August 30, 2022 - Markets

Peloton Reports Big Losses, Retools Strategy

It’s riding six consecutive quarterly losses.
Peloton

Peloton reported Q4’22 earnings on August 25. The connected fitness company is attempting to right the ship after posting a quarterly loss of over $1.2B.

By the numbers:

  • Net loss of $1.24B, widening from a loss of $313.2M a year earlier.
  • Revenue was $678.7M, a 28% decrease and $40M under analysts’ expectations.
  • Connected fitness gross margins were -98.1% vs. +11.7% in the prior year period.
  • Churn rose to 1.41% from 0.73%, shedding 143K members in the last three months.

Between the lines: This makes six consecutive quarterly losses. And the company is still sitting on $1.1B in excess inventory.

But, in a shareholder letter, CEO Barry McCarthy stressed that turnarounds take time.

All signs point to the new direction as making its premium connected products more affordable while digging out of expensive supply chain issues.

What to watch for: Peloton is cutting 3K+ jobs, closing showrooms, outsourcing manufacturing, eliminating white glove delivery, retooling its equipment for self-assembly, and just inked a distribution partnership with Amazon.

Meanwhile, early reports from its bike rental program suggest it’s popular with younger, more value-conscious customers. 20% of all first-gen Bikes have been rented under this program, equating to 5K members who pay $89/month.

Takeaway: The path ahead won’t be easy. Putting content and community ahead of premium hardware, Peloton is likely to move further away from expensive equipment.

Ryan Deer
Ryan Deer

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