In Dusseldorf, Germany, the exterior of a Peloton store was photographed on February 5, 2022. The fitness company reported its fourth fiscal quarter results on Wednesday, revealing a wider loss than expected and a decrease in new subscribers. This was attributed to the recall of the Bike seat post and seasonality. As a result, Peloton’s shares dropped approximately 22%.
Although Peloton did not meet analysts’ earnings estimates, it did exceed sales expectations. Here’s a breakdown of how the company performed in its fourth fiscal quarter compared to Wall Street’s predictions:
– Loss per share: 68 cents (compared to an expected 38 cents)
– Revenue: $642.1 million (compared to an expected $639.9 million)
During the three-month period ending on June 30, Peloton reported a net loss of $241.8 million, or 68 cents per share. This is a significant improvement compared to the loss of $1.26 billion, or $3.72 per share, during the same period the previous year. Sales decreased to $642.1 million, down from $678.7 million in the previous year.
The fiscal fourth quarter is typically slow for Peloton and other fitness retailers, coinciding with the summer months when consumers tend to decrease their workout activities due to travel and other summer plans. CEO Barry McCarthy had already warned that this quarter would be challenging in terms of growth. For the first time, Peloton projected a decline in subscribers.
At the end of the quarter, Peloton had 3.08 million subscribers, a 4% increase compared to the previous year. However, there was a decrease of 29,000 subscribers compared to the previous quarter. Peloton attributes this decline to a seasonal slowdown in hardware sales and higher-than-expected churn.
The recall of the Bike seat post also had a significant impact on subscriber numbers. Peloton estimates that 15,000 to 20,000 people paused their monthly subscriptions while waiting for their seat post to be replaced. The recall affected over 2 million Bikes sold since January 2018 and cost Peloton $40 million in the quarter. The company has received 750,000 requests for replacement seat posts and expects to fulfill the remaining requests by the end of September.
Despite the disappointing performance, Peloton remains optimistic about its future. The company’s CEO, Barry McCarthy, acknowledged the disconnect between the stock price and the company’s efforts to drive growth. Peloton has been implementing new strategies to attract customers, such as offering a rental program and certified refurbished options for those who can’t afford the expensive connected fitness products. The company has also rebranded itself as a fitness company for all, emphasizing its fitness app’s importance alongside its equipment.
Peloton’s app has seen significant growth since the relaunch, with over 900,000 downloads, two-thirds of which were from non-members. The company is also seeing positive shifts in perception among different demographics, including Gen Z, men, and Black and Hispanic consumers. Peloton is focusing on expanding its business-to-business strategy and has recently partnered with companies like Volvo and Dropbox to offer access to its app and products as employee benefits. The company has also launched a discounted offering for college students.
Overall, Peloton is determined to bounce back from its recent setbacks and continue its growth trajectory. The company is confident that its new strategies and initiatives will drive future success.
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