Business

Peloton (PTON) reports first quarter earnings


Brody Longo trains on his Peloton exercise bike on April 16, 2021 in Brick, New Jersey.

Michael Loccisano | beautiful pictures

Peloton posted a larger-than-expected loss in its fiscal first quarter, as a sharp decline in connected fitness products revenue outweighed the increase in subscription revenue.

Shares fell more than 20% in pre-market trading Thursday. As of late Wednesday, Peloton’s stock is down about 75% so far this year.

Here’s how the fitness equipment maker performs against Wall Street estimates, according to Refinitiv.

  • Loss per share: $1.20 vs 64 cents, expected
  • Turnover: $616.5 million versus $650.1 million, expected.

Revenue fell 23% year-over-year. Peloton’s revenue outlook for the holiday quarter, between $700 million and $725 million, would mark an increase from the previous quarter, but it was far below analyst estimates of $874 million.

“Given the macroeconomic uncertainties, we believe short-term demand for Connected Fitness hardware is likely to remain challenged,” the company said.

Peloton CEO Barry McCarthy said in an earnings announcement Thursday that the company’s changeover is a “work in progress.” The company has been grappling with an end to demand during the pandemic, as closures spurred growth in home exercise. This year, the company made significant leadership changes, mass layoffs and New business strategy under McCarthy. The company has moved beyond its direct-to-consumer origins into deals with other retailers and into a model that emphasizes subscriptions.

McCarthy, a former Spotify and Netflix executive, said on Thursday: “The ship is turning.

Co-founder and former CEO John Foley left his position as chairman of the board in September along with co-founder and chief legal officer Hisao Kushiright after that Head of Marketing for Peloton, Dara Treseder. Foley had Resigned as CEO in Februarywhen he was succeeded by McCarthy.

McCarthy led an extensive change effort for the company. He oversaw thousands of layoffs, including 500 jobs selected at the beginning of October. The cost-cutting efforts are combined with new initiatives to sell more bikes and grow Peloton’s digital subscribers.

Subscription revenue grew to $412.3 million from $304.1 million last year. Meanwhile, revenue from connected fitness products fell from $501 million to $204.2 million. Peloton’s gross margin, 35.2%, was largely in line with expectations and improved sharply from negative 4.4% in the previous quarter.

Peloton reported a total of 6.7 million members, up from 6.3 million last year, but down from 6.9 million the previous quarter. McCarthy has said that the company hopes to one day reach 100 million members.

The company also touted its improved free cash flow, which was negative $246.3 million, compared with $411.9 million in the previous quarter and negative $651.9 million in the same period a year earlier. Peloton said it expects to be close to breaking even in the second half of the fiscal year.

Among McCarthy’s recent initiatives is Peloton’s decision to sell bicycles and bicycles through Amazon and Dick’s Sportswear. The company also started certifying pre-owned bicycles and expanded nationwide bike rental program. And, in partnership with Hilton, the company will put bicycles in the fitness centers of approximately 5,400 hotels across the country.

The first quarter also saw Peloton’s $3,195 release of rowing machine. Recently, the company extended refund period for Tread + treadmil recalledl, was withdrawn due to multiple user injuries and one death.

The company reported $199 million in recall reserves in the first quarter, restructuring costs, and losses as it continued to embark on capital turnover.

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