeology, BEACHBAR), and connected fitness equipment[253](index=253&type=chunk) Financial Performance (2022 vs. 2021) | Metric | 2022 | 2021 | Change | | :-------------------- | :--------- | :--------- | :------- | | Total revenue | $692.2 million | $873.6 million | (21%) | | Digital revenue | $300.7 million | $365.4 million | (18%) | | Nutrition and other revenue | $353.3 million | $465.5 million | (24%) | | Connected fitness revenue | $38.2 million | $42.7 million | (11%) | | Net loss | $(194.2) million | $(228.4) million | 15% | | Adjusted EBITDA loss | $(23.3) million | $(86.1) million | 73% | - Post-pandemic consumer behavior (desire to spend more time outside) and increased supply chain costs adversely impacted demand for at-home fitness solutions and gross margins in 2022[258](index=258&type=chunk) - In January 2023, the company executed cost-reduction initiatives (expected **$6.5 million in costs**) to streamline the business, focusing on revamping BODi (new BODi Blocks, mindset content) and growing Shakeology in the Healthy Dessert market[259](index=259&type=chunk) - The 'One Brand' strategy, consolidating streaming content into a single Beachbody platform in Q3 2022, aims to simplify product offerings and increase customer acquisition[260](index=260&type=chunk) - Connected fitness gross margin is expected to remain negative until existing inventory is sold, due to high supply chain costs and competitive pricing; the company is exploring new pricing and bundling strategies like the BODi Bike Studio[262](index=262&type=chunk) [Key Operational and Business Metrics](index=45&type=section&id=2.5%20Key%20Operational%20and%20Business%20Metrics) Analysis of digital and nutritional subscriptions, retention rates, and total streams Key Operational and Business Metrics (2022 vs. 2021 vs. 2020) | Metric | 2022 | 2021 | 2020 | | :---------------------- | :----- | :----- | :----- | | Digital subscriptions (M) | 1.95 | 2.54 | 2.63 | | Nutritional subscriptions (M) | 0.22 | 0.30 | 0.39 | | Average digital retention | 95.9 % | 95.7 % | 95.5 % | | Total streams (M) | 120.5 | 167.1 | 179.6 | | DAU/MAU | 30.1 % | 31.4 % | 31.6 % | - Digital subscriptions decreased by **23%** in 2022 compared to 2021, while nutritional subscriptions decreased by **27%**[281](index=281&type=chunk)[282](index=282&type=chunk) [Non-GAAP Information (Adjusted EBITDA)](index=46&type=section&id=2.6%20Non-GAAP%20Information%20(Adjusted%20EBITDA)) Adjusted EBITDA as a non-GAAP measure for core operating performance, excluding non-cash items - Adjusted EBITDA is a non-GAAP measure used by management to evaluate core operating performance, excluding non-cash expenses (e.g., depreciation, equity-based compensation, inventory net realizable value adjustments) and non-operating items (e.g., interest income/expense)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk) Adjusted EBITDA Reconciliation (2022 vs. 2021 vs. 2020) | Metric | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | | Net loss | $(194,192) | $(228,382) | $(21,432) | | Impairment of goodwill and intangible assets | $19,907 | $94,894 | $0 | | Depreciation and amortization | $74,848 | $59,597 | $44,257 | | Amortization of content assets | $24,276 | $14,838 | $7,485 | | Equity-based compensation | $17,620 | $16,413 | $5,398 | | Inventory net realizable value adjustments | $24,864 | $10,082 | $0 | | Change in fair value of warrant liabilities | $(8,322) | $(50,729) | $0 | | **Adjusted EBITDA** | **$(23,265)** | **$(86,108)** | **$51,460** | [Results of Operations](index=47&type=section&id=2.7%20Results%20of%20Operations) Detailed breakdown of revenue, gross profit, and operating expenses, highlighting key changes and drivers Revenue Breakdown (2022 vs. 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | $ Change | % Change | | :---------------- | :------------------ | :------------------ | :------- | :------- | | Digital | $300,673 | $365,412 | $(64,739) | (18%) | | Nutrition and other | $353,331 | $465,495 | $(112,164) | (24%) | | Connected fitness | $38,195 | $42,738 | $(4,543) | (11%) | | **Total revenue** | **$692,199** | **$873,645** | **$(181,446)** | **(21%)** | - Digital revenue decreased primarily due to a **$40.9 million decrease** from the online Coach business management platform (fewer Coaches) and a **$21.4 million decrease** from digital streaming services (**23% fewer digital subscriptions**)[281](index=281&type=chunk) - Nutrition and other revenue decreased by **$123.0 million** from nutritional products and **$8.0 million** from accessories, with nutritional subscriptions decreasing **27%**, partially offset by **$26.9 million** from the preferred customer membership program[282](index=282&type=chunk) Gross Profit and Margin Breakdown (2022 vs. 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | $ Change | % Change | | :-------------------- | :------------------ | :------------------ | :------- | :------- | | Digital gross profit | $234,254 | $317,100 | $(82,846) | (26%) | | Nutrition gross profit | $188,578 | $252,188 | $(63,610) | (25%) | | Connected fitness gross profit | $(53,259) | $(24,305) | $(28,954) | (119%) | | **Total gross profit** | **$369,573** | **$544,983** | **$(175,410)** | **(32%)** | | Digital gross margin | 78% | 87% | - | - | | Nutrition gross margin | 53% | 54% | - | - | | Connected fitness gross margin | (139%) | (57%) | - | - | - Digital cost of revenue increased by **37%** due to higher fixed costs, including a **$9.4 million increase** in content asset amortization and a **$6.2 million increase** in depreciation[287](index=287&type=chunk) - Connected fitness cost of revenue increased by **36%** due to an incremental **$17.8 million** in inventory adjustments (excess/obsolete) and a **$4.5 million increase** in fulfillment costs[289](index=289&type=chunk) Operating Expenses (2022 vs. 2021) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Selling and marketing | $359,987 | $548,130 | $(188,143) | (34%) | | Enterprise technology and development | $104,363 | $119,915 | $(15,552) | (13%) | | General and administrative | $78,426 | $79,682 | $(1,256) | (2%) | | Restructuring | $10,047 | $(320) | $10,367 | (3,240%) | | Impairment of goodwill and intangible assets | $19,907 | $94,894 | $(74,987) | (79%) | - Selling and marketing expense decreased by **$188.1 million (34%)** due to a **$123.0 million reduction** in television media and online advertising and a **$62.0 million decrease** in Coach compensation[292](index=292&type=chunk) - The company recognized a **$19.9 million impairment** of various intangible assets in 2022 (vs. **$94.9 million in 2021**) due to reduced revenue and operating income forecasts[302](index=302&type=chunk)[305](index=305&type=chunk) - A gain of **$8.3 million** was recognized from the change in fair value of warrant liabilities in 2022 (vs. **$50.7 million in 2021**), and interest expense increased to **$3.4 million** (vs. **$0.5 million in 2021**) due to higher interest rates on borrowings[307](index=307&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=2.8%20Liquidity%20and%20Capital%20Resources) Cash position, Term Loan details, cash flow activities, and expected liquidity for the next 12 months - As of December 31, 2022, the company had **$80.1 million** in cash and cash equivalents[310](index=310&type=chunk) - On August 8, 2022, the company entered into a **$50.0 million** senior secured Term Loan, maturing on August 8, 2026, with an effective interest rate of **16.66%** for 2022[311](index=311&type=chunk)[313](index=313&type=chunk)[507](index=507&type=chunk) Net Cash Flows (2022 vs. 2021 vs. 2020) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | :------------------ | | Net cash provided by (used in) operating activities | $(47,173) | $(215,249) | $61,430 | | Net cash used in investing activities | $(26,493) | $(125,191) | $(46,686) | | Net cash provided by financing activities | $47,561 | $390,651 | $165 | - The decrease in cash used in operating activities in 2022 was primarily due to reduced purchases of media (**$116.7 million decrease**) and connected fitness inventory[316](index=316&type=chunk) - The company believes existing cash and cash equivalents, combined with cost control initiatives, will provide sufficient liquidity to meet anticipated cash needs for the next 12 months[321](index=321&type=chunk) [Critical Accounting Policies and Estimates](index=54&type=section&id=2.9%20Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies for inventory, goodwill, intangible asset impairment, and income taxes - Inventory is valued at the lower of cost or net realizable value, with reserves recorded based on future demand, anticipated margin, and product discontinuances; **$39.8 million** and **$17.5 million** charges were recorded in 2022 and 2021, respectively[324](index=324&type=chunk) - Goodwill and indefinite-lived intangible assets are assessed for impairment annually or more frequently; definite-lived intangible assets are tested for recoverability. In 2022, a **$18.9 million impairment charge** was recognized for definite-lived intangible assets and a **$1.0 million charge** for an indefinite-lived trade name[326](index=326&type=chunk)[329](index=329&type=chunk)[331](index=331&type=chunk) - Income taxes are accounted for using the asset and liability method, requiring assessment of deferred tax asset recoverability. A valuation allowance of **$116.6 million** was established as of December 31, 2022, due to accumulated losses[337](index=337&type=chunk)[338](index=338&type=chunk)[556](index=556&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Exposure to foreign currency exchange risk and interest rate risk, with mitigation strategies - The company is exposed to foreign currency exchange risk, with approximately **10% of its 2022 revenue** in foreign currencies (Canadian dollars and British pounds), managed through derivative instruments (option and forward contracts)[341](index=341&type=chunk)[342](index=342&type=chunk) - Interest rate risk is primarily associated with its SOFR-based Term Loan; a hypothetical **1% change** in interest rates would not result in a material change to annual interest expense[345](index=345&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements, auditor's opinions, and detailed notes on accounting policies [Independent Auditor's Report](index=59&type=section&id=2.11%20Independent%20Auditor's%20Report) Unqualified opinion on financial statements but adverse on internal controls due to material weaknesses - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements for the period ended December 31, 2022, in conformity with U.S. GAAP[350](index=350&type=chunk) - An adverse opinion was expressed on the effectiveness of internal control over financial reporting as of December 31, 2022, due to identified material weaknesses[351](index=351&type=chunk)[361](index=361&type=chunk) - Goodwill and Long-lived Assets Impairment was identified as a critical audit matter due to significant judgment in estimating fair value and sensitivity to assumptions like discount rate, revenue, and EBITDA margin[355](index=355&type=chunk)[357](index=357&type=chunk) [Consolidated Financial Statements](index=63&type=section&id=2.12%20Consolidated%20Financial%20Statements) Key consolidated financial statements including Balance Sheets, Statements of Operations, and Cash Flows Consolidated Balance Sheets (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Total assets | $443,395 | $637,612 | | Total liabilities | $231,853 | $252,227 | | Total stockholders' equity | $211,542 | $385,385 | Consolidated Statements of Operations (Years Ended December 31, 2022, 2021, and 2020) | Metric | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | :------------------ | | Total revenue | $692,199 | $873,645 | $863,582 | | Gross profit | $369,573 | $544,983 | $613,875 | | Operating loss | $(203,157) | $(297,318) | $(6,302) | | Net loss | $(194,192) | $(228,382) | $(21,432) | | Net loss per common share, basic and diluted | $(0.63) | $(0.83) | $(0.09) | Consolidated Statements of Cash Flows (Years Ended December 31, 2022, 2021, and 2020) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | :------------------ | | Net cash provided by (used in) operating activities | $(47,173) | $(215,249) | $61,430 | | Net cash used in investing activities | $(26,493) | $(125,191) | $(46,686) | | Net cash provided by financing activities | $47,561 | $390,651 | $165 | [Notes to Consolidated Financial Statements](index=68&type=section&id=2.13%20Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations of significant accounting policies, business combinations, and financial statement items [Note 1. Description of Business and Summary of Significant Accounting Policies](index=68&type=section&id=2.13.1%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) Company formation, segment reporting changes, and key accounting policies for fair value and inventory - The company's formation involved a reverse recapitalization on June 25, 2021, where Forest Road Acquisition Corp. was treated as the acquired company and The Beachbody Company Group, LLC ('Old Beachbody') as the acquirer for financial reporting purposes[384](index=384&type=chunk)[387](index=387&type=chunk) - Segment reporting changed during Q3 2022, consolidating from two operating segments (Beachbody and Other) to one operating and reportable segment following the integration of Openfit streaming fitness offering[393](index=393&type=chunk) - Key accounting policies include fair value measurements (Level 1, 2, 3), inventory valuation at the lower of cost or net realizable value, accelerated amortization for content assets, and accounting for common stock warrant liabilities at fair value through profit or loss[394](index=394&type=chunk)[396](index=396&type=chunk)[398](index=398&type=chunk)[422](index=422&type=chunk) [Note 2. Business Combination](index=76&type=section&id=2.13.2%20Business%20Combination) Details of the June 2021 Business Combination, capital stock authorization, and PIPE financing - The Business Combination on June 25, 2021, involved the conversion of Old Beachbody equity units into Class A and Class X Common Stock at an exchange ratio of **3.359674941 shares per unit**[459](index=459&type=chunk) - The company's certificate of incorporation was amended to authorize **2,000,000,000 shares**, including **1,600,000,000 Class A** (1 vote), **200,000,000 Class X** (10 votes), and **100,000,000 Class C** (no votes) Common Stock[462](index=462&type=chunk) - The PIPE financing resulted in the purchase of **22,500,000 shares of Class A Common Stock** for **$225.0 million**[463](index=463&type=chunk) - The Myx acquisition involved the conversion of Myx equity units into approximately **13.5 million shares of Class A Common Stock**, with some cash consideration[464](index=464&type=chunk) [Note 3. Revenue](index=78&type=section&id=2.13.3%20Revenue) Revenue breakdown by geographic region and deferred revenue recognition Revenue by Geographic Region (2022 vs. 2021 vs. 2020) | Geographic region | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :---------------- | :------------------ | :------------------ | :------------------ | | United States | $620,942 | $787,083 | $786,186 | | Rest of world | $71,257 | $86,562 | $77,396 | | **Total revenue** | **$692,199** | **$873,645** | **$863,582** | - The company recognized **$106.5 million of revenue** in 2022 that was included in the deferred revenue balance as of December 31, 2021[470](index=470&type=chunk) [Note 4. Fair Value Measurements](index=78&type=section&id=2.13.4%20Fair%20Value%20Measurements) Fair value measurements for derivative assets and warrants, including valuation models and changes Fair Value Measurements (as of December 31, 2022) | Item | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | | Derivative assets | $0 | $462 | $0 | | Public Warrants | $415 | $0 | $0 | | Private Placement Warrants | $0 | $0 | $107 | | Term Loan Warrants | $0 | $0 | $1,226 | - Private Placement Warrants and Term Loan Warrants are classified as Level 3 and valued using a Black-Scholes option-pricing model, with implied volatility as a significant unobservable input[473](index=473&type=chunk)[476](index=476&type=chunk) - The fair value of Private Placement Warrants decreased by **$2.0 million** in 2022 to **$0.1 million**, and Term Loan Warrants decreased by **$4.0 million** to **$1.2 million**, with changes recognized in the consolidated statements of operations[475](index=475&type=chunk)[477](index=477&type=chunk) [Note 5. Inventory, Net](index=81&type=section&id=2.13.5%20Inventory,%20Net) Inventory valuation at lower of cost or net realizable value, with recorded adjustments Inventory, Net (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :------------------------ | :------------------ | :------------------ | | Raw materials and work in process | $13,380 | $24,436 | | Finished goods | $40,680 | $108,294 | | **Total inventory** | **$54,060** | **$132,730** | - Adjustments to the carrying value of inventory for excess and obsolete items, and to reduce to net realizable value, amounted to **$39.8 million** in 2022 and **$17.5 million** in 2021[324](index=324&type=chunk)[481](index=481&type=chunk) [Note 6. Other Current Assets](index=81&type=section&id=2.13.6%20Other%20Current%20Assets) Breakdown of other current assets including deferred coach costs and deposits Other Current Assets (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :------------------ | :------------------ | :------------------ | | Deferred coach costs | $31,270 | $30,928 | | Deposits | $4,527 | $8,915 | | Accounts receivable, net | $866 | $1,225 | | Other | $2,585 | $2,659 | | **Total other current assets** | **$39,248** | **$43,727** | [Note 7. Property and Equipment, Net](index=82&type=section&id=2.13.7%20Property%20and%20Equipment,%20Net) Property and equipment values, accumulated depreciation, and disposal losses Property and Equipment, Net (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :---------------------------------------- | :------------------ | :------------------ | | Property and equipment, gross | $276,900 | $294,881 | | Less: Accumulated depreciation | $(202,753) | $(181,783) | | **Property and equipment, net** | **$74,147** | **$113,098** | - The company recognized a net loss of **$1.2 million** in 2022 from the disposal of certain property and equipment due to digital platform consolidation and office lease assignment[483](index=483&type=chunk) Total Depreciation Expense (2022 vs. 2021 vs. 2020) | Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | :------------------ | | Cost of revenue | $27,137 | $18,160 | $13,619 | | Selling and marketing | $381 | $1,471 | $2,220 | | Enterprise technology and development | $28,833 | $25,290 | $21,274 | | General and administrative | $242 | $4,104 | $3,014 | | **Total depreciation** | **$56,593** | **$49,025** | **$40,127** | [Note 8. Content Assets, Net](index=82&type=section&id=2.13.8%20Content%20Assets,%20Net) Content asset values, amortization expense, and expected future amortization Content Assets, Net (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :-------------------- | :------------------ | :------------------ | | Released, less amortization | $34,713 | $35,936 | | In production | $175 | $3,411 | | **Content assets, net** | **$34,888** | **$39,347** | - Amortization expense for content assets was **$24.3 million** in 2022, **$14.8 million** in 2021, and **$7.5 million** in 2020[485](index=485&type=chunk) - The company expects **$19.8 million of content assets** to be amortized during the next 12 months[485](index=485&type=chunk) [Note 9. Acquisitions](index=82&type=section&id=2.13.9%20Acquisitions) Details of the Myx and Ladder acquisitions, including consideration and goodwill recognized - The company acquired Myx in June 2021 for a total consideration of **$222.9 million**, including cash, share consideration, and the fair value of a convertible instrument and promissory note[487](index=487&type=chunk) - Goodwill recognized from the Myx acquisition was **$158.8 million**, primarily attributable to the assembled workforce and expected synergies[489](index=489&type=chunk) - The Ladder sports nutrition company was acquired in September 2020 for **$27.9 million**, resulting in **$11.6 million in goodwill**[493](index=493&type=chunk)[494](index=494&type=chunk) [Note 10. Goodwill and Intangible Assets, Net](index=85&type=section&id=2.13.10%20Goodwill%20and%20Intangible%20Assets,%20Net) Goodwill and intangible asset values, impairment charges, and amortization expense - Goodwill for the Beachbody reporting unit remained at **$125.2 million** as of December 31, 2022, with no impairment recorded in 2022, following a **$52.6 million impairment charge** for the Other reporting unit in 2021[498](index=498&type=chunk) Intangible Assets, Net (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Contract-based | $0 | $50 | | Customer-related | $6,300 | $17,019 | | Technology-based | $800 | $12,201 | | Talent and representation contracts | $0 | $0 | | Formulae | $804 | $1,097 | | Trade name | $300 | $16,000 | | **Total Intangible Assets, Net** | **$8,204** | **$46,367** | - In 2022, the company recorded a **$18.9 million non-cash impairment charge** for definite-lived intangible assets (customer relationships, developed technology, trade names) and a **$1.0 million charge** for an indefinite-lived trade name due to reduced revenue and margin forecasts[501](index=501&type=chunk)[502](index=502&type=chunk) - Amortization expense for intangible assets was **$18.3 million** in 2022, **$10.6 million** in 2021, and **$4.1 million** in 2020[504](index=504&type=chunk) [Note 11. Accrued Expenses](index=87&type=section&id=2.13.11%20Accrued%20Expenses) Breakdown of accrued expenses including employee compensation, coach costs, and IT Accrued Expenses (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Employee compensation and benefits | $20,584 | $8,996 | | Coach costs | $14,535 | $19,168 | | Inventory, shipping and fulfillment | $11,687 | $14,360 | | Sales and other taxes | $4,818 | $5,097 | | Information technology | $2,207 | $10,150 | | Advertising | $1,176 | $4,033 | | Customer service expenses | $956 | $1,773 | | Other accrued expenses | $8,467 | $10,948 | | **Total accrued expenses** | **$64,430** | **$74,525** | [Note 12. Debt](index=88&type=section&id=2.13.12%20Debt) Details of the $50.0 million Term Loan, interest rate, associated warrants, and maturity schedule - On August 8, 2022, the company entered into a **$50.0 million** senior secured Term Loan, maturing on August 8, 2026, with **$49.4 million** outstanding as of December 31, 2022[506](index=506&type=chunk) - The Term Loan was a SOFR loan with an effective interest rate of **16.66%** in 2022, and the company recorded **$3.4 million** in interest related to it[507](index=507&type=chunk) - In connection with the Term Loan, warrants for the purchase of **4,716,756 shares of Class A Common Stock** (exercise price **$1.85/share**) were issued to affiliated holders, vesting over four years[508](index=508&type=chunk) Debt Maturity Schedule (as of December 31, 2022) | Year | Amount (in thousands) | | :---------------------- | :-------------------- | | Year ending Dec 31, 2023 | $1,250 | | Year ending Dec 31, 2024 | $1,563 | | Year ending Dec 31, 2025 | $2,500 | | Year ending Dec 31, 2026 | $44,062 | | **Total debt** | **$49,375** | [Note 13. Leases](index=89&type=section&id=2.13.13%20Leases) Lease liabilities, right-of-use assets, total lease costs, and impact of office lease assignment Lease Liabilities and Right-of-Use Assets (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Operating lease liabilities | $5,345 | $6,900 | | Finance lease liabilities | $123 | $300 | | Operating right-of-use assets | $5,030 | $6,400 | | Finance right-of-use assets | $100 | $300 | - Total lease costs were **$2.99 million** in 2022, **$9.87 million** in 2021, and **$10.33 million** in 2020[514](index=514&type=chunk) - The assignment of the Santa Monica office lease in November 2021 reduced right-of-use assets by **$22.1 million** and lease liabilities by **$28.2 million**, resulting in a **$6.5 million reduction in net loss**[516](index=516&type=chunk) [Note 14. Commitments and Contingencies](index=90&type=section&id=2.13.14%20Commitments%20and%20Contingencies) Future minimum payments under noncancelable agreements and resolution of a legal challenge Future Minimum Payments under Noncancelable Agreements (as of December 31, 2022) | Year | Amount (in thousands) | | :---------------------- | :-------------------- | | Year ended Dec 31, 2023 | $20,849 | | Year ended Dec 31, 2024 | $1,844 | | Year ended Dec 31, 2025 | $1,385 | | Year ended Dec 31, 2026 | $100 | | Thereafter | $150 | | **Total** | **$24,328** | - The company resolved a legal challenge regarding the 2021 Class A common stock increase amendment, with the Delaware Court of Chancery validating the amendment and related share issuances on March 14, 2023[520](index=520&type=chunk)[523](index=523&type=chunk) [Note 15. Restructuring](index=92&type=section&id=2.13.15%20Restructuring) Restructuring costs in 2022, primarily for employee termination benefits and accelerated depreciation - The company recognized **$10.0 million in restructuring costs** during 2022, primarily for employee termination benefits related to consolidating its streaming fitness and nutrition offerings[524](index=524&type=chunk) - Platform consolidation also led to accelerated depreciation (**$3.4 million**) of computer software and web development assets and accelerated amortization (**$2.7 million**) of content assets in 2022[525](index=525&type=chunk) [Note 16. Stockholders' Equity](index=92&type=section&id=2.13.16%20Stockholders'%20Equity) Authorized capital stock, conversion of equity units, and accumulated other comprehensive income - The company's authorized capital stock includes **1,600,000,000 shares of Class A Common Stock** (one vote), **200,000,000 shares of Class X Common Stock** (ten votes), and **100,000,000 shares of Class C Common Stock** (no voting rights)[526](index=526&type=chunk)[527](index=527&type=chunk) - In connection with the Business Combination, Old Beachbody's preferred units converted into **33,828,030 shares of Class A Common Stock**, and common units converted into **67,934,584 shares of Class A** and **141,250,310 shares of Class X Common Stock**[532](index=532&type=chunk)[533](index=533&type=chunk) - Accumulated other comprehensive income (loss) was **$37 thousand** as of December 31, 2022, reflecting changes in fair value of derivative financial instruments and foreign currency translation adjustments[535](index=535&type=chunk) [Note 17. Equity-Based Compensation](index=93&type=section&id=2.13.17%20Equity-Based%20Compensation) Shares available under the 2021 Incentive Award Plan and activity for stock options and RSUs - The 2021 Incentive Award Plan had **14,822,267 shares of Class A Common Stock** available for issuance as of December 31, 2022[539](index=539&type=chunk) Stock Option Activity (as of December 31, 2022) | Metric | Number of Options | Weighted Average Exercise Price (per option) | | :-------------------------- | :---------------- | :------------------------------------------- | | Outstanding at Dec 31, 2021 | 41,753,042 | $3.86 | | Granted | 22,805,144 | $1.18 | | Exercised | (1,879,095) | $1.52 | | Forfeited | (10,499,831) | $4.55 | | Expired | (3,764,635) | $2.48 | | **Outstanding at Dec 31, 2022** | **48,414,625** | **$2.65** | | Exercisable at Dec 31, 2022 | 21,755,992 | $2.60 | RSU Activity (as of December 31, 2022) | Metric | Number of RSUs | Weighted Average Fair Value (per RSU) | | :-------------------------- | :------------- | :------------------------------------ | | Outstanding at Dec 31, 2021 | 573,678 | $5.97 | | Granted | 3,693,286 | $1.21 | | Vested | (856,697) | $2.51 | | Forfeited | (251,082) | $4.62 | | **Outstanding at Dec 31, 2022** | **3,159,185** | **$1.45** | Equity-Based Compensation Expense (2022 vs. 2021 vs. 2020) | Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | :------------------ | | Cost of revenue | $1,416 | $1,187 | $216 | | Selling and marketing | $7,015 | $7,357 | $2,169 | | Enterprise technology and development | $1,403 | $2,380 | $1,294 | | General and administrative | $7,786 | $5,489 | $1,719 | | **Total equity-based compensation** | **$17,620** | **$16,413** | **$5,398** | [Note 18. Derivative Financial Instruments](index=95&type=section&id=2.13.18%20Derivative%20Financial%20Instruments) Notional amount of foreign exchange options and breakdown of derivative assets - The notional amount of outstanding foreign exchange options was **$17.6 million** as of December 31, 2022, down from **$30.4 million** in 2021[548](index=548&type=chunk) Derivative Assets (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | | Derivatives designated as hedging instruments | $343 | $240 | | Derivatives not designated as hedging instruments | $119 | $74 | | **Total derivative assets** | **$462** | **$314** | [Note 19. Income Taxes](index=96&type=section&id=2.13.19%20Income%20Taxes) Income tax benefit, deferred tax liabilities, net operating loss carryforwards, and valuation allowance Income Tax Benefit (Provision), Net (2022 vs. 2021 vs. 2020) | Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :-------------------------- | :------------------ | :------------------ | :------------------ | | Current | $92 | $(323) | $326 | | Deferred | $2,961 | $15,862 | $(15,595) | | **Total income tax benefit (provision), net** | **$3,053** | **$15,539** | **$(15,269)** | Net Deferred Tax Liabilities (as of December 31, 2022 and 2021) | Category | 2022 (in thousands) | 2021 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | | Total deferred tax assets | $140,824 | $107,614 | | Total deferred tax liabilities | $(24,441) | $(42,670) | | Net deferred tax assets before valuation allowance | $116,383 | $64,944 | | Valuation allowance | $(116,564) | $(68,109) | | **Net deferred tax liabilities** | **$(181)** | **$(3,165)** | - As of December 31, 2022, the company had accumulated U.S. federal net operating loss carryforwards of **$293.7 million** and state net operating loss carryforwards of **$285.2 million**[557](index=557&type=chunk) - A full valuation allowance of **$116.6 million** was recorded against deferred tax assets as of December 31, 2022, due to the level of losses[556](index=556&type=chunk)[559](index=559&type=chunk) [Note 20. Employee Benefit Plan](index=99&type=section&id=2.13.20%20Employee%20Benefit%20Plan) Details of the 401(k) plan and matching contributions expense - The company maintains a 401(k) plan, matching **50% of participant contributions** up to **6% of total compensation**[561](index=561&type=chunk) - Matching contributions expense was **$2.9 million** in 2022, **$3.4 million** in 2021, and **$2.0 million** in 2020[561](index=561&type=chunk) [Note 21. Earnings (Loss) per Share](index=99&type=section&id=2.13.21%20Earnings%20(Loss)%20per%20Share) Net loss per common share, basic and diluted, and exclusion of antidilutive shares Net Loss per Common Share (2022 vs. 2021 vs. 2020) | Metric | 2022 | 2021 | 2020 | | :------------------------------------ | :----- | :----- | :----- | | Net loss per common share, basic and diluted | $(0.63) | $(0.83) | $(0.09) | - Basic and diluted net loss per common share were the same for all periods presented, as the inclusion of all potential common shares would have been antidilutive[562](index=562&type=chunk) - Approximately **79.4 million potential common shares** were excluded from the computation of diluted net loss per common share in 2022 due to their antidilutive effect[563](index=563&type=chunk) [Note 22. Related Party Transactions](index=99&type=section&id=2.13.22%20Related%20Party%20Transactions) Transactions with related parties, including property purchase, royalty payments, and legal services - In July 2021, the company purchased a building for **$5.1 million** from a company owned by its controlling shareholder[564](index=564&type=chunk) - Royalty payments to a company related to the controlling shareholder were **$0.5 million** in 2022 and **$1.0 million** in 2021[565](index=565&type=chunk) - Legal services from a law firm where a minority shareholder and director is affiliated amounted to **$1.3 million** in 2022 and **$2.3 million** in 2021[566](index=566&type=chunk) - Financial advisory services related to the August 2022 Term Loan resulted in **$1.0 million** in payments to a minority shareholder affiliated with a director[567](index=567&type=chunk) [Note 23. Subsequent Events](index=100&type=section&id=2.13.23%20Subsequent%20Events) Cost-reduction initiatives initiated in January 2023, expecting termination benefits - In January 2023, the company initiated cost-reduction initiatives, expecting approximately **$6.5 million in termination benefits** during the first quarter of 2023[568](index=568&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=101&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with independent accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[570](index=570&type=chunk) [Item 9A. Controls and Procedures](index=101&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were ineffective due to material weaknesses, but financial statements are fairly presented [Management's Evaluation of Disclosure Controls and Procedures](index=101&type=section&id=2.15%20Management's%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses - Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2022, due to material weaknesses in internal control over financial reporting[571](index=571&type=chunk) - Despite the identified material weaknesses, management believes the consolidated financial statements and other information in the report fairly present the company's financial position, results of operations, and cash flows[572](index=572&type=chunk) [Management's Annual Report on Internal Control over Financial Reporting](index=101&type=section&id=2.16%20Management's%20Annual%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management concluded internal control over financial reporting was not effective as of December 31, 2022 - Management is responsible for establishing and maintaining adequate internal control over financial reporting and concluded that the system was not effective as of December 31, 2022, based on COSO criteria[573](index=573&type=chunk)[575](index=575&type=chunk) [Material Weaknesses and Remediation Plan](index=102&type=section&id=2.17%20Material%20Weaknesses%20and%20Remediation%20Plan) Identified material weaknesses in IT general controls and impairment analysis documentation, with a remediation plan - Material weaknesses identified include ineffective information technology general controls (user access, program change management) and insufficient contemporaneous documentation for review controls over goodwill and long-lived asset impairment analyses[579](index=579&type=chunk) - The company is implementing measures, including additional training and quality control, to remediate these material weaknesses, with expected completion prior to the end of 2023[581](index=581&type=chunk)[582](index=582&type=chunk) [Item 9B. Other Information](index=102&type=section&id=Item%209B.%20Other%20Information) Chief Legal Officer Blake Bilstad will depart, receiving severance benefits and accelerated equity vesting - Blake Bilstad, Chief Legal Officer and Corporate Secretary, will leave the company effective May 1, 2023, due to business reprioritization[584](index=584&type=chunk) - Severance benefits include a lump sum payment of annual base salary plus a pro rata target bonus, 12 months of COBRA reimbursements, and accelerated vesting of time-based equity awards through May 15, 2024[585](index=585&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=103&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[587](index=587&type=chunk) PART III [Item 10. Directors, Executive Officers, and Corporate Governance](index=104&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[589](index=589&type=chunk) [Item 11. Executive Compensation](index=104&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[590](index=590&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=104&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[591](index=591&type=chunk)[592](index=592&type=chunk)[593](index=593&type=chunk)[594](index=594&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=104&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[595](index=595&type=chunk) [Item 14. Principal Accounting Fees and Services](index=104&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[596](index=596&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=105&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) Lists financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K - The section includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[597](index=597&type=chunk) Financial Statement Schedules (as of December 31, 2022) | Schedule | 2022 (in thousands) | | :------------------------------------ | :------------------ | | Inventory reserve, end of year | $52,975 | | Deferred tax asset valuation allowance, end of year | $116,564 | - A comprehensive list of exhibits required under Item 601 of Regulation S-K is provided, including agreements, certificates, and plans[601](index=601&type=chunk)[602](index=602&type=chunk) [Item 16. Form 10-K Summary](index=109&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item states that no Form 10-K Summary is provided - No Form 10-K Summary is provided[604](index=604&type=chunk)
The Beachbody Company(BODI) - 2022 Q4 - Earnings Call Transcript
2023-03-15 02:06
Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $148 million, which was 2% higher than the midpoint of guidance [44] - Adjusted EBITDA for the fourth quarter was $3.5 million, a significant improvement from a loss of $26.6 million in the prior-year period [34][50] - The company improved EBITDA and CapEx by $125 million in 2022, exceeding the $110 million target set earlier in the year [13] Business Line Data and Key Metrics Changes - Digital revenue was $69 million, down 16% year-over-year, with digital subscriptions declining 23% to 1.95 million [44] - Nutrition revenue was $75 million, down 23% year-over-year, but the company expects improvements from new initiatives [44] - Connected fitness revenue was $5 million, with approximately 3,700 bikes delivered [45] Market Data and Key Metrics Changes - The company is targeting a significant addressable market of 150 million adults in the U.S. who are overweight or obese, representing 74% of adults [17] - The launch of the Health Esteem category aims to fill a void in the fitness and diet industry, focusing on consumer well-being rather than just physical results [14][19] Company Strategy and Development Direction - The company consolidated its business into one platform, focusing on capital allocation and centralizing technology, marketing, and content investment [8] - The launch of the BODi brand represents a shift towards a holistic health platform, combining fitness, nutrition, and mindset content [10][30] - The company aims to generate long-term, sustainable, profitable growth and shareholder value through these strategic initiatives [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving consistent adjusted EBITDA profitability by Q4 of 2023, despite the unpredictable environment [13][33] - The company is focused on attracting higher value customers with a higher average revenue per user (ARPU) and believes the new Health Esteem platform will drive stronger consumer engagement [57] Other Important Information - The company reduced its headcount by over 40% to 615 employees since January 2022, contributing to significant cost savings [41] - Capital expenditures (CapEx) were reduced by 58% in 2022, from $109 million in 2021 to $46 million [43] Q&A Session Summary Question: What percentage of today's digital subscribers are on BODi, and how will the ASP play out? - The majority of customers are still on the basic BOD platform, but BODi has been growing healthily since the price adjustment [62] Question: Can you help us understand the renewal rate from existing subscribers switching to BODi? - The company has not seen significant pushback on the price increase, and the average total solution pack price has increased from $180 to $220 [66] Question: What is the timeline for achieving target margins across digital, nutrition, and connected fitness? - Digital margins are currently in the high 70s, with expectations to return to the low to mid-80s as revenue scales up [68] - Nutrition margins aim to improve towards 60% through better product mix and inventory management [68] Question: How does the company plan to manage costs while launching new initiatives? - The launch costs were covered in 2022, and the focus is now on running the business efficiently [76] Question: What is the expected year-end cash balance and key performance metrics? - The company aims to avoid going below its net debt balance and plans to generate positive cash flow [81]
The Beachbody Company(BODI) - 2022 Q3 - Quarterly Report
2022-11-09 21:24
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO Section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-39735 The Beachbody Company, Inc. (Exact name of registrant as specified in its charter) Delaware 85-3222090 (State or other jurisdict ...
The Beachbody Company(BODI) - 2022 Q2 - Earnings Call Transcript
2022-08-09 03:03
Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $179.1 million, in line with guidance, reflecting a shift in consumer priorities and a focus on profitable customer acquisition [33][8] - Adjusted EBITDA loss improved to $1.5 million, significantly better than the loss recorded in Q1 2022 [43][28] - Cash burn was reduced to approximately $6 million in Q2, a nearly $38 million improvement compared to Q1 [28][8] - The company ended the quarter with $57 million in cash on hand and entered into a $50 million debt financing agreement to enhance financial flexibility [8][45] Business Line Data and Key Metrics Changes - Digital revenue was $78 million, a 17% decline year-over-year, but showed solid growth of 35% compared to Q2 2019 [33][34] - Nutrition and other revenue decreased by 30% year-over-year to $90.5 million, correlating with the decline in digital subscriptions [34][33] - Connected fitness revenue was $10.6 million with 8,800 bikes delivered, indicating higher engagement among digital subscribers who own a bike [36][33] Market Data and Key Metrics Changes - The global dietary supplements market was valued at $151.9 billion in 2021 and is expected to grow at a CAGR of 8.9% from 2022 to 2030 [20] - The global home fitness category is projected to reach $21.8 billion by 2026, growing at a CAGR of 9.6% [20] Company Strategy and Development Direction - The company is focused on a "one brand strategy" to consolidate content and leverage subscriber scale, aiming to enhance customer acquisition and engagement [9][10] - New product launches and a disciplined marketing approach are key to driving profitable customer acquisitions [10][11] - The company is optimizing its nutritional offerings and managing operating expenses tightly while continuing to invest in transformation [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment, focusing on cost management and profitable growth [19][51] - The company anticipates variability in demand patterns for at-home fitness due to post-pandemic consumer behavior and inflationary pressures [47][19] - Management highlighted the importance of a strong coach network as a countercyclical momentum during economic uncertainty [15][19] Other Important Information - The company has made significant improvements in cash burn and liquidity, with a focus on maintaining strict cost discipline [45][8] - Management team changes include the appointment of a new CFO and COO, aimed at enhancing strategic and operational efficiency [21][22] Q&A Session Summary Question: Digital subscriber changes and impact of pricing - Management acknowledged that the decline in digital subscribers is partly due to the pandemic's effects and emphasized the importance of a variable cost structure to manage demand uncertainty [55][56] Question: Floor on membership and revenue - Management believes that the current state of subscribers is stable, with expectations for continued growth in the BOD Interactive subscription [57][58] Question: De-risking connected fitness - Management indicated that they have sufficient inventory and are focusing on creating great content to drive sales without needing to chase acquisition costs [62][63] Question: Guidance clarification for 2022 - Management confirmed that the definition of guidance remains the same, with a focus on EBITDA minus CapEx, while being cautious about the macro environment [66][68] Question: Customer acquisition trends - Management reported that customer acquisition costs have remained steady, with a focus on leveraging the coach network for direct sales [85][86]
The Beachbody Company(BODI) - 2022 Q2 - Quarterly Report
2022-08-08 20:29
Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Q2 2022 financial statements reflect significant declines in assets, revenue, and net income, alongside increased operating cash burn, with a subsequent $50.0 million term loan bolstering liquidity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 57,060 | 104,054 | | Inventory, net | 72,271 | 132,730 | | Total current assets | 184,476 | 299,372 | | Total assets | 490,039 | 637,612 | | **Liabilities & Equity** | | | | Total current liabilities | 196,871 | 236,232 | | Total liabilities | 209,883 | 252,227 | | Total stockholders' equity | 280,156 | 385,385 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | | :--- | :--- | :--- | | Total revenue | 179,136 | 223,108 | | Gross profit | 87,269 | 154,338 | | Operating loss | (44,404) | (30,036) | | Net loss | (41,867) | (12,440) | | Net loss per share | (0.14) | (0.05) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (33,256) | (25,487) | | Net cash used in investing activities | (19,222) | (74,480) | | Net cash provided by financing activities | 2,660 | 389,775 | | Net (decrease) increase in cash | (49,994) | 290,402 | - In January 2022, the company initiated a strategic realignment to consolidate its streaming fitness offerings onto a single Beachbody platform, resulting in restructuring costs of **$8.5 million** for the first six months of 2022, primarily from employee termination benefits[64](index=64&type=chunk) - Subsequent to the quarter end, on August 8, 2022, the company entered into a **$50.0 million** senior secured term loan agreement with a four-year maturity to be used for general corporate purposes[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2022 revenue decline and gross margin compression to market shifts and inventory issues, responding with cost reductions and a strategic realignment, while securing a term loan for liquidity - Management identifies post-pandemic consumer behavior, a global economic slowdown, and rising prices as adverse factors impacting demand for at-home fitness solutions and contributing to declines in gross margins[90](index=90&type=chunk) Key Operational and Business Metrics | Metric | As of/For Q2 2022 | As of/For Q2 2021 | | :--- | :--- | :--- | | Digital subscriptions (millions) | 2.28 | 2.72 | | Nutritional subscriptions (millions) | 0.28 | 0.42 | | Total streams (millions) | 31.0 | 44.5 | | Gross margin | 49% | 69% | | Net loss (millions) | $(41.9) | $(12.4) | | Adjusted EBITDA (millions) | $(1.5) | $(4.4) | - The company is implementing a "One Brand" strategy to consolidate streaming content onto a single Beachbody platform, expected to be fully implemented by mid-Q3 2022, to simplify offerings and increase customer acquisition[91](index=91&type=chunk) - Connected fitness gross margin is expected to remain negative until current inventory is sold through, due to high manufacturing and shipping costs and competitive market pricing[93](index=93&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2022 results show a 20% revenue decrease and significant gross margin compression, particularly in Connected Fitness due to inventory write-downs, despite reduced selling and marketing expenses Revenue by Segment (Q2 2022 vs Q2 2021) | Revenue Segment | Q2 2022 ($ thousands) | Q2 2021 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Digital | 78,015 | 94,325 | (17%) | | Connected fitness | 10,605 | 10 | NM | | Nutrition and other | 90,516 | 128,773 | (30%) | | **Total revenue** | **179,136** | **223,108** | **(20%)** | Gross Margin by Segment (Q2 2022 vs Q2 2021) | Segment | Q2 2022 Gross Margin | Q2 2021 Gross Margin | | :--- | :--- | :--- | | Digital | 76% | 88% | | Connected fitness | (197%) | NM | | Nutrition and other | 54% | 56% | - The negative connected fitness gross margin in Q2 2022 was primarily due to **$15.0 million** in adjustments for excess and obsolete inventory and to reduce carrying value to net realizable value[120](index=120&type=chunk) - Selling and marketing expense decreased by **38%** (**$53.6 million**) in Q2 2022 compared to Q2 2021, mainly due to a **$35.8 million** reduction in media expense and a **$19.0 million** decrease in Coach compensation[127](index=127&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company had $57.1 million in cash, with operating cash burn increasing to $33.3 million for the six months, leading to a subsequent $50.0 million term loan to enhance liquidity Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (33,256) | (25,487) | | Net cash used in investing activities | (19,222) | (74,480) | | Net cash provided by financing activities | 2,660 | 389,775 | - On August 8, 2022, the company entered into a **$50.0 million** senior secured term loan with a four-year maturity, bearing interest at SOFR + 7.15% or a reference rate + 6.15%, plus a 3.00% paid-in-kind interest component[158](index=158&type=chunk) - In connection with the term loan, the company issued warrants to purchase **4,716,756 shares** of Class A Common Stock at an exercise price of **$1.85 per share**, vesting over four years[159](index=159&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces foreign currency exchange risk, with 11% of Q2 2022 revenue in foreign currencies, mitigated by derivative instruments with a $26.5 million notional amount - The company's primary market risk is foreign currency exchange risk, with about **11%** of revenue in Q2 2022 coming from foreign currencies, mainly Canadian dollars and British pounds[167](index=167&type=chunk) - Beachbody uses derivative instruments (option contracts) to hedge foreign currency risk, with the total notional amount of these derivatives being **$26.5 million** at the end of Q2 2022, down from **$30.4 million** at year-end 2021[168](index=168&type=chunk)[170](index=170&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2022, disclosure controls and procedures were deemed effective by management, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[171](index=171&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[172](index=172&type=chunk) Part II. Other Information [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) No material changes to legal proceedings have occurred since the 2021 Annual Report on Form 10-K - There have been no material changes in legal proceedings since the company's 2021 Annual Report on Form 10-K[174](index=174&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) On August 8, 2022, the company secured a $50.0 million senior secured term loan with a four-year maturity, including financial covenants and an incremental borrowing option - On August 8, 2022, the company entered into a **$50.0 million** senior secured term loan facility, with an option for an additional **$25.0 million**[180](index=180&type=chunk)[182](index=182&type=chunk) - The loan has a four-year maturity and is secured by substantially all assets of the company and its subsidiaries[182](index=182&type=chunk)[183](index=183&type=chunk) - The financing agreement includes financial covenants requiring the company to maintain minimum revenue levels and minimum liquidity, starting at **$10.0 million** and increasing to **$15.0 million** over time[187](index=187&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Financing Agreement, Form of Warrant, and required certifications - Key exhibits filed include the Financing Agreement for the new term loan (Exhibit 10.2) and the associated Form of Warrant (Exhibit 10.3)[193](index=193&type=chunk)
The Beachbody Company(BODI) - 2022 Q1 - Earnings Call Transcript
2022-05-10 03:47
The Beachbody Company, Inc. (BODY) Q1 2022 Earnings Conference Call May 9, 2022 5:00 PM ET Company Participants Eddie Plank - VP, IR Carl Daikeler - Co-Founder, Chairman and CEO Sue Collyns - President and CFO Conference Call Participants Joanna Zhao - Bank of America John Heinbockel - Guggenheim Partners Jonathan Komp - Baird Ben Sherlund - Cantor Fitzgerald Operator Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company’s First Quarter 2022 Earnings Call. At this time, all participants are ...
The Beachbody Company(BODI) - 2022 Q1 - Quarterly Report
2022-05-09 21:12
PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements for the first quarter of 2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decline in assets, liabilities, and stockholders' equity as of March 31, 2022 Condensed Consolidated Balance Sheets | Metric (in thousands) | March 31, 2022 | December 31, 2021 | Change | % Change | | :-------------------- | :------------- | :---------------- | :----- | :------- | | Cash and cash equivalents | $63,426 | $104,054 | $(40,628) | -39.0% | | Total current assets | $220,548 | $299,372 | $(78,824) | -26.3% | | Total assets | $544,194 | $637,612 | $(93,418) | -14.6% | | Total current liabilities | $210,285 | $236,232 | $(25,947) | -11.0% | | Total liabilities | $225,967 | $252,227 | $(26,260) | -10.4% | | Total stockholders' equity | $318,227 | $385,385 | $(67,158) | -17.4% | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations reveals a decline in total revenue and a significant increase in operating and net losses Unaudited Condensed Consolidated Statements of Operations | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Digital Revenue | $81,745 | $95,150 | $(13,405) | -14.1% | | Connected Fitness Revenue | $19,513 | $0 | $19,513 | NM | | Nutrition and Other Revenue | $97,664 | $131,069 | $(33,405) | -25.5% | | Total Revenue | $198,922 | $226,219 | $(27,297) | -12.1% | | Gross Profit | $93,017 | $158,102 | $(65,085) | -41.2% | | Operating Loss | $(74,420) | $(31,629) | $(42,791) | 135.3% | | Net Loss | $(73,533) | $(30,058) | $(43,475) | 144.6% | | Net Loss per Common Share, Basic and Diluted | $(0.24) | $(0.12) | $(0.12) | 100.0% | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The statement of comprehensive loss details the net loss and other comprehensive income components for the quarter Unaudited Condensed Consolidated Statements of Comprehensive Loss | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(73,533) | $(30,058) | | Total other comprehensive income (loss) | $(112) | $100 | | Total comprehensive loss | $(73,645) | $(29,958) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines the changes in stockholders' equity, primarily driven by the net loss for the period Unaudited Condensed Consolidated Statements of Stockholders' Equity | Metric (in thousands) | December 31, 2021 | March 31, 2022 | | :-------------------- | :---------------- | :------------- | | Total Stockholders' Equity | $385,385 | $318,227 | | Net loss | — | $(73,533) | | Other comprehensive loss | — | $(112) | | Equity-based compensation | — | $4,564 | | Options exercised, net of tax withholdings | — | $1,923 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement shows increased cash usage in operating activities and a net decrease in cash equivalents Unaudited Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(33,371) | $(8,880) | | Net cash used in investing activities | $(12,403) | $(18,299) | | Net cash provided by financing activities | $1,923 | $17,758 | | Net decrease in cash and cash equivalents | $(43,628) | $(9,178) | | Cash and cash equivalents, end of period | $63,426 | $47,649 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of significant accounting policies and financial statement components [1. Description of Business and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) The company operates as a subscription health and wellness provider and is consolidating its digital platforms - The Beachbody Company, Inc is a subscription health and wellness company offering fitness programs (BOD, BODi, Openfit), nutritional products (Shakeology, BEACHBAR, Ladder), and connected fitness equipment[26](index=26&type=chunk) - In Q1 2022, the company began consolidating its Openfit streaming fitness offerings onto a single Beachbody digital platform[26](index=26&type=chunk) - During Q1 2022, the Company changed the useful life of an acquired trade name from indefinite to two years, recording **$1.9 million** in amortization expense[30](index=30&type=chunk) - The Company adopted ASU 2020-06 on January 1, 2022, which did not materially affect its financial statements[31](index=31&type=chunk) [2. Revenue](index=10&type=section&id=2.%20Revenue) Revenue is disaggregated by product type and geographic region, showing declines in digital and nutrition sales Revenue by Type | Revenue Type (in thousands) | Q1 2022 | Q1 2021 | Change | % Change | | :-------------------------- | :------ | :------ | :----- | :------- | | Digital | $81,745 | $95,150 | $(13,405) | -14.1% | | Connected fitness | $19,513 | $0 | $19,513 | NM | | Nutrition and other | $97,664 | $131,069 | $(33,405) | -25.5% | | Total revenue | $198,922 | $226,219 | $(27,297) | -12.1% | Revenue by Geographic Region | Geographic Region (in thousands) | Q1 2022 | Q1 2021 | | :------------------------------- | :------ | :------ | | United States | $178,607 | $202,716 | | Rest of world | $20,315 | $23,503 | - The Company recognized **$62.5 million** of revenue from deferred revenue balance as of December 31, 2021, during the three months ended March 31, 2022[34](index=34&type=chunk) [3. Fair Value Measurements](index=11&type=section&id=3.%20Fair%20Value%20Measurements) This note details the fair value of derivative assets and warrant liabilities held by the company Fair Value of Financial Instruments | Financial Instrument (in thousands) | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Derivative assets | $109 | $314 | | Public warrants | $2,650 | $2,701 | | Private placement warrants | $1,920 | $2,133 | - The fair value of private placement warrants **decreased by $213 thousand** during Q1 2022, primarily due to changes in the Company's Class A Common Stock price, remaining contractual term, and risk-free rate[38](index=38&type=chunk) [4. Inventory, Net](index=12&type=section&id=4.%20Inventory,%20Net) Inventory levels decreased, with a significant adjustment for net realizable value during the quarter Inventory Breakdown | Inventory Type (in thousands) | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Raw materials and work in process | $22,809 | $24,436 | | Finished goods | $77,184 | $108,294 | | Total inventory, net | $99,993 | $132,730 | - Adjustments to inventory for net realizable value were **$16.9 million** in Q1 2022, significantly higher than **$2.0 million** in Q1 2021[39](index=39&type=chunk) [5. Other Current Assets](index=12&type=section&id=5.%20Other%20Current%20Assets) This note provides a breakdown of other current assets, led by deferred coach costs Other Current Assets | Other Current Assets (in thousands) | March 31, 2022 | December 31, 2021 | | :---------------------------------- | :------------- | :---------------- | | Deferred coach costs | $33,523 | $30,928 | | Deposits | $3,617 | $8,915 | | Accounts receivable, net | $1,296 | $1,225 | | Other | $2,539 | $2,659 | | Total other current assets | $40,975 | $43,727 | [6. Property and Equipment, Net](index=12&type=section&id=6.%20Property%20and%20Equipment,%20Net) The composition of property and equipment is detailed, along with associated depreciation expenses Property and Equipment, Net | Property and Equipment (in thousands) | March 31, 2022 | December 31, 2021 | | :------------------------------------ | :------------- | :---------------- | | Computer software and web development | $252,276 | $231,943 | | Computer software and web development projects in-process | $10,225 | $26,490 | | Total property and equipment, net | $102,978 | $113,098 | Depreciation Expense | Depreciation Expense (in thousands) | Q1 2022 | Q1 2021 | | :---------------------------------- | :------ | :------ | | Cost of revenue | $9,081 | $3,738 | | Enterprise technology and development | $7,449 | $7,311 | | Total depreciation | $17,001 | $12,146 | [7. Acquisition](index=13&type=section&id=7.%20Acquisition) This note discusses the 2021 acquisition of Myx and provides pro forma financial information - The Company acquired 100% of Myx on June 25, 2021, with **no purchase price allocation adjustments** in Q1 2022[43](index=43&type=chunk) Pro Forma Combined Results | Pro Forma Combined (in thousands) | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | | Revenue | $243,257 | | Net loss | $(42,385) | [8. Accrued Expenses](index=13&type=section&id=8.%20Accrued%20Expenses) A breakdown of accrued expenses shows employee compensation and benefits as the largest component Accrued Expenses | Accrued Expenses (in thousands) | March 31, 2022 | December 31, 2021 | | :------------------------------ | :------------- | :---------------- | | Employee compensation and benefits | $20,956 | $8,996 | | Coach costs | $13,889 | $19,168 | | Inventory, shipping and fulfillment | $12,891 | $14,360 | | Total accrued expenses | $69,897 | $74,525 | [9. Commitments and Contingencies](index=14&type=section&id=9.%20Commitments%20and%20Contingencies) The company discloses future minimum payment obligations and its position on current litigation Future Minimum Payments | Future Minimum Payments (in thousands) | Amount | | :------------------------------------- | :----- | | Nine months ending December 31, 2022 | $35,696 | | Year ending December 31, 2023 | $2,693 | | Year ending December 31, 2024 | $1,260 | | Year ending December 31, 2025 | $1,250 | | Total | $40,899 | - The Company is subject to litigation in the ordinary course of business but does not believe any currently identified claims will have a **material adverse effect** on its financial position or results of operations[50](index=50&type=chunk) [10. Stockholders' Equity](index=14&type=section&id=10.%20Stockholders'%20Equity) This note details the components of accumulated other comprehensive income (loss) Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) (in thousands) | December 31, 2021 | March 31, 2022 | | :----------------------------------------------------------- | :---------------- | :------------- | | Balances | $(21) | $(133) | | Other comprehensive loss before reclassifications | $(158) | $(158) | | Amounts reclassified from accumulated other comprehensive income (loss) | $69 | $69 | | Tax effect | $(23) | $(23) | [11. Equity-Based Compensation](index=15&type=section&id=11.%20Equity-Based%20Compensation) This note summarizes stock option and RSU activity and the total compensation expense recognized Option Activity | Option Activity | December 31, 2021 | March 31, 2022 | | :-------------- | :---------------- | :------------- | | Options Outstanding | 41,753,042 | 38,674,077 | | Granted | — | 616,445 | | Exercised | — | (1,132,508) | | Forfeited | — | (2,562,902) | RSU Activity | RSU Activity | December 31, 2021 | March 31, 2022 | | :------------- | :---------------- | :------------- | | RSUs Outstanding | 573,678 | 322,596 | | Forfeited | — | (251,082) | Equity-Based Compensation Expense | Equity-Based Compensation Expense (in thousands) | Q1 2022 | Q1 2021 | | :----------------------------------------------- | :------ | :------ | | Total equity-based compensation | $4,564 | $2,573 | [12. Derivative Financial Instruments](index=16&type=section&id=12.%20Derivative%20Financial%20Instruments) The company uses foreign exchange options to hedge currency risk, with a decrease in notional amounts - The notional amount of outstanding foreign exchange options **decreased from $30.4 million** at December 31, 2021, to **$21.5 million** at March 31, 2022[57](index=57&type=chunk) Effects of Derivative Instruments | Derivative Effects (in thousands) | Q1 2022 | Q1 2021 | | :-------------------------------- | :------ | :------ | | Unrealized losses (OCI) | $(162) | $(92) | | Losses reclassified into net loss | $(69) | $(167) | | Losses recognized on non-hedging derivatives | $(51) | $(21) | [13. Strategic Realignment](index=16&type=section&id=13.%20Strategic%20Realignment) A strategic realignment initiative resulted in restructuring costs and accelerated depreciation and amortization - In January 2022, the Company initiated a strategic realignment to consolidate streaming fitness offerings, incurring **$7.2 million** in restructuring costs, primarily for employee termination benefits[58](index=58&type=chunk) - The realignment led to accelerated depreciation of computer software and web development assets (**$2.2 million**) and amortization of content assets (**$1.1 million**) in Q1 2022[59](index=59&type=chunk) [14. Income Taxes](index=17&type=section&id=14.%20Income%20Taxes) The company recorded a small income tax benefit with an effective tax rate differing from the statutory rate Income Tax Summary | Income Tax Metric | Q1 2022 | Q1 2021 | | :---------------- | :------ | :------ | | Income tax benefit | $0.7 million | $0.4 million | | Effective benefit tax rate | 1.0% | 1.3% | - The effective tax rate differs from the U.S statutory rate primarily due to changes in **valuation allowances** on deferred tax assets[61](index=61&type=chunk) [15. Earnings (Loss) per Share](index=17&type=section&id=15.%20Earnings%20(Loss)%20per%20Share) Net loss per share doubled compared to the prior year, with basic and diluted figures being identical Earnings Per Share Calculation | EPS Metric | Q1 2022 | Q1 2021 | | :--------- | :------ | :------ | | Net loss | $(73,533) | $(30,058) | | Weighted-average common shares outstanding | 306,362,730 | 243,012,924 | | Net loss per common share, basic and diluted | $(0.24) | $(0.12) | - Basic and diluted net loss per common share are the same because the inclusion of potential common shares would have been **antidilutive**[63](index=63&type=chunk) [16. Segment Information](index=18&type=section&id=16.%20Segment%20Information) The company operates two segments, with the primary Beachbody segment showing decreased revenue and contribution - The Company operates two segments: Beachbody (reportable) and Other[66](index=66&type=chunk) - Beachbody revenue **decreased from $221.75 million** in Q1 2021 to **$186.11 million** in Q1 2022, while Other revenue increased from **$4.47 million to $12.82 million**[66](index=66&type=chunk) Segment Contribution | Segment Contribution (in thousands) | Q1 2022 | Q1 2021 | | :---------------------------------- | :------ | :------ | | Beachbody | $28,091 | $46,475 | | Other | $(1,376) | $(5,135) | | Consolidated contribution | $26,715 | $41,340 | [17. Subsequent Events](index=18&type=section&id=17.%20Subsequent%20Events) No subsequent events were reported that would require adjustment to or disclosure in the financial statements [Item 2. Management's Discussion and Analysis of Financial Condition and Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Operations.) Management discusses the company's financial condition, operational results, and key business metrics for Q1 2022 [Overview](index=20&type=section&id=Overview) The company is a leading subscription health and wellness provider currently consolidating its digital platforms - Beachbody is a leading subscription health and wellness company, offering digital content, supplements, connected fitness, and comprehensive nutrition programs[74](index=74&type=chunk) - In January 2022, the Company began consolidating its Openfit streaming fitness offerings onto a single Beachbody platform[74](index=74&type=chunk) Key Financial Metrics | Metric (in millions) | Q1 2022 | Q1 2021 | Change | % Change | | :------------------- | :------ | :------ | :----- | :------- | | Total Revenue | $198.9 | $226.2 | $(27.3) | -12% | | Digital Revenue | $81.7 | $95.1 | $(13.4) | -14% | | Connected Fitness Revenue | $19.5 | $0 | $19.5 | NM | | Nutrition and Other Revenue | $97.7 | $131.1 | $(33.4) | -25% | | Net Loss | $(73.5) | $(30.1) | $(43.4) | 145% | | Adjusted EBITDA | $(19.1) | $(11.7) | $(7.4) | 63% | [Key Operational and Business Metrics](index=20&type=section&id=Key%20Operational%20and%20Business%20Metrics) Operational metrics show a decline in subscriptions and user engagement compared to the prior year Key Metrics | Metric (millions) | March 31, 2022 | March 31, 2021 | | :---------------- | :------------- | :------------- | | Digital Subscriptions | 2.46 | 2.74 | | Nutritional Subscriptions | 0.30 | 0.42 | | Total Streams | 38.2 | 56.0 | | Average Digital Retention | 95.6% | 95.8% | | DAU/MAU | 31.6% | 35.1% | - Digital subscriptions include BOD, BODi, and Openfit, encompassing paid and free-to-pay subscriptions across various billing plans[81](index=81&type=chunk) - Total Streams, defined as programs viewed for a minimum of 25% of total running time, serve as a leading indicator of customer engagement and retention[84](index=84&type=chunk) [Non-GAAP Information](index=21&type=section&id=Non-GAAP%20Information) This section provides a reconciliation of net loss to the non-GAAP measure of Adjusted EBITDA - **Adjusted EBITDA** is a non-GAAP measure used by management to evaluate core operating performance and trends, excluding non-cash expenses and items not related to underlying business performance[86](index=86&type=chunk)[88](index=88&type=chunk) Adjusted EBITDA Reconciliation | Adjusted EBITDA Reconciliation (in thousands) | Q1 2022 | Q1 2021 | | :-------------------------------------------- | :------ | :------ | | Net loss | $(73,533) | $(30,058) | | Depreciation and amortization | $21,587 | $13,726 | | Amortization of content assets | $6,164 | $2,817 | | Equity-based compensation | $4,564 | $2,573 | | Inventory net realizable value adjustment | $14,934 | $0 | | Restructuring and platform consolidation costs | $7,887 | $0 | | Adjusted EBITDA | $(19,108) | $(11,744) | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's operational results for the first quarter [Revenue](index=24&type=section&id=Revenue) Revenue analysis shows a decline across digital and nutrition segments, partially offset by new connected fitness sales Revenue Breakdown | Revenue (in thousands) | Q1 2022 | Q1 2021 | $ Change | % Change | | :--------------------- | :------ | :------ | :------- | :------- | | Digital | $81,745 | $95,150 | $(13,405) | -14% | | Connected fitness | $19,513 | $0 | $19,513 | NM | | Nutrition and other | $97,664 | $131,069 | $(33,405) | -25% | | Total revenue | $198,922 | $226,219 | $(27,297) | -12% | - Digital revenue decreased due to a reclassification of **$8.7 million** to nutrition and other revenue, fewer coaches, and decreased VIP early access revenue[96](index=96&type=chunk) - Nutrition and other revenue decreased primarily due to a **$33.8 million** decline in nutritional product sales and a **$4.5 million** decrease in shipping revenue, driven by **29% fewer** nutritional subscriptions[98](index=98&type=chunk) [Cost of Revenue](index=24&type=section&id=Cost%20of%20Revenue) Cost of revenue increased significantly, driven by connected fitness costs and lower gross margins across all segments Cost of Revenue Breakdown | Cost of Revenue (in thousands) | Q1 2022 | Q1 2021 | $ Change | % Change | | :----------------------------- | :------ | :------ | :------- | :------- | | Digital | $16,425 | $11,122 | $5,303 | 48% | | Connected fitness | $44,706 | $0 | $44,706 | NM | | Nutrition and other | $44,774 | $56,995 | $(12,221) | -21% | | Total cost of revenue | $105,905 | $68,117 | $37,788 | 55% | Gross Margin by Segment | Gross Margin | Q1 2022 | Q1 2021 | | :------------- | :------ | :------ | | Digital | 80% | 88% | | Connected fitness | (129%) | NM | | Nutrition and other | 54% | 57% | - Connected fitness gross margin was **negative (129%)** in Q1 2022, primarily due to a **$14.9 million** inventory net realizable value adjustment, higher product/freight costs, and lower pricing[104](index=104&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) Operating expenses were impacted by reduced marketing spend, increased technology costs, and new restructuring charges Operating Expense Breakdown | Operating Expense (in thousands) | Q1 2022 | Q1 2021 | $ Change | % Change | | :------------------------------- | :------ | :------ | :------- | :------- | | Selling and marketing | $106,444 | $144,696 | $(38,252) | -26% | | Enterprise technology and development | $33,697 | $27,089 | $6,608 | 24% | | General and administrative | $20,073 | $17,946 | $2,127 | 12% | | Restructuring | $7,223 | $0 | $7,223 | NM | - Selling and marketing expenses **decreased by $38.3 million**, driven by a **$29.7 million** reduction in online/television media and a **$17.3 million** decrease in Coach compensation, reflecting a strategic shift to performance marketing[107](index=107&type=chunk)[108](index=108&type=chunk) - Enterprise technology and development expenses **increased by $6.6 million**, primarily due to a **$6.2 million** increase in personnel-related expenses for technology initiatives[110](index=110&type=chunk) - General and administrative expenses **rose by $2.1 million**, mainly due to increased personnel-related expenses (**$2.4 million**) and insurance costs (**$1.9 million**) as a public company, partially offset by reduced rent and transaction costs[113](index=113&type=chunk) - Restructuring charges of **$7.2 million** were incurred in Q1 2022 due to the strategic alignment initiative, primarily for employee termination costs[115](index=115&type=chunk)[116](index=116&type=chunk) [Other Income (Expense)](index=27&type=section&id=Other%20Income%20(Expense)) Other income (expense) fluctuated due to changes in warrant liability fair value and the absence of a prior-year investment gain Other Income (Expense) Breakdown | Other Income (Expense) (in thousands) | Q1 2022 | Q1 2021 | $ Change | % Change | | :------------------------------------ | :------ | :------ | :------- | :------- | | Change in fair value of warrant liabilities | $264 | $0 | $264 | NM | | Interest expense | $(19) | $(123) | $104 | -85% | | Other income (expense), net | $(64) | $1,299 | $(1,363) | -105% | - The change in fair value of warrant liabilities was **$0.3 million**, primarily due to a decline in stock price[118](index=118&type=chunk) - The decrease in other income (expense), net, was mainly due to the absence of a gain on investment in a convertible instrument from Myx, which occurred in Q1 2021[119](index=119&type=chunk) [Income Tax Benefit](index=28&type=section&id=Income%20Tax%20Benefit) The income tax benefit increased due to changes in projected net deferred tax liabilities Income Tax Benefit | Income Tax Benefit (in thousands) | Q1 2022 | Q1 2021 | $ Change | % Change | | :-------------------------------- | :------ | :------ | :------- | :------- | | Income tax benefit | $706 | $395 | $311 | 79% | - The increase in income tax benefit was driven by a change in projected net deferred tax liabilities, resulting in a higher deferred income tax benefit[121](index=121&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position weakened due to higher cash used in operations, though cost-saving measures are underway Cash Flow Summary | Cash Flow (in thousands) | Q1 2022 | Q1 2021 | | :----------------------- | :------ | :------ | | Net cash used in operating activities | $(33,371) | $(8,880) | | Net cash used in investing activities | $(12,403) | $(18,299) | | Net cash provided by financing activities | $1,923 | $17,758 | - Cash and cash equivalents totaled **$63.4 million** as of March 31, 2022[122](index=122&type=chunk) - The increase in cash used in operating activities was due to **higher net loss**, payments for 2021 payables, and decreased subscription revenue receipts, partially offset by increased cash from inventory sales[123](index=123&type=chunk) - The Company expects to reduce cash used in operating activities through a performance marketing model and anticipated annualized cost savings of at least **$29.0 million** from strategic realignment[123](index=123&type=chunk) - The Company is exploring additional equity or debt financing but believes existing cash and cost controls will provide sufficient liquidity for the next twelve months[127](index=127&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes have been made to the company's critical accounting policies and estimates - There have been **no material changes** to the Company's critical accounting policies and estimates since the 2021 Annual Report on Form 10-K[128](index=128&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) Information on recent accounting pronouncements is available in the notes to the financial statements - Refer to Note 1 for details on recently adopted and recently issued accounting pronouncements not yet adopted[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company's primary market risk exposure is related to foreign currency exchange rate fluctuations - The Company is exposed to foreign currency exchange risk, with approximately **10% of its revenue** in foreign currencies (primarily Canadian dollars and British pounds)[131](index=131&type=chunk) - Derivative instruments, mainly option contracts, are used to hedge forecasted payments for various expenses and intercompany transactions[132](index=132&type=chunk) - The aggregate notional amount of foreign exchange derivative instruments was **$21.5 million** at March 31, 2022, down from **$30.4 million** at December 31, 2021[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls - Management concluded that the Company's disclosure controls and procedures were **effective** as of March 31, 2022[135](index=135&type=chunk) - There have been **no material changes** in internal control over financial reporting during the most recent fiscal quarter[136](index=136&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings.) There have been no material changes to the company's legal proceedings since the last annual report - **No material changes** to legal proceedings information since the 2021 Annual Report on Form 10-K[138](index=138&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors.) No material developments have occurred regarding the risk factors previously disclosed by the company - **No material developments** regarding risk factors since the 2021 Annual Report on Form 10-K[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reports no unregistered sales of equity securities or issuer repurchases during the period - **No unregistered sales** of equity securities or use of proceeds[140](index=140&type=chunk) - **No issuer repurchase** of equity securities[140](index=140&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company confirms that no defaults upon senior securities occurred during the reporting period - **No defaults** upon senior securities[141](index=141&type=chunk) [Item 4. Mine Safety Disclosure](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosure.) This section is not applicable as the company has no mine safety information to disclose - **No mine safety disclosures**[142](index=142&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information.) There is no other information required to be disclosed in this report for the period - **No other information** to disclose[143](index=143&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed as part of the Form 10-Q report - Exhibits include the Agreement and Plan of Merger, Amended and Restated Certificate of Incorporation and Bylaws, Offer of Employment Letter, Separation Agreement, CEO/CFO Certifications, and XBRL Instance Document[146](index=146&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) The report is duly signed by the company's Chief Executive Officer and Chief Financial Officer - The report is signed by Carl Daikeler, Chief Executive Officer, and Sue Collyns, President and Chief Financial Officer, on May 9, 2022[152](index=152&type=chunk)
The Beachbody Company(BODI) - 2021 Q4 - Earnings Call Transcript
2022-03-02 03:02
The Beachbody Company, Inc. (BODY) Q4 2021 Earnings Conference Call March 1, 2022 5:00 PM ET Company Participants Eddie Plank - Vice President of Investor Relations Carl Daikeler - Co-Founder, Chairman & Chief Executive Officer Sue Collyns - President & Chief Financial Officer Conference Call Participants Jonathan Komp - Baird Operator Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company’s Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in listen-only mo ...
The Beachbody Company(BODI) - 2021 Q4 - Annual Report
2022-03-01 21:16
FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the transition period from to Commission File Number 001-39735 The Beachbody Company, Inc. (Exact name of Registrant as specified in its Charter) Delaware 85-3222090 (State or other jurisdic ...