Beachbody Company Inc ((BODI)) has held its Q4 earnings call. Read on for the main highlights of the call.
The latest earnings call from Beachbody Company Inc. paints a picture of a company in transition. While the call highlighted significant restructuring efforts leading to improved financial metrics and cost efficiency, it also acknowledged challenges such as a decline in revenue and difficulties with the affiliate program uptake. The sentiment reflected a balanced outlook, with promising financial improvements tempered by ongoing challenges in key revenue streams.
Transition to Affiliate Model
Beachbody has successfully transitioned from a multi-level marketing model to a single-level affiliate model. This strategic shift aims to broaden the market strategy and enhance revenue streams. However, the transition has been moderate, with fewer new affiliates joining than expected, indicating a slower pace in acquiring new affiliates.
Improved Financial Metrics
The company reported an adjusted EBITDA of $8.7 million, significantly exceeding the guidance range of $2 million to $6 million. This achievement marks the fifth consecutive quarter of positive adjusted EBITDA, showcasing the company’s ability to improve its financial metrics amidst a challenging transition.
Significant Cash Flow Improvement
Beachbody generated a cash flow from operations of $2.6 million for 2024, compared to a cash use of $22.5 million for 2023. This marks a remarkable $25.1 million improvement year-over-year, highlighting the company’s efforts in enhancing its cash flow position.
Digital Gross Margin Improvement
The company reported a digital gross margin increase to 85.9%, up 540 basis points from the prior quarter and representing a 1,280 basis point improvement from the prior year. This improvement underscores Beachbody’s focus on optimizing its digital operations.
Revenue Decline
Despite the positive financial metrics, Beachbody experienced a decline in total revenues, which amounted to $86.4 million, down 15% sequentially and 27% year-over-year. This decline was impacted by the transition from a multi-level marketing platform.
Nutrition Revenue and Subscription Decline
The company faced challenges in its nutrition segment, with revenue decreasing 26.6% from the prior quarter to $34.8 million and declining 32.8% year-over-year. Nutrition subscriptions also saw a 29.2% sequential decline, reflecting the difficulties in this area.
Net Loss
Beachbody reported a Q4 2024 net loss of $34.6 million, which included $20 million of goodwill impairment expenses. Excluding these impairments, the net loss was $14.6 million, indicating the financial challenges the company is navigating.
Forward-Looking Guidance
Looking ahead, Beachbody anticipates a shift in its revenue composition, with 60% expected to come from digital channels and 40% from nutrition in 2025. The company projects gross margins of approximately 85% for digital and 50% for nutrition. For the first quarter, revenues are expected to be between $60 million and $70 million, with adjusted EBITDA projected between negative $2 million to $2 million, indicating a transition phase as they implement their new business model.
In summary, Beachbody Company Inc.’s earnings call reflects a company in the midst of a strategic transition. While the financial improvements are promising, the challenges in revenue decline and affiliate program uptake present a balanced outlook. The company’s forward-looking guidance suggests a focus on digital and nutrition channels, as it navigates through its transition phase.