The Beachbody Company, now known as BODi, announced a strategic shift to its business model. Effective November 1, 2024, the company will transition from a multi-level marketing structure to a single-level affiliate program. This move is part of the company’s efforts to optimize its omnichannel model, reduce costs, broaden its distribution channels and better position the company for future profitable growth.
In a statement, BODi Executive Chairman Mark Goldston described the multi-level marketing distribution model as “outdated and unsustainable” and pointed to the affiliate model as the “simpler, more modern approach to customer acquisition.”
In 2015, Beachbody welcomed private equity investors LNK Partners into its business, followed by Latin American private equity fund L Catterton in 2016, which promised to support the company’s growth throughout Latin America. In 2021, the private equity stakeholders participated in the decision to take Beachbody public in a three-way merger agreement with SPAC Forest Road Acquisition Corp and Myx Fitness Holdings.
Since going public, the company has been in a systemic decline. In 2020, Beachbody’s revenue was $880 million, and on its first day of trading, BODi’s stock price was $25 per share. Revenue in 2021 dipped to $873 million, followed by $696 million in 2022 and $527 million in 2023. In November of 2023, the company announced a 50 to 1 reverse share split. More than $3 billion dollars of market cap was erased in just over the last 3 years. Today, its stock price hovers around $5.50, or the equivalent of $0.11 per share before reverse split.
“The first phase of our turnaround is centered on lowering our infrastructure costs and re-architecting our financial model,” said Mark Goldston, BODi Executive Chairman. “We have successfully accomplished that goal – we’ve lowered our revenue break-even point by more than $400 million, have reduced our net losses and generated positive Adjusted EBITDA over the last three quarters. The next phase of our journey is to optimize and broaden our points of distribution by converting the existing MLM to a single-level affiliate network, and expanding our direct-to-consumer, Amazon and partnership-driven sales channels, which we believe will further open the sales aperture and diversify our revenue sources.”
The company’s board also approved a corporate restructuring plan that will centralize business around one eCommerce platform at BODi.com, eliminate network marketing support functions and create cost reductions of $54 million on an annualized run-rate basis and lower its revenue break-even point from less than $430 million of annual revenue to less than $225 million of annual revenue. This restructuring plan will also include reducing the company’s workforce by 33%.
“Since our founding, we have had a long history of evolving our business model to adjust to dynamic market environments,” said Carl Daikeler, BODi CEO and Co-founder. “We continue to adapt and evolve to optimize our sales channels. We believe that transitioning to the affiliate model will energize our network of partners and new participants to stay more consistent with their own health and fitness objectives and share their results to help others live healthier and more fulfilling lives and get paid for it, now without the complexity of managing and recruiting a team of other partners. While these steps are absolutely necessary to align the company with its new strategic direction, the painful part of this decision is saying goodbye to some of our team. I am deeply grateful to everyone who has contributed so much to the substantial progress BODi has experienced over the last 26 years. But our evolution is critical to position us to help even more people and improve the opportunity for our partners and customers to get the best results for the long term.”
BODi’s switch is part of a larger pattern and follows the announcement of a number of other direct selling companies with multi-level structures switching to single-level or affiliate models in the last six months, including Seint, Lorde and Belle and Rodan + Fields, and the closure of Beautycounter in April.
“BODi’s decision to exit the coaching business is a devastating blow to both Coaches and the customers who relied on them for accountability and support,” said Brett Blake, Annuity.com Chief Executive Officer and author of Private Equity Investing in Direct Selling. “Like similar recent announcements from Rodan + Fields and Beautycounter, this announcement does not represent a channel failure but yet another failure to align financing partners behind the power and strategic value of a dedicated salesforce.”
