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Management Series: Beachbody (BODI)

Beachbody (BODI; $8.87; $61MM Market Cap) participated in WTR’s Consumer Products Virtual Investor Conference on June 5, 2024. Representing the company was CFO Marc Suidan. This report contains a transcript of the conversation, which can be accessed on demand. Link accessible in our full report. Management believes its current turnaround is going very well. Liquidity used to be an issue, and Beachbody used to get a lot of questions about it, but those questions have subsided now that the company returned to being free cash positive in 1Q24. Margins have recovered now that Beachbody is well on the way to realizing its $250 million in cost savings by the end of this year, including 1,000 basis points of reduced selling & marketing expenses as a percentage of sales. We note that its variable contribution margin (Sales-COGS-Selling & Marketing) in 1Q24 1Q was higher than the pre-pandemic 1Q20. The final stage of the turnaround is getting revenue back into growth mode. Initiatives on that front include offering a freemium model, which is offering trial content, and if customers like it, they can either subscribe or buy a program. Beachbody is also leveraging its database of existing and former subscribers, which is basically free access to 12-14 million potential customers who are already engaged or who have been in the past. The company has increased its focus on Amazon, where business grew 50% in the most recent quarter. Beachbody is also launching influencer marketing, and notes that it is the first in the fitness industry to allow a consumer to buy a program, not just rent it for single use but to buy it for use in perpetuity on its platform. The company noted that CNN named Beachbody as the best fitness and workout app in 2023, offering it as a proof point that the cost reductions currently underway are not affecting the strength of the brand. The cost reductions came from areas such as consolidating duplicative digital platforms and shifting marketing focus toward active spend and away from passive spend. It was basically a zero-based budgeting approach where the company rethought its entire P&L. Beachbody views the current GLP-1 craze as a benefit on three fronts: (1) it is making more people healthier and fit, which expands the TAM for those interested in workout programs like the ones Beachbody offers; (2) a byproduct of the drugs is that its users also lose muscle mass, and Beachbody has many muscle building programs; and (3) the users of GLP-1 drugs can also have a protein deficiency, which can be addressed by the company’s supplement offerings. WTR held its inaugural Consumer Products Virtual Investor Conference on June 5 and 6. Presentations are available on demand via a link in our full report and 1x1 requests can be sent to .