Peloton (PTON) reports fourth quarter 2021 loss

Peloton said Thursday its fourth-quarter tax loss widened as the pace of revenue growth slowed significantly and costs associated with a treadmill recall increased.

Peloton warned that his income would be affected in the short term as he reduced the price of his original bike by about 20%. It is also beginning to reorient its mix of activities towards sales of treadmills, which are less profitable than those of its cycles.

The company faces rising commodity costs and freight prices, as it plans to increase marketing spending in the coming months.

Peloton offered a disappointing first quarter earnings outlook.

Here’s how Peloton fared for the quarter ended June 30 compared to what Wall Street expected, using a survey of analysts from Refinitiv:

• Loss per share: $ 1.05 vs. 45 cents expected
• Revenue: $ 936.9 million vs. $ 927.2 million expected

Peloton posted a net loss of $ 313.2 million, or $ 1.05 per share, compared with net income of $ 89.1 million, or 27 cents per share, a year earlier. That topped the loss forecast of 45 cents by analysts polled by Refinitiv.

Total revenue rose 54% to $ 936.9 million from $ 607.1 million a year earlier, beating estimates of $ 927.2 million. But the pace of growth slowed from the third quarter, when sales more than doubled from last year’s levels and topped $ 1 billion.

Growth slowed, in part due to Peloton’s recall of its Tread and Tread + treadmill products in May and the temporary halt in sales of the machines. Its cheaper tread should go on sale next week. The company has yet to announce when it will resume sales of the Tread +.

But the cycle maker is also facing stiffer competition from other home fitness companies, such as Lululemon-owned Hydrow, Tonal and Mirror. And as pandemic restrictions are lifted, more consumers are choosing to return to the gym or take group classes in person.

“The past year has been an inflection point for the connected fitness industry, with a significant increase in awareness and demand following the onset of the Covid-19 pandemic,” wrote CEO John Foley in a letter to shareholders.

Peloton’s connected fitness segment revenue, which includes contributions from the company’s acquisition of Precor, increased 35% year-on-year to $ 655.3 million, or 70% of total revenue. Subscription revenue increased 132% to $ 281.6 million.

Peloton ended the quarter with 2.33 million connected fitness subscribers, an increase of 114% from the previous year. Connected Fitness subscribers are people who own a Peloton product and also pay a monthly fee to access the company’s digital workout content.

Digital subscriptions – which do not require equipment – rose 176% to more than 874,000, boosted by free trials, the company said.

The average monthly net churn of connected fitness, which Peloton uses to measure the retention of connected fitness subscribers, climbed to 0.73% from 0.52% a year earlier. Peloton’s churn rate hit a six-year low of 0.31% in the previous quarter. The lower the churn rate, the less revenue Peloton sees with its user base.

Meanwhile, the average number of monthly workouts per connected fitness subscriber fell to 19.9 from 24.7 a year earlier. The company said the decline was expected due to seasonal trends – fewer people sweating indoors during the summer months – and more people leaving their homes amid the health crisis.

In its first fiscal quarter, Peloton expects sales to reach $ 800 million, well below the $ 1.01 billion sought by analysts.

The outlook takes into account the reduction in the price of the bike and a “modest” contribution to tread revenue, Peloton said.

It plans to have 2.47 million connected fitness subscriptions by the end of the quarter, with an average monthly churn rate of around 0.85%.

For the year, Peloton saw its sales reach 5.4 billion dollars and the number of connected fitness subscribers reached 3.63 million. That’s ahead of consensus estimates of $ 5.27 billion.

Find the full press release on Peloton’s results here.

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