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The Beachbody Company, Inc. Announces First Quarter 2023 Financial Results

Delivered First Quarter Results Ahead of Guidance

Improved First Quarter Operating Loss by $47.0 million

Successfully Launched BODi, the New Health Esteem Platform

The Beachbody Company, Inc. (NYSE: BODY) (“Beachbody” or the “Company”), a leading subscription health and wellness company, today announced financial results for its first quarter ended March 31, 2023.

"During the quarter we successfully completed the transition to our expanded BODi platform", said Carl Daikeler, Beachbody’s Co-Founder, Chairman, and Chief Executive Officer. "While we are still in the early stages of scaling this transformation, our subscribers clearly recognize the unrivaled value BODi offers with renewals and upgrades ahead of our expectations. We are also seeing the intended increase in LTV with higher than expected nutrition retention and healthy nutrition attachment rates. The early indications we have witnessed from the launch of BODi, along with the positive customer response to our Health Esteem platform and nutrition initiatives, give us confidence in our strategy as we progress towards a return to profitable growth by the end of the year.”

First Quarter 2023 Results

  • Total revenue was $144.9 million compared to $198.9 million in the prior year period.
    • Digital revenue was $64.8 million compared to $81.7 million in the prior year and digital subscriptions totaled 1.75 million in the first quarter.
    • Nutrition and Other revenue was $74.1 million compared to $97.7 million in the prior year and nutritional subscriptions totaled 0.21 million in the first quarter.
    • Connected Fitness revenue was $6.0 million compared to $19.5 million in the prior year and approximately 4,700 bikes were delivered in the first quarter.
  • Operating loss improved by $47.0 million to $27.4 million compared to an operating loss of $74.4 million in the prior year period.
  • Net loss was $29.2 million compared to a net loss of $73.5 million in the prior year period.
  • Adjusted EBITDA1 was ($0.9) million compared to ($19.1) million in the prior year period.
  • Cash used in operating activities was $7.9 million compared to $33.4 million in the prior year period, and cash used in investing activities was $3.4 million compared to $12.4 million in the prior year period. Total cash used in operating and investing activities was $11.3 million compared to $45.8 million in the prior year period.

Key Operational and Business Metrics

For the Three Months Ended March 31,

2023

2022

Change v 2022

 
Digital Subscriptions (in millions)

1.75

2.46

(28.9%)

Nutritional Subscriptions (in millions)

0.21

0.30

(30.0%)

Total Subscriptions

1.96

2.76

(29.0%)

 
Average Digital Retention

95.9%

95.6%

30bps
Total Streams (in millions)

29.7

38.2

(22.3%)

DAU/MAU

32.5%

31.6%

90bps
 
Connected Fitness Units Delivered (in thousands)

4.7

16.6

(71.7%)

 
Digital

$64.8

$81.7

(20.7%)

Nutrition & Other

$74.1

$97.7

(24.2%)

Connected Fitness

$6.0

$19.5

(69.2%)

Revenue (in millions)

$144.9

$198.9

(27.1%)

Net Loss (in millions)

($29.2)

($73.5)

60.3%

Adjusted EBITDA (in millions)

($0.9)

($19.1)

95.3%

Outlook for The Second Quarter of 2023

Outlook For Quarter Ending June 30, 2023
(in millions)
Revenue

$125

$140

 
Net Loss

($35)

($30)

 
Adjustments:
Depreciation and Amortization

$11

$11

Amortization of Content Development Assets

$6

$6

Interest Expense

$2

$2

Equity-Based Compensation

$6

$6

Other Adjustment Items

$1

$1

Total Adjustments

$25

$25

 
Adjusted EBITDA

($10)

($5)

----------------

1 A definition of Adjusted EBITDA and reconciliation to net loss is at the end of this release.

Conference Call and Webcast Information

Beachbody will host a conference call at 5:00pm ET on Monday, May 8, 2023, to discuss its financial results. To participate in the live call, please dial (833) 470-1428 (U.S. & Canada), or +1 (404) 975-4839 (all other locations) and provide the conference identification number: 878296. The conference call will also be available to interested parties through a live webcast at https://investors.thebeachbodycompany.com/.

A replay of the call will be available until May 15, 2023, by dialing (866) 813-9403 (U.S & Canada), or +1 (929) 458-6194 (all other locations). The replay passcode is 649427.

After the conference call, a webcast replay will remain available on the investor relations section of the Company’s website for one year.

About BODi and The Beachbody Company, Inc.

Headquartered in Southern California, BODi is a leading digital fitness, nutrition, and mindset subscription company with over two decades of creating innovative content and nutritional supplements designed to support and enrich strong Health Esteem. The Beachbody Company, Inc. is the parent company of BODi. For more information, please visit TheBeachbodyCompany.com.

Safe Harbor Statement

This press release of The Beachbody Company, Inc. (“we,” “us,” “our,” and similar terms) contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are statements other than statements of historical facts and statements in future tense. These statements include but are not limited to, statements regarding our future performance and our market opportunity, including expected financial results for the first quarter and full year, the potential impact of COVID-19 on the fitness and wellness industry in general as well as our business, our business strategy, our plans, and our objectives and future operations.

Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date hereof, and are subject to risks and uncertainties. Accordingly, actual results could differ materially due to a variety of factors, including: our ability to effectively compete in the fitness and nutrition industries; our ability to successfully acquire and integrate new operations; our reliance on a few key products; market conditions and global and economic factors beyond our control; intense competition and competitive pressures from other companies worldwide in the industries in which we operate; and litigation and the ability to adequately protect our intellectual property rights. You can identify these statements by the use of terminology such as "believe", “plans”, "expect", "will", "should," "could", "estimate", "anticipate" or similar forward-looking terms. You should not rely on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements. For more information regarding the risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements, as well as risks relating to our business in general, we refer you to the "Risk Factors" section of our Securities and Exchange Commission (SEC) filings, including those risks and uncertainties included in the Form 10-K filed with the SEC on March 16, 2023 and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are available on the Investor Relations page of our website at https://investors.thebeachbodycompany.com and on the SEC website at www.sec.gov.

All forward-looking statements contained herein are based on information available to us as of the date hereof and you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this press release or to conform these statements to actual results or revised expectations, except as required by law. Undue reliance should not be placed on forward-looking statements.

The Beachbody Company, Inc.

Consolidated Balance Sheets

 
March 31, December 31,
(in thousands, except par value and share data)

 

2023

 

2022

(unaudited)
Assets
Current assets:
Cash and cash equivalents

$

66,393

$

80,091

Inventory, net

 

48,304

 

54,060

Prepaid expenses

 

11,403

 

13,055

Other current assets

 

45,687

 

39,248

Total current assets

 

171,787

 

186,454

Property and equipment, net

 

67,395

 

74,147

Content assets, net

 

31,551

 

34,888

Goodwill

 

125,166

 

125,166

Intangible assets, net

 

6,926

 

8,204

Right-of-use assets, net

 

4,520

 

5,030

Other assets

 

8,428

 

9,506

Total assets

$

415,773

$

443,395

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable

$

16,754

$

17,940

Accrued expenses

 

54,784

 

64,430

Deferred revenue

 

99,894

 

95,587

Current portion of lease liabilities

 

2,100

 

2,150

Current portion of Term Loan

 

1,250

 

1,250

Other current liabilities

 

3,513

 

3,283

Total current liabilities

 

178,295

 

184,640

Term Loan

 

40,276

 

39,735

Long-term lease liabilities, net

 

2,794

 

3,318

Deferred tax liabilities

 

172

 

181

Other liabilities

 

4,679

 

3,979

Total liabilities

 

226,216

 

231,853

Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 100,000,000 shares

authorized, none issued and outstanding at March 31, 2023

and December 31, 2022

 

 

Common stock, $0.0001 par value, 1,900,000,000 shares

authorized (1,600,000,000 Class A, 200,000,000 Class X and

100,000,000 Class C);
Class A: 177,004,131 and 170,911,819 shares issued and

outstanding at March 31, 2023 and December 31,

2022, respectively;

 

18

 

17

Class X: 141,250,310 shares issued and outstanding at

March 31, 2023 and December 31, 2022, respectively;

 

14

 

14

Class C: no shares issued and outstanding at

March 31, 2023 and December 31, 2022

 

 

Additional paid-in capital

 

638,135

 

630,709

Accumulated deficit

 

(448,423)

 

(419,235)

Accumulated other comprehensive income (loss)

 

(187)

 

37

Total stockholders’ equity

 

189,557

 

211,542

Total liabilities and stockholders’ equity

$

415,773

$

443,395

The Beachbody Company, Inc.

Consolidated Statements of Operations

 
 
(in thousands, except per share data)
Three Months Ended March 31,

 

2023

 

2022

Revenue:
Digital

$

64,773

$

81,745

Nutrition and other

 

74,120

 

97,664

Connected fitness

 

6,008

 

19,513

Total revenue

 

144,901

 

198,922

Cost of revenue:
Digital

 

14,967

 

16,425

Nutrition and other

 

31,039

 

44,774

Connected fitness

 

7,555

 

44,706

Total cost of revenue

 

53,561

 

105,905

Gross profit

 

91,340

 

93,017

Operating expenses:
Selling and marketing

 

76,576

 

106,444

Enterprise technology and development

 

19,096

 

33,697

General and administrative

 

17,716

 

20,073

Restructuring

 

5,387

 

7,223

Total operating expenses

 

118,775

 

167,437

Operating loss

 

(27,435)

 

(74,420)

Other income (expense):
Change in fair value of warrant liabilities

 

57

 

264

Interest expense

 

(2,331)

 

(19)

Other income (expense), net

 

569

 

(64)

Loss before income taxes

 

(29,140)

 

(74,239)

Income tax (provision) benefit

 

(48)

 

706

Net loss

$

(29,188)

$

(73,533)

 
Net loss per common share, basic and diluted

$

(0.09)

$

(0.24)

Weighted-average common shares outstanding, basic and diluted

 

309,141

 

306,363

The Beachbody Company, Inc.

Consolidated Statements of Cash Flows

 
Three months ended March 31,
(in thousands)

 

2023

 

2022

Cash flows from operating activities:
Net loss

$

(29,188)

$

(73,533)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense

 

10,713

 

21,587

Amortization of content assets

 

5,561

 

6,164

Provision for inventory and inventory purchase commitments

 

2,734

 

16,896

Realized (gains) losses on hedging derivative financial instruments

 

(87)

 

69

Change in fair value of warrant liabilities

 

(57)

 

(264)

Equity-based compensation

 

9,555

 

4,564

Deferred income taxes

 

(53)

 

(808)

Amortization of debt issuance costs

 

479

 

Paid-in-kind interest

 

374

 

Other non-cash items

 

 

91

Changes in operating assets and liabilities:
Inventory

 

3,056

 

15,887

Content assets

 

(2,224)

 

(6,448)

Prepaid expenses

 

1,652

 

(293)

Other assets

 

(4,958)

 

2,895

Accounts payable

 

(1,366)

 

(20,752)

Accrued expenses

 

(8,768)

 

(1,386)

Deferred revenue

 

4,746

 

2,370

Other liabilities

 

(38)

 

(410)

Net cash used in operating activities

 

(7,869)

 

(33,371)

Cash flows from investing activities:
Purchase of property and equipment

 

(3,417)

 

(12,403)

Net cash used in investing activities

 

(3,417)

 

(12,403)

Cash flows from financing activities:
Proceeds from exercise of stock options

 

 

2,115

Remittance of taxes withheld from employee stock awards

 

 

(192)

Debt repayments

 

(313)

 

Tax withholding payments for vesting of restricted stock

 

(2,128)

 

Net cash (used in) provided by financing activities

 

(2,441)

 

1,923

Effect of exchange rates on cash

 

29

 

223

Net decrease in cash and cash equivalents

 

(13,698)

 

(43,628)

Cash, cash equivalents and restricted cash, beginning of period

 

80,091

 

107,054

Cash and cash equivalents, end of period

$

66,393

$

63,426

Supplemental disclosure of cash flow information:
Cash paid during the year for interest

$

1,464

$

10

Cash (received) paid during the year for income taxes, net

 

(265)

 

32

Supplemental disclosure of noncash investing activities:
Property and equipment acquired but not yet paid for

$

1,291

$

4,225

The Beachbody Company, Inc.

Adjusted EBITDA

In addition to our results determined in accordance with accounting principles generally accepted in the United States, or GAAP, we believe the following non-GAAP financial measure of Adjusted EBITDA is useful in evaluating our operating performance.

We define and calculate Adjusted EBITDA as net income (loss) adjusted for depreciation and amortization, amortization of capitalized cloud computing implementation costs, amortization of content assets, interest expense, income taxes, equity-based compensation, inventory net realizable value adjustments, restructuring, change in fair value of warrant liabilities, and other items that are not normal, recurring, operating expenses necessary to operate the Company’s business.

The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure. A reconciliation of our non-GAAP Adjusted EBITDA to GAAP net income (loss) can be found below:

(in thousands)

Three Months Ended March 31,

 

2023

 

2022

Net loss

$

(29,188)

$

(73,533)

Adjusted for:
Depreciation and amortization

 

10,713

 

21,587

Amortization of capitalized cloud computing implementation costs

 

41

 

168

Amortization of content assets

 

5,561

 

6,164

Interest expense

 

2,331

 

19

Income tax provision (benefit)

 

48

 

(706)

Equity-based compensation

 

9,555

 

4,564

Employee incentives, expected to be settled in equity (1)

 

(5,466)

 

Inventory net realizable value adjustments (2)

 

 

14,934

Restructuring and platform consolidation costs (3)

 

6,059

 

7,887

Change in fair value of warrant liabilities

 

(57)

 

(264)

Non-operating (4)

 

(484)

 

72

Adjusted EBITDA

$

(887)

$

(19,108)

1 The non-cash charge for employee incentives which were expected to be settled in equity was recorded and included in the Adjusted EBITDA calculation during the year ended December 31, 2022. During the three months ended March 31, 2023, we reclassified the non-cash charge from employee incentives expected to be settled in equity to equity-based compensation because we settled certain employee incentives with RSU awards during the period.

2 Represents a non-cash expense to reduce the carrying value of our connected fitness inventory and related future commitments. This adjustment was included during the three months ended March 31, 2022, because of its unusual magnitude due to disruptions in the connected fitness market.

3 Includes restructuring expense and non-recurring personnel costs associated with executing our key growth priorities during the three months ended March 31, 2023, and with the consolidation of our digital platforms during the three months ended March 31, 2022.

4 Primarily includes interest income.

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