Beachbody Sees Revenue Drop in Q2 but Encouraged by Turnaround Strategy
Carl Daikeler, Beachbody’s CEO, told investors it will take time to see the full results of the company’s profit-maximizing initiatives
The Beachbody Company, recently rebranded as BODi, is still in the midst of a strategic revamp according to its Q2 2023 earnings results, demonstrating a total revenue decrease of 7%, with $134.9 million compared to $179.1 million in the prior-year period.
While the first quarter marked a significant transition for the subscription health and wellness company, BODi says its second-quarter results are in line with the fitness industry’s seasonality. Now, the company is banking on Mark Goldston’s recent appointment as executive chairman, confident that he will restore the at-home fitness and wellness brand back to its former glory.
Goldston, who assumed his role approximately two months ago, had agreed to compensation in the form of equity stock options.
“This transaction was so important to my determination to turn around the company and my enthusiasm for partnering with an executive who has done this kind of turnaround many times before,” Carl Daikeler, BODi’s co-founder and CEO, told investors during Q2’s earnings call. “I forfeited eight million common shares that I personally own to minimize dilution of Mark’s equity grant to the rest of the shareholders.”
Goldston says BODi’s goal is to prioritize profitable revenue, not growth, at all costs.
“As one of the largest digital fitness companies today, scale is not the primary issue for this company,” Goldston told investors. “What we need to develop are higher quality revenue streams that generate healthy contribution margins to increase the bottom line… We’ve constructed a powerful turnaround plan for the company and we will be vigilant in our focus and execution as we move our way through the priority list to help transform BODi into a very profitable, cash-rich company.”
Goldston reminded investors that BODi is poised to make a significant comeback, pointing to its comprehensive digital fitness library and lineup of nutritional products, as well as a customer database containing over 14 million former customers – ones that he says can be activated easily and “profitably” via “aggressive win-back programs.”
BODi has also restructured the financial covenants in its financing agreement and paid down its debt level by $15 million to approximately $35 million.
“We are excited about the trajectory of BODi’s transformation and are proud of our team’s hard work to get us where we are today,” said Daikeler.
BODi Looks to Amazon as Growth Opportunity
BODi also reports that its conversion ratio of visitors to subscribers increased by 27% in Q2 over Q1, which the company says is driven by audience targeting and messaging enhancements. The health and fitness company will also pilot additional strategies, including launching a new free preview tier, in Q3.
As for BODi’s nutrition portfolio, the company will expand its products on Amazon, identifying this avenue as a significant growth opportunity without undermining its other sales channels. Nutrition revenue was $64.6 million in Q2, down 13% from $74.1 million in the prior quarter, but BODi says it sold more digital and nutritional bundles, which resulted in higher allocations of revenue to digital.
“We’re in the process of selecting an experienced partner with best-in-class capabilities that will help us drive growth on Amazon with proven best practices,” Daikeler said.
Digital revenue was $65.2 million, up from $64.8 million in Q1, but had decreased from $78.0 million in the prior-year period. Another strategy for attracting fitness enthusiasts is to create a complimentary preview layer of digital content, which BODi says will enable its database activation team to convert visitors into paying digital and supplement subscribers.
While overall digital subscriber count decreased by 12% to $1.53 million in Q2 from Q1 of 2023, the new BODi digital premium subscription platform shows promise, growing subscribers by 77% to $711,000 in Q2 over Q1.
Connected fitness revenue was $5.1 million, down 15% from $6 million in Q1, although BODi delivered 5,500 bikes versus 4,700 bikes in Q1, a 17% increase, which Marc Suidan, CFO, says reflected a planned promotion during Q2 for BODi’s partners.
As for what the future holds for BODi, Goldston and Daikeler encourage patience.
“The next few months will be a period of positive and deliberate transformation,” Goldston said. “So I’m going to ask that you please be patient with us as we tap into new revenue streams, new audiences and new marketing tactics that the company has not previously utilized. I feel great about the prospects for a successful turnaround at BODi and I’m looking forward to profitable growth ahead.”
