Good afternoon, ladies and gentlemen. Welcome to The Beachbody Company's Third Quarter Earnings Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I'll now turn the conference over to your host, Bruce Williams, Managing Director of ICR Investor Relations. Please go ahead.

Welcome everyone, and thank you for joining us for our third quarter earnings call. With me on the call today are Mark Goldston, Executive Chairman of The Beachbody Company, Carl Daikeler, Co-Founder and Chief Executive Officer, and Marc Suidan, Chief Financial Officer. Following the prepared remarks, we'll open the call up for questions. Before we get started, I would like to remind you of the company's Safe Harbor language. The statements contained in this conference call, which are not historical facts, may be deemed, to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements, due to a number of risks and uncertainties, all of which I describe in the company's filings with the SEC, which includes today's press release. Today's call will include references to non-GAAP financial measures, such as adjusted EBITDA. A reconciliation of these non-GAAP financial measures, to the most comparable GAAP financial measures, is available within the earnings release, which can be found on our website. Now, I would like to turn the call over to Mark Goldston. Mark?

Hello. Good afternoon. Thank you for joining us today. I'm thrilled to be part of this exciting journey and to contribute my extensive experience, to the company's success. I want to make three key points that, are really important for investors and analysts, to gain a perspective on where we are, and where we're going. First, as you know, we intend to execute a reverse stock split later this month. This should get this stock into a range that, will attract institutional investors. Second, and critically, we must lower the break-even of the company. We previously have taken out $125 million in costs, and Marc Suidan, our CFO, will talk about an additional $40 million that we've identified in cost savings. We expect to realize these additional savings in 2023, bringing the total to $165 million in aggregate, annualized cost savings since 2021. And third, we have begun the implementation of the turnaround plan, we architected after my arrival in June of 2023. As part of that plan, we'll be aggressively pursuing ways to win back some of the 14 million people in our extremely valuable CRM base, who are either former subscribers or qualified leads that were added to our database since 2016. In addition, we fortified the product offering, for our direct sales organization with the addition of GrowthDay. This was developed by the dynamic, world-renowned Brendon Burchard and we're aggressively pursuing outside partnerships and additional direct-to- consumer channels, to help diversify our beta and create additional revenue streams, from those untapped channels. Last quarter, I told investors that our main focus, is on the generation of cash in the near to midterm, and we're developing programs designed to deliver on that goal. As a result of the $165 million in expected cost savings, along with the key…

Thank you so much, Mark. And let me start by saying how great it is to work with Mark as Executive Chairman and have the benefit of his experience turning around public companies and strategizing, how we can unlock the value we've created, over the last 25 years, which maybe we've taken the underlying value of the business for granted a little bit, and it's such a great partnership to work with Mark. Okay. So let's talk about the third quarter. First, a high-level overview of results and operational highlights. Then Marc Suidan, our Chief Financial Officer, will give additional detail on Q3 financial results and guidance for Q4. We made significant progress implementing our turnaround plan this quarter, where our primary focus, is on cash flow generation and creating new incremental revenue opportunities. Q3 revenues and adjusted EBITDA, were within our guidance range. And while our overall digital subscriber count, decreased by 10% sequentially to 1.38 million in Q3. As we mentioned last quarter, the more meaningful metric is our premium digital subscription BODi, spelled B-O-D-I, which grew by 27% in Q3 over Q2, to exceed 900,000 subscribers at the end of Q3. And you've no doubt heard of the emergence of GLP-1 weight loss drugs, which have generated a considerable amount of attention and even question, to their effect on demand for services like ours. We're actually encouraged about treatments that can help some of the 74% of Americans that are overweight or obese, but we also recognize that a chemical solution, is only a single step towards sustaining a healthy lifestyle and does nothing to improve skeletal muscle mass, which is critical to health and functioning in the world. It's really vital that people supplement these weight loss drugs, with healthier lifestyle choices, including fitness and nutrition.…

Thank you, Carl and Mark. And good afternoon, everybody. I am pleased to announce that in the third quarter, we met our guidance on revenue, adjusted EBITDA, and cash flows and operations. This is the eighth consecutive quarter that we have achieved or exceeded our guidance. I will now discuss our results for the third quarter along with our KPIs and then provide guidance for the fourth quarter. Revenues were $128.3 million, which was above the midpoint of guidance and 5% below the prior quarter. The year-over-year decline in quarterly revenue was 23%, down from 25% in Q2 and 27%, in Q1. The Q3 sequential revenue change, reflects the normal seasonal decline in the fitness industry. I will elaborate on each of our three product lines and given all the changes in the past year, I will focus my comments on sequential revenue performance. Digital revenue was $64.3 million, down 1% from $65.2 million in Q2. Our overall digital subscriber count is 1.4 million, down 10% from 1.5 million in the second quarter. Given the $179 annual price of the BODi subscription, the ARPU is now higher, and our stable quarter-over-quarter digital revenue is also supported by a partner count, which remained flat over Q2, a reminder that we have tens of thousands of partners selling our products. Nutrition revenue was $59 million, down 9% from $64.6 million in the prior quarter. Our nutrition subscriber file size is 177,000, down 10% from 196,000 in the prior quarter. In Q3, we launched a new monthly digital nutrition bundle called the $99 Rebel at a competitive introductory price. This bundle offers strong value, and we believe will resonate with consumers in this macro-inflationary environment, without sacrificing profitability. We believe this new bundle and the broadening of our sales distribution channel, will stem…

Thank you. [Operator Instructions] Our first question today comes from the line of Darin Tuttle from Singular Research. Please go ahead. Your line is now open.

Yes, thanks, guys. And a great quarter here. My question comes up from the debt payment here. So that one - this latest debt payment so that was a use of cash. Is that sort of a one-off plan, or is there going to be extended plans in the following quarters to have an accelerated debt repayment schedule? Thank you.

Hi, Darin. This is Marc. That was a one-off in Q3. We paid down $15.3 million of the debt. We continue now on the regular schedule of the debt, and the total debt carries out through February 2026.

Okay. Okay. And was that just, you know, was that just part of cleaning up some of the balance sheet and opening up some cash flow for following quarters? Or was that more just like a strategic allocation where you thought paying down the debt was the best incremental return for the dollar?

Yes, listen, we spoke with our lender and if you look in early August, we filed information relating to debt modification covenant on. So that was our part of that negotiation with them, where we changed the liquidity and revenue covenants on the debt. And given our outlook, we're managing with the capital we got on hand and our plan allows us to execute against that. But for now there's no other plans to further pay down the debt.

Okay. Thank you for that.

Thank you. There are no additional questions waiting at this time. So, I'd like to pass the call back over to Carl Daikeler for any closing remarks.

Okay. Thanks for joining us today, everybody. As we continue to execute on our turnaround plan, I want to leave you with the four key takeaways from the call today. First, we're widening the sales aperture, to expand our sales channels and driving more profitable revenues, through performance marketing, our launch of the BODi previews free tier, and Amazon. Second, we acknowledge that it's a difficult environment for most direct selling models, but we're increasing momentum throughout our network, and with our partnership with Brendon Burchard and the introduction of the GrowthDay Personal Development app this week. And we're aligning performance incentives with partner productivity and our overall financial goals. Third, we believe we're well positioned in an environment, where there's increased focus on weight loss with our unique approach to structured fitness, nutrition, and personal development tools, all at a great value to the consumer. And fourth, we're moving fast and continue to be focused on generating profitable revenues, driving free cash flow and building cash. I want to thank all our stakeholders for believing in this vision and for supporting The Beachbody Company through this process. Our work is extremely important, and I look forward to demonstrating significant progress in our next call. I will add that investors and analysts, can reach out directly to Marc Suidan, our CFO, with any requests for meetings with management or with Mark Goldston, and we will keep you posted on our activities going forward. Thanks again, everybody. Appreciate you.

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.