What to know about the 2021 Beachbody IPO


Beachbody is a fitness and nutrition company known for its upbeat, on demand workouts and nutritional meal plans. Before the advent of streaming video, the workouts were available on sets of DVDs and sold along with the meal plans and supplements via direct marketing. The founders of the company have a long personal history in fitness and utilize their industry knowledge to build and grow their at-home fitness platform. Beachbody has grown its number of users of it’s fitness and nutrition plans via direct sales marketing.

Now they plan to embark on a three way spac-merger combining BeachBody with MyX Fitness and Forest Road Acquisition Corporation. The company will still be called BeachBody and the stock symbol on the NYSE will be BODY. Estimates predict the new entity will be valued around $3. 

Related: What is a SPAC?

TL;DR

  • The company was founded in 1998 by Carl Daikeler and Jonathan Congdon. Daikeler is CEO; Congdon is President.
  • From the start, the brand was focused on at-home fitness. 
  • They have raised a total of $8.5 million in one venture round in July 2019. 
  • starting sales to current sales
  • The multilevel marketing efforts, which started in 2007, landed the company in hot water with complaints about false advertising. The company insists there is nothing wrong with the Team Beachbody MLM approach because it is simply word of mouth advertising. However, their newest corporate component, OpenFit, does not utilize this business model.
  • The company settled a lawsuit where it had been alleged they were charging clients without consent. Beachbody agreed to change its business practices around recurring payments. 
  • They are seeking a second quarter 2021 IPO and the new company is expected to be valued at $3 billion. 

Beachbody at a Glance

Co-founder Daikeler had career experience in the direct marketing industry in addition to his health and fitness background. He created “:08 Minute Abs”. After its success he realized that there was a lot of opportunity in the in-home fitness content segment of the fitness industry. Co-founder Cogndon, also had a fitness background. He is formerly a ranked beach volleyball player, and is a functional fitness and yoga practicioner.

Beachbody was one of the first to utilize social-media influencer networks. From the beginning, Beachbody focused on providing a total solution to weight loss and fitness by including meal planning, supplements and encouragement from a community. Initial funding of $500,000 came from angel investors in 1998.

The company has been recognized for winning Newsweek Magazine’s “America’s Best Customer Service 2020” award in the nutrition and weight loss category. The brand has evolved from the multilevel marketing model to offer both streamed and live fitness and nutrition products. The company’s website says in their two decades they have served nearly 25 million customers overall. Beachbody’s mission is to, “Help people achieve their goals and enjoy a healthy fulfilling life.” They have a non-profit foundation called, The Beachbody Foundation. It’s motto is: “We rise by lifting others.” The foundation has raised over $12 million dollars and so far has helped 35 organizations. They support work centered around health, fitness, justice and equality. Organizations they have funded include International Justice Mission, Hope Of The Valley, NAACP, The Lakota Tribe, Upward Bound House, Go Campaign, and Save-A-Warrior (SAW).

Beachbody’s user base has continually grown – in 2018, they had 1.5 million digital subscribers whereas now in 2021, they are estimated to have 3.7 million digital subscribers. Revenue has had its ups and downs. In 2017, revenue was estimated at $1 billion. In 2018, it dropped to $790 million and in 2019 it dropped further to $756 million. However in 2020, it rose to $880 million and for 2021, they are on track to reach $1.1 billion. Beachbody OnDemand users pay an annual fee of $99 to use the service.

Currently Beachbody On Demand is available anywhere users have internet access and a streaming device. More than 60 exercise programs are available consisting of 2000+ different videos. They offer nutritional recommendations with their meal planning services. And through their Shakeology brand, they offer meal replacement shakes and supplements. The company also has their Openfit brand – run by co-Founder Congdon. Openfit offers live and on-demand classes, personalized meal-prep and food tracking tools and supplements. 

Other notable leadership for the new company are the leaders of Forest Road Acquisition Corp, Former Disney executives Kevin Mayer, Tom Staggs and Salil Mehta. Kevn Mayer is also known for being the former CEO of TikTok and the architect of Disney+. 

Beachbody fundraising to know about

Beachbody is a private company based in California. It has had two rounds of funding and raised a total of $8.5 million as of July 2019. Here’s a breakdown of the key Beachbody fundraising over the years:

  • Seed Round: $500,000 in 1998 from angel investors
  • Series A: $8million from private investors

In addition to those two infusions of capital, they have expanded by adding services and product lines. The company started in 1998; it added Team Beachbody – the direct sales marketing arm of the company in 2007. In Jan 2016 they acquired Burn This, Inc. and in 2019 they started OpenFit. In 2020, OpenFit acquired Ladder, a sports nutrition company founded by Arnold Schwarzenegger and LeBron James. In 2021 as part of the merger, Beachbody will acquire Myx Fitness, LLC. Founded in 2017, Myx sells studio-level bikes plus basic small equipment like kettlebells. Known as the “best Peloton dupe”, the goal is to have Myx offer connected fitness bundled with Beachbody On Demand and Openfit. 

Path to the Beachbody IPO

Beachbody has not publicly shared its 2019 valuation; however with the merger, the expected valuation will bring it to unicorn status prior to the IPO. Prior to the news of the merger, the company had not publicly discussed any plans for going public. 

When is the Beachbody IPO date? 

Beachbody has not yet filed for the IPO and a date has not been set; however, the IPO is expected to occur in the second quarter of 2021. In February 2021, they announced the three way SPAC-merger between Beachbody, Myx Fitness and Forest Road Acquisition Corp. The spac-merger is led by Fidelity Management & Research Company, LLC and Fertitta Capital. lCEO Daikeler states that after the merger, the company will operate three online fitness businesses: Myx Fitness, Beachbody on Demand and digital streaming platform, Openfit. Combined under the Beachbody name, the new company is expected to generate more than $1billion in revenue in 2021. 

What investors should know about the Beachbody IPO 

While all investments have risks, it’s important to explore what type of risks investors might need to consider with a Beachbody IPO. The company is no stranger to controversy. The first area of controversy is the Team Beachbody part of their business, which runs on the business model of multi level marketing. In 2017, Truth in Advertising found in an investigation that Beachbody distributors (direct sales people) made false claims regarding potential income earnings opportunities in an attempt to recruit new distributors. Multi-level marketing businesses, though often lucrative for those at the top, do not have the best reputation in the business world. The FTC found that 99.6% of MLM participants actually lose money by becoming distributors in the various multi level marketing companies in the United States. An additional source of controversy was a 2017 lawsuit settled by Beachbody for $3.6 million with the city of Santa Monica, CA over their automatic credit card renewals processes. The company has changed their credit card use practices.

While Beachbody has achieved a lot of success, the health and fitness industry is very competitive. Adding Myx Fitness helps expand the company’s connected device segment. However, it also exposes the company to the risk related to the current patent infringement cases filed against Myx fitness spin bikes. Another risk is in customer retention – while users increased during the pandemic, the company will need to maintain the users’ loyalty as local gyms, studios and centers open up post-pandemic. Additionally, so far the company has not mentioned plans to scrap the direct sales marketing business model; with the low general opinion of multi level marketing may damage the brand image of the overall new company. Furthermore, in this digital world, there are low barriers to entry to digital health and fitness coaching and workouts and there are low costs to canceling a subscription and switching to a different company. Beachbody’s main competitors are: Mannatech, Precision Nutrition, Truweight and Plexus Worldwide. None of these are publicly traded companies. 

With 75% of revenues coming from their digital subscriptions, they have a healthy revenue stream. Revenue is split between three main sources: nutrition and supplement subscriptions (50%); digital subscriptions (40%) and connected equipment (10%). The digital subscriptions segment of revenue has seen massive expansion – in 2015 they had 0.3 million subscribers and today over 2.5 million. Additionally, digital subscriptions, according to Beachbody internal financial information, are operating at 89% gross margins and they have a 96% retention rate of customers. 

Since Beachbody intends to grow with the infusion of capital, analysts and investors seek to understand likely scenarios of expansion. They could expand internationally. Currently they only ship products to the US, its territories and APOs, and only US based individuals can sign up as distributors. However, the on demand streaming workouts are available everywhere. Beachbody could consider expanding their produce verticals to include health-related products and services such as mindfulness or sleep hygiene. It is unclear how they will cross-sell products between OpenFit, MyX and Beachbody. They could acquire additional fitness-related companies rather than starting another from scratch. Some analysts believe they could consider merging with physical gyms like Planet Fitness, to create an all-inclusive fitness offering or that they could be an acquisition target themselves by one of the media giants. Official statements from the company indicate they intend to focus on investing in domestic and international customer acquisition; bundling, streamlining and integrating all of the nutritional supplements and products; new product development and international expansion of OpenFit after the IPO. Beachbody has stated they will use acquisition of other companies as a growth strategy as well. 

The health and fitness industry has three main trends right now: digital subscriptions, increased focus of consumers on wellness and connected fitness equipment and apps. Beachbody after the three-way blank check merger will have a hand in each of these three areas. Beachbody has higher projected Revenue CAGR CY 2021-2023 and gross profit margin than Disney, Spotify, Netflix and Peloton. Beachbody’s subscriber base grew during the COVID-19 pandemic – surpassing the 2 million mark in April 2020. The company reported more than 100% usage growth for its streaming workouts, including yoga, cardio, strength and resistance programs. And it’s Vimeo-based children’s programming usage has grown by a multiplier of 13. 

CEO Daikeler shared that the increase in usage and subscribers began around March 15, 2020, when shelter-at-home orders took effect in the US. “We started to see people who were gym orphans wanting to find an alternative,” Daikeler said. “You can’t find dumbbells online or in stores right now, but we’ve got (programs) that give you a pretty intense body workout without needing dumbbells.” Previously what drove most people to Beachbody was a desire to lose weight. “Where normally we might be about helping people lose weight for spring break or to prepare for summer, instead what we were hearing was, people just wanted to have control of something,” he said. “And the two things they could control was activity level and the things they put into their mouths.”

Within a few weeks of the quarantine shut downs, Beachbody had his highest months of subscriber registration and usage ever. This highlights the fact that Beachbody is also a technology-based company because of its streaming technology. Over 40 different types of technologies are embedded in its various offerings. One of their newest platforms is BODgroups – Beachbody’s social media platform which serves as both encouragement and accountability for users for both exercise and nutrition tracking. New programs are tested rigorously with a careful, empirical approach involving developing product, testing, learning, revision and rollout. “We have created a vast portfolio of the most engaging and effective fitness and nutrition content over the last 21 years and have seen several evolutions, but we have always maintained a holistic approach to losing weight, getting fit, and getting healthy,” said Daikeler. “The metrics are exciting because the more people engage with the content, the better their results, and the better their results, the more people engage with the content. It’s a virtuous cycle.”

Bottom line

Beachbody is pursuing a second quarter 2021 IPO after the completion of its three way SPAC-merger. The company seeks to benefit from the current industry and market trends where adults are focusing more on their health and well-being – and willing to pay for it. While the company will encompass many avenues of being an all-in-one solution for fitness and nutrition with connected devices, personalized plans and a myriad of workout plans to choose from, customers will have to wait to see how well they’re able to cross-pollinate the offerings of Beachbody On Demand, OpenFit and Myx Fitness. It also remains unknown if after the IPO, the company will ditch the multilevel marketing business model that underpins Team Beachbody and go fully to a digital subscription model. While no investment is exempt from risk, the amount of unknowns in this competitive landscape will be the big challenges Beachbody seeks to overcome in its third decade of operation.

Related: What to know about the Oatly IPO

Julie Pierce Onos is a Massachusetts-based writer and Organization Development expert. She loves the stories that numbers tell us about business, relationships and health. You can connect with her on Twitter at @juliepierceonos.

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