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Date

Tuesday, May 12, 2026 at 5 p.m. ET

Call participants

  • Executive Chairman — Mark R. Goldston
  • Cofounder and Chief Executive Officer — Carl D. Daikeler
  • Interim Chief Financial Officer — Brad Ramberg

Takeaways

  • Total revenue -- $54.3 million, which was above the high end of company guidance and represented a decline of 2.3% sequentially and 25% year over year.
  • Net income -- $2.3 million, the third consecutive quarter of positive net income after a net loss of $5.7 million in the same quarter last year.
  • Operating income -- $3.1 million, achieving profitability on this metric for the third consecutive quarter.
  • Adjusted EBITDA -- $8 million, versus $3.7 million a year ago and $12.9 million in the preceding quarter, marking the tenth straight quarter of positive adjusted EBITDA.
  • Gross margin -- 71.8%, within company target range, down 270 basis points sequentially, but up 60 basis points year over year.
  • Digital revenue -- $33.6 million, down 2.1% sequentially and 21.8% year over year, with digital subscriptions declining 6.9% quarter over quarter to approximately 810,000 and falling 20.6% from the prior year.
  • Nutrition and other revenue -- $20.7 million, decreasing 2.5% sequentially and 27.7% year over year; nutrition subscriptions dropped 25% quarter over quarter to 60,000 and 18.5% year over year.
  • Digital gross margin -- 87.4%, up 10 basis points sequentially and 190 basis points year over year, attributed to lower amortization and production discipline.
  • Nutrition and other gross margin -- 46.7%, decreasing 700 basis points sequentially and 640 basis points year over year; the decline was linked to inventory adjustments this quarter.
  • Operating expenses -- $35.9 million, an increase of 8.2% sequentially but a decrease of 35% year over year, as the elimination of MLM seller compensation improved expense ratios.
  • Cash balance -- $36.6 million as of March 31, compared to $39 million the prior quarter and $18.1 million a year earlier; outstanding debt principal is approximately $25 million.
  • Free cash flow -- negative $1.7 million versus positive $1.6 million in the prior calendar year.
  • EBITDA breakeven level -- Lowered significantly from over $900 million in 2022 to approximately $180 million current run rate, improving operating leverage.
  • Q2 2026 guidance -- Revenue projected at $46 million to $51 million, net income expected between negative $3 million to breakeven, and adjusted EBITDA forecasted at $3 million to $6 million.
  • Q2 gross margin expectations -- Digital gross margin targeted at 86%-88%, nutrition and other at 43%-47%, and total gross margin at 69%-72%.
  • Retail distribution announcements -- Shakeology to be carried in more than 80 Sprouts Farmers Market locations and, later this year, in over 640 The Vitamin Shoppe stores nationwide, all featuring the new 7-serve pack at a $34.95 price point.
  • Distribution network -- Partnership secured with KeHE Distributors, giving access to 30,000 grocery, supermarket, and online channels.
  • New channel innovation -- "P90X Generation Next" launched on Shopify with positive subscriber response and uses proprietary "P90X factor" formulations in supplements.
  • Omnichannel strategy -- Shift to omnichannel approach prioritizes nutrition-first customer acquisition, integrating retail, direct-to-consumer, and digital channels for broader market reach.
  • Digital product enhancements -- Introduction of the 10 Minute Body program, expansion of microdose fitness content, and ability for a digital membership to include up to five household profiles at no added charge.
  • Operational structure -- Asset-light model with outsourced manufacturing, sales, fulfillment, and logistics, retaining marketing, brand management, product innovation, and R&D in-house.
  • Test markets -- Southern California test market for Insanity and P90X branded energy drinks to begin distribution in August with production quantities available in July.

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Risks

  • Ramberg stated, "Free cash flow was negative $1.7 million compared to positive $1.6 million in the prior year," indicating a negative operational cash flow trend.
  • Guidance for Q2 2026 includes a potential net loss, with projected net income of "negative $3 million to breakeven."
  • Ramberg said, "As we move to Q3 of 26, we will be able to show a direct year-over-year comparison because the remaining legacy revenue associated with a former MLM will have burned off," signaling near-term revenue comparability will be distorted by legacy headwinds.
  • "The decrease in nutrition and other gross margin was primarily due to inventory adjustments in the current quarter," presenting a risk to margin stability in nutrition sales.

Summary

Operational and financial momentum continued as The Beachbody Company (BODI +0.24%) reported its third consecutive profitable quarter, amid an ongoing business transformation away from MLM and toward an omnichannel nutrition-driven model. Management highlighted the imminent launch of Shakeology at national retail chains and the expansion of new branded products, such as P90X supplements and energy drinks, into digital and retail channels. Guidance indicates short-term revenue pressure from legacy business wind-down and upfront costs related to new product introductions, with a temporary drag on margins and profitability anticipated. Strategic initiatives prioritize retail and nutrition channel penetration, leveraging an asset-light model to enable growth investments without permanent structural cost additions.

  • Leadership attributed increased average revenue per digital and nutrition subscriber to organic growth, enhanced bundling, and traffic generated by nutrition-first advertising.
  • Recent transition to Shopify e-commerce improves website conversion rates and unlocks further gains through better site navigation and landing page optimization.
  • Retail distribution scale will depend on current negotiations and actual in-store performance, while quantitative cross-selling metrics for digital trial conversions via retail products remain uncommitted pending rollout data.
  • Test of Insanity and P90X energy drinks in Southern California will inform 2027 national planogram presentations, with initial on-shelf presence expected in August.

Industry glossary

  • MLM (Multilevel Marketing): A legacy revenue model where distribution and sales relied on a network of independent sellers compensated via tiered commissions.
  • Planogram: A retailer’s schematic specifying product placement for shelf resets, critical for determining timing and presence in retail outlets.
  • 3PL (Third Party Logistics): An external service provider managing warehouse, fulfillment, and delivery processes for retail and e-commerce orders.
  • SKU (Stock Keeping Unit): A unique product identifier used for inventory and sales tracking, critical for scaling CPG lines.
  • CPG (Consumer Packaged Goods): Products sold quickly and at a relatively low cost, often used in reference to food, beverages, and supplements in retail channels.
  • AOV (Average Order Value): The average dollar amount each customer spends per transaction, a key metric in direct-to-consumer and retail e-commerce operations.

Full Conference Call Transcript

Mark R. Goldston, Executive Chairman of Beachbody Company. Carl D. Daikeler, Cofounder and Chief Executive Officer, Brad Ramberg, interim chief financial officer. Following the prepared remarks, we will open the call up for questions. Before we get started, I would like to remind you of the company's safe harbor language. Statements contained in this conference call, which are not historical facts, may be deemed to constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2 thousand. 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 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.

Mark R. Goldston: Thanks very much, Bruce, and good afternoon, everyone. Welcome to the Body Q1 26 Earnings Call. Last quarter, we reported our Q4 and full year 2025 results. A transformational year where we achieved positive operating income and adjusted net income for the first time since going public. Today, I am pleased to report the momentum continued in 2020-- let me start with the numbers and the Q1 2026 financial highlights. Total revenue for Q1 was $54.3 million which came in above the high end of our guidance.

As a reminder, and as we have consistently noted, Q3 26 will mark the first quarter where we can make direct year over year comparisons that fully reflect our new business model as the legacy MLM business will have completely cycled out of both periods. More importantly, we delivered our third consecutive quarter of net income at $2.3 million compared to a net loss of $5.7 million in 2025. Operating income was $3.1 million, marking our third consecutive quarter of profitability on this metric. We posted our tenth consecutive quarter of positive adjusted EBITDA at $8 million up from $3.7 million in the prior year. And gross margin remained strong at 71.8% and within our guidance.

As of March 31, our cash balance was $36.6 million against outstanding debt principal of approximately $25 million. Providing financial flexibility to execute our growth strategy. The operational discipline that we have built in over the past 2 plus years is now embedded in how we run the business. We have lowered our EBITDA breakeven from over $900 million in 2022 to approximately $180 million currently giving us tremendous operating leverage and the ability to invest strategically in growth initiatives without sacrificing profitability. As we discussed in March 2026 is the year we are unleashing our innovation pipeline.

With our strong balance sheet and substantially improved financial position, we have got the flexibility to fund our retail expansion, and the innovation pipeline without compromising the financial discipline that delivered this turnaround. The cornerstone of our growth strategy is a pivot towards a heavier emphasis on nutrition. And that will be executed through an omnichannel strategy spanning direct to consumer, to retail distribution. This represents entry into a nutrition products category with a market opportunity that is more than 12x the size of the digital fitness category. We are bringing iconic brand names like P90X, Insanity, and Shakeology to retail with very high aided brand awareness.

Now we are freed from the MLM commission constraints, and we can price our new nutritional products at dramatically lower price points than we have done in the past. In the case of Shakeology, we can utilize a much smaller form factor. The 7 serving size, which will give us a $34.95 retail price point versus our previous price point, which was a $129 for a 30 serve pack. This represents a significant opportunity for us. As many of you may know, in my career, I have got a long history in the consumer products or CPG industry.

From my days at Johnson and Johnson and Bristol, Myers, Clare All, Cheeseboro Ponds, Revlon, and as president of Faberge, which became Faberge Elizabeth Arden. I have got background at Reebok, LA Gear, and the huge flower company, FTD. I have been responsible for the creation and/or billions of dollars worth of some of the most successful consumer products of all time sold through retail distribution. And that is 1 of our major areas of expansion that I brought to body. The process is submitting samples through our broker sales organization Advantage Solutions, securing buyer commitments, and then waiting for the retailer shelf set planogram to be updated is about a 6- to 12-month process with inflexible adherence dates.

We are right now in the midst of that process, And over the next 60 to 90 days, we expect to see which retailers will be adding Shakeology, and the P90X line of nutritional supplements. Look. I am sure you have seen the recent spate of acquisitions in the CPG industry, whether it be Huel, Ghost, Bloom, Alani Nu, Poppy, and a host of other companies that have sold for between $1 billion to $2 billion in the past year. With brand names that while we have great respect for, are not nearly as well known as the P90X and even Shakeology brand names.

So the potential for creating massive brand equity value for sure of body within the nutritional supplement and energy drink industry for body is potentially the single largest mid to long term opportunity that we have got at the company. Speaking of securing retail distribution, last week, we announced that Shakeology will be carried in more than 80 Sprouts Farmers Market stores around the country. Starting in late May, early June. And we just secured a partnership with KeHE Distributors which is 1 of the 2 largest distributors of natural, organic, and fresh products to the grocery industry.

This will give us the opportunity to reach the 30 thousand grocery, supermarket, and online channels that are covered by the KeHE distribution network. And in late breaking news, we just announced in a press release yesterday that Shakeology will now be carried by The Vitamin Shoppe, across its more than 640 stores all over the USA later this year with The Vitamin Shoppe taking all 5 of the Shakeology flavor variants in our new 7-serve $34.99 retail price packaging.

This exciting news along with the Sprouts Farmers Market news and the KeHE distribution deal will mark the first time that Shakeology, which is a $4 billion cumulative sales brand with more than 1 billion cumulative servings, the first time it will be available in retail stores across the USA. On the next quarterly earnings call, we hope to have an update on more exciting retail partners for the Shakeology brand and new retailers signed up to carry the P90X line of supplements and the retail stores who will be carrying the Insanity and P90X energy drinks in the Southern California test market we will be running later this summer.

1 of the truly unique and compelling aspects of the new body retail distribution initiative as a consumer product company is that we fundamentally created a virtual consumer products company. What do I mean by that? Well, we have outsourced virtually every aspect of our supply chain and distribution infrastructure. Manufacturing is outsourced to best in class contract manufacturers. Sales and retail distribution are managed through our outside partner, Advantage Solutions. Fulfillment and logistics of all of the retail orders are handled by a third party logistics provider or a 3PL. And we are evaluating the use of purchase order financing and accounts receivable factoring to optimize our working capital as it relates to the retail project.

What we keep in house are the core competencies that drive our competitive advantage. Those are marketing, brand management, product innovation, and R&D. So this asset light model gives us exceptional financial flexibility, minimal capital requirements, and importantly, the ability to scale rapidly without proportional increases in fixed costs. Since this structure moves the majority of those costs to a variable based cost based on usage and demand. So in conclusion, our financial turnaround has created massive operating leverage, giving us the ability to invest strategically in high return initiatives while maintaining profitability. We are excited about the opportunities ahead, particularly as we move into the 2026 and then beyond. This year marks the opening of our nutritional innovation pipeline.

We are actively in the process of developing new products, securing retail placement, and building market acceptance. While we expect to see initial traction in 2026, The substantial yield from these initiatives will materialize in 2027 and beyond, as our retail presence expands and our multichannel strategy fully takes hold. We have built a resilient financial foundation that positions us to capitalize on significant growth opportunities in both nutrition and digital fitness. And we are taking a disciplined, methodical approach to ensure we execute this transition successfully. I will now turn it over to Carl to discuss our operational progress and product innovation strategy. Carl?

Carl D. Daikeler: Thanks, Mark. Our Q1 results demonstrate the operational momentum we have been building throughout 2025 and into early 2026. The financial discipline we have established has created an extremely efficient platform with leverage to execute against the compelling innovation pipeline across multiple sales channels. P90X Generation Next launched in early February to a packed house of media and influencers in New York City, generating millions of impressions in both earned and paid media. The response from our subscriber base has been very enthusiastic.

And we are now gathering the success stories from the first wave of participants. that is especially important as we launch our branded nutritional line extensions in the P90X supplements, which will be sold direct to consumer on Amazon, TikTok shops, as Mark mentioned, at retail including an entire ready to drink line of P90X energy drinks. This is a really big deal with very special formulations, which live up to the reputation of the best selling extreme home fitness program of all time. We have launched a P90X pre workout, P90X hydration, P90X creatine, P 90 X recovery protein, and P90X fast acting energy that can be used to fuel longer training sessions.

Or in my case, for a midday boost of energy. Each SKU in the line has something called a P90X factor, a proprietary element of the formulation, which makes it fast acting, potent, and effective so you get the performance benefits as promised. The P90X supplement line launched with our long overdue transition over to the Shopify ecommerce platform, which will make it easier for us to offer special bundle configurations, subscribe and save discounts, and improve AOV using Shopify's add to cart recommendation engine. Combine these entire new product lines with the new ease of shopping and thousands of success stories coming in from the first wave of P90X generation next users.

We expect that to propel momentum of the fitness program and the P90X supplement line in every channel over the next 12 months. Meanwhile, the 10 minute body initiative continues to gain traction, The category of microdose fitness, we launched under the 10 minute body brand just before Christmas, continues to be a very popular program on the platform. Since our last call, we have expanded the catalog with 3 new targeted programs, 10 minute speed train by Joel Freeman, 10 minute active aging led by Debbie Sievers for those 60 and older, You will recognize Debbie from her recent appearance on ABC's Golden Bachelor. She is also 1 of the first super trainers to help us launch the company.

We also just launched the 10 minute GLP 1 fitness formula. Specifically designed to help people on GLP 1 medications to build and preserve muscle mass. The platform now features over 400 science backed 10 minute workouts, and this high volume, low price subscription at $10 a month is successfully opening up our addressable market to the over 185 million Americans who are overweight or obese and may be intimidated by longer workout programs. Okay. Looking ahead to the summer, we have a new super trainer joining us, Chase Colette, with the brand new 30 day booty boost program launching in June.

This has been 1 of the most requested additions to the catalog by subscribers and prospects, and we will integrate the P90X supplement line to help people get the maximum gains from the program where it counts using the pre workout, P90X creatine, and P90X protein. And that is exactly how nutrition has been fundamental to our success since we founded the company, helping people get the best results from their effort. And Shakeology the world's first superfood protein shake, which we launched in 2009, is probably our most significant nutrition innovation in the company's history.

To put that in perspective, during our peak revenue years, fitness programs accounted for roughly 1-third total revenue, while nutrition drove about 2-thirds largely driven by Shakeology. Now that we are freed from the margin and distribution constraints, of the network marketing model, we can offer all our supplements, whether it is Shakeology, P90X, or other brands, all at more accessible price points with healthy margins. Dramatically expanding our opportunities to grow and scale in multiple sales channels like Amazon, TikTok shops, and retail, as Mark outlined. But what makes this nutrition expansion especially compelling is how it transforms our customer engagement and results model.

Our data continues to show that we scale customer acquisition at a lower cost when offering nutrition first and bundling fitness with it. As opposed to offering digital fitness first. I believe that is because of the significant size of the nutrition and the ease of consumption relative to the decision to start a new fitness program. By leading with nutrition in this substantially larger category, we can attract customers through a wider top of the funnel. Then introduce them to our digital fitness platform through free trial offers.

Every customer who enters the ecosystem with a nutrition purchase is offered a free trial to join the fitness platform, a major value and a competitive advantage in the massive supplement market. This nutrition first approach with fitness second enables us to deliver the total solution, the unique combination of comprehensive lifestyle change that has consistently driven our best customer results over nearly 3 decades.

We think this construct could be especially potent for the digital app experience now that we just launched the ability to add up to 4 additional profiles to 1 membership, meaning anyone who is in a free trial of the digital app can invite up to 4 members of their household to set up their own profile under the same membership at no extra cost. This can help overall conversion as more household use should translate into retention. And what follows, of course, is more people using the body app in the household means more people who would likely consume our P90X supplements, our preworkouts, Shakeology, and so on in order to maximize their results.

All of these improvements work together to optimize our marketing model that will drive traffic across multiple channels and improve the customer experience at every touch point. And all of this should position us well to build on the momentum of our turnaround. Now I will turn it over to Brad Ramberg, our CFO, to walk you through the Q1 financial details and our guidance for Q2.

Brad Ramberg: Brad? Thank you, Carl, and thank you everyone for joining the call today. I will review our Q1 results and provide our outlook for 2026. We continue to make significant progress on our transformation and on driving operating efficiency. For the quarter, we exceeded the high end of our guidance for revenue net income and adjusted EBITDA. We generated our third consecutive quarter of net income and operating income and our tenth consecutive quarter of positive adjusted EBITDA. For the quarter, total revenues of $54.3 million declined 2.3% sequentially and declined 25% year over year, better than expectations as we continue to execute in our strategic transformation.

Revenues continue to be impacted in the near term by a shift from a multilevel marketing platform to our current omnichannel model. Moving to digital and nutrition and other revenues. it is important to reiterate that the year over year decline continues to be heavily influenced by remnant revenue from the former MLM legacy business which was shut down 12/31/2024. Therefore, there is a component of MLM legacy digital and nutrition revenue that will remain through the first half of this year.

As we move to Q3 of 26, we will 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 who remain from that cohort will become part of the body new business model revenue base. To be clear, this is not to suggest that we are projecting year over year revenue growth in March 2026. We are not providing guidance for 2026. As that will occur on our next earnings release.

Now note, the direct year over year comparisons I am about to disclose for digital nutrition revenue are still skewed by the fact that the 2026 numbers reflect the new business model versus the 2025 numbers, which still had a major component of revenue that was part of the legacy MLM. Digital revenue decreased 2.1% sequentially to $33.6 million and 21.8% year over year. Digital revenues reflect continued pressure on our digital subscriptions, which decreased 6.9% quarter over quarter to approximately 810 thousand and declined 20.6% compared to the same period a year ago. Nutrition and other revenue decreased 2.5% from the prior quarter to $20.7 million and decreased 27.7% year over year.

Nutrition subscriptions decreased 25% sequentially to 60 thousand. And fell 18.5% year over year. As our business evolves into an omnichannel model generating higher 1 time sales and retail sales, the subscription metric will be a less relevant KPI. Digital gross margin was 87.4%, increasing 10 basis points sequentially up 190 basis points from prior year. Our digital gross margin was in line with our target. The continued strength in year over year gross margin was primarily due to a decrease in digital content amortization and depreciation, due to more disciplined production and fixed asset spending. Nutrition and other gross margin was 46.7% decreasing 700 basis points sequentially and down 640 basis points versus last year.

Nutrition and other gross margin was in line with our target. As a reminder, Q4 25 nutrition gross margin of 53.7% included certain 1 time benefits. Exclusive of those benefits, nutrition and other gross margins declined 390 basis points sequentially. The decrease in nutrition and other gross margin was primarily due to inventory adjustments in the current quarter. Consolidated Q1 gross margins were 71.8%, reflecting a decrease of 270 basis points sequentially but an increase of 60 basis points compared with the prior year. We are pleased to report that consolidated gross margin remained within our target gross margin range. Operating expenses for the quarter increased 8.2% sequentially, and declined 35% year over year to $35.9 million.

Selling and marketing expense as a percent of revenue increased 230 basis points over the prior quarter. The increase from the prior quarter was due to planned higher advertising spend and new product launch expense. Selling and marketing expense declined 820 basis points year over year to 34.6%. The significant improvement over prior year stems from eliminating MLM seller compensation following our 12/31/2024 exit from the multilevel marketing channel. Enterprise technology and development was 17.3% of revenue, up 160 basis points sequentially and declined 10 basis points year over year. As a reminder, Q4 25 enterprise technology and development expense at 15.7% included certain 1 time benefits. Excluding these benefits, enterprise technology and development expense increased 40 basis points. Sequentially.

G&A was 14.2% of revenue. Increasing 240 basis points sequentially. As a reminder, Q4 25's G&A expense of 11.8% included certain onetime benefits. Excluding these benefits, G and A expense increased 70 basis points sequentially. G and A declined 190 basis points from the prior year due to a decrease in personnel related expenses and professional fees. Operating income for the quarter was $3.1 million compared to a loss of $3.7 million in the prior year. Marking our third consecutive quarter of operating income. Net income for the quarter was $2.3 million, compared to a net loss of $5.7 million in the prior year. Marking our third consecutive quarter of net income.

Adjusted net income was $2.5 million for the quarter, versus a $5.1 million adjusted net loss in the prior year. Adjusted EBITDA was $8 million compared to $12.9 million sequentially and 3.7 million in the prior year. Marking our tenth consecutive quarter Of positive adjusted EBITDA. Now turning to the balance sheet. Our cash balance was 36.6 million compared to $39 million in the prior quarter and $18.1 million last year. Our net cash position was $13 million Cash used in operations for the quarter was $1 million compared to cash generated from operations of $2.3 million in prior year. Free cash flow was negative $1.7 million compared to positive $1.6 million in the prior year.

Now turning to our second quarter guidance. While we are pleased with the execution of our transformation, I want to reiterate that this guidance should not be compared to 2025. Because 2025 still had revenue recognized in the legacy MLM model. We continue to drive operating leverage and we are excited about the opportunities ahead. We have a stronger balance sheet, a sustainable and viable long term business model that allows us to grow without the structural impediment of the previous MLM model. However, we are still in the early stages of the new distribution model, and it will take time to develop traction in these new lines of business.

As a reminder, the tail of our legacy business is winding down, and we expect that the first time we will be able to do a year over year comparison of our new business model will be comparing 2026 to 2025. We expect second quarter revenues to be in the range of $46 million to $51 million Net income to be in the range of negative $3 million to breakeven, and adjusted EBITDA to be in the range of $3 million to $6 million. For the quarter, we anticipate revenues to approximate 60% digital and 40% nutrition and other.

However, in line with the strategies we articulated on this call, we currently expect a shift by 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 gross margin target is expected to be in the range of 86% to 88%. Our nutrition and other gross margin target is forecasted to be in the 43 to 47% range which is in line with our volume expectations and certain promotional efforts plan. Our total gross margin target is expected to be in the 69% to 72% range. In closing, we continue to make considerable progress against our business transformation.

We significantly lowered our breakeven point and strengthened our financial position. Putting us on a solid financial 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.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 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 Kay Anderson with Canaccord Genuity. Your line is open. Please go ahead.

Susan Kay Anderson: Hi. Good evening. Thanks for taking my questions. Nice job on the quarter. I was wondering maybe if you could give some more color on the new P90X launch and then the 10 minute body programs. It sounds like they are doing well, particularly the 10 minute body. I guess, is there any way to quantify what percent utilizing the program or new subscribers versus existing subscribers.

Carl D. Daikeler: Thanks, Susan. You can hear me okay? Yeah. Okay. Great. So I just wanted to make sure. So we do not break them out like that, but I will say that as we pivoted to the nutrition where we are advertising nutrition, I will say that the P90X supplements are attracting both new traffic, but also doing a really good job of activating new customers from the large database that we have got. So it is a reactivation play that is actually where pleasantly surprised by how it is working within the database.

10 minute body is where we are seeing more of a new subscriber acquisition volume happen because of that high volume, low price opportunity where we are advertising 10-day free trial and a $10-per-month subscription. But seeing a nice proportion of those people coming in for the 10-day free trial, $10, level up to the $19 a month full subscription. So that is the way we are looking at those 2 particular aspects of the content. But like I said, P90X is in its very early days.

We are just collecting all the success stories from the first wave and that is what is gonna propel the next 12 to 18 months of traffic and excitement about that particular program and then we layer on top of it with the new programs like the 30 day booty boost that will come out this summer. But, again, all of it, is secondary to the strength of customer acquisition that we are seeing from advertising nutrition first digital second.

Susan Kay Anderson: K. Great. that is completely positive.

Carl D. Daikeler: And then maybe if you could give us an update on the Shopify transition. I think that happened in late Mark. Any changes there? Any color on how that transition went?

Susan Kay Anderson: Yeah. Well, that is that is probably my favorite thing to talk about.

Carl D. Daikeler: I will try not to monopolize this. But we are definitely seeing across the board that was a very good decision. What we are even more encouraged by is how we are improving conversion of the current rate of traffic based on the ease of use of both the Shopify platform and now adding the Shop Pay option so that people who already have their information with 1 click of the purple button have an easier time to check out. But, I think maybe what is most encouraging to me, there is 2 things. 1, we are seeing that from a competitive standpoint, our website is actually converting better than some competitors that were appropriately compared to.

And but there is also some low fruit on the tree for us to make improvements in our conversion and our landing page and landing pages and site navigation so we can even make more efficient use of the traffic that we are already generating. So, again, we got 2 levers here to work with. 1 is nutrition is generating traffic at a much more efficient cost of acquisition, and the ease of use of the Shopify platform is converting more of those customers and we see low fruit on the tree to improve on that traffic already.

So overall, it is been a very good transition for us despite being at the end of the quarter and a lot of stuff going on, very pleased with the effort that the team put into that.

Susan Kay Anderson: Okay. Great. Then maybe if I could just add 1 more, I guess, just trying to get a sense of what the top line will look like once you know, we cycle the MLM departure. So I guess, you know, when we when you look at the top line right now, it is seems like kind of the quarters are about a $50 million run rate. I guess, do you have any insight into, you know, if you know, think there is still a lot of legacy MLM subscribers left to cancel or you know, kind of what that run rate will look like once we are done with that? Thanks.

Mark R. Goldston: Most of the Most of that is gonna be cleaned by Q3. that is why we say Q3. Susan, this is Mark, is gonna be the first sort of a year on year clean quarter read. So we are just getting to the remnants of it right now and, you know, through the end of Q2. And then when we get to Q3, that should be a rather de minimis amount. There will be a pure read of Q3 26 versus Q3 25.

Susan Kay Anderson: Okay. Great. Thanks so much.

Carl D. Daikeler: Good luck the rest of the year. Thanks, Susan.

Operator: Your next question comes from the line of Eric DeLoret with Craig Hallum Capital Group. Your line is open. Please go ahead.

Analyst (Eric DeLoret): Thank you for taking my questions. Congrats on the continued impressive progress here. So my first question is a bit of a follow on to the last question.

Mark R. Goldston: So sequential revenue declines here, they have improved now to less than 3%. And then average revenue per digital subscriber increased sequentially for the first time in nearly 2 years. Average revenue per nutrition subscriber also up sequentially. Can you talk about just kind of trying to parse that out, the impact of any recent price increases on that sort of average revenue per nutrition subscriber and, I guess, digital as well. And then just whether we should take that, you know, these sequential increases as signs of the MLM headwinds easing or if there is other sort of pricing or customer dynamics to sort of be aware of here.

Just wondering how you expect that average revenue per subscriber number to progress and if that is a sign of MLM headwinds easing?

Brad Ramberg: Yeah. Hey, Eric. Those are great questions. So, essentially, it is not really because of the headwinds easing.

Mark R. Goldston: We really did not have pricing increases to speak of. As we talked about in the last call, you know, we started a pivot and we are pushing nutrition more than we did before. We were using the digital fitness sort of as the lead before, and then we would convert people to nutrition. But realizing that digital fitness is a $13 billion category and nutrition is $164 billion it was kind of like the tail was wagging the dog. So since we changed our pivot, 1, our CACs are lower. Even though we do not publicly disclose the actual CAC, our CACs are lower. And the conversion rates are great.

And there is a very high percentage of people who take nutritional supplements in general, as you know, who exercise. We are seeing organic improvement. In that nutrition business, and part of it is up until about 9 months ago, we never even advertised it. I mean, by and large, you know, it was only done by the MLM where they sold it direct or they sold it as an add on. So we are making the public, which previously had not seen these products, aware of them. And the results have been quite effective. And so that is a big reason why we made the pivot and why we feel so emboldened by the results that we are seeing.

So not saying it is gonna be on a high glide path because we do not know that. We are not projecting that. But we do see as our future goes that because this company in its past had 66% of its revenue in nutrition, that the opportunity for us to significantly grow that part of our business is real, and we are going after it.

Analyst (Eric DeLoret): Yeah. Certainly a very attractive, you know, growth opportunity and outlook here. I guess just 1 more on that. So should I understand the increase in sort of average revenue per subscriber as lowered customer acquisition costs as you were kind of just touching on or, you know, lower contra revenue items, or is there some other sort of just organic growth aspect that is that is helping drive that average revenue per subscriber number up?

Brad Ramberg: I think Eric, this is Brad. In terms of, nutrition in particular, we are having more 1 time sales, especially now that we are advertising it. So as I as I mentioned in my sort of prepared remarks, I think the nutrition sub number is not necessarily the best metric to use going forward. And over the time, we will come up with a better sense of guidance, but there is certainly more 1 time sales. In addition to the nutrition orders that are sold via subscription.

Mark R. Goldston: Yeah. And remember, a lot of people do not just buy a single product.

Carl D. Daikeler: So if they buy a bundle or buy a stack, as the case may be, that obviously helps to build AOV. Yeah. Absolutely.

Analyst (Eric DeLoret): that is helpful. Thank you. Just wondering if you could expand on the impact of KeHE distribution. I mean, does this simply sort of get you a seat at the table with grocers, or is KeHE itself doing any marketing on behalf of Beachbody? If you could just expand on what you expect from that partnership. That would be great.

Mark R. Goldston: Great question. As you know, KeHE is a huge company, 1 of the 2 dominant distributors in the food industry. They have got as I understand, over 30 thousand individual grocers who are in their network. So the way it works is, for example, we are selling Sprouts. Sprouts is part of the KeHE network. And so when you get Sprouts, you get added to KeHE. And now you are in their system. And KeHE has its own sales organization, which goes out to these 30 thousand retailers as well.

So separate from our broker organization that we have hired at Advantage, They have their own internal organization, so they can now make their client companies, the 30 thousand grocers, aware of the fact that they now carry our product, and it is available for purchase. So we intend to work closely with KeHE to help indoctrinate their sales organization so that they can do effective communications out to their grocer member network so that they can potentially buy our Shakeology product, and this is for Shakeology. that is all very encouraging.

Analyst (Eric DeLoret): Thank you. Yes. Thank you, Eric.

Operator: Your next question comes from the line of George Arthur Kelly with ROTH Capital Partners. Your line is open. Please go ahead.

George Arthur Kelly: Hi everyone. Thanks for taking my questions.

Carl D. Daikeler: Sure. Hey, George.

George Arthur Kelly: First 1, hey, Mark.

Mark R. Goldston: First 1 is on the Southern California test. Can you just update us on the status of that test and what you have learned? I am not sure what the distribution looks like or just any kind of update on that test would be great.

George Arthur Kelly: We literally just got off a call an hour ago on this. So we have hired the best beverage distribution beverage company to help us distribute it in country, which is LA Libations. Out of Los Angeles. They are just top drawer.

Mark R. Goldston: Heck, they just ran their beverage forum 2 weeks ago. It was massively attended. So they are representing us in the Southern California market. To go out to distribution, remembering that we are, George, off the planogram cycle right now. So most of these retailers are you know, already have their store shelves set. So they are gonna be going out with what they would call an interrupt sale, which is you are going in off cycle. To show 2 very compelling products. So Insanity, which is gonna be called Insanity Liquid Shock. that is what we are calling it.

And then we have got our P90X product, And so that product is in the process of going through final stage of production. We will have production quantities available in July, and then they are ready to ship. So we anticipate probably being on shelf in Southern California stores that the LA libation sales organization will be selling over the next, call it, 6 to 8 weeks, probably be on shelf at some point in August, which is exactly when we thought we would be. So we are tracking. it is on schedule, and the plan would be put it in the test market. Read the results.

And then a lot of retailers, have their meetings in October and November for their spring 27 planogram resets. So the planogram resets for most retailers is in March of 2027. And the presentations to get into those planograms, this is for national will be in October and November. So the goal is get on shelf, end of the summer, get some great reads hopefully, of P90X and Insanity energy drinks in the Southern California market, and then use that as a proxy to go into those October and November national meetings to secure distribution that will then occur in 2027.

George Arthur Kelly: Okay. Okay. that is that is great. And then a follow-up to that. As you build both the business you were just talking about, the P90X and Insanity stuff as well as the Shakeology at retail.

Mark R. Goldston: Mhmm. How should we think about gross margin? Is it gonna be a material kind of impact as those revenue lines grow? And just any kind of context there would be helpful. I think the best way to think about it and, Brad, feel free to jump in here, those margins in nutrition as wholesale becomes a bigger and bigger part of the business, which now that it will, will probably be in and around the mid forties. And so for nutrition. So that is the best way to think about that. And so on a weighted average basis, you know, versus where we were, which is 48 to 50, it will not be a huge difference.

And the way we look at it, George, is while that will be the margin, component as we move into 2027, we are looking at the material gross profit dollars themselves. Because this should become a volume business at some point where we are just looking at actual gross profit. So we know going in that a wholesale business in nutrition will be in the 40 plus range of margin. And so the question will become what percentage of our overall company is that? And then where do your weighted average gross margins go? But at this point, we really cannot project that yet because we are in such early days.

George Arthur Kelly: Yep. Understood. And then last question for you. I know it is less a focus, but the digital fitness side of your business, How is the sort of content spend and new programming and, like, how much are you scaling all of that back?

Carl D. Daikeler: And marketing around your digital fitness business like, how quickly should we think about, the shift in focus like, starting to sort of play through the numbers? Or am I-- yeah. I really would not-- how much it is-- Yeah. I would not look at it that way, George. What we are really seeing like, it is still a very critical and, frankly, a competitive advantage that we have with the size of the library, the scope of the over a 160 programs in the library. And, frankly, we have kept the capital allocation to new content the same for about the last 2.5, 3 years. So that is consistent.

What we have found, though, is we are acquiring customers into both the digital subscription and the nutritional products at a more efficient rate by leading with the nutritional. So if you think about it just from a consumer standpoint, they are thinking about a healthy lifestyle change. See Shakeology, or they see the new P90X supplements being advertised D2C. And they go, oh, you know what? I would like to make a lifestyle change. They come in, and then see the digital subscription offerings available to them and we are still converting people into digital. So plus, when they buy for instance, a Shakeology let's say they buy a bag of Shakeology, and that is about a $120.

They might get a little discount on that. If they are a first time customer, we will offer them a free 30 day trial into the digital subscription that rolls over into, whether either a monthly or an annual subscription. So it is still what we call the total solution. Which is what has driven the company, to growth since we started it. So it is so digital fitness is still fundamental. We are still investing in it, and it is still, I think, an important competitive advantage that we have got in all these sales channels where we are leading with nutrition.

Mark R. Goldston: Sure. Let me-- the value that we get to add to the purchase-- let me add something on to what Carl just said, and think about it like this because this is really a very clever move that we are making here. With the digital fitness market, being $13 billion, just imagine you are fishing in a lake. The nutritional category, $164 billion, is literally an ocean. And what we are finding is that it is a much more efficient catch mechanism. To go into that larger nutritional market because 60-plus percent of the people who take nutritional supplements exercise.

So we are now taking a focus, and we are going to get you out there with the advertising on nutrition. And when you come to the Body website and you see that we are the premier player in the world in digital fitness, we are getting a lot of upselling occurring. So people now buying the supplements, but buying the digital fitness. So what does that do? That brings your CAC down. So you are getting much more efficient CAC because you are promoting nutrition and you are getting the add on of digital fitness, or they are going right to digital fitness and they just were attracted by the advertising and nutrition.

So what we are finding is that with the same level of dollar spend, we are actually getting a preferential customer acquisition cost which gives us a better yield and lifetime value. Does that make sense?

George Arthur Kelly: It does. Yeah. It does. Thank you.

Carl D. Daikeler: Sure.

Operator: Your next question comes from the line of Alec Hantman with Sidoti & Co. Your line is open. Please go ahead.

Analyst (Alex Hantman): Good evening. Thanks for taking our questions.

Mark R. Goldston: Hey, Alec. My first question just following up on the retail launch. I know you spoke about Vitamin Shoppe coming into play later this year. Could you talk a little bit about, how many stores might be used at launch and if there is any metric that you might be looking to hit for the rollout to be expanded.

Analyst (Alex Hantman): So luckily, they were very impressed with the product line.

Mark R. Goldston: So it is going-- I think it is going chain wide to the over 600 vitamin shop stores out of the gate. So it is not a limited roll. See how it does, and then roll it out. We are going chain wide. Nationwide with Vitamin Shoppe at present. So it should be in stores, you know, probably sometime maybe late August into early September. that is the plan. So, yeah, they are a great partner, and they are excited about it, and so are we.

Analyst (Alex Hantman): that is great. Congrats, Mark.

Mark R. Goldston: Yeah. Thank you. Is Sprouts also starting, you know, at the full rollout?

Analyst (Alex Hantman): No.

Mark R. Goldston: Sprouts, I think we are gonna be at 90 stores. And that was, you know, basically laid out by them and us as the best places for us to be out of the gate. And assuming we have great success there, I assume there will be more stores obviously added after that. But we have a great component of stores that we are going in and enough to really do a meaningful business. And they are, again, a fantastic partner to be in incredibly well respected, not only by the consumer, but by their brethren in the grocery business. that is great momentum. Thank you.

Analyst (Alex Hantman): Yeah. And then just, yeah, a couple more from us. You know, I know you have spoken about nutrition being, you know, much more efficient catch mechanism, you know, and providing a lot of cross selling opportunities. I know you mentioned, that the retail products will come with complementary digital access. Do you have, you know, conversion rate assumptions? You know, basically, how are you thinking about the cross selling success of that channel after launch?

Mark R. Goldston: Measuring that? Well, we will have uh, we do not really know because we are still waiting on you know, we have like, 30, 40 sets of samples that are sitting in retail buyers' offices waiting to get responses from them as to who we will be adding the product line. So hard to make any kind of an estimate while we are not really sure where that distribution's going. So I said in my prepared remarks, hopefully, the next call, we will have an update as to who is carrying these products where, and what kind of doors we will have. But there is really no way to know that out of the gate.

I mean, we can make an educated guess, but you do not really know that. And so we are gonna have to see how it plays out, but it is a tremendously effective tool And, so it just depends on how many doors promote our product, whether we get end cap displays or just in line. And whether there will be in store signage that touts the fact that when you buy the product, you are getting a month of free access to Body. So but that will all start to materialize as we get the distribution nailed down.

Analyst (Alex Hantman): Understood. that is great. Thank you. Sure.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted, please remember to unmute your device. Your next question comes from the line of Michael Lipinski with Noble Capital Markets. Your line is open. Please go ahead.

Carl D. Daikeler: Mark R. Goldston: Hi, Michael.

Operator: Michael, you might be muted on your end. Mark R. Goldston: Yeah, Michael. We are not hearing you. Michael, I will have you try 1 more time. Your line is open. Please go ahead.

Mark R. Goldston: Well, it looks like the string to the an dixie cup may have been disconnected.

Operator: Well, that concludes our Q&A session for today. I will now turn the call back to Mark R. Goldston for closing remarks.

Mark R. Goldston: Thanks very much, Elizabeth. Really appreciate everybody attending today. We are really, really proud of the quarter. That we just put up, and we are we are really excited about what the future holds for the company as we have articulated. So as always, if you have any questions, please feel free to reach out to the company either through ICR or directly to Brad Ramberg, our CFO. Thanks, everyone. Have a great evening.

Operator: That concludes today's call. Thank you for your participation. And enjoy the rest of your day. You may now disconnect.