Peloton's Stock Crashes After Q4 Performance, CEO Points to Travel Resurgence and Product Recalls as Key Factors

Peloton Interactive Inc (NASDAQ: PTON) shares are down following its mixed Q4 results. 

PTON reported a fourth-quarter FY23 sales decline of 5% year-on-year to $642.1 million, beating the consensus of $639.9 million. EPS loss was $(0.68), missing the consensus loss of $(0.38).

The total number of members in the quarter fell 5% Y/Y to 6.5 million.

Ending connected fitness subscriptions rose 4% Y/Y to 3.08 million, and Ending App subscriptions fell 16% to 0.83 million.

The average net monthly connected fitness churn was firm Y/Y at 1.4%.

Gross profit for the quarter increased 775% to $201.1 million, and the margin expanded 3,570 basis points to 31.3%, driven by connected fitness products. 

The operating expenses plunged 64% to $426.8 million.

Adjusted EBITDA loss for the quarter was $(34.7) million versus $(288.7) million last year.

The company held $813.9 million in cash and equivalents.

“The slowdown exceeded our expectations through May and through the first three weeks of June as consumer spending shifted toward travel and experiences. Then, eight weeks ago, the trend reversed itself, and we began to see a reacceleration in hardware sales,” said Barry McCarthy CEO.

“Growth also was slowed by the seat post recall we announced on May 11th in so far as first party and third party sales of our original Peloton Bike were supply constrained by seat post availability. To date we’ve received approximately 750 thousand requests for replacement seat posts, which was more than we expected.”

Outlook: Peloton sees Q1 FY24 revenue of $580 million - $600 million, representing a decline of 4% Y/Y and 8% Q/Q at the midpoint vs. consensus of $655.9 million.

The company expects Q1 ending connected fitness subscriptions of 2.95 million - 2.96 million.

Price Action: PTON shares are trading lower by 28.60% at $4.99 in premarket on the last check Wednesday.