Peloton reports first earnings results since IPO: 10 top takeaways

Brian Sozzi
·Executive Editor
Updated

It’s unclear at first blush from Peloton’s first earnings report as a public company whether Wall Street — generally bullish on the recently IPOed, at-home fitness provider — will still view the stock as a healthy long-term investment.

To be sure, there is a little something for both the bulls and bears from Peloton’s (PTON) first fiscal quarter report out on Tuesday.

Here are the main results, compared to consensus expectations:

  • Total revenue: $228 million surged 103% from the prior year vs. analyst forecasts of $196.9 million

  • Adjusted EBITDA loss: $1.29 a share vs. analyst projections for a loss of 39 cents a share.

  • Full-year sales guidance: $1.45 billion to $1.50 billion vs. analyst estimates for $1.35 billion

  • Full-year adjusted EBITDA loss guidance: $150 million to $170 million vs. estimates on the Street ranging from a loss of $124 million (Bank of America Merrill Lynch) to as high as $266 million (UBS).

The company continued to notch losses as it works to add tech headcount, instructors and build out its infrastructure globally. While what looks to be a much worse loss per share in the quarter relative to analyst forecasts isn’t the best case scenario for Peloton amid concerns on the Street about the path to profitability for the latest crop of hot tech IPOs, the company did deliver solidly on several fronts.

Peloton’s president William Lynch tells Yahoo Finance investors should view favorably the company’s strong revenue growth and ability to pare its losses year over year. He declined to share when Peloton may turn profitable.

What we like

  • Peloton’s key engagement metric known as average monthly workouts spiked to 11.9 workouts from 8.9 a year ago.

  • The company’s net loss did improve by $4.8 million year over year.

  • The number of connected fitness subscribers and the number of workouts rose solidly on a sequential basis.

  • Gross profit margins for Peloton’s subscription revenue base surged 763 basis points year-over-year.

  • $1.4 billion in cash.

  • 1.6 million total members, up from about 1.4 million at the time of the IPO in late September.

  • Disclosed that in October it acquired one of its long-time bike manufacturers Tonic Fitness Technology for $47.4 million in cash. The purchase will give Peloton more control over its supply chain, which is usually a positive step.

What we didn’t like

  • Average monthly workouts of 11.7 dipped from 12 in the fourth fiscal quarter.

  • Gross profit margins in the connected fitness business — Peloton’s largest — hurt as sales of the larger margin Tread product increased and the company invested in its logistics.

  • The company is clearly still investing aggressively in its business — from building a new headquarters in New York City to showrooms for its equipment abroad. Those investments will likely continue to fuel concerns on the profitability timeline not unlike other former unicorn tech plays (see Uber and Lyft).

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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