The Beachbody Co., Inc. Q1 FY2026 earnings call

• Financial Turnaround & Positioning

  • Delivered third consecutive quarter of net income ($2.3 million vs a $5.7 million net loss in Q1 2025) and operating income ($3.1 million vs a $3.7 million operating loss in Q1 2025)
  • Posted 10th consecutive quarter of positive adjusted EBITDA at $8.0 million, up from $3.7 million year-over-year
  • Lowered EBITDA breakeven from over $900 million in 2022 to approximately $180 million currently, creating substantial operating leverage
  • Ended Q1 with $36.6 million in cash and $25 million in outstanding debt, for a $11.6 million net cash position providing financial flexibility for growth initiatives

• Core Growth Strategy: Nutrition-First Omnichannel Expansion

  • Pivoting to a nutrition-first omnichannel strategy spanning direct-to-consumer, social commerce, and retail, entering a $164 billion nutrition market 12x larger than the $13 billion digital fitness market
  • Freed from legacy MLM commission constraints, the company can offer new nutrition products at far lower accessible price points; the new 7-serve retail Shakeology pack is priced at $34.95, compared to the legacy 30-serve MLM pack at $129
  • Uses an asset-light virtual consumer products model: all manufacturing, retail sales, and logistics are outsourced to third parties, while core competencies of marketing, brand management, and product R&D are kept in-house. This model minimizes capital requirements and enables rapid scalable growth with variable costs rather than high fixed overhead

• Recent Retail Distribution Wins

  • Announced Shakeology will launch in over 80 Sprouts Farmers Market stores in late May/early June 2026, in 640+ Vitamin Shoppe stores nationwide later in 2026 (full chain rollout for Vitamin Shoppe, limited 80-store launch for Sprouts)
  • Secured a partnership with KaHi Distributors, one of the two largest distributors of natural organic products to U.S. grocers, gaining access to KaHi's network of 30,000 grocery, supermarket, and online retail channels

• Product Innovation & Platform Updates

  • Launched P90X Next Generation fitness program and a full line of branded P90X nutritional supplements (pre-workout, hydration, creatine, recovery protein, fast-acting energy) with proprietary formulations
  • Expanded the 10 Minute Body microdose fitness platform (priced at $10/month) with three new targeted programs, including a GLP-1-specific program designed to help users on GLP-1 medications build and preserve muscle mass; the platform now has over 400 10-minute workouts, opening access to the large market of consumers intimidated by longer workout programs
  • Completed transition to the Shopify e-commerce platform, enabling easier bundle configuration, subscribe-and-save options, and improved ad-to-cart conversion, with early results showing improved conversion rates compared to the prior platform
  • Added support for up to 4 additional household profiles per digital membership at no extra cost, to improve household engagement, conversion, and retention

• Nutrition-First Customer Acquisition Model

  • Data shows lower customer acquisition costs when leading with nutrition and bundling digital fitness as a free add-on, compared to the prior model of leading with digital fitness. Nutrition purchasers get a free trial of the digital fitness platform, creating cross-selling and upselling opportunities that improve lifetime value per customer

Total Q1 2026 revenue was $54.3 million, a 2.3% sequential decline and 25% year-over-year decline, with the year-over-year drop driven by the winding down of the legacy MLM business, which will fully cycle out by Q3 2026. Digital revenue was $33.6 million, representing 61.9% of total Q1 revenue. This is a 2.1% sequential decline and 21.8% year-over-year decline, with a gross margin of 87.4% (up 10 basis points sequentially and 190 basis points year-over-year). Nutrition and Other revenue was $20.7 million, representing 38.1% of total Q1 revenue. This is a 2.5% sequential decline and 27.7% year-over-year decline, with a gross margin of 46.7% (down 390 basis points sequentially after adjusting for Q4 2025 one-time benefits, driven by Q1 inventory adjustments). Consolidated gross margin was 71.8%, which was within management's target range.

• Q2 2026 guidance (not comparable to year-ago Q2 2025 due to remaining legacy MLM revenue in the 2025 period):
  • Total revenue expected in the range of $46 million to $51 million, with an approximate 60% / 40% split between digital and Nutrition and Other revenue
  • Net income expected between a $3 million loss and breakeven
  • Adjusted EBITDA expected in the range of $3 million to $6 million
  • Gross margin targets: 86% to 88% for digital, 43% to 47% for Nutrition and Other, and 69% to 72% for consolidated gross margin, which is in line with planned promotional activity and volume expectations
• By the end of 2026, management expects Nutrition and Other to represent a larger percentage of total revenue than digital, consistent with the company's strategic pivot
• Initial retail traction is expected in H2 2026, with meaningful revenue contribution from new retail nutrition initiatives to materialize in 2027 and beyond as retail distribution expands

• The company is in the early stages of its retail nutrition expansion, and it will take time to build market traction and scale the new business model. No guarantee of meaningful retail adoption or revenue growth from the new omnichannel strategy can be made at this stage
• Retail expansion follows an inflexible 6-12 month timeline aligned with retailer shelf set/planogram reset cycles, so rollout and revenue growth will be gradual
• As wholesale retail nutrition becomes a larger share of revenue, consolidated gross margins will decline modestly compared to prior direct-to-consumer only nutrition margins, as wholesale margins are expected to hold in the mid-40% range
• Remnants of the legacy MLM business will continue to negatively impact year-over-year top line comparisons through Q2 2026, even as the business winds down

Q: Can you share how many new vs existing subscribers are using P90X Next Gen and 10 Minute Body, and how did the Shopify transition go? / A: P90X supplements attract both new customers and reactivate lapsed customers from the company's large existing database, which has outperformed early expectations. 10 Minute Body drives most new subscriber acquisition due to its low $10/month price point, with a meaningful share of free trial users upgrading to the full $19/month subscription. The Shopify transition went smoothly, and the platform is already delivering better conversion rates than the prior system, with additional low-hanging improvements to landing pages and navigation that will further boost conversion over time.

Q: What is driving the recent sequential increase in average revenue per subscriber, and are MLM headwinds now easing? / A: The increase is not from price increases or easing MLM headwinds, but from the company's new nutrition-first strategy. The nutrition market is far larger than digital fitness, and advertising nutrition first delivers lower customer acquisition costs and higher conversion, with many customers purchasing multiple products or bundles that boost average order value. Subscription metrics are becoming less relevant for the nutrition business as onetime retail and D2C sales grow, rather than just recurring subscription orders.

Q: What value does the KaHi distribution partnership provide beyond just access to grocers? / A: KaHi is one of two dominant national distributors to U.S. grocers, with an existing network of 30,000 retail clients. Beyond logistics, KaHi has its own internal sales organization that proactively promotes Shakeology to its network of retail clients, separate from the company's broker team at Advantage Solutions, expanding the company's reach to secure new retail placements.

Q: What is the timeline and outlook for the Southern California P90X/Insanity energy drink test? / A: The test is on schedule: production of the energy drinks will be completed in July 2026, and products are expected to be on Southern California retail shelves in August 2026, distributed by top-tier beverage distributor L.A. Libations. Test results from the launch will be used to support presentations for national retail planogram resets in October/November 2026, with national distribution planned for spring 2027 if testing is successful.