The Beachbody Company, Inc. (Bodi) said it is evolving its core business model with an omni-channel sales channel approach that will streamline operations and better position the company for future profitable growth. As a result of this restructuring, Bodi will reduce costs, broaden its distribution channels and significantly lower its revenue break-even point.
The company’s Board-approved corporate restructuring plan (the Pivot) will centralize the business around one e-commerce platform at bodi.com, eliminate the network marketing support functions and reduce Bodi’s workforce by approximately 33 percent.
The company anticipates that these cost reductions will result in overhead savings of $54 million on an annualized run-rate basis and will lower the company’s revenue break-even point from less than $430 million of annual revenue to less than $225 million of annual revenue.
“While these steps are absolutely necessary to align the company with its new strategic direction, the painful part of this decision is saying goodbye to some of our team,” offered Carl Daikeler, co-founder and CEO, The Beachbody Company, Inc. “I am deeply grateful to everyone who has contributed so much to the substantial progress Bodi has experienced over the last 26 years. But our evolution is critical to position us to help even more people and improve the opportunity for our partners and customers to get the best results for the long term.”
New Business Model
As part of its strategic shift to optimize its omni-channel distribution platform, Bodi will transition from its Multi-Level Marketing (MLM) Network channel to a single-level Affiliate Program, which will launch on November 1, 2024. Current participants in Bodi’s Partner Network in the U.S. and Canada will transition to the new Affiliate Program. Bodi’s MLM Network will begin winding down and complete the process by January 1, 2025.
“The first phase of our turnaround is centered on lowering our infrastructure costs and re-architecting our financial model,” said Mark Goldston, executive chairman, The Beachbody Company, Inc. “We have successfully accomplished that goal—we’ve lowered our revenue break-even point by more than $400 million, have reduced our net losses and generated positive Adjusted EBITDA over the last three quarters. The next phase of our journey is to optimize and broaden our points of distribution by converting the existing MLM to a single-level affiliate network and expanding our direct-to-consumer, Amazon and partnership-driven sales channels, which we believe will further open the sales aperture and diversify our revenue sources.”
Goldston continued, “We recognize that in light of today’s current market dynamics, as well as consumer preferences, the multi-level marketing distribution model is outdated and unsustainable. The evolution to the affiliate model offers a simpler, more modern approach to customer acquisition and will directly reward the seller for their effort. The organizational challenges and complexity of the MLM approach have weighed on the company’s turnaround and the ability of partners to optimize their potential. We are confident this shift will be beneficial to stakeholders and to new potential participants. I look forward to sharing more details on our third-quarter earnings call.”
Daikeler added: “Since our founding, we have had a long history of evolving our business model to adjust to dynamic market environments. We continue to adapt and evolve to optimize our sales channels. We believe that transitioning to the Affiliate Model will energize our network of Partners and new participants to stay more consistent with their own health and fitness objectives and share their results to help others live healthier and more fulfilling lives and get paid for it now without the complexity of managing and recruiting a team of other Partners.”
Third Quarter Guidance
As part of the announcement, Bodi also reaffirmed its financial guidance for the third-quarter ending September 30, 2024. The company continues to expect revenue in the range of $97 million to $107 million, a net loss of $9 million to $13 million, excluding restructuring-related charges of approximately $9 million to $11 million, and the potential for goodwill impairment that it is evaluating as part of the company’s third-quarter close), and Adjusted EBITDA of $2 million to $6 million. The company will announce third-quarter results and discuss its fourth-quarter and full-year outlook when it reports third-quarter earnings.
Initially founded in 1999 as Beachbody, Bodi has created step-by-step home fitness and nutrition programs for 26 years, including P90X, Insanity, and 21-Day Fix, plus the nutrition supplement Shakeology.
Image courtesy The Beachbody Company, Inc.
