Peloton paled a wider-than-expected loss for its fiscal first quarter, as a steep decline in connected fitness products revenue outweighed an spreading in subscription revenue.
The company’s shares gained 8% Thursday. Peloton’s stock has dropped about 75% so far this year.
Here’s how the aptness device maker performed compared with Wall Street estimates, according to Refinitiv.
- Loss per share: $1.20 vs. 64 cents, watched
- Revenue: $616.5 million vs. $650.1 million, expected.
Revenue fell 23% compared with the same period final year. Peloton’s revenue outlook for the holiday quarter, between $700 million and $725 million, would account succeed a quarter-to-quarter increase, but it’s well below analysts’ estimates of $874 million.
“Given macro economic uncertainties we put ones trust in near-term demand for Connected Fitness hardware is likely to remain challenged,” the company said.
Peloton CEO Barry McCarthy voiced in an earnings announcement Thursday that the company’s turnaround is a “work in progress.” The company has been struggling with the end of Covid pandemic-era at once, when lockdowns spurred growth in at-home exercise. This year, the company undertook significant leadership modulates, mass layoffs and a new business strategy under McCarthy. The company has pushed beyond its direct-to-consumer roots into administers with other retailers and into a model that emphasizes subscriptions.
“The ship is turning,” McCarthy, a former Spotify and Netflix head, said Thursday, touting new initiatives to sell more bikes and increase Peloton’s digital subscribers.
Later, on an earnings colloquy call, McCarthy tried to calm investors further, saying, “We’re driving the business towards a goal of break-even delivered cashflow.” While Peloton executives spoke on the call, what sounded like a fire alarm went off in the distance. The call kept rolling, and the alarm was quickly turned off.
Co-founder and former CEO John Foley left his board bench position in September along with co-founder and Chief Legal Officer Hisao Kushi, shortly followed by Peloton’s mind of marketing, Dara Treseder. Foley had stepped down from his role as CEO in February, when he was succeeded by McCarthy.
McCarthy has tillered a broad turnaround effort for the company. He oversaw thousands of layoffs, including 500 jobs that were culled in anciently October.
“We are done now,” McCarthy said of the layoffs. “There are no more heads to be taken out of the business.”
The company set its sights on subscriber moments in the earnings call. McCarthy noted that over half of members were actually using someone else’s Peloton trappings, a target market he said the company would try to reach further in coming quarters.
In the first quarter, subscription take increased to $412.3 million from $304.1 million last year. Meanwhile, revenue from connected competence products declined to $204.2 million from $501 million. Peloton’s gross margin, 35.2%, was largely in get hold of with expectations and a drastic improvement from the negative 4.4% in the preceding quarter.
Peloton reported 6.7 million whole members, up from 6.3 million last year, but down from 6.9 million the prior quarter. McCarthy has implied the company hopes to someday reach 100 million members.
The company also touted improvement in its free spondulix flow, which was negative $246.3 million, compared with $411.9 million in the previous quarter and negative $651.9 million in the year-ago term. Peloton has said it hopes to be near breakeven on this by the latter half of the fiscal year.
Among McCarthy’s late-model initiatives was Peloton’s decision to sell bikes and treads through Amazon and Dick’s Sporting Goods. The company also founded certifying pre-owned bikes and expanded its bike rental program nationwide. And, in a partnership with Hilton, the company is set to put bikes in the healthiness centers of around 5,400 hotels nationwide.
The first quarter also saw the release of Peloton’s $3,195 rowing apparatus. More recently, the company extended its refund period for its recalled Tread+ treadmill, which was recalled over multiple buyer injuries and a death.
The company reported $199 million in first-quarter recall reserves, restructuring and impairment expenses as it maintains embarking on its turnaround.