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Peloton Reports Lower-Than-Expected Holiday Quarter Revenue Amidst Profitability Gains

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Peloton's Second Fiscal Quarter Results

Peloton reported financial results for its second fiscal quarter, ending December 31, which were below analyst expectations for both revenue and loss per share.

The company posted a loss of 9 cents per share, compared to an anticipated loss of 6 cents per share.

Key financial outcomes for the quarter include:

  • Revenue reached $656.5 million, falling short of the $674 million expected by analysts.
  • Overall sales decreased by approximately 3% from $673.9 million in the prior year.
  • Hardware sales generated $244 million, below the $253 million forecast.
  • Subscription sales amounted to $413 million, less than the $424 million anticipated.

Product Performance and Sales Outlook

Peloton's new AI-driven product line and increased subscription prices did not lead to the expected sales growth. The company anticipates continued sluggish sales in the current quarter, projecting revenue between $605 million and $625 million, which is below analyst expectations of $638 million.

Profitability Improvements

Despite the revenue shortfall, Peloton demonstrated improvements in profitability.

The company generated $81 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the holiday quarter, exceeding the $73 million analysts had expected.

Looking ahead, Peloton expects further gains:

  • Following recent staff reductions, the company projects to generate between $120 million and $135 million in adjusted EBITDA for the current quarter, surpassing the $119 million analyst expectation.
  • Peloton raised its full-year adjusted EBITDA guidance to a range of $450 million to $500 million, up from the previous range of $425 million to $475 million.

Leadership Change

CFO Liz Coddington announced her departure from Peloton to pursue an opportunity outside the industry. She will remain with the company through March as a search for her replacement is conducted.

Company Statement

CEO Barry McCarthy stated that the second quarter represented a significant period of innovation for Peloton. He also highlighted the company's continued operational discipline, which resulted in a 39% year-over-year growth in Adjusted EBITDA and a 52% reduction in Net Debt.