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Peloton (PTON) Second Quarter 2023 Earnings

Brody Longo works out on the Peloton exercise bike on April 16, 2021 in Brick, NJ.

Michael Roxano | Getty Images

Peloton said on wednesday Narrow net loss Year-over-year growth, subscription revenue surpassed sales of the company’s connected fitness products for the third consecutive quarter.

CEO Barry McCarthy said the results could mark a “tipping point” for a business that has spent much of the past year implementing an aggressive turnaround strategy. .

The fitness-equipment company’s second-quarter earnings beat Wall Street expectations, but its losses per share were higher than expected. Peloton’s shares closed Wednesday about 26% higher.

Based on analyst research by Refinitiv, here’s how Peloton fared in the three months ending Dec. 31 compared to what Wall Street expected.

  • Loss per share: 98 cents versus expected 64 cents
  • Earnings: $792.7 million vs. $710 million forecast

The company’s reported net loss for the period was $335.4 million, or 98 cents per share, compared with a loss of $439.4 million, or $1.39 per share, in the same period last year.that is 8 consecutive quarters The exercise company reports a loss, the smallest loss Peloton has marked since the fourth quarter of 2021.

30% lower revenue compared to one year ago period However, it exceeded the company’s expected range of $700 million to $725 million. Sales of connected fitness products typically do well during Peloton’s holiday season, but subscription revenues were up 22% for him, but down 52% year-over-year.

“This is a time when you expect to have a lot of hardware if you sell a lot of hardware. Hardware related revenueyou would probably expect that revenue to exceed subscriptions,” McCarthy told CNBC. “It didn’t. [to investors]I call it because it could be a turning point.

In a letter to investors, McCarthy said he expects the trend to continue.

The company ended the quarter with 6.7 million total members and 3.03 million connected fitness subscriptions. This is a 10% increase compared to the same period last year. The company’s app had 852,000 subscribers, down 1% year-on-year. He has a goal of 1 million people signing up for a trial of the app within the next year.

Peloton is losing money on its bikes, treads and other machines, but its subscription business is once again maintaining overall margins. Gross margins for connected fitness products were negative 11.2%, while subscription sales gross margins were 67.6%. Gross margin was 29.7%, up from 24.8% a year ago. However, it was down from the previous quarter due in part to increased promotions during the holiday season.

Peloton expects lower earnings in the next quarter but higher margins. The company expects revenue to rise from $690 million to $715 million, with total gross margins of around 39%. A Wall Street analyst puts his earnings forecast for the quarter at $692.1 million.

The company also expects 3.08 to 3.09 million connected fitness subscribers.

The next stage of turnaround

Peloton, the early boom covid pandemicwas in the midst of an extensive reconstruction strategy under McCarthy. took the helm of business a year ago.

The company’s stock has more than doubled this year, closing at $16.36 on Wednesday. But the stock is still a long way from McCarthy’s $40.35 high, which was his 52-week high when he took over as CEO.

“The viability of the business was very questionable when I came in,” McCarthy once said Spotify When netflix Executive. “I think it’s fair to say that some people didn’t expect us to survive this long.”

Since he took over, McCarthy has Peloton layoffs We expanded our bike rental program nationwide and started selling certified pre-owned bikes. Rowing machine first appearanceWhen Partner with Amazon When dicks sporting goods We sell bikes and treads.

McCarthy’s top priority was to manage cash flow and get the company out of the red. He said the company has nearly achieved this goal. Free cash flow was negative $94.4 million, compared with negative $246.3 million in the prior quarter and negative free cash flow of $546.7 million in the prior year quarter.

McCarthy told CNBC that he is ready to pivot from trying to keep the company alive to growing it.

“Now that we’ve addressed the viability issue, let’s get back to thinking about business growth and the future,” McCarthy said.

“So there are a number of initiatives we have announced to enable us to pursue growth,” he added. “And now that we’re not talking about viability, the question that needs to be answered for investors is, how fast, how much profit, where will it come from, and over time, how many of these questions will we be able to answer? I will start dealing with it.”

https://www.cnbc.com/2023/02/01/peloton-pton-q2-earnings-2023.html Peloton (PTON) Second Quarter 2023 Earnings

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