The Beachbody Company Reports 20% Revenue Decline, Improves Gross Profit Margins, and Announces Restructuring Initiative

As of September 30, 2024, The Beachbody Company, Inc. reported total revenue of $102.2 million for the third quarter, reflecting a 20% decrease from $128.3 million in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $332.4 million, down 19% from $408.1 million in the prior year. The decline in revenue was primarily attributed to significant decreases in digital streaming services and nutritional product subscriptions, alongside a sharp drop in connected fitness revenue, which fell 78% due to an 80% decrease in bike deliveries.

Despite the revenue decline, the company improved its gross profit margins, achieving $68.8 million in gross profit for Q3 2024, compared to $75.0 million in Q3 2023. The gross margin increased to 67.3% from 58.5% year-over-year. For the nine-month period, gross profit was $226.5 million, down from $249.1 million, but the gross margin improved to 68.1% from 61.0%.

Operating expenses for Q3 2024 were $81.8 million, a decrease from $104.0 million in Q3 2023, contributing to a reduced operating loss of $13.0 million, compared to a loss of $29.0 million in the prior year. For the nine months, the operating loss was $33.3 million, significantly improved from $80.6 million in 2023. The net loss for Q3 2024 was $12.0 million, down from $32.7 million in Q3 2023, while the nine-month net loss was $37.1 million, compared to $87.6 million in the same period last year.

The company announced a strategic restructuring initiative called the "Pivot" on September 30, 2024, transitioning from a multi-level marketing model to a single-level affiliate model. This initiative is expected to result in a workforce reduction of approximately 170 employees, or 33% of its staff, with associated costs estimated at $18.4 million. The restructuring included $5.1 million in termination and retention benefits recorded for the three and nine months ended September 30, 2024.

Total current assets decreased to $95.3 million from $119.3 million at the end of 2023, while total liabilities also declined to $167.1 million from $194.1 million. The accumulated deficit increased to $(609.0 million) from $(571.9 million) at the end of 2023. The company reported cash and cash equivalents of $32.3 million as of September 30, 2024, with net cash provided by operating activities amounting to $9.3 million for the nine months, a significant turnaround from the $(14.6) million used in the same period of 2023.

In terms of strategic developments, the company executed a 1-for-50 reverse stock split in November 2023 and has been actively managing its debt, including a recent amendment to its financing agreement that adjusted liquidity covenants and increased quarterly principal payments on its term loan.