A Peloton bike is displayed at Dick’s Sporting Goods store in Daly City, California, on May 8, 2024.
Justin Sullivan | Getty Images
Peloton The connected fitness company has returned to generating free cash flow and is approaching profitability as it controls costs and seeks to improve the unit economics behind its hardware, the company said Thursday.
Despite the progress, Peloton expects to lose more members and sell fewer bikes and treadmills than Wall Street analysts expect in the all-important holiday quarter.
Still, the stock rose 10% in premarket trading Thursday following the quarterly update and announcement of a new CEO.
The method is as follows Peloton’s fiscal first quarter performance Compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: 0 cents vs expected loss of 16 cents
- income: $586 million vs. $574.8 million expected
The company reported a net loss of $900,000, or effective breakeven per share, for the three-month period ended Sept. 30, compared with a net loss of $159.3 million, or 44 cents per share, in the year-ago period earlier.
Sales fell to $586 million, down approximately 1.6% from $596 million in the same period last year.
As Peloton prepares for the holiday quarter, when hardware sales are typically strongest, the company expects revenue in the range of $640 million to $660 million, below Wall Street expectations of $671.4 million, according to StreetAccount.
It also expects fewer paid app subscribers than analysts forecast, reflecting the company’s decision to shift marketing dollars away from lower-priced apps and toward product development, a focus of former CEO Barry McCarthy focus areas.
Peloton announced in May that McCarthy would step down after about two years in the top job. On Thursday, the company said Ford executive Peter Stern would take over.
By the end of the quarter, the company expects to have 560,000 to 580,000 paid app users, compared with expectations of 608,200, according to StreetAccount.
In Peloton’s first fiscal quarter, operating expenses were reduced by 30% compared with the previous year, with adjusted EBITDA of nearly $116 million and free cash flow of nearly $11 million.
Adjusted EBITDA for the quarter is expected to be $20 million to $30 million, while StreetAccount EBITDA is expected to be $13.9 million.
For fiscal 2025, Peloton raised its full-year EBITDA guidance, a key metric investors are watching to gauge the company’s future value. The company said it now expects adjusted EBITDA of $240 million to $290 million, compared with the previous range of $200 million to $250 million. Revenue is expected to be between $2.4 billion and $2.5 billion, according to LSEG, in line with analysts’ expectations of $2.46 billion.
These gains are the result of previously announced cost-cutting plans and the company’s efforts to improve unit economics of hardware, which has long been a loss-making business for the company.
In its first fiscal quarter, Peloton increased the suggested retail price of its Bike and Bike+ in international markets and increased the price of its Row in North America while reducing discounts across its hardware portfolio.
These efforts, coupled with a better mix among various revenue streams, boosted its connected fitness margin to 9.2% in the latest quarter, up 6 percentage points from the year-earlier period.
This story is developing. Please check back for updates.
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