Mark Goldston: I mean, essentially, I think we’ve disclosed it — we haven’t disclosed it publicly. Our revenue covenant is $100 million a quarter between now and the end of the year. So if you look at our seasonality, obviously, you can see our previous year’s recording, Q1 typically indexes up probably about 112-ish or thereabouts and then Q2, Q3 are more around a 100 [index] level. So we planned our initiatives, as you know, and they’re somewhat back loaded in the second half of the year. The seasonality swings are not really that dramatic, so they don’t really affect us that much. And so our goal is to have them start to take effect in the second half of the year and into Q1, and the $100 million quarter revenue covenant was established mutually between us and Blue Torch and everybody felt comfortable with that.
Jonathan Komp: And then just one more follow-up as we think about the digital business. Can you give any insights — any line of sight you may have to the membership stabilizing or where they may start to stabilize? And as you think about measuring the success and the initiatives you have in place for the digital business specifically, what are you looking for in terms of the milestones or the key metrics to get comfortable in the direction that you’re headed?
Mark Goldston: I think part of this is — what we might want to focus on is the fact that we’re trying to broaden the aperture of the customer base in the company. The company has been, as you know, hyper focused over the last five, six years on subscriptions. If you go back to the halcyon days of The Beachbody Company, it was almost entirely purchasing individual programs, what we call entitlements. So what we’re now trying to do is to have a mix where we still obviously are focused on the subscription business. But we believe we’re leaving a lot of money on the table and we’re leaving a lot of satisfied potential customers off the grid by not offering individual programs. Might there be some level of cannibalization with regard to entitlements to subscription, it’s possible.
But in the end of the day, if our total engagement base, which is subscription plus entitlement, is larger as a result and therefore, the company would have more revenue and obviously be more profitable then that absolutely plays into our core strategy. So we’re going to learn more as we go down the process. We just started this. When we talk to you in Q3and Q4, when we’ve been at this for four or six months, we’ll have a better idea of where things settle out. But the goal here all along was to widen the overall aperture of appeal of this company and its fabulous library of well known programs. And for the last four to six years, I would say we really haven’t been maximizing that because we’ve been hell bent on the subscription business as the sole source.
Does that make sense? Jon, are you there?
Jonathan Komp: Yes. No, I think the nature of the question, we’re just trying to understand. I mean, 1.2 million digital subscribers is down significantly from the peak and not necessarily showing signs of normal seasonality or stabilization. So it’s hard to get a handle on the efforts that you just walked through paying off versus the pressure is still on the core subscription business?
Carl Daikeler: I would say that the — frankly, we’re in a better position than I feel we’ve been for two decades, because we never had the digital subscription business as a complement to the front end program sales. So now that we are basically unleashing the single digital purchase component of this with the prospect of upselling the digital subscription and upselling the deep nutritional supplement catalog, we’re in a position now to dramatically increase our new customer acquisition at a higher lifetime value, because I’ve got more SKUs to offer them than we’ve ever had in the history of the business. So really, if you look at it from a learn — test and learn perspective, we’ve got more levers in our arsenal to build lifetime value, which of course, contributes to what you can spend on the front end.
So the — frankly, since we’ve made the transition over the last 18 months by consolidating our digital subscription business into one higher value subscription, we went through these multiple stages of reducing the number of subscription tiers that we’ve had and settled in at this higher price now we can open up the, as Mark said, the aperture of the front end acquisition using digital program purchases, and then on the back end sell the subscription. So we think these two things are going to complement each other and frankly help keep the subscription base quite stable.
Mark Goldston: And the other thing is you might note, Jon, because of the pricing that we’ve got on the digital, program purchases, we’ll be able to put together a nutritional bundle with our digital program and nutrition that will give us some absolute price flexibility to make it a more attractive lower priced entry point potentially and then we will provide a migration path for those people who purchase the entitlement to either migrate to a full digital subscription or clearly to the nutritional subscription, because they will be getting a portion of the nutrition as part of their digital bundle when they join. So we’re really going back to the things that worked the best for the company several years ago with those things that we know worked today. And of course, this is all dependant on the size and the nature of our digital selling organization, as well as what we’ll be augmenting that with our direct-to-consumer direct response system.
Operator: Our next question today comes from Susan Anderson with Canaccord.
Susan Anderson: I was wondering maybe just, I guess, on the Amazon details, it sounds like the start there has been pretty successful. You sound pleased with that. I guess, does that give you confidence in expanding into other retailers or other channels? And then also, I’m curious if any of those Amazon customers that may be a little early, but if they eventually migrate to your own site?
Carl Daikeler: Yes, we do expect the Amazon business to continue to grow and we’re also getting possibility of expanding sales channels. What matters to us is that the sales — the channels that we go into continue to contribute to the cash flow and profitability of the business. So that’s how we measure any opportunities that we’re looking at and there are plenty of them because of the quality of the supplement catalog that we’ve got. In terms of those customers from Amazon coming over to the mothership, if you will. , I think it’ll happen in some cases. But you just can’t beat the, convenience for people who want to shop from Amazon. They get to shop from Amazon and we probably would have never gotten them, because they appreciate the convenience of being over there.