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

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