Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

The Beachbody Company, Inc. Announces Third Quarter 2021 Financial Results


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, 2021.

"While we continued to execute on our strategy to drive growth, the third quarter proved more challenging than forecasted. Our results reflect a confluence of external factors, including softer at-home fitness demand as consumers grew tired of social distancing, and a challenging media environment that did not meet our disciplined ROI requirements, coupled with a short delay in product launches from September to October. Although our digital subscriber base remains strong and engaged with high levels of retention, we did not acquire new subscribers at the rate we expected," said Carl Daikeler, Beachbody's Co-Founder, Chairman, and Chief Executive Officer. "We maintained disciplined cost control in the quarter, and we are taking immediate steps to improve customer acquisition and lifetime value, getting back on course to driving profitable growth. As both the CEO and the single largest shareholder, I am laser focused on driving revenue growth, creating value for shareholders, and delivering on our mission."

Third Quarter 2021 Results

Key Operational and Business Metrics

   
The Beachbody Company

Post Merger

 

Post Merger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

2021

 

2020

 

Change v

2020

2019

 

Change v

2019

 

2021

 

2020

 

Change v

2020

2019

 

Change v

2019

Connected Fitness Units Sold (in thousands)

14.7

 

0.0

 

NM

 

0.0

 

NM

 

 

15.2

 

0.0

 

NM

 

0.0

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

Digital Subscriptions (in millions)

2.64

 

2.61

 

1

%

1.70

 

55

%

 

2.64

 

2.61

 

1

%

1.70

 

55

%

Nutritional Subscriptions (in millions)

0.34

 

0.44

 

-23

%

0.34

 

0

%

 

0.34

 

0.44

 

-23

%

0.34

 

0

%

Total Subscriptions

2.98

 

3.05

 

-2

%

2.04

 

46

%

 

2.98

 

3.05

 

-2

%

2.04

 

46

%

 

 

 

 

 

 

 

 

 

 

 

Average Digital Retention

95.6

%

95.1

%

50bps

95.2

%

40bps

 

95.5

%

95.4

%

10bps

95.1

%

40bps

Total Streams (in millions)

35.9

 

48.5

 

-26

%

26.5

 

35

%

 

136.4

 

137.2

 

-1

%

78.5

 

74

%

DAU/MAU

29.6

%

32.1

%

(250bps)

29.4

%

20bps

 

32.1

%

31.9

%

20bps

29.2

%

290bps

 

 

 

 

 

 

 

 

 

 

 

Connected Fitness

$5.9

 

$0.0

 

NM

 

$0.0

 

NM

 

 

$5.9

 

$0.0

 

NM

 

$0.0

 

NM

 

Digital

$94.1

 

$99.1

 

-5

%

$68.1

 

38

%

 

$283.5

 

$240.0

 

18

%

$192.8

 

47

%

Nutrition & other

$108.1

 

$152.4

 

-29

%

$127.9

 

-16

%

 

$367.9

 

$399.3

 

-8

%

$397.8

 

-8

%

Revenue (in millions)

$208.1

 

$251.5

 

-17

%

$196.0

 

6

%

 

$657.4

 

$639.3

 

3

%

$590.7

 

11

%

Net Income/(Loss) (in millions)

($39.9

)

$13.8

 

-390

%

$3.4

 

-1277

%

 

($82.4

)

($4.6

)

-1707

%

$30.5

 

-370

%

Adjusted EBITDA (in millions)

($43.4

)

$31.4

 

-238

%

$19.5

 

-322

%

 

($59.5

)

$34.9

 

-270

%

$59.2

 

-201

%

Near-Term Actions to Optimize Performance

The Company has implemented immediate actions to optimize near-term performance, while advancing its long-term growth strategies. Actions include:

2021 Guidance1

While the Company remains confident in the significant long-term opportunity in the health and wellness space, the third quarter results, delayed product launches, media spend reassessment, COVID-related consumer behavior and market uncertainty have resulted in a more conservative view for 2021 revenue compared to previous guidance.

Accordingly, for the fiscal year ended December 31, 2021 the Company now expects:

1 Net loss guidance is not reasonably available due to changes in stock compensation, taxes and other matters that we cannot forecast at this time.

2 Total revenue and Adjusted EBITDA project the post-merger consolidated revenue and Adjusted EBITDA ranges (with only six months and five days of Myx results in 2021 from 6/26/2021-12/31/2021).

Conference Call and Webcast Information

Beachbody will host a conference call at 5:00pm ET on Monday, November 15, 2021 to discuss its financial results. To participate in the live call, please dial (833) 989-3106 (domestic) or (873) 415-0233 (international) and provide the conference identification number: 2666107. 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 22, 2021 by dialing (800) 585-8367 (domestic) or (416) 621-4642 (international) and entering the conference identification number: 2666107.

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 worldwide 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), the live digital streaming platform Openfit, and MYXfitness, the Company's connected indoor bike. For more information, please visit TheBeachbodyCompany.com.

Safe Harbor Statement

This press release 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 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 Amendment No. 5 to Form S-4 Registration Statement filed with the SEC on May 27, 2021, 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.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

 

As of September 30,

 

As of December 31,

2021

 

2020

(unaudited)

 

 

Assets
Current assets:
Cash and cash equivalents

$199,839

 

$56,827

 

Accounts receivable, net

1,378

 

855

 

Inventory, net

141,139

 

65,354

 

Prepaid expenses

14,014

 

8,650

 

Other current assets

48,556

 

37,364

 

Total current assets

404,926

 

169,050

 

Property and equipment, net

115,338

 

80,169

 

Content assets, net

34,786

 

19,437

 

Intangible assets, net

92,587

 

21,120

 

Goodwill

176,903

 

18,981

 

Right-of-use assets, net

27,434

 

33,272

 

Other assets

6,847

 

14,224

 

Total assets

$858,821

 

$356,253

 

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable

$48,298

 

$28,981

 

Accrued expenses

89,844

 

79,955

 

Deferred revenue

126,894

 

97,504

 

Current portion of lease liabilities

9,977

 

10,371

 

Other current liabilities

2,656

 

3,106

 

Total current liabilities

277,669

 

219,917

 

Long-term lease liabilities, net

23,845

 

31,252

 

Deferred tax liabilities

6,415

 

3,729

 

Warrant liabilities

19,900

 

?

 

Other liabilities

5,362

 

2,097

 

Total liabilities

333,191

 

256,995

 

Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, $0.0001 par value; 100,000,000 shares authorized, none issued and outstanding as of September 30, 2021 and December 31, 2020

?

 

?

 

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); 168,218,173 and 101,762,614 Class A shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; 141,250,310 Class X shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively and no Class C shares issued and outstanding at September 30, 2021 and December 31, 2020

31

 

24

 

Additional paid-in capital

604,665

 

96,097

 

Accumulated other comprehensive income (loss)

15

 

(202

)

Retained earnings (accumulated deficit)

(79,081

)

3,339

 

Total stockholders' equity

525,630

 

99,258

 

Total liabilities and stockholders' equity

$858,821

 

$356,253

 

The Beachbody Company, Inc.

Condensed Consolidated Statements of Income

Unaudited (in thousands, except per share amounts)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2021

 

2020

 

2021

 

2020

Revenue:
Digital

$94,072

 

$99,082

 

$283,547

 

$239,964

 

Connected fitness

5,927

 

?

 

5,937

 

?

 

Nutrition and other

108,053

 

152,397

 

367,895

 

399,335

 

Total revenue

208,052

 

251,479

 

657,379

 

639,299

 

Cost of revenue:
Digital

12,124

 

9,843

 

34,858

 

27,507

 

Connected fitness

10,261

 

?

 

10,417

 

?

 

Nutrition and other

50,682

 

61,082

 

164,679

 

151,654

 

Total cost of revenue

73,067

 

70,925

 

209,954

 

179,161

 

Gross profit

134,985

 

180,554

 

447,425

 

460,138

 

Operating expenses:
Selling and marketing

153,782

 

123,980

 

438,672

 

352,872

 

Enterprise technology and development

29,680

 

23,852

 

83,718

 

67,558

 

General and administrative

23,346

 

16,523

 

58,523

 

46,229

 

Restructuring gain

?

 

(1,677

)

?

 

(1,677

)

Total operating expenses

206,808

 

162,678

 

580,913

 

464,982

 

Operating income (loss)

(71,823

)

17,876

 

(133,488

)

(4,844

)

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

30,274

 

?

 

35,664

 

?

 

Interest expense

(62

)

(89

)

(490

)

(432

)

Other income, net

202

 

113

 

3,155

 

555

 

Income (loss) before income taxes

(41,409

)

17,900

 

(95,159

)

(4,721

)

Income tax benefit (provision)

1,487

 

(4,129

)

12,739

 

161

 

Net income (loss)

($39,922

)

$13,771

 

($82,420

)

($4,560

)

 
Net income (loss) per common share, basic

($0.13

)

$0.06

 

($0.31

)

($0.02

)

Net income (loss) per common share, diluted

($0.13

)

$0.05

 

($0.31

)

($0.02

)

Weighted-average common shares outstanding, basic

304,599

 

238,831

 

265,117

 

238,374

 

Weighted-average common shares outstanding, diluted

304,599

 

252,085

 

265,117

 

238,374

 

The Beachbody Company, Inc.

Condensed Consolidated Statements of Cash Flows

Unaudited (in thousands)

 

Nine Months Ended September 30,

2021

 

2020

Cash flows from operating activities:
Net loss

($82,420

)

($4,560

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense

40,557

 

31,881

 

Amortization of content assets

10,008

 

5,103

 

Provision for excess and obsolete inventory

4,431

 

1,083

 

Allowance for doubtful accounts

?

 

77

 

Change in fair value of derivative financial instruments

294

 

16

 

Gain on investment in convertible instrument

(3,114

)

?

 

Change in fair value of warrant liabilities

(35,664

)

?

 

Equity-based compensation

10,839

 

3,169

 

Deferred income taxes

(12,964

)

398

 

Other non-cash items

?

 

6

 

Changes in operating assets and liabilities:
Accounts receivable

(226

)

(2,150

)

Inventory

(68,765

)

(17,510

)

Content assets

(21,958

)

(9,922

)

Prepaid expenses

(5,364

)

7,838

 

Other assets

(5,575

)

(4,387

)

Accounts payable

9,095

 

9,216

 

Accrued expenses

(406

)

19,806

 

Deferred revenue

27,041

 

41,775

 

Other liabilities

(5,068

)

(9,499

)

Net cash provided by (used in) operating activities

(139,259

)

72,340

 

Cash flows from investing activities:
Purchase of property and equipment

(61,065

)

(28,107

)

Investment in convertible instrument

(5,000

)

?

 

Other investment

(5,000

)

?

 

Cash acquired in acquisition of Ladder

?

 

1,247

 

Cash paid for acquisition of Myx, net of cash acquired

(37,280

)

?

 

Net cash used in investing activities

(108,345

)

(26,860

)

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

4,477

 

?

 

Remittance of taxes withheld from employee stock awards

(3,154

)

?

 

Borrowings under Credit Facility

42,000

 

32,000

 

Repayments under Credit Facility

(42,000

)

(32,000

)

Business Combination, net of issuance costs paid

389,125

 

?

 

Net cash provided by financing activities

390,448

 

?

 

Effect of exchange rates on cash

168

 

(397

)

Net increase in cash and cash equivalents

143,012

 

45,083

 

Cash and cash equivalents, beginning of period

56,827

 

41,564

 

Cash and cash equivalents, end of period

$199,839

 

$86,647

 

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

$389

 

$335

 

Cash paid during the year for income taxes, net

$389

 

$377

 

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

$13,640

 

$3,914

 

Class A Common Stock issued in connection with the acquisition of Myx

$162,558

 

$0

 

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

$22,618

 

$0

 

Old Beachbody Common units issued in connection with acquisition

$0

 

$27,889

 

Supplemental disclosure of noncash financing activities:
Tax asset contribution

$0

 

($135

)

Net assets assumed from Forest Road in the Business Combination

$293

 

$0

 

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, 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 their most directly comparable GAAP financial measure. A reconciliation of the non-GAAP Adjusted EBITDA to GAAP measures can be found below:

(in thousands)

Three Months Ended September 30,

 

Nine Months Ended September 30,

2021

 

2020

 

2021

 

2020

Net income (loss)

($39,922

)

$13,771

 

($82,420

)

($4,560

)

Adjusted for:
Depreciation and amortization

14,616

 

11,203

 

40,557

 

31,881

 

Amortization of capitalized cloud computing implementation costs

168

 

?

 

504

 

?

 

Amortization of content assets

3,889

 

1,907

 

10,008

 

5,103

 

Interest expense

62

 

89

 

490

 

432

 

Income tax (benefit) provision

(1,487

)

4,129

 

(12,739

)

(161

)

Equity-based compensation

5,744

 

1,261

 

10,839

 

3,169

 

Transaction costs

677

 

612

 

2,819

 

612

 

Restructuring gain

?

 

(1,677

)

?

 

(1,677

)

Change in fair value of warrant liabilities

(30,274

)

?

 

(35,664

)

?

 

Other adjustment items (1)

3,044

 

?

 

9,082

 

?

 

Non-operating items (2)

71

 

77

 

(3,017

)

131

 

Adjusted EBITDA

($43,412

)

$31,372

 

($59,541

)

$34,930

 

 

(1) Other adjustment items include incremental costs associated with Covid-19.

(2) Non-operating primarily includes interest income and gain on investment in the Myx convertible instrument.

 


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