BODI - NYSE

Good afternoon, ladies and gentlemen. Welcome to The Beachbody Company Fourth Quarter 2023 and Full Year Earnings Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. And I will now turn the conference over to your host, Bruce Williams, Managing Director of ICR Investor Relations.

Welcome, everyone. And thank you for joining us for our fourth quarter earnings call. With me on the call today are Mark Goldston, Executive Chairman of The Beachbody Company; Carl Daikeler, Co-Founder and Chief Executive Officer; and Marc Suidan, Chief Financial Officer. Following the prepared remarks, we'll open the call up for questions. Before we get started, I would like to remind you of the company's safe harbor language. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release. Today's call will include references to non-GAAP financial measures, such as adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release, which can be found on our website. Now I would like to turn the call over to Mark.

Thank you, Bruce, and welcome, everyone. I joined the company last summer with one goal to help this team and this amazing company execute a successful turnaround plan to return Beachbody to its roots of being solidly profitable and as the leader in helping people get healthy results with our fitness and nutrition products. We've made incredible strides in the last 7 months, and it shows in the results this quarter and for the year. Last quarter, we told you we would lower the breakeven point of our company, improve our liquidity and expand our sales channels and continue to execute against our turnaround plan. I'm happy to report that during the fourth quarter, we accomplished all of these goals. We dramatically lowered our revenue breakeven from over $900 million in 2022 to less than $500 million in 2024. We put an agreement in place to expand our sales presence on Amazon. We improved our liquidity position, and we're going to continue to execute against our turnaround plan by posting positive adjusted EBITDA performance this quarter. We exceeded both revenue and adjusted EBITDA guidance, and we can confidently state that we will achieve a milestone event by becoming cash flow positive in Q1 of 2024, which would be the first time since 2020. We built significant operating leverage in the P&L, and we're actively deploying several operating strategies this quarter and getting encouraging results. As a reminder, our turnaround plan has been focused on enhancing our liquidity, re-architecting our selling and marketing, digital experience and nutrition business to drive revenues and continuing our cost transformation and rearchitecture of the company to dramatically reduce our breakeven point without undermining the core business model that generates the revenue. We actually accomplished what we said we would do in each of these areas this quarter. Our fourth quarter performance gives us confidence that we will be cash flow positive in the first quarter of 2024 and puts us in a good position for the remainder of the year and beyond. I'll now expand on our liquidity enhancement before I turn it over to Carl, who will update you on our go-to-market strategy and our digital and nutrition businesses. And then Marc will close out with an update on our cost transformation initiatives. On the liquidity front, we've been enhancing our balance sheet with numerous actions, including the capital raise in Q4, we are selling noncore assets and those things that help to enhance the overall liquidity position of the company. The combination of these actions enhance the balance sheet by over $10 million to date. This, along with our reduced breakeven point, has put us in a position to generate positive free cash flow in Q1 of 2024. We believe that our improved liquidity position puts us in a better position to execute on our strategic initiatives to take advantage of the competitive advantages of the company and to stabilize and drive revenue while importantly, building cash. In 2023, we successfully completed a reinvention and simplification of our digital platform, and we're extremely pleased with the results, evidenced by the stable quarter-to-quarter revenues. We also have healthy retention metrics, and we were just awarded the top-rated fitness app in 2023 by CNN. I'm also excited to share the new initiatives to rebuild the value of our nutrition business with a robust spotlight schedule on a different supplement every month. We will also continue the expansion of our nutrition business on Amazon, and we've got compelling new product initiatives scheduled to be introduced throughout 2024. In addition, we now believe that our database of 14 million contacts includes potential Beachbody nutritional supplement customers who collectively purchased well over $1 billion of our nutritional products since 2016. We intend to create tailored nutritional offers designed to reengage that massive reservoir of millions of our former nutritional subscribers as part of our nutritional turnaround plan for 2024 and beyond. Stepping back, I believe we barely scratched the surface on the enormous white space that's in front of us. Some of the major opportunities are as follows: we have significant potential to expand our sales aperture to partnerships with large organizations. We'll be expanding our outreach and appeal to the male demographic, which represents roughly 50% of the digital fitness and nutrition TAM and yet is only around 15% of our business today, despite our rich past with the male market. Carl will talk more about the male market initiative later and he'll also unveil a significant initiative which builds upon our successful history of leveraging our existing award-winning content in a very new and exciting way that augments our conventional subscription model. As I look across this marketplace, I believe that the fitness industry is still very fragmented, and it's ripe for consolidation. I've purchased many, many companies during my career. And I believe that once our turnaround is complete, we will be in a strong position to use our $340 million federal NOL and our $385 million state NOL as a powerful vehicle to initiate some meaningful consolidation within the fitness and nutrition industries. I want to reiterate my confidence in the value of the BODi platform. The company holds invaluable assets, including what we believe to be the world's most extensive digital fitness library. We have a range of highly efficacious nutritional products and a massive database in excess of 14 million contacts that will be the focus of our win-back programs along with our large base of subscribers who have a very low churn rate, and, of course, our highly skilled leadership team. What we have accomplished thus far in our transformation in such a short time is a testament to the power of the platform and the team's hard work. Now I will turn it over to Carl to discuss the progress we've made on our initiatives. Carl?

Thanks, Mark. Our progress in 2023 marks significant milestones in our turnaround in an environment that has challenged the entire industry, and I'm very pleased with our progress. We lowered our cost structure and position the company to substantially improve its operating leverage as we position ourselves for the kind of growth that's possible with our unique and agile business model. We revamped and simplified our digital platform with the launch of the consolidated BODi subscription in March 2023. We reconfigured our subscription pricing into an annual offering for $179. And I'm pleased that our monthly subscriber retention has remained stable through these changes. Likewise, as Mark mentioned, we were rated the top workout and fitness app by CNN for 2023. We don't take this recognition lightly, and I'm extremely proud of our team that continue to provide the best fitness and nutrition solutions for the consumer. Now let me start by updating you on the sales and marketing initiatives that we discussed on our Q3 earnings call, then I'll outline some of our key 2024 initiatives. Okay. First, we introduced a new compensation plan to our network of partners to better reward their productivity, and I'm pleased that our network has been reinvigorated with the addition of these incentives along with the launch of our new programs, such as DIG DEEPER, a new weightlifting program by Super Trainer Shaun T, that's attracting significant demand. Also, a partnership with Brendon Burchard, a leading motivator and high-performance habits expert has been very well received by our network of partners. Second, performance marketing continues to produce strong return on ad spend, particularly as we're working closely with Meta to continue expanding our visibility on all their social networks. Third, customer database reactivation. We continue to aggressively mine our customer database of prospect e-mail addresses in the fourth quarter and in the month of January, we converted a sizable cohort in each of those periods. Conversion rates are very encouraging and exceeded our expectations. We'll keep enhancing this core competence to reactivate past customers and improve engagement, retention and lifetime value KPIs, especially a new initiative coming in April, which I'll describe in a minute. Fourth, we continue to ramp up activity on Amazon with our new agency and should start to see benefits through improved listing optimization and increased SKU count on the platform throughout the year. And fifth, we launched BODi previews in Q4 where customer prospects can view over 120 sample workouts for free. These prospects are now seeing the value of our content before we ask for the order, resulting in a strong conversion ratio of free sign-ups to paying subscribers and conversion is exceeding our expectations. Now we're focused on increasing the visibility of this channel through YouTube, new partnerships and capturing significant traffic that visits our sites every month. Moving to 2024 initiatives. First, in late March, we're making our programs available for digital program purchase and download, allowing customers to buy a title and stream it over our platform without being a subscriber. Similar to the DVD purchase model, which is very profitable and the cornerstone of scaling our business for 2 decades, we believe this new initiative will satisfy consumers who have a strong affinity for titles in our catalog or for people who just prefer to own and download the content. This is an exciting complement to our current subscription business, and we'll leverage our competitive advantage of monetizing our strong branded library of titles. Imagine the latent demand in the market to own programs like P90X, 21 Day Fix and INSANITY. This is a big opportunity, and no other platform has the capability and library that BODi has. Next, we intend to have a greater focus on targeting men. Currently, over 85% of our subscribers are women. So there's a substantial untapped market opportunity. Our legacy programs, such as P90X and newer weightlifting programs like DIG DEEPER and LIIFT MORE, provide content that's super effective and appealing to the male audience. We don't need to build a new skill set to reach men because in our 25-year history, we've had a significant content and supplement business with men. With new efficiencies we've achieved in performance marketing, we're confident we can return to attracting and retaining a significant number of male customers. And last, as Mark also mentioned, we'll be focusing on rebuilding our nutrition business with special bundling configurations, monthly nutrition product spotlights, in-app merchandising and new products launching in Q3 and Q4. Okay. In summary, I'm very pleased that our strategic efforts are beginning to yield the results intended as evidenced by: one, delivering a much lower breakeven point to provide some safety as we navigate the turbulence in the health and fitness sector. And two, generating positive adjusted EBITDA and guiding to be free cash flow positive in Q1 2024. These results reflect the progress we aim for in our turnaround plan. And as I think about 2024, I'm excited about the road ahead for the company and the prospect of helping more people find the right solution for their overall health and fitness needs. We're a unique company in that respect. And I appreciate the effort of our team and support of our investors to provide this incredibly important service. Okay. Now let me turn the call over to Marc Suidan to walk through the specifics of our fourth quarter financials.

Thanks, Carl, and hello, everyone. We are excited to share that we exceeded guidance on revenue and adjusted EBITDA in the fourth quarter of 2023, including our first positive adjusted EBITDA quarter for the year. We continue to execute on our turnaround plan and the results are starting to bear fruit as demonstrated by our lower cost structure and our stabilized digital streaming revenue. With the company's new operating leverage and cost structure in place, we can be free cash flow positive at this level of revenue. As Carl discussed, we believe that the foundation is set for us to return to growth. Getting into the financial results for the quarter, let me start with revenues. Revenues for the quarter came in at $119 million, which exceeded the company's high point of guidance and was 8% higher than the guidance midpoint. Revenues were 7% below the prior quarter and 20% below the prior year fourth quarter. The year-over-year decline in quarterly revenue improved each quarter throughout 2024. Digital revenue of $64 million was essentially flat compared to the last quarter. On a year-over-year basis, Digital revenue was down 7% from the fourth quarter of last year. We had 1.3 million digital subscribers as of December 31, of which 80% of them were on the premium BODi platform. Nutrition revenue of $52 million declined by 12% quarter-over-quarter and 31% from the prior year fourth quarter. At the end of the year, we had 160,000 nutrition subscriptions. As Mark and Carl mentioned, we are now laser focused on turning around the nutrition supplement business. Connected Fitness revenue, which is our connected bikes was $3.2 million down from $4.9 million in the prior quarter and $4.7 million in the prior year fourth quarter. We continue to strategically use promotions to sell our existing inventory. Moving on to gross margin. Our gross margin for the fourth quarter was 62.2%, up from 58.5% in the prior quarter and up from 57.1% in the prior year fourth quarter. For the year, the gross margin was 61.3%, up from 53.4% in 2022, representing a 790 basis point improvement. Our digital gross margin was 73.1%, down from 74.5% in the prior quarter and down from 77.4% in the prior year fourth quarter. The decline from the prior year is largely due to sales deleverage. However, we are at the tail end of our 2021 content amortization when our capitalized content was significantly higher. So the 2024 digital gross margin will now benefit from lower content amortization. We have been shifting to a more efficient content production schedule, which has dramatically reduced our capitalized expenditures. Nutrition gross margin was 53.2%, in line with the prior quarter and above the 49.8% in the prior year fourth quarter. Despite losing scale, our nutrition gross margin improved compared to the prior year, given our focus on pricing, supply chain optimization and tighter inventory management. Connected Fitness gross margin was minus 13%, a significant improvement sequentially and from the prior fourth quarter when the gross margin was greater than minus 100% for both of those comparable periods. Moving on to operating expenses. Excluding the asset impairment and restructuring charges, our operating expenses were 76.7% of revenue, an improvement from 80.1% in the prior year and in line with 76.8% in the fourth quarter of last year. In terms of absolute dollars, our operating expenses, excluding the asset impairment and restructuring charges, improved by 11% from the prior quarter and by 20% from the prior year. We continue to aggressively manage our costs and are in a great position to drive operating leverage. Selling and marketing was 50% of revenue this quarter, an improvement from 54% in the prior quarter and in line with the prior year fourth quarter. Generally, we spend less on media in the fourth quarter given the [ Connected Fitness ] seasonality. Going forward, we will have a 1,000 basis point improvement in selling and marketing that will be reflected in our 2024 results. Tech and development was 15% of revenue, same as the prior quarter and higher than the 14% of revenue in the prior fourth quarter. In absolute dollars, we reduced our expenses by 6% from the prior quarter and by 15% over the prior year. G&A is 11% of revenue this quarter, in line with the prior quarter and down from 13% in the prior year. In absolute dollars, we reduced our G&A by 8% from the prior quarter and by 30% from the fourth quarter of last year. Overall, we continue to find ways to make our business more efficient and reduce our breakeven point. Compared to 2021, we have reduced our fixed cost and capital expenditures by $165 million annually. In 2024, we are planning an additional $35 million in savings to bring the total savings to $200 million compared to 2021. As it relates to our net loss, we had goodwill and intangible asset impairment charges of $43 million, which increased our net loss to $65 million in Q4 compared to a $33 million loss in the prior quarter and $45 million loss in the fourth quarter of last year. Excluding these charges, the net loss would have been $22 million, which is a substantial improvement from $33 million loss in the prior quarter and a $26 million loss in the prior year fourth quarter exclusive of intangible asset impairment charges. As for adjusted EBITDA, we reported a positive adjusted EBITDA of $3 million. This was well ahead of our guidance and a meaningful improvement from the prior quarter loss of $6 million. The prior year fourth quarter also had a similar positive adjusted EBITDA, but was driven by the bonus amount that we decided to settle in equity. Factoring out the prior year anomaly, this was the first positive adjusted EBITDA quarter since going public in 2021. Moving on to the balance sheet. Our cash balance finished at $33 million, $5 million less than the prior quarter. Given seasonality, Q4 has the lowest cash billings and our new selling and marketing cost structure had not taken effect. We did a capital raise to improve our liquidity and that enhanced our cash position by $5 million. We also announced last week the sale of our Van Nuys production facility. The sales leaseback transaction further enhances our liquidity position in the first quarter of 2024. Inventory was $25 million, down from $32 million in prior quarter. This is the tenth consecutive quarter of net inventory reduction as we continue to tightly balance our demand and supply requirements. Our content and tech CapEx was in line with prior quarters at $3.7 million. For the year, the CapEx was $15.6 million compared to $38.7 million in 2022, representing a 60% improvement. We continue to be judicious in our technology investments and our product schedule. We are producing new content at significantly less production cost, which requires less CapEx. It should be noted that we have a major advantage in our program, library, as we have a large selection of the evergreen content that continues to resonate with our subscriber base. Looking at our cash flows. Our cash used in operations for the year was $23 million compared to $47 million in 2022, representing an improvement of 51%. Our free cash flows, which is the combination of cash flows used in operating activities and CapEx under investing activities improved by 59% for the year in 2023 compared to 2022. Looking at the quarter ahead, we will start to see benefits of both our $200 million savings over 2021 and the targeted 1,000 basis points improvement in selling and marketing. All of this sets up the next quarter to be free cash flow positive. We expect the first quarter revenues to be in the range of $113 million to $121 million. We expect a net loss in the range of $15 million to $10 million and an adjusted EBITDA in the range of $0 to positive $5 million. We are also expecting to be free cash flow positive in Q1 of 2024, which will be the first time since 2020. We are very proud of our accomplishments to date and look forward to keep sharing results from our turnaround. Now I will turn the call back over to the operator to open it up for questions.

[Operator Instructions] The first question is from the line of George Kelly with ROTH.

So a fair one to go through first, maybe if I'll start on the commission structure changes. I'm curious is the full impact of those changes reflected in your Q1 guide? Or is that something where we'll see a lot of it, but there will be sort of continued tailwinds throughout the year that is greater impact to Q2 through Q4?

George, great to have you on. This is Marc Suidan. So what I would say on that one, George, is, as you know, we said there's going to be 1,000 basis points improvement in 2024. It started off in January. That's a factor of multiple things, including the incentive comp plan as well as the aggressive win-back, BODi previews and so on. So I just wanted to be sure everybody knows it's a multiple of factors that influence that number. I do think it should have tailwinds throughout the year because remember, when you start off in January, you also have deferred costs, right, that's coming in from the prior year on the balance sheet. So it kind of takes effect all throughout the year at an accelerating pace.

Okay. And now here we are several months past when you first announced those changes. And I'm just curious what you've seen as far as the reaction from your partner network? And has it been pretty consistent and people are still engaged? Or has there been much flowback?

George, this is Carl, and I appreciate the question. So we're actually very pleased with the response within the network because what we're doing is rewarding productivity. So it's really had a great galvanizing effect to get the network back in gear, understanding their role in getting the word out, bringing in new customers and we're definitely seeing the momentum since that we gained when we first announced the changes into the actual deployment of the changes in January, it's continuing to build. So the mood and demeanor of the network is actually very positive and intent on growing.

Okay. And then a couple of other topics I wanted to cover. First, and this is sort of a broad question, but I'll just -- I'll leave it that way. Your Q1 guidance calls for kind of flattish sequential growth. And I'm curious, can you give any kind of direction on your segment level growth? What's baked into your guide as far as the sequential digital and sequential nutrition growth? And then part 2 to that question is you listed a whole bunch of initiatives in both businesses. And I'm curious, do you anticipate them like should we see that sort of sequential declines we've seen in the nutrition business, should those stabilize midyear? Like what's your anticipation for the rest of the year in both businesses? When are we going to start seeing the impact of these various initiatives?

George, what I would say is -- well, we don't want to give guidance ahead of Q1. As you noted, our initiatives are really a healthy mix of both the digital and nutrition. So we're attacking it on all fronts. Our focus is being cash flow positive from a free cash flow definition standpoint on a sustainable basis. So I don't -- based on that, right, I would say you shouldn't see nutrition decline the way it did in the past in the coming year.

Yes. And George, this is Mark Goldston. Thanks for coming on. In terms of the nutritional questions in terms of when you can possibly return to growth, one of the things that we mentioned in our prepared remarks and you're going to see is this monthly spotlight on individual nutrition programs, which is really new for us. I mean, by and large, the majority of our nutrition is typically sold as part of a total solution pack bundle by the organization versus an individual focus on nutrition. But with the huge growth in that category, and the number of people that we've got in our network, both in terms of members and partners, the team really felt that focusing on individual spotlighted items month to month would raise the awareness within our own organization of selling nutrition and actually appeal to the people who are driving up the tremendous TAM in that market. So we feel really good about it. And you're going to see as we even get towards the back half of the year, we've got a lot of innovative ideas coming down the pike as it relates to nutrition. So I think what we've really done, George, is we've bifurcated this into being a focus on building back the nutrition business versus just selling it as part of a total package of products inclusive of digital fitness.

Okay. Understood. That's helpful. And then just two last quick questions. In your prepared remarks, you said that the -- on the digital side of your business, your content amortization should step down, and that will benefit the digital gross margin in '24. Can you maybe provide a little bit more quantification on how meaningful is that? And then the second question is on the balance sheet. Saw the transaction that was announced here recently about the property sale. But is there anything else that's noncore that you're contemplating, monetizing? And that's all I had.

Yes, George. So on the first one, CapEx. If you go back to our financials in 2021, for instance, the level of CapEx was significantly higher than what it is now. I mean if I take 2021, as an example, it was -- it was like -- I think it was like over $100 million. So if you look at our current run rate right now, like if I take this past year, that same number is around $15 million, $16 million mark. So based on that, you could see that whatever we had capitalized on the balance sheet, we're kind of just in the process of finishing the tail end of it. So as the year passes, you're just not going to see that come through into the P&L because we typically amortize those over 3 years. That's on the amortization question of the digital library. On the question of Van Nuys, you did see this past quarter, part of enhancing our liquidity, we sold noncore assets. Van Nuys was a principal 1 real estate that we sold in the sales leaseback transaction. I don't think we have anything else on the balance sheet to expect at this point. Like I said, inventory has been run incredibly well. You've had 10 quarters of that coming down, but that's a core asset. But in terms of anything else, we had a start-up investment. We also sold in Q1, those are subsequent events, both that in the Van Nuys sales leaseback.

The next question is from Jonathan Komp with Baird.

Yes. Marc Suidan, I have a follow-up question. I believe you said in your prepared remarks that given the operating cost structure you're at today, you're at a level to be free cash flow positive at the current level of revenue. Could you just maybe be more specific, what level of revenue on an annual or ongoing basis does that refer to?

Yes. Hey, Jon, thanks very much. Marc Suidan here. As Mark Goldston stated in his section, we've taken our revenue breakeven point from above $900 million to below $500 million. So if you think about this level we're at times 4, we are -- we gave guidance that we would be both EBITDA 0 to $5 million, right, which is positive in Q1 and free cash flow positive. So the changes we've been talking about and been making for a while are -- has set up the company to have incredible operating leverage. Sorry, Jon, go ahead.

Yes. And just a follow-up, I think the last 2 years in the first quarter was roughly 27% to 29% to full year revenue. Are there factors that would cause that to be different this year? And then maybe relatedly, when you think about all the initiatives how far off do you think the business might be to be at a state where the revenue is flat or growing again on a year-over-year basis?

Jon, it's Carl Daikeler. I'll let Mark answer that last part of the question. But as we outlined in terms of the initiatives, frankly, I'm more excited about the last 3 quarters of the year than I am even about the first quarter because of the initiatives, the depth of our library and moving that into this concept of digital program purchases, which is something unique to BODi and our catalog that we built over 25 years is we have the ability to monetize those now as a total additive and extra part of the business. So we still have the subscription business. We still have the nutrition business. Now we have the ability to sell the program the way we did for basically 20 years on DVD. So we do expect as those start to roll out in April that, that will be additive to the overall revenue picture. Likewise, as Mark outlined, the nutrition spotlights and the diversification of our sales channels into Amazon, into our database marketing will also be compounding as we roll through the year and expect all of that to bode well for this -- the first quarter to not necessarily be the primary quarter of strength for us for the year.

And just a follow-on, Jon, to what Carl just said, this is really important because the legacy of the company, which is what made this the pioneer in the fitness industry, was that it sold entitlements. You bought P90X, you bought INSANITY, you bought Body Beast. And then, of course, we transitioned to being purely subscription now that we're going to go back with this dual mode where we'll have subscription, but we'll also have these entitlements where you can buy. It gives us an additional catchment mechanism that we really have not had here for years because if for some reason, you don't want to subscribe to a system, but you want to own the content we've not been able to serve that to you, and now we can. We can also use that, frankly, as a lever to try to push people into the subscription business by using our ability to buy the content as an incentive. So there's a lot of exciting stuff coming down the pike. You know we're hyper focused on cash, cash and cash, and that's still part of the program throughout the first half of this year, we will absolutely not lower our cash focus in the second half, but these growth programs as they start to come out can actually help us do both focus on growth for top line basis and also focus on liquidity. So -- but you have to get through the turnaround before you can really hit the gas pedal in any of those other initiatives. And that's about where we are right now.

Okay. Great. Last one for me. Just as a follow-up, how -- can you give any more context on the pricing of the new content model? Is there any risk of cannibalizing potential subscribers? So just interested how you're planning to price the individual library. And then just on the nutrition business, one separate question on pricing with -- now that you're selling that nutrition online as a stand-alone on Amazon. Is there any feedback on comparability of pricing or any other reaction from the coach network that you're selling that separately?

Yes. So I'll answer the latter first. We're very careful to make sure that the value of the supplements are reflected wherever we sell them. And obviously, the network is extremely important for holding people accountable to their health and wellness goals. So our pricing is respectable -- is respecting the diversification of channels. So we're not letting any one channel dominate, if you will, from a pricing perspective. So that all is basically a strategy of a rising tide will float all boats in this strategy of diversification. As it relates to the cannibalization question, this is a big opportunity for us because the TAM is so large. There's really a very small opportunity for cannibalization, but, frankly, we open up the aperture for reaching more people because many people just aren't interested in a subscription. They want to own that program. So now we haven't been able to do this for 6 years, basically, but it's how the company thrived from 1999 to 2018 effectively. So now we're going to be able to serve people where they want to be served, but also at the same time, have the leverage. This is what Mark was talking about. We have the leverage of using the digital entitlement to incentivize people to actually upgrade to the subscription. And this is going to be a competitive advantage. So you can imagine somebody coming in to buy P90X for $59, that's half of what you used to be able to buy it, half the price that you buy it for on DVD. But then we have the ability to say, if you'd like to upgrade to the subscription, we can give you a special offer on that. So there's a lot of additional creativity and flexibility that we can provide to make sure that the customer is getting what they want. And again, that's a competitive moat that we've got because no other company has a library of over 120 branded programs that they can offer to people so that they're being -- we're solving a specific problem with a unique selling proposition that will help them. And that's why we think this is such a big opportunity for us.

Yes. We also -- listen, if you go back to the legacy of the company, I mean, today, as we said, the male audience is a huge opportunity for us. It's only about 15% of the business where it used to be over half. So when the company was in its glory days and it was selling entitlements, half of the business, so it's met. So there's every reason to believe that when we go back and focus on this in addition to the subscription we have a great stimulus for tapping into the male market.

The next question is from the line of B.J. Cook with Singular Research.

Just kind of a question regarding your cost-cutting initiatives in combination with your new sales initiatives. So looks like a lot of cost cutting comes from both G&A and selling and marketing. I'm just wondering if you guys are able to reinvigorate revenue growth. Does that change, for instance, this year, you got touched on this, too, but sales and marketing going to go up from there? Or is this a sustainably lower fixed cost structure as we're working on?

BJ, this is Marc. This is a sustainable cost reduction. Nothing we've done in the cost reduction impacts demand generation. It's quite the opposite while cutting back our costs, we simplified our model, reinvigorated our digital platform, got named the #1 fitness platform by CNN for 2023. Our retention -- our monthly retention stayed the same. And all the initiatives we're talking about, whether it's Amazon, aggressive win-back from the database or BODi previews are targeting male. None of this stuff is capital-intensive. It all fits within this new economic model we've created. So the cost savings we're doing does not impact demand, quite the opposite.

And further to that, if I just could add, we have a very sophisticated way of analyzing our return on invested capital. Internally, we call it the allowable in terms of what we'll pay to acquire a customer. And our TLV-to-CAC calculations are they really as sophisticated as anybody is around. And so there is no governor on the spend as long as the yield is at or above your threshold levels. And so -- and they have been. And so we can continue to feed the fuel into the fire as long as we maintain the allowables and our team does a phenomenal job of being disciplined against that. So it will generate its own capital to reinvest.

There are no further questions in queue. [Operator Instructions]. There are no further questions in queue. With that, I'd like to turn the call back over to the team for concluding remarks.

Thank you very much, operator. Just in closing, I'd love to say that the turnaround is well underway. We're really pleased with the performance and the discipline that's been instilled in the company towards this common goal of a major improvement in our liquidity. The huge milestone of adjusted EBITDA positive in Q4, roughly $3 million is really a major move for the company. As frankly, is being cash flow positive as we projected in Q1 of 2024. I mean that's going to be the first time since 2020 that the company would be cash flow positive. That's a real testament to the collective turnaround effort here. So in addition, and Marc had mentioned this, I mean, the order of magnitude of understanding how a company in essentially 2 years can lower its positive breakeven from $900 million to less than $500 million is really, really quite incredible. And it really puts us in a great position to generate a significant amount of operating leverage as we go forward. So at this point, our turnaround is working extremely well. We feel great about the efforts of the organization to help us achieve our goals and, most importantly, to maximize shareholder value which is why we're all here. So I want to thank everybody for attending the call today. And as always, if you have any additional questions, please feel free to reach out to ICR or to the company directly. Everybody, have a great day. Thank you.