The Beachbody pany(BODY) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the second quarter was $134.9 million, which was 7% lower than the previous quarter and above the midpoint of guidance [25] - Net loss improved to $25.7 million compared to a net loss of $41.9 million in the prior year and $29.2 million in the prior quarter [31] - Adjusted EBITDA was a loss of $4.8 million, which was worse than the loss of $1.5 million in the prior year but better than the loss of $0.9 million in the prior quarter [31] Business Line Data and Key Metrics Changes - Nutrition revenue was $64.6 million, down 13% from $74.1 million in the prior quarter, with subscriber count decreasing by 6% [8] - Connected Fitness revenue was $5.1 million, down 15% from $6 million in Q1, despite a 17% increase in units delivered [9] - Digital revenue was $65.2 million, slightly up from $64.8 million in Q1, but overall digital subscriber count decreased by 12% [26] Market Data and Key Metrics Changes - The company is focusing on transitioning its subscriber base to a more profitable average revenue per user (ARPU) [38] - The company has a customer database of over 14 million former customers, which presents a significant opportunity for reactivation with minimal acquisition costs [67] Company Strategy and Development Direction - The company has implemented a turnaround plan focusing on launching a new digital platform, cutting costs, and aiming for sequential revenue improvement [4][5] - The strategy includes activating a coach and partner network, enhancing performance marketing, and expanding sales channels, including Amazon [20][50] - The company aims to prioritize profitable revenue rather than growth at all costs, focusing on cash generation and targeting valuable subscribers [88] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that sequential improvement in revenue has not occurred as expected, leading to the implementation of a turnaround plan [3] - The company expects revenue for Q3 to be in the range of $120 million to $130 million, with adjusted EBITDA losses projected between $3 million and $8 million [35] - Management expressed confidence in the transformation journey and the potential for long-term profitability and cash flow generation [36][71] Other Important Information - The company amended its financing agreement with Blue Torch Capital, allowing for lower revenue covenants and providing flexibility for the turnaround plan [23] - Cash balance at the end of the quarter was $59 million, down from $66 million in the prior quarter, with cash used in operations at $6.5 million [32][33] Q&A Session Summary Question: Why is EBITDA negative in Q3 guidance? - Management clarified that the $7 million convention expense was incurred in Q2 and will not recur in Q3, leading to an expected sequential improvement in EBITDA [29] Question: What are the expectations for subscriber renewal rates? - Management reported that customers are renewing at a rate of 60%, exceeding expectations, and indicated a focus on higher value customers [27] Question: How will the company manage potential channel conflict with Amazon sales? - Management acknowledged the sensitivity to channel conflict but emphasized the broad total addressable market (TAM) and the importance of leveraging all sales channels [95]