Peloton ends streak of revenue declines, sending its stock soaring on earnings

By Emily Bary

The connected-fitness company also beat bottom-line expectations for the latest quarter

Peloton Interactive Inc. eked out quarterly revenue growth for the first time in 21/2 years, and the connected-fitness company's stock was surging in Thursday action.

The company posted fiscal fourth-quarter revenue of $644 million, up 0.2% from a year before and ahead of the $628 million FactSet consensus view. Peloton (PTON) said this was its first quarter of revenue growth since the second quarter of fiscal 2022.

But Peloton sees the potential for quarterly revenue to fall again in the current quarter, as the company's outlook calls for $560 million to $580 million in revenue. That would compare with $596 million in revenue for the year-earlier period. Analysts were modeling $598 million.

Peloton is modeling a decline as well in its new full-year view, which is for $2.4 billion to $2.5 billion in revenue, below the $2.7 billion seen in fiscal 2024.

The company said it's making strides on profit metrics, with $70 million in adjusted earnings before interest, taxes, depreciation and amortization, compared with a $35 million loss on the metric a year prior. Analysts were looking for $53 million in adjusted Ebitda.

Peloton posted a net loss of $30.5 million, or 8 cents a share, compared with a loss of $241.8 million, or 68 cents a share, in the year-earlier period. Analysts were modeling a 17-cent per-share loss.

Shares of Peloton were up 28.3% in midday activity Thursday and tracking toward their largest single-day percentage gain on record.

See also: Zoom sees more sales from some of its biggest customers, and stock rises

"Our improvement in profitability reflects our continued focus on aligning our costs with the size of our business," the company said in a shareholder letter.

The company booked $26 million in free cash flow, whereas it posted negative free cash flow of $74 million a year before. "With our expectation of sustainable positive free cash flow, we are exploring how to best deploy excess cash on our balance sheet as part of an overall capital allocation strategy," the company said in the shareholder letter.

Peloton called out momentum in its Bike+ rental business and noted that the secondary market has driven "a steady stream of paid connected fitness subscriber additions." The company continues to prioritize growing its Tread business and building the member base for that connected treadmill offering.

The search for Peloton's next chief executive remains ongoing.

-Emily Bary

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08-22-24 1216ET

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