The Beachbody Company, Inc.

Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company first quarter 2024 earnings call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a Q&A 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. And I will now turn the conference over to our host, Bruce Williams, Managing Director of ICR Investor Relations.

Welcome, everyone, and thank you for joining us for our first 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, net cash, and free cash flows. 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.

Thank you, Bruce, and good afternoon, everyone. 2024 is off to a strong start as we continue to deliver against our strategic initiative and remain steadfast in our turnaround plan. With our efforts thus far in 2024, we have some great news to announce. First, I'm thrilled to share that we beat the midpoint of our revenue guidance and achieved quarter-over-quarter revenue growth for the first time since Q4 of 2021. we exceeded the midpoint of our adjusted EBITDA guidance, and we've now delivered positive adjusted EBITDA for two consecutive quarters. And today we reported our highest adjusted EBITDA since going public back in 2021. And third, we reached a critical milestone of becoming free cashflow positive this quarter. Once again, a first for our company since 2020. As a reminder, The goal of our turnaround strategy centers on, one, continuing to enhance our cash position and balance sheet, two, transforming our cost base and re-architecting the enterprise to dramatically reduce our break-even point without compromising the core business model that generates revenue, and three, launching a series of initiatives to refine the business model and drive top-line growth. In terms of where we stand in the turnaround process, we feel that we're considerably ahead of schedule. Let me walk through the details of our three key turnaround strategies. First is enhancing our cash liquidity and balance sheet position. We reported our first positive free cash flow quarter since 2020. During the quarter, we took additional strategic action to fortify our liquidity position by engaging in a sales-leaseback transaction and divesting a non-core investment, which resulted in a $7 million debt reduction. As a direct outcome of that, our loan balance has been cut in half since I joined in June of 2023, from a level of $50 million to now $25 million. In April, we proactively amended our revenue covenants for our term loan with Blue Torch Capital. We finished Q4 2023 with a net cash position of $4 million. But at the end of Q1 2024, we showed continued improvement with positive net cash position of $14 million. This transformation in just one quarter is impressive and resulted in a $10 million liquidity improvement sequentially. Additionally, our amended debt covenant lowered the quarterly revenue threshold from $120 million down to $100 million per quarter, and this will last until December 31st of 2024. And then subsequently, it will go to $110 million per quarter beginning in Q1 of 2025. We believe this demonstrates that our lenders have confidence in our progress to run a positive free cash flow business at a much lower revenue threshold requirement. Second, we're transforming our cost base and re-architecting the body enterprise to dramatically reduce our break-even point. In what we believe to be a very short period of time, we have successfully reduced our revenue threshold from over $900 million in 2022 to less than $500 million in 2024 to be in a cash generating position. That's more than a $400 million reduction in the break-even threshold for the company. What's important about that is that we've built operating leverage into the P&L at the current run rate of revenues and believe that as our turnaround gains traction, we will drive significant operating profit over time. We stated that we would generate over $250 million in cost savings in 2024 versus where the company was back in 2021. So a long process of improving the cost structure. And we're currently at a run rate to deliver these savings in 2024. And this has been demonstrated by our Q1 24 results. And third, we've developed revenue initiatives designed to drive top line growth. And we're thrilled to announce that we grew sequential quarterly revenues for the first time since 2021. Looking forward, we're excited about our existing and upcoming innovation pipeline, which focuses on expanding consumer access to our rich catalog of programs, and we'll also be exploring strategic partnerships and developing innovative marketing programs, which will expand the distribution of our nutrition business, among other initiatives. Our performance reflects many proof points. that the strategy and discipline focus of the turnaround plan we constructed after my arrival in June of 2023 are working and we're tracking ahead of schedule on critical milestone achievements. I like to create strategic imperative lists that focus on five key areas. I've been doing that for decades in the companies that I've run. I'm pleased to announce that the company has already achieved the five key strategic imperatives of the turnaround plan that we established after my arrival in June of 2023. Let me quickly review these five key strategic imperative accomplishments. One, we strengthened our liquidity position. Two, we dramatically lowered the break-even point of the company. Three, we delivered positive adjusted EBITDA now for two consecutive quarters. Four, we built substantial operating leverage into our P&L. And five, and thus far in 2024, we achieved our first positive three cash flow quarter since 2020. As a reminder, we are still in balance sheet optimization mode, which means we will remain hyper-focused on maximizing cash and liquidity. Therefore, we will continue to focus on executing our turnaround plan to optimize cash generation from our valuable asset base. We're on track to build a company that not only delivers positive adjusted EBITDA and positive free cash flows, but also achieves the third element of the critical financial measurements of a turnaround, and that will be delivering GAAP net income, which will be our next key milestone in the impressive and, might I say, rapid turnaround of BODY. Now, I'll turn it over to Carl to discuss our top-line revenue growth initiatives. Carl?