Beachbody (BODI) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01If we are unable to anticipate and satisfy consumer preferences and shifting views of health, fitness and nutrition, our business may be adversely affected
2. 02If we are unable to sustain pricing levels for our products and services, our business could be adversely affected
3. 03Our success depends on our ability to maintain the value and reputation of our brands
4. 04Changes to our business model, including as a result of the Pivot, could materially and adversely affect our business
5. 05The perception of the effects of our nutritional products may change over time, which could reduce customer demand
6. 06We rely on consumer discretionary spending, which may be adversely affected by economic downturns and other macroeconomic conditions or trends
7. 07Adverse publicity associated with our products or ingredients, or those of similar companies, could adversely affect our business
8. 08the direct selling business generally
9. 09We may not successfully execute or achieve the expected benefits of our strategic initiatives, including the Pivot, and other cost-saving measures we may take in the future, and our efforts may result in further actions and/or additional asset impairment charges and adversely affect our business
10. 10We may be unable to attract and retain customers, which would materially and adversely affect our business, results of operations and financial condition
11. 11a general deterioration of economic conditions or a change in consumer spending preferences or buying trends
12. 12Our customers use their connected fitness products and fitness accessories to track and record their workouts. If our products fail to provide accurate metrics and data to our customers, our brand and reputation could be harmed, and we may be unable to retain our customers
13. 13Our business relies on sales of a few key products
14. 14We operate in highly competitive markets and we may be unable to compete successfully against existing and future competitors
15. 15We have limited control over our suppliers, manufacturers, and logistics providers, which may subject us to significant risks, including the potential inability to produce or obtain quality products on a timely basis or in sufficient quantity in order to meet demand
16. 16The occurrence of any of these risks, especially during seasons of peak demand, could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers
17. 17If any of our products are unacceptable to us or our customers, our business could be harmed
18. 18Our products and services may be affected from time to time by design and manufacturing defects that could adversely affect our business and result in harm to our reputation
19. 19We may incur material product liability claims, which could increase our costs and adversely affect our revenues and operating income
20. 20Our business model relies on high quality customer service, and any negative impressions of our customer service experience may adversely affect our business and result in harm to our reputation
21. 21The seasonal nature of our business could cause operating results to fluctuate
22. 22If we fail to obtain and retain high-profile strategic relationships, or if the reputation of any of these parties is impaired, our business may suffer
23. 23Our operating results could be adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory
24. 24Our co-founder has control over all stockholder decisions because he controls a substantial majority of our voting power through our Class X common stock, or “super” voting stock
25. 25The concentration of our stock ownership limits our stockholders’ ability to influence corporate matters
26. 26Because the Company is a “controlled company” within the meaning of the NYSE rules, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies
27. 27We track certain operational and business metrics with internal methods that are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business

Risks Related to our Indebtedness

1. 28Our Financing Agreement restricts our current and future operations and our ability, and the ability of our future subsidiaries, to engage in certain business and financial transactions, and, as a result, may adversely affect our business, financial position, results of operations and cash flows
2. 29enter into certain transactions with affiliates
3. 30Covenant restrictions may limit our operations and impact our ability to make payments to our investors
4. 31Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control

Risks Related to Expansion

1. 32There can be no assurance that we can further penetrate existing markets or that we can successfully expand our business into new markets
2. 33We may expand into international markets, which would expose us to significant risks
3. 34political or social unrest or economic instability in a specific country or region in which we operate
4. 35We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results

Risks Related to Our Personnel

1. 36Increases in labor costs, including wages, could adversely affect our business, financial condition and results of operations
2. 37If we cannot maintain our culture, we could lose the innovation, teamwork, and passion that we believe contribute to our success and our business may be harmed
3. 38We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel could have an adverse effect on our business, financial condition and results of operations

Risks Related to Data and Information Systems

1. 39We collect, store, process, and use personal information and other customer data, which subjects us to legal obligations and laws and regulations related to data security and privacy, and any actual or perceived failure to meet those obligations could harm our business
2. 40Any major disruption or failure of our information technology systems or websites, or our failure to successfully implement upgrades and new technology effectively, could adversely affect our business and operations
3. 41could be reduced, our reputation could be harmed, and we may be required to issue credits or refunds, or risk losing customers
4. 42If we are unable to maintain a good relationship with Apple, our business will suffer
5. 43Apple removes our apps from their store; or
6. 44If we suffer a security breach or otherwise fail to properly maintain the confidentiality and integrity of our data, including customer credit card, debit card and bank account information, our reputation and business could be materially and adversely affected
7. 45There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information
8. 46We rely heavily on information systems, and any material failure, interruption or weakness may prevent us from effectively operating our business and damage our reputation

Risks Related to Laws and Regulations

1. 47We face risks, such as unforeseen costs and potential liability in connection with content we produce, license and distribute through our content delivery platform
2. 48Increasing attention to, and evolving expectations regarding ESG matters may impact our business and reputation
3. 49demand for certain products, enhanced compliance or disclosure obligations, or other impacts to our business, financial condition, or results of operations
4. 50Our nutritional products must comply with regulations of the FDA, as well as state, local and applicable international regulations. Any non-compliance with the FDA or other applicable regulations could harm our business
5. 51Changes in the legal and regulatory environment could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation
6. 52Our products or services offered as part of automatically renewing subscriptions or memberships could be found not to be in compliance with laws or regulations in one or more markets, which could have a material adverse effect on our business
7. 53Changes in legislation or requirements related to electronic funds transfer ("EFT"), or our failure to comply with existing or future regulations, may materially and adversely impact our business
8. 54We are subject to a number of risks related to ACH, credit card and debit card payments we accept
9. 55We are subject to the risk of payment processors changing or divesting their relationships with us
10. 56We are subject to governmental export and import controls and economic sanctions laws that could subject us to liability and impair our ability to compete in international markets
11. 57Failure to comply with anti-corruption and anti-money laundering laws, including the FCPA and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences
12. 58Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand
13. 59including government agencies or government contractors. In these countries, patents may provide limited or no benefit
14. 60Our subscriber engagement on mobile devices depends upon effective operation with mobile operating systems, networks, and standards that we do not control
15. 61Our BODi Bikes may be subject to warranty claims that could result in significant direct or indirect costs, or these products could experience greater returns than expected, either of which could have an adverse effect on our business, financial condition, and operating results
16. 62Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results
17. 63We may be subject to obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which could adversely harm our business

Risks Related to Ownership of Our Common Stock

1. 64The price of shares of our Class A common stock may experience volatility
2. 65general market and local, regional and national economic conditions, including factors unrelated to our operating performance and prospects
3. 66There can be no assurance that we will be able to comply with the continued listing standards of the NYSE, which could result in the delisting of our securities, limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
4. 67You may experience future dilution as a result of future equity offerings or other equity issuances
5. 68The number of shares of our Class A common stock available for future issuance or resale could adversely affect the market price of our Class A common stock
6. 69Because we do not expect to declare cash dividends on our Class A common stock in the foreseeable future, shareholders must rely on appreciation of the value of our Class A common stock for any return on their investment
7. 70Declines in our financial performance have resulted in and could result in future impairment charges
8. 71Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy, and impact our stock price
9. 72Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation
10. 73If we identify material weaknesses in our internal control over financial reporting which, if not remediated appropriately or timely, could result in the loss of investor confidence and adversely impact our business operations and our stock price
11. 74If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our share price and trading volume could decline
12. 75As a public company, we are subject to laws, regulations and stock exchange listing standards, which impose additional costs on us and may strain our resources and divert our management’s attention
13. 76Our ability to raise capital in the future may be limited
14. 77Our quarterly operating results and other operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict
15. 78Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our operating results
16. 79Our ability to use our net operating loss carryforwards (NOLs) to offset future taxable net income may be subject to limitations
17. 80We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints both domestically and abroad
18. 81The forecasts of market growth and other projections we provide in our 10-K may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot assure you that our business will grow at a similar rate, if at all