Peloton
Peloton reported Q4’23 earnings on August 23, showing a mixed quarter marked by unforeseen difficulties and emerging priorities to stabilize the business.
By the numbers:
- Revenue was $642.1M vs. $639.9M expected.
- Net loss was $242M, compared to a loss of $1.26B in Q4’22.
- Subscriber count ended at 3.08M, a 4% YoY increase but a 29K dip from Q3.
- Churn rose to 1.4% from 1.1% last quarter, impacted by a costly hardware recall.
Of note, app subscribers exceeded internal expectations at 828K, with the majority of downloads from non-Peloton users — but, coinciding with its newly launched app tiers, 256K are on the free plan.
Surprised by the level of overall churn, it expects cash flow and subscriber losses to continue into the first two quarters of the new year.
Between the lines: The brand is struggling as it attempts a massive shift away from pricey DTC hardware toward content and B2B offerings.
In a shareholder letter, CEO Barry McCarthy reminded investors that the strategy is still playing out, emphasizing “meaningful positive shifts in perception” and increased app adoption among nontraditional Peloton users—like men, Gen Z, and Black and Hispanic populations—as a promising signal.
Peloton U. Looking forward, the company sees co-branding content, NCAA partnerships, and enterprise opportunities like hospitality and corporate wellness as prime avenues for growth.
It just announced a partnership with University of Michigan Athletics, the first of a new college initiative. The deal will put co-branded Peloton bikes on Michigan Football sidelines, in training facilities and student rec buildings, and be accompanied by bespoke content, including NIL (name, image, and likeness) branding with student-athletes.
Going pro. Peloton also announced a multi-year partnership with Liverpool FC in July.
Meanwhile, it’s pushing rental programs and refurbished options to attract customers at lower price points and leaning into its app to capture omnichannel audiences.
And reaching more users on the go, Peloton added to its international 5.8K-bike Hilton hospitality deal by entering 50+ Australian Accor properties this August.
Punchline: Despite its new horizons, it’s going to get worse before it gets better. Peloton’s strategic play to diversify its customer base (and lock in young, lifetime members) is in the works, but the evolution from a stationary bike company to a fitness brand for anyone, anytime, anywhere will take time — and success isn’t certain.
