10-Q: Beachbody Q3 2026: Revenue Drops, Restructuring Continues

The Beachbody Company, Inc. reported a 25% year-over-year revenue decrease for Q3 2026, driven by lower demand for digital and nutrition products, alongside continued restructuring efforts.

Summary

• Total revenue for the third quarter of 2026 was $45.2 million, a 25% decrease compared to $59.9 million in the same period last year.
• Digital revenue decreased by 24% to $27.8 million, and nutrition and other revenue fell by 26% to $17.4 million.
• Gross margin declined to 70.7% from 74.6% in the prior year's quarter.
• Operating expenses were reduced to $30.7 million from $39.7 million.
• Operating income was $1.3 million, a decrease from $5.0 million in Q3 2025, marking the fifth consecutive quarter of operating income.
• Net income was $3.3 million, a slight decrease from $3.6 million in the prior year, also marking the fifth consecutive quarter of net income.
• Adjusted EBITDA was $6.4 million, down from $9.5 million in Q3 2025.
• The company announced a 'Nutrition Restructuring' in October 2026, involving a headcount reduction of approximately 80 employees, expected to incur $3.0 million in costs.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to significant revenue declines and ongoing restructuring efforts, despite some improvements in profitability metrics.

Positives

• Achieved operating income of $1.3 million and net income of $3.3 million in Q3 2026, marking the fifth consecutive quarter of profitability.
• Reduced total operating expenses to $30.7 million from $39.7 million in the prior year's quarter.
• Maintained a strong gross margin of 70.7% for digital revenue.
• The company believes it will remain in compliance with ABL Facility financial covenants for at least one year and has adequate cash flows for ongoing operations.

Negatives

• Total revenue decreased by 25% to $45.2 million in Q3 2026 compared to $59.9 million in Q3 2025.
• Digital revenue declined 24% and nutrition and other revenue fell 26% year-over-year.
• Gross margin decreased to 70.7% from 74.6% in the prior year's quarter.
• Adjusted EBITDA decreased to $6.4 million from $9.5 million year-over-year.
• Net cash used in operating activities was $(10.1) million for the nine months ended September 30, 2026, compared to $16.8 million provided in the prior year.
• The company is undergoing a 'Nutrition Restructuring' in Q4 2026, impacting approximately 31% of its workforce.

Risks

• The company's future financial performance, including revenue, cost of revenue, gross profit, operating expenses, Adjusted EBITDA, and Adjusted Net Income (Loss), and its ability to achieve and maintain future profitability.
• Disruptions related to the 'Pivot' (transition from MLM to affiliate model), the 'Nutrition Restructuring', or any further restructurings, and the ability to implement proposed business model changes.
• The company's liquidity and ability to raise financing.
• The ability to comply with the financial covenants in its ABL Facility.
• Intense competition and competitive pressures from other companies worldwide in the fitness and nutrition industries.
• The impact of tariffs and global trade disruptions on suppliers and customers.
• The company's reliance on a few key products.
• Market conditions and global and economic factors beyond the company's control.

Future Outlook

The company believes it will remain in compliance with its ABL Facility financial covenants for at least one year and has adequate cash flows to support ongoing operations for at least one year. However, it may explore additional debt or equity financing to strengthen its financial position, with no assurance of success or acceptable terms.

Management Comments

• We believe that existing cash and cash equivalents and cost control initiatives will provide the Company with sufficient liquidity to meet our anticipated cash needs, including debt service requirements, for the next twelve months as well as for the longer term.
• We may explore additional debt or equity financing to supplement our anticipated working capital balances and further strengthen our financial position, but do not at this time know which form it will take or what the terms will be.
• The Company's management evaluated the effectiveness of its disclosure controls and procedures and concluded they were effective as of September 30, 2026.

Industry Context

StockSavvy.ai notes that the decline in revenue for Beachbody aligns with broader trends in the digital fitness and wellness sector, which has seen increased competition and a normalization of demand post-pandemic. The company's strategic shift towards nutrition and restructuring efforts reflect an attempt to adapt to these evolving market dynamics.

Comparison to Industry Standards

• The digital subscription retention rate of 95.4% for Q3 2026 is strong, indicating good customer loyalty within the digital fitness segment.
• The DAU/MAU ratio of 31.4% suggests moderate user engagement with the digital platform.
• Competitors like Peloton have also faced revenue challenges and have diversified their offerings. However, Peloton's revenue for its most recent reported quarter was significantly higher, indicating a difference in scale.
• Other digital fitness platforms are focusing on content variety and community building to retain subscribers, an area where Beachbody has historically excelled but may need to reinvest.

Legal Proceedings

• The company is subject to litigation from time to time in the ordinary course of business, typically involving products, intellectual property, and relationships with suppliers, customers, distributors, and employees.
• The company does not believe any currently identified claims or litigation matters will have a material adverse effect on its condensed consolidated financial position or results of operations, other than those noted as settled or dismissed.

Stakeholder Impact

• Shareholders may be impacted by the continued revenue decline and ongoing restructuring, potentially affecting stock value.
• Employees face job uncertainty due to the 'Nutrition Restructuring' impacting approximately 31% of the workforce.
• Creditors and lenders will be monitoring compliance with ABL Facility covenants and the company's liquidity position.

Next Steps

• Implement the 'Nutrition Restructuring' impacting approximately 80 employees in Q4 2026.
• Continue to monitor and manage working capital and cost control initiatives.
• Potentially explore additional debt or equity financing.
• Continue to provide holistic health and fitness content, subscription-based solutions, and digital program sales.

Key Dates

Recommendation

The significant year-over-year revenue decline, coupled with ongoing restructuring and a negative trend in operating cash flow, indicates a deteriorating business performance. While profitability was maintained on a net income basis, the substantial drop in revenue and Adjusted EBITDA suggests underlying operational challenges that outweigh the positives. The uncertainty surrounding future financing and the impact of further workforce reductions present considerable risks.

Keywords

Beachbody, BODi, Digital Subscriptions, Nutrition, Fitness Programs, Restructuring, Revenue Decline, Form 10-Q