BowFlex Inc.

Q1 fiscal 2024 net sales were $42 million, down 24% year over year; Direct sales were $22 million and declined about 17%, while retail sales declined 29%. Gross profit was $9 million, up 24% year over year, and gross margin was 21%, up 800 basis points. Adjusted operating expenses were $19 million, down $12 million or 40%; adjusted operating loss was $10 million and adjusted EBITDA loss was $6 million, both improving by $14 million year over year. Cash was $18 million, debt was $16 million, liquidity was $28 million, and net cash was positive $2 million at quarter end. Full-year guidance was reiterated for revenue of $270 million to $300 million, adjusted EBITDA of negative $15 million to breakeven, royalty revenue of about $1.8 million, and JRNY members of about 625,000 at year end.

Jim Barr framed the quarter as evidence that Nautilus is moving back toward profitability through gross margin improvement, cost cuts, and balance-sheet repair. He emphasized consumer demand in Direct, encouraging sell-through in retail, and the strength of the Bowflex and Schwinn brands as the company launches refreshed products and a broader rebrand. His tone was constructive and confident, but he repeatedly noted the environment remains uncertain and that there is still a long way to go in fiscal 2024.

Aina Konold highlighted the mechanics behind the quarter: 800 bps of gross margin expansion to 21%, with about 1100 bps from lower landed product costs, 200 bps from lower discounting, and 100 bps from lower logistics overhead, partially offset by outbound freight and JRNY COGS deleverage. She said adjusted opex fell to $19 million, helped by lower advertising, personnel, and contracted services, and that adjusted EBITDA loss improved to $6 million from $20 million last year. On the balance sheet, she pointed to $18 million cash, $16 million debt, $28 million liquidity, inventory down to $40 million, and free cash flow of negative $4 million versus negative $10 million last year. Guidance was reaffirmed, with revenue expected at $270 million to $300 million and EBITDA ranging from a $15 million loss to breakeven.

Analysts focused on the retail outlook, advertising plans, inventory, and the implications of the rebrand. Management said retail remains cautious but inventory is moving down, Prime Day sell-through was better than expected, and holiday orders should start showing up in late Q2 or early Q3. They said ad spend was about $1 million in Q1 versus about $5 million last year, but would rise in Q2 and peak in Q3, and they also confirmed inventory should begin building again for Direct to be ready for November demand. On the rebrand, management said the costs were already embedded in guidance and that the goal is to modernize Bowflex and stand out from a “sea of sameness.”