The Beachbody Company, Inc.

Good afternoon. Thank you for attending today's Beachbody Company Inc. Third Quarter 2025 Earnings Conference Call. My name is Jayla, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'll now pass the conference over to our host, Bruce Williams, the Managing Director of ICR. You may proceed, Bruce.

Welcome, everyone, and thank you for joining us for our Third Quarter Earnings Call. With me on the call today are Mark Goldstein, Executive Chairman of the Beachbody Company, Carl Deichler, Co-Founder and Chief Executive Officer, and Brad Ramberg, Interim 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. 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 by 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 nine GAAP financial measures, such as adjusted EBITDA, debt cash, and free cash flow. And a reconciliation of these nine 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 and good afternoon, everyone. I'd like to welcome you to BODY's third quarter 2025 earnings call. We're pleased with our outstanding third quarter results and the progress and speed of our turnaround that's far exceeded our expectations. Let me put this achievement in perspective. We've now delivered eight consecutive quarters of positive adjusted EBITDA. Our free cash flow performance has been equally strong. We've generated 13.1 million in free cash flow through nine months, with Q3 alone contributing $9 million of free cash flow. Perhaps most significantly, We generated net income this quarter, a seminal milestone that we identified years ago as the ultimate marker of our turnaround effort. Our cash position of $33.9 million substantially exceeds our outstanding debt principle of $25 million, providing us with financial flexibility. Our operational metrics continue to demonstrate the structural improvements we've made. We've maintained strong gross margins while significantly reducing our revenue breakeven point from approximately $900 million in 2022 down to $180 million today, a $720 million lowering of the breakeven that positions us to generate operating leverage at a much lower revenue level. Looking ahead, we're focused on our growth strategy in 2026. This upcoming year will mark our transition from a financial restructuring to capitalizing on new revenue opportunities from our innovation pipeline and from market expansion. We're launching a comprehensive retail initiative that will leverage our portfolio of billion-dollar brands in entirely new channels. In 2026, we'll introduce Shakeology to retail for the first time in our company's history. That will be followed by our brand new P90X nutritional supplements line and Insanity branded supplements later in 2026. These products will be distributed in different form factors and different price points made possible by our new business model. Complementing our retail expansion, we will be launching a brand new P90X fitness program, the first in over a decade. which will create powerful cross-marketing opportunities between our digital content and our retail nutrition products. So going forward, we see a substantial opportunity to expand our TAM by developing innovative approaches, including a focus on healthspan and a shorter, easier-to-perform workout program to reach underserved segments. including the 185 million overweight Americans who don't currently engage in regular fitness routines. In our current business model, our revenues are generated via multiple channels, what we like to call the omni-channel opportunity. One of the smaller elements within the omni-channel opportunity is our affiliate program. Why do I say that? Because on a go-forward basis, the affiliate program will be a smaller portion of our total revenue mix given our heavy focus on the maximization of both our direct-to-consumer channels and our upcoming brick-and-mortar retail initiative. This strategic shift reflects our evolution from what was previously an MLM-dependent model in 2024 to a now diversified omni-channel approach in 2025 and beyond. The transformation we've achieved positions Abadi as a fundamentally different company than it was just two years ago. We've proven our ability to generate consistent positive adjusted EBITDA over the last eight quarters. We've generated positive cash flow through 2025 year to date. And we finally achieved a positive net income quarter in Q3 of 2025. During the two-year turnaround effort, which began when I joined back in June of 2023, we've eliminated the huge structural inefficiencies that previously required a massive $900 million revenue level just to break even on a cash basis. And we've reduced that cash break even by 80%. and brought it down to an incredibly low $180 million breakeven through a complete re-architecture of the company and the way we operate. The efficiencies we've built into the company have allowed us to construct a powerful and nimble operating model that will allow future revenue growth to drive significant operating leverage and increase EBITDA. The headline for Q3 2025 is that body has completely reinvented itself over the last two plus years, and with the benefits of the financial restructuring, the elimination of the MLM model, massive improvement in profitability, an increase in direct-to-consumer focus, a significant improvement in gross margins, and a more efficient sales and marketing spend. As a result of accomplishing all of the financial turnaround goals, body is now poised to open the hatch of the innovation pipeline for 2026 and roll out a slew of new innovations in both digital fitness and nutrition that'll not only fortify our dtc business but it will also open up a whole new arm of our omni-channel strategy with brick and mortar retail and an expanded amazon presence featuring popularly priced p90x and Insanity Nutritional Supplements, and a new lower priced, smaller serving size Shakeology lineup. We've revolutionized and significantly improved our financial foundation. We filled the innovation pipeline and those initiatives are set to be in motion in 2026. And the market opportunities and huge increase in TAM are substantial. we could not be happier with the progress that we've made the speed with which the turnaround has been performed and the exciting and modernized future we see for body with that i'll turn the call over to our ceo carl deichler to discuss the operational details carl thanks mark and thanks to everyone for joining us today i'm excited to share our q3 results which i believe demonstrate