Peloton reports Q1 earnings miss, slashes forecast: PTON plunges 25%

Peloton reported its earnings for fiscal Q1 2022, coming in below analyst expectations both in terms of revenue and loss-per-share. The company reported $805.2 million in revenue for the quarter, compared to expectations of $810.7 million. It reported a loss per share of $1.25, higher than expectations of a $1.07 loss per share, for a total loss of $376 million.

CNBC reports:

For the three-month period ended Sept. 30, Peloton reported a net loss of $376 million, or $1.25 per share, compared with net income of $69.3 million, or earnings of 20 cents a share, a year earlier. Analysts had been looking for Peloton to post a loss of $1.07 per share. 

Revenue grew 6% to $805.2 million from $757.9 million a year earlier, missing estimates for $810.7 million. 

Other stats from Peloton’s earnings release:

• 2.49 million connected fitness subscribers, up 87% year-over-year
• Average net monthly churn was up from 0.73% last quarter to 0.82% this quarter
• Subscribers completed an average of 16.6 workouts per month, down from 20.7 year-over-year
• Sales and marketing expenses rose 148% YOY

In addition to missing expectations for fiscal Q1 2022, Peloton also slashed its guidance for fiscal 2022. The company says that it expects to have between 3.35 million and 3.45 million connected fitness subscribers by the end of the fiscal year, down from its original outlook of 3.63 million.

In terms of revenue, Peloton expects fiscal year revenue to amount to between $4.4 billion and $4.8 billion, down from the original outlook of $5.4 billion.

In a letter to shareholders, CEO John Foley explained:

As discussed last quarter, we anticipated fiscal 2022 would be a very challenging year to forecast, given unusual year-ago comparisons, demand uncertainty amidst re-opening economies, and widely-reported supply chain constraints and commodity cost pressures. Although we are pleased to have delivered first quarter results that modestly exceeded our guidance, a softer than anticipated start to Q2 and challenged visibility into our near-term operating performance is leading us to recalibrate our fiscal year outlook.

While we are reducing our near-term forecast, our confidence in and commitment to our strategy is unchanged. Software and streaming media have redefined at-home fitness and are driving a migration of workouts into the home, a consumer behavioral shift that we believe is still in its early stages. This trend was well-underway prior to the pandemic, and has clearly been accelerated by the growing awareness and adoption of Connected Fitness over the past year and a half. In conjunction with our revised demand forecasts, we will be taking concrete steps to re-examine our expense base and adjust our operating costs to better align our investments with our revised growth expectations.

The market is reacting poorly to the news, with PTON stock dropping by nearly 25% in after-hours trading to around $66.50 per share. You can find the company’s full Q1 2022 results here.