Peloton sees revenue fall but beat estimates for holiday quarter

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Peloton Interactive Inc. came up shy Thursday with its revenue forecast for the current quarter, but the maker of connected fitness equipment beat the consensus view in the holiday period.

Shares of Peloton
were moving about 3% higher in premarket action initially following the latest report.

The company notched a fiscal second-quarter net loss of $194.9 million, or 54 cents a share, whereas it posted a loss of $335.4 million, or 98 cents a share, in the year-prior period. Analysts were modeling a 54-cent per-share loss.

Peloton also reported a loss of $82 million on the basis of adjusted earnings before interest, taxes, depreciation and amortization, while it had recorded a $122 million loss on the metric a year earlier. The FactSet consensus was for a $78 million adjusted Ebitda loss.

Revenue fell to $744 million from $793 million but beat the FactSet consensus, which was for $733 million.

The company ended the quarter with 3.004 million paid connected fitness subscribers, compared with 2.964 million in the September quarter and 2.979 million in the prior year’s December quarter. Analysts were modeling 2.989 million.

In a shareholder letter, Chief Executive Barry McCarthy noted that the holiday quarter is Peloton’s “most important quarter of the year from a sales standpoint,” and several recent initiatives paid off in the period.

For example, Peloton “saw exceptionally strong sales growth” from third-party retailers including Dick’s Sporting Goods Inc.
and Inc.
And Peloton’s rental program for its Bike product “is attracting a more diverse, more female, and younger customer than it was six months ago.”

Other initiatives didn’t pan out so well, including a co-branded bike with the University of Michigan.

“Notwithstanding the football team’s success winning the national championship, we sold substantially fewer bikes to alumni and boosters than we expected,” McCarthy wrote. “What seemed like a good idea didn’t deliver,” so Peloton will end the initiative.

For the March quarter, Peloton anticipates $700 million to $725 million in revenue, below the FactSet consensus view, which was for $749 million. The company also expects a $20 million to $30 million loss based on adjusted Ebitda, while analysts had been projecting a $2 million loss.

For the full fiscal year, Peloton expects $2.675 billion to $2.750 billion in revenue along with a $25 million to $75 million adjusted Ebitda loss. The FactSet consensus called for $2.739 billion in revenue and a $40 million adjusted Ebitda loss.

“Our guidance for the remainder of FY24 represents our current best thinking about the future performance for the business, but I’ll be disappointed if we can’t figure out how to improve our performance during the quarter, like we did in Q2,” McCarthy said.

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