Good afternoon. Thank you for attending today's Beachbody Company, Inc. fourth quarter 2024 earnings conference call. My name is Tamia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now ask to pass the conference over to your host, Bruce Williams, Managing Director of ICR. You may proceed.

Welcome, everyone, and thank you for joining us for our fourth quarter earnings call. With me on the call today are Mark Goldston, Executive Chairman of the Beachbody Company, Carl Dykler, Co-Founder and Chief Executive Officer, and Brad Ramberg, Interim Chief Financial Officer. Following the 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. 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 by 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, net cash, and free cash flow. And 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 Mark.

Thanks, Bruce, and thanks, everyone, for joining us today. I'll start by providing an update on our company's restructuring efforts and the significant changes to our business model that we announced last September. Then I'll highlight our fourth quarter performance and share the progress we've made on our turnaround plan. After my remarks, I'll hand it over to Carl Deichler, our CEO, who will discuss our strategic initiatives in more detail. And that'll be followed by our interim CFO, Brad Ramberg, who will discuss our financial guidance and outlook. As you're aware, as of November 1st of 2024, Body restructured into essentially a new company as we eliminated our long-standing multi-level marketing platform and moved to a single-level affiliate model. We made decisive and immediate changes to transition from our old model and paved the way for this transformation. The restructuring fundamentally broadens our go-to-market strategy and allowing us to be more dynamic and nimble by taking advantage of new distribution opportunities that the company could not unlock previously, and I'll detail that later. I'd like to emphasize that 2025 is a transition year for the company, and we're at the early stages of implementing our new strategy. As I communicated last quarter, it's essential for investors and analysts to view our business model through a fresh lens as year-over-year comparisons will not be a true representation of our progress, given the vastly different business model that we are now employing. Let me briefly reiterate our strategic shift to position body for future success. We phased out the multi-level marketing, or MLM, structure, which had been in place since 2007. The MLM model, while once effective, had become outdated, costly, and burdensome, with a negative stigma that hampers new customer and seller acquisition. Instead, we've made a quantum strategic shift to an omni-channel strategy, heavily focused on direct-to-consumer marketing. This includes utilizing direct response, Amazon, and conventional retail distribution for our nutrition products, and predominantly direct-to-consumer channels for our digital fitness products. The affiliate model, which simplifies our structure, will complement this omni-channel approach by enhancing revenue streams and empowering affiliates with performance-based compensation structure. This transition better aligns with our direct marketing roots and offers more sustainable economic framework while focusing on profitability and operating efficiency. We successfully met our internal target for transitioning active sellers from the MLM network to the new affiliate program. In addition to the new affiliate program, we have several exciting initiatives that we believe will be key drivers of our long-term growth. Our direct response marketing unit continues to perform well, and we continue to experience strong growth in our Amazon business. While early, we're also making progress in developing new products in the nutrition segment under our very popular T90X and Insanity brand names, which we hope to introduce in the next 12 months. These products will be available in major retailers within our affiliate network and through our direct response business. The omni-channel opportunity is vast. Body has never marketed any of our highly rated nutritional supplements outside of the former MLM network due to constraints of the former MLM model. However, we now have much more robust go-to-market opportunities where we can market our leading products like Shakeology, Energize, and additional product lines we're developing direct to consumers through media outlets like Facebook, Instagram, Google, et cetera, which is an opportunity that we could not take advantage of previously and which significantly hamstrung our ability to serve our addressable market. While this will take time, I really couldn't be more excited about the growth potential ahead of us. Now let's take a look at our performance highlights for the fourth quarter. Our revenues were in line with the high end of our guidance, and we achieved extremely healthy gross margins, which improved by 830 basis points year over year. Adjusted EBITDA of $8.7 million significantly exceeded our guidance range of $2 million to $6 million. This marks our fifth consecutive quarter of positive adjusted EBITDA. For the full year, we've generated $28.3 million of adjusted EBITDA. That's a $37 million improvement from the $8.7 million loss in the prior year. Additionally, we had a dramatic improvement in year-over-year cash flow. We generated cash flow from operations of $2.6 million for the year 2024, compared to a cash use of $22.5 million for the year 2023. That was a $25.1 million improvement year-over-year in cash flow. We've made significant progress in our turnaround by restructuring our financial model, and we're really pleased that we generated positive, full-year adjusted EBITDA and cash flow from operations for the first time since 2020. As we look ahead to 2025, we recognize, look, this is going to be a transition year as we implement our new business model, which is a crucial step in moving the company forward in this new direction. We understood that transitioning to our new omni-channel business model would involve some short-term dislocations, but it was necessary to position the company more competitively for long-term success. While we're excited about our new initiatives, we know it'll take time for these efforts to fully take hold, but we're fully committed to playing the long game at BODY. With our new business model now in place, we're entering the next phase of our strategy, which is dedicated to unlocking our top-line potential. With that being said, I'd like to turn the call over to Carl Deichler, and he'll discuss our strategic initiatives as we move into the next phase of our transformation.

Thanks, Mark, and good afternoon. Before our interim CFO to provide an overview of our initiatives and priorities, but first I want to say this past year has been full of challenges, important changes. As a majority shareholder, we've made significant progress toward positioning the business to serve more people, to return to the kind of growth and profitability we've enjoyed for the majority of our 26-year history, and to get back to a trajectory of a profoundly important and productive public company. But none of that happens without our incredible management and staff, plus our affiliate partners, our amazing subscribers. Now, looking back on 2024, the year was about taking a hard look at what was working and what was underperforming, what aspects of the model had changed since the pandemic and were holding us back from reaching and helping more people. And we made the very difficult choices that would return the business to its mission of helping people achieve their goals and celebrating the amazing customer success stories our programs and supplements enable. I believe we're seeing the signs that our recent shifts have great potential to scale. Our focus continues to be on delivering real results for people, helping them get fit, stay active, and feel their best. And with this refined business model, we're moving toward a more efficient, more profitable, and more impactful business model with incredible agility and leverage. We know the demand is there, especially in this new GLP-1 semi-glutide age of weight loss pharmaceuticals. More people need our no-nonsense approach to fitness and nutrition than ever. There's real demand there. So I maintain that our opportunity is huge, and with a clear strategy in place, we're creating momentum for the long term. What we continue to be focused on is building profitable revenue and cash flow, which, as Mark outlined, created the imperative for exiting the network marketing business and simplifying the business to a model that balances affiliate marketing with our roots of highly efficient performance marketing. That also opened up the prospect for sales channel expansion and greater control of the positioning and definition of the body brand across multiple sales channels. That's why our affiliate transition is such a big focus. More visibility of actual customer success, better incentives for the customers who step into the affiliate opportunity, and a smarter approach to customer acquisition. It's all really starting to come together. Now, it's still early in the game. We made the shift to a single-level or more traditional affiliate model, which let us remove the stigma of multilevel marketing from the narrative and direct our marketing spend where it matters most. attracting and rewarding the people who are ready to actually do this incredible thing of lifestyle change, getting results with our programs, and sharing that success with their followers on social media. It's very early in the process, but I'm optimistic about everything we've learned in the three months since it began, and I'm excited for how the team has already spotted significant opportunities to simplify and improve the entire affiliate model. Our marketing initiatives are focused on reaching more people with this incredibly efficient offer of what we call the total solution, combining digital programs with a monthly subscription to Shakeology. Not only is that incredibly effective for the customer, the price point is extremely compelling, especially when compared to the offer propositions of our peers in the equipment space. People get results with our business model more reliably and for less money. And this is the first time we've been in a position to mass market this total solution bundle. And while it's early in the ramp up, I have no doubt that it can really scale because we've done it before. We're doubling down on direct response marketing now, leaning into what's driving the best engagement and conversion rates. And while the impact of those changes weren't completely realized in the fourth quarter, every week we're learning, finding new wins that generate traffic, improving landing page conversion, and growing average order value. And we're gradually getting more and more traction. Our women's hormone health program, Belvitel, had launched in December. The exit from network marketing was a significant disruption to the original business plan for this new product. But we did see strong demand in the original launch, and now we're ramping up direct marketing with compelling, user-generated content. As our first wave of users complete the program next week, the results are consistent with our test groups, and the resulting flood of success stories will be used to drive marketing of Belle Vitaille throughout 2025. This is actually the same playbook that worked for P90X and Insanity. Neither of those programs were blockbusters out of the gate, but once the success stories started to come in and were integrated into the marketing message, the momentum builds and word of mouth starts to spread really fast. And I expect that same dynamic to happen for Belle Vitaille based on the enthusiasm we're seeing as women complete the program. We also launched two new programs to expand our audience. We call them specials. One is called Walk Week with Lacey Green. This is an indoor walking program, which is very appealing for people who want something easy to get started with. The other special is called the GLP-1 Fitness Formula, which we launched at the end of February and represents our initiative to help people who are using those pharmaceuticals to have a healthier and more permanent healthy outcome. As we mentioned last quarter, channel expansion is also a priority. We're seeing continued success with Amazon and adding subscribe and save nutrition subscribers at a faster clip than expected, and we believe this will compound as this channel expands. We started taking what we learned from the Amazon channel and launched a subscribe and save option within our own body checkout flow, which is also building our nutrition continuity file and driving long-term retention. That's a very healthy sign for the turnaround. We also launched on Walmart.com in February. It'll start small, but the growth potential is significant, especially given the retail initiative that Mark referenced, a project that he's personally leading for us. That's meaningful given his background scaling major CPG brands over the course of his impressive career, which leads me to talk about nutrition. We know our nutrition and supplements are some of the best out there, led by the Shakeology Historically, our nutrition products have mostly been sold within our network, which is all the more reason to be impressed with the fact that we've sold over a billion servings of Shakeology. Well, now we can expand that distribution via our own CRM activities, alternative marketplaces like Amazon and Walmart.com, and in the near future, Shakeology will be at retail. I'm also pleased to say that we've retained more of the legacy nutrition subscription file than we might have expected through the transition out-of-network marketing, which speaks to the positive customer experience of that product. Now, in addition to getting brand new nutrition subscribers, we're seeing returning customers who are re-subscribing to our nutritionals. That's a very promising sign. We also discussed partnerships in our last earnings call. Partnerships continue to be a significant opportunity for body. And here's where we stand. Helping people leverage their HSA and FSA accounts is a particularly important focus. 40% of adults have a funded HSA FSA account, and 80% of adults in the U.S. have access to these pre-tax funds. We're working with Dr. B and now even the leader, TruMed, to make these payment options available in the body checkout flow. We also just announced a partnership with telehealth provider Hello Alpha, who's excited to offer our products to their subscribers, especially the Belvitel Women's Hormone Health Program. And we've just begun offering their telehealth services to our database on a revenue share basis. Sum things up quickly. We're building a stronger, more profitable business from a foundation of dramatically reduced operating expenses and synthesized marketing. Performance marketing, affiliate marketing, strategic partnerships, and new sales channels will set us up for scaling the business profitably. 2024 was about taking a hard look at what was underperforming, holding us back from reaching more people and making hard but important choices so we can better achieve our objectives to help more people. 2025 is now about smart and careful acceleration. After the important step back, we can now work from a stronger foundation, and we're ready to really push forward.

I'm excited about where we're headed, and I can't wait to see the impact of everything we're rolling out. now i'll turn it over to our interim cfo brad ramberg to walk you through the numbers for q4 brad thank you carl and thank you everyone for joining the call today i will review our q4 results and provide our outlook for the first quarter for the fourth quarter the company generated revenue of 86.4 million dollars which was at the high end of our guidance range of 77 million to $87 million. Adjusted EBITDA of $8.7 million significantly exceeded our guidance range of $2 million to $6 million, and we generated our fifth consecutive quarter of positive adjusted EBITDA. Now I'd like to provide more details about the quarter. Total revenues of $86.4 million declined 15% sequentially and declined 27% year over year. As expected, revenues were impacted as we strategically transitioned from a multi-level marketing platform to an omni-channel model. Consolidated Q4 growth margins were 70.5%, representing an increase of 320 basis points over the prior quarter and an increase of 830 basis points compared to the prior year. Q4 growth margins were our highest quarterly rate since 2020, reaching the high end of our long-term target of 65% to 70%. Moving to digital and nutrition revenues, digital revenue decreased 6.2% from the prior quarter to $50.4 million and decreased 21.4% year over year. Revenues were impacted by continued pressure on our digital subscriber count, which decreased 3.4% sequentially to $1.07 million and declined 19.1% compared to the same period a year ago. It's important to note that the transition from an MLM structure to the current omni-channel model was primarily driven by the need to reduce the unsustainable overhead costs associated with the operation of an MLM. From a business standpoint, the transition away from the MLM has the most impact on the monthly nutrition sale. Therefore, our Q4 2024 guidance reflected the fact that we expected to see a significant decline in both revenues and the number of subscribers in our nutrition business post the announcement of the elimination of the MLM model. Consistent with that expectation, nutrition revenue decreased 26.6% from the prior quarter to $34.8 million and decreased 32.8% year over year. Nutrition subscriptions declined 29.2% sequentially to 91,000 and fell 44.1% year-over-year. Digital growth margin was 85.9% for the quarter, up 540 basis points in the prior quarter and representing a 1,280 basis point improvement from the prior year. Our digital growth margin results exceeded our previous long-term target of 80%. The continued strain in year-over-year gross margin was due to a decrease in digital content amortization as a result of a more disciplined production spend and a decrease in depreciation as well as the end-of-the-useful life of certain fixed assets. Nutrition and other gross margin was 52.3%, representing a 630 basis point decline from the prior quarter and a 90 basis point decline year-over-year. The decline from the prior quarter was primarily due to the discontinuation of preferred customer fees on November 1st, which were part of our old business model, where customers paid a monthly fee to purchase products at a discount, as well as increased inventory reserves and higher product costs as a percent of revenue. Moving on to operating expenses. Operating expenses for the quarter, which included $20 million in goodwill impairment charges, increased 14.6% sequentially and declined 30.2% year-over-year to $93.8 million. Excluding impairments, operating expenses declined 9.8% from the previous quarter and declined 19.2 percent year-over-year. Selling and marketing expense as a percent of revenue increased 50 basis points over the prior quarter and declined 530 basis points year-over-year to 45.1 percent. This significant improvement over the prior year was driven by changes to our partner compensation plan and a decrease in media spend. Enterprise technology and development expense as a percent of revenue increased 660 basis points in the prior quarter and increased 1,070 basis points year over year to 25.6% of revenue. The increase was primarily due to accelerated depreciation of $8.2 million in the current quarter related to assets that will not be used after the December 31, 2024 attributed to Pivot. G&A was 13.4% of revenue, an increase of 190 basis points sequentially and an increase of 200 basis points from the prior year. The Q4 2024 net loss was $34.6 million, compared to a net loss of $12 million from the prior quarter. This quarter's net loss included $20 million of goodwill impairment expenses. Excluding impairment, the net loss was $14.6 million. The net loss represents an improvement of $65 million versus the same quarter last year, which included $43.1 million in goodwill and intangible asset impairments. Adjusted EBITDA was $8.7 million compared to $10.1 million in the prior quarter and $2.8 million in the prior year. Notably, this quarter marks our fifth consecutive quarter of positive adjusted EBITDA. Next, moving on to the balance sheet and cash flows. Our cash balance of $20.2 million compared to $33.4 million in the prior year, which reflects our net cash balance after paying $15.8 million of principal on our outstanding loan with Blue Torch Capital during 2024. After making the principal payment, we've reduced the outstanding balance of our debt on the balance sheet to $19.2 million as of December 31st. We had a dramatic improvement to cash generation versus cash usage in 2024 versus 2023. Our cash generated from operations for the year was $2.6 million compared to cash used in operations of $22.5 million in the prior year, a $25 million improvement in cash generated from operations. Moving on to first quarter guidance, I want to reiterate that our fourth quarter results mark the final quarter of the company's old business model. As discussed, we significantly lowered expenses and our revenue break-even when we strategically pivoted away from the MLM model to our omni-channel marketing and distribution model. This shift has opened new growth channels that we could not previously access, and we are very excited about these opportunities ahead. We now have a stronger and 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. Therefore, our Q1 outlook reflects our new business model. We expect first quarter revenues to be in the range of $60 million to $70 million. Given that we are in a new business model and therefore do not have historical trends that reflect the business that we have today, we are not certain as to the indexing that each individual quarter of the year will have for 2025. Having said that, historically, Q1 has over-indexed the average quarterly revenue by approximately 15%. We will closely monitor this as we go throughout the year and hopefully have a more accurate quarterly indexing as we get to the back half of this year and into 2026. For Q1 2025, we expect a net loss in the range of $11 million to $7 million, and we expect adjusted EBITDA to be in the range of negative $2 million to $2 million. As we transition to our new business model, we want to provide some additional color to help you conceptualize changes in our financial model. As of today, we expect revenues to approximate 60% digital and 40% nutrition moving forward. This is the first quarter of giving guidance in our new model, and should this trend change in the future, we'll update you accordingly. Additionally, we expect our gross margin target for digital fitness to be approximately 85% and our nutrition target to be approximately 50%. As we progress throughout 2025 and into 2026, you will see the benefits of our new product pipeline and programs, as well as the development of the additional channels we can now sell, which we believe will bear fruit. We look forward to updating you on our progress throughout the year.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. The first comes from Susan Anderson with Canaccord Genuity.

You may proceed. hi good evening thanks for taking my questions um i was curious maybe if you could give some more color just on kind of the movement you saw with the affiliates as you moved over to the new business model i guess you know what was the reaction and um did you see the majority you know want to continue to work on the new platform and continue to drive sales or have you been also maybe acquiring new affiliates that see the new platform as an opportunity for them. Thanks.

Thanks, Susan. It's Carl. Good to hear from you. Yeah, the transition to affiliate, I would say, was right about where we expected it to be at the beginning. As you can imagine, the transition out of network marketing can be extremely turbulent and upsetting to the people who were committed to that model. However, the people, and what I think is the most important affinity is those people who are using the product and most passionate specifically about our products, and those are the people that came over. And I would say from a transition perspective, while we hit the numbers expected in the initial transition to affiliate, We have not been adding new affiliates as fast as we would like. However, we have started to bring in outside affiliates, meaning people who were not originally involved in our network marketing operations. And we're launching an initiative later in the late spring, early summer to dramatically attract more affiliates, particularly from our own current subscriber base. So, again, I would say it was a moderate success in the transition from network to affiliate. It has slowed down since, but we have plans for it to pick up from external sources and internal sources throughout the spring.

Okay, great. And then maybe if I could just have a follow-up, I guess, how should we think about just the P&L structure? Should we think about this quarter? I know it was two out of three months, but being as kind of the new base for, you know, gross margin and operating expense or are you guys expecting um changes as we move forward and the new um business model kind of progresses if you could just give any color on gross margin and not expense throughout the year that'd be great thanks hi susan this is brad good good to hear from you uh as we said on the pre-recorded comments what what we're what we're expecting is that the revenues will approximate 60% digital and about 40% nutrition.

And given that this is a new model, we'll watch it and we'll continue to update you as the quarters progress. For gross margin, we're expecting our digital gross margin to be in the range of 85% and our nutritional gross margin to be in the range of 50%. And then we've also provided guidance on EBITDA for the quarter of negative two to a positive two.

Okay, great. Thanks so much. Good luck.

Susan, this is Mark. Nice to talk to you. Yeah, just for context, as I said in my remarks, this is essentially a new business right now. So our ability to predict quarter to quarter right now in a brand new business model is getting better every day, but there is uncertainty there. So I I think the most important thing to note is Brad's, which is that 60% of the business is anticipated to be digital fitness and 40% is anticipated to be nutrition. And with the margins at 85 and 50 respectively, that's a weighted average margin of about 71. And, you know, typically first quarter is indexed, as we've said previously, around 110, 112 for the year. We don't know that that's going to be in the new model the same thing. But absent that, we're using that as a compass. So, we're learning every day as we're going. We really enjoy having this omni-channel approach versus being wholly dependent on the previous MLM. But it's also giving us a lot of learning on the fly, which is what we're responding to every day.

Okay, great.

And as we learn, we'll update you through the year as we learn more.

Sounds good. Yeah, we look forward to watching the progression as well.

Thank you, Susan.

Thank you. The following comes from J.P. Wallum with Roth Capital Partners. You may proceed.

Thank you guys for taking my question. If I could maybe just start a little bit more on the sort of Q1 guide and understanding a bit of what you talked about in terms of the mix and thinking through the lens of a sort of new business. But I just want to maybe get a little clarification. If we think about the sequential step down, are you guys really attributing the entirety of that step down from the affiliate change or, you know, kind of like how much of the decline are you bucketing to affiliate change and what else might be involved in sort of that decline across segments?

Yeah, it's definitely, as we said last quarter, we anticipated a certain percentage of the active sellers that were in the former MLM to migrate over, and that's essentially what has migrated over. That being said, there were many people who did not choose to become affiliates and have since left the body network. And so that is where you see the difference in the volume. The direct response business continues to be strong. The Amazon business continues to be strong. Both of those things will become a bigger part of our business going forward. The retail that we will be doing hopefully at the end of 25 and 26 will be another component, which will be brand new. But we had always said that in this shift, We are going from a MLM-dependent model to an omni-channel model where affiliates are now a component of the mix, but not nearly at the level as they were in the former MLM. And so the guidance is reflective of the fact that this is the first pure quarter of the new business model, and that's why we are where we are.

Okay. Understood there. Sure. And then maybe just a little bit of a follow-up from Susan's question, but if I kind of go to the EBITDA guidance and work my way through OPEX, I just want to get a sense, is that sort of number the kind of fully baked number we should think about going forward in terms of all of the cost reductions you were able to pull with the model change? Or are there still some steps left as we progress through the rest of 2025 that could see OPEX move even further?

What you're seeing in the guidance is the way we're looking at the business right now. So that's what we're expecting the first quarter to be. As we continue to learn as the model progresses, we, of course, will continue to look at every operating expense line to make sure we're getting the appropriate leverage that we can. But the guidance we gave is the way we are seeing the business right now for Q1 and 2025.

Fair enough. And if I could just squeeze one last one, you know, just want to kind of give the opportunity to talk about the nutrition business a little bit more. It sounds like, you know, certainly a lot of progress and some positives in terms of the Amazon business and the what sounds like increasing subscriptions. so you know just how are you thinking about you talked about retail you know we've talked about this whole outside the walled garden like what more can you share in terms of just positives and and if you're able to quantify at all kind of what can you share in terms of how well that's going well it's early days but let's talk about nutrition because it is a major opportunity for the company.

So the Shakeology product, which you're familiar with, I think cumulatively in its life has done three, four billion dollars of revenue and over a billion servings. It has never been sold in a retail store and had never been marketed in Facebook, Google, et cetera. So now that there is no MLM anymore, that can be marketed. So that alone is a significant potential opportunity that we will start to tap later in this year from a retail perspective, but from a marketing standpoint, we're starting to advertise it, and you'll see it now, and it's doing very well. The other nutrition products that we've got, forget about the existing portfolio, the new stuff we talked about, P90X, Insanity, etc., those will probably be out either end to 25, end to 26. Those are major, major retail revenue opportunities, so we're talking about two of the best-known brand names in the history of the fitness business so unlike brands that walk into the retail environment starting from scratch they have to build awareness we're going with two huge awareness brands right out of the gate and so we are now working on our formulations across the categories that will enter jt and this could be a major new part of this company as we go into 26 and beyond so we talked about omni-channel, but that was starting on January 1. That channel has not yet been developed, and it will be. The unburdening of the nutrition channel is just starting to take hold, and the digital will obviously continue to be a great part of the business, and the affiliate will be one of those four or five streams that we've got. So nutrition for us, once we expose this to the general consuming public, both as existing products and the new product, should become a much bigger part of the company in the next 24 months. Carl, you want to add something on that?

Yeah, I just want to add that one thing that we have not been able to do for the last almost 18 years with the network marketing business was literally advertise our nutritionals, which are best in class, and the synergy of what we call the total solution, and that is leveraging the content, access to our brand-leading content with our nutritionals. We just started doing that this first quarter, and we're seeing very strong signs in the direct marketing channel, now that we have the ability to market both nutrition and content together, that that bundle is a very efficient way to acquire new digital and nutritional subscribers. So that synergy is something that is a core competency and competitive advantage that the company has that now we are completely untethered to do now that we've retired the network marketing model. And that's pretty exciting.

Perfect. I'll leave it there. Let's do that going forward, guys. Thanks, JP.

Thank you. The next question comes from with Singular Research. You may proceed.

Good afternoon. Can you hear my question? Can you hear me?

Yeah, we can hear you.

Okay. Thanks for taking my question. I think we might have alluded to it, but maybe you can give us a little more color. Given the significant changes in the business model, how are you guys thinking about the long-term composition of your revenue strips? Do you anticipate any shift from between subscription to one-time purchases? And now that you're in retail and the omni-channel, is it more nutritional products? Can you give us some color on how you think about the long-term?

That's actually, without giving guidance, that's actually a great question. We have previously been, as you know, heavily dependent on subscriptions. And we still see that as being an important part of the business. But now that we're no longer network bound and we can go into the general consuming public, you will see more one-time purchases as we bring new people into the franchise. And when we develop the retail part of our business over the next 12 months, more in the latter part of this year, early next year, A lot of those will be single purchases because that's how people buy at retail. So you're going to start to see a mixture here of the digital fitness product being heavily subscription-oriented and a component of the nutrition being subscription-oriented and a component of the online business or nutrition being one-time and then all of the retail being one-time. That's how the business will play out. And if I'm taking a 24- to 36-month horizon and you ask me what will this look like in two or three years, once that retail is taken home, it will become a much bigger part of the total mix.

I know you guys have mentioned the success of the Amazon channel. Any color on the Walmart channel, thewalmart.com, will it grow to be successful or bigger? How do you see that playing out? Carl?

It's very early in the process. We just launched Walmart about a month ago, so I think that'll be covered in our Q1 earnings call so that we can provide what clarity and progress there is on that. But we are seeing it generally perform with the same kind of ramp in the early days that we saw from Amazon. Okay, awesome.

And I'll just squeeze in one more. So just to – how do you evade or manage any kind of potential cannibalization between the direct-to-consumer and the affiliate network channels?

Frankly, they're complementary. The more successful and the more scale we get with direct marketing, the more wind it puts at the back of the affiliate marketer. That's definitely what we saw in the early days of the network marketing business. And the reason we lost that dynamic was there needed to be such a my most favored nation relationship with the network that it was holding back our ability to expand direct marketing. Now that we've sort of retooled it and made it simpler and just easier for more people to participate in, we expect that more of our subscriber base will actually be able to benefit from the exposure that we generate from new programs. I've got some very exciting stuff coming out this summer that is specifically being designed to have a significant scaling performance marketing advertising campaign that with that exposure, now our affiliates will be able to leverage their audience with promo codes and discounts to help convert more of their audience into subscribers. So I think it's going to have synergy, frankly, that we haven't enjoyed for about a decade.

The best way to think of it is, you know, all affiliates need air cover for the brands they sell. It's really important. And so the marketing that we do with the direct response marketing that we do is providing air cover to anyone who is an affiliate selling our product.

Awesome. I'll take the rest offline. Thank you for taking my questions. Thanks for coming.

Thank you. There are currently no more questions in the queue, so I will pass it back to Mark Goldston for closing remarks.

Well, I just want to thank everybody for attending today, and again, if you have any questions, please feel free to reach out to us either through ICR or directly through Brad Ramberg, our CFO, and we'd be happy to speak with you. So thanks, everybody, for attending.

This concludes today's conference call. Thank you for your participation. You may now disconnect at your line.