BODI — Q2 2026 Financial Report Analysis

Overview

Beachbody (now branded BODi), the company behind P90X, Insanity and Shakeology, made a small profit in the second quarter of 2026 even though sales fell by more than a fifth. Revenue was $49.6 million, down 22% from $63.9 million a year earlier, while the company swung from a $4.0 million operating loss to $1.7 million of operating income. The profit came almost entirely from spending less: its 2024 switch away from multi-level marketing (MLM) means it barely pays commissions to its old network of sellers anymore. The customer base is still shrinking. Digital subscriptions fell to 0.76 million from 0.94 million.

At a glance

• Revenue $49.6M, down 22%. Both businesses shrank at about the same pace: digital streaming fell 22% and nutrition products (shakes, supplements) fell 24%.
• Operating income $1.7M vs a $4.0M loss. Operating expenses dropped by $16.1 million while gross profit dropped by $10.5 million, so cost cuts outran the lost sales.
• Cash $32.4M, down from $39.0M in December. Operating cash flow was negative $4.3 million for the first half, so the profit on paper is not yet turning into cash.

Q2 2026 vs Q2 2025

Operating margin is the share of revenue left after running the business, before interest and tax. Adjusted EBITDA is the company's own profit measure that excludes depreciation, amortization, stock-based pay, interest, tax and one-off items.

Where the revenue went

Digital (63% of revenue). The filing says the $8.5 million drop in streaming revenue came from "20% fewer average subscriptions in the current quarter as compared to the prior year as the result of lower demand." Engagement among the members who stay is steady: daily-to-monthly active users (DAU/MAU, a measure of how often members come back) edged up to 31.9% from 31.4%. Average monthly retention, though, slipped to 96.1% from 96.7%. In plain terms, roughly 3.9% of subscribers left each month instead of 3.3%, which is about a fifth more cancellations.

Nutrition (37% of revenue). Nutrition revenue fell by $5.2 million. The filing attributes this mostly to a 23% decrease in average order value "due to product mix and promotional offerings" and only 3% fewer average nutrition subscriptions. So the company is keeping roughly the same number of shake and supplement buyers, but it is discounting to keep them. That shows up in margin: the nutrition gross margin fell to 46.7% from 51.4%, which the filing says was "primarily due to a higher level of promotional offerings." Digital gross margin held at 87.1% (87.7% a year ago).

Where the profit came from

Total operating expenses fell to $34.1 million from $50.2 million:

• Selling and marketing: $15.6M vs $25.5M. Of that $9.9 million decrease, $7.1 million was lower Partner compensation, meaning commissions to the former MLM sellers, which fell from $7.6 million to $0.4 million. The remaining $0.4 million is amortization of commissions deferred from before November 2024. Media spending fell another $1.3 million. Selling and marketing dropped to 31.5% of revenue from 39.9%.
• General and administrative: $8.6M vs $11.6M. This was mostly $2.0 million less in professional fees, plus lower headcount.
• No restructuring charge this quarter, against $2.5 million a year ago.

The commission saving is a one-time step down rather than something that can keep growing. With Partner pay already near zero, there is little left to cut there. Future profit has to come from revenue stabilizing, or from further cuts to marketing and overhead, and those cuts risk speeding up the subscriber decline.

Takeaway: BODi's return to profit comes from cost cuts, mainly getting rid of MLM commissions. Its customers are not coming back. Digital subscriptions are down 19% in a year, cancellations are rising, and revenue fell 9% from Q1 to Q2. Once the commission savings are fully counted, any further profit has to come from a customer base that is still getting smaller.

What the headline numbers hide

• The profit is not turning into cash. First-half net income was $3.7 million, but operating cash flow was negative $4.3 million (positive $6.6 million a year ago). Free cash flow, meaning operating cash flow minus equipment and technology spending, was negative $5.7 million. The filing names two main reasons: an $8.3 million increase in cash spent on inventory, "due primarily to the Company's increased focus on nutritional products as well as the Company beginning to sell nutritional products through a retail environment," and the continued unwinding of prepaid Partner commissions, which reduced cash from other assets by $17.1 million year over year.
• Inventory is rising while sales fall. Inventory rose 34% in six months, to $12.6 million from $9.4 million, while nutrition revenue fell 26% in the first half. If the retail push sells through, this is stock built ahead of new sales. If it doesn't, the company may have to write some of it down. Inventory write-downs were $0.8 million in the first half, up from $0.6 million a year earlier.
• Deferred revenue is shrinking. Deferred revenue is money customers have already paid for subscriptions the company hasn't delivered yet. It fell to $48.8 million from $56.9 million in December, down 14%. Because about 99% of it turns into revenue within 12 months, a smaller pool now usually means lower revenue in the quarters ahead.
• A small accounting gain helps the profit line. Net income included a $0.5 million non-cash gain from lower warrant values, which went up because the share price fell. Without it, adjusted net income was $0.9 million. This is also why diluted EPS ($0.11) sits well below basic EPS ($0.19): the diluted calculation takes out the warrant gain and counts about 0.7 million potential extra shares.
• Revenue fell from Q1 to Q2, not just year over year. Revenue in the first half was $103.9 million, so Q1 was about $54.3 million. Q2's $49.6 million is about 9% lower than Q1, and operating income fell from about $3.1 million in Q1 to $1.7 million.

Debt, cash and going-concern status

The filing gives no going-concern warning, meaning auditors and management have not flagged doubt that the company can keep operating. Management says it "will have adequate cash flows to support its ongoing operations for at least one year" and that the company was in compliance with its loan terms on June 30, 2026. The numbers behind that:

• Cash: $32.4 million, plus $4.25 million in restricted short-term investments.
• Debt: a $25 million asset-based loan from Tiger Finance (carried at $23.6 million on the balance sheet), due May 2028. Its interest rate is the benchmark SOFR rate plus 9%, which worked out to a 12.66% cash rate (14.86% effective) in the first half. The August amendment removed the chance of a cut to SOFR plus 7.75%, so that rate now stays until the loan matures. Principal repayments of about $2.1 million a year started in July 2026.
• Net cash (cash minus debt, the company's own measure): $8.8 million, down from $15.4 million in December.
• The lender has amended the loan twice in seven months. The August 3, 2026 amendment raised the minimum liquidity requirement to $18 million. Liquidity here means cash the company must always keep available. The amendment also lowered the digital-subscription minimum, now checked only during a "testing period," from 700,000 to 650,000 through year-end and 550,000 after that. The current count is 760,000. A testing period now starts if cash falls below $22.5 million. That leaves about $10 million of room above today's $32.4 million. At the first half's burn rate (cash fell $6.6 million since December), that room lasts several quarters, not years.

None of this points to a near-term crisis, since the company is profitable on an operating basis and the loan has no large repayment until 2028. But the lender is already resetting covenants to fit a shrinking subscriber base. The cushion depends on cash flow turning positive again.

Outlook

The 10-Q gives no numerical revenue or profit guidance. For the second half, watch three things:

1. Whether the retail nutrition push turns the inventory build into sales. It is the only growth initiative the filing names, and $8.3 million of cash has already gone into it.
2. Digital subscriptions against the 650,000 floor. Subscriptions fell by about 180,000 in a year. If that pace continued, the count would approach the floor by late 2027. The floor only applies if cash drops below $22.5 million, but those two numbers are the ones to track together.
3. Operating cash flow. With commission savings now fully counted, profit cannot keep improving faster than revenue declines for long. The company needs to stabilize revenue or show positive cash generation to stop the steady drop in net cash.

Our read: the 2024 shift to an affiliate model did what it was meant to do for costs, and the company has kept making a small operating profit. But revenue is still declining at more than 20% a year, and digital revenue, the high-margin core with an 87% gross margin, is shrinking as fast as nutrition. Unless that changes, profits are likely to get smaller from here rather than grow.