BODY - The Beachbody Company Inc. Announces Third Quarter 2022 Financial Results

November, 09 2022 04:00 PM Body Central Corp.

Delivered Third Quarter Revenue and Adjusted EBITDA Results Ahead of Guidance

Maintained Strong Cost Discipline; Reduced Operating Expense by 32% Year-Over-Year

Strong Growth Compared to 2019 Pre-COVID Baseline: Total Digital and Nutritional Subscriptions +15%, Average Digital Retention +50BPS, Total Streams +4%, DAU/MAU +10BPS

The Beachbody Company, Inc. (NYSE: BODY) (“Beachbody” or the “Company”), a leading subscription health and wellness company, today announced financial results for its third quarter ended September 30, 2022.

“Our third quarter efforts reflect the solid progress we’re making to improve the business by generating demand through compelling content, and tightly controlling costs, all as we continue to navigate the challenging market dynamics facing our industry,” said Carl Daikeler, Beachbody’s Co-Founder, Chairman, and Chief Executive Officer. “Meanwhile, we’re focused on appropriately sizing and designing fitness and nutrition solutions to appeal to the millions of Americans who want to live happier and more fulfilling lives. Looking ahead, we will remain laser-focused on capitalizing on our growth opportunities as we drive towards profitability and free cash flow generation.”

Third Quarter 2022 Results

Total revenue was $165.9 million, a 20% decrease compared to 2021 and a 15% decrease compared to 2019
- Revenue exceeded the mid-point of guidance by 7%
Digital revenue was $72.2 million, a 23% decrease compared to 2021
- Digital subscriptions were 2.10 million, a 20% decrease compared to 2021 and a 24% increase compared to 2019
Nutrition and Other revenue was $90.4 million, a 16% decrease compared to 2021
- Nutritional subscriptions were 0.24 million, a 29% decrease compared to 2021 and a 29% decrease to 2019
Connected Fitness revenue was $3.3 million, a 44% decrease compared to 2021
- Delivered approximately 2,300 bikes in the third quarter
Operating expenses were $140.9 million, a 32% decrease compared to 2021
Net loss was $33.9 million, compared to a net loss of $39.9 in 2021
Adjusted EBITDA ¹ was ($6.2) million, compared to ($43.4) million in 2021 and $19.5 million in 2019
- Adjusted EBITDA exceeded the mid-point of guidance by $11.3 million
Free cash flow was ($7.7) million, compared to ($147.6) million in 2021
Cash and cash equivalents were $94.1 million, a 53% decrease compared to 2021, but a 65% increase compared to the second quarter of 2022, driven by the August 2022 debt financing agreement, enhancing the Company’s financial flexibility

Key Operational and Business Metrics




















For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2022

2021

Change v 2021
2019

Change v 2019 Pre-Covid Baseline

2022

2021

Change v 2021
2019

Change v 2019 Pre-Covid Baseline
Digital Subscriptions (in millions)
2.10

2.64

(20%)
1.70

24%

2.10

2.64

(20%)
1.70

24%
Nutritional Subscriptions (in millions)
0.24

0.34

(29%)
0.34

(29%)

0.24

0.34

(29%)
0.34

(29%)
Total Subscriptions
2.34

2.98

(21%)
2.04

15%

2.34

2.98

(21%)
2.04

15%


















Average Digital Retention
95.7%

95.6%

10bps
95.2%

50bps

95.6%

95.5%

10bps
95.1%

50bps
Total Streams (in millions)
27.5

35.9

(23%)
26.5

4%

96.7

136.4

(29%)
78.5

23%
DAU/MAU
29.5%

29.6%

(10bps)
29.4%

10bps

30.4%

32.1%

(170bps)
29.2%

120bps


















Connected Fitness Units Delivered (in thousands)
2.3

6.5

(64%)
0.0

NM

27.7

7.0

299%
0.0

NM


















Digital
$72.2

$94.1

(23%)
$68.1

6%

$232.0

$283.5

(18%)
$192.8

20%
Nutrition & other
$90.4

$108.1

(16%)
$127.9

(29%)

$278.6

$367.9

(24%)
$397.8

(30%)
Connected Fitness
$3.3

$5.9

(44%)
$-

NM

$33.4

$5.9

466%
$-

NM
Revenue (in millions)
$165.9

$208.1

(20%)
$196.0

(15%)

$544.0

$657.3

(17%)
$590.7

(8%)
Net Income/(Loss) (in millions)
$(33.9)

$(39.9)

15%
$3.4

(1099%)

$(149.3)

$(82.4)

(81%)
$30.5

(589%)
Adjusted EBITDA (in millions)
$(6.2)

$(43.4)

86%
$19.5

(132%)

$(26.8)

$(59.5)

55%
$59.2

(145%)

2022 Financial Outlook 2

For the fourth quarter of 2022 the Company expects:

Total revenue to be between $140 million and $150 million
Adjusted EBITDA loss to be between $9 million and $14 million

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

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

2 Net loss guidance is not reasonably available due to potential changes in matters that we cannot forecast at this time.

Conference Call and Webcast Information

Beachbody will host a conference call at 5:00pm ET on Wednesday, November 9, 2022 to discuss its financial results. To participate in the live call, please dial (844) 200-6205 (U.S. & Canada), or (646) 904-5544 (all other locations) and provide the conference identification number: 577340. 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 November 16, 2022 by dialing (866) 813-9403 (U.S & Canada), or (929) 458-6194 (all other locations). The replay passcode is 137285.

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

About The Beachbody Company, Inc.

Headquartered in Southern California, Beachbody is a leading digital fitness and nutrition subscription company with over two decades of creating innovative content and powerful brands. The Beachbody Company is the parent company of the Beachbody On Demand streaming platform (BOD), including its live digital streaming subscription BODi, and the Beachbody Bike powered by MYXfitness, the Company's connected indoor bike. For more information, please visit TheBeachbodyCompany.com .

Safe Harbor Statement

This press release contains "forward-looking" statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, which are statements other than historical fact or in the 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 second quarter and full year, 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 1, 2022 and quarterly reports on Form 10-Q, which are available on the Investor Relations page of the Beachbody 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.



Condensed Consolidated Balance Sheets



(in thousands, except par value and share data)




September 30,

December 31,


2022



2021


(unaudited)


Assets



Current assets:



Cash and cash equivalents
$
94,063


$
104,054

Restricted cash

-



3,000

Inventory, net

67,993



132,730

Prepaid expenses

7,181



15,861

Other current assets

41,028



43,727

Total current assets

210,265



299,372

Property and equipment, net

82,030



113,098

Content assets, net

36,783



39,347

Goodwill and intangible assets, net

156,800



171,533

Other assets

12,727



14,262

Total assets
$
498,605


$
637,612

Liabilities and Stockholders’ Equity



Current liabilities:



Accounts payable
$
13,867


$
48,379

Accrued expenses

71,695



74,525

Deferred revenue

102,086



107,095

Current portion of Term Loan

1,250



-

Other current liabilities

3,879



6,233

Total current liabilities

192,777



236,232

Term Loan

39,474



-

Deferred tax liabilities

1,319



3,165

Other liabilities

12,702



12,830

Total liabilities

246,272



252,227

Commitments and contingencies (Note 8)







Stockholders’ equity:



Preferred stock, $0.0001 par value; 100,000,000 shares authorized, none issued and outstanding at September 30, 2022 and December 31, 2021

—



—

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: 170,911,819 and 168,333,463 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively;

17



17

Class X: 141,250,310 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively;

14



14

Class C: no shares issued and outstanding at September 30, 2022 and December 31, 2021

—



—

Additional paid-in capital

626,255



610,418

Accumulated other comprehensive income (loss)

349



(21
)
Accumulated deficit

(374,302
)


(225,043
)
Total stockholders’ equity

252,333



385,385

Total liabilities and stockholders’ equity
$
498,605


$
637,612

The Beachbody Company, Inc.







Unaudited Condensed Consolidated Statements of Operations







(in thousands, except per share data)








Three Months Ended September 30,

Nine Months Ended September 30,


2022



2021



2022



2021

Revenue:







Digital
$
72,228


$
94,072


$
231,988


$
283,547

Nutrition and other

90,416



108,053



278,596



367,895

Connected fitness

3,331



5,927



33,449



5,937

Total revenue

165,975



208,052



544,033



657,379

Cost of revenue:







Digital

16,078



12,124



50,909



34,858

Nutrition and other

40,486



50,682



127,262



164,679

Connected fitness

4,745



10,261



80,910



10,417

Total cost of revenue

61,309



73,067



259,081



209,954

Gross profit

104,666



134,985



284,952



447,425

Operating expenses:







Selling and marketing

93,145



153,782



286,213



438,672

Enterprise technology and development

25,686



29,680



83,516



83,718

General and administrative

19,532



23,346



59,189



58,523

Restructuring

1,492



—



10,047



—

Impairment of intangible assets

1,000



—



1,000



—

Total operating expenses

140,855



206,808



439,965



580,913

Operating loss

(36,189
)


(71,823
)


(155,013
)


(133,488
)
Other income (expense):







Change in fair value of warrant liabilities

2,362



30,274



4,696



35,664

Interest expense

(1,152
)


(62
)


(1,174
)


(490
)
Other income, net

571



202



696



3,155

Loss before income taxes

(34,408
)


(41,409
)


(150,795
)


(95,159
)
Income tax benefit

549



1,487



1,536



12,739

Net loss
$
(33,859
)

$
(39,922
)

$
(149,259
)

$
(82,420
)








Net loss per common share, basic and diluted
$
(0.11
)

$
(0.13
)

$
(0.49
)

$
(0.31
)
Weighted-average common shares outstanding, basic and diluted

307,949



304,599



307,178



265,117

The Beachbody Company, Inc.


Unaudited Condensed Consolidated Statements of Cash Flows


(in thousands)




Nine months ended September 30,



2022



2021






Cash flows from operating activities:




Net loss

$
(149,259
)

$
(82,420
)
Adjustments to reconcile net loss to net cash used in operating activities:




Impairment of intangible assets


1,000



—

Depreciation and amortization expense


58,858



40,557

Amortization of content assets


18,673



10,008

Provision for inventory and net realizable value adjustment


35,195



4,431

Realized losses on hedging derivative financial instruments


141



481

Gain on investment in convertible instrument


—



(3,114
)
Change in fair value of warrant liabilities


(4,696
)


(35,664
)
Equity-based compensation


13,166



10,839

Deferred income taxes


(1,754
)


(12,964
)
Amortization of debt issuance costs


262



—

Paid-in-kind interest expense


221



—

Other non-cash items


311



—

Changes in operating assets and liabilities:




Inventory


31,676



(68,765
)
Content assets


(16,111
)


(21,958
)
Prepaid expenses


8,681



(5,364
)
Other assets


4,496



(5,762
)
Accounts payable


(30,379
)


9,095

Accrued expenses


(209
)


(406
)
Deferred revenue


(3,690
)


27,041

Other liabilities


(3,525
)


(5,294
)
Net cash used in operating activities


(36,943
)


(139,259
)
Cash flows from investing activities:




Purchase of property and equipment


(23,236
)


(61,065
)
Investment in convertible instrument


—



(5,000
)
Other investment


—



(5,000
)
Cash paid for acquisition, net of cash acquired


—



(37,280
)
Net cash used in investing activities


(23,236
)


(108,345
)
Cash flows from financing activities:




Proceeds from exercise of stock options


3,162



4,477

Remittance of taxes withheld from employee stock awards


(308
)


(3,154
)
Borrowings under Credit Facility


—



42,000

Repayments under Credit Facility


—



(42,000
)
Business combination, net of issuance costs paid


—



389,125

Shares withheld for tax withholdings on vesting of restricted stock


(183
)


—

Borrowings under Term Loan


50,000



—

Repayments under Term Loan


(313
)


—

Payment of debt issuance costs


(4,075
)


—

Net cash provided by financing activities


48,283



390,448

Effect of exchange rates on cash


(1,095
)


168

Net (decrease) increase in cash and cash equivalents


(12,991
)


143,012

Cash, cash equivalents and restricted cash, beginning of period


107,054



56,827

Cash and cash equivalents, end of period

$
94,063


$
199,839

Supplemental disclosure of cash flow information:




Cash paid during the year for interest

$
738


$
389

Cash paid during the year for income taxes, net


365



389

Supplemental disclosure of noncash investing activities:




Property and equipment acquired but not yet paid for

$
789


$
13,640

Class A Common Stock issued in connection with acquisition


—



162,558

Fair value of Myx instrument and promissory note held by Old Beachbody


—



22,618

Supplemental disclosure of noncash financing activities:




Net assets assumed in the Business Combination

$
—


$
293

Warrants issued in relation to Term Loan


5,236



—

Debt issuance costs, accrued but not paid


136



—

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 impairment of goodwill and intangible assets, depreciation and amortization, amortization of capitalized cloud computing implementation costs, amortization of content assets, interest expense, income taxes, equity-based compensation, net realizable value adjustment, 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 loss can be found below:



Three Months Ended September 30,

Nine Months ended September 30,
(in thousands)


2022



2021



2022



2021

Net loss

$
(33,859
)

$
(39,922
)

$
(149,259
)

$
(82,420
)
Adjusted for:








Impairment of intangible assets


1,000



—



1,000



—

Depreciation and amortization


17,306



14,616



58,858



40,557

Amortization of capitalized cloud computing implementation costs


126



168



462



504

Amortization of content assets


5,493



3,889



18,673



10,008

Interest expense


1,152



62



1,174



490

Income tax benefit


(549
)


(1,487
)


(1,536
)


(12,739
)
Equity-based compensation


5,601



5,744



13,166



10,839

Inventory net realizable value adjustment (1)


(1,867
)


—



23,569



—

Transaction costs


—



677



2



2,819

Restructuring and platform consolidation costs (2)


1,745



—



11,718



—

Change in fair value of warrant liabilities


(2,362
)


(30,274
)


(4,696
)


(35,664
)
Other adjustment items (3)


—



3,044



—



9,082

Non-operating (4)


(15
)


71



61



(3,017
)
Adjusted EBITDA

$
(6,229
)

$
(43,412
)

$
(26,808
)

$
(59,541
)

(1)

Represents a non-cash expense to reduce the carrying value of our connected fitness inventory and related future commitments. This adjustment is included because of its unusual magnitude due to disruptions in the connected fitness market.
(2)

Includes restructuring expense and non-recurring personnel costs associated primarily with the consolidation of our digital platforms.
(3)

Incremental costs associated with COVID-19.
(4)

Includes interest income, and during the nine months ended September 30, 2021, also includes the gain on investment on the Myx convertible instrument.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221109005782/en/

Media
Jill Murray
Jillian.Murray@teneo.com

Investor Relations
Edward Plank
eplank@beachbody.com

Company Name:	Body Central Corp.
Stock Symbol:	BODY
Market:	NYSE
Website:	bodyc.com

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