September 27, 2023

Brighton Journal

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Peloton (PTON) Earnings for the Fourth Quarter of 2023

Peloton (PTON) Earnings for the Fourth Quarter of 2023

The exterior of the Peloton store is seen on February 05, 2022 in Dusseldorf, Germany.

Jeremy Mueller | Getty Images

Peloton on Wednesday reported a bigger-than-expected loss and a quarterly decline in new subscribers, which it blamed on its bike seat recall and seasonality, which sent shares down about 25% in pre-market trading.

The company didn’t hit analyst earnings estimates but beat sales expectations.

Here’s how the fitness company fared in the fiscal fourth quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by Refinitiv:

  • Loss per share: 68 cents vs. 38 cents expected
  • Revenue: $642.1 million vs. $639.9 million expected

The company reported a net loss of $241.8 million, or 68 cents per share, for the three-month period ended June 30, compared to a loss of $1.26 billion, or $3.72 per share, in the previous year.

Sales fell to $642.1 million, down from $678.7 million in the previous year.

The company’s fiscal fourth quarter, which falls during the summer months, is typically slow not only for Peloton but also for other fitness retailers. Consumers tend to fall back on in-season workouts as they travel and engage in other summer plans.

In May, CEO Barry McCarthy warned that the fourth quarter would be among the most challenging from a growth perspective. For the first time, Peloton predicted a drop in subscribers.

It ended the quarter with 3.08 million subscribers, up 4% year-on-year and in line with the company’s expectations. But compared to the last quarter, the number of subscribers decreased by 29,000. The company attributed this decline to a “seasonal” slowdown in device sales and higher-than-expected volatility.

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“Peloton’s fiscal fourth-quarter performance is a reminder that we are running a seasonal business,” McCarthy wrote in a letter to shareholders.

“The slowdown exceeded our expectations during May and through the first three weeks of June as consumer spending shifted towards travel and experiences,” he wrote. “Then eight weeks ago, the trend reversed, and we started seeing hardware sales accelerate.”

The former Netflix and Spotify CEO has spent the past three months focusing on new strategies aimed at getting the fitness company back on a path to growth.

In May, it announced a major rebranding under the direction of its new chief marketing officer Leslie Berland, making Peloton a fitness company for just as much of what’s invested in its app as it is in its expensive connected fitness products, like its bike, treadmill and row.

It has revealed a series of new pricing tiers for its fitness app that includes an unlimited free membership option (no credit card required) and tiers that cost $12.99 and $24 per month. The app allows consumers to view Peloton’s fitness classes and build their own workouts wherever they are, including in their own home gym.

Peloton is also leaning towards its business strategy to increase revenue and attract new customers. And earlier this month, it announced the launch of Peloton for Business, which allows companies to provide access to the app and related fitness products through its benefits offering.

Customers include Volvo, which has Peloton bikes in its corporate fitness center and offers employees access to the Peloton app, full access memberships and discounts on devices including Bike, Bike+, Tread and Guide. Dropbox offers a similar package for its employees.

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Peloton has also launched a new program aimed at partnering with colleges and universities. The new strategy kicked off Tuesday with its announcement that it will partner with the University of Michigan to create co-branded Peloton bikes that will be used in the school’s various fitness facilities — and along the sidelines on the school’s football field, better known as the Big House.

It also launched a new discounted offer for college students from the “One” level, which normally costs $12.99 per month but will be reduced to $6.99 per month.

Read the full earnings release here.