Peloton Interactive, Inc. (NASDAQ: PTON) faced a steep decline in its stock price after reporting second-quarter financial results that missed Wall Street expectations. The company’s quarterly loss per share was greater than anticipated, and revenue figures also fell below analyst estimates, overshadowing signs of margin improvement and increased profitability. Additionally, the firm provided softer guidance for the upcoming quarter and disclosed a transition in its financial leadership, further unsettling investors.
For the second quarter, Peloton reported a loss per share of $0.09, missing the consensus estimate, which anticipated a smaller loss of $0.05 per share. Revenue for the quarter stood at $656.5 million, marking a 3% decline compared to the same period the previous year and trailing the expected revenue of $672.22 million. Despite these shortcomings in top-line and earnings figures, the company achieved a total gross margin of 50.5%, reflecting a 320-basis-point improvement year over year. Adjusted EBITDA reached $81 million, representing a 39% increase compared to the prior year’s results.
CEO Peter Stern highlighted the company's operational discipline, emphasizing the substantial year-over-year growth in Adjusted EBITDA and a dramatic 52% reduction in net debt. He credited these achievements to the company’s ability to innovate while simultaneously increasing profitability.
The quarter closed with Peloton’s paid Connected Fitness subscriptions numbering 2.661 million, which was a decline of 214,000 subscribers, or 7%, compared to the previous year. However, this figure slightly exceeded the midpoint of the company's own guidance by 6,000 subscribers. Subscriber churn remained more stable than anticipated following price increases implemented on October 1, though the gross number of new subscribers was weaker.
Financial liquidity remains strong for Peloton, with cash and cash equivalents reported at $1.179 billion as the quarter ended.
In a significant management update, Peloton announced that Chief Financial Officer Liz Coddington will be departing to pursue a career opportunity outside the fitness industry. She is expected to remain with the company until March to assist with the transition as a search for her successor is underway. CEO Stern acknowledged her considerable contribution to Peloton’s financial turnaround, including strengthening the balance sheet and embedding a culture of financial discipline. Ms. Coddington expressed pride in the progress made during her four-year tenure and optimistic expectations for the company’s future.
Looking ahead, Peloton issued guidance for third-quarter sales ranging between $605 million and $625 million, which is below analyst projections of $639.4 million. The conservative outlook further contributed to negative investor sentiment.
Reflecting these developments, Peloton’s shares dropped sharply, declining by over 23% to trade at approximately $4.53 during Thursday’s session. This move established a new 52-week low for the company’s stock.
In summary, Peloton’s financial disclosures revealed a complex mix of progress and challenges. Although the firm improved profitability metrics and reduced debt substantially, the loss per share and revenue misses underscored ongoing pressures. Subscriber base contraction, coupled with a cautious revenue outlook and the CFO departure, generated headwinds impacting market confidence.