Peloton Interactive Inc. Fourth Quarter Financial Results

Shares of Peloton fell sharply after reporting disappointing Q4 financial results which missed analyst estimates.
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3 min read
Peloton

Peloton have announced their fourth quarter earnings report on Thursday.

The report included earnings for the fourth quarter, and also a fiscal audit conducted up to June 30 2021.

Peloton revealed that their fourth quarter loss had widened deeply. Peloton had a net loss of $313.2 million, compared to a net income of $89.1 million ($0.25 earnings per share) in Q4 of 2020. As a result, they reported $1.05 loss per share (vs $0.45 loss per share expected), with a revenue of $936.9 million (vs $927.2 million expected). Although revenue has increased 54% from $607.1 million in Q4 2020, the revenue growth rate is slowing.

The reason behind the increased net losses is that Peloton has had to deal with increased freight and commodity costs. They plan to increase marketing expenditure in the next few months, which may increase their deficit even further. Losses also were attributable to the fact that Peloton recalled their Tread and Tread+ machines back in May and were forced to halt sales of these machines. The Tread model will go back on sale next week, but Peloton have been silent regarding the Tread+ model.

The Chief Executive John Foley said in a letter to shareholders:

“The past year represented an inflection point for the connected fitness industry, with significant increases in awareness and demand following the onset of the Covid-19 pandemic”

Peloton ended Q4 with 2.33 million connected subscribers, which represents a 114% increase year-on-year. ‘Connected subscribers’ are defined as those who own a Peloton product and pay a recurring monthly fee to use their fitness workout content.

Those with digital subscriptions (which doesn’t require the user to have a Peloton product) were in excess of 800,000, up 176%, because of free trial offers.

Peloton has forecasted a disappointing Q1 revenue of $800 million, due to its price reduction in bikes by hundreds of dollars. Analysts forecasted a revenue in excess of $1 billion.

Peloton expects to see sales reach $5.4 billion and connected subscribers hit 3.63 million. Estimates expect to see sales reach approximately $5.27 billion.

Looking further ahead, Peloton said that they expect to reach profitability by the fiscal year 2023, as capital expenditures start to wane. Foley revealed Peloton is preparing to launch new products, but did not give any hints to what they may entail.

As a result of the earnings report and fiscal audit, shares of Peloton Interactive Inc. slid 8% to approximately $104 per share.

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