Dive Brief:
- Peloton on Thursday reported fourth-quarter total revenue was essentially flat, increasing 0.2% year over year to $643.6 million. The company’s connected fitness products revenue declined 4% from the year-ago period to $212.1 million, while subscription revenue grew 2% to $431.4 million.
- The connected fitness company reduced its losses during Q4, with operating loss improving 72% to $63.3 million and net loss narrowing 87% to $30.5 million.
- For the full fiscal year, Peloton reported total revenue fell 3.6% year over year to $2.7 billion. Both operating loss and net loss for the year narrowed by more than 50%, reaching $529 million and $552 million, respectively.
Dive Insight:
Though Peloton’s fourth quarter revenue gains were incremental, the numbers beat analysts’ projections and marked the first period of growth since the second quarter of fiscal year 2022, the company said.
Membership during Q4, however, declined 2% year over year to 6.4 million, with ending paid connected fitness subscriptions down 1% to about 3 million and ending paid app subscriptions down 26% to about 615,000.
The decline in memberships came as Peloton pulled back on marketing expenses during the fourth quarter. Sales and marketing expenses in Q4 reduced by 18.5% year over year to $112 million, and Peloton expects to continue to cut costs in that area throughout this fiscal year. The cost reductions in sales and marketing are part of a broader restructuring plan the company laid out in May, which includes delivering more than $200 million in expense reductions by the end of its 2025 fiscal year. In the fourth quarter, Peloton said it drove $15 million in cost savings.
The fourth quarter also marked the first reported financial results since Barry McCarthy stepped down as Peloton’s CEO in May. The search for its next leader is still “well underway,” per the company, but Karen Boone — who is serving as interim co-CEO alongside Chris Bruzzo — said they expect to fill the role by Peloton’s next earnings call.
Looking ahead, CFO Liz Coddington on a call with analysts Thursday said she expects “softness” in connected fitness demand in the medium term, but still sees growth potential for the category. Peloton expects first-quarter total revenue to be between $560 million and $580 million, representing a 4% year-over-year decline at the midpoint. It also expects ending paid connected fitness subscriptions to be down 3% and ending paid app subscriptions to fall 26%. For the full fiscal year, Peloton projects total revenues between $2.4 billion and $2.5 billion, a 9% decline at the midpoint.
