Peloton Q2 Earnings Highlights: Revenue Miss, CEO Transition, Restructuring Plan And More

Connected fitness company Peloton Interactive PTON reported second quarter financial results before market open Tuesday. The company also announced several management changes. Here are the key details.

What Happened: Peloton reported second quarter revenue of $1.13 billion, up 6% year-over-year. The total came in shy of the analyst consensus estimate of $1.15 billion, according to Benzinga Pro.

Peloton ended the second quarter with 2.77 million connected fitness subscribers, up 66% year-over-year. Paid digital subscribers grew 38% year-over-year to 862,000. Total Peloton members stood at 6.6 million at the end of the second quarter.

Connected fitness segment revenue was down 8% year-over-year at $796.4 million in the second quarter. The company said it had fewer unit sales and lower prices on sold items.

Subscription revenue increased 73% year-over-year to $337.5 million in the second quarter.

Peloton CEO John Foley also announced he is stepping down from the role to best position the company for the future.

“Among other actions being taken, together, we have decided that now is the right time to introduce the next phase of leadership at this great company,” Foley said.

Foley will transition into the Executive Chair of the Board of Directors. “We are taking steps to best position Peloton for sustainable growth, while also establishing a clear path to consistent profitability,” he added.

Peloton also announced a “meaningful reduction” of their workforce on Tuesday. The company expects job cuts and restructuring to yield $800 million in annual run-rate cost savings.

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What’s Next: Peloton announced former Netflix Inc NFLX and Spotify Technology SPOT Chief Financial Officer Barry McCarthy as the new CEO.

Foley said McCarthy has a proven track record of execution helping public and private companies.

McCarthy said he's looking forward to helping move Peloton forward. “I’m honored to join Peloton at such an important moment in the company’s history and look forward to working closely with John, the Board, and Peloton’s team members at all levels of the organization to execute against Peloton’s strategy and take the business to the next level,” he said.

The company is introducing Peloton Guide on April 5. The new connected fitness strength product will be priced at $495 and provide full-body workout experiences.

Peloton is guiding for third quarter revenue to come in a range of $950 million to $1 billion. The total comes in shy of analysts’ current estimate of $1.26 billion.

The company is expecting to end the third quarter with 2.93 million connected fitness subscribers.

For the full fiscal 2022 year, peloton sees revenue coming in a range of $3.7 billion to $3.8 billion and hitting 3 million connected fitness subscribers.

Peloton shares jumped on Monday on the heels of acquisition rumors linking the company to Amazon.com Inc AMZN, Apple Inc AAPL and Nike Inc NKE.

The company made no comment on buyout rumors.

Price Action: PTON shares are up 1.78% to $31.60 on Tuesday morning.

Photo: Courtesy of press.onepeloton.com