Peloton (PTON) reviews earnings and gross sales within the second quarter of 2021

Peloton Interactive Inc. stationary bikes will be on display in the company’s showroom on Madison Avenue in New York, USA on Wednesday, December 18, 2019.

Jeenah Moon | Bloomberg | Getty Images

Peloton posted quarterly revenue growth of 128% on Thursday, marking its first billion dollar quarter as momentum continues to build for the home fitness equipment maker.

The company also increased its sales outlook for the full year. But it cautioned that in the near future it still faces hurdles when it comes to getting items to its customers quickly, amid rising demand.

Peloton stock fell more than 6% in expanded trading on Thursday. The stock closed 7% at $ 157.53.

According to a survey by Refinitiv, Peloton performed as follows in the second quarter of the fiscal year compared to analyst expectations:

  • Earnings per share: 18 cents compared to 9 cents, expected
  • Revenue: $ 1.06 billion versus $ 1.03 billion expected

For the three-month period ended December 31, Peloton’s earnings rose from a loss of $ 55.4 million, or 20 cents per share, a year ago to $ 63.6 million, or 18 cents per share. According to Refinitiv, analysts had asked Peloton to earn 9 cents per share.

Revenue increased 128% from $ 466.3 million a year ago to $ 1.06 billion, beating expectations for $ 1.03 billion.

For the current third fiscal quarter, Peloton forecasts sales of 1.10 billion US dollars. Analysts had asked for $ 1.09 billion.

Invest in the supply chain

As a result of the higher sales, Peloton now expects full year sales of over $ 4 billion, compared to an earlier forecast of more than $ 3.9 billion. Analysts had asked for $ 3.95 billion.

The company has kept its earnings outlook for fiscal 2021 unchanged.

Peloton said it continues to see robust demand for its products and will make additional investments in its supply chain to remove bottlenecks that could weigh on profits.

In a letter to shareholders, the company said it will invest more than $ 100 million in air and expedited ocean freight over the next six months to help expedite shipments.

“While this investment will dampen our short-term profitability, improving our member experience is our number one priority,” said the company.

Peloton continues to expect inventory to improve and delivery times to decrease, in part due to the upcoming acquisition of exercise equipment maker Precor, valued at $ 420 million. However, progress is expected to be “slow but steady” for the remainder of the year.

Chief Executive Officer John Foley said Peloton remains “hopeful” that “accelerating vaccine distribution and opening up our economy more broadly” will benefit business in the months ahead.

The retention rates remain high

Peloton ended its final quarter with 1.67 million connected fitness subscribers, up 134% year over year. Affiliate Fitness Subscribers are people who pay a monthly fee to sync the company’s exercise classes with their Peloton devices, rather than accessing the programs separately on a phone or tablet and paying a lower price.

The company expects 2.28 million or more connected fitness subscriptions by fiscal year-end, compared to an earlier outlook of 2.17 million users.

Peloton’s retention rates also remain high, a good indicator of future success.

Average monthly net fitness churn was 0.76% in the most recent quarter, up from a slight 0.65% in the prior period. However, the company expects its current quarter churn rate to be below 0.75% and fiscal year 2021 churn rate to be below 0.80%, which is better than a previous outlook of below 0.90%. The lower the churn rate, the less revenue Peloton has from its user base.

And the bicycle manufacturer is still looking for ways to get its customers to exercise. The total number of training sessions in the last period rose from 26 million a year ago to over 113 million. A feature was recently launched that allows users to “stack” classes one after the other and have them play automatically one after the other. Pilates classes have recently been added to the catalog.

Peloton made these investments as competition in the home fitness space continues to increase during the Covid pandemic. Companies like Mirror, which is part of Lululemon, Hydrow, and Tonal, make high-end products that offer arm and leg workouts and cardio classes from the comfort of a basement or bedroom.

Peloton stocks are up more than 365% year over year. The company has a market capitalization of $ 46 billion.

You can find the full results release from Peloton here.

Comments are closed.