Q1 2024 The Beachbody Co Inc Earnings Call

May 6, 2024

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Good afternoon, ladies and gentlemen.

Operator: Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company first quarter 2024 earnings call.

Speaker Change: Welcome to the Beach body company first quarter 'twenty 'twenty four earnings call.

Operator: At this time, all participants are in listen-only mode. Following the presentation, we will conduct a Q&A session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded. And I will now turn the conference over to our host, Bruce Williams, Managing Director of ICR Investor Relations.

Speaker Change: At this time, all participants are in listen only mode.

Speaker Change: Following the presentation, we will conduct a Q&A session instructions.

Speaker Change: Instructions will be provided at that time for you to queue up for questions.

If anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time.

Speaker Change: I would like to remind everyone that this conference call is being recorded.

Speaker Change: And I will now turn the conference over to our host Bruce Williams, managing director of ICR Investor Relations.

Bruce Williams: Welcome everyone, and thank you for joining us for our first quarter earnings call. With me on the call today are Mark Goldston, the Executive Chairman of Beachbody; Carl Daikler, Co-Founder and Chief Executive Officer; and Marc Suidan, Chief Financial Officer.

Bruce Williams: Welcome everyone and thank you for joining us for our first quarter earnings call with me on the call today are Mark Goldstein Executive Chairman of the Beach bought a company called <unk> co founder and Chief Executive Officer, and Mark, Sweden, Chief Financial Officer.

Bruce Williams: 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 link. 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. However, actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release.

Bruce Williams: Following the prepared remarks, we'll open the call up for questions before we get started I would like to remind you of the Companys 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 995.

Bruce Williams: Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties all of which are described in the company's filings with the SEC, which includes today's press release todays.

Bruce Williams: Today's call will include references to non-GAAP financial measures such as adjusted EBITDA, net cash, and free cash flow. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available in the earnings release, which can be found on our website. Now, I would like to turn the call over to Mark.

Bruce Williams: Today's call will include references to non-GAAP financial measures such as adjusted EBITDA net cash and free cash flows 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 Goldston: Thank you, Bruce, and good afternoon, everyone. 2024 is off to a strong start as we continue to deliver on our strategic initiatives and remain steadfast in our turnaround plan. With our efforts thus far in 2024, we have some great news to announce. First, I'm thrilled to share that we beat the midpoint of our revenue guidance and achieved quarter-over-quarter revenue growth for the first time since Q4 of 2021. Second, we exceeded the midpoint of our adjusted EBITDA guidance, and we've now delivered positive adjusted EBITDA for two consecutive quarters. And today, we reported our highest adjusted EBITDA since going public back in 2021.

Mark Goldston: Thank you Bruce and good afternoon, everyone two.

Mark: 2024 is off to a strong start as we continue to deliver against our strategic initiatives and remain steadfast in our turnaround plan.

Mark Goldston: And third, we reached a critical milestone of becoming free cash flow positive this quarter, once again, a first for our company since 2020. As a reminder, the goal of our turnaround strategy centers on one, continuing to enhance our cash position and balance sheet, two, transforming our cost base and re-architecting the enterprise to dramatically reduce our breakeven point without compromising the core business model that generates revenue, and three, launching a series of initiatives to refine the business model and drive top-line growth. In terms of where we stand in the turnaround process, we feel that we're considerably ahead of schedule. Let me walk you through the details of our three key turnaround strategies.

Mark: With our efforts thus far in 2024, we have some great news to announce.

Mark: First I am thrilled to share that we beat the midpoint of our revenue guidance and achieved quarter over quarter revenue growth for the first time since Q4 of 2021 second.

Mark: Second we exceeded the midpoint of our adjusted EBITDA guidance and we've now delivered positive adjusted EBITDA for two consecutive quarters and today, we reported our highest adjusted EBITDA is going public back in 2021 and third we reached a critical milestone of becoming <unk>.

Mark: Free cash flow positive this quarter once again, a first for our company since 2020.

Mark: As a reminder, the goal of our turnaround strategy centers on one continuing to enhance our cash position and balance sheet to transforming our cost base and we are protecting the enterprise to dramatically reduce our breakeven point without compromising the core business model.

Mark: Generates revenue and three launching a series of initiatives to refine the business model and drive top line growth.

Mark: In terms of where we stand in the turnaround process. We feel that were considerably ahead of schedule. Let me walk through the details of our three key turnaround strategy.

Mark Goldston: The first step is enhancing our cash liquidity and balance sheet position. We reported our first positive free cash flow quarter since 2020. During the quarter, we took additional strategic action to fortify our liquidity position by engaging in a sales leaseback transaction and divesting a non-core investment, which resulted in a $7 million debt reduction. As a direct outcome of that, our loan balance has been cut in half since I joined in June of 2023, from a level of $50 million to now $25 million. In April, we proactively amended our revenue covenants for our term loan with Blue Torch Capital.

Mark: First is enhancing our cash liquidity and balance sheet position.

Mark: Sorted our first positive free cash flow quarter since 2020 during the quarter, we took additional strategic action to fortify our liquidity position by engaging in a sale leaseback transaction and divesting of noncore investments, which resulted in a $7 million debt reduction.

Mark: As a direct outcome of that our loan balance has been cut in half since I joined in June of 2023 from a level of $50 million to now $25 million.

Mark: In April we proactively amended our revenue covenants for our term loan with blue towards capital. We finished Q4 2023 with a net cash position of $4 million, but at the end of Q1 2024, we showed continued improvement with positive net cash position.

Mark Goldston: We finished Q4 2023 with a net cash position of $4 million. But at the end of Q1 2024, we showed continued improvement with a positive net cash position of $14 million. This transformation in just one quarter is impressive and resulted in a $10 million liquidity improvement sequentially. Additionally, our amended debt covenant lowered the quarterly revenue threshold from $120 million down to $100 million per quarter, and this will last until December 31st, 2024. And then subsequently, it will go to $110 million per quarter beginning in Q1 of 2025.

Mark: A $14 million. This transformation in just one quarter is impressive and resulted in a 10 million dollar liquidity improvement sequentially.

Mark: Additionally, our amended debt covenant lowered the quarterly revenue threshold from $120 million down to $100 million per quarter and this will last until December 31 of 2024, and then subsequently it will go to $110 million per quarter, beginning in Q1 of 2025.

Mark: Hi.

Mark Goldston: We believe this demonstrates that our lenders have confidence in our progress to run a positive, free cash flow business at a much lower revenue threshold requirement. Second, we're transforming our cost base and re-architecting the body enterprise to dramatically reduce our break-even point. In what we believe to be a very short period of time, we have successfully reduced our revenue threshold from over $900 million in 2022 to less than $500 million in 2024 to be in a cash-generating position. That's more than a $400 million reduction in the breakeven threshold for the company.

Mark: We believe this demonstrates that our lenders have.

Mark: Confidence in our progress to a positive free cash flow of business at a much lower revenue threshold requirement.

Mark: Second.

Mark: We're transforming our cost base and re architected the body enterprise to dramatically reduce our breakeven point.

Mark: What we believe can be a very short period of time, we have successfully reduced our revenue threshold from over $900 million in 2022 to less than $500 million in 2024 to be in a cash generating position.

Mark: That's more than a 400 million dollar reduction in the breakeven threshold for the company.

Mark Goldston: What's important about that is that we've built operating leverage into the P&L at the current run rate of revenues and believe that as our turnaround gains traction, we will drive significant operating profit over time. We stated that we would generate over $250 million in cost savings in 2024 versus where the company was back in 2021. So, a long process of improving the cost structure, and we're currently at a run rate to deliver these savings in 2024. And this has been demonstrated by our Q124 results.

Mark: What's important about that is that we build operating leverage into the P&L at the current run rate of revenues and believe that as our turnaround gains traction we will drive significant operating profit overtime.

Mark: We stated that we would generate over $250 million in cost savings in 2024 versus where the company was back in 2021, So a long process of improving the cost structure and we're currently at a run rate can deliver these savings in 2024 and this has been demonstrated by our Q1 'twenty for a reason.

Mark: <unk>.

Mark: And third.

Mark Goldston: We've developed revenue initiatives designed to drive top-line growth, and we're thrilled to announce that we grew sequential quarterly revenues for the first time since 2021. Looking forward, we're excited about our existing and upcoming innovation pipeline, which focuses on expanding consumer access to our rich catalog of programs. And we'll also be exploring strategic partnerships and developing innovative marketing programs, which will expand the distribution of our nutrition business, among other initiatives.

Mark: We've developed revenue initiatives designed to drive top line growth and were thrilled to announce that we grew sequential quarterly revenues for the first time since 2021.

Mark: Looking forward, we're excited about our existing and upcoming innovation pipeline, which focuses on expanding consumer access to a rich catalog of programs and will also be exploring strategic partnerships and developing innovative marketing programs, which will expand the distribution of our nutrition business.

Mark: Among other initiatives.

Mark Goldston: Our performance reflects many proofs that the strategy and discipline focus of the turnaround plan we constructed after my arrival in June of 2023 is working, and we're tracking ahead of schedule on critical milestone achievement. I like to create strategic comparative lists that focus on five key areas, and I've been doing that for decades in the companies that I've run.

Mark: Our performance reflects many proof points that the strategy and disciplined focus of the turnaround plan. We constructed after my arrival in June of 2023 are working and we're tracking ahead of schedule.

Mark: Critical milestone achievements.

Mark: I like to create a strategic imperative list that focus on five key areas I've been doing that for decades, and the companies that I've run and I'm pleased to announce that the company has already achieved the five key strategic imperatives of the turnaround plan that we established after my arrival in June of 2023, let.

Mark Goldston: I'm pleased to announce that the company has already achieved the five key strategic imperatives of the turnaround plan that we established after my arrival in June of 2023. Let me quickly review these five key strategic imperative accomplishments. One, we strengthened our liquidity position. Two, we dramatically lowered the breakeven point of the company. Three, we have delivered positive adjusted EBITDA now for two consecutive quarters. Four, we built substantial operating leverage into our P&L, and five, and thus far in 2024, we achieved our first positive three cash flow quarter since 2020.

Mark: Let me quickly review these five key strategic imperative accomplishment, one we strengthened our liquidity position to we dramatically lowered the breakeven point of the company three we delivered positive adjusted EBITDA now for two consecutive quarters for we built substantial operating leverage.

Mark: Into our P&L and five and thus far in 2024, we achieved our first positive free cash flow quarter since 2020.

Mark Goldston: As a reminder, we are still in balance sheet optimization mode, which means we will remain hyper-focused on maximizing cash and liquidity. Therefore, we will continue to focus on executing our turnaround plan to optimize cash generation from our valuable asset base. We're on track to build a company that not only delivers positive adjusted EBITDA and positive free cash flow but also achieves the third element of the critical financial measurement of eternity, and that will be Delivering Gap Net Income, which will be our next key milestone in the impressive, and might I say rapid, turnaround of Body. Now, I'll turn it over to Carl to discuss our top-line revenue growth initiatives. Carl?

Mark: As a reminder, we are still as balance sheet optimization mode, which means we will remain hyper focused on maximizing cash and liquidity. Therefore, we will continue to focus on executing our turnaround plan to optimize cash generation from our valuable asset base. We're on track to build a company that not.

Mark: We delivered positive adjusted EBITDA and positive free cash flows, but also achieved the third element of the critical financial measurements of a turnaround and that will be delivering GAAP net income, which will be our next key milestone and the impressive and might I say rapid turnaround of body.

Mark: Now I'll turn it over to Carl to discuss our top line revenue growth initiatives.

Carl D. Daikeler: Thanks, Marc, and thank you, everyone, for joining our first quarter earnings call. Achieving our first positive free cash flow quarter since 2020 is a major milestone in our turnaround, and we look forward to sharing more proof points now as every quarter unfolds. I'll walk you through our key revenue initiatives, which align with our overall mission to help people achieve their goals and live healthy, fulfilling lives. First, we just launched our digital program purchase initiative that we're extremely excited about.

Mark: Sure.

Carl: Thanks, Mark and thank you everyone for joining our first quarter earnings call achieve.

Carl: Achieving our first free cash flow positive quarter. Since 2020 is a major milestone in our turnaround and we look forward to sharing more proof points now as every quarter unfolds.

Carl: Walk through our key revenue initiatives, which align with our overall mission to help people achieve their goals and live healthy fulfilling lives.

Carl: First we just launched our digital program purchase initiative that we're extremely excited about think of it as the itunes model of buying music, but for fitness programs, where customers can now buy and stream programs from our fitness and nutrition library without a subscription we believe there's latent demand for.

Carl D. Daikeler: Think of it as the iTunes model of buying music, but for fitness programs, where customers can now buy and stream programs from our fitness and nutrition library without a subscription. We believe there's latent demand for our library of content, from programs that were bestsellers and famous on DVD, like P90X and Insanity, to other popular programs which have never been on DVD, like 80 Day Obsession, Lyft 4, and Shanti's latest program called Dig Deeper.

Carl: Our library of content from programs that were best sellers and famous on DVD like P 90 accident Saturday to other popular programs, which have never been on DVD like 80 day obsession lift for and Sean Ts latest program called dig deeper we're now giving consumers the ability to purchase.

Carl D. Daikeler: We're now giving consumers the ability to purchase individual programs, which is actually the business model that propelled the business for 20 years. Each month, we'll be offering additional titles from our library of over 120 programs for sale in Body's new shop at body.com. And we're confident that this new initiative will cater to people who prefer to buy a specific program rather than subscribe to the entire library.

Carl: The individual programs, which is actually the business model that propelled the business for 20 years. Each month, we will be offering additional titles from our library of over 120 programs for sale in bodies, new shop programs store at <unk> Dot com.

Carl: And we're confident that this new initiative will cater to people who prefer to buy specific program rather than subscribe to the entire library. We believe that we're the only major player in home fitness, who has a catalog that makes this kind of commerce viable and again, we believe that expanding access to our content.

Carl D. Daikeler: We believe that we're the only major player in home fitness who has a catalog that makes this kind of commerce viable. And again, we believe that expanding access to our content provides an extremely compelling marketing opportunity. And then we can introduce those new customers to the benefits of our fitness and supplement subscriptions once they experience the efficiency of our tested approach to step-by-step training. We're in the early stages of marketing and refining the digital purchase program to maximize LTV by bringing new people to the platform and then upselling them additional programs or digital subscriptions and supplements.

Carl: Provides an extremely compelling marketing opportunity and then we can introduce those new customers to the benefits of our fitness and supplement subscriptions once they experience the efficiency of our tested approach to step by step training.

Carl: We're in the early stages of marketing and refining the digital purchase program to maximize LTV by bringing new people to the platform and then upselling them additional programs or digital subscriptions and supplement.

Carl D. Daikeler: Next, within our nutrition business, we've expanded our sales channels, and in March, we launched more aggressive marketing campaigns across our entire ecosystem, highlighting the superiority and quality of our formulations. These marketing campaigns will highlight a key product every month to our existing member base.

Carl: Next within our nutrition business, we've expanded our sales channels and in March we launched more aggressive marketing campaigns across our entire ecosystem highlighting the superiority and quality of our formulations. These marketing campaigns will highlight a key product every month to our existing.

Carl: Member base and were further broadening our distribution by working with social media Influencers to test review and promote our nutrition products and to transact through a simplified checkout process on social media platforms. Looking ahead, we're reviewing an extensive range of pricing and packaging in portion config.

Carl D. Daikeler: And we're further broadening our distribution by working with social media influencers to test, review, and promote our nutrition products and to transact through a simplified checkout process on social media platforms. Looking ahead, we're reviewing an extensive range of pricing, packaging, and portion configurations to determine the best way to generate trials and conversions and repeat purchases of our nutrition products. We're doing this across all our sales channels, including our network of partners, our direct-to-consumer marketing, and now on Amazon.

Carl: Durations to determine the best way to generate trials and conversions and repeat purchases of our nutrition products. We're doing this across all our sales channels, including our network of partners, our direct to consumer marketing and now in Amazon more news on this will be shared as we expand these activities in the coming quarters.

Carl D. Daikeler: More news on this will be shared as we expand these activities in the coming quarters. Okay, now moving to Amazon. We're encouraged by the growth that we've seen this quarter. Sales on Amazon increased by over 50%, both sequentially and year-over-year from Q1 2023.

Carl: Okay now moving to Amazon, we are encouraged by the growth that we've seen this quarter sales on Amazon increased by over 50% both sequentially and year over year from Q1 2023.

Carl D. Daikeler: Now, while this is starting off a smaller base, the growth gives us confidence that we have the right products, strong brand recognition, and the right price points. We recognize that we have a real opportunity to expand access to our incredibly effective nutritional products, and we're seeing positive, compounding results from our distribution partner on Amazon. And last, I want to highlight the progress we've made with reactivating our extensive database of former and prospective customers.

Carl: Now while this is starting off a smaller base the growth gives us confidence that we have the right products strong brand recognition and the right price points, we recognize that we have a real opportunity to expand access to our incredibly effective nutritional products and we're seeing positive compounding results from our distribution partner on Ami.

Carl:

Carl: And last I want to highlight the progress we've made with reactivating our extensive database of former and prospective customers. We continue to execute against our strategy of sending targeted messages and special offers to drive conversion, but the process of methodically coming through this large database is taking longer than we.

Carl D. Daikeler: We continue to execute against our strategy of sending targeted messages and special offers to drive conversion, but the process of methodically combing through this large database is taking longer than we anticipated as we test and formulate our messaging and formats for email and text.

Carl: Painted as we test and formulate our messaging and formats for email and text messaging, we have a new team leading this project and we remain very optimistic that this will be a very effective customer acquisition and engagement tool that will drive LTV with minimal CAC I.

Carl D. Daikeler: We have a new team leading this project, and we remain very optimistic that this will be a very effective customer acquisition and engagement tool that will drive LTV with minimal capital. I think it's also important today to discuss weight loss pharmaceuticals and their potential related impact on the body and the overall weight loss industry, if I may. Several analysts have published reports that fitness is not impacted by the weight loss pharmaceutical business, but meal replacement and snacking consumption is actually being negatively impacted.

Carl: I think it's also important today to discuss weight loss pharmaceuticals, and their potential related impact on body and the overall weight loss industry. If I may.

Carl: Several analysts have published reports that fitness is not impacted by the weight loss pharmaceutical business, but meal replacement and snacking consumption is actually being negatively impacted the.

Carl D. Daikeler: The science is very clear that consumers who are using GLP-1 drugs need to augment that investment with fitness and nutrition to maintain muscle mass and prevent other side effects. Scientific studies have consistently shown that the best preventive medicine for overall health and longevity is exercise and healthy eating, and that's our opportunity. Body is the one comprehensive fitness and nutrition company that can truly complement this wave of pharmaceutical innovation, and we have not seen a negative impact from the adoption of GLP-1. In fact, whether you're a GLP-1 consumer or not, we remain the most effective and affordable fitness and nutrition solution for people.

The science is very clear that consumers, who are using <unk>, one drugs need to augment that investment with fitness and nutrition to maintain muscle mass and prevent other side effects scientific studies have consistently shown the best preventive medicine for overall health and longevity is.

Carl: <unk> and healthy eating and there is our opportunity body is the one comprehensive fitness and nutrition company that can truly complement this wave of pharmaceutical innovation and we have not seen a negative impact from the adoption of <unk> in fact, whether you're a DLP one consumer or not we remain the most effect.

Carl: <unk> and affordable fitness and nutrition solution for people okay.

Marc Suidan: Okay. Now, I'll turn the call over to Marc Suidan to walk through the specifics of our first quarter financials. Marc.

Carl: Now, let me turn the call over to marks we Dan to walk through the specifics of our first quarter financials Mark.

Marc Suidan: Thanks, Carl. And thank you, everyone, for joining the call today. I'm very pleased with our Q1 results that we just released. As Mark and Carl mentioned, we have hit several key milestones in our turnaround journey. We remain on track to achieve approximately $250 million in cash cost savings in 2024, in line with our business rearchitecture plan that we began back in 2021. I will not provide a review of our first quarter financials, starting with revenue.

Mark: Thanks, Carl and thank you everyone for joining the call today.

Mark: I am very pleased with our Q1 results that we just released.

Mark: As Mark and Karl mentioned, we've hit several key milestones in our turnaround journey.

Mark: We remain on track to achieve approximately $250 million in cash cost savings in 2024 in line with our business re architecture plan that we began back in 2021.

Speaker Change: I will now provide a review of our first quarter financials, starting with revenues.

Marc Suidan: Revenues were $120 million for the quarter, which was above the midpoint of the guidance range and an increase from Q4 of 2023. This would mark the first sequential revenue growth in the past eight quarters. Compared to the prior year, first quarter revenues declined 17% year over year. Digital revenue decreased 4% from the prior quarter to $62 million and decreased 5% year-over-year. We believe that digital revenue will continue to be relatively stable.

Speaker Change: Revenues were $120 million for the quarter, which was above the midpoint of the guidance range and an increase from Q4 of 2023. This would mark the first sequential revenue growth in the past eight quarters.

Speaker Change: Compared to the prior year first quarter revenues declined 17% year over year.

Speaker Change: Digital revenue decreased 4% from the prior quarter through $62 million and decreased 5% year over year.

Speaker Change: We believe that digital revenue continued to be relatively stable.

Marc Suidan: We ran a successful BOGO promotion, which stands for buy one year, get the second year for free, that resulted in strong cash generation. However, less digital revenues were recognized this quarter due to the BOGO promotion, as we deferred digital subscription revenue over the two-year period of the promotion. Our overall digital subscriber count was 1.2 million, of which 100% are now on the Body Premium platform.

Speaker Change: We ran a successful bogo promotion, which sense for by one year give the second year for free that resulted in strong cash generation. However, less digital revenues were recognized this quarter due to the bogo promotion as we the first digital subscription revenue over the three year period of the promotion.

Speaker Change: Our overall digital subscriber accounts was one 2 million of which a 100% are now in the body premium platform.

Marc Suidan: Nutrition revenue increased 7% from the prior quarter to $56 million and decreased 25% year-over-year. This marks our first sequential nutrition revenue increase since Q1 of 2022. We are pleased that our nutrition revenue grew sequentially this quarter, showing early signs of improvements within our turnaround plan. However, it is important to note that we are still in the early stages of reinvigorating our nutrition business. And it will take more time to grow the nutrition business sustainably.

Speaker Change: Nutrition revenue increased 7% from the prior quarter to $56 million and decreased 25% year over year. This.

Speaker Change: This marks our first sequential nutrition revenue increase since Q1 of 2022.

Speaker Change: We are pleased that our nutrition revenue grew this quarter sequentially showing early signs of improvements within our theater output.

Speaker Change: It is important to note that we are still in the early stages of reinvigorating, our nutrition business and it will take more time to grow the nutrition business sustainably.

Marc Suidan: At the end of Q1 2024, our nutrition subscriptions were $150,000 compared to $160,000 in the prior quarter. Connected fitness revenue was $3 million, in line with the prior quarter and 50% below the prior first quarter. We will continue to strategically use promotions to sell our existing inventory.

Speaker Change: At the end of Q1 2020 for our nutrition subscriptions were 150000 compared to 160000 in the prior quarter.

Speaker Change: Connected fitness revenue was $3 million in line with the prior quarter and 50% below the prior year first quarter.

We will continue to strategically use promotions to sell our existing inventory.

Marc Suidan: We are very pleased to announce that gross margin improved dramatically in Q1 of 2024. The company achieved a gross margin of 67.7% for the first quarter, which increased 550 basis points from 62.2% in Q4 of 2023 and increased 470 basis points from 63% in Q1 of 2022. This was the highest gross margin reported by the company since we went public in Q2 of 2021, when we had a gross margin of 69.

Speaker Change: We are very pleased to announce that gross margin improved dramatically in Q1 of 2020 for.

Speaker Change: The company achieved a gross margin of 67, 7% for the first quarter, which increased 550 basis points from 62, 2% in Q4 of 2023 and increased 470 basis points from 63% in Q1 of 2023.

Speaker Change: This was the highest gross margin reported by the company. Since we went public in Q2 of 2021, when we had a gross margin of 69, 2%.

Marc Suidan: Digital Gross Margin was an impressive 79.1% for the quarter, which represented a 600 basis points improvement over the 73.1% in Q4 of 2023 and a 220 basis points higher than the 76.9% in Q1 of 2023. As we discussed in the last training call, our 2024 digital gross margin will benefit from lower content amortization as our production and content spend have become more efficient. Our goal is to drive digital gross margin to over 80%.

Speaker Change: Digital gross margin was an impressive 79, 1% for the quarter, which represented a 600 basis points improvement over the 73, 1% in Q4 of 2023, and 220 basis points higher than the 76, 9% in Q1 of 2023.

Speaker Change: As we discussed in the last earning call. Our 2024 digital gross margin will benefit from lower content that amortization as our production and content spend has become more efficient.

Speaker Change: Our goal is to drive digital gross margin to over 80%.

Marc Suidan: The company also recorded major improvements in nutrition gross margin during the quarter. Nutrition Gross Margin was 59.9%, representing a 670 basis points increase from 53.2% in Q4 of 2023 and a 180 basis points improvement from 58.1% in Q1 of 2023. The year-over-year improvement was driven by carefully managing inventory and prices. Connected fitness gross margin was minus 19.5% for the quarter versus minus 13% in the prior quarter and minus 25.7% in the prior first quarter.

Speaker Change: The company also recorded major improvements in nutrition gross margin during the quarter.

Speaker Change: Attrition gross margin was 59, 9%, representing a 670 basis points increase from the 53, 2% in Q4 of 2023.

Speaker Change: And the 180 basis points improvement from 58, 1% in Q1 of 2023.

Speaker Change: The year over year improvement was driven by carefully managing inventory and pricing.

Speaker Change: Connected fitness gross margin was minus 19, 5% for the quarter versus minus 13% in the prior quarter and minus 25, 7% in the prior year first quarter.

Marc Suidan: Our connected fitness business is less than 5% of our total revenues, and as shared on our previous earnings call, we are focused on selling on-hand inventory to generate incremental cash. While we're not actively looking to expand the connected fitness hardware business, we are still very focused on ensuring that we will continue to deliver the finest connected fitness content.

Speaker Change: Our connected fitness business is less than 5% of our total revenues and that's shared on previous earnings call. We are focused on selling on hand inventory to generate incremental cash. While we are not actively looking to expand that connected fitness hardware business. We are still very focused on ensuring that we will continue to deliver the brightness connected fitness concept.

Marc Suidan: Moving on to operating, Excluding the asset impairment and restructuring charges, operating expenses for the quarter were $90 million versus $91 million in the previous quarter and $113 million in the same quarter last year. This represents a $23 million reduction in operating expenses versus the same quarter last year. Selling and marketing expense was reduced to 49% of revenue compared to 50% in the prior quarter and 53% in the prior year's first quarter.

Speaker Change: Moving onto operating expenses.

Speaker Change: Excluding the asset impairment and restructuring charges operating expenses for the quarter were $90 million versus $91 million in the previous quarter and $113 million in the same quarter last year. This represents a $23 million reduction in operating expenses versus the same quarter last year.

Speaker Change: Selling and marketing expense was reduced to 49% of revenue compared to 50% in the prior quarter and 53% in the prior year's first quarter we.

Marc Suidan: We remain on track to achieve our 1,000 basis points improvement in EBITDA from selling and marketing expense reduction and our lower preferred customer discount. This benefit would equate to $50 million based on revenues of $500 million.

We remain on track to achieve our 1000 basis points improvement in EBITDA from selling and marketing expense reduction and our lower preferred customer discounts.

Speaker Change: This benefit would equate to $50 million based on revenues of $500 million.

Marc Suidan: Technology and development was 15% of revenue in the current quarter and prior quarter compared to 13% in the prior year's first quarter. GNA was 11% of revenue, in line with the prior quarter, and it was 12% in the prior year's first quarter. The company recorded a significant reduction in our net loss for the first quarter. Net loss was $14 million in Q1 of 2024, compared to a net loss of $65 million in the prior quarter and a net loss of $29 million in the prior year's first quarter. This represents a major improvement of 52% from the prior year for sports.

Speaker Change: Technology and development was 15% of revenue in the current quarter and prior quarter compared to 13% in the prior year first quarter.

Speaker Change: G&A was 11% of revenue in line with the prior quarter and it was 12% in the prior year's first quarter.

Speaker Change: The company recorded a significant reduction in our net loss for the first quarter net loss was $14 million in Q1 of 2024 compares to a net loss of $65 million in the prior quarter and a net loss of $29 million in the prior year's first quarter.

Speaker Change: This represents a major improvement of 52% from the prior year first quarter.

Marc Suidan: Adjusted EBITDA, which has now been positive for two consecutive quarters, was $5 million in Q1 of 2024 versus $3 million in Q4 of 2023 and a meaningful improvement compared to minus $1 million in Q1 of 2022. We believe that this is a clear indicator of the effectiveness of the company's turnaround plan and the overall reduction in the break-even threshold that we have engineered. Next, moving on to the balance sheet in cash.

Speaker Change: Adjusted EBITDA, which has now been positive for two consecutive quarters with $5 million in Q1 of 2024 versus $3 million in Q4 of 2023.

Speaker Change: And a meaningful improvement compared to the minus $1 million in Q1 of 2023.

Speaker Change: We believe that this is a clear indicator of the effectiveness of the company's turnaround plan and the overall reduction in the breakeven threshold that we have engineered.

Speaker Change: Next moving on to the balance sheet and cash flows.

Marc Suidan: Our cash balance was $39 million compared to $33 million in the prior quarter. This improvement was driven by cash generated from organic operations. Our net cash position, which is our cashless debt, as described in our earnings release, increased from $4 million at December 31 to $14 million at March 31. This $10 million liquidity improvement in a 90-day period was driven by our focus on cash generation.

Speaker Change: Our cash balance was $39 million compared to $33 million in the prior quarter.

Speaker Change: This improvement was driven by cash generated from organic operations.

Speaker Change: Our net cash position, which is our cashless that I've described in our earnings release increased from $4 million at December $31 million to $14 million at March 31, the $10 million liquidity improvement any 90 day period was driven by our focus on cash generation.

Marc Suidan: Our operating cash flow in the first quarter was $9 million versus cash used in operations of $9 million in the prior quarter and $8 million in Q1 of 2023. Year over year, this is a $17 million improvement driven by a turnaround plan that created the ability to run the business in a cash-generating position at this level of revenue. Inventory was $21 million at the end of the quarter, down from $25 million at the end of the prior quarter.

Speaker Change: Our operating cash flow in the first quarter was $9 million.

Speaker Change: Versus cash used in operations of $9 million in the prior quarter and $8 million cash use in Q1 of 2023.

Speaker Change: Year over year. This is a $17 million improvement driven by its turnaround plan, which created the ability to run the business and the cash generating position at this level of revenue.

Speaker Change: Inventory was $21 million at the end of the quarter down from $25 million at the end of the prior quarter.

Marc Suidan: This represents 10 quarters of inventory balance improvement and is the lowest inventory level since going public in 2021. As we continue to sell the connected bike inventory, we will settle in this range of inventory value, which is primarily comprised of nutrition supplements.

Speaker Change: This represents 10 quarters of inventory balance improvement.

Speaker Change: And there is the lowest inventory level since going public in 2021.

As we continue to sell the connected bike inventory, we will settle in this range of inventory value, which is primarily comprised of nutrition supplements.

Marc Suidan: Our content in TechCapx was in line with the prior quarter at $4 million and 28% below the prior year first quarter. The lower CapEx profile is already showing in both our improved gross margins and our improved cash flow. We measure pre-cash flows as our cash generated from operations, less PP and ECAPX, which equates to $7 million in the first quarter. This is a tremendous improvement versus minus $10 million in the prior quarter and minus $11 million in Q1 of 2023.

Speaker Change: Our content and Tech Capex was in line with the prior quarter at $4 million and 28% below the prior year first quarter.

Speaker Change: The lower Capex profile is already showing in both our improved gross margins and our improved cash flows.

Speaker Change: We measure free cash flow as our cash generated from operations less PP&E, capex, which equates to $7 million in the first quarter.

Speaker Change: This is a tremendous improvement versus minus $10 million in the prior quarter and minus $11 million in Q1 of 2023. This is the first positive free cash flow quarter since going public in 2021.

Marc Suidan: This was the first positive free cash flow quarter since going public in 2021. Our debt balance was $25 million at March 31st. We have paid down half the debt since the original borrowing in 2022. Turning to our outlook for the second quarter, we expect second quarter revenues to be in the range of $103 million to $113 million. We expect a net loss in the range of $20 million to $14 million and an adjusted EBITDA in the range of minus $3 million to positive $3 million.

Speaker Change: Yeah.

Speaker Change: Our debt balance was $25 million in March 31, we.

Speaker Change: We have paid down after that with the original borrowing in 2022.

Speaker Change: Lastly, turning to our outlook for the second quarter, we expect the second quarter revenues to be in the range of $103 million to $113 million.

Speaker Change: We expect a net loss in the range of $20 million to $14 million and an adjusted EBITDA in the range of minus $3 million to positive $3 million.

Marc Suidan: Our guidance assumes seasonality, which typically results in a lower level of revenues in Q2 versus Q1, ongoing turnaround initiatives being implemented, and higher expenses associated with our annual summit event. With that said, we announced several major milestones today and look forward to providing further updates over the coming quarters. I will now ask the operator to open it up for questions.

Speaker Change: Our guidance assumes seasonality, which typically results in lower level of revenues in Q2 versus Q1 <unk>.

Speaker Change: Ongoing turnaround initiatives being implemented and higher expenses associated with our annual summit event.

Speaker Change: With that said, we announced several major milestone today and look forward to providing further updates over the coming quarters I'll now ask the operator to open it up for questions.

Speaker Change: Absolutely.

Operator: We will now begin the Q&A session. If you'd like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to remove a question, press star followed by 2. And if you are using a speakerphone, please pick up your handset before asking your question. Our first question today comes from George Kelly with Roth MKM. Please proceed.

Speaker Change: We will now begin the Q&A session.

Speaker Change: And you'd like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: If you'd like to remove that question press star followed by two.

Speaker Change: And if you are using a speakerphone. Please pick up your handset before asking your question.

Speaker Change: Our first question today comes from George Kelly with Roth and Cam.

George Arthur Kelly: Please proceed.

George Arthur Kelly: Hey everyone, thanks for taking my question. So maybe I'll start on the nutrition business. I'm curious... You showed nice sequential growth there. And I'm just curious, what drove that? Was it Amazon, or was there something else that was meaningful in that sequential improvement?

George Arthur Kelly: Hey, everyone. Thanks for taking my questions.

George Arthur Kelly: So maybe I'll start on the nutrition business I am curious.

George Arthur Kelly: Hugh.

George Arthur Kelly: You showed nice sequential growth there and I'm just curious what drove that was that Ams.

George Arthur Kelly: Is there something else.

George Arthur Kelly: That was meaningful and that sequential improvement.

Marc Suidan: Hey, George, this is Marc. Good to have you on. Yeah, it's a mix of things. One thing to note there is, in addition to a better volume of orders, there was also a discount that went from 25 to 20%, which effectively increases revenue. And then also, there's some earned events, because that line is called nutrition and other things. But overall, George, I would say, you know, it's the early green shoots of that business starting to turn around, which is good news.

George Arthur Kelly: Hey, George This is Mark you have you are right.

George Arthur Kelly: Okay, that's helpful. Thanks.

George Arthur Kelly: Yes.

Mark: I would say, it's a mix of things one it is definitely early green shoots of our turnaround happening in nutrition.

Mark: Some things to note there is.

In addition to better volume of.

Mark: Of orders there was also the discount that went from 25%, 20%, which effectively increases revenue.

Mark: And then also there is some earned events because that line is called nutrition and other but.

Mark: Overall, George I would say, it's early green shoots of that business starting to.

Mark: To turnaround, which is good news.

Mark: Yeah.

George Arthur Kelly: And then the second topic I wanted to cover is some of the new growth initiatives. Specifically, I was hoping you could share a little bit more about what you've seen in the month since you launched the entitlement campaign. And then, secondly, if you could cover, Carl, I know you mentioned that the reactivation campaign is taking a bit longer than you hoped. I'm just curious why that hasn't been more successful.

Speaker Change: Okay. That's helpful. Thanks, and then second topic I wanted to cover is on the some of the new growth initiatives.

Speaker Change: You spent time discussing specifically I was hoping you could.

Speaker Change: Sure a little bit more about what you've seen in the month.

Speaker Change: Since you launched the entitlement campaign.

Speaker Change: And then secondly, if you could cover.

Speaker Change: Carl I know you mentioned that the reactivation campaign is taking a bit longer than than you hoped I'm just curious why that hasn't been more successful.

Carl D. Daikeler: Yeah, thanks, George. So the entitlement campaign is happening in stages. So it launched literally the last week of March. So it's just ramping up. So it's a balance between marketing subscriptions and marketing specific programs that solve a specific problem. So, as we've always done in our 25 years, we're building up the marketing at a ratio of customer acquisition to lifetime value. As that marketing matures, and we increase lifetime value, that marketing will scale.

Speaker Change: Yes, Thanks George.

Speaker Change: So the entitlement campaign is happening in stages. So it launched literally last week of March. So it's just ramping up so it's a balance between marketing subscriptions and marketing specific programs that solve a specific <unk>.

Speaker Change: So.

Speaker Change: As we've always done in our 25 years, where.

Speaker Change: Building up the marketing at a ratio of customer acquisition to lifetime value.

Speaker Change: Has that marketing matures and we increased lifetime value that marketing will scale. So we're really in the early days of that scale as we continue to add new or new programs available for single program purchase.

Carl D. Daikeler: So, we're really in the early days of that scale; as we continue to add or new programs available for single program purchase, each of those will now scale, and that'll start to compound. But it's very early at this in this chapter of selling specific programs. But I will say, this is literally what the company's been doing for 25 years when we, you know, really came out of the gate, selling specific programs on VHS tapes, and then DVDs. Now we're just doing it digitally.

Speaker Change: Each of those will now scale and that will start to compound, but it's very early.

Speaker Change: This is in this chapter of selling specific programs, but I will say this is literally what the company has been doing for 25 years. When we really came out of the gate selling specific programs on VHS tape and then Dvds now we're just doing it digitally so.

Speaker Change: Very excited about what that means in the coming months, but it's early days on it in terms of the.

Carl D. Daikeler: So very excited about what that means in the coming months, but it's early days on it. In terms of the pace of reactivation, you need to be very careful with spam laws and regulations to make sure that we're not spamming people. So we've got to be just careful with how many emails we send to what cohorts in the prospect list. So what is a very large bucket of emails.

Speaker Change: Pace of reactivation.

Speaker Change: You need to be very careful with can spam laws.

Speaker Change: And regulations to make sure that we're not spamming people. So we've got to be just careful with how many E. Mails, we send to what cohorts in the prospect list. So what is a very large bucket of emails. We just want to be appropriate. So that we're both respecting the recipients of those email.

Carl D. Daikeler: We just want to be appropriate so that we're both respecting the recipients of those emails and also being as efficient as possible with those emails so that we're not scorching the database right, so we're building a relationship with them, and gradually over time, we expect to be more and more productive, obviously without the cost of acquisition because we already own the name.

Speaker Change: And also being as efficient as possible with those E. Mails. So that we're not scorching the database right. So we're building a relationship with them and gradually over time, we expect it to be more and more productive obviously without the cost of acquisition because we already own the name does that help.

Carl D. Daikeler: Does that help?

George Arthur Kelly: It does. Yep. Yep. Understood.

Speaker Change: It does yes understood and then last question for me.

George Arthur Kelly: And then last question for me is on the selling and marketing line. I'm curious whether the sequential decline in sales in the absolute amount of selling and marketing dollars spent was pretty modest, less than a million dollars compared to 4Q. And so I'm curious if the commission changes. A, are they kind of fully in that one queue number? And B, are you choosing to reinvest some of that savings in other advertising campaigns? And should we expect that going forward, you'll kind of divert some of those savings into other marketing related activities?

Speaker Change: Is on the.

Speaker Change: Selling and marketing line.

Speaker Change: I'm curious the sequential decline in selling and the absolute amount of selling and marketing dollars spent.

Speaker Change: It was pretty modest less than $1 million compared to <unk>.

Speaker Change: And so I'm curious if the.

Speaker Change: The commission changes.

Speaker Change: Are they kind of fully in that <unk> number and B are you choosing to reinvest some of that savings in other advertising campaigns and should we expect that going forward that youll kind of divert some of those savings into other marketing related initiatives.

Marc Suidan: So, George, this is Mark again, the CFO. So, what I'll say is there's cash spend, and then there's accounting spend, right? So, what happened is at the end of Q4 of last year, we accrued expenses at the old structure, but we benefited from a cash spend profile in Q1 while that deferred cost from the balance sheet was working its way onto the balance sheet. So, that's number one why you didn't see as much of a benefit there as anticipated.

Speaker Change: So.

Speaker Change: This is mark again, the CFO, so what I'll say is.

Mark: There is there is cash spend and then there's accounting expense right. So what happens is at the end of Q4 of last year.

Mark: We accrued expenses at the old structure, but we benefited from a cash spend profile in Q1, while we were while the deferred cost from the balance sheet was working its way onto the balance sheet. So so that's number one why you didn't see as much of a benefit there.

As anticipated number two Q4 is always a quarter, where we spend at least on media just because.

Marc Suidan: Number two, Q4 is always a quarter where we spend the least on media, just because, you know, for seasonality purposes, while in Q1, we spend more. So, that's another factor why it goes up in Q1 over Q2. And then number three, like I said earlier, part of that 1,000 basis points is going to come in the form of enhanced revenue, about 200 to 250 basis points because the discounts are lower, right? So, our changes were in many places.

For seasonality purposes, while Q1, we spend more so thats another factor why it goes up.

Mark: In Q1 over Q2, and then number three like I said earlier.

Mark: Part of those part of that 1000 basis point is going to come in the form of enhanced revenue.

Mark: About 200, and I'd say about 200 to 250 basis points because.

Mark: Because of the discounts are lower right. So are our changes where we are in many places. So that's where the benefits are coming from so from a cash standpoint, we're seeing the benefit and you see it in the in the EBIT line and Youre going to see it kind of perfect itself more quarter over quarter I would say on the on the reinvestment question.

Marc Suidan: So, that's where the benefits are coming from. So, from a cash standpoint, we're seeing the benefit, and you see it in the EBITDA line, and you're going to see it kind of manifest itself more quarter over quarter. I would say on the reinvestment question, that's a good one, George. I would say whatever we reinvest is going to be within our desired P&L structure and our LTV to CAC discipline.

Speaker Change: Good one George I would say whatever we reinvest is going to be within our desired P&L structure, and our LTV to CAC discipline.

Mark Goldston: Yeah, Mark, it's Mark Goldston, George. Just to add to that, you know, given that we are still in turnaround mode, and we are absolutely driving, obviously, we've had two consecutive quarters of adjusted EBITDA and positive free cash flow, we're really not in reinvestment mode. We will be, but that's not really where we are right now. Right now, we're trying to run a very profitable company with a radically revised cost structure.

Mark Goldston: Yeah, Mark.

Speaker Change: Yes, Mark it's Mark Goldstein, George just to add onto that.

Mark Goldston: Given that we are still in turnaround mode, and we are absolutely driving obviously, you've had two consecutive quarters of adjusted EBITDA and positive free cash flow, we're really not in reinvestment mode. We will be but that's not really where we are right now right now we're trying to run a very profitable company with a rash.

Mark Goldston: And we're vigilant about our ROI C numbers that we use in our marketing. So we have allowables or thresholds that we will spend up to, beyond which we don't get the ROI yield that we're looking for. So we curtail spending beyond that. So when we fully turn the company around, we will be in a position where we can do more investment spending and elongate the horizon for the return on the invested capital. But right now, in the middle of a turnaround, that's not what you'd want to do.

Mark Goldston: <unk> revised cost structure, and we're vigilant about our ROI see numbers that we use in our marketing. So we have allowable there thresholds that we will spend up two beyond which we don't get the ROI yield that we're looking for so we curtail spending beyond that so when we.

<unk> fully turned the company around we will be in a position, where we can be more investment spending and elongate the horizon for the return on invested capital, but right now in the middle of a turnaround thats not what you'd want to do.

George Arthur Kelly: All right, that's all I have. Thank you.

Speaker Change: Got you.

Speaker Change: That's all I had thank you.

Speaker Change: Thank you George.

Jonathan Robert Komp: Our next question today comes from Jonathan Komp with Bayard. Please proceed.

Speaker Change: Our next question today comes from Jonathan Komp with Baird.

Jonathan Robert Komp: Please proceed.

Jonathan Robert Komp: Yeah, hi, good afternoon. Suidan, just one question about the progression quarterly that you see. Are you expecting to stay above 100 million in revenue in the third quarter and fourth quarter? And if so, could you share by how much?

Jonathan Robert Komp: Yes, hi, good afternoon.

Jonathan Robert Komp: Dan just one question about the progression quarterly that you'd see.

Jonathan Robert Komp: Are you expecting to stay above $100 million of revenue in the third quarter and fourth quarter and if so could you share by how much.

Marc Suidan: Hey Jon. It's good to talk to you.

Speaker Change: Hey, John.

John: Good to talk to you, we're not giving guidance beyond Q2.

Jonathan Robert Komp: We're not giving guidance beyond Q2. As you know, we detailed a whole bunch of initiatives. And we're in the middle of the turnaround. As these initiatives start bearing more fruit, you will see that percolate into the revenue line, and you will see the revenue line go in a different direction.

John: As you know, we detailed a whole bunch of initiatives and we're in the middle of the turnaround as these initiatives start.

Speaker Change: Bearing more fruit you will see that percolate into the revenue line.

Speaker Change: And Youll see the revenue line going in a different direction.

Marc Suidan: Okay, and just to follow up, given typical seasonality, I'm just trying to understand how much flexibility and time you may have for those initiatives to take hold. So could you maybe just share more detail on the nature of the covenants that you have, and if those initiatives did take longer to take hold, what options do you have with the balance sheets?

Okay, and just a follow up given typical seasonality I'm just trying to understand how much flexibility.

Speaker Change: In time, you may have for those initiatives to take hold so could you maybe just share more detail on the nature of the covenants that you have in.

Speaker Change: If those initiatives did take longer to take hold.

Speaker Change: And as you would have with the balance sheet.

Marc Suidan: I mean, essentially, I think we've disclosed, we have disclosed publicly, our revenue covenant is $100 million a quarter between now and the end of the year. So if you look at our seasonality, obviously, you can see our previous year's recording, the, you know, Q1 typically indexes up, you know, probably about 112-ish or thereabouts. And then Q2 and Q3 are more around a 100 index level. So we planned our initiatives, as you know, they're somewhat backloaded in the second half of the year.

Speaker Change: I mean, essentially I think we've disclosed that we have disclosed publicly.

Speaker Change: Publicly our revenue covenants $100 million a quarter.

Speaker Change: Now and the end of the year.

If you look at our seasonality, obviously, you can see our previous years recording Q.

Speaker Change: Q1, typically index is up probably about $1 12, this year, there or thereabouts, and then Q2 and Q3 are more around a 100 and that level. So.

Speaker Change: We planned our initiatives as you know there is somewhat back loaded in the second half of the year. This seasonality swings are not really that dramatic so they don't really affect us that much.

Speaker Change: And so our goal is to have them start to take effect in the second half of the year and into Q1, and the $100 million a quarter revenue Covenant was established mutually between us and Blue torch.

Marc Suidan: The seasonality swings are not really that dramatic, so they don't really affect us that much. And so our goal is to have them start to take effect in the second half of the year and into Q1. And the $100 million a quarter revenue covenant was established mutually between us and Blue Torch, and everybody felt comfortable.

Speaker Change: Everybody felt comfortable with that.

Jonathan Robert Komp: Okay, I understand. Thank you.

Speaker Change: Okay understood. Thank you and then just one more follow up.

Speaker Change: Thinking about the digital business can you give any insight.

Any line of sight, you may have to the membership stabilizing or where they may start to stabilize.

Jonathan Robert Komp: And then just one more follow-up as we think about the digital business. Can you give any insights, any line of sight you may have to the membership stabilizing or where they may start to stabilize? And as you think about measuring the success of the initiatives you have in place for the digital business specifically, what are you looking for in terms of the milestones or the key metrics to get comfortable in the direction that you're headed? Thanks again.

Speaker Change: And as you think about <unk>.

Measured the success on the initiatives you have in place for the digital business specifically.

Speaker Change: What are you looking for in terms of the milestones are the key metrics too.

Speaker Change: Get comfortable in the direction that youre headed thanks.

Speaker Change: Thanks again.

Mark Goldston: I think part of this is...

Mark Goldston: I think part of this is what we might want to focus on is the fact that we're trying to broaden the aperture of the customer base. The company has been, as you know, hyper-focused over the last five, six years on subscription. If you go back to the halcyon days of the Beachbody company, it was almost entirely purchasing individual programs, what we call entitled. So what we're now trying to do is to have a mix where we still obviously are focused on the subscription business, but we believe we're leaving a lot of money on the table, and we're leaving a lot of satisfied potential customers off the grid by not offering individual programs.

Speaker Change: Yes.

Speaker Change: I think part of this we might want to focus on is the fact that we're trying to broaden the aperture of the customer base in the company. The company has been as you know hyper focused over the last five six years on subscription. If you go back to the Halcyon days of the Beach body company. It was almost entirely purchasing individual programs will be.

Speaker Change: Our entitlement so what we're now trying to do is to have a mix, where we still obviously are focused on the subscription business, but we believe we are leaving a lot of money on the table.

Speaker Change: And we're leaving a lot of satisfied potential customers off the grid by not offering individual programs might there be some level of cannibalization with regard to entitlement to subscription it's possible, but at the end of the day, if our total engagement base, which is subscription plus entitlement is larger as.

Mark Goldston: Might there be some level of cannibalization with regard to entitlement to subscription? It's possible, but at the end of the day, if our total engagement base, which is subscription plus entitlement, is larger as a result, and therefore the company would have more revenue and, obviously, be more profitable, then that absolutely plays into our core strategy. So we're going to learn more as we go down the process. We just started this. When we talk to you in Q3 and Q4, when we've been at this for four or six months, we'll have a better idea of where things settle out.

Speaker Change: As a result, and therefore the company would have more revenue and obviously be more profitable than that absolutely plays into our core strategy. So we're going to learn more as we go down the process. We just started this when we talked to you in Q3 and Q4 when we've been asked district for six months, we'll have a better idea of where things settle out there.

Mark Goldston: But the goal here all along was to widen the overall aperture of appeal of this company and its fabulous library of well-known programs. And for the last four to six years, I would say we really haven't been maximizing that because we've been hell-bent on the subscription business as the sole source. Does that make sense?

Youll hear all along was to widen the overall aperture of appeal of this company and it's Fabulous library of well known programs and for the last four to six years I would say, we really haven't been maximizing that because we've been hell bent on the subscription business is the sole source does that makes sense.

John: John Hey, there.

Jonathan Robert Komp: Yeah, no, I think the nature of the question we're just trying to understand. I mean, a million digital subscribers is down significantly from the peak and not necessarily showing signs of normal seasonality or stabilization. So it's hard to get a handle on the efforts that you just walked through, paying them off versus the pressure that is still on the core subscription business.

John: Yes no.

John: I think the nature of the question we're just.

John: Trying to understand I mean $1 million to digital subscribers.

John: Significantly from our peak and not.

John: Necessarily showing signs of normal seasonality or stabilization. So it's hard to get a handle on the effort that you just walked through.

John: Paying off versus.

John: The pressure is still out in the core subscription business.

Carl D. Daikeler: I would say, well, I think Carl. Yeah. I would say that, frankly, we're in a better position than I feel we've been for two decades because we never had the digital subscription business as a complement to the front end program sales. So now we are basically unleashing the single digital purchase component of this with the prospect of upselling the digital subscription and upselling the deep nutritional supplement catalog. We're in a position now to dramatically increase our new customer acquisition at a higher lifetime value because I've got more SKUs to offer them than we've ever had in the history of the business.

Speaker Change: I would say yes.

Speaker Change: Carl.

Speaker Change: I would say that the frankly.

Speaker Change: We're in a better position than I feel we've been for two decades, because we never had the digital subscription business as a complement to the front end program sales. So now that we are basically unleashing the single digital purchase component of this.

Speaker Change: With the prospect of.

Speaker Change: Upselling, the digital subscription and Upselling.

Speaker Change: The deep nutritional supplement.

Speaker Change: Catalog.

Speaker Change: We're in a position now to dramatically increase our new customer acquisition at a higher lifetime value because I've got more skus to offer them than we've ever had in the history of the business. So.

Carl D. Daikeler: So really, if you look at it from a test and learn perspective, we've got more levers in our arsenal to build lifetime value, which, of course, contributes to what you can spend on the front end. So frankly, since we've made the transition over the last 18 months by consolidating our digital subscription business into one higher-value subscription, remember, we went through multiple stages of reducing the number of subscription tiers that we had and settled in at this higher price.

Speaker Change: Really if you look at it.

Speaker Change: From a learn test and learn perspective, we've got more.

Speaker Change: Levers in our Arsenal to build lifetime value, which of course contributes to what you can spend on the front end. So the frankly since we've made the transition.

Speaker Change: Over the last 18 months by consolidating our digital subscription business into one higher value subscription remember we went through these multiple stages of of reducing the number of subscription tiers that we've had and settled in at this higher price now we can open up the <unk>.

Carl D. Daikeler: Now we can open up, as Mark said, the aperture of the front end acquisition using digital program purchases and then, on the back end, sell the subscription. So we think these two things are going to complement each other and, frankly, help keep the subscription base quite stable.

Speaker Change: As Mark said the aperture of the front end acquisition.

Speaker Change: Using digital.

Speaker Change: Program purchases and then on the backend sell the subscription. So we think these two things are going to complement each other and frankly help keep the subscription base quite stable.

Mark Goldston: And the other thing is, you might note, John, because of the pricing that we've got on the digital program purchases, we'll be able to put together a nutritional bundle with our digital program and nutrition that will give us some absolute price flexibility to make it a more attractive, lower-priced entry point. And then we will provide a migration path for those people who purchase the entitlement to either migrate to a full digital subscription or clearly to the nutritional subscription, because they will be getting a portion of the nutrition as part of their digital bundle when they join.

Speaker Change: And the other thing as you might know John.

Speaker Change: Because of the pricing that we've got on the digital program purchases will be able to put together a nutritional bundle with our digital program and nutrition that will give us some absolute price flexibility.

Speaker Change: To make it a more attractive lower priced entry point potentially and then we will provide a migration path for those people purchasing entitlement either migrate to a full digital subscription are clearly nutritional subscription because they will be getting a portion of the nutrition as part of their digital bundle when they joined so we're really.

Mark Goldston: So we're really going back to the things that worked the best for the company several years ago with those things that we know work today. And, of course, this is all dependent on the size and the nature of our digital selling organization, as well as how we'll be augmenting that with our direct-to-consumer, direct-response approach.

Speaker Change: Going back to the things that work the best for the company several years ago with those things that we know work today and of course. This is all dependent on the size and the and the nature of our digital selling organization as well as what we'll be augmenting that with our direct to consumer direct responses.

Speaker Change: Sure.

Jonathan Robert Komp: Okay, very well. Thanks for all the color.

Speaker Change: Okay, very well thanks for all the color.

Speaker Change: Thank you John.

Susan Anderson: Our next question today comes from Susan Anderson with CannaGord. Please proceed.

Speaker Change: Our next question today comes from Susan Anderson with Canaccord. Please.

Susan Anderson: Please proceed.

Susan Anderson: Hi, thanks for taking my question. Nice job on the quarter. I was thinking maybe just on the Amazon details, it sounds like, you know, the start there has been pretty successful. You sound pleased with that. I guess, does that give you confidence in expanding into other retailers or other channels? And then also, I'm curious if any of those Amazon customers, it may be a little early, but if they eventually migrate to your own site.

Susan Anderson: Hi, Thanks for taking my question and nice job on the quarter.

Susan Anderson: Thank you maybe just.

Susan Anderson: I guess on the Amazon details it sounds like the start.

Susan Anderson: There has been pretty successful so I'm pleased with that I guess does that give you confidence in expanding into other retailers or other channels and then also I'm curious if any of those and Amazon customers. It may be a little early but if they eventually migrate to your own site.

Susan Anderson: Thanks.

Carl D. Daikeler: Thanks, Susan. Yeah, we do expect the Amazon business to continue to grow. And we're also getting interest in terms of the possibility of expanding sales channels. What matters to us is that the sales of the channels that we go into continue to contribute to the cash flow and profitability of the business. So that's how we measure any opportunities that we're looking at, and there are plenty of them because of the quality of the supplement catalog that we've got.

Speaker Change: Thanks, Susan Yes, we do expect the Amazon business to continue to grow and we're also getting interest in terms of the possibility of expanding sales channels what matters to us is that the sales of the.

Speaker Change: The channels that we go into continue to contribute to the.

Susan Anderson: Cash flow and profitability of the business. So that's that's how we measure any opportunities that we're looking at and there are plenty of them because of.

Susan Anderson: The quality of the supplement catalog that we've got in terms of those.

Carl D. Daikeler: In terms of those customers from Amazon coming over to the mothership, if you will, I think it'll happen in some cases, but you just can't beat the convenience for people who want to shop from Amazon. They get to shop from Amazon, and we probably would never get them because they appreciate the convenience of being over there. So as long as we're managing our contribution margin on each transaction, we were sort of agnostic to where they came from.

Susan Anderson: Customers from Amazon coming over to.

Susan Anderson: The the mothership, if you will I think it will happen in some cases, but you just cant beat the.

Susan Anderson: Convenience for people, who want to shop from Amazon.

Susan Anderson: Get to shop from Amazon.

Susan Anderson: And we probably would have never gotten them because they appreciate the convenience of being over there. So as long as we're managing our contribution margin of each transaction.

Susan Anderson: We're sort of agnostic to where they come from however.

Carl D. Daikeler: However, the good news is that the brand that goes along with every transaction is Body and the Beachbody company. So if they do a search for who this Shakeology is from, for instance, they're going to find the parent company and have the opportunity to come in and, for instance, start a free membership of Body Previews, where they can get access to 130 programs to decide what they'd like to have complement their supplement choice. So we do think there's going to be some cross-collateralization, but that's not necessarily the strategy.

Susan Anderson: The good news is that the brand that goes along with every transaction is body and the beach body company. So if they do any search for who's This J <unk> from for instance, they're going to find the parent company and have the opportunity to come in and for instance start a free membership of body previews, where they can get access.

As to 130 programs to decide what what they'd like to.

Susan Anderson: Have complement or supplement choice. So we do think theres going to be some cross collateralization, but that's not necessarily the strategy there.

Marc Suidan: Susan, I'm sure you heard this in Carl's prepared remarks, but our Amazon business went up 50% both sequentially and year over year. Granted, it was a smaller base, but, you know, it's great.

And Susan I am sure you heard this.

Susan Anderson: Im sure you heard this in karl's prepared remarks.

Susan Anderson: Our Amazon business went up 50%, both sequentially and year over year.

Susan Anderson: Granted it was a smaller base.

Susan Anderson: But it is great and the other thing is you asked about other retailers I mean look a bit traction holds up the way we think it will.

Mark Goldston: And the other thing is you asked about other retailers. I mean, look, if the traction holds up the way we think it will, with the appeal of our products and moving them outside of, you know, just selling them internally, you will see us potentially look at other retail outlets in addition to Amazon, because this is a huge category. It's a big deal, and we've got superior products. So we're looking at pricing, package serving sizes, you name it. We're looking at all those things so we can maximize the arsenal of our nutritional business, and Amazon's the first leg of that. Okay, great.

Susan Anderson: The appeal of our products and moving them outside of just selling them internally.

Susan Anderson: You will see us potentially look at other retail outlets. In addition to Amazon because this is a huge category is a big Tam and we've got superior products. So we're looking at pricing package serving sizes.

Susan Anderson: You name it we're looking at all of those things. So we can maximize the arsenal of our nutritional business.

Susan Anderson: Amazon is the first leg of that.

Susan Anderson: Okay, great. I'm looking forward to the additional details there. Maybe also, I may have missed this, but did you parcel out the buckets of the expense savings this quarter? Like, for example, how much was due to the change in commission structure, etc.

Speaker Change: Okay great.

Speaker Change: Looking forward to the additional details there maybe.

Speaker Change: Maybe also I may have missed this but did you parcel out the buckets of the expense savings. This quarter like for example, how much was due to the change in commission structure et cetera.

Speaker Change: Hi, Susan.

Marc Suidan: ?

Speaker Change: As Mark listen we're on track this year to achieve $215 million of savings.

Susan Anderson: This is Mark. Listen, we're on track this year to achieve $250 million in savings. $200 million of that is reducing our overall operating and capital expenditures, and $50 million is from our improved sales and marketing. So that's a 1,000 basis points. Some of it may come in a bit of enhanced revenue, some of it in lower sales and marketing as a percentage of revenue. But that should deliver 1,000 basis points to EBITDA this year.

Mark: $200 million of that is reducing our overall operating and capital expenditures and $50 million is from our improve.

Sales and marketing so.

Susan Anderson: That's a 1000 basis points some of it may come.

Susan Anderson: And a bit of.

Susan Anderson: Hence revenue.

Susan Anderson: Some of it in lower sales and marketing as a percentage of revenue, but net net that should deliver 1000 basis points to.

Susan Anderson: To EBITDA this year.

Carl D. Daikeler: Okay, great, and then I guess last question for me: did you give an update on the subscriber reactivation campaign? I'm curious how that's going and then any uptick that you've seen there, and then also, I'm just curious about the difference in marketing spend to try and get those customers back, compared to what you would normally spend to acquire a customer.

Speaker Change: Okay, Great and then I guess last question for me.

Speaker Change: Did you give an update on the subscriber reactivation campaign, just curious how that's going and then.

Speaker Change: Any uptick that you've seen there and then also I'm just curious in the <unk>.

Speaker Change: And marketing spend to try and get those customers back then you would I guess just normally spend to acquire a customer.

Carl D. Daikeler: As we mentioned, the reactivation campaign is slower than expected because we've got to be careful not to violate can spam regulations. However, we do see it to be ongoing. It's an ongoing, productive channel. It just hasn't hit the scale that we expect.

Speaker Change: As we mentioned the <unk>.

Speaker Change: <unk> campaign is slower than expected because we got to be careful not to violate violate can spam regulations. However, we do see it to be ongoing it's an ongoing productive channels just hasnt hit the scale that we expect.

Carl D. Daikeler: The good news is that it doesn't really have any cost of acquisition at all because we already own the names, with the exception of just the effort to put email campaigns together and or any discounts or promotions that we put in place to reactivate those customers. And we have seen those be pretty prolific for us and effective based on results in the first quarter. So we continue to expand the reactivation campaign.

Speaker Change: The good news is that it doesn't really have any cost of acquisition at all because we already own the names with the exception of just the effort to put E mail campaigns, together and or any discounts or promotions that we put in place to reactivate those customers and we have seen those be pretty pretty pretty prolific for us.

Speaker Change: And effective based on results from the first quarter. So we continue to expand the reactivation campaign and in fact with the new leadership that we've put in place.

Carl D. Daikeler: And in fact, with the new leadership that we put in place, they have started to do a really good job of what we would call a fast follow. So somebody who cancels or doesn't renew their membership, the team is contacting them very quickly, where you have the best window, the best opportunity to keep that customer from actually going back on the prospect list. So they're all over it. It's just slower than expected.

We have.

Speaker Change: <unk> started to do a really good job of what we would call a fast follow so somebody who cancels or doesn't renew their membership the team is.

Speaker Change: Contacting them very quickly where you have the first window, the best opportunity to keep that customer from actually going back into the prospect list. So.

Speaker Change: They are all over it it's just slower than expected.

Mark Goldston: Susan, I might just add to that. I just might add an interesting data point.

Speaker Change: Susan I would like to do that.

Speaker Change: Just I just.

Susan Anderson: I just want to have an interesting data point.

Mark Goldston: As we're sort of getting up to speed with this CRM recapture program, most of the things that we've been doing and that we've been testing have been digital fitness, as you can imagine. An interesting anecdote to that is that we have over a billion dollars of former body nutritional supplement use in that CRM base. So if you looked at the CRM base, there were over a billion dollars of nutritional supplement purchases from Body previously represented by that group.

Susan Anderson: As we're sort of getting up to speed with this CRM recapture program most of the things that we've been doing and we've been testing have been digital fitness and so you can imagine.

Susan Anderson: Interesting anecdote to that is that we have over a $1 billion.

Susan Anderson: Former body nutritional supplement users.

Susan Anderson: In that CRM base. So if you looked at the CRM base, there's been over $1 billion of nutritional supplement purchases from body previously represented by that group, we have not up to this point attempted to remarket to them nutritional products Ironically, even though there is a reservoir of the <unk>.

Mark Goldston: We have not, up to this point, attempted to re-market nutritional products to them, ironically, even though there is a reservoir of a billion plus dollars of former revenue there. So as part of the new management that we brought in that group and our focus as we scrub this list and keep ourselves off of the spam list, so to speak, having run one of the largest ISPs in the world, I'm uniquely confident that we'll avoid that.

Susan Anderson: 1 billion plus dollars of pharma revenue there so as part of the new management that we brought in that group and our focus as we've scrubbed. This list and keep ourselves off of the spam list so to speak having run one of the largest Isps in the world and uniquely confident that we will avoid that if there is a huge opportunity down the road here.

Mark Goldston: But there is a huge opportunity down the road here to recapture a lot of these people with what we're looking at in nutrition in terms of package sizing, pricing, etc. We could go back to those people with a very compelling offer. So just stay tuned on that for the second half of the year. I think you'll see some stuff that will impress you.

Susan Anderson: To recapture a lot of these people with what we're looking at in nutrition in terms of package sizing pricing et cetera that we could go back to those people with a very compelling offer. So just stay tuned on that the second half of the year I think youll see some stuff there that will impress you.

Susan Anderson: Okay, great. Thanks. That sounds good. Thanks so much for all the details. Good luck the rest of the year. Thank you.

Speaker Change: Okay, great. Thanks that sounds good. Thanks, so much for all the details good luck the rest of the year. Thank you. Thank you Susan.

Susan Anderson: Thank you. Thank you, Susan.

BJ Cook: Our next question comes from BJ Cook with Cingular Research. Please proceed.

Speaker Change: Our next question comes from P. J <unk> with singular research. Please proceed.

BJ Cook: Hey guys, thanks for taking my call. You talked really briefly about partnerships and announced one here about a week ago or so. Can you give us some, like I said, shed some light on that partnership and maybe some What is your strategy there? Would you expect to be promoting those partnerships on your side and on the partner side? And would you expect that to be meaningful to revenue in the near term or long term?

P. J: Hey, guys. Thanks for taking my call you talk really briefly about partnerships and announced one here, but a week ago or so.

P. J: We didn't see big.

P. J: Shed some light on.

P. J: That partnership and maybe some.

P. J: What your strategy is there would you expect to be promoting those partnership on your side and on the partner side.

P. J: Would you expect that to be meaningful to revenue near term or long term.

P. J: Okay.

Carl D. Daikeler: Thanks, BJ. The partnership that you're referring to with Dr. B to allow our customers and subscribers to get reimbursement through their HSA and FSA accounts should be a meaningful contributor to help customers or people who, you know, might be on the fence about subscribing to a service like that now can realize that they can get reimbursed for it. And we actually have quite a solid pipeline of potential partnerships, particularly interesting with the advent of single digital program purchases versus a subscription offer. But I'm not at liberty to make any announcements right now.

Speaker Change: Yeah. Thanks, Vijay the partnership that you are referring to with doctor be to allow our customers and subscribers too.

Vijay: To get reimbursement through their HSA and FSA accounts.

Vijay: Should be a meaningful contributor to help customers are people who.

Vijay: Might be on the fence about subscribing to a service like that now can realize that they can get reimbursed for it.

Vijay: And we actually have.

Vijay: Quite a.

Vijay: Solid pipeline of potential partnerships, particularly.

Vijay: Interesting with the advent of single digital program purchases.

Vijay: Versus the subscription offer.

Speaker Change: I'm not at Liberty to make any announcements right now we're hoping to in the next.

Carl D. Daikeler: We're hoping to in the next several weeks, but, you know, this is part of the reason that, you know, the overall platform of solutions, both from a fitness perspective and nutrition perspective, fits so perfectly in the current environment where you've got GLP-1 and other pharmaceuticals for weight loss, but lifestyle is still the primary and an important decision that people make to complement those decisions. That is a perfect scenario for partnership because it helps people succeed with those products.

Speaker Change: Several weeks, but.

This is part of the reason that debt.

Speaker Change: The the overall platform of solutions, both from a fitness perspective, and nutrition perspective fits so perfectly in the current environment, where you've got <unk> one.

Speaker Change: In other pharmaceuticals for weight loss, but lifestyle is still the primary and important decision that people make to complement those decisions that is a perfect scenario for partnership because it helps people succeed with those products. There is certainly a lot of demand for them, but.

Carl D. Daikeler: There's certainly a lot of demand for them, but lifestyle is going to have to be a part of it, and we offer the most cost-effective and proven solution for that. So we do think we're going to have some good announcements in the near future, and we think it's going to be a decent contributor to the 2024 scenario.

Speaker Change: Now, it's going to have to be a part of it and we offer the most cost effective and proven solution for that so we do think we're going to have some good announcements.

Speaker Change: In the near future and we think it's going to be a decent contributor to the 2024 scenario.

BJ Cook: Fantastic. I appreciate it.

Speaker Change: Fantastic I appreciate it.

Speaker Change: You touched on Q2 guidance here, so just just quickly.

Speaker Change: At the midpoint.

Speaker Change: Is down and so.

Speaker Change: So it would be sequentially as.

Speaker Change: As well could you just touch on how much of it is just seasonality and also other factors.

BJ Cook: You touched on the Q2 guidance here. So just, just quickly, I guess the midpoint is down. And so is it and so will sequentially as well. Could you just touch on how much is it just seasonality and also other factors?

Speaker Change: Hi, Vijay this is mark should we then yes. There is look there are three factors contributing to this one is obviously seasonality if you look at prior years.

Mark: Similar similar.

Mark: Midpoint procured quarter over quarter.

Mark: Number two we did say we're heavily focused on balance sheet fortification. So we're looking at improving our liquidity so that before we get back into investment mode to drive growth.

Mark: And number three listen we've detailed out quite a few initiatives theyre going to drive some housing revenues, but these initiatives just stake.

Mark: It takes time to implement right and Thats why we created a cost structure that gives us the runway to implement our initiatives.

Marc Suidan: Hi BJ, this is Marc Suidan.

Mark: But it's also.

Mark: It's also really really important vijay to keep in mind.

Marc Suidan: Yeah, there are three factors contributing to this. One is obviously seasonality. If you look at prior years, a similar midpoint occurred quarter over quarter. Number two, we did say we were heavily focused on balance sheet fortification. So we're looking at improving our liquidity so that before we get back into investment mode to drive growth. And number three, listen. We've detailed out quite a few initiatives that are going to drive some healthy new revenues, but these initiatives just take time to implement, right? And that's why we created a cost structure that gives us the runway to implement our initiatives.

Vijay: Yes, we've had two consecutive quarters of positive adjusted EBITDA, Yes, we have the free cash flow positive in this quarter, but we're still in the turnaround I mean, we're ahead of the schedule, where we thought we'd be but we're still in the maximize the balance sheet.

Vijay: <unk> expense efficiency mode. We had these programs in the pipeline and they will start to come before the second half of the year.

Vijay: Third quarter and fourth quarter, but just keep in mind. The fact that while we've been successful we're thrilled with where we are we're still in the turnaround and so we're going to continue to manage it that way as we move towards the second half of the year.

Mark Goldston: But it's also, this is Mark Goldston, it's also really important for BJ to keep in mind. Because, yes, we've had two consecutive quarters of positive adjusted EBITDA, yes, we had free cash flow positive in this quarter, but we're still in the turnaround. I mean, we're ahead of the schedule where we thought we'd be, but we're still in Maximize Expense Efficiency Mode.

Mark Goldston: We have these programs in the pipeline, and they will start to come to the fore in the second half of the year, the third quarter and the fourth quarter. But just keep in mind the fact that while we've been successful and we're thrilled with where we are, we're still in the turnaround. And so we're gonna continue to manage it that way as we move toward the second half of the year.

BJ Cook: Fantastic. Thank you, guys. I appreciate it.

Speaker Change: Fantastic Thanks, guys I appreciate it.

Speaker Change: Thank you BJ.

Operator: Thank you all for your questions. That will be all the questions we have in queue currently, so I will pass the conference back over to Carl for any closing remarks.

Speaker Change: Thank you all for your questions.

Carl D. Daikeler: Great. Yeah, thanks so much.

Speaker Change: That will be all the questions. We have in <unk> currently so I will pass the conference back over to Carl for any closing remarks.

Carl D. Daikeler: I'll just close by saying I'm so excited about our progress and what we've been learning about our current customer needs and our ability now to respond with exactly what they're looking for thanks to the launch of single digital program purchases, plus special digital subscription offers, and these refined supplement marketing bundles that Marc's talking about. I feel like we're frankly back to our wheelhouse that served the company so well for the last 25 years and are just extremely grateful to our stakeholders and to the team for all the support of our long-term objective of sustained profitability and helping more people achieve their goals and lead healthy, fulfilling lives. Thanks for joining us, and we'll talk to you next quarter.

Speaker Change: Great.

Carl: Yeah. Thanks, so much I'll, just close by saying I'm. So excited about our progress and what we've been learning about our current customer needs and our ability now to respond with exactly what theyre looking for thanks to the launch of single digital program purchases.

Carl: Special digital subscription offers in these refined supplement.

Carl: Marketing bundles that Mark's talking about I feel like we're frankly back to our wheelhouse that served the company so well for the last 25 years and just.

Carl: Extremely grateful to our stakeholders and to the team for all the support of our long term objective of sustained profitability and helping more people achieve their goals and lead healthy fulfilling lives.

Speaker Change: For joining us and we'll talk to you next quarter.

Operator: That will conclude today's conference call. Thank you all for your participation. You may now disconnect your line.

Speaker Change: That will conclude today's conference call.

Speaker Change: You all for your participation you may now disconnect your line.

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