Business Wire | Nov 15, 2021 04:05PM EST

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

Nov. 15, 2021

SANTA MONICA, Calif.--(BUSINESS WIRE)--Nov. 15, 2021--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

* Total revenue was $208.1 million, a 17% decrease compared to 2020 and a 6% increase compared to 2019 * Digital revenue was $94.1 million, a 5% decrease compared to 2020 and a 38% increase compared to 2019 Digital subscriptions were 2.64 million, a 1% increase compared to 2020 and a 55% increase compared to 2019 95.6% month-over-month average digital retention, a 50-basis point increase compared to 2020 and a 40-basis point increase compared to 2019 35.9 million total streams, a 26% decrease compared to 2020, and a 35% increase compared to 2019 29.6% DAU/MAU, a 250-basis point decrease compared to 2020, and a 20-basis point increase compared to 2019 * Connected Fitness revenue was $5.9 million, compared to none in 2020, which preceded the Myx Fitness acquisition There were approximately 14,700 bikes sold in the third quarter. However, only 44% of bikes were delivered to customers, which determines when revenue can be recognized On a pro forma basis, Connected Fitness revenue was $8.9 million in Q3 2020, with roughly 8,600 bikes sold and 118% of bikes sold delivered in the quarter * Nutrition and Other revenue was $108.1 million, a 29% decrease compared to 2020 and a 16% decrease compared to 2019 Nutritional subscriptions were 0.34 million, compared to 0.44 million in 2020 and 0.34 million in 2019 * Net loss was $39.9 million, compared to net income of $13.8 million in 2020 and net income of $3.4 million in 2019 * Adjusted EBITDA was ($43.4) million, compared to $31.4 million in 2020 and $19.5 million in 2019

Key Operational and Business Metrics

The Beachbody Post Merger Post MergerCompany

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Change v Change Change Change v 2021 2020 2019 v 2021 2020 v 2019 2020 2019 2019 2020

ConnectedFitness Units 14.7 0.0 NM 0.0 NM 15.2 0.0 NM 0.0 NM Sold (inthousands)

Digital 2.64 2.61 1 % 1.70 55 % 2.64 2.61 1 % 1.70 55 %Subscriptions (in millions)Nutritional 0.34 0.44 -23 % 0.34 0 % 0.34 0.44 -23 % 0.34 0 %Subscriptions (in millions)Total 2.98 3.05 -2 % 2.04 46 % 2.98 3.05 -2 % 2.04 46 %Subscriptions

Average 95.6 % 95.1 % 50bps 95.2 % 40bps 95.5 % 95.4 % 10bps 95.1 % 40bpsDigital RetentionTotal Streams 35.9 48.5 -26 % 26.5 35 % 136.4 137.2 -1 % 78.5 74 %(in millions)DAU/MAU 29.6 % 32.1 % (250bps) 29.4 % 20bps 32.1 % 31.9 % 20bps 29.2 % 290bps



Connected $5.9 $0.0 NM $0.0 NM $5.9 $0.0 NM $0.0 NM FitnessDigital $94.1 $99.1 -5 % $68.1 38 % $283.5 $240.0 18 % $192.8 47 %

Nutrition & $108.1 $152.4 -29 % $127.9 -16 % $367.9 $399.3 -8 % $397.8 -8 %otherRevenue (in $208.1 $251.5 -17 % $196.0 6 % $657.4 $639.3 3 % $590.7 11 %millions)Net Income/ ($39.9 ) $13.8 -390 % $3.4 -1277 % ($82.4 ) ($4.6 ) -1707 % $30.5 -370 %(Loss) (in millions)Adjusted ($43.4 ) $31.4 -238 % $19.5 -322 % ($59.5 ) $34.9 -270 % $59.2 -201 %EBITDA (in millions) 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:

* Sharpening Marketing Focus by adjusting media investment to maximize ROI * Prioritizing the Highest-Return Growth Opportunities by leveraging BODi to drive acquisition and lifetime value and continuing to scale the Connected Fitness business across the Beachbody on Demand and Openfit platforms * Maximizing the Micro-Influencer Coach Network through the return of in-person live events and new product introductions * Maintaining Cost Discipline, including a transition to a work-from-anywhere environment with the successful lease assignment of our Santa Monica office * Strengthening the Leadership Team with a specific focus on revenue growth and long-term strategy, with appointments including: Jon Congdon, Beachbody's Co-Founder and CEO of Openfit appointed as Vice Chairman of the Company, in a newly created role focused on long-term strategy and business development effective November 15, 2021 Jean-Michel Fournier appointed to the new role of President, Global Partnerships and Corporate Development effective November 1, 2021 Christina Cartwright appointed to the role of Senior Vice President, Nutrition effective October 28, 2021 Blake Bilstad appointed as Chief Legal Officer and Corporate Secretary effective October 28, 2021

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:

* Total revenue2 to be between $820.0 million and $830.0 million * Adjusted EBITDA2 to be between ($110.0) million and ($100.0) million, consistent with previous expectations

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.

2Total 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 As of September December 30, 31,

2021 2020

(unaudited)

AssetsCurrent 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' EquityCurrent 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 ofSeptember 30, 2021 and December 31, 2020Common stock, $0.0001 par value, 1,900,000,000 sharesauthorized (1,600,000,000 Class A, 200,000,000 ClassX and 100,000,000 Class C); 168,218,173 and101,762,614 Class A shares issued and outstanding atSeptember 30, 2021 and December 31, 2020, 31 24 respectively; 141,250,310 Class X shares issued andoutstanding at September 30, 2021 and December 31,2020, respectively and no Class C shares issued andoutstanding at September 30, 2021 and December 31,2020Additional 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 fitness5,927

-

5,937

-

Nutrition and other108,053

152,397

367,895

399,335

Total revenue208,052

251,479

657,379

639,299

Cost of revenue:Digital12,124

9,843

34,858

27,507

Connected fitness10,261

-

10,417

-

Nutrition and other50,682

61,082

164,679

151,654

Total cost of revenue73,067

70,925

209,954

179,161

Gross profit134,985

180,554

447,425

460,138

Operating expenses:Selling and marketing153,782

123,980

438,672

352,872

Enterprise technology and development29,680

23,852

83,718

67,558

General and administrative23,346

16,523

58,523

46,229

Restructuring gain-

(1,677

)

-

(1,677

)

Total operating expenses206,808

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 liabilities30,274

-

35,664

-

Interest expense(62

)

(89

)

(490

)

(432

)

Other income, net202

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, basic304,599

238,831

265,117

238,374

Weighted-average common shares outstanding, diluted304,599

252,085

265,117

238,374

The Beachbody Company, Inc.

Condensed Consolidated Statements of Income

Unaudited (in thousands, except per share amounts)

Three Months Ended Nine Months Ended September 30, 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 29,680 23,852 83,718 67,558 developmentGeneral 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 30,274 - 35,664 - liabilitiesInterest expense (62 ) (89 ) (490 ) (432 )

Other income, net 202 113 3,155 555

Income (loss) before income (41,409 ) 17,900 (95,159 ) (4,721 )taxesIncome 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 ($0.13 ) $0.06 ($0.31 ) ($0.02 )share, basicNet income (loss) per common ($0.13 ) $0.05 ($0.31 ) ($0.02 )share, dilutedWeighted-average common shares 304,599 238,831 265,117 238,374 outstanding, basicWeighted-average common shares 304,599 252,085 265,117 238,374 outstanding, dilutedThe 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 expense40,557

31,881

Amortization of content assets10,008

5,103

Provision for excess and obsolete inventory4,431

1,083

Allowance for doubtful accounts-

77

Change in fair value of derivative financial instruments294

16

Gain on investment in convertible instrument(3,114

)

-

Change in fair value of warrant liabilities(35,664

)

-

Equity-based compensation10,839

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 payable9,095

9,216

Accrued expenses(406

)

19,806

Deferred revenue27,041

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 options4,477

-

Remittance of taxes withheld from employee stock awards(3,154

)

-

Borrowings under Credit Facility42,000

32,000

Repayments under Credit Facility(42,000

)

(32,000

)

Business Combination, net of issuance costs paid389,125

-

Net cash provided by financing activities390,448

-

Effect of exchange rates on cash168

(397

)

Net increase in cash and cash equivalents143,012

45,083

Cash and cash equivalents, beginning of period56,827

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:

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 providedby (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 294 16 instrumentsGain 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 investingactivities:Property and equipment acquired but not yet paid for $13,640 $3,914

Class A Common Stock issued in connection with the $162,558 $0 acquisition of MyxFair value of Myx instrument and promissory note held $22,618 $0 by Old BeachbodyOld Beachbody Common units issued in connection with $0 $27,889 acquisitionSupplemental disclosure of noncash financingactivities:Tax asset contribution $0 ($135 )

Net assets assumed from Forest Road in the Business $293 $0 Combination 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:

Three Months Ended Nine Months Ended(in thousands) September 30, 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 168 - 504 - cloud computing implementationcostsAmortization 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 (30,274 ) - (35,664 ) - warrant liabilitiesOther 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 inthe Myx convertible instrument.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211115006061/en/

CONTACT: Media Madeleine O'Hagan madeleine.ohagan@teneo.com

CONTACT: Investor Relations Edward Plank eplank@beachbody.com