Good afternoon, ladies and gentlemen. Welcome to the Beachbody Company’s Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. And I will now turn the conference over to Eddie Plank, Beachbody’s Group VP of Investor Relations. Please go ahead.

Welcome, everyone, and thank you for joining us for our fourth quarter 2021 earnings call. With me on the call today is Carl Daikeler, Co-Founder, Chairman and Chief Executive Officer of The Beachbody Company; and Sue Collyns, President and Chief Financial Officer. Following Karl's and Sue's 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 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 1995. 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. Today's call will include references to non-GAAP financial measures, such as adjusted EBITDA. 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 Carl.

Thank you, Eddie, and good afternoon, everyone. Our fourth quarter performance reflects our disciplined execution against the plan we laid out in November. The plan was to increase focus on prioritizing the highest return marketing opportunities, improve the cost of subscriber acquisition to lifetime value ratios, capitalize on new product launches and tightly manage expenses and we did just that. These efforts in conjunction with the multiple new revenue streams we developed in 2021 delivered results that were ahead of our revenue and EBITDA expectations. Our fourth quarter performance is encouraging, but there's even more we're doing to make the business more productive and more efficient, while continuing to deliver growth that is scalable within our means. Near-term demand patterns will likely be variable but we're very confident in the long-term demand for at-home fitness and demand for our products that confidence is why we are taking decisive action to ensure we can deliver profits, cash flow and create long-term shareholder value in every type of demand environment, regardless of whether there are tailwinds or headwinds. And we're doing all of this while continually advancing our mission to help millions more people achieve their goals and lead healthy fulfilling lives. 2021 was a valuable year of making growth investments, which we are only just starting to deploy. Given that we're currently facing less predictable industry dynamics, we're determined to capitalize on the strengths we've built. To do this, we're moving quickly to focus on the strongest components of our business with the highest ROI and implementing actions to reduce operating and capital expenditures. As a result, we expect to reduce our cash burn by approximately $110 million in 2022 compared to 2021. And we're taking steps to deliver positive adjusted EBITDA in 2023. This is a playbook we know well.…

Thanks Carl and good afternoon. I'll start with a review of our fourth quarter results and then provide context around our outlook for 2022. As Carl mentioned in the quarter, we adapted quickly to navigate the realities of a dynamic marketplace. We're now taking action to accelerate these efforts to ensure we're optimizing spend to support cost effective growth and a return to profitability in 2023. Now, turning to the details of the quarter. Total revenue was $216.3 million, declining 3.6% year-over-year, but increasing 31% compared to the fourth quarter of 2019. These results were ahead of our expectations largely driven by stronger nutritional bundles and higher Connected Fitness revenue as we delivered more bikes than previously guided in the quarter. Digital revenue was $81.9 million and this represented a 14% decline versus the prior year period, but a 41% increase on a two-year basis. Digital subscriptions decreased 3% year-over-year, but were up 50% compared to 2019. And while engagement was lower compared to the pandemic elevated levels of 2020, we saw a 220 basis point improvement on the full year versus 2019. Importantly, quarterly retention levels also grew on both year-over-year and a two-year basis. And this validates the strength of our offerings and provides a solid foundation for future growth. Connected Fitness revenue was $36.8 million with 23,900 bikes sold compared to 12,300 bikes sold in Q4 of 2020 on a pre-merger basis. We were pleased with the positive response to the integration of our content library on to the bike which drove higher demand, particularly within our coach network. Additionally, with bike inventory on hand, we successfully navigated the challenging supply chain and logistics environment to reduce delivery time. This enabled approximately 11,000 more bikes to be delivered in Q4 than indicated on our November 15 guidance.…

Thanks, Sue. There is no doubt our industry is facing some near-term headwinds, as we move through the pandemic recovery. But in my 23 years of experience at Beachbody, I can tell you, we've seen challenging moments like this before and we've come out ahead every time. The total addressable market in fitness and nutrition remains significant and I firmly believe in the fundamentals of demand for our products within this category. We're moving quickly to align behind the strongest elements of our business and a return to profitability next year. As the company's largest stockholder, I'm confident in the long-term opportunity to drive sustainable, profitable growth and deliver on our mission to help millions more customers. With that operator, would you please open the call up for questions?

Certainly. [Operator Instructions] The first question is from the line of Jonathan Komp with Baird. You may proceed.

Yeah, hi, thank you. Maybe one clarification first, Sue, could I just go back and clarify? Are there shipping expenses that you're excluding from the adjusted EBITDA? I missed that. And does that carry-forward into 2022 on any piece of that?

We did add-back COVID-related shipping costs in general. And in Q4, a total of about $2.6 million and that related to incremental shipping on nutrition. We didn't add-back the incremental shipping on the bikes. And that was because we didn't have a basis for that in the previous year. It was higher than the pre-merger forecast we were given by the management team from Myx, but it wasn't something we experienced. So we wanted to highlight it in the script, but we didn't added-back in the reconciliation of net loss to adjusted EBITDA. The total overall COVID-related costs totaled $11.7 million for the 12 months ended December 31.

And then just on the forward projection, are you excluding some piece of the shipping or COVID-related costs going forward for 2022?

No. We don't have any adjustments in that adjusted EBITDA. I think the only thing that might occur ultimately would be add-backs associated with the reduction enforced.

Okay. Great. Thanks for clarifying. And then Carl, I want to ask more about the drivers of the shift in the One Brand strategy. I'm curious maybe a little more specifically what you see in the business in terms of the drivers and the reasons, and more importantly, the benefits or the impacts that we should see going forward from that move?

Yes. Thanks Jonathan. So, obviously, we were excited about Openfit and the prospect of casting a wider net to attract as much as the massive TAM available to health and fitness. But in this environment, it's a really difficult environment to allocate capital to two platforms much less on newer platforms. So it made much more sense for us to reduce redundancies, focus on marketing and technology and content into one brand particularly the Beachbody brand, which has better cost of acquisition efficiencies and much more mature and stronger lifetime value. So by bringing that all together frankly, we think that we're also treating all of the subscribers cumulative better because they get access to all this content that we've been developing over two decades. So strategically, we don't think we're sacrificing much particularly in this environment as opposed to the strengths that we pick up by really taking advantage of the flagship Beachbody brand.

Okay. Great. And just last one for me Sue on the balance sheet. I know you said we may hear more at a later date. But can you maybe comment on how long the current cash on the balance sheet with your current plans will be able to fund the business? I don't know if we can think about it in a number of months or quarters or any other context around that comment? Thank you.

Yes, sure. I mean, the fact that we've obviously got no debt at $107 million of cash at year-end, it's obviously a really strong starting position. And the other data point that we're looking at is budget projections for 2022 is really what gives us the confidence that we can service our working capital needs for at least the next 12 months without accessing the capital markets. So it doesn't mean we won't access the capital markets, it just means we don't need to. And part of the reason for that, of course, is we've got an incredibly strong inventory balance, and our ability to flex on CapEx and media in the year. So those are the big levers that are giving us that level of confidence.

Understood. Thank you.

Thank you Mr. Komp. There are no additional questions waiting at this time. I would like to pass the conference over -- back over to Carl Daikeler for any closing remarks.

No, I think we've pretty much covered it. I just appreciate everyone joining us today. I know you're busy, so we appreciate your interest in the Beachbody Company, and look forward to speaking with you again in the next few months. Take care everybody.

That concludes the Beachbody Company's fourth quarter and full year 2021 earnings conference call. I hope you all enjoy the rest of your day. You may now disconnect your lines.