Beachbody Company Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
BODI$4.25-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-06.
0000950170-24-053684
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000950170-24-091973
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 134 current paragraphs.
64 unchanged; 38 reworded; 28 added; 13 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 13 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
Total revenue was $110.2 million, an 18% decrease;
Current report
Digital revenue was $58.8 million, a 10% decrease;
Current report
Nutrition and other revenue was $50.1 million, a 22% decrease;
Current report
Connected fitness revenue was $1.3 million, a 74% decrease;
Current report
Operating expenses was $85.9 million, compared to $106.9 million;
Current report
Net loss was $10.9 million, compared to net loss of $25.7 million; and
Current report
For the six months ended June 30, 2024, as compared to the six months ended June 30, 2023:
Current report
Total revenue was $230.2 million, an 18% decrease;
Current report
Digital revenue was $120.3 million, a 7% decrease;
Current report
Nutrition and other revenue was $105.6 million, a 24% decrease;
Current report
Connected fitness revenue was $4.3 million, a 61% decrease;
Current report
Operating expenses was $178.0 million, compared to $225.7 million;
Current report
Net loss was $25.1 million, compared to net loss of $54.9 million; and
Current report
Adjusted EBITDA was $9.5 million, compared to a loss of $5.7 million.
Current report
In connection with the Fifth Amendment, on the Fifth Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $4.0 million along with the related prepayment premium of 3% ($0.1 million) and accrued interest. The partial prepayment of $4.0 million was accounted for as a partial debt extinguishment and the Company wrote off the proportionate amount of unamortized debt discount and debt issuance costs as of the Fifth Amendment Effective Date ($0.6 million) which in addition to the prepayment premium ($0.1 million) was recorded as a loss on partial debt extinguishment of $0.7 million in the three and six months ended June 30, 2024.
Current report
The decrease in digital revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to a $10.3 million decrease in revenue from our digital streaming services due to 25% fewer subscriptions on lower demand partially offset by the transition of all digital subscriptions to the higher priced BODi subscription over the past year and a decrease of $1.1 million in fees from Partners due to a 27% decrease in the number of Partners, partially offset by an increase in digital program sales of $1.3 million.
Current report
The decrease in connected fitness revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to an approximate 50% decrease in the number of bikes delivered from approximately 10,200 for the six months ended June 30, 2023 to approximately 5,100 for the six months ended June 30, 2024 and an approximate 22% decrease in the average sales price for a bike.
Current report
The decrease in digital cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a $1.8 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets, a $1.3 million decrease in the amortization of content assets as the result of lower production spend and a $1.1 million decrease in digital content revisions. The increase in digital gross margin for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily as a result of the decrease in expenses as noted above.
Current report
The decrease in connected fitness cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was driven by a $2.3 million decrease in freight, fulfillment and shipping expenses and a $1.3 million decrease in product costs, as the result of an approximate 70% decrease in the number of bikes delivered, and lower inventory reserve adjustments of $2.0 million. The decrease in connected fitness gross margin for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily as a result of fixed expenses on lower connected fitness revenue and due to the decrease in the average sales price for a bike.
Current report
The decrease in nutrition and other cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $5.0 million decrease in product costs and a $3.1 million decrease in fulfillment and shipping expenses related to the decrease in nutrition and other revenue, a $2.9 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets, a $1.7 million decrease in customer service expense due to a decrease in the volume of contacts related to nutrition and other revenue and lower inventory adjustments of $1.6 million. Nutrition and other gross margin increased for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily as a result of the decrease in depreciation expense.
Current report
The decrease in connected fitness cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was driven by a $4.2 million decrease in product costs and a $2.3 million decrease in freight, fulfillment, and shipping expenses, as the result of an approximate 50% decrease in the number of bikes delivered, and lower inventory adjustments of $2.5 million. The connected fitness negative gross margin for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was flat.
Current report
Enterprise technology and development expense as a percentage of total revenue increased by 180 bps due to the decrease in revenue at a faster pace than the reduction in enterprise technology and development expenses.
Current report
The decrease in enterprise technology and development expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $2.4 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets.
Current report
The slight increase in general and administrative expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to the modification of certain stock awards for employees who were terminated in the prior year period which reduced general and administrative expenses by $0.4 million in the three months ended June 30, 2023.
Current report
General and administrative expenses as a percentage of total revenue increased by 240 bps due to the increase in general and administrative expenses and the decrease in revenue.
Current report
General and administrative expense as a percentage of total revenue increased by 60 bps due to the decrease in revenue at a faster pace than the reduction in general and administrative expenses.
Current report
Income Tax (Provision) Benefit
Current report
Agreement, would constitute a condition of default and would allow Blue Torch to accelerate the maturity of all indebtedness under the Financing Agreement. If such acceleration were to occur, we would likely have to seek an amendment and/or waiver of the impacted financial covenant or repay the debt with proceeds from the issuance of new debt or equity, or asset sales, if necessary. We may be unable to amend the Financing Agreement or raise sufficient capital to repay such obligations in the event the maturity is accelerated. See Note 9, Debt, for additional information on the Term Loan.
Removed paragraphs (13)
Previous report
Total revenue was $120.0 million, a 17% decrease;
Previous report
Digital revenue was $61.5 million, a 5% decrease;
Previous report
Nutrition and other revenue was $55.5 million, a 25% decrease;
Previous report
Connected fitness revenue was $3.0 million, a 50% decrease;
Previous report
Operating expenses were $92.1 million, compared to $118.8 million;
Previous report
Net loss was $14.2 million, compared to a net loss of $29.2 million; and
Previous report
Sale/Leaseback of Property
Previous report
On February 29, 2024, we sold our Van Nuys production facility which had a net carrying value of $4.8 million at December 31, 2023, for $6.2 million. Simultaneous with the sale we entered into a five year lease of the facility at an annual base rate of $0.3 million per year. The Company used the proceeds received from the sale to make a partial prepayment of $5.5 million on the Term Loan. The Company also entered into the Fourth Amendment (as defined below) which amended the minimum liquidity financial covenant. See Note 6, Property and Equipment, Net and Note 9, Debt, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the sale and leaseback of this facility and the Fourth Amendment.
Previous report
2024 Restructuring
Previous report
In January 2024, the Company executed cost-reduction initiatives primarily related to the Company's key initiatives. These actions resulted in approximately $1.6 million in costs consisting primarily of termination benefits during the first quarter of 2024.
Previous report
Term Loan Amendment No. 5
Previous report
The decrease in connected fitness cost of revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was driven by a $2.9 million decrease in product costs and a decrease in inventory adjustments of $0.4 million. The decrease in product costs was primarily due to a 24% decrease in the number of bikes delivered in the current quarter as compared to the prior year quarter as well as the bikes delivered in the current quarter had a lower carrying value than the bikes delivered in the prior year quarter. The connected fitness improvement in gross margin for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily as a result of the lower carrying value of the bikes that were delivered in the three months ended March 31, 2024.
Previous report
Income Tax Provision
Reworded paragraphs (38)
Previous wording
BODi is a leading subscription health and fitness company. We focus primarily on digital content, supplements, connected fitness, and consumer health and fitness. Our goal is to continue to provide holistic health and fitness content, subscription-based solutions and digital program sales. We are the creator of some of the world’s most popular fitness programs, including P90X, Insanity, and 21 Day Fix, which transformed the at-home fitness market and disrupted the global fitness industry by making it accessible for people to get results—anytime, anywhere. Our comprehensive nutrition-first programs, Portion Fix and 2B Mindset, teach healthy eating habits and promote healthy, sustainable weight loss. These fitness and nutrition programs are available through our BODi streaming service.
Current wording
BODi is a leading fitness and nutrition company. We focus primarily on digital content, supplements, connected fitness, and consumer health and fitness. Our goal is to continue to provide holistic health and fitness content, subscription-based solutions and digital program sales. We are the creator of some of the world’s most popular fitness programs, including P90X, Insanity, and 21 Day Fix, which transformed the at-home fitness market and disrupted the global fitness industry by making it accessible for people to get results—anytime, anywhere. Our comprehensive nutrition-first programs, Portion Fix and 2B Mindset, teach healthy eating habits and promote healthy, sustainable weight loss. These fitness and nutrition programs are available through our BODi streaming service.
Previous wording
Our revenue is generated primarily through our network of Partners, social media marketing channels, and direct response advertising. Components of revenue include recurring digital subscription revenue, revenue from the sale of nutritional and other products, and connected fitness revenue. In addition to selling individual products on a one-time basis, we bundle digital and nutritional products together at discounted prices.
Current wording
Our revenue is generated primarily through our network of Partners, social media marketing channels, and direct response advertising. Components of revenue include recurring digital subscription revenue, digital program sales, revenue from the sale of nutritional and other products, and connected fitness revenue. In addition to selling individual products on a one-time basis, we bundle digital and nutritional products together at discounted prices.
Previous wording
Adjusted EBITDA was $4.6 million, compared to a loss of $0.9 million.
Current wording
Adjusted EBITDA was $4.9 million, compared to a loss of $4.8 million.
Previous wording
On April 5, 2024 (the "Fifth Amendment Effective Date"), the Company and Blue Torch entered into Amendment No. 5 to the Financing Agreement (the "Fifth Amendment"), which amended, among other things, certain terms of the Financing Agreement including without limitation, to (1) amend the minimum revenue financial covenant and (2) amend the minimum liquidity financial covenant. In connection with the Fifth Amendment, on the Fifth Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $4.0 million (which amount was classified as a current obligation at March 31, 2024) along with the related prepayment premium of 3% ($0.1 million) and accrued interest. The Company also incurred a 2% fee as paid in kind on the outstanding Term Loan balance prior to the prepayment (fee of $0.6 million).
Current wording
On April 5, 2024 (the "Fifth Amendment Effective Date"), the Company and Blue Torch entered into Amendment No. 5 to the Financing Agreement (the "Fifth Amendment"), which amended, among other things, certain terms of the Financing Agreement including without limitation, to (1) amend the minimum revenue financial covenant and (2) amend the minimum liquidity financial covenant.
Previous wording
See Note 15, Subsequent Events, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly report for additional information on the Fifth Amendment and amendments to the Term Loan Warrant.
Current wording
See Note 9, Debt, for additional information on the Fifth Amendment and amendments to the Term Loan Warrants.
Previous wording
(1) See “Non-GAAP Information” below for a reconciliation of net loss to Adjusted EBITDA and an explanation for why we consider Adjusted EBITDA to be a helpful metric for investors.
Current wording
(1) Please see “Non-GAAP Information” below for a reconciliation of net loss to Adjusted EBITDA and an explanation for why we consider Adjusted EBITDA to be a helpful metric for investors.
Previous wording
We use month-over-month digital subscription retention, which is defined as the average rate at which the total subscriber file is retained for the next period, to measure customer retention. For example, a 95% average digital retention rate would correspond with retaining each month an average of 95% of digital subscribers existing at the beginning of that month. A 95% average digital retention rate would translate into a loss at the end of the quarter of approximately 15% of the subscribers existing at the beginning of the quarter. This calculation excludes new customer acquisitions or subscribers added in a specific month, so this calculation can never exceed 100%.
Current wording
We use month-over-month digital subscription retention, which is defined as the average rate at which the total subscriber file is retained for the next period, to measure customer retention. For instance, a 95% average digital retention rate would correspond with retaining each month an average of 95% of digital subscribers existing at the beginning of that month. A 95% average digital retention rate would translate into a loss at the end of the quarter of approximately 15% of the subscribers existing at the beginning of the quarter. This calculation excludes new customer acquisitions or subscribers added in a specific month, so this calculation can never exceed 100%.
Previous wording
We include this non-GAAP financial measure because it is used by management to evaluate BODi’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA excludes certain expenses that are required in accordance with GAAP because they are non-cash (for example, in the case of depreciation and amortization and equity-based compensation) or are not related to our underlying business performance (for example, in the case of restructuring costs, interest income and expense).
Current wording
We include this non-GAAP financial measure because it is used by management to evaluate BODi’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA excludes certain expenses that are required in accordance with GAAP because they are non-cash (for example, in the case of depreciation and amortization and equity-based compensation) or are not related to our underlying business performance (for example, in the case of interest income and expense).
Previous wording
Represents the loss related to the $1.0 million and $5.5 million partial debt prepayments that the Company made on January 9, 2024 and February 29, 2024, respectively.
Current wording
Represents the loss related to the $1.0 million, $5.5 million and $4.0 million partial debt prepayments that the Company made on January 9, 2024, February 29, 2024 and April 5, 2024, respectively.
Previous wording
Includes restructuring expense and personnel costs associated with the Company's key initiatives during the three months ended March 31, 2024 and with executing our key growth priorities during the three months ended March 31, 2023.
Current wording
Includes restructuring expense and personnel costs associated with the Company's key initiatives during the three and six months ended June 30, 2024 and executing our key growth priorities during the three and six months ended June 30, 2023.
Previous wording
The decrease in digital revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily attributable to a $5.5 million decrease in revenue from our digital streaming services due to 30% fewer subscriptions on lower demand and a decrease of $0.5 million in fees from Partners as there was a 27% decrease in the number of Partners, partially offset by digital program sales of $2.5 million which were not sold in the prior year period.
Current wording
The decrease in digital revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to a $4.8 million decrease in revenue from our digital streaming services due to 25% fewer subscriptions on lower demand partially offset by the transition of all digital subscriptions to the higher priced BODi subscription over the past year, a decrease in digital program sales of $1.2 million and a decrease of $0.5 million in fees from Partners as there was a 27% decrease in the number of Partners.
Previous wording
The decrease in nutrition and other revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily attributable to a $14.4 million decrease in revenue from nutritional products due to 28% fewer nutritional subscriptions on lower demand, a $2.5 million decrease in revenue generated from our preferred customer fees as there was a 34% decrease in preferred customers and a $1.3 million decrease in event ticket sales due primarily to the decrease in the number and length of events.
Current wording
The decrease in nutrition and other revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to a $10.5 million decrease in revenue from nutritional products due to 26% fewer nutritional subscriptions on lower demand, a $2.2 million decrease in revenue generated from our preferred customer fees as there was a 31% decrease in preferred customers and a $0.9 million decrease in event ticket sales due primarily to the decrease in the number of, length of and attendance at events.
Previous wording
The decrease in connected fitness revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a 27% decrease in the average sales price for a bike and a decrease in bikes delivered from approximately 4,700 for the three months ended March 31, 2023 to approximately 3,500 for the three months ended March 31, 2024.
Current wording
The decrease in connected fitness revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an approximate 70% decrease in number of bikes delivered from approximately 5,500 for the three months ended June 30, 2023 to approximately 1,600 for the three months ended June 30, 2024 and an approximate 9% decrease in the average sales price for a bike.
Previous wording
Connected fitness cost of revenue consists of product costs, including bike and tablet hardware costs, duties and other applicable importing, shipping, fulfillment, warehousing and logistics costs, costs associated with service calls and repairs of products under warranty, payment processing and financing fees, customer service expenses, and personnel-related expenses associated with supply chain and logistics.
Current wording
Connected fitness cost of revenue consists of product costs, including bike and tablet hardware costs, duties and other applicable importing costs, shipping, fulfillment, warehousing and logistics costs, costs associated with service calls and repairs of products under warranty, payment processing and financing fees, customer service expenses, and personnel-related expenses associated with supply chain and logistics.
Previous wording
The decrease in nutrition and other cost of revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a $2.0 million decrease in product costs and a $1.6 million decrease in fulfillment and shipping expense related to the decrease in nutrition and other revenue, lower inventory adjustments of $1.7 million, a $1.7 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets and a $1.0 million decrease in customer service expense due to a decrease in the volume of contacts related to nutrition and other revenue. The increase in nutrition and other gross margin for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily as a result of the decrease in inventory adjustments, depreciation expense and customer service.
Current wording
The decrease in nutrition and other cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a $3.0 million decrease in product costs and a $1.6 million decrease in fulfillment and shipping expenses related to the decrease in nutrition and other revenue, a $1.2 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets and a $0.7 million decrease in customer service expense due to a decrease in the volume of contacts related to nutrition and other revenue. The increase in nutrition and other gross margin for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily as a result of the decrease in depreciation expense.
Previous wording
The decrease in digital cost of revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a $1.2 million decrease in depreciation and a $1.0 million decrease in digital content amortization as a result of the end of the useful life of certain assets and a $0.3 million decrease in digital content revisions partially offset by a $0.7 million increase in customer service. The increase in digital gross margin for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily as a result of the decrease in depreciation and amortization.
Current wording
The decrease in digital cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was due to a $3.0 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets, a $2.4 million decrease in digital content amortization as a result of lower production spend and a $1.4 million decrease in digital content revisions. The increase in digital gross margin for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily as a result of the decrease in depreciation expense and digital content amortization.
Previous wording
Selling and marketing expenses primarily include the cost of Partner compensation, advertising, royalties, promotions and events, and third-party sales commissions as well as the personnel expenses for employees and consultants who support these areas. Selling and marketing expenses also include depreciation of certain software and amortization of contract-based intangible assets (in the 2023 period). Selling and marketing expense as a percentage of total revenue may fluctuate from period to period based on total revenue, timing of new content and nutritional product launches, and the timing of our media investments to build awareness around launch activity.
Current wording
Selling and marketing expenses primarily include the cost of Partner compensation, advertising, royalties, promotions and events, and third-party sales commissions as well as the personnel expenses for employees and consultants who support these areas. Selling and marketing expense as a percentage of total revenue may fluctuate from period to period based on total revenue, timing of new content and nutritional product launches, and the timing of our media investments to build awareness around launch activity.
Previous wording
The decrease in selling and marketing expense for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a $11.4 million decrease in Partner compensation as a result of the decrease in the number of Partners, lower commissionable revenue and an approximate 20% decrease in the commission rate paid to Partners that started at the beginning of January 2024, a $2.7 million decrease in event expenses due primarily to a decrease in the number and length of events, a $1.5 million decrease in personnel-related expenses due to lower headcount primarily related to the restructuring activities that occurred in the past year and a $1.1 million decrease in the amortization of intangible assets due to the impairment of the remaining intangible asset balance in the fourth quarter of 2023.
Current wording
The decrease in selling and marketing expense for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an $11.5 million decrease in Partner compensation as a result of the decrease in the number of Partners, lower commissionable revenue and a decrease in the commission rate paid to Partners that started at the beginning of January 2024, a $5.6 million decrease in event expenses due primarily to a decrease in the number of, length of and attendance at events, a $1.2 million decrease in personnel-related expenses due to lower headcount primarily related to the restructuring activities that occurred in the past year and a $1.1 million decrease in the amortization of intangible assets due to the impairment of the remaining intangible asset balance in the fourth quarter of 2023.
Previous wording
Selling and marketing expense as a percentage of total revenue decreased by 340 basis points ("bps") primarily due to the decrease in Partner commissions and event expense.
Current wording
Selling and marketing expense as a percentage of total revenue decreased by 560 basis points ("bps") primarily due to the decrease in Partner compensation and event expenses.
Previous wording
General and administrative expense as a percentage of total revenue decreased by 100 bps due to the decrease in expenses noted above.
Current wording
Selling and marketing expense as a percentage of total revenue decreased by 450 bps primarily due to the decrease in Partner compensation and event expenses.
Previous wording
Enterprise technology and development expenses includes maintenance and enhancements of the Company’s enterprise resource planning system, which is the core of our accounting, procurement, supply chain and other business support systems and primarily relate to enterprise systems applications, hardware, and software that serve as the technology infrastructure for the Company and are not directly related to services provided or tangible goods sold. Enterprise technology and development also includes reporting and business analytics tools, security systems such as identity management and payment card industry compliance, office productivity software, research and development tracking tools, and other non-customer facing applications. Enterprise technology and development expenses include personnel-related expenses for employees and consultants to maintain the Company's technology systems and are involved in the research and development of new and existing nutritional products, depreciation of enterprise technology-related assets, software licenses, hosting expenses, and technology equipment leases.
Current wording
Enterprise technology and development expenses includes maintenance and enhancements of the Company’s enterprise resource planning system, which is the core of our accounting, procurement, supply chain and other business support systems and primarily relate to enterprise systems applications, hardware, and software that serve as the technology infrastructure for the Company and are not directly related to services provided or tangible goods sold. Enterprise technology and development expenses also includes reporting and business analytics tools, security systems such as identity management and payment card industry compliance, office productivity software, research and development tracking tools, and other non-customer facing applications. Enterprise technology and development expenses include personnel-related expenses for employees and consultants to maintain technology systems and are involved in the research and development of new and existing nutritional products, depreciation of enterprise technology-related assets, software licenses, hosting expenses, and technology equipment leases.
Previous wording
The decrease in enterprise technology and development expense for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a $1.2 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets.
Current wording
The decrease in enterprise technology and development expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a $1.2 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets.
Previous wording
Enterprise technology and development expense as a percentage of total revenue increased by 160 bps due to the decrease in revenue.
Current wording
Enterprise technology and development expense as a percentage of total revenue increased by 160 bps due to the decrease in revenue at a faster pace than the reduction in enterprise technology and development expenses.
Previous wording
General and administrative expense includes personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal and human resources functions. General and administrative expense also includes fees for professional services principally comprised of legal, audit, tax, and insurance.
Current wording
General and administrative expenses includes personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal and human resources functions. General and administrative expenses also includes fees for professional services principally comprised of legal, audit, tax, and insurance.
Previous wording
The decrease in general and administrative expense for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a $2.3 million decrease in professional and accounting fees due to management focus on decreasing spending, a $1.0 million decrease in insurance expense as some of our insurance is based on the level of the Company's revenues or the number of employees, which both have declined in the current period compared to the prior period, and a $0.8 million gain on the sale of the Van Nuys facility which was recorded as a reduction of general and administrative expense in the three months ended March 31, 2024.
Current wording
The decrease in general and administrative expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $2.3 million decrease in professional and accounting fees due to a management focus on decreasing spending, a $1.4 million decrease in insurance expense as some of our insurance is based on the level of the Company's revenues or the number of employees, which both have declined in the current period compared to the prior period and a $0.8 million gain on the sale of the Van Nuys facility which was recorded as a reduction of general and administrative expenses in the three months ended March 31, 2024.
Previous wording
In 2024, restructuring charges primarily relate to the Company's key initiatives. Restructuring charges in 2023 primarily relate to activities focused on aligning our operations with our key growth priorities, including a reduction in headcount. The charges incurred primarily consist of employee termination costs.
Current wording
In 2024, restructuring charges primarily relate to the Company's key initiatives. Restructuring charges in 2023 relate to activities focused on aligning our operations with our key growth priorities, including a reduction in headcount. The charges incurred primarily consist of employee termination costs.
Previous wording
The change in fair value of warrant liabilities consists of the fair value changes of the public, private placement, Term Loan and Common Stock warrants. Interest expense primarily consists of interest expense associated with our borrowings and amortization of debt discount and issuance costs for our Term Loan (as defined below) in 2023 and 2022. Other income, net, consists of interest income earned on investments and gains (losses) on foreign currency.
Current wording
The change in fair value of warrant liabilities consists of the fair value changes of the public, private placement, Term Loan And Common Stock warrants. Interest expense primarily consists of interest expense associated with our borrowings and amortization of debt discount and issuance costs for our Term Loan (as defined below). Other income, net, consists of interest income earned on investments and gains (losses) on foreign currency.
Previous wording
The loss on partial debt extinguishment for the three months ended March 31, 2024 was due to the partial prepayments of $1.0 million and $5.5 million on the Term Loan as of January 9, 2024 and February 29, 2024, respectively. The change in fair value of warrant liabilities during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily resulted from an increase in our stock price during the current quarter as compared to a decrease in our stock price in the prior year quarter. The decrease in interest expense was primarily due to principal prepayments of $21.5 million on the outstanding Term Loan balance from March 31, 2023 to March 31, 2024.
Current wording
The loss on partial debt extinguishment for the three months ended June 30, 2024 was due to the partial prepayment of $4.0 million on the Term Loan as of April 5, 2024. The change in fair value of warrant liabilities during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily resulted from the decline in our stock price during the current quarter and an increase in the number of outstanding warrants due to the Common Stock Warrants that were issued in December 2023. The decrease in interest expense was primarily due to principal prepayments of $25.5 million on the outstanding Term Loan balance from June 30, 2023 to June 30, 2024.
Previous wording
Income tax provision consists of income taxes related to U.S. federal and state jurisdictions as well as those foreign jurisdictions where we have business operations.
Current wording
Income tax (provision) benefit consists of income taxes related to U.S. federal and state jurisdictions as well as those foreign jurisdictions where we have business operations.
Previous wording
The income tax provision increase for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily driven by changes in our valuation allowance and a decrease in the net expense from discrete events.
Current wording
The income tax provision increase for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily driven by changes in our valuation allowance and an increase in the net expense from discrete events.
Previous wording
As of March 31, 2024, we had cash and cash equivalents totaling $38.9 million.
Current wording
As of June 30, 2024, we had cash and cash equivalents totaling $32.3 million.
Previous wording
Net cash provided by (used in) operating activities was $9.1 million and $(7.9) million for the three months ended March 31, 2024 and 2023, respectively. The increase in cash provided by operating activities during the three months ended March 31, 2024, compared to the prior year period, was primarily due to a decrease in net loss of $15.0 million, an increase in cash due to change in other assets of $9.0 million and a decrease in cash used in accrued expenses of $7.4 million partially offset by a decrease in depreciation and amortization expense of $5.3 million, a decrease in equity based compensation of $5.2 million and a decrease in provision for inventory and inventory purchase commitments of $2.1 million.
Current wording
Net cash provided by (used in) operating activities was $8.2 million and $(14.4) million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash provided by operating activities during the six months ended June 30, 2024, compared to the prior year period, was primarily due to a decrease in net loss of $29.9 million, an increase in cash provided by other assets of $18.1 million and a decrease in cash used for accrued expenses of $8.8 million partially offset by a decrease in cash provided by deferred revenue of $13.0 million, a decrease in depreciation and amortization expense of $10.8 million and a decrease in provision for inventory and inventory purchase commitments of $4.1 million.
Previous wording
Net cash provided by (used in) investing activities was $3.9 million and $(3.4) million for the three months ended March 31, 2024 and 2023, respectively. The increase in net cash provided by investing activities was due to proceeds received from the sale of the Van Nuys facility of $5.6 million and a decrease in capital expenditures of $1.7 million due to continued focus by management on capital expenditures, in particular related to technology.
Current wording
Net cash provided by (used in) investing activities was $2.7 million and $(5.0) million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash provided by investing activities was due to proceeds received from the sale of the Van Nuys facility of $5.6 million and a decrease in capital expenditures of $2.1 million due to increased focus by management on capital expenditures, in particular related to technology.
Previous wording
Net cash used in financing activities was $7.2 million and $2.4 million for the three months ended March 31, 2024 and 2023, respectively. The change in net cash used in financing activities was primarily due to debt repayments on our Term Loan in the three months ended March 31, 2024.
Current wording
Net cash used in financing activities was $11.5 million and $2.4 million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash used in financing activities was primarily due to debt repayments on our Term Loan in the six months ended June 30, 2024.
Previous wording
On August 8, 2022, the Company, Beachbody, LLC, a Delaware limited liability company and wholly-owned direct subsidiary of the Company (the “Borrower”), and certain subsidiaries of the Company (together with the Company, the “Guarantors”), entered into a financing agreement (as amended, the “Financing Agreement”) with the lenders party thereto and Blue Torch Finance, LLC, ("Blue Torch") as administrative agent and collateral agent for such lenders, providing for a senior secured term loan facility in an initial aggregate principal amount of $50.0 million (the “Term Loan”). Obligations under the Financing Agreement are guaranteed by the Guarantors, and secured by a lien on and security interest in substantially all of the assets of the Borrower and the Guarantors (together with the Borrower, the “Loan Parties”), subject to customary exceptions. On July 24, 2023 the Company and Blue Torch entered into the Second Amendment. In connection with the Second Amendment, on the Second Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $15.0 million. On January 9, 2024 and February 29, 2024, the Company made partial prepayments of $1.0 million and $5.5 million, respectively, on the Term Loan in connection with the Third and Fourth Amendments. As of March 31, 2024, the principal balance outstanding (including capitalized paid in kind interest) under the Term Loan was $28.9 million. On April 5, 2024, the Company and Blue Torch entered into the Fifth Amendment. In connection with the Fifth Amendment, on the Fifth Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $4.0 million (which was classified as a current obligation at March 31, 2024). During the three months ended March 31, 2024, the Term Loan was a secured overnight financing rate ("SOFR") loan, with an effective interest rate of 21.83% and a cash interest rate of 12.65% for the three months ended March 31, 2024.
Current wording
On August 8, 2022, the Company, Beachbody, LLC, a Delaware limited liability company and wholly-owned direct subsidiary of the Company (the “Borrower”), and certain subsidiaries of the Company (together with the Company, the “Guarantors”), entered into a financing agreement (as amended, the “Financing Agreement”) with the lenders party thereto and Blue Torch Finance, LLC, ("Blue Torch") as administrative agent and collateral agent for such lenders, providing for a senior secured term loan facility in an initial aggregate principal amount of $50.0 million (the “Term Loan”). Obligations under the Financing Agreement are guaranteed by the Guarantors, and secured by a lien on and security interest in substantially all of the assets of the Borrower and the Guarantors (together with the Borrower, the “Loan Parties”), subject to customary exceptions. On July 24, 2023 the Company and Blue Torch entered into the Second Amendment. In connection with the Second Amendment, on the Second Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $15.0 million. On January 9, 2024, February 29, 2024 and April 5, 2024, the Company made partial prepayments of $1.0 million, $5.5 million and $4.0 million, respectively, on the Term Loan in connection with the Third, Fourth and Fifth Amendments. As of June 30, 2024, the principal balance outstanding (including capitalized paid in kind interest) under the Term Loan was $25.4 million. During the six months ended June 30, 2024, the Term Loan was a secured overnight financing rate ("SOFR") loan, with an effective interest rate of 22.71% and a cash interest rate of 12.75% for the six months ended June 30, 2024.
Previous wording
The Financing Agreement contains financial covenants, customary representations, warranties, covenants and customary events of default. We were in compliance with the financial covenants as of March 31, 2024. See Note 9, Debt, and Note 15, Subsequent Events, for additional information on the Term Loan.
Current wording
The Financing Agreement contains financial covenants, customary representations, warranties, covenants and customary events of default. In particular, the Financing Agreement contains a minimum revenue financial covenant of $100.0 million, for each fiscal quarter ending on or prior to December 31, 2024, and $110.0 million for each fiscal quarter thereafter to December 31, 2025. We were in compliance with the financial covenants as of June 30, 2024 and we expect to remain in compliance with the financial covenants based on our current expectation of future results of operations. Unexpected weakness in the demand for our products may interfere with our ability to remain in compliance with the covenants, in particular the quarterly minimum revenue financial covenant for which the cushion in passing is expected to narrow in upcoming quarters. Failure to comply with the financial and other covenants under the Financing
Previous wording
As of March 31, 2024, we have $25.9 million of lease obligations and purchase commitments associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. See Note 8, Commitments and Contingencies, for discussion of our contractual commitments that are primarily due within the next year.
Current wording
As of June 30, 2024, we have $26.2 million of lease obligations and purchase commitments associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. See Note 8, Commitments and Contingencies, for discussion of our contractual commitments that are primarily due within the next year.
Previous wording
There have been no material changes to the Company's critical accounting policies and estimates discussed in the 2023 Annual Report on Form 10-K in Item 7 under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations -Critical Accounting Policies and Estimates.
Current wording
There have been no material changes to the Company's critical accounting policies and estimates discussed in the 2023 Annual Report on Form 10-K in Item 7 under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates other than noted below.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The decrease in nutrition and other revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to a $24.8 million decrease in revenue from nutritional products due to 26% fewer nutritional subscriptions on lower demand, a $4.7 million decrease in revenue generated from our preferred customer fees as there was a 31% decrease in preferred customers, a $2.2 million decrease in event ticket sales due primarily to the decrease in the number of, length of and attendance at events and a $1.0 million decrease in fitness accessories revenue.
Current report — wording carried from elsewhere
The decrease in selling and marketing expense for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $22.8 million decrease in Partner compensation as a result of the decrease in the number of Partners, lower commissionable revenue and a decrease in the commission rate paid to Partners that started at the beginning of January 2024, an $8.3 million decrease in event expenses due primarily to a decrease in the number of, length of and attendance at events, a $2.7 million decrease in personnel-related expenses due to lower headcount primarily related to the restructuring activities that occurred in the past year and a $2.3 million decrease in the amortization of intangible assets due to the impairment of the remaining intangible asset balance in the fourth quarter of 2023.
Current report — wording carried from elsewhere
The loss on partial debt extinguishment for the six months ended June 30, 2024 was due to the partial prepayments of $10.5 million on the Term Loan that occurred in the six months ended June 30, 2024. The change in fair value of warrant liabilities during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily resulted from a slight increase in our stock price during the current period as compared to a decrease in our stock price in the prior year period. The decrease in interest expense was primarily due to principal prepayments of $25.5 million on the outstanding Term Loan balance from June 30, 2023 to June 30, 2024. The decrease in other income was primarily due to lower interest income as a result of lower average cash balances for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Current report — wording carried from elsewhere
The income tax provision increase for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily driven by changes in our valuation allowance and an increase in the net expense from discrete events.