The Beachbody Company, Inc.

Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company first quarter earnings call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for questions. If anyone has any difficulty hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded. And I will now turn the conference over to your host, Bruce Williams, Managing Director of ICR Investor Relations.

Welcome, everyone, and thank you for joining us for our first quarter 2023 earnings call. With me on the call today are Carl Deichler, Co-Founder, Chairman, and Chief Executive Officer of the Beachbody Company, and Mark Swedan, Chief Financial Officer. Following Carl and Mark's prepared remarks, we'll open the call up for questions. Before we get started, I would like to remind you of the company's safe harbor language. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC which include today's press release. Today's call will include references to non-GAAP financial measures, such as adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release, which can be found on our website. Now, I would like to turn the call over to Carl.

Good afternoon, everyone. As we communicated in our last earnings call, this first quarter marked a major transition for the company. We completed the preparation and engineering of a significant upgrade to our subscription platform, and on a parallel path, simplified our business model. We evolved from a business model built on expensive and more complex program launches to a more economical and customer-friendly tempo of constant new monthly content organized into three-week blocks around genre and objectives. And based on almost nine months of successful pilots and tests, in March, we made the full transition to a single subscription we call BODY, that's spelled B-O-D-Y, aligned with the company rebranding from Beachbody to BODY. And we introduced a new content channel integrating mental health into our total solution formula. In doing this, we became the first comprehensive health esteem platform, synthesizing a holistic approach to living a healthy, flexible lifestyle, including the proven body block fitness format, sensible healthy nutrition programs, and positive mindset masterclasses to help people navigate the obstacles of day-to-day life and improve their mental health. I want to thank the team for their perseverance and skill creating this incredible new subscription product. And in the midst of this major launch, For the sixth quarter in a row, we've exceeded our met guidance in both revenue and adjusted EBITDA for the quarter. But there's so much more for us to accomplish. When we're scaling innovation, we operate a test and learn process. This is the process we've successfully executed multiple times over the last two decades. We did it when we launched P90X, effectively doubling our price per unit. And when we launched Shakeology into the network, moving from a $40 a month multivitamin subscription to a $130 subscription for the world's first superfood dessert shake. And in 2016, moving the business model from a single one-time purchase of DVDs to the Beachbody On Demand annual subscription. As the company scaled through these transitions, each time we reached the billion-dollar revenue milestone faster than the last, and we believe the expanded and repositioned body subscription is our biggest and most important innovation since we launched the company. I'm confident that this will be our next multi-billion-dollar opportunity to drive long-term, sustainable growth. We're in the early stages of promoting this new premium subscription, but I can report that we are already seeing promising customer demand based on the engagement and renewals of existing customers. Bodies surpassed 500,000 subscriptions as of April 30. That's roughly double since the end of Q4 2022, primarily driven by digital renewals and upgrades that are exceeding forecast. the early strength in renewals demonstrates customers are recognizing that our pricing represents tremendous value associated with our rich catalog of over 120 programs. I mean, everybody knows P90X, Insanity, and 21 Day Fix, but also our new body programming and the monthly release of new body blocks for general fitness consistency and to help our bike customers get the incredible results that our company's known for. Likewise, Nutrition subscription retention is ahead of our internal forecast, with March seeing the strongest retention rate in over 12 months. We also see a healthier nutrition attach rate with the new body subscription platform. This aligns to our vision of increasing our customer LTV by focusing on these loyal and highly engaged subscribers. In terms of engagement, our first quarter 2023 streams were 25% above the fourth quarter 2022. While seasonality was a factor with consumers refocusing on their health at the start of a new year, our sequential growth accelerated relative to 2022, which is a very healthy sign of consumer engagement and a testament to the loyalty of our subscriber base and the consistent popularity of our content. While the home fitness industry continues to normalize from the gains during COVID, we're seeing signs that our health esteem category is attracting significant interest as searches for the term body again that searches for our spelling b-o-d-i on google well google search is up 287 percent in the first quarter over the prior year and since the repositioning to body just in march web traffic to our sites increased by 20 percent over february We're strategically increasing the LTV of our customers and are already seeing the benefits of this subscription, as our digital LTV was up 13% in March versus February. Moving on to driving customer acquisition, now that the product has been completely introduced, we're focused on the execution of our go-to-market strategy. As a reminder, our three sales channels are our proprietary network of partners, previously called coaches, direct media acquisition through advertising and search optimization, and sales into our significant database. This is the time to go on offense, so let me share how we plan to achieve growth. Our partner network forms the majority of our sales generation. In addition to significant ongoing training, we've implemented new incentives to align our partners with our goal to drive digital body and nutrition subscription. This June, we're hosting our annual partner summit. which is typically attended by around 10,000 partners. This will be an immersive training of our network to align them with our strategy and sales tactics to serve the massive TAM of over 150 million people who are overweight or obese in the US alone, and to whom that health esteem platform is uniquely designed to help achieve long-term health and happiness. With the help of our team body partners, we intend to create the largest health and fitness community in the world. And I'm highly encouraged by the enthusiastic response of our partner network, although we do see that it's going to take some time to fully optimize and train the partners to leverage this significant transition. But based on their enthusiasm and engagement with the platform, I'm confident that we'll be successful. It's only a matter of time and execution. On the direct media acquisition front, we just started the test and learn process to acquire new subscribers into the body platform in our online and offline media advertising. We're also working with an extremely experienced social media and marketing agency to expand the reach of our message into TikTok and YouTube. Through our test and learn approach, our ROAS, or return on ad spend, continues to improve, allowing us to gradually expand customer acquisition while maintaining our LTV to CAC ratio, thanks to the improved economics of this new body subscription. On the customer database activation front, we see more significant opportunities to drive re-engagement as well as cross-sell, and we're expanding our efforts in CRM and database marketing to offer this new subscription to our massive database of customers, both past and present. In April, we launched technology to communicate with customers within our app and through text messages, expanding our customer engagement as well as building more targeted and sophisticated email marketing campaigns. Finally, we also began testing the expansion of our Shakeology supplement into the category of superfood desserts in Q1. Our marketing has just begun to leverage this category, and again, early signs are that this campaign will resonate, grow retention, and expand the total addressable market over time. In summary, the first quarter performed generally as expected, given the transition to the expanded business model. have experience with this level of content transformation and we understand what levers we need to pull to navigate the transition i believe that this chapter of growth will be the biggest opportunity in the company's history with two months of data points we're encouraged by the green shoots of demand and customer renewals and based on what we're hearing from the industry our pivot is not only the right strategy for these times but we have a significant head start however I do want to reiterate that it will take some time to fully train our partner network about the benefits of our comprehensive health esteem platform for them to drive significant new subscribers. And as such, we're taking a more conservative view of our Q2 outlook, but remain confident in achieving EBITDA profitability on a quarterly basis by the end of the year. Now, for more specifics on the quarter, I'll pass it over to Mark, our CFO, to detail our financial results for the quarter. Mark?