Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Beachbody Co Inc (BODI, Financial) has successfully transitioned from a multilevel marketing (MLM) model to a single-level affiliate model, which is expected to improve profitability and agility.
- The company reported a significant improvement in adjusted EBITDA, achieving $10.1 million in Q3 2024, marking the fourth consecutive quarter of positive adjusted EBITDA.
- Gross margins improved by 880 basis points year over year, reaching 67.3%, which is within the company's long-term target range.
- The new affiliate model offers higher commission rates (35-50%) compared to typical affiliate models, which is expected to attract more sellers.
- The company has reduced its cash break-even level by several hundred million dollars since 2022, indicating a leaner and more efficient operation.
Negative Points
- Revenues for Q3 2024 declined 20% year over year, and the company expects a further decline in Q4 due to seasonality and the transition to the affiliate model.
- Digital subscriber count decreased by 19.7% year over year, impacting digital revenue.
- Nutrition subscriptions also saw a decline, falling 27.3% year over year.
- The transition to the new business model is still in its early stages, with Q4 being a transitional period, which may lead to short-term revenue instability.
- The company reported a net loss of $12 million for Q3 2024, although this was an improvement from the previous year.
Q & A Highlights
Q: Can you expand on the revenue guidance for the fourth quarter, and is the step down consistent across digital and nutrition businesses?
A: Brad Ramb, Interim CFO: Q4 is traditionally a softer quarter due to seasonality. It's also a transitional period as we move to the affiliate model. We expect the mix between digital and nutrition to remain steady, and as affiliates gain traction, we'll report on that in the next earnings call.
Q: How is the transition to the affiliate program going to work, and how are you marketing this new program?
A: Carl Diler, CEO: We're incentivizing former network partners to sign up in November for the highest bonus tier. We're also opening it up to our database for a refer-a-friend type program. Additionally, we've launched on the Impact.com platform to penetrate their existing affiliates with our aggressive commission structure.
Q: Can you provide more details on the Belle Vitae program and its launch timeline?
A: Carl Diler, CEO: Belle Vitae has completed testing with impressive results. It includes a fitness program, nutrition plan, breathwork app access, and proprietary supplements. It will launch on December 10th for $299 for a three-month program, with supplements on a continuity plan.
Q: What are the features and capabilities of the centralized e-commerce platform at body.com, and how does it differ from the previous offering?
A: Mark Goldston, Executive Chairman: Previously, we had a bifurcated approach with Team Beachbody.com. Now, body.com will be the primary direct-to-consumer site, selling all products. Affiliates will direct customers there, eliminating the MLM constraints and focusing on a single, powerful DTC website.
Q: Are there plans to introduce subscription models or tiered access options to your digital content?
A: Mark Goldston, Executive Chairman: We currently operate on a digital subscription model for our fitness business. Customers can subscribe for various durations or purchase individual programs. The focus will remain on subscription-based offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
