PTON continues to struggle as revenues slip 16% YoY

Peloton, the leading connected fitness company, released its earnings report for the fourth quarter of fiscal year 2023. While the company's revenue and subscriber growth showed some signs of improvement, certain challenges persist.

In terms of revenue, Peloton reported total revenue of $743.6 million for the quarter, representing a 6.2% year-over-year decrease. This figure fell slightly short of the estimated $733.7 million. The decline in revenue was primarily driven by a 16% year-over-year decrease in connected fitness revenue, which amounted to $319.1 million. However, subscription revenue grew by 3.2% year-over-year to reach $424.5 million. 

Despite the decline in revenue, Peloton's gross profit demonstrated significant growth. The company's total gross profit for the quarter was $299.4 million, resulting in a gross margin of 40.3%. This exceeded the company's guidance of 40%. Notably, the gross profit growth of 27% year-over-year outpaced the 6% decline in revenue, highlighting the company's improving profitability. 

Peloton reported a quarterly adjusted EBITDA loss of $81.7 million, a 33% decrease compared to the same period last year. While the loss met expectations, it signifies an ongoing challenge for the company. Peloton's management stated that they expect an adjusted EBITDA loss of $25 million to $75 million for the fiscal year 2024, in line with the estimated loss of $44.6 million. 

The number of connected fitness subscribers stood at 3 million, roughly in line with the estimated 3.01 million. Peloton expects the number of connected fitness subscribers to grow to a range of 2.99 million to 3.01 million in fiscal year 2024. The company also ended the quarter with 718,000 paid digital subscribers, which marks a 16% year-over-year decrease. 

Looking ahead to the third quarter forecast, Peloton expects revenue in the range of $700 million to $725 million. Although this estimate is lower than the expected $755.6 million, the company has highlighted the stronger-than-expected demand backlog for its Tread+ product, which could potentially drive revenue growth in the future. 

Peloton's performance in the fourth quarter demonstrates its continued leadership in the connected fitness category and the resilience of its subscription business. The company remains confident in its key growth initiatives but acknowledges uncertainty regarding the timing of growth acceleration and the performance of new initiatives. Despite ongoing challenges, Peloton is committed to improving its internal capabilities and delivering innovative solutions to its loyal member base.

In conclusion, while Peloton's revenue and subscriber growth faced some hurdles in the fourth quarter of fiscal year 2023, the company's strong gross profit growth and strategic outlook indicate potential for future success. With a focus on innovation and transformative initiatives, Peloton aims to navigate through the competitive fitness industry and drive long-term growth.

$PTON(PTON)