Peloton continues in free fall and closes the third quarter 24% below

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Peloton reports a further decline in equipment sales, only partially offset by a slight increase in its subscription program.

(10-5-2022). Peloton is still subscribed to the red numbers. The decline in demand has led it to close a negative third quarter, with losses of 757.1 million dollars.

Platoon does not lift its head. The connected fitness company continues to chain negative balances that have led it to close the third quarter of its fiscal year with losses of 757.1 million euros, which represents a loss of 24% compared to the same period of the previous year.

In total, adding the first three quarters of its exercise, the losses already reach 1,570 million dollars, for a company that is not quite finding its place in the new pandemic scenario.

Revenues have fallen 23.6% to 964.3 million dollars, as reported by the company, which aspired to place sales at 972.9 million dollars.

By segments, the connected equipment, which includes the Precor division, registered this third quarter a revenue of 594.4 million dollars, 42% less than in the analogous third quarter.

According to the company, these setbacks are due to a reduction in demand in this exit phase of the pandemic. Only partially offset by sales of the Tread range.

However, the results of the quarter have also been affected by the returns of Tread+ treadmills, following the safety problem reported by several consumers, which have turned out to be higher than what the company had forecast, for a value of 18 million euros. euros, from last May to March this 2022.

Improve subscription data

In contrast to the decrease in income from the equipment area, the behavior of subscription income stands out, which has grown by 55% to 369.9 million dollars, representing 38.4% of the company’s total income compared to to 19.0% in the quarter of the previous year.

Gross profit in the third quarter was $184.2 million, and 19.1% percent of revenue, representing a 59% year-over-year decline. Compared to the prior year period, Peloton argues for these results by the August 2021 Peloton bike price reduction, the impact of accessory inventory write-down, higher logistics expenses per delivery, higher port and warehousing costs , and fees associated with the voluntary withdrawal of the Tread+.

Gross subscription revenue was $252.1 million in the third quarter, representing 63% year-over-year growth. The gross underwriting margin was 68.1%, compared to 64.6% in the same period of the previous year, driven by the continued leverage of fixed costs.

Total operating expense was $920 million, growing 101%, representing 95.4% of total revenue versus 36.3% in the prior year period. Third quarter operating expenses included $158.5 million in restructuring charges, $181.9 million in goodwill impairment, $32.5 million in impairment charges and losses on disposals. Excluding these non-recurring items, operating expenses grew 19% to $547.2 million, representing 56.7% of revenue.

Adjusted Ebitda for the quarter was $194 million, compared to $63.2 million in the same period a year ago. The main drivers of the year-over-year decline were lower revenues and gross margins from the equipment area, as well as higher operating expenses.

Outlook for the fourth quarter of fiscal year 2022

For the fourth quarter, Peloton expects sales to be in the range of $675 million to $700 million, down from $937 million in the fourth quarter a year ago.

The company expects “weaker” demand than forecast last February. In addition, it is difficult to reach 2.98 million subscribers by the end of the fiscal year, due to the increase in subscription prices scheduled for June 1.


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