Peloton Shares Fall Despite Financial Progress
Peloton Interactive Inc. saw its shares decline by about 9% in Thursday's premarket trading, following the release of its latest quarterly report. Although the connected exercise equipment manufacturer demonstrated improvement in its finances, it presented a somewhat bleaker outlook for the upcoming holiday season.
Strong Quarter with a Disappointing Forecast
During the fiscal first quarter, Peloton reported a net loss of $159 million, or 44 cents per share. This is in comparison to a net loss of $409 million, or $1.20 per share, in the same period last year. Analysts had anticipated a slightly smaller loss of 34 cents per share based on FactSet's data.
The company also revealed adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $9.1 million. This stands in stark contrast to the $33 million loss reported in the previous year. Analysts had projected a loss of $17 million.
Revenue Decline and Subscription Growth
Although Peloton experienced a slight decline in revenue, with earnings reaching $596 million compared to $617 million last year, it still managed to outperform analysts' expectations of $589 million. The company's revenue included $181 million from connected fitness products, representing a decrease of 12% from the previous year. On the other hand, subscription revenue increased by 1% to $415 million.
Despite these positive aspects, Peloton's downbeat holiday season forecast overshadowed its financial progress and resulted in a decline in its stock value during premarket trading.
Peloton App Sees Strong Download Numbers, but Struggles to Convert Free Users into Paid Members
In a recent letter to shareholders, Peloton's CEO, Barry McCarthy, shared both positive and negative updates regarding the company's standalone app. McCarthy expressed satisfaction with the success of the brand relaunch. He mentioned that the new strategy not only continued to resonate with Peloton's core demographic but also attracted more male, Gen Z, Black, and LatinX users compared to before the relaunch.
McCarthy emphasized that optimizing user conversion will be an ongoing and long-term process. As a testimony to Peloton's resilience, the company remains committed to finding effective strategies to enhance user engagement and drive membership growth.
Looking ahead, Peloton expects revenue between $715 million and $750 million for the December quarter. However, the projected figures also entail a loss of $70 million to $90 million in adjusted Ebitda. The FactSet consensus had predicted higher revenue at $767 million, accompanied by an adjusted Ebitda loss of $49 million.
Despite the challenges encountered, Peloton remains determined to address the issue and pursue sustainable growth in the coming quarters.
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