Peloton (PTON) reports first quarter earnings for fiscal 2022; stocks are falling
Jen Van Santward rides a Peloton stationary bike at her home on April 7, 2020 in San Anselmo, California.
Ezra Shaw | Getty Images
Peloton shares fell more than 20% on Thursday after the company reported weaker sales growth and higher-than-expected losses in the first quarter of the fiscal year.
The company sharply lowered its full-year outlook due to declining demand for exercise equipment and ongoing supply chain problems.
“We expected fiscal 2022 to be very challenging to predict, given the unusual year-on-year comparisons, demand uncertainty amid a rebounding economy, and highly publicized supply chain constraints and pressure on commodity prices,” said CEO John Foley. letter to shareholders.
A slower-than-expected start to the second quarter and “obstruction of visibility” in the near term led the company to lower its expectations, Foley said.
Here are Peloton’s fiscal first quarter results, compared to analysts’ expectations surveyed by Refinitiv:
- Loss per share: $ 1.25 vs. expected $ 1.07
- Income: $ 805.2 million vs. expected $ 810.7 million
For the three-month period ending September 30, Peloton reported a net loss of $ 376 million, or $ 1.25 per share, compared with net income of $ 69.3 million or earnings of 20 cents per share a year earlier. Analysts had expected Peloton to post a loss of $ 1.07 per share.
Revenue rose 6% to $ 805.2 million from $ 757.9 million a year earlier, falling short of an estimate of $ 810.7 million.
This marked the significant 250% slowdown in sales growth that Peloton recorded in the first quarter of 2020, when consumers were eager to get their hands on indoor workout bikes when gyms were closed.
Sales of Internet-connected fitness products, including bicycles and treadmills, fell 17% to $ 501 million. Subscription revenue increased 94% to $ 304.1 million. Sales of Internet-connected fitness products accounted for 62% of Peloton’s business this quarter.
Peloton had 2.49 million connected fitness subscribers at the end of the three-month period, up 87% from a year earlier. Connected Fitness subscribers are people who own a Peloton product and also pay a monthly fee to access the company’s digital workout content.
Its entire membership base, which includes only digital subscribers, was 6.2 million.
The median net monthly churn of connected fitness users, which Peloton uses to measure connected fitness subscriber retention, rose to 0.82% from 0.73% in the previous quarter.
Connected fitness subscribers averaged 16.6 workouts per month, down from 20.7 workouts a year earlier.
Sales and marketing expenses rose 148% to $ 284.3 million, about 35% of revenue. The company has invested in advertising for its now less expensive Bike product and the Tread treadmill. The latter was recently put up for sale in the US again after a massive recall.
“In the end, we see how big Peloton’s business is, not how far its voice has spread,” said Simeon Siegel, an analyst at BMO Capital Markets. “What Peloton has achieved is great, but that doesn’t mean its trajectory is limitless.”
Peloton lowers forecast
Due to the uncertain nature of the pandemic, Peloton said it now presents its projections as ranges rather than individual estimates.
Online fitness subscribers will grow to 2.8 million to 2.85 million in the second quarter. Sales are projected between $ 1.1 billion and $ 1.2 billion. Analysts were looking for $ 1.5 billion.
Peloton added that it expects a “healthy” holiday season now that it has sufficient inventory to meet demand and normal delivery times.
In the fiscal year, he sharply slashed his subscriber and sales expectations. Fitness-connected subscribers are currently expected to range from 3.35 million to 3.45 million, up from the previous forecast of 3.63 million. His revenues range from $ 4.4 billion to $ 4.8 billion, up from $ 5.4 billion. The analyst consensus was $ 5.39 billion.
“The main drivers of our downgraded forecast are the more pronounced contraction in demand associated with the continued opening of the economy and the richer than expected sales mix of our original bike,” the company said.
Peloton added that along with its revised outlook, it will review its cost base and adjust operating expenses to better align the investment with new growth expectations.
“Connected fitness is becoming more of a sector than a single company story,” Siegel said.
Peloton shares are down 43% year-to-date as of Thursday’s market close. The company has a market capitalization of approximately $ 26 billion.
Find the complete Peloton earnings report here…