The Beachbody pany(BODY) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, total revenue was $110.2 million, an 18% decrease compared to $134.9 million for the same period in 2023[115] - Digital revenue was $58.8 million, a 10% decrease, while nutrition and other revenue was $50.1 million, a 22% decrease[115] - Connected fitness revenue was $1.3 million, reflecting a 74% decrease[115] - Net loss for the three months was $10.9 million, compared to a net loss of $25.7 million in the prior year[115] - Adjusted EBITDA was $4.9 million, compared to a loss of $4.8 million in the same period last year[115] - Total revenue for Q2 2024 was $110.2 million, a decrease of 18% compared to $134.9 million in Q2 2023[130] - For the six months ended June 30, 2024, total revenue was $230.2 million, down 18% from $279.8 million in the same period of 2023[135] Revenue Breakdown - Digital revenue decreased by 10% to $58.8 million in Q2 2024 from $65.2 million in Q2 2023, primarily due to a 25% reduction in subscriptions[133] - Nutrition and other revenue fell by 22% to $50.1 million in Q2 2024 from $64.6 million in Q2 2023, driven by a 26% decrease in nutritional subscriptions[134] - Connected fitness revenue dropped 74% to $1.3 million in Q2 2024 from $5.1 million in Q2 2023, attributed to a 70% decrease in bikes delivered[134] Operating Expenses - Operating expenses were $85.9 million, down from $106.9 million[115] - Total operating expenses for Q2 2024 were $85.9 million, down from $106.9 million in Q2 2023[130] - Selling and marketing expenses decreased by 26% to $56,308,000 in Q2 2024 from $76,492,000 in Q2 2023, representing 51.1% of total revenue[145] - General and administrative expenses for the three months ended June 30, 2024, were $12.4 million, an increase of $0.5 million (4%) compared to $11.9 million for the same period in 2023[153] - General and administrative expenses as a percentage of total revenue increased by 240 basis points to 11.2% for the three months ended June 30, 2024, compared to 8.8% in the prior year[154] - For the six months ended June 30, 2024, general and administrative expenses decreased by $3.7 million (13%) to $25.9 million from $29.6 million in the same period in 2023[155] Profitability Metrics - Digital gross profit decreased by 3% to $47,295,000 in Q2 2024 compared to $48,878,000 in Q2 2023, while gross margin increased to 80.5% from 75.0%[141] - Nutrition and other gross profit decreased by 19% to $30,480,000 in Q2 2024 from $37,426,000 in Q2 2023, with gross margin improving to 60.8% from 57.9%[141] - Connected fitness cost of revenue decreased by 69% to $2,710,000 in Q2 2024 from $8,666,000 in Q2 2023, with a gross margin improvement to -106.7% from -69.7%[141] - Total gross profit for the first six months of 2024 was $157,658,000, down 9% from $174,084,000 in the same period of 2023[143] - The gross margin for total revenue improved to 68.5% in the first six months of 2024 from 62.2% in the same period of 2023[143] Cash Flow and Debt - Net cash provided by operating activities was $8.2 million for the six months ended June 30, 2024, compared to a net cash used of $(14.4) million in the same period in 2023[165] - As of June 30, 2024, the principal balance outstanding under the Term Loan was $25.4 million, following several partial prepayments totaling $15.5 million in 2024[167] - The company made a partial prepayment of $4.0 million on the Term Loan as part of the Fifth Amendment to the Financing Agreement[116] - The company incurred a loss of $719,000 on partial debt extinguishment in Q2 2024[130] - The loss on partial debt extinguishment for the three months ended June 30, 2024, was $0.7 million, attributed to a partial prepayment of $4.0 million on the Term Loan[160] Future Outlook - The company expects continued challenges in digital and nutrition segments due to lower demand and subscription declines[134] - The company plans to explore additional debt or equity financing to strengthen its financial position, although the terms and amounts are currently uncertain[172] - The company expects to remain in compliance with financial covenants, including a minimum revenue requirement of $100.0 million for each fiscal quarter ending on or prior to December 31, 2024[168] Foreign Currency Exposure - Approximately 10% of the company's revenue for the six months ended June 30, 2024, was in foreign currencies, primarily in Canadian dollars and British pounds[175] - The notional amount of the company's outstanding foreign exchange options decreased to zero at June 30, 2024, as all options expired prior to March 31, 2024[176] - A hypothetical 10% change in exchange rates would result in an approximate $2.2 million increase or decrease in cost of revenue and operating expenses[178] - The aggregate notional amount of foreign exchange derivative instruments was $4.4 million at the year ended December 31, 2023[178]