The Beachbody Co., Inc. Q4 FY2024 earnings call

• Mark Goldston discussed the company's restructuring from a multi-level marketing platform to an omni-channel model, phasing out the MLM structure since 2007 and transitioning to a single-level affiliate model. He highlighted progress in the affiliate transition, new product development in the Nutrition segment under P90X and Insanity brands, and the vast omni-channel opportunity.
• Carl Daikeler emphasized focusing on delivering real results for people, the affiliate transition as a key focus with more visibility of customer success and smarter customer acquisition, marketing initiatives like the Total Solution bundle combining digital programs and Shakeology subscription, direct response marketing, new programs such as Belle Vitale, Walk Week, and GLP-1 Fitness Formula, channel expansion including Amazon and Walmart.com, retained nutrition subscription file, and partnerships like with telehealth provider Hello Alpha.
• Brad Ramberg reviewed Q4 results, including revenue, adjusted EBITDA, gross margins, operating expenses, and provided Q1 2025 guidance on revenues, net loss, and adjusted EBITDA based on the new business model.

For the fourth quarter, total revenues were $86.4 million, which was at the high end of the guidance range. Digital revenue decreased 6.2% sequentially to $50.4 million and 21.4% year-over-year, with digital gross margin at 85.9%, up 540 basis points from the prior quarter and 1,280 basis points from the prior year. Nutrition revenue decreased 26.6% sequentially to $34.8 million and 32.8% year-over-year, with nutrition and other gross margin at 52.3%, down 630 basis points from the prior quarter and 90 basis points from the prior year. Moving forward, revenues are expected to approximate 60% digital and 40% nutrition, with digital gross margin target at approximately 85% and nutrition at approximately 50%.

• Q1 2025 revenues are expected to be in the range of $60 million to $70 million.
• Q1 2025 net loss is expected to be in the range of $11 million to $7 million.
• Q1 2025 adjusted EBITDA is expected to be in the range of negative $2 million to $2 million.
• Revenues are anticipated to be approximately 60% digital and 40% nutrition moving forward, with digital gross margin target at ~85% and nutrition at ~50%.

Q: Susan Anderson asked about the movement with affiliates as the business model shifted, reaction, and if they're acquiring new affiliates.

A: Carl Daikeler said the transition to affiliate was as expected, moderate success in transition from network to affiliate, slowed down but plans to pick up from external and internal sources in spring.

Q: Susan Anderson followed up on P&L structure and gross margin/OpEx guidance.

A: Brad Ramberg said revenues approximate 60% digital and 40% nutrition, and provided guidance on gross margin and EBITDA for Q1.

Q: JP Wollam asked about Q1 guide, attributing decline, and OpEx.

A: Mark Goldston said decline due to former MLM active sellers migrating, direct response and Amazon businesses strong, and Brad Ramberg said guidance reflects first pure quarter of new business model.

Q: JP Wollam asked about nutrition business and retail.

A: Mark Goldston said nutrition is a major opportunity, Shakeology never sold in retail before, new products like P90X and Insanity to be retail opportunities.

Q: Gowshi Sri asked about long-term revenue streams, Walmart channel, and cannibalization.

A: Carl Daikeler said mixture of subscriptions and one-time purchases in long-term, Walmart channel early days, and affiliates and direct marketing are complementary with synergy.