Beachbody (BODI) Q4 2025 Earnings Call Transcript

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Date

Tuesday, Mar. 10, 2026 at 5 p.m. ET

Call participants

• Executive Chairman — Mark R. Goldston
• Co-Founder and Chief Executive Officer — Carl D. Daikeler
• Chief Financial Officer — Brad Ramberg

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Takeaways

• Revenue -- $55.5 million, declining 7.3% sequentially and 35.7% year over year, reflecting the impact of exiting the multilevel marketing (MLM) business model.
• Operating income -- $8.2 million, marking the second consecutive quarter of positive operating income and a $41.1 million improvement from the prior-year quarter's $32.9 million loss.
• Net income -- $5.2 million, second consecutive quarter of net profitability, an improvement of $39.8 million compared to the prior-year quarter's $34.6 million net loss.
• Adjusted net income -- $7.2 million, compared to a $4.7 million adjusted net loss in the prior-year quarter.
• Adjusted EBITDA -- $12.9 million, a 48% increase over $8.7 million in the prior-year quarter and ninth consecutive positive quarter.
• Cash balance -- $39 million as of year-end, exceeding outstanding debt of $25 million by $14 million and surpassing required debt cushion per new lender covenants.
• Free cash flow -- $17.4 million for the full year, compared to negative $2 million in the prior year.
• Operating expenses -- $33.2 million, down 16.4% sequentially and 64.6% year over year; prior year included a $20 million goodwill impairment.
• Digital revenue -- $34.3 million, down 5.8% sequentially and 31.9% year over year; digital subscriptions at approximately 870,000, down 3.3% quarter over quarter and 18.7% year over year.
• Nutrition and other revenue -- $21.2 million, down 9.6% sequentially and 39% year over year; nutrition subscriptions at approximately 80,000, up 14.3% sequentially and down 11.1% year over year.
• Gross margin (total) -- 74.5%, relatively flat sequentially and up 400 basis points year over year.
• Digital gross margin -- 87.3%, down 80 basis points sequentially and up 140 basis points year over year.
• Nutrition and other gross margin -- 53.7%, flat sequentially and up 140 basis points versus prior year; adjusted to 50.5% excluding one-time benefits.
• Q1 2026 guidance -- Revenue expected between $49 million and $54 million; net income projected in a range of negative $2 million to positive $1 million; adjusted EBITDA anticipated between $4 million and $7 million.
• Omnichannel model launch -- Transition from MLM to a five-pronged strategy: direct-to-consumer, Amazon/marketplaces, retail distribution, single-level affiliate, and win-back of eight million former customers.
• Retail rollout -- Shakeology (new seven-serve $34.99 format) and P90X supplement lines launching direct-to-consumer and via new Shopify site in April, with brick-and-mortar debut at Sprouts supermarkets in May, pending additional retail agreements.
• Ten Minute Body launch -- New low-price MicroDose fitness tier introduced, now accounting for about 8% of platform viewership within months of launch.
• P90X Generation Next program -- New version released after fifteen years, with positive initial uptake and planned marketing initiatives supporting further growth.
• Legacy MLM impact -- Management stated, year-over-year comparisons are not really relevant from a revenue perspective because the company is no longer utilizing the tens of thousands of former MLM sellers in the 2025 and beyond business model. In fact, management continually expressed over the last twelve months, as you know, the first time investors can actually make a direct year-over-year quarterly revenue comparison with clean results reflecting the new business model in both years will be the Q3 2026 earnings release.

Summary

The Beachbody Company (NASDAQ:BODI) achieved its first full year of positive operating income and adjusted net income since going public, delivering two consecutive quarters of net profitability and driving a substantial improvement in cash position while operating under a rearchitected omnichannel business model. The company announced new product launches, including a highly affordable fitness tier and reentry into retail for nutrition products under recognizable brands, reflecting a pivotal strategic reset away from legacy MLM structures and enabling lower pricing and healthier margins. Management emphasized disciplined expense control, streamlined breakeven revenue thresholds, and the anticipated growth trajectory of the nutrition segment, signaling a long-term shift in business mix toward higher-margin offerings and broadening retail distribution in 2026 and beyond.

• The new covenant structure with lenders eliminates testing of key financial covenants provided cash exceeds debt by $4.6 million, reinforcing current liquidity strength and operational flexibility.
• Performance marketing will focus on supporting the P90X Generation Next and supplement launches across direct-to-consumer, retail, and marketplaces, leveraging established brand awareness exceeding 60% for P90X according to management.
• The Ten Minute Body subscription strategy delivers a compelling $10 monthly price with free trial offers, yielding encouraging early conversion rates and supporting user migration to premium subscriptions.
• Nutrition and supplements historically outpaced digital fitness in revenue contribution, with management targeting expanded cross-selling and bundled solutions under a revised pricing architecture now possible without MLM constraints.
• Upcoming product innovation includes new ready-to-drink Shakeology variants, Insanity-branded beverages, and broader rebranding under the Body name, all timed for staged rollouts throughout 2026 and into 2027.
• Early data suggests customer acquisition costs are declining for nutrition-first offers relative to digital fitness, influencing channel mix and future marketing allocation.
• Management views the rising GLP-1 pharmaceutical segment as a potential customer acquisition opportunity, with targeted content and product positioning aligning fitness and nutrition solutions for this demographic.
• Reebok and partnership initiatives are in preliminary stages, and management indicated increased investment in strategic alliances to expand distribution and subscriber acquisition over the next twelve months.
• First quarter 2026 results are expected to retain the revenue mix at approximately 63% digital and 37% nutrition and other, with further shifts projected as new nutrition launches scale throughout the year.

Industry glossary

• MLM (Multilevel marketing): Sales strategy relying on independent sellers compensated via direct sales and recruitment, previously integral to BODI's distribution architecture.
• MicroDose fitness: BODI's term for short-duration, high-volume fitness workouts (ten minutes or less), introduced as a distinct subscription tier targeting time-constrained consumers.
• Form factor: Packaging format and serving size configuration used for nutritional products, such as the seven-serve $34.99 Shakeology bag detailed in the call.
• Planogram: Retail terminology for visual diagrams that allocate product placements on store shelves, referenced in the context of retail rollout strategy.
• EDLP (Everyday low price): Retail pricing approach featuring consistently low prices, contrasted on the call with high-low pricing models.
• TAM (Total addressable market): Represents the total potential customer base for BODI's products, repeatedly cited in narrative.

Full Conference Call Transcript

Mark R. Goldston: Thanks very much, Bruce, and good afternoon, everyone, and welcome to The Beachbody Company, Inc. Q4 2025 Earnings Call. 2025 was an important transitional year for The Beachbody Company, Inc. as we started on 01/01/2025 as a brand new company which has extinguished our former multilevel marketing business model in favor of a five-pronged omnichannel model featuring direct-to-consumer, Amazon and marketplaces, retail distribution for the first time ever later this year, and a single-level affiliate program, and a totally revamped customer win-back program for our former customers which count more than 8,000,000. And that covers former digital fitness and nutritional customers.

As a result of the dramatic shift in our business model, year-over-year comparisons are not really relevant from a revenue perspective because we are no longer utilizing the tens of thousands of former MLM sellers in the 2025 and beyond business model. In fact, we continually expressed over the last twelve months, as you know, the first time investors can actually make a direct year-over-year quarterly revenue comparison with clean results reflecting the new business model in both years will be the Q3 2026 earnings release. As a result of our outstanding financial performance in 2025, in early January 2026, we were able to secure some substantial improvement to certain financial covenants with our lenders Tiger Finance and SG Capital.

In the new agreement, as long as The Beachbody Company, Inc. maintains a cash balance of more than $4.6 million above the debt level, there will be no testing of the key covenants by our lenders. These covenants will only be tested if our cash balance dips below the $4.6 million cushion above the outstanding debt level. I am very pleased to report that as of 12/31/2025, our cash balance was $39 million against an outstanding debt level of only $25 million, giving us a $14 million cash cushion versus the $4.6 million cash cushion we are required to maintain in order to not have the covenants tested.

As we indicated on the Q3 2025 earnings call, extremely pleased with the dramatic turnaround of our financial performance in the two and a half years since I joined as Executive Chairman to conduct a major turnaround in The Beachbody Company, Inc. Our financial turnaround, which we previously defined as achieving quarterly and then full-year positive operating income and net income, is one year ahead of the original articulated goal of achieving the milestone by 12/31/2026. In fact, we achieved positive net income in Q3 2025 and today, reporting that we achieved positive net income in 2025, and we have achieved positive adjusted net income for the full year 2025.

We also achieved positive operating income in both Q4 and for the full year of 2025. This marks the first time since 2021 that we had both positive operating income and adjusted net income for the full year. To put this impressive milestone achievement in perspective, we had the second consecutive quarter of operating income in Q4 2025 at $8.2 million for the quarter, which was a $41.1 million improvement in operating income versus the same quarter, which was Q4 2024, when we recorded an operating loss of $32.9 million.

From a net income perspective, we recorded positive net income for the second quarter in a row in 2025 of $5.2 million which was $39.8 million better than the $34.6 million net loss in 2024. In addition, we have continued to demonstrate our financial discipline since I joined ten quarters ago in June 2023 by posting our ninth consecutive quarter of positive adjusted EBITDA in Q4 2025 at $12.9 million, which was a 48% increase over the $8.7 million in 2024.

You know, as we have stated on previous earnings calls, because of the accelerated pace of The Beachbody Company, Inc. financial turnaround, and the fact that we are a full year ahead of schedule, we have designated 2026 as the year when we unleash the first element of our fertile innovation pipeline. The innovations kicked off in December 2025 with the launch of a revolutionary concept designed to address the 185 million American adults who are overweight and/or have issues with blood pressure, cholesterol, blood sugars, sleep apnea, and frankly do not have the time, the knowledge, or even the inclination to participate in a full-fledged 45- to 90-minute exercise program.

This innovative program called the Ten Minute Body is a 400-video program covering a whole range of exercises and body part movements, and it is fun, easy, effective, and can all be accomplished in just ten minutes a day and for just $10 a month. Next, we launched the P90X Generation Next program last month, marking the first time in fifteen years where we have introduced a new version of the legendary P90X program, the number one selling extreme fitness program of all time with many millions of users. Carl is going to speak more about the digital fitness innovations for 2026 in a minute.

One of the major themes of our innovation pipeline and revised focus within our business is the development of the nutritional side of the business. The nutritional supplement category globally is a $164 billion business. That is more than 12 times the size of the global digital fitness category and was always a critical element of The Beachbody Company, Inc. revenue base, often exceeding the digital fitness revenue by two to one in the most successful years of the company.

We are going to enter the retail market of grocery, drugstores, mass merchants, and club stores for the first time ever in Q2 of this year with our new P90X line in nutritional supplements, a new seven-serve $34.99 form factor of our Shakeology brand, which, by the way, has sold $3.4 billion cumulatively and had over 1 billion servings as a 30-serve $129 product, and this product, Shakeology, has never been sold at retail. We will also have a Southern California test market in late Q2, early Q3, featuring uniquely formulated energy drinks under the P90X and Insanity label. We will then have an Insanity nutritional supplement line coming out.

We are developing a ready-to-drink Shakeology superfood protein drink in late Q3, early Q4 in Q3 and Q4. It requires no mixing, and we will add innovative new protein bars from P90X and Shakeology as well, hopefully, in 2026. We are also considering a complete revamp of the existing line of The Beachbody Company, Inc. supplement products, putting them under the new Body brand name and in new packaging, in late 2026, or early 2027. So the pipeline is fertile. It is full. There is a lot of new nutritional elements in there. We are really excited about it.

But importantly, now that we no longer have the constraints of the incredibly high 40% to 50% sales commission structure of the former MLM model, we can now price our nutritional products at very affordable price points that are dramatically lower than our previous nutritional products were priced at. With brand names like P90X, Insanity, and Shakeology, we will walk in the door of retail with very high aided brand awareness level, given that millions of people have been exposed to or have been part of those brands previously.

We now have the ability to price our products at much lower price points which represents a huge opportunity not only at retail, but in our DTC business as well at body.com. Our intention is to introduce P90X supplements and the new seven-serve $34.99 Shakeology form factor in April 2026 on our new Shopify website, and the retail rollout of these products in brick and mortar will follow beginning in May 2026 with some exciting news when Shakeology will debut in Sprouts supermarkets in the seven-serve $34.99 bag.

There will be many other retail accounts who will carry the Shakeology and the P90X supplement lines as well, and our retail selling partner, Advantage Solutions, is in the process of presenting those lines and securing confirmation and orders over the next four to eight weeks.

With the impressive financial turnaround in The Beachbody Company, Inc., the highlights of which include recording positive operating income for the full year of 2025, positive adjusted net income for the full year of 2025, nine consecutive quarters of positive adjusted EBITDA, a cash balance of $39 million at 12/31/2025, which is 56% above our outstanding debt level of $25 million with Tiger Finance, a 44% reduction in interest charges versus our previous Blue Torch debt, massive operating leverage being built into the P&L as a result of the lowering of the EBITDA breakeven level from over $900 million prior to my arrival down to a $180 million breakeven level today, and lastly, achieving the financial aspect of the turnaround a year ahead of our original schedule, combined with the 2026 debut of the new products and programs within our impressive innovation pipeline, The Beachbody Company, Inc. is poised to complete the total turnaround of the company by the 2026, a full year ahead of schedule.

We are looking forward to 2026 when the first clean year-over-year top line comparison can be made as the legacy business model elements from the MLM will have burned off by then, and we can clearly describe how the new products and programs that we are introducing throughout 2026 are doing and whether or not they are contributing to our number one goal of returning to year-over-year top line revenue growth to match the impressive year-over-year financial turnaround performance. With that, I would now like to turn the mic over to our Co-Founder and CEO, Carl D. Daikeler. Carl?

Carl D. Daikeler: Thanks, Mark, and thank you all for joining us today. Our Q4 results, which Mark introduced and Brad will detail shortly, demonstrate the operational momentum we have been building throughout 2025. The progress we have made with the financial turnaround has created an extremely efficient business, which is now in such a good position to accelerate into this exciting pipeline of new offers that we can maximize in multiple sales channels. As we said in our last earnings call, the end-of-year offers we launched going into Black Friday and Cyber Monday and the holidays and then into 2026 were well stacked to maximize the new model.

We saw productive demand for the new Shaun T lifting program called Dig In bundled with the special holiday and New Year subscription offer. We also launched our high-volume, low-price tier of over 400 MicroDose fitness workouts that are ten minutes or less to serve the over 185 million people in the U.S. who are overweight or obese or just do not have time or the inclination to do longer work sessions or who are intimidated by the gym. That tier, which we call Ten Minute Body, is driven by a free ten-day trial and a very compelling $10 a month price point.

The Ten Minute Body launch has shown instant popularity of MicroDose Fit programming with about 8% of our viewership already choosing these shorter formats in the last couple months. Looking ahead, our restructured performance marketing and creative teams are prepared to support our most exciting launch from our innovation pipeline, P90X Generation Next. After this last year of restructuring in 2025, we now have the people, the agencies, the strategies in place to maximize this launch and the rest of our plans for the year.

In fact, we launched the new P90X program in early February to a packed house of media and influencers in New York City, which will carry that launch momentum in the second quarter as we debut the P90X branded supplement line both direct-to-consumer and at retail. Here is what is most meaningful about this supplement launch. Our supplement strategy represents a significant business model shift.

What many people never realized about the company is that historically, in our peak year of $1.2 billion in annual revenue, fitness accounted for only 34% of that revenue or about $400 million, while other revenue driven primarily by supplements accounted for $783 million, and our MLM model at that time required a network compensation structure that limited margin and pricing flexibility to really scale. Now without that obstacle, we will soon offer our highly effective supplements under the P90X and Shakeology brands at $15 to $35 price points with healthy margins. That is unprecedented for us and significantly changes our economics and potential to really scale into the mass market.

And this shift in affordability fits well into our proven model of what we call the total solution that people need for healthy lifestyle change, which includes both fitness and nutrition. This approach to the total solution is one of the reasons our customers have always gotten such amazing healthy results upon. We have definitely seen that our best years were driven by this combination of effective supplements and fitness. But our data and analytics team has recently seen a growing trend where cost of customer acquisition offering digital fitness first has steadily increased, while customer acquisition cost when offering nutrition first has actually decreased.

It makes sense too because the nutrition supplement business has swelled to over 12 times the market size of digital fitness. So we are taking all those observations built on the foundation of the power of the total solution of bundled fitness and nutrition and now starting to leverage three of our most famous and successful brand names into this proven premise, starting with this combination of the new P90X Generation Next program and the new line of P90X supplements and beverages. P90X brand already has an incredible 62% aided awareness score in consumer surveys, which gives us a massive competitive advantage in launching this nutrition line in all our sales channels, especially retail.

Likewise, we will be advertising Shakeology direct to consumers, which as we have mentioned in prior calls, and as Mark said, Shakeology has already sold over a billion servings without ever being offered at retail. So the enthusiasm from major retailers for our second quarter Shakeology launch is confirming that this product is ready to scale past its legacy in the MLM. And in late Q2 or early Q3 2026, we will be launching an irreverent energy beverage line under the Insanity brand targeting a younger, more male-oriented demographic. We will also be launching a science-backed performance energy beverage line to serve a broader male and female target customer under the P90X brand, both in the Southern California market test.

Our goal is to read the performance of those new products in the test market, make any necessary modifications, and be ready for a national rollout of the Insanity and P90X energy drinks in 2027. In terms of marketing support, this is where it gets really interesting. Our DTC marketing model, which we have refined over nearly thirty years, is designed to be self-liquidating, meaning the advertising basically pays for itself through sales generating. So now that marketing spend for our nutritional lines will not only drive profitable direct sales, it will also drive traffic across retail, Amazon, affiliate channels, and through our customer database, which is already showing very promising signs of productivity with new supplement offerings.

And every one of those customers who enter the ecosystem with a nutrition purchase will get a free trial offer to join the fitness platform, which is a major value add and a competitive advantage in the supplement space. So this rising tide of supplement promotion with the value add of digital fitness will give us efficiencies that will float all ships in all channels. Again, the power of the total solution, which has driven customer results for almost thirty years, is alive and well. We are just attenuating that relationship of nutrition and fitness to take advantage of current tailwinds.

And as I mentioned last quarter, all of this will be supported by our transition to the Shopify ecommerce platform and its ease of checkout and high conversion metrics to maximize all this traffic starting in late March. So we are in a very strong position with the agility of a start thanks to our new operating efficiencies, combined with our portfolio of proven, well-known brands and a customer database that took decades to build, all running on an incredibly efficient structure. With nine quarters of positive EBITDA, and our second consecutive quarter of positive net income since we went public in 2021, it is clear this turnaround now has some stability.

As we execute our first full year with this completely new business model, the team is invigorated and hustling to maximize our momentum, responsibly deploying capital in 2026 and gradually ramping up into 2027. Okay. So let us get the details on Q4 results and the 2025 full-year performance from our CFO, Brad Ramberg. Brad?

Brad Ramberg: Thank you, Carl, and thank you everyone for joining the call today. I will review our Q4 results and provide our outlook for 2026. We continue to make significant progress on our transformation and have successfully rearchitected our cost structure to drive operating leverage. For the quarter, we exceeded our guidance for net income and adjusted EBITDA while producing revenues that were above the midpoint of guidance.

Before I get into the details of the quarter, I want to note that the quarter includes a $2.2 million benefit from the reversal of a bonus accrual made in Q3, of which $1.9 million benefited operating expenses and $300,000 benefited the cost of revenue, and the elimination of an additional planned $2.2 million bonus accrual in Q4 that was included in our guidance. We generated our second consecutive quarter of net income and our ninth consecutive quarter of positive adjusted EBITDA. For the full year, we are proud that we generated operating income and adjusted net income both for the first time since going public in 2021 while also driving positive free cash flow.

Now I would like to provide more details about the quarter. Total revenues of $55.5 million declined 7.3% sequentially and declined 35.7% year-over-year, in line with our expectations as we continue our strategic transformation. Revenues continue to be impacted in the near term by our shift from a multilevel marketing platform to the omnichannel model. Consolidated Q4 gross margins were 74.5%, reflecting a decrease of 10 basis points sequentially but an increase of 400 basis points compared to the prior year. We are pleased to report that consolidated gross margin remained at the high end of our target, underscoring our strong operational execution.

Moving to Digital and Nutrition and Other revenues, it should be noted that the year-over-year decline is heavily influenced by remnant revenue from the former MLM legacy business which was shut down 12/31/2024. Therefore, there is a component of the MLM legacy DTC and nutrition revenue in the 2025 numbers, which prevents us from having a direct year-on-year comparison to what we are forecasting for Q1 2026. Digital revenue decreased 5.8% sequentially to $34.3 million and 31.9% year-over-year. Digital revenues reflect continued pressure on our digital subscriptions which decreased 3.3% quarter-over-quarter to approximately 870,000 and declined 18.7% compared to the same period a year ago.

Nutrition and Other revenue decreased 9.6% from the prior quarter to $21.2 million and decreased 39% year-over-year. Nutrition subscriptions increased 14.3% sequentially to approximately 80,000 and fell 11.1% year-over-year. Digital gross margin was 87.3%, decreasing 80 basis points sequentially but up 140 basis points from prior year. Our digital gross margin was in line with our target. The continued strength in year-over-year gross margin was primarily due to a decrease in digital content amortization and depreciation due to more disciplined production and fixed asset spending. Nutrition and Other gross margin was 53.7%, flat sequentially and up 140 basis points versus last year. Nutrition gross margins exceeded our target. Excluding certain one-time benefits, the gross margin would have been 50.5%.

Operating expenses for the quarter declined 16.4% sequentially and 64.6% year-over-year to $33.2 million. Note, the prior year included a $20 million impairment of goodwill. Selling and marketing expense as a percent of revenue increased 40 basis points over the prior quarter but declined a significant 1,280 basis points year-over-year to 32.3%. This significant improvement over the prior year stems from eliminating partner compensation following our 12/31/2024 exit from the multilevel marketing channel. Enterprise technology and development expense was 15.7% of revenue, down 170 basis points sequentially and 990 basis points year-over-year, driven primarily by lower depreciation due to lower tech spend necessary to support our new business model.

G&A was 11.8% of revenue, decreasing 510 basis points sequentially and 160 basis points from the prior year. The sequential improvement reflects reduced personnel expenses from prior restructurings and lower professional fees. This disciplined expense management delivered strong profitability. Operating income for the quarter was $8.2 million compared to a loss of $32.9 million in the prior year, marking our second consecutive quarter of operating income. Q4 2025 net income was $5.2 million, our second consecutive quarter of net income, compared to a net loss of $34.6 million last year. For the full year, net loss was $2.9 million versus a $71.6 million net loss a year ago.

Adjusted net income was $7.2 million for the quarter, versus a $4.7 million adjusted net loss in the prior year. For the full year, adjusted net income was $3.5 million compared to a $31.2 million adjusted net loss last year. Adjusted EBITDA was $12.9 million compared to $9.5 million sequentially and $8.7 million in the prior year, marking our ninth consecutive quarter of positive adjusted EBITDA. For the full year, adjusted EBITDA was $30.8 million versus $28.3 million in the prior year. As Mark discussed, in 2026, we executed an amendment for our ABL facility, which modified our covenant.

Most importantly, as long as our cash balance exceeds our outstanding debt principal by $4.6 million, our key covenants are not subject to testing. Our cash balance was $39 million, compared to $33.9 million in the prior quarter and $20.2 million last year. Our net cash position is $15.4 million. Cash generated from operations for the full year was $21.8 million compared to $2.6 million in the prior year, while free cash flow was $17.4 million compared to negative $2 million in the prior year. Now turning to our first quarter guidance.

While we are pleased with the execution of our transformation, I want to reiterate that we just completed the first year of our pivot away from the MLM model to our multichannel marketing and distribution model. Please keep in mind that this guidance should not be compared to Q1 2025 because Q1 2025 still had significant revenue recognized from the legacy MLM model. As discussed, we significantly lowered expenses and our revenue breakeven point. This shift has opened new growth channels that we could not previously access, and we are very excited about the opportunities ahead. We now have a stronger balance sheet and a more viable long-term business model.

But as with companies that are undergoing a transformation, it will take time to develop traction in these new lines of business. As the tail of our legacy business winds down, we expect that the first time we will be able to do a year-over-year comparison of our new business model will be comparing Q3 2026 to Q3 2025. We expect first quarter revenues to be in the range of $49 million to $54 million, net income to be in the range of negative $2 million to positive $1 million, and adjusted EBITDA to be in the range of $4 million to $7 million.

The outlook for net income does not include the change in fair value of warrant liabilities, as it is significantly impacted by the change in the company's stock price, which cannot be estimated. As we continue to transition to our new business model, we want to provide additional updates to help you contextualize changes in our new financial model. For the quarter, we anticipate revenues to approximate 63% Digital and 37% Nutrition and Other. However, in line with the strategies we articulated on this call, we currently expect a notable shift by 2026 to a much larger percentage of our business being in Nutrition and Other, and the attendant margins that come along with it.

For the quarter, our Digital gross margin target is expected to be in the range of 86% to 88%. Our Nutrition and Other gross margin target is forecasted to be in the 44% to 50% range, which is in line with our volume expectations and certain promotional efforts planned. Our total gross margin target is expected to be in the 69% to 73% range. Over the last two years, we have made considerable progress against our business transformation. We have significantly lowered our breakeven point and strengthened our financial position, putting us on a solid financial foundation to execute against our growth that will drive long-term shareholder value.

I look forward to updating you on our progress in our next earnings call. I will now turn the call back over to Mark for closing remarks.

Mark R. Goldston: Thanks very much, Brad, and thanks to everybody for attending today. Camille, we will open it up now to questions. There should be some in the queue. She will take the questions as they appear. Then at the conclusion of the questions, I will come back on for some closing remarks.

Operator: Thank you. We will now open for questions. If you would like to ask a question, please press star, follow-up. The first question comes from Susan Anderson with Canaccord Genuity. You may proceed.

Alec Legg: Hi. Good afternoon. Alec Legg on for Susan. Thanks for taking our question. You guys have done a great job lowering the breakeven point over the last few years. I guess, what is next for management's priorities? If you had to kind of rank them? Is it still a focus on driving profitability? Or maybe starting to shift some of that towards returning to growth through all of the new launches and innovations planned for this year into 2027? Thank you.

Mark R. Goldston: Alex, great question. This is Mark. You know, listen. We have worked so hard to rearchitect the company to be focused on profitability that is just not something we are probably ever going to take out of our primary focus. That being said, this innovation pipeline, which we articulated, is pretty fertile. The beauty is a lot of what you are going to see, I believe, at this point, is a reallocation of the marketing spend to the newer shiny pin initiatives. So rather than making a large increase in the amount of the marketing spend, we are just going to basically redeploy that capital into what we believe is the highest and best use.

And you will see an increased focus, as Carl alluded to, on nutrition, and typically, with us, nutrition has a much lower customer acquisition cost and gives us a great yield. It also gives us a migratory path over to the digital fitness business. So I think that the takeaway is financial discipline will never go away. People are enjoying the fruits of our in terms of watching what has happened to this company financially. People want to stay on that. It is kind of like getting yourself fit. You know? You do not want to lose your newfound fitness. We have a lot of exciting things that we can invest in. And look.

If we see green shoots, and the profitability allows for it, would we do additional investment spending? Sure. But for right now, we think we have got an ample media budget that if we allocate it against the right news, will bear fruit.

Alec Legg: Thanks, Mark. And then just to follow-up, I know still it is about a month in, but I guess any early reads on the P90X launch? Has it brought in new customers to the platform, reactivated old ones? I know you talked about the reactivation campaign or maybe a good mix of both. Carl?

Carl D. Daikeler: Yeah. We are very pleased with the reaction from our customers and subscribers to the release. It is obviously a brand new program that is paying homage to the legacy that was created fifteen years ago when we launched the original P90X. This big activation in New York and have had millions of impressions, both in earned media and paid media. We are seeing solid uptake within our subscriber base of the program. But we are also, quite honestly, just a month into the release of it. So this first wave of customers who are doing it, they are going to be, like, the next wave of proof.

So we will be surfing this launch for probably the next twelve months as we continue to gather success stories and demonstrate to both our current subscribers and new prospective subscribers that this program works, that people, not just extreme athletes or extreme fitness people can do it, but beginners can do it with a modifier and people who are just trying to get back their athletic body from when they were in high school and college. So the initial indications are good. But it is also early days, and this next wave of success stories are what sort of propel the momentum of a new program like this.

Alec Legg: Thanks, Carl. I will turn it back. Thanks, Alex.

Mark R. Goldston: Thanks, Alex.

Carl D. Daikeler: Thank you.

Operator: The next question comes from Eric DeLauris with Craig-Hallum. You may proceed.

Eric DeLauris: Great. Thanks for taking my questions and congrats on another very impressive quarter and impressive year here. First question is just yeah, just a bit of a follow-up to the early read on P90X. Yeah. Just want to give an early read on the Ten Minute Body, you know, consumer response thus far. And then on this note, if you could just kind of clarify, I heard you mention, 8% I think, of your customers are essentially doing this sort of I think you call it MicroDose, you know, kind of ten-minute fitness programs on your platform. Was that all the Ten Minute Body? Are there other sort of MicroDose fitness programs that you have on the platform as well?

Carl D. Daikeler: Thanks for the question, Eric. Yeah. Very pleased with the response to Ten Minute Body. Again, these things, they start to grow. Right? You start to learn what channels work best. What media platforms work best, what creative messaging works best. And, yes, it is actually not 8% of our subscribers are using it, but 8% of the viewership for the entire platform is coming from ten-minute or less MicroDose fitness workouts.

So we have got five-minute workouts, eight-minute workouts, and that is all part of this Ten Minute Body subscription, which as you recall, the exciting thing about the subscription is it gives us the lever that, you know, we saw Planet Fitness do so well with, and that is high volume, low price. So we are advertising ten days free trial of our full MicroDose fitness catalog, which then rolls into a $10 a month subscription. However, people coming in to subscribe or take that ten-day free trial also then get offered the $19 full subscription.

And the thing I am most pleased about, I will not get too specific, but I will say I am quite pleased with what the conversion is of people who come in with the intent to buy the $10 a month subscription who actually then level up to the full subscription, which is a similar model that we have seen offline that grew Planet Fitness so well. We are starting to see that same dynamic in this virtual fitness environment. So, again, still early days. Just launched it around Christmas time. But we are seeing strong uptake, and it is frankly helping us do exactly what we said.

And that is reach the 185 million people who are overweight or obese, not inclined to do a full program, definitely not going to join a gym to do a ten-minute workout program, but are just looking for a way to fit it in their schedule. And we think this really has some great running room, particularly in conjunction with the focus on nutrition. So that combination is going to be a total solution that helps us reach this huge TAM. So good signs, and we think good runway ahead of us.

Mark R. Goldston: You know, Eric, this is Mark. What is interesting is, especially on a Ten Minute Body, because we are going after the 185 million people who largely do not exercise. So really, the first thing you have to do is build awareness. Then you have to build reception. Then you have to build exploration into the program, and then build conversion. Very different when you are marketing a fitness program to a fitness audience.

When you are marketing a fitness program to an audience that does not partake in fitness, your gestation period is longer than it normally would be because they have to first be aware of it, then they have to look into it, decide if they want to do it, and then convert. So we have known that all the way through. This is a long-term play by The Beachbody Company, Inc. to make sure that we have got a product offering to this massive TAM of people who have previously exhibited behavior that would say they do not want to do 45- to 90-minute workouts. That is for the people who are already in the fitness business.

Eric DeLauris: That is all very helpful, and sounds like you guys have done a great job thus far on this sort of different or new marketing approach. I mean, it sounds like, you know, very great uptake already. So, congrats on the initial success, and excited to see what is to come. My next question is on the nutritional brick and mortar rollout. First, I mean, huge congrats on announcing Sprouts. I mean, you know, what an excellent fresh customer to be able to announce. Just wondering if you could delve in a bit deeper to the extent that you are able to share how the conversations between other retailers and Advantage Solutions are going thus far.

And if we should think of, you know, any other help in terms of channel penetration? Like, should we continue to think of grocery as being the initial channel that we should look for these early wins? Or I guess, just how broad are these, you know, early conversations going with retailers?

Mark R. Goldston: Yeah. So we have sent out, I mean, dozens of what are called sample sets, which is when the brokers go and present this to the buyers. If the buyers have interest, they request what is called the sample set so they can actually see the product. And then the way that works is they then take that to a buying committee, which then makes a decision, puts it into a planogram, and gives you a target date to get in the store. So we, now, through Advantage, have a lot of these sets out to people who are going through the quote review process. And, yes, a lot of the initial will be in the grocery channel.

Shakeology going into Sprouts is a big deal. We just heard today. I cannot share it because I do not have anything in writing yet. But we did hear today from our nutrition division that there is a multi-100-store chain, I cannot say the trade class, who wants to put in the entire Shakeology line, all SKUs. So, again, this is going to be a momentum that is going to build throughout, you know, Q2 as we talked about. We will be in store in Sprouts, it looks like, May, which is great.

And then as we get into Q3, these buying committees that receive these sample sets who hopefully will have made positive decisions to put the product in for both P90X and Shakeology start to bear fruit. Remember, though, we are launching the new Shopify platform in a couple weeks for body.com, and that is when the new P90X and the new Shakeology form factor will be available direct-to-consumer, both to our current users in our database, our former users, and people who show up on the site. So the DTC business for P90X supplements and Shakeology will lead the brick and mortar rollout just from a timing standpoint.

And then we will start marketing it using our various and sundry media tools at the April and into May.

Eric DeLauris: That is all very helpful, and very encouraging. Congrats again on all the progress so far.

Mark R. Goldston: Thanks, Eric. Appreciate it.

Operator: Thank you. The following comes from Michael Kupinski with Noble Capital Markets. You may proceed.

Michael Kupinski: Thank you for taking my questions and congratulations on an excellent print. Yes. I just want to follow-up. Exciting news on the Shakeology and the Sprouts supermarkets. I was just wondering, how many stores will that be? Is it all 484 stores beginning in May?

Mark R. Goldston: No. It will not. It will be a component, a meaningful component, but it will be a component of that.

Michael Kupinski: Gotcha. And then in terms of the fact that your implication in terms of Q3 kind of showing revenue growth, can you kind of just break out for us in terms of your thoughts of what you anticipate that you will achieve by then. I mean, are you anticipating that, yeah, like, for instance, will you be in all 484 stores and with the Shakeology, you know, just kind of lay out the timeline maybe of what you anticipate to kind of see in delivering the revenue growth?

Mark R. Goldston: Yeah. So just to be clear, when Brad talked about this, he talked about that 2026 will be the first quarter where you can do a clean year-on-year comparison. And then, hopefully, we can then report on the progress on the traction of the items from our innovation pipeline. He did not say and did not make a projection that we will grow in that quarter because that would be giving guidance beyond the quarter in front of us, which, of course, we do not do. So not to say that it will not grow, but we are not making a projection about growth for Q3.

Logically, for Sprouts, it is unlikely that you will be in those stores and then three months later go to the chain. It probably does not work that way. You are going to read the component stores you are in, which is a meaningful number. Then at some point, yes, you will probably go chainwide. Usually, it does not happen in a two- or three-month period.

And then the other retailers we believe, Michael, will have started to show that we are in the store on the shelf with both P90X and Shakeology by Q3, and we will start to be able to read one, how much incremental business are we doing in DTC because of the advent of these new products? Two, are we getting a better penetration rate with our digital subscriber base? Because right now, as you know, Michael, it is less than 10% of our digital fitness subscribers also use our nutrition. There is no way that only 10% of those people are using anyone's nutrition.

That is largely because we were so formerly hamstrung by the pricing strata of the MLM that we were selling $50 to $130 products in nutrition. Today, the P90X line is $15 to $35, and the new Shakeology form factor is $34.99. So we are in a whole different ballgame in terms of trying to get cross-pollination, trying to get new people who land on the site, and trying to get the 8,000,000 former The Beachbody Company, Inc. members, probably a billion to a billion and a half dollars of former revenue is in there, try to get them to now look at these new products.

So we think the confluence of all of these spokes on the wheel will start to show in Q3 and into Q4, and if that were to be successful, then that would put us in a position where you are comparing us clean to clean year-on-year, and, hopefully, that would show some green shoots, which would be great.

Michael Kupinski: And thanks for that clarification and the color. I am asking the next question because I get this from shareholders. How relevant is the Beachbody brand to the younger fitness consumers today? And especially as you plan to roll out new products targeting the younger demo, just kind of give us some clarification there.

Mark R. Goldston: I mean, listen. It is a great question. The reality of it is Beachbody and now Body are authentication brand names. So they are not primary destination brand names. They are authentication names. So the Shakeology carries the day. The P90X carries the day. The Insanity carries the day. What we have done historically is use the Beachbody name because of its history to provide an aura of efficacy that we now have with Body because we think Body is more suited to the current world and the current environment that we are in, one.

And two, as we want to branch out into nutrition, and as we want to branch out into the people who do not heavily exercise, having a company called Body with a fresh perspective is a far better tool than communicating that everybody who uses our products is after six-pack abs and big biceps. Not that we do not have those products, but our TAM is far greater with the broader Body name.

And you are going to see we are working on a concept I mentioned in my prepared remarks where we may take a lot of our existing nutritional products, not P90X, not Shakeology, and put them under a Body brand name umbrella with dynamic packaging, etcetera, that we could then launch and further entrench the Body brand name and take advantage of the history of the company. Carl, do you have anything to add to that?

Carl D. Daikeler: I will add one little side anecdotal proof point that the underlying brands are really what attract the customer. So at this activation event for the launch of P90X Generation Next, I was shocked at the number of 20-something influencers who came up to me and told me that they watched their parents succeed and maybe had the best results and be in the best shape of their adult lives while these kids were growing up. They are in grade school, and now this was their chance to participate in an extreme fitness program that they can do at home.

And the trainer, Waz Ashar, appeals to this twenty-something, thirty-something year old who is looking for extreme results that are very convenient right at home. On the other side of that, we just got finished shooting some workouts, Ten Minute Body workouts that are designed for people who are 50, 60, plus. So we get to attract the demographic under the overarching brand, the brand that stands for holistic fitness and health. We get to attract the demographic based on the content and the nutritional solution that we pair it with. And that is what gives the company incredible flexibility. That is the beauty of content.

We can morph the target based on what we create rather than perhaps an equipment or brick-and-mortar type of strategy, and that gives us great flexibility and breadth.

Mark R. Goldston: But you will see us, Michael, going forward, you will see us using the Body brand name more in an authentication vein to help build its awareness of these high-awareness products that we are marketing. So we are definitely going to make a transitional focus to make sure that the Body brand name raises its awareness and can take advantage of the legacy of the prior The Beachbody Company, Inc. in terms of being an expert coming to the marketplace.

Michael Kupinski: Terrific. That was extremely helpful. Thank you very much.

Mark R. Goldston: Thank you, Michael.

Michael Kupinski: Thank you.

Operator: Next question comes from George Kelly with ROTH Capital Partners.

George Kelly: Hey, everyone. Thanks for taking my questions. First, just an accounting question on 4Q. I think I just wanted to make sure I had it right. There was a $2.2 million reversal that benefited the OpEx lines you gave? I guess there was a small component in COGS as well. And then there was an additional $2.2 million that was baked into guidance. So, effectively, it was a $4.4 million benefit to guidance. Did I just repeat that correctly?

Brad Ramberg: Yes. This is Brad. You did repeat that correctly. That is right.

George Kelly: Okay. Excellent. Thank you. And then second question, was a lot of discussion in the prepared remarks just about you having an opportunity to sort of adjust pricing, and you went through the new P90X pricing stuff and Shakeology at the different form factor. Within Shakeology, you know, on a per-serving basis, the pricing is still pretty elevated. So I am wondering if there is a point over the next year or so where you would contemplate just lowering, you know, once maybe your retail business has developed, or I am not sure what it would take, but might you do more of a per-serving pricing shift at Shakeology?

Mark R. Goldston: That is a great question, George. I would say the following. Our per-serving price today on the seven-serve is about $4.99, something around just $5. We are positioned, as you know, because we have got these 100 different ingredients and all the superfood ingredients in addition to protein, we are positioned as a premium product because we give you all of these extra benefits. So we want to be priced at the upper end within that marketplace, whereas the pure solo protein powders are priced less. That is not our direct competitor because we are a superfood with adaptogens and all of the other things that we have got in the Shakeology product.

So if we were just a protein powder, it might be a different ballgame, one. Two, we are going to see how this performs in the retail market. You would always like to take the superior product, which we have, and go out with a more premium positioning because that margin flexibility gives you the ability to do more marketing, more sampling, more trial, more local participation events. You have got the margin to be able to do that. And so that has been our strategy.

Certainly, we have the opportunity both at retail and direct-to-consumer, as opposed to lowering the absolute price, to use a promotional well where there are points at which we can put this thing on promotional pricing. Will give us the ability to make a value statement because our regular retail price would be $34.99, now yours for, making this up, for $29.99. Whereas if you just lower the absolute price of the product, then you are just an EDLP, which is everyday low price, versus a high-low strategy. And as you know, grocery follows two pricing strata. Some people are EDLP. Some people are high-low. And I think the high-low gives you more flexibility.

So my strong preference would be to keep our premium positioning and then if we need to, to promote off of that.

Carl D. Daikeler: I will just add that the reason this product has sold over a billion servings is people can tell the substance of this formulation. And we have always had pressure internally and externally to, perhaps, tweak the formula to lower the price and have the optics of a lower price formula. But we have held the quality and potency because it is so distinct. And that is our unique proposition, that you can feel the difference. And that is why we think it is going to be a good decision for retailers to put it on the shelf, because this one stands out because of the resilience of this formulation. You really can tell the difference.

I will add we are selling, you know, we are selling a tub of whey protein on P90X for the same price we are selling a seven-serve in Shakeology because the additional ingredients in Shakeology is what makes it a premium product. I mean, at $129.95, which is what the company sold it for the last umpteen years, you were at about $4.33 per serving. Normally, as you know, George, when you come down in form factor, you go up in price per serving. So our price per serving on the seven-serve is $4.99. On the 30-serve, it is, like, $4.33. So it is in the same ZIP code.

George Kelly: Okay. Okay. And then last question I had for you. I guess a two-parter. Before the Sprouts launch, have you done any kind of testing in store at Sprouts? And then second question is, do you have any just additional retail distribution secured after Sprouts? And that is all I had. Thank you.

Mark R. Goldston: We have not done any testing there. The testing, as Carl alluded to, has been fifteen years and $3.4 billion and a billion servings, which a lot of the buyers have said, you know, everybody knows Shakeology. Thank God it is finally available at retail. So that is the answer to that question. And in terms of the additional retailers, as I was saying in my earlier comments when Eric asked the question, we have, you know, dozens and dozens of sample sets out to the retail buying community that our brokers at Advantage Solutions have taken out there, and they are all under review by the buyers and then ultimately the buying committee.

And we are waiting for feedback, most of which will happen within the month of April and early May. And then we will have, you know, hard numbers about who is taking the initial launch and when it will be on shelf. But our anticipation is we will be in late Q2 and into Q3, we will start getting many more refills. And like I said, we have one, I cannot talk about because it was an oral, not a firm purchase order yet, which is coming. But it is a multi-100-store chain that is planning on putting Shakeology, all flavors, all SKUs. We just learned that this morning.

So, hopefully, that will materialize with the written purchase order, and then we can talk about it.

Operator: Thank you. The final question comes from Alex Hantman with Sidoti & Co. You may proceed.

Alex Hantman: Hi. Good afternoon. Thanks for taking questions. Getting, you know, a little bit beyond retail, I am curious what you have learned so far from the Reebok relationship and whether that channel can become a meaningful contributor to subscriber adds and if there is an opportunity to partner with similar brands.

Mark R. Goldston: Yeah. I think it is early days, certainly, on that partnership, and that is a subscription model as well. So we will certainly read that closely.

But regardless of where that nets out, whether it is great or whether it does not end up being great, we just brought in somebody to head partnerships, and our whole focus is going to be, who can we align with where we become a value add to their customer base, and reciprocal, as they become a value add to our customer base, because we have now got a much broader range of product, both in terms of our embedded Body, the new P90X program, now these new nutritional products, the new form factors at more attractive overall price points. We are selling $15 to $34 product. We did not have that before.

And so our ability to go out and craft partnerships because of that is way more compelling now than it would have been six months ago. So I am hopeful that over the next twelve months, you will start to see some of these partnerships materialize because everybody acknowledges the power of our brand. And now that we have got some pricing power to go along with that, I think it will bear fruit.

Alex Hantman: Thanks, Mark. Great context. And then just to follow-up on something from the 10-K. Yeah. Just to follow-up on something from the 10-K. You know, I think you mentioned GLP-1s as both a tailwind, you know, and a potential headwind. Curious. You know, are you hearing customers talk to you about that? Is it affecting, you know, any sort of meal planning that you are doing or formulations that you guys are making?

Carl D. Daikeler: I would say that it is actually, we see it far more as an opportunity for us because every person who makes the investment in a GLP-1 weight loss pharmaceutical is going to need to remediate the prospect of muscle loss by doing some exercise and by fueling themselves well. Shakeology is an absolute ideal easy solution for people who are obviously looking for an easy solution. So that has been a quite productive line of communication and messaging in our marketing and advertising. But, likewise, we have also produced content on the platform specifically for the GLP-1 user. Again, this is not a person who was seeking complete lifestyle change.

They are looking for a bit of a biohack, a shortcut to try to get some results and get traction on a healthier lifestyle. So you can imagine how something like Ten Minute Body, and specifically content designed for a GLP-1 user to help them with resistance training and cardio in a way that is manageable and fits into their lifestyle, that will be quite attractive. And the convenience of doing it at home is just a perfect formula.

So we actually feel quite well aligned with the growth of the GLP-1 sector and also, quite honestly, offering GLP-1 type formulations into our large database of people who have already raised their hand and said, you know, we would like to find a way to lose weight. And, perhaps they are not a current subscriber, but now they are in our database that we can make compelling offers to them so that they get access to the best solution available.

Alex Hantman: So we see it as a tailwind.

Mark R. Goldston: If you read the research that has been published on GLP-1, it basically says that when you go on a normal diet without a drug and you lose 20 pounds, approximately 20% to 25% of your loss is muscle, and the other 75% to 80% is fat. You lose weight on a GLP-1 drug, based on all the research that we have seen, you lose between 40% to 50% of that weight in lean muscle. So your lean muscle loss, based on the research we have read, is double when you do it through a drug versus when you do it through a regular caloric-restricted diet.

So to Carl's point, we become the perfect adjunct to anybody on a GLP-1 drug because otherwise, you know, you run the risk of getting what people would call skinny fat, which is you have lost the weight, but you have no musculature. If you are 40, that is definitely not what you want to be doing because your musculature, your musculoskeletal strength, has everything to do with your balance and not having falls and fractures and things of that nature.

So the more that category expands, and now that they are offering it in pill form, it looks like, not just injections, syringe injection, I think the more relevant we become as a partner to that as opposed to viewing them as a competitor.

Alex Hantman: Great context. Thank you. That is all from us. Great. Thank you very much.

Operator: That concludes the Q&A. I will now turn the call back to management for closing remarks.

Mark R. Goldston: No. Listen. This has been great. I really appreciate everybody attending today. We are obviously thrilled with our performance in 2025. It was beyond our expectations, and we are really excited about the innovation pipeline for 2026 and hopefully watching that bear fruit, especially as we get towards the second half of the year. So as always, if anything comes up, please reach out to us directly at the company through Brad Ramberg, our CFO, or through ICR. Thanks, everyone. Have a great day.

Operator: That concludes today's call. Thank you for your participation, and enjoy the rest of your day.

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