The Beachbody Company, Inc.

Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company third quarter earnings call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties 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. I'll now turn the conference over to your host, Bruce Williams, Managing Director of ICR Investor Relations. Please go ahead.

Welcome, everyone, and thank you for joining us for our third quarter earnings call. With me on the call today are Mark Goldston, Executive Chairman of the Beachbody Company, Carl Deichler, Co-Founder and Chief Executive Officer, and Mark Sweetan, Chief Financial Officer. Following the 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 includes 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 Mark Goldson. Mark?

Hello. Good afternoon. Thank you for joining us today. I'm thrilled to be part of this exciting journey and to contribute my extensive experience to the company's success. I want to make three key points that are really important for investors and analysts to gain a perspective on where we are and where we're going. First, as you know, we intend to execute a reverse stock split later this month. This should get this stock into a range that will attract institutional investors. Second, and critically, we must lower the breakeven of the company. We previously have taken out $125 million in costs, and Mark Sweden, our CFO, we'll talk about an additional $40 million that we've identified in cost savings. We expect to realize these additional savings in 2023, bringing the total to $165 million in aggregate annualized cost savings since 2021. And third, we have begun the implementation of the turnaround plan we architected after my arrival in June of 2023. As part of that plan, we'll be aggressively pursuing ways to win back some of the 14 million people in our extremely valuable CRM base who are either former subscribers or qualified leads that were added to our database since 2016. In addition, we fortified the product offering for our direct sales organization with the addition of Growth Day. This was developed by the dynamic, world-renowned Brendan Burchard, and we're aggressively pursuing outside partnerships and additional direct-to-consumer channels to help diversify our beta and create additional revenue streams from those untapped channels. Last quarter, I told investors that our main focus is on the generation of cash in the near to mid-term, and we're developing programs designed to deliver on that goal. As a result of the $165 million in expected cost savings, along with the key elements of the turnaround plan I just spoke about, we believe there's a clear path to becoming cash flow positive which would indeed be a milestone for the turnaround effort at Body. Body possesses invaluable assets, including what we believe to be the world's most extensive digital fitness library, a valuable range of nutritional products, a massive database of current and past customers, and importantly, a highly skilled leadership team. Last quarter, we developed a plan that prioritized profitable revenue over growth at all costs. and a drastically reduced timeframe for return on investment capital. If you look at the P&L of the company, you can see that scale is really not our primary concern. We believe we've got the girth and the scale to be profitable in the revised cost structure that we've created, and the potential for generating operating leverage during the course of 2024 exists largely as a result of those major cost-saving conditions. I've now been here for five months, and I am more convinced than ever that we've got the products, the team, the total adjustable market size, or TAM, and the turnaround plan to return Body to its position as a dominant, highly profitable company, but one that is architected in a much more efficient manner. As I stated on last quarter's earnings call, turnarounds are not linear, and there will definitely be some bumps in the road. But our turnaround plan has been meticulously crafted, and we're making good progress. In the coming months, you should expect to see additional positive and purposeful changes taking place in the company. Our products are world-class, and I believe this because I'm a fitness enthusiast, and I've got significant experience in this athletic space with leading companies like Reebok, LA Gear, Converse, and Athletic Propulsion Labs, or APL. This is my wheelhouse. Now that we're in the process of focusing on improving the balance sheet and implementing strategies to expand our sales and marketing ecosystem, I firmly believe that we're on our way to driving more profitable revenues and, importantly, building cash. I'm focused on helping the team optimize our LTV to CAC to additional monetization opportunities that will drive cash and profitability. We have significant opportunities in front of us, and we're just getting started. You'll note that on our investor relations presentation on our website, we expect our selling and marketing costs as a percentage of revenue to decline 1,000 basis points to 45% during 2024. Just take a moment to reflect on this change. This 1,000 basis point reduction should result in an additional 10% of revenue flowing through to the bottom line in 2024. That's a game changer. And it's going to be critical in helping us to be cash flow positive in the future. I'd now like to turn the mic over to Carl, who will give you more insight into the company's transformation. Carl.