Peloton (PTON) Q1 2025 Results

Peloton is generating free cash flow again and moving closer to profitability as the connected fitness company reins in costs and seeks to improve the unit economics behind its hardware, it said Thursday.

Despite the progress, Peloton expects to lose more members and sell fewer bikes and treadmills than Wall Street analysts expected in its key holiday quarter.

Still, the stock rose more than 25% in early trading Thursday following its quarterly update and the announcement of a new CEO. Shares closed about 28% higher.

Here's how Peloton performed in the fiscal first quarter compared to Wall Street expectations, based on an analyst survey from LSEG:

• Loss per share: Zero cents versus 16 cents expected
• Revenue: $586 million versus expected $574.8 million

The company's reported net loss for the three-month period ended Sept. 30 was $900,000, effectively breaking even per share, compared with a net loss of $159.3 million, or 44 cents per share, in the same period of the year earlier.

Revenue fell to $586 million, down about 1.6% from $596 million a year ago.

As Peloton prepares for the holiday quarter, typically the strongest quarter for hardware sales, the company expects revenue between $640 million and $660 million, below Wall Street expectations of $671.4 million, according to StreetAccount. Dollar.

The company also expects to have fewer paying app subscribers than analysts forecast, reflecting a decision to shift marketing dollars into product development and away from the low-cost app – a key focus of former CEO Barry McCarthy.

Peloton announced in May that McCarthy would step down after about two years at the helm. On Thursday, the company announced that Ford CEO Peter Stern would take over.

“He is the man who will set the strategy that will get us back on a growth path,” interim co-CEO Karen Boone said during Peloton’s earnings call Thursday. “Under his leadership, our brand is well positioned to be a long-term player and the absolute leader in this category.”

According to StreetAccount, the company expects between 560,000 and 580,000 paid app subscribers by the end of the current quarter, compared to expectations of 608,200.

In the fiscal first quarter, Peloton reduced operating costs by 30% year-over-year and reported adjusted EBITDA of nearly $116 million and free cash flow of nearly $11 million.

For the current quarter, adjusted EBITDA is expected to be between $20 million and $30 million, compared to StreetAccount's EBITDA estimates of $13.9 million.

For fiscal 2025, Peloton raised its full-year EBITDA guidance – a key metric that investors keep an eye on to gauge the company's future value. The company now expects adjusted EBITDA to be between $240 million and $290 million, compared to a previous range of $200 million to $250 million. According to LSEG, revenue is forecast to be between $2.4 billion and $2.5 billion, in line with analyst expectations of $2.46 billion.

The gains are the result of a previously announced cost-cutting plan and the company's efforts to improve the unit economics of its hardware, which has long been a losing proposition for the company.

As part of the plan, Peloton reduced salary and staff compensation, which Chief Financial Officer Liz Coddington said the company estimates will result in annual savings of about $100 million. Additionally, the company reduced its total sales and marketing spend by $64 million, or 44%, year-over-year, reflecting the lowest media spend since fiscal 2020.

“As we look ahead to the holiday season, we are already increasing media spending to support demand generation ahead of this important time for hardware sales and subscriber growth,” interim co-CEO Chris Bruzzo said during Peloton's earnings call Thursday.

Overall, Coddington said the company is on track to save around $200 million by the end of fiscal year 2025.

During the fiscal first quarter, Peloton increased the suggested retail price for its Bike and Bike+ in its international markets and increased the price of its Row in North America, while reducing discounts across its hardware portfolio.

These efforts, along with a better mix of revenue streams, resulted in Connected Fitness margin increasing to 9.2% in the most recent quarter, an increase of 6 percentage points compared to the same period last year.