# Beachbody Company, Inc.: Form 10-Q for the period ended Jun 30, 2024

- Company: [Beachbody Company, Inc.](/companies/bodi.md) (CIK 1826889)
- Form: 10-Q
- Filed: 2024-08-06
- Accepted by EDGAR: Aug 6, 2024, 17:05 ET
- Period: 2024-06-30
- Accession: 0000950170-24-091973
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1826889/000095017024091973/body-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1826889/000095017024091973/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $110.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $230.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $33.8m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-01-01 to 2024-06-30 | $72.6m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $76.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-01-01 to 2024-06-30 | $157.7m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$9.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$20.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $1.7m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $3.5m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $67.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $129.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$10.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$25.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | −$1.59 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | −$3.70 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$1.59 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$3.70 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 6,812,750 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 6,786,761 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $8.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $2.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $32.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $103.4m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $245.0m | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $146.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $178.2m | us-gaap:Liabilities |
| Long-term debt | at 2024-06-30 | $19.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-06-30 | $2.2m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-06-30 | $66.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 49,429 characters.

*The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) as well as our financial statements and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2023 (our "Form 10-K"). Unless otherwise indicated, the terms “BODi,” “we,” “us,” or “our” refer to The Beachbody Company, Inc., a Delaware corporation, together with its consolidated subsidiaries.*

### Forward-Looking Statements

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements about the financial condition, results of operations, earnings outlook and prospects of the Company. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on our current expectations as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to the following:

- our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses including changes in selling and marketing, general and administrative, and enterprise technology and development expenses (including any components of the foregoing), Adjusted EBITDA (as defined below) and our ability to achieve and maintain future profitability;
- our anticipated growth rate and market opportunity;
- our liquidity and ability to raise financing;
- our success in retaining or recruiting, or changes required in, officers, key employees or directors;
- other than the pre-funded warrants, our warrants are accounted for as liabilities and changes in the value of such warrants could have a material effect on our financial results;
- our ability to effectively compete in the fitness and nutrition industries;
- our ability to successfully acquire and integrate new operations;
- our reliance on a few key products;
- market conditions and global and economic factors beyond our control;
- intense competition and competitive pressures from other companies worldwide in the industries in which we will operate;
- litigation and the ability to adequately protect our intellectual property rights; and
- other risk and uncertainties under the heading “*Risk Factors”* set forth in this Report as well as our most recent Form 10-K.

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by management prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

You should not place undue reliance upon our forward-looking statements.

Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

### Overview

BODi is a leading fitness and nutrition company. We focus primarily on digital content, supplements, connected fitness, and consumer health and fitness. Our goal is to continue to provide holistic health and fitness content, subscription-based solutions and digital program sales. We are the creator of some of the world’s most popular fitness programs, including P90X, Insanity, and 21 Day Fix, which transformed the at-home fitness market and disrupted the global fitness industry by making it accessible for people to get results—anytime, anywhere. Our comprehensive nutrition-first programs, Portion Fix and 2B Mindset, teach healthy eating habits and promote healthy, sustainable weight loss. These fitness and nutrition programs are available through our BODi streaming service.

We offer nutritional products such as Shakeology nutrition shakes, Beachbody Performance supplements and BEACHBAR snack bars, as well as a commercial-grade stationary cycle with or without a 360-degree touch screen tablet and connected fitness software. Leveraging our history of fitness content creation, nutrition innovation, and our network of micro-influencers, whom we call “Partners”, we plan to continue market penetration into connected fitness to reach a wider health, wellness and fitness audience.

Our revenue is generated primarily through our network of Partners, social media marketing channels, and direct response advertising. Components of revenue include recurring digital subscription revenue, digital program sales, revenue from the sale of nutritional and other products, and connected fitness revenue. In addition to selling individual products on a one-time basis, we bundle digital and nutritional products together at discounted prices.

For the three months ended June 30, 2024, as compared to the three months ended June 30, 2023:

- Total revenue was $110.2 million, an 18% decrease;
- Digital revenue was $58.8 million, a 10% decrease;
- Nutrition and other revenue was $50.1 million, a 22% decrease;
- Connected fitness revenue was $1.3 million, a 74% decrease;
- Operating expenses was $85.9 million, compared to $106.9 million;
- Net loss was $10.9 million, compared to net loss of $25.7 million; and
- Adjusted EBITDA was $4.9 million, compared to a loss of $4.8 million.

For the six months ended June 30, 2024, as compared to the six months ended June 30, 2023:

- Total revenue was $230.2 million, an 18% decrease;
- Digital revenue was $120.3 million, a 7% decrease;
- Nutrition and other revenue was $105.6 million, a 24% decrease;
- Connected fitness revenue was $4.3 million, a 61% decrease;
- Operating expenses was $178.0 million, compared to $225.7 million;
- Net loss was $25.1 million, compared to net loss of $54.9 million; and
- Adjusted EBITDA was $9.5 million, compared to a loss of $5.7 million.

See “Non-GAAP Information” below for information regarding our use of Adjusted EBITDA and a reconciliation of net loss to Adjusted EBITDA.

### Recent Developments

On April 5, 2024 (the "Fifth Amendment Effective Date"), the Company and Blue Torch entered into Amendment No. 5 to the Financing Agreement (the "Fifth Amendment"), which amended, among other things, certain terms of the Financing Agreement including without limitation, to (1) amend the minimum revenue financial covenant and (2) amend the minimum liquidity financial covenant.

In connection with the Fifth Amendment, on the Fifth Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $4.0 million along with the related prepayment premium of 3% ($0.1 million) and accrued interest. The partial prepayment of $4.0 million was accounted for as a partial debt extinguishment and the Company wrote off the proportionate amount of unamortized debt discount and debt issuance costs as of the Fifth Amendment Effective Date ($0.6 million) which in addition to the prepayment premium ($0.1 million) was recorded as a loss on partial debt extinguishment of $0.7 million in the three and six months ended June 30, 2024.

In connection with the Fifth Amendment, the Company also amended and restated the Term Loan Warrant for the purchase of 97,482 shares of the Company's Class A common stock.

See Note 9, *Debt,* for additional information on the Fifth Amendment and amendments to the Term Loan Warrants.

### Key Operational and Business Metrics

We use the following key operational and business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.

|  | As of June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Digital subscriptions (millions) | 1.15 | 1.53 |
| Nutritional subscriptions (millions) | 0.14 | 0.20 |

|  | Three months ended June 30, 2024 | 2023 | Six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Average digital retention | 96.5% | 95.2% | 96.1% | 95.5% |
| Total streams (millions) | 22.7 | 25.3 | 48.3 | 55.0 |
| DAU/MAU | 31.9% | 31.6% | 32.6% | 32.1% |
| Revenue (millions) | $110.2 | $134.9 | $230.2 | $279.8 |
| Gross profit (millions) | $76.4 | $82.7 | $157.7 | $174.1 |
| Gross margin | 69.3% | 61.3% | 68.5% | 62.2% |
| Net loss (millions) | $(10.9) | $(25.7) | $(25.1) | $(54.9) |
| Adjusted EBITDA (millions) (1) | $4.9 | $(4.8) | $9.5 | $(5.7) |

(1) Please see “Non-GAAP Information” below for a reconciliation of net loss to Adjusted EBITDA and an explanation for why we consider Adjusted EBITDA to be a helpful metric for investors.

### Digital Subscriptions

Our ability to expand the number of digital subscriptions is an indicator of our market penetration and growth. Digital subscriptions include BOD (through March 2023) and BODi. Digital subscriptions include paid and free-to-pay subscriptions, with free-to-pay subscriptions representing less than 1% of total digital subscriptions on average. Digital subscriptions are inclusive of all billing plans, currently for annual, semi-annual, quarterly and monthly billing intervals.

### Nutritional Subscriptions

Nutritional subscriptions include monthly subscriptions for nutritional products such as Shakeology, Beachbody Performance, BEACHBAR, Bevvy and Ladder Supplements. We also package and bundle the content experience of digital subscriptions with nutritional subscriptions to optimize customer results.

### Average Digital Retention

We use month-over-month digital subscription retention, which is defined as the average rate at which the total subscriber file is retained for the next period, to measure customer retention. For instance, a 95% average digital retention rate would correspond with retaining each month an average of 95% of digital subscribers existing at the beginning of that month. A 95% average digital retention rate would translate into a loss at the end of the quarter of approximately 15% of the subscribers existing at the beginning of the quarter. This calculation excludes new customer acquisitions or subscribers added in a specific month, so this calculation can never exceed 100%.

### Total Streams

We use total streams to quantify the number of fitness, nutrition and mindset programs viewed, which is an indicator of customer engagement and retention. While the measure of a digital stream may vary across companies, to qualify as a stream on any of our digital platforms, a program must be viewed for a minimum of 25% of the total running time.

### Daily Active Users to Monthly Active Users (DAU/MAU)

We use the ratio of daily active users to monthly active users to measure how frequently digital subscribers are utilizing our service in a given month. We define a daily active user as a unique user streaming content on our platform in a given day. We define a monthly active user as a unique user streaming content on our platform in that same month.

### Non-GAAP Information

We use Adjusted EBITDA, which is a non-GAAP performance measure, to supplement our results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We believe Adjusted EBITDA is useful in evaluating our operating performance, as it is similar to measures reported by our public competitors and is regularly used by security analysts, institutional investors, and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA is not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.

We define and calculate Adjusted EBITDA as net income (loss) adjusted for depreciation and amortization, amortization of capitalized cloud computing implementation costs, amortization of content assets, interest expense, income tax provision (benefit), equity-based compensation, and other items that are not normal, recurring, operating expenses necessary to operate the Company’s business as described in the reconciliation below.

We include this non-GAAP financial measure because it is used by management to evaluate BODi’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA excludes certain expenses that are required in accordance with GAAP because they are non-cash (for example, in the case of depreciation and amortization and equity-based compensation) or are not related to our underlying business performance (for example, in the case of interest income and expense).

The table below presents our Adjusted EBITDA reconciled to our net loss, the closest GAAP measure, for the periods indicated:

*(in thousands)*

|  | Three months ended June 30, 2024 | 2023 | Six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net loss | $(10,865) | $(25,748) | $(25,081) | $(54,936) |
| Adjusted for: |  |  |  |  |
| Loss on partial debt extinguishment (1) | 719 | — | 1,928 | — |
| Depreciation and amortization | 5,411 | 10,919 | 10,789 | 21,632 |
| Amortization of capitalized cloud computing implementation costs | 38 | 40 | 75 | 81 |
| Amortization of content assets | 4,112 | 5,459 | 8,652 | 11,020 |
| Interest expense | 1,652 | 2,368 | 3,527 | 4,699 |
| Income tax provision (benefit) | 67 | (12) | 129 | 36 |
| Equity-based compensation | 4,739 | 3,161 | 9,104 | 12,716 |
| Employee incentives, expected to be settled in equity (2) | — | — | — | (5,466) |
| Restructuring and platform consolidation costs (3) | — | (107) | 1,644 | 5,952 |
| Change in fair value of warrant liabilities | (647) | (375) | 77 | (432) |
| Gain on sale of property and equipment | — | — | (784) | — |
| Non-operating (4) | (298) | (479) | (578) | (963) |
| Adjusted EBITDA | $4,928 | $(4,774) | $9,482 | $(5,661) |

(1) Represents the loss related to the $1.0 million, $5.5 million and $4.0 million partial debt prepayments that the Company made on January 9, 2024, February 29, 2024 and April 5, 2024, respectively.

(2) The non-cash charge for employee incentives which were expected to be settled in equity was recorded and included in the Adjusted EBITDA calculation during the year ended December 31, 2022. During the three months ended March 31, 2023, we reclassified the non-cash charge from employee incentives expected to be settled in equity to equity-based compensation because we settled certain employee incentives with restricted stock unit ("RSU") awards during the period.

(3) Includes restructuring expense and personnel costs associated with the Company's key initiatives during the three and six months ended June 30, 2024 and executing our key growth priorities during the three and six months ended June 30, 2023.

(4) Primarily includes interest income.

### Results of Operations

The Company has one operating segment. The following discussion of our results and operations is on a consolidated basis.

*(in thousands)*

| Revenue: | Three months ended June 30, 2024 | 2023 | Six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Digital | $58,771 | $65,214 | $120,277 | $129,987 |
| Nutrition and other | 50,101 | 64,628 | 105,613 | 138,748 |
| Connected fitness | 1,311 | 5,106 | 4,339 | 11,114 |
| Total revenue | 110,183 | 134,948 | 230,229 | 279,849 |
| Cost of revenue: |  |  |  |  |
| Digital | 11,476 | 16,336 | 24,338 | 31,303 |
| Nutrition and other | 19,621 | 27,202 | 41,905 | 58,241 |
| Connected fitness | 2,710 | 8,666 | 6,328 | 16,221 |
| Total cost of revenue | 33,807 | 52,204 | 72,571 | 105,765 |
| Gross profit | 76,376 | 82,744 | 157,658 | 174,084 |
| Operating expenses: |  |  |  |  |
| Selling and marketing | 56,308 | 76,492 | 115,569 | 153,068 |
| Enterprise technology and development | 17,162 | 18,650 | 34,879 | 37,746 |
| General and administrative | 12,388 | 11,887 | 25,871 | 29,603 |
| Restructuring | — | (107) | 1,644 | 5,280 |
| Total operating expenses | 85,858 | 106,922 | 177,963 | 225,697 |
| Operating loss | (9,482) | (24,178) | (20,305) | (51,613) |
| Other income (expense) |  |  |  |  |
| Loss on partial debt extinguishment | (719) | — | (1,928) | — |
| Change in fair value of warrant liabilities | 647 | 375 | (77) | 432 |
| Interest expense | (1,652) | (2,368) | (3,527) | (4,699) |
| Other income, net | 408 | 411 | 885 | 980 |
| Loss before income taxes | (10,798) | (25,760) | (24,952) | (54,900) |
| Income tax (provision) benefit | (67) | 12 | (129) | (36) |
| Net loss | $(10,865) | $(25,748) | $(25,081) | $(54,936) |

32

### Revenue

Revenue includes digital subscriptions, digital program sales, nutritional supplement subscriptions, one-time nutritional sales, connected fitness products, access to our online Partner business management platform, preferred customer program memberships, and other fitness-related products. We often sell bundled products that combine digital subscriptions, nutritional products, and/or other fitness products. We consider these sales to be revenue arrangements with multiple performance obligations and allocate the transaction price to each performance obligation based on its relative stand-alone selling price. We defer revenue when we receive payments in advance of delivery of products or the performance of services. Digital subscription revenue is recognized ratably over the subscription period of up to 38 months.

*(dollars in thousands)*

| Revenue | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Digital | $58,771 | $65,214 | $(6,443) | (10%) |
| Nutrition and other | 50,101 | 64,628 | (14,527) | (22%) |
| Connected fitness | 1,311 | 5,106 | (3,795) | (74%) |
| Total revenue | $110,183 | $134,948 | $(24,765) | (18%) |

The decrease in digital revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to a $4.8 million decrease in revenue from our digital streaming services due to 25% fewer subscriptions on lower demand partially offset by the transition of all digital subscriptions to the higher priced BODi subscription over the past year, a decrease in digital program sales of $1.2 million and a decrease of $0.5 million in fees from Partners as there was a 27% decrease in the number of Partners.

The decrease in nutrition and other revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to a $10.5 million decrease in revenue from nutritional products due to 26% fewer nutritional subscriptions on lower demand, a $2.2 million decrease in revenue generated from our preferred customer fees as there was a 31% decrease in preferred customers and a $0.9 million decrease in event ticket sales due primarily to the decrease in the number of, length of and attendance at events.

The decrease in connected fitness revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an approximate 70% decrease in number of bikes delivered from approximately 5,500 for the three months ended June 30, 2023 to approximately 1,600 for the three months ended June 30, 2024 and an approximate 9% decrease in the average sales price for a bike.

*(dollars in thousands)*

| Revenue | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Digital | $120,277 | $129,987 | $(9,710) | (8%) |
| Nutrition and other | 105,613 | 138,748 | (33,135) | (24%) |
| Connected fitness | 4,339 | 11,114 | (6,775) | (61%) |
| Total revenue | $230,229 | $279,849 | $(49,620) | (18%) |

The decrease in digital revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to a $10.3 million decrease in revenue from our digital streaming services due to 25% fewer subscriptions on lower demand partially offset by the transition of all digital subscriptions to the higher priced BODi subscription over the past year and a decrease of $1.1 million in fees from Partners due to a 27% decrease in the number of Partners, partially offset by an increase in digital program sales of $1.3 million.

The decrease in nutrition and other revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to a $24.8 million decrease in revenue from nutritional products due to 26% fewer nutritional subscriptions on lower demand, a $4.7 million decrease in revenue generated from our preferred customer fees as there was a 31% decrease in preferred customers, a $2.2 million decrease in event ticket sales due primarily to the decrease in the number of, length of and attendance at events and a $1.0 million decrease in fitness accessories revenue.

The decrease in connected fitness revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to an approximate 50% decrease in the number of bikes delivered from approximately 10,200 for the six months ended June 30, 2023 to approximately 5,100 for the six months ended June 30, 2024 and an approximate 22% decrease in the average sales price for a bike.

### Cost of Revenue

#### Digital Cost of Revenue

Digital cost of revenue includes costs associated with digital content creation including amortization and revision of content assets, depreciation of streaming platforms and digital streaming costs. It also includes customer service costs, payment processing fees, depreciation of production equipment, live trainer costs, facilities, and related personnel expenses.

#### Nutrition and Other Cost of Revenue

Nutrition and other cost of revenue includes product costs, shipping and handling, fulfillment and warehousing, customer service, and payment processing fees. It also includes depreciation of nutrition-related e-commerce websites and social commerce platforms, amortization of acquired formulae intangible assets (in the 2023 period), facilities, and related personnel expenses.

#### Connected Fitness Cost of Revenue

Connected fitness cost of revenue consists of product costs, including bike and tablet hardware costs, duties and other applicable importing costs, shipping, fulfillment, warehousing and logistics costs, costs associated with service calls and repairs of products under warranty, payment processing and financing fees, customer service expenses, and personnel-related expenses associated with supply chain and logistics.

*(dollars in thousands)*

| Cost of revenue | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Digital | $11,476 | $16,336 | $(4,860) | (30%) |
| Nutrition and other | 19,621 | 27,202 | (7,581) | (28%) |
| Connected fitness | 2,710 | 8,666 | (5,956) | (69%) |
| Total cost of revenue | $33,807 | $52,204 | $(18,397) | (35%) |
| Gross profit |  |  |  |  |
| Digital | $47,295 | $48,878 | $(1,583) | (3%) |
| Nutrition and other | 30,480 | 37,426 | (6,946) | (19%) |
| Connected fitness | (1,399) | (3,560) | 2,161 | 61% |
| Total gross profit | $76,376 | $82,744 | $(6,368) | (8%) |
| Gross margin |  |  |  |  |
| Digital | 80.5% | 75.0% |  |  |
| Nutrition and other | 60.8% | 57.9% |  |  |
| Connected fitness | (106.7%) | (69.7%) |  |  |
| Total gross margin | 69.3% | 61.3% |  |  |

The decrease in digital cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a $1.8 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets, a $1.3 million decrease in the amortization of content assets as the result of lower production spend and a $1.1 million decrease in digital content revisions. The increase in digital gross margin for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily as a result of the decrease in expenses as noted above.

The decrease in nutrition and other cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a $3.0 million decrease in product costs and a $1.6 million decrease in fulfillment and shipping expenses related to the decrease in nutrition and other revenue, a $1.2 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets and a $0.7 million decrease in customer service expense due to a decrease in the volume of contacts related to nutrition and other revenue. The increase in nutrition and other gross margin for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily as a result of the decrease in depreciation expense.

The decrease in connected fitness cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was driven by a $2.3 million decrease in freight, fulfillment and shipping expenses and a $1.3 million decrease in product costs, as the result of an approximate 70% decrease in the number of bikes delivered, and lower inventory reserve adjustments of $2.0 million. The decrease in connected fitness gross margin for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily as a result of fixed expenses on lower connected fitness revenue and due to the decrease in the average sales price for a bike.

*(dollars in thousands)*

| Cost of revenue | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Digital | $24,338 | $31,303 | $(6,965) | (22%) |
| Nutrition and other | 41,905 | 58,241 | (16,336) | (28%) |
| Connected fitness | 6,328 | 16,221 | (9,893) | (61%) |
| Total cost of revenue | $72,571 | $105,765 | $(33,194) | (31%) |
| Gross profit |  |  |  |  |
| Digital | $95,939 | $98,684 | $(2,745) | (3%) |
| Nutrition and other | 63,708 | 80,507 | (16,799) | (21%) |
| Connected fitness | (1,989) | (5,107) | 3,118 | 61% |
| Total gross profit | $157,658 | $174,084 | $(16,426) | (9%) |
| Gross margin |  |  |  |  |
| Digital | 79.8% | 75.9% |  |  |
| Nutrition and other | 60.3% | 58.0% |  |  |
| Connected fitness | (45.8%) | (46.0%) |  |  |
| Total gross margin | 68.5% | 62.2% |  |  |

The decrease in digital cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was due to a $3.0 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets, a $2.4 million decrease in digital content amortization as a result of lower production spend and a $1.4 million decrease in digital content revisions. The increase in digital gross margin for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily as a result of the decrease in depreciation expense and digital content amortization.

The decrease in nutrition and other cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $5.0 million decrease in product costs and a $3.1 million decrease in fulfillment and shipping expenses related to the decrease in nutrition and other revenue, a $2.9 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets, a $1.7 million decrease in customer service expense due to a decrease in the volume of contacts related to nutrition and other revenue and lower inventory adjustments of $1.6 million. Nutrition and other gross margin increased for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily as a result of the decrease in depreciation expense.

The decrease in connected fitness cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was driven by a $4.2 million decrease in product costs and a $2.3 million decrease in freight, fulfillment, and shipping expenses, as the result of an approximate 50% decrease in the number of bikes delivered, and lower inventory adjustments of $2.5 million. The connected fitness negative gross margin for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was flat.

### Operating Expenses

### Selling and Marketing

Selling and marketing expenses primarily include the cost of Partner compensation, advertising, royalties, promotions and events, and third-party sales commissions as well as the personnel expenses for employees and consultants who support these areas. Selling and marketing expense as a percentage of total revenue may fluctuate from period to period based on total revenue, timing of new content and nutritional product launches, and the timing of our media investments to build awareness around launch activity.

*(dollars in thousands)*

|  | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling and marketing | $56,308 | $76,492 | $(20,184) | (26%) |
| As a percentage of total revenue | 51.1% | 56.7% |  |  |

The decrease in selling and marketing expense for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an $11.5 million decrease in Partner compensation as a result of the decrease in the number of Partners, lower commissionable revenue and a decrease in the commission rate paid to Partners that started at the beginning of January 2024, a $5.6 million decrease in event expenses due primarily to a decrease in the number of, length of and attendance at events, a $1.2 million decrease in personnel-related expenses due to lower headcount primarily related to the restructuring activities that occurred in the past year and a $1.1 million decrease in the amortization of intangible assets due to the impairment of the remaining intangible asset balance in the fourth quarter of 2023.

Selling and marketing expense as a percentage of total revenue decreased by 560 basis points ("bps") primarily due to the decrease in Partner compensation and event expenses.

*(dollars in thousands)*

|  | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling and marketing | $115,569 | $153,068 | $(37,499) | (25%) |
| As a percentage of total revenue | 50.2% | 54.7% |  |  |

The decrease in selling and marketing expense for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $22.8 million decrease in Partner compensation as a result of the decrease in the number of Partners, lower commissionable revenue and a decrease in the commission rate paid to Partners that started at the beginning of January 2024, an $8.3 million decrease in event expenses due primarily to a decrease in the number of, length of and attendance at events, a $2.7 million decrease in personnel-related expenses due to lower headcount primarily related to the restructuring activities that occurred in the past year and a $2.3 million decrease in the amortization of intangible assets due to the impairment of the remaining intangible asset balance in the fourth quarter of 2023.

Selling and marketing expense as a percentage of total revenue decreased by 450 bps primarily due to the decrease in Partner compensation and event expenses.

### Enterprise Technology and Development

Enterprise technology and development expenses includes maintenance and enhancements of the Company’s enterprise resource planning system, which is the core of our accounting, procurement, supply chain and other business support systems and primarily relate to enterprise systems applications, hardware, and software that serve as the technology infrastructure for the Company and are not directly related to services provided or tangible goods sold. Enterprise technology and development expenses also includes reporting and business analytics tools, security systems such as identity management and payment card industry compliance, office productivity software, research and development tracking tools, and other non-customer facing applications. Enterprise technology and development expenses include personnel-related expenses for employees and consultants to maintain technology systems and are involved in the research and development of new and existing nutritional products, depreciation of enterprise technology-related assets, software licenses, hosting expenses, and technology equipment leases.

*(dollars in thousands)*

|  | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Enterprise technology and development | $17,162 | $18,650 | $(1,488) | (8%) |
| As a percentage of total revenue | 15.6% | 13.8% |  |  |

The decrease in enterprise technology and development expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a $1.2 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets.

Enterprise technology and development expense as a percentage of total revenue increased by 180 bps due to the decrease in revenue at a faster pace than the reduction in enterprise technology and development expenses.

*(dollars in thousands)*

|  | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Enterprise technology and development | $34,879 | $37,746 | $(2,867) | (8%) |
| As a percentage of total revenue | 15.1% | 13.5% |  |  |

The decrease in enterprise technology and development expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $2.4 million decrease in depreciation expense as a result of the end of the useful life of certain fixed assets.

Enterprise technology and development expense as a percentage of total revenue increased by 160 bps due to the decrease in revenue at a faster pace than the reduction in enterprise technology and development expenses.

### General and Administrative

General and administrative expenses includes personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal and human resources functions. General and administrative expenses also includes fees for professional services principally comprised of legal, audit, tax, and insurance.

*(dollars in thousands)*

|  | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $12,388 | $11,887 | $501 | 4% |
| As a percentage of total revenue | 11.2% | 8.8% |  |  |

The slight increase in general and administrative expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to the modification of certain stock awards for employees who were terminated in the prior year period which reduced general and administrative expenses by $0.4 million in the three months ended June 30, 2023.

General and administrative expenses as a percentage of total revenue increased by 240 bps due to the increase in general and administrative expenses and the decrease in revenue.

*(dollars in thousands)*

|  | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $25,871 | $29,603 | $(3,732) | (13%) |
| As a percentage of total revenue | 11.2% | 10.6% |  |  |

The decrease in general and administrative expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a $2.3 million decrease in professional and accounting fees due to a management focus on decreasing spending, a $1.4 million decrease in insurance expense as some of our insurance is based on the level of the Company's revenues or the number of employees, which both have declined in the current period compared to the prior period and a $0.8 million gain on the sale of the Van Nuys facility which was recorded as a reduction of general and administrative expenses in the three months ended March 31, 2024.

General and administrative expense as a percentage of total revenue increased by 60 bps due to the decrease in revenue at a faster pace than the reduction in general and administrative expenses.

### Restructuring

In 2024, restructuring charges primarily relate to the Company's key initiatives. Restructuring charges in 2023 relate to activities focused on aligning our operations with our key growth priorities, including a reduction in headcount. The charges incurred primarily consist of employee termination costs.

*(dollars in thousands)*

|  | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Restructuring | $— | $(107) | $107 | (100%) |

*(dollars in thousands)*

|  | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Restructuring | $1,644 | $5,280 | $(3,636) | (69%) |

38

### Other Income (Expense)

The change in fair value of warrant liabilities consists of the fair value changes of the public, private placement, Term Loan And Common Stock warrants. Interest expense primarily consists of interest expense associated with our borrowings and amortization of debt discount and issuance costs for our Term Loan (as defined below). Other income, net, consists of interest income earned on investments and gains (losses) on foreign currency.

*(dollars in thousands)*

|  | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Loss on partial debt extinguishment | $(719) | $— | $(719) | NM |
| Change in fair value of warrant liabilities | 647 | 375 | 272 | NM |
| Interest expense | (1,652) | (2,368) | 716 | (30%) |
| Other income, net | 408 | 411 | (3) | (1%) |

The loss on partial debt extinguishment for the three months ended June 30, 2024 was due to the partial prepayment of $4.0 million on the Term Loan as of April 5, 2024. The change in fair value of warrant liabilities during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily resulted from the decline in our stock price during the current quarter and an increase in the number of outstanding warrants due to the Common Stock Warrants that were issued in December 2023. The decrease in interest expense was primarily due to principal prepayments of $25.5 million on the outstanding Term Loan balance from June 30, 2023 to June 30, 2024.

*(dollars in thousands)*

|  | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Loss on partial debt extinguishment | $(1,928) | $— | $(1,928) | NM |
| Change in fair value of warrant liabilities | (77) | 432 | (509) | NM |
| Interest expense | (3,527) | (4,699) | 1,172 | (25%) |
| Other income, net | 885 | 980 | (95) | (10%) |

The loss on partial debt extinguishment for the six months ended June 30, 2024 was due to the partial prepayments of $10.5 million on the Term Loan that occurred in the six months ended June 30, 2024. The change in fair value of warrant liabilities during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily resulted from a slight increase in our stock price during the current period as compared to a decrease in our stock price in the prior year period. The decrease in interest expense was primarily due to principal prepayments of $25.5 million on the outstanding Term Loan balance from June 30, 2023 to June 30, 2024. The decrease in other income was primarily due to lower interest income as a result of lower average cash balances for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

### Income Tax (Provision) Benefit

Income tax (provision) benefit consists of income taxes related to U.S. federal and state jurisdictions as well as those foreign jurisdictions where we have business operations.

*(dollars in thousands)*

|  | Three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | --- |
| Income tax (provision) benefit | $(67) | $12 | $(79) | NM |

The income tax provision increase for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily driven by changes in our valuation allowance and an increase in the net expense from discrete events.

*(dollars in thousands)*

|  | Six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | --- |
| Income tax provision | $(129) | $(36) | $(93) | NM |

The income tax provision increase for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily driven by changes in our valuation allowance and an increase in the net expense from discrete events.

### Liquidity and Capital Resources

*(in thousands)*

|  | Six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $8,209 | $(14,367) |
| Net cash provided by (used in) investing activities | 2,655 | (5,030) |
| Net cash used in financing activities | (11,504) | (2,400) |

As of June 30, 2024, we had cash and cash equivalents totaling $32.3 million.

Net cash provided by (used in) operating activities was $8.2 million and $(14.4) million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash provided by operating activities during the six months ended June 30, 2024, compared to the prior year period, was primarily due to a decrease in net loss of $29.9 million, an increase in cash provided by other assets of $18.1 million and a decrease in cash used for accrued expenses of $8.8 million partially offset by a decrease in cash provided by deferred revenue of $13.0 million, a decrease in depreciation and amortization expense of $10.8 million and a decrease in provision for inventory and inventory purchase commitments of $4.1 million.

Net cash provided by (used in) investing activities was $2.7 million and $(5.0) million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash provided by investing activities was due to proceeds received from the sale of the Van Nuys facility of $5.6 million and a decrease in capital expenditures of $2.1 million due to increased focus by management on capital expenditures, in particular related to technology.

Net cash used in financing activities was $11.5 million and $2.4 million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash used in financing activities was primarily due to debt repayments on our Term Loan in the six months ended June 30, 2024.

On August 8, 2022, the Company, Beachbody, LLC, a Delaware limited liability company and wholly-owned direct subsidiary of the Company (the “Borrower”), and certain subsidiaries of the Company (together with the Company, the “Guarantors”), entered into a financing agreement (as amended, the “Financing Agreement”) with the lenders party thereto and Blue Torch Finance, LLC, ("Blue Torch") as administrative agent and collateral agent for such lenders, providing for a senior secured term loan facility in an initial aggregate principal amount of $50.0 million (the “Term Loan”). Obligations under the Financing Agreement are guaranteed by the Guarantors, and secured by a lien on and security interest in substantially all of the assets of the Borrower and the Guarantors (together with the Borrower, the “Loan Parties”), subject to customary exceptions. On July 24, 2023 the Company and Blue Torch entered into the Second Amendment. In connection with the Second Amendment, on the Second Amendment Effective Date, the Company made a partial prepayment on the Term Loan of $15.0 million. On January 9, 2024, February 29, 2024 and April 5, 2024, the Company made partial prepayments of $1.0 million, $5.5 million and $4.0 million, respectively, on the Term Loan in connection with the Third, Fourth and Fifth Amendments. As of June 30, 2024, the principal balance outstanding (including capitalized paid in kind interest) under the Term Loan was $25.4 million. During the six months ended June 30, 2024, the Term Loan was a secured overnight financing rate ("SOFR") loan, with an effective interest rate of 22.71% and a cash interest rate of 12.75% for the six months ended June 30, 2024.

The Financing Agreement contains financial covenants, customary representations, warranties, covenants and customary events of default. In particular, the Financing Agreement contains a minimum revenue financial covenant of $100.0 million, for each fiscal quarter ending on or prior to December 31, 2024, and $110.0 million for each fiscal quarter thereafter to December 31, 2025. We were in compliance with the financial covenants as of June 30, 2024 and we expect to remain in compliance with the financial covenants based on our current expectation of future results of operations. Unexpected weakness in the demand for our products may interfere with our ability to remain in compliance with the covenants, in particular the quarterly minimum revenue financial covenant for which the cushion in passing is expected to narrow in upcoming quarters. Failure to comply with the financial and other covenants under the Financing

Agreement, would constitute a condition of default and would allow Blue Torch to accelerate the maturity of all indebtedness under the Financing Agreement. If such acceleration were to occur, we would likely have to seek an amendment and/or waiver of the impacted financial covenant or repay the debt with proceeds from the issuance of new debt or equity, or asset sales, if necessary. We may be unable to amend the Financing Agreement or raise sufficient capital to repay such obligations in the event the maturity is accelerated. See Note 9, *Debt*, for additional information on the Term Loan.

As of June 30, 2024, we have $26.2 million of lease obligations and purchase commitments associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. See Note 8, *Commitments and Contingencies*, for discussion of our contractual commitments that are primarily due within the next year.

Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth and overall economic conditions. We continue to assess and efficiently manage our working capital, and expect to generate additional liquidity through continued cost control initiatives. 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 (i.e., beyond the next twelve months).

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 incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financial covenants that would restrict our operations. The sale of additional equity would result in additional dilution to our shareholders. There can be no assurances that we will be able to raise additional capital in amounts or on terms acceptable to us.

### Critical Accounting Policies and Estimates

There have been no material changes to the Company's critical accounting policies and estimates discussed in the 2023 Annual Report on Form 10-K in Item 7 under the heading *Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates* other than noted below.

### Recent Accounting Pronouncements

See Note 1, *Description of Business and Summary of Significant Accounting Policies*, of the notes to our unaudited condensed consolidated financial statements included elsewhere in this Report for recently adopted accounting pronouncements.

## Market risk

As filed, 2,661 characters.

### Foreign Currency Risk

We are exposed to foreign currency exchange risk related to transactions in currencies other than the U.S. Dollar, which is our functional currency. Our foreign subsidiaries, sales, certain inventory purchases and operating expenses expose us to foreign currency exchange risk. For the six months ended June 30, 2024 and 2023, approximately 10% of our revenue was in foreign currencies. These sales were primarily denominated in Canadian dollars and British pounds.

We may use derivative instruments to manage the effects of fluctuations in foreign currency exchange rates on our net cash flows. We primarily enter into option contracts to hedge forecasted payments, typically for up to 12 months, for cost of revenue, selling and marketing expenses, general and administrative expenses and intercompany transactions not denominated in the local currencies of our foreign operations. We designate some of these instruments as cash flow hedges and record them at fair value as either assets or liabilities within the consolidated balance sheets. Some of these instruments are freestanding derivatives for which hedge accounting does not apply.

In the year ended December 31, 2023, management made a determination to cease entering into any further foreign exchange options at this time, which resulted in a decrease in the notional amount of the Company's outstanding foreign exchange options to zero at June 30, 2024 as all of the foreign exchange options expired prior to March 31, 2024.

Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income (loss) until the hedged forecasted transaction affects earnings. Deferred gains and losses associated with cash flow hedges of third-party payments are recognized in cost of revenue, selling and marketing or general and administrative expenses, as applicable, during the period when the hedged underlying transaction affects earnings. Changes in the fair value of certain derivatives for which hedge accounting does not apply are immediately recognized directly in earnings to cost of revenue.

A hypothetical 10% change in exchange rates, with the U.S. dollar as the functional and reporting currency, would result in an approximate $2.2 million increase or decrease in cost of revenue and operating expenses. The higher exposure to changes in foreign currency from previous periods was due to management's decision to cease entering into foreign exchange options at this time.

The aggregate notional amount of foreign exchange derivative instruments at June 30, 2024 and year ended December 31, 2023 was zero and $4.4 million, respectively.

## Controls and procedures

As filed, 1,389 characters.

### Management’s Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.

### Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on Effectiveness of Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.

## Risk factors

As filed, 549 characters.

There have been no material developments with respect to the information previously reported under Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These risk factors describe some of the assumptions, risks, uncertainties and other factors that could adversely affect our business or that could otherwise result in changes that differ materially from our expectations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Filed Aug 6, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-091973. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.