Stationary bikes from Peloton Interactive Inc. are on display in the company’s showroom on Madison Avenue in New York, USA, on Wednesday, December 18, 2019.
Jeenah Moon | Bloomberg | Getty Images
Peloton reported a quarterly sales growth of 128% on Thursday, marking its first quarter of billions of dollars, as momentum continues to rise for the home gym equipment maker.
The company also increased its revenue outlook for the entire year. But he warned that he still faces short-term obstacles to getting items to customers quickly, amid rising demand.
Peloton’s shares fell more than 6% in trading extended on Thursday. The stock had closed up 7% to $ 157.53.
See how Peloton fared during the second fiscal quarter compared to what analysts expected, based on a Refinitiv survey:
- Earnings per share: 18 cents vs. 9 cents, expected
- Revenue: $ 1.06 billion versus $ 1.03 billion, expected
In the three-month period ended December 31, Peloton’s profit grew to $ 63.6 million, or 18 cents per share, from a loss of $ 55.4 million, or 20 cents per share, a year ago . Analysts had been asking Peloton to earn 9 cents a share, according to Refinitiv.
Revenue soared 128% to $ 1.06 billion from $ 466.3 million a year earlier, exceeding expectations of $ 1.03 billion.
For its current fiscal third quarter, Peloton expects sales to reach $ 1.10 billion. Analysts were asking for $ 1.09 billion.
Investing in the supply chain
In the wake of increased sales, Peloton now expects full-year revenue to reach $ 4 billion, above the previous forecast of more than $ 3.9 billion. Analysts were asking for $ 3.95 billion.
The company kept its profit forecast for fiscal year 2021 unchanged.
Peloton said he continues to see robust demand for his products and that he will make additional investments in his supply chain to ease bottlenecks, which can weigh on profits.
In a letter to shareholders, the company said it would invest more than $ 100 million in airfreight and accelerated seafreight over the next six months to help speed up deliveries.
“Although this investment decreases our profitability in the short term, improving the experience of members is our first priority,” said the company.
Peloton said he still expects inventory levels to improve and delivery windows to shrink, thanks in part to the pending $ 420 million acquisition of fitness equipment maker Precor. But, he said he expects his progress to be “slow but steady” for the rest of the year.
Chief Executive John Foley said Peloton remains “hopeful”, however, that “an acceleration in vaccine distribution and the wider opening of our economy” will benefit business in the coming months.
Retention rates remain strong
Peloton ended its last quarter with 1.67 million connected fitness subscribers, an increase of 134% over the previous year. Connected fitness subscribers are people who pay a monthly fee to synchronize Peloton training classes with their Peloton equipment, instead of accessing the programs separately via a phone or tablet and paying a lower fee.
The company expects to have 2.28 million or more connected fitness subscriptions by the end of the fiscal year, compared to a previous forecast of 2.17 million users.
Peloton’s retention rates remain strong, a good indication of its future success. The average monthly net churn of connected fitness was 0.76% during the last quarter, which marked a slight increase of 0.65% in the previous period. But the company said it expects its turnover rate during the current quarter to be below 0.75%, and its turnover rate for fiscal year 2021 will be below 0.80%, better than an earlier perspective of less 0.90%. The lower the turnover rate, the less turnover Peloton is seeing with its user base.
And the bike maker continues to look for ways to entice its customers to exercise more. He said the total training during the most recent period had risen to more than 113 million from 26 million a year ago. It recently launched a feature where users can “stack” classes one after another and have them play automatically one after the other. Recently, he also added Pilates classes to his catalog.
Peloton’s shares were up more than 365% over the previous year. The company has a market value of US $ 46 billion.
Find the full Peloton earnings release here.
This story is developing. Please check again for updates.