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Peloton sales grow 141% in Q3, the lowest churn in 6 years

Today, Peloton released its financial results for Q3 of fiscal year 2021, including a 141% growth in sales. According to the report, more and more people are joining the Peloton community and are sticking with it longer than ever.

Peloton Q3 earnings for FY 2021:

  • Loss per share: 3 cents vs. 12 cents expected
  • Revenue: $1.26 billion vs. $1.1 billion expected

Peloton reported 141% sales growth and a revenue of $1.26 billion compared to $524.6 million a year ago, topping Wall Street’s expectations of $1.1 billion. Last quarter, Peloton raised its Q3 sales guidance to $1.10 billion and has surpassed that.

These increased sales were partially driven by the connected fitness company’s $100 million investment in expedited deliveries to consumers, after overseas shipments saw extensive delays among congested ports as a result of the global pandemic. Per today’s shareholder letter, delivery wait times for Peloton Bikes are back to pre-COVID levels.

Earlier this year, Peloton acquired fitness manufacturer Precor to help grow its manufacturing stateside. Today Peloton reported that it will begin limited manufacturing of its products at Precor’s North Carolina facility at the end of 2021, with plans to ramp up production further into 2022.

Peloton subscriber growth

In addition to boosted sales, Q3 Peloton Connected Fitness subscriptions grew 131% to over 2.08 million. Those subscriptions pertain to those who purchased a Peloton product as well as the monthly membership. Paid digital subscriptions (content only) saw even larger growth of 404% to 891,000 and the total number of members in the Peloton community is now over 5.04 million.

Subscription revenue grew to $239.4 million, capturing 144% year over year growth, and 19% of Peloton’s total revenue. A slight dip in YOY growth compared to Q2, but a higher percentage of total revenue nonetheless.

One of Peloton’s key metrics long term is their churn rate (the rate at which members cancel their subscriptions). For the Q3 2021, the average net monthly connected fitness churn was an impressive 0.31%, more than half the previous quarter churn of 0.76% and Peloton’s lowest rate in six years. The company has previously said its churn rate for the entire fiscal 2021 will be below 0.80%, and these Q3 numbers can pretty much solidify that.

Other important notes

Peloton’s Average Monthly Workouts per Connected Fitness Subscription was 26.0, which is 47% year-over-year growth and is a significant jump up from the previous quarter. 

Customers with Connected Fitness Subscriptions logged nearly 150 million workouts, which is an increase from 105 million workouts in the same period last year.

While most all of the Q3 sales report from Peloton was good news, there was zero mention of the Tread or Tread+, or what the company plans to do with these products moving forward following its recent recall due to safety issues.

Contrary to previous quarterly reports, Peloton did not provide an updated financial forecast either. Previously however, the company has stated sales were expected to top $4 billion this fiscal year. 

At the time of the shareholders report being released, Peloton shares fell more than 5% in after hours trading.

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