The Beachbody Company, Inc.

Hello everyone, thank you for joining us and welcome to the Beachbody Company, Inc. second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Bruce Williams, Managing Director of ICR. Bruce, please go ahead.

Welcome, everyone, and thank you for joining us for our second 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 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 hardware 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 non-GAAP financial measures such as adjusted EBITDA, net cash, and free cash flow. And 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.

Thanks very much, Bruce. And good afternoon, everyone. Welcome to the body's second quarter 2026 earnings call. I'm pleased to report the body delivered another quarter of consistent execution against the turnaround we've been building for three years now. Total revenue for the second quarter was $49.6 million, above the midpoint of our guidance range of $46 to $51 million. More importantly, this was our fourth consecutive quarter of both operating income and net income. And it was our 11th consecutive quarter of positive adjusted EBITDA, which came in at 6.7 million, which was above the high end of our guidance range of 3 to 6 million. That also marks our fourth consecutive quarter of double digit adjusted EBITDA margins, which tells you that the operational discipline that we've built into this business over the past three years is durable. Net income for the quarter was $1.4 million, also above the high end of our guidance range of a loss of $3 million to break even. So across the board, revenue, net income, and adjusted EBITDA, we either met or exceeded our own guidance again this quarter. Let's turn to the balance sheet. We ended the quarter with $32.4 million of cash. That's against the total debt of approximately $23.6 million. So we had a net cash position of $8.8 million. I'm pleased that we modified our lending agreement with Tiger Finance, and we now have a much less restrictive covenant package. Our new agreement demonstrates the conviction and confidence that our partners have in our long-term strategic initiatives. Let me give you an update on the retail expansion, which continues to build momentum. Shakeology is off to a great start at Sprouts Farmers Market Stores, and they've now expanded our footprint into 131 Sprouts stores nationwide. And importantly, we're already seeing stores coming back for reorders on Shakeology. This quarter, in fact, right now, we've brought Shakeology into 481 vitamin shop locations around the country. We've also continued to build our relationship with KEHI, one of the two largest distributors of natural and organic products in the country. And this gives us a path into their network of grocery accounts. And just recently, we added an account which will open up the UNFI distribution network. That'll happen in November of this year. And UNFI is the other major distributor of consumer goods to the grocery channel. As we've previously discussed, waiting for the retailer's shelf-set planogram to be updated is a six to 12-month process. While we continue to actively participate in that process with strong distribution partners, we expect to modestly build distribution this year with the expectation for accelerated growth in 2027 as we become more integrated into retailers' planograms. On the nutrition innovation side, our P90X supplement line, which is pre-workout, hydration, creatine, recovery protein, and fast-acting energy, that just became available on Amazon, which opens up an important channel for us to build brand awareness and drive trial. We're also in the process of preparing for the Southern California test market for our new energy drink lineup. We've hired one of the top beverage distribution companies in the country to represent us in the market, and both our Insanity Liquid Shock and our P90X energy drinks are in production and will soon be ready to ship. We expect the test market rollout to begin in late Q3 or into Q4, and we will continue that rollout throughout the end of the year. I'm very pleased with our packaging and the flavors, and they really distinguish us from the competition. You know, the digital fitness category is a $13 billion market, and the nutritional supplement category is a $164 billion market. That's like a lake versus an ocean. So by leading with nutrition, which is exactly what we've done with P90X and Shakeology this year, We're acquiring customers more efficiently, and a meaningful share of those nutrition customers are actually converting into our digital fitness subscriptions as well. So that combination, what we call the total solution, is what has always driven this company's best results. And it's exactly what's fueling our direct-to-consumer expansion today. With that, let me turn the call over to Carl.

Thanks, Mark. Coming out of Q1, we outlined a handful of initiatives. We planned to build on the momentum of the P90X Generation Next launch by bringing the P90X supplement line direct to consumer and setting it up for retail. We were planning to transition onto the Shopify e-commerce platform, keep expanding our 10-minute body microdose fitness catalog, including promotion to the GLP-1 audience.

And we talked about our plans to launch our new 30-day booty boost program with a new super trainer.

Our focus in Q2 was also to continue shifting the business toward a nutrition-first, multi-channel model, now that we're free of the margin and distribution constraints of the old operating expense structure. Here's where each of those initiatives stand. I'll start with P90X. The Generation Next launch in February was very well received, and it did exactly what we designed it to do. It set us up for the direct-to-consumer launch of the P90X supplement line in April. Promoting the P90X brand as a whole puts us in a strong position to build demand for both the P90X supplement and the brand new P90X ready-to-drink energy beverage. On the retail front, we're navigating the retailer's planogram reset timing, which governs when new products get on the shelf. So we don't control the growth as much as we'd like, but the interest is definitely real. As Mark outlined, Shakeology is seeing reorders in our test with Sprouts, and we just launched into 481 vitamin shop stores. And the P90X and Insanity energy beverage line will launch at retail in the second half of 2026. Our transition to the Shopify platform, which we completed right at the end of Q1, was achieved efficiently and with no business interruption. And honestly, The most exciting thing to come out of Q2, in my opinion, was the visibility Shopify has given us to areas where we can make dramatic improvements in the sales funnel, such as improving order conversion from existing traffic, improving engagement in the funnel, and reducing visitor bounce rate. Shopify ran a thorough audit for us and we're aggressively adjusting our landing pages and promotions to conform to best practices. will continue to see benefits with faster checkout using Shop Pay, better conversion, and the flexibility to run bundle and subscribe and save offers that we simply couldn't do on our old e-commerce platform. We see real opportunity to improve conversion further as we optimize our landing pages and site navigation. And we have new creative and marketing campaigns in development to build on that momentum. This is our top priority heading into the third quarter, especially as we set up for the prime health and fitness season in Q1 of 2027. Likewise, the shift to Shopify unlocks our ability to improve our HSA-FSA partnership with industry leader TruMed, which will make it much easier for qualified customers to use their HSA and FSA benefits to save on their purchase of eligible body products like Shakeology by using pre-tax dollars. Our 10-minute body initiative has proven to be a genuinely valuable addition to the catalog because it fills a need that a fitness app is uniquely qualified to meet versus gyms. We now have a massive catalog of over 400 micro-dose workouts between 5 and 10 minutes long for people who are only getting started on their fitness journey or who simply have no more time than that. That very much includes GLP-1 users who the data shows are statistically under-exercising, even though their use of these weight loss medications makes resistance training all the more critical, even if it's just 10 minutes a day. And speaking of GLP-1s, here's something we didn't fully anticipate. Our superfood protein shake, Shakeology, is seeing real demand from that same GLP-1 audience. So we're leaning into that application in our advertising and on our landing pages. In early June, we launched 30-Day Booty Boost with a terrific new super trainer, Chase Collette, and the feedback on both the program and the trainer has been exceptional. It continues to add to what is the most substantial library of health and fitness content in the world. But the most important observation from Q2 is this. Our cost to acquire a customer through nutrition products like Shakeology, P90X, and others is substantially lower than the cost of acquiring a customer through fitness program advertising. So to act on that insight, we've inverted our media allocation toward nutrition advertising. That's driving more traffic to the site and that shift has an added benefit. It increases the visibility of these nutrition products and helps drive our retail presence at the same time as we expand our direct to consumer footprint. Q3, has been about integration and testing. We're putting the Shopify improvements to work across our e-commerce platform, taking advantage of the flexibility to test promotions and bundling configurations that used to be tedious, if not impossible, on our old technology. The move toward nutrition advertising has been productive and we expect the benefits of these changes to begin materializing at the end of this quarter and into Q4. We've launched a significant affiliate promotion in August, running in parallel with the launch of an exciting new lifting program from Shaun T. called Max Built, a simplified strength program launching in early September. It pairs extremely well with the P90X Supplement Stack, and it's well-timed to serve the households shifting back into their normal routine as the kids head back to school. And looking forward to the end of the year, We're particularly excited about our November promotions around Black Friday and Cyber Monday, which will be built around a brand new program and pre-workout supplement under the Insanity brand. We're just wrapping up principal photography on what we're calling Insanity Unhinged, led by one of the most recognizable faces in hybrid fitness, three-time High Rocks World Champion Hunter McIntyre. Sean T., who originated the Insanity program, has signed on as executive producer and is really supporting how we're making Insanity attractive to a broader audience with this iteration. I can tell you this program is going to be outstanding and it's the perfect launch heading into the end of the year and into Q1 of 2027. Taken together, what our Q2 results demonstrate is agility. Because we significantly reduced our operating expenses and moved on to Shopify, we can now iterate and operate with far more flexibility to test, to learn, and to reposition the business to return to growth as a multi-channel, nutrition-led company. That's exactly the platform we set out to build, and the team is doing outstanding work to continue making progress with our turnaround. Okay, with that, I'll turn it over to Brad Ramberg, our CFO, to walk you through the Q2 financial details and our guidance.

Brad? Thank you, Carl, and thank you, everyone, for joining the call today. I will review our second quarter results and provide our outlook for the third quarter of 2026. We continue to make significant progress on our transformation and in driving operating efficiency. For the quarter, revenue exceeded the midpoint of our guidance, and both net income and adjusted EBITDA exceeded the high end of our guidance. We generated our fourth consecutive quarter of both positive net income and operating income and our 11th consecutive quarter of positive adjusted EBITDA. For the quarter, total revenue was $49.6 million, a decrease of 8.6% sequentially and a decrease of 22.4% year over year. Keep in mind, revenues continue to be impacted in the near term by our shift from a multi-level marketing platform to our current omnichannel model. Turning to revenue by category, please note the direct year-over-year comparisons I'm about to disclose for digital and nutrition revenue are still skewed by the fact that 2026 numbers reflect the new business model versus the 2025 numbers, which still had a major component of revenue that was driven in part by the legacy MLM. As we move to Q3 of 2026, we'll be able to show a direct year-over-year comparison because the remaining legacy revenue associated with a former MLM will have burned off, and those customers who remain from that cohort will become part of the new body business models revenue base. I'll go into more detail regarding Q3 guidance later on the call. With that said, Digital revenue decreased 7.2% sequentially to $31.2 million and decreased 21.5% year-over-year. Digital revenues reflect continued pressure on our digital subscriptions, which decreased 6.2% sequentially to $760,000 and decreased 19.1% compared to the same period a year ago. The number of digital subscribers continues to be impacted by churn from our legacy file. However, the number of new subscribers has increased over the prior year period. Nutrition and other revenue decreased 10.9% sequentially to 18.5 million and decreased 23.7% year over year. Nutritional subscriptions increased approximately 16.7% sequentially to approximately 70,000 and were essentially flat to the same period a year ago. As our business evolves into a multi-channel model, generating higher one-time sales and retail sales, the nutrition subscription metric will become a less relevant KPI. Digital growth margin was 87.1%. decreasing approximately 30 basis points sequentially and approximately 60 basis points from the prior year. Our digital gross margin was in line with our target. Nutrition and other gross margin was 46.7%, flat sequentially and down approximately 470 basis points versus last year. Our nutrition and other gross margin was in line with our target, considering volume expectations and promotional efforts during the quarter. Consolidated Q2 gross margin was 72%, increasing 20 basis points sequentially and declining 30 basis points compared to the prior year. We're pleased to report the consolidated gross margin is at the high end of our estimated gross margin range of 69 to 72%. Operating expenses for the quarter decreased 5% sequentially and decreased 32.1% year-over-year to $34.1 million. Selling and marketing expense as a percent of revenue decreased approximately 310 basis points sequentially. The decrease compared to the prior quarter was due to seasonally higher media spend in Q1. Selling and marketing expense decreased approximately 840 basis points year over year to 31.5%. The significant improvement over prior year stems from eliminating the MLM seller compensation following our December 31, 2024 exit from the multi-level marketing channel. Enterprise technology and development expense was approximately 19.9% of revenue, increasing approximately 260 basis points sequentially and approximately 330 basis points year over year. The increase was primarily due to product development and revenue deleverage. G&A was 17.3% of revenue, increasing approximately 310 basis points sequentially through a lower capitalized labor and revenue deleverage and decreasing approximately 80 basis points year over year. Operating income for the quarter was $1.7 million compared to $3.1 million in the prior quarter and an operating loss of $4 million in the prior year period. marking our fourth consecutive quarter of positive operating income. Net income for the quarter was $1.4 million compared to $2.3 million in the prior quarter and a net loss of $5.9 million in the prior year period, marking our fourth consecutive quarter of positive net income. Adjusted net income was $0.9 million for the quarter compared to 2.5 million in the prior quarter and an adjusted net loss of 2.8 million in the prior year period. Adjusted EBITDA was 6.7 million compared to 8.0 million sequentially and 4.6 million in the prior year period, marking our 11th consecutive quarter of positive adjusted EBITDA. Our adjusted EBITDA margin was approximately 13.4% in the quarter, our fourth consecutive quarter of double-digit adjusted EBITDA margins. Now turning to the balance sheet. Our cash balance was $32.4 million compared to $36.6 million in the prior quarter and $39 million at the end of last year. Our net cash position was $8.8 million. As Mark mentioned, we're also pleased to announce that on August 3rd, we amended our credit agreement to a more flexible covenant structure, which reflects our lenders' continued confidence in the long-term trajectory of our business. For the six months ended June 30, 2026, cash used in operating activities was $4.3 million compared to cash provided by operating activities of $6.6 million in the prior year period. And cash used in investing activities was $1.4 million compared to $2.5 million in the prior year period. Free cash flow was negative $5.7 million compared to $4.1 million generated in the prior year period. The decline in free cash flow in the current year is primarily due to cash use for inventory purchases as we have shifted our focus to nutrition and our retail rollout and a continued decline in deferred revenue. Now turning to our third quarter guidance. As mentioned previously, Q3 will be the first quarter since winding down our legacy MLM model that we're able to compare our new business model year over year. We expect third quarter revenues to be in the range of $44 million to $48 million, net income to be in the range of negative $3 million to break even, and adjusted EBITDA to be in the range of $3 million to $6 million. For the quarter, we continue to anticipate revenues to approximate 60% digital and 40% nutrition and other. However, in line with the strategies articulated on this call, we currently expect a shift by the end of 2026 to a larger percentage of our business being in nutrition and the attendant margins that come along with it. For the quarter, our digital growth margin target is expected to be in the range of 86% to 88%. Our nutrition and other growth margin target is forecast to be in the range of 42% to 45%, which is in line with our volume expectations and certain promotional efforts planned. Our total growth margin target is expected to be in the 68% to 71% range. In closing, we continue to make considerable progress against our business transformation. We strengthened our financial position and lowered our break-even points, putting us on a solid foundation to execute against our growth initiatives that will drive long-term shareholder value. I look forward to updating you on our progress on our next earnings call. I'll now turn the call back over to Mark for closing remarks.

Thank you, Brad. Thank you, everyone. We will now turn it over to Sarah, who will get people into the Q&A queue so we can go through, because I see there's some people waiting there. So, Sarah, can you please process those with questions?

Yes, we will now begin the question and answer session. Everyone, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Susan Anderson with Canaccord Genuity. Your line is open. Please go ahead. Hi, good evening.

Thanks for taking my questions. I was wondering about, so it looks like the nutritional segment is starting to see some traction there. I guess I'm curious, is that being driven by, you know, the rollout to, say, vitamin shops, Sprouts, Amazon, etc.? ? Are you seeing that really kind of drive the sales there? Or I guess, is it related to the increased marketing spend that you spent in the quarter? And then also, what should we expect from marketing going forward? Thanks.

Hey, Susan. Thanks for the question. No, it's organic. It's not from the retail yet because Sprouts is doing great, but we got the initial order from Sprouts, put it into Kahey, who feeds Sprouts. So while they have reordered and it's doing well, that's really not what's reflected there. And the vitamin shop just started literally this week. So that's a Q3 number, not Q2. So what you're seeing is Q2 organic traction in nutrition and as a result of the pivot that we announced a couple months ago where we're putting more of our money into the nutritional marketing. In terms of going forward, yes, we expect to see more traction on Amazon. We just launched recently the 7Serve Shakeology, as you know. We used to sell the 30Serve bag on that for like $149. Now we've got a 7Serve that's selling at $34.99, which is a huge difference. And P90X just this week. went up, actually just at the end of last week, went up on Amazon for the first time. So on a go-forward basis, we should see Amazon become a little bit more of a factor. We may look at some other marketplaces. We will have retail rollouts continuing, hopefully get sell-through and replenishment from Vitamin Shoppe, from Sprouts. And then as we move toward the end of this year, Susan, and into the beginning of 27, we should have a broader distribution footprint for both Shake and P90X. And we will also have the SoCal test market results in full swing for the Insanity Liquid Shock Energy Drink and the P90X Energy Drink.

Okay, great. That sounds exciting. And then maybe just one follow-up on the digital side. Maybe if you could just talk about the consumer response, what it's been to the 10-minute body programs that you've rolled out. How are those trending? And then also, I guess, what are you doing around the marketing on the digital front to get new customers into the brand? Thanks.

Thanks, Susan. We're continuing the playbook that we started with the 10-Minute Body Series. as a complement to the overall subscription plus its own unique subscription for $10 a month. I would say the most interesting finding there is that how it is proving to be applicable for GLP-1 users. So we're really riding in the tailwind of the growth of the GLP-1 segment as these are people who are Generally under exercising, according to statistics and our GLP-1 fitness formula, the 10-minute program that we designed for that, plus the overall catalog specifically for the 10-minute beginner program is definitely appealing to that segment. So our advertising, that is putting GLP-1 messaging forward, is benefiting both the 10-minute series plus our catalog overall from a digital perspective. And I'll add, It's also benefiting Shakeology, which is a great nutritional complement to people who are taking a GLP-1. So overall, I would say that the 10-Minute Body has been successful for us. Otherwise, as I mentioned, we've got the 30-Day Booty Boost that came out this summer, which got very warm reception. And we have a new program called Max Built coming from Sean T., which I'm personally excited about because it's a simpler approach to weightlifting resistance training, which aligns very well with the P90X supplement story for people who want to increase their metabolic health, improve bone density, and overall just improve their metabolism with weightlifting. So we continue to build the catalog in a way that is both on trend, complements the overall catalog, and expands the catalog with these short-form workouts, microdose fitness workouts, so that we're appealing to the customer who might not be interested in going to the gym. They're not going to do 10-minute workouts at the gym. They're going to do it at home, and that's where we really appeal with this catalog.

Okay, great. That's exciting. I'll go ahead and toss it on. Good luck the rest of the year.

Thanks, Susan.

Your next question comes from the line of Michael Kopunsky with Noble Capital Markets. Your line is open. Please go ahead.

Thank you, and good afternoon, everyone. Mark, I was wondering if you can just provide us some early indications from Shakeology's rollout and Sprouts. I know that you were talking about that you're already getting some reorders, but I was wondering if you had any early indications in terms of sell-through, repeat purchases, or probably more importantly, I would think, what the performance is relative to the retailer's expectations, and then maybe what you have learned from the rollout that could influence your much broader rollout.

Great question, Michael. Here's what I can tell you. We were originally, as you know, in 90 Sprout stores. Then we got expanded, I think, to 110. Now I think we're up to 131. So they've continued to expand within Sprouts. I think some of the Sprouts store GMs are seeing what's being posted about what's selling through. One. Two, Kehi, our distributor, actually ran low on stock from what we had originally sold into them. So there was a little bit of a gap and they had to reorder, which of course is a good thing because that means that it's selling through well. at Sprout. So they've expanded our store count. We're 40 stores more now than we were then, which is a 45% increase from the 90 where we were at. And so we're feeling really good about that. And we will start to get specific sell-through data as we move forward. But thus far, they're happy with it, evidence the 45% expansion of the stores that we're in. And KG obviously is happy because they were running low on goods and had a reorder from us. So all of that's a good thing.

Gotcha. And I know that the free cash flow was a little negative. I was just wondering if you can talk a little bit about cash usage. I assume it's associated with the preparing for retail expansion. Just wondering when we should start to see working capital begin to normalize on that.

Hi, Michael. This is Brad. Yes, you're absolutely right. So the decline in free cash flow was due to two things. One, primarily an increase in inventory as we shifted the strategy to more nutrition and the retail rollout. We needed to invest a little bit in inventory. And then likewise, as we shifted to inventory, we have a little less deferred revenue. So the decline in free cash flow was due to those two factors.

Gotcha. And then you've been highlighting more flexible covenant structure on your new credit agreement. I was just wondering if you could just talk a little bit about the changes and maybe how this might give you the ability to invest in growth or deploy capital. I was just wondering if you could just give some color there.

Yeah. I mean, thanks, Michael. But the lender and we meet all the time. As you know, they're very happy with how we're operating this business. I mean, the fact that we've made almost $80 million over the past 11 quarters in EBITDA has been very impressive to them. So what we did was we renegotiated the covenant package so that the thresholds are even lower than they were, so there's not anything to be concerned about, one. And two, as you remember, we used to have to have $4.6 million above the outstanding debt level in order to not test covenants. That was going to be about $29.6 million. That has now been lowered by almost $7 million to $22.5 million. So what does that do? It buys us $7 plus million of additional cushion vis-a-vis the hurdle rate that they use to measure the covenants. So as long as we keep our cash balance above that $22.5 million level, then the covenants never get tested. And so we have that, plus we have the $18 million minimum liquidity against the $25 million outstanding loan. So much better situation, lower metrics in terms of hurdles to hit on billable subscribers, billings. So it's just an overall response from the lender that they recognize the operational excellence that we've had in this turnaround. And they've given us essentially more room to operate with all of these growth initiatives in front of us.

Yeah, that's terrific. One last question. Just a little bit about your Q3 guide, your revenue of 44 to 48 million. What are the major variables that would determine whether or not those results land at the high end or the low end of those ranges?

This is Carl. I would say that it's really looking at the market dynamics, meaning we have said for a couple of years that we want to be pursuing revenue that is profitable, right? Not just revenue or billings for billing's sake. So the variables are obviously efficiency of media. And also, we're looking at the variables of how the sell-through at retail continues to go. So we're balancing those factors, but not being overly optimistic that the marketplace is going to respond to any one particular promotion. So we're cautiously optimistic about what we're pursuing right now in the launch of MaxBuilt and the launch of the P90X supplements on Amazon. And how those will relate, how the marketing will all contribute to all channels performing is sort of the unknown. But ultimately, we're going to do it in the most efficient way possible to get the most out of our media spend.

So, Michael, the best thing for you to think about as an analyst would be if you look at the buckets. So you've got a legacy bucket. People who've been here, Renew, etc. Then you got the newly acquired DTC customers. Some of them are one-time nutritional purchasers. Some of them are subscribers. And then you've got these subscribers that you get on the digital side. Then you've got the marketplaces, the principal one being Amazon. Now that you've got these new products on Amazon, if you want to try to get to the high end of that range or better or whatever the case may be, that performance will also be critical. And then lastly, but much less, you have the retail component. Because as the retail rollouts start to occur, the orders will start to roll in, but you're going to have some free-fill orders and slotting, et cetera, that occurs. So the Q3 revenue will not be wholly dependent at all on any one element. And if I had to rank them, I would say it would be Legacy 1, DTC 2, Marketplaces 3, Retail 4. Now, we have this discussion in Q1, Q2 of 2027. We'll have a different mix. But for right now, that's what we're looking at.

Great. Thanks, Mark, for the color. I appreciate that. That's all I have. Thank you. Thank you, Michael.

Your next question comes from the line of Alex Hantman with Sudoti and Company. Your line is open. Please go ahead.

Thank you, and good afternoon, everybody. Maybe just to piggyback on the retail rollout, can we talk about Vitamin Shop? I know it's live at a little under 500 stores. I think that was ahead of the fall timeline you discussed in June. So I was curious what pulled the launch forward and how you think about building towards the full chain.

Yeah, Alex, great to hear from you. Listen, they were great. They're very excited about this. I mean, they've really gotten behind it such that we were able to get in those stores probably two to three, two to four weeks ahead of when we thought. So the folks at Vitamin Shop have been great partners. They're very bullish on the opportunity, as are we. And so, yeah, so that's what's going on. And we're in 481 of those stores. And we just got in there a couple days ago. And we have a whole plan that we're laying out for the next several months on how to try to support Vitamin Shoppe and our distribution there. But, yeah, we're looking for really good things.

Great. Thanks, Mark. And I know, you know, you touched on the sample sets and the prepared remarks. My understanding is November, April, planogram resets. Is there any update on how many decisions might land for the next window?

It's a great question. Carl and I just had a status meeting on that with the team four days ago. And I think there are 12 decisions pending. between middle of September and the end of November. So we'll wait to see how those go. Listen, right now, in addition to Vitamin Shop and Sprouts, which combined are about 610 doors, I think altogether we have another 100, 150 doors on top of that. And that's going to continue to roll and gain momentum. Getting in Vitamin Shop and getting P90X and Shakeology Factor on Amazon and being now in 131 Sprouts will help the other retailers who are looking at and considering Shake and P90X. It will definitely help because those are pinnacle retailers that a lot of other retail buyers look to for proof of concept, etc. So that's what you'll start to see probably as we get into the middle of Q4.

Great context. Thank you, Mark.

Sure.

Thank you.

Your next question comes from the line of Eric Delorier with Craig Halla Capital Group. Your line is open. Please go ahead.

Great. Thanks for taking my questions. Congrats on another strong bottom line quarter and the great progress with Sprouts. Thanks, Eric. My first question here is just on the P90X Amazon launch. I think you said this just launched recently. I believe you've had Shakeology on Amazon for about a year or two now. How have those learnings from Shakeology sort of informed your P90X strategy on Amazon? And then overall, as you, or I guess as Amazon potentially becomes a larger mix of sales, how does that sort of impact your customer acquisition, retention efforts? Overall, how should we think about the sort of roadmap for product launches on Amazon and the kind of impact that you have on your model?

Well, the one thing to think about, as you asked about Shakeology performance on Amazon over the last, call it year and a half, is we were basically selling a 30 serve that we normally sell for $129.95. That thing was on Amazon for $149 to $169, which is, you know, Not to be humorous, it's like you're in charge of sales prevention. That's not what's going on in Amazon. People are buying Amazon products for between $29 and $69. And so we were on Amazon, but we were being protective of that former business model, the MLM, that we couldn't undercut. We have just now started to seed the multiple SKUs of Shakeology in the seven-serve bag. which is a $34.95 product, which is a completely different pitch to the consumer. Same thing on P90X. We just got up in Amazon. It was like four days ago. But that line is a $15 to $39.95 product line. So between Shake and P90X, everything that we're selling other than the big bag, which will still be there, Everything is sub $40. That opens up a whole lot. Because as you know, in most nutrition companies, and I don't know how it will be for us, but most nutrition companies do 25% to 30% of their total revenue on Amazon. These are all of the nutrition companies that you know. So how it will play out for us, don't know yet. But we were with one arm behind our back before because of our price points and because of the limitations. that the MLM had placed on our pricing. Those shackles are now gone. So we got pricing, we got form factor, we got distribution. So there's a much bigger opportunity there. And in terms of retaining those customers, look, they'll either retain by coming to us for a repurchase or they'll go back to Amazon. Either way, we're happy. What we want to do is get a wider aperture of distribution and therefore get more customers. And whether they buy it from us or they buy it directly on Amazon or they buy it at Sprouts or Vitamin Shop or wherever else, we're happy regardless. And that assumption mix is what went into Brad's guidance that he gave you on nutritional gross margins.

That's certainly exciting. I'll be excited to track that progress. You also called out a meaningful share of nutrition customers that are converting to digital subscriptions. I was wondering if you could share any more detail on that and just overall how that might compare to your internal expectations.

I don't think we break that out individually, but we're offering everybody who comes in on a nutrition subscription gets a 30-day trial into the digital subscription. So if they don't cancel, they renew into a monthly subscription and have the opportunity then to upgrade. You can imagine in a world where supplements are growing so quickly, we're definitely seeing the improvement in demand and efficiency increase. on the front end by selling nutritionals, but it's also an additional value add or increases the value proposition by offering a free month of digital subscription and access to 225 fitness programs that we've developed over 20 years that people are getting that additional value with their purchase. So we're pleased with the number of starts that we're getting from the digital subscription being attached to nutritionals. We haven't implemented that out into retail yet, but we do think, as we've mentioned before, that that'll be a part of our strategy of the value equation that we can offer uniquely.

That's great, Cole. I appreciate that. And then just last one from me. You called out a few insights you learned from Shopify in terms of So it's overall optimizing the user experience and minimizing friction. You mentioned aggressively adjusting the website. So I guess we have a little over kind of three months until the holiday season. How confident do you feel in being able to get all those adjustments done in time? Just any other color that you want to share on some of those improvements you're making? It would be great. Thank you.

Yeah, thank you. This is the thing I'm most excited about because we can easily – Watch the KPIs as these things improve. Harmonizing the front end ads with the landing pages is something that is a best practice of Shopify, obviously. And this gives us the ability now to show the actual price that somebody is going to get from a special offer or special promotion, which both improves traffic from the front end, but then add to cart and ultimate conversion on the back end. So we are rapidly iterating. And in fact, have one of the best companies that works with Shopify clients to make improvements to our landing pages so that we can increase our conversion. We've recently started to consolidate landing pages. So we had multiple URLs that are now coming right into the Shopify platform. So we're getting all this organic traffic coming into a better performing, a better converting website experience that people are familiar with. rather than our old e-commerce platform, which was unique to us. So I think as we go into Black Friday, Cyber Monday, we're definitely going to see the benefits of the Shopify platform and that familiarity and the fact that people already have accounts with Shopify. That'll in order the benefit of the promotions that we have going into the holidays in Q1.

Well, you have a lot of exciting things upcoming. Congrats on all the progress, guys. Looking forward to seeing what else comes up. Thanks.

Thanks, Eric.

Appreciate you.

There are no further questions at this time. I will now turn the call back over to Mark Goldstein.

Thank you, Sarah. And thanks, everybody, for attending. As always, if you have any questions, et cetera, please reach out to the company. We are going to be presenting tomorrow at the Canaccord Conference here at Canaccord Growth here in Boston. And so we will have a webcast of that. And again, we look forward to keeping you informed on our progress as we talk to you on the next quarter earnings call. So thanks very much. Have a great evening.

This concludes today's call. Thank you for attending. You may now disconnect.