Peloton (PTON) reports Q1 earnings

Peloton (PTON) reports Q1 earnings
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Brody Longo trains on a Peloton exercise bike on April 16, 2021 in Brick, New Jersey.

Michael Loccisano | Getty Images

platoon posted a wider-than-expected loss in its fiscal first quarter as a sharp decline in revenue from its connected fitness products outpaced growth in subscription revenue.

Shares fell more than 17% in premarket trading Thursday. As of Wednesday’s close, Peloton’s shares are down about 75% so far this year.

Here’s how the fitness device maker fared compared to Wall Street estimates, according to Refinitiv.

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

Revenue decreased by 23% compared to the same period last year. Peloton’s holiday quarter revenue forecast of $700 million to $725 million would mark quarter-over-quarter growth, but it was well below analysts’ estimates of $874 million.

“Given macroeconomic uncertainties, we believe that near-term demand for Connected Fitness equipment will remain challenging,” the company said.

Peloton CEO Barry McCarthy said in Thursday’s earnings call that the company’s turnaround is “a work in progress.” The company is grappling with the tail end of pandemic-era demand when lockdowns spur growth in home workouts. This year, the company underwent significant management changes, massive layoffs, and a New business strategy under McCarthy. The company has moved beyond its direct-to-consumer roots to deals with other retailers and a model that emphasizes subscriptions.

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

Co-Founder and Ex CEO John Foley stepped down as chairman of the board in September, along with co-founder and chief legal officer Hisao Kushi.shortly after Dara Treseder, Peloton’s head of marketing. There was Foley resigned from the post of general director in Februarywhen he was replaced by McCarthy.

McCarthy led an extensive turnaround effort for the company. I’ve overseen thousands of layoffs, Including the 500 jobs killed in early October. Cost-cutting efforts were combined with new initiatives to sell more bikes and grow Peloton’s digital subscribers.

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

Peloton reported 6.7 million total members, up from 6.3 million last year but down from 6.9 million in the previous quarter. McCarthy said the company hopes to someday reach 100 million members.

The company also reported improved free cash flow of negative $246.3 million, compared with $411.9 million in the prior quarter and negative $651.9 million in the year-ago period. Peloton said it hopes to deal with this issue by the second half of its financial year.

Among McCarthy’s recent initiatives was Peloton’s decision sell bikes and treads through Amazon and Dick’s Sports goods. The company also started certifying old bikes and expanded them bike rental program across the country. And, in partnership with Hilton, the company is determined to put bicycles in approximately 5,400 hotel fitness centers nationwide.

He also saw the first quarter The launch of Peloton’s $3,195 rowing machine. Recently the company has extended the refund period for the recalled Tread+ treadmilll, many users were recalled due to injury and death.

The company reported $199 million in recall provisions, restructuring and impairment charges in the first quarter.

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