Why Peloton Interactive Shares Are Sinking Today

Peloton Interactive Inc PTON shares are diving today after it reported mixed second-quarter financial results and issued third-quarter 2024 revenue guidance below estimates.

Sales declined 6% Y/Y to $743.6 million, beating the consensus of $733.5 million. 

The exercise equipment and media company’s EPS loss was $(0.54), missing the consensus loss of $(0.53).

The total number of members in the quarter fell 4% Y/Y to 6.4 million. Ending connected fitness subscriptions rose 1% Y/Y to 3.00 million, and Ending App subscriptions fell 16% Y/Y to 0.718 million.

The average monthly paid app subscription churn was 7.2%, and the average net monthly paid connected fitness subscription churn was 1.2%.

Gross profit for the quarter increased 27% to $299.4 million, and the margin expanded 1,060 basis points to 40.3%, driven by connected fitness products.

The operating expenses plunged 14% to $486.5 million. Adjusted EBITDA loss for the quarter was $(81.7) million versus $(122.4) million last year.

The company held $798.1 million in cash and cash equivalents.

Peloton, which began taking Tread+ orders in December for third-quarter delivery, noted demand has been significantly stronger than expected.

Outlook: Peloton sees third quarter FY24 revenue of $700 million – $725 million, representing a decline of 5% Y/Y at the midpoint vs. consensus of $753.8 million.

The company expects FY24 revenue of $2.675 billion-$2.750 billion, representing a decline of 3% Y/Y at the midpoint vs. consensus of $2.748 billion.

The company expects third quarter ending paid connected fitness subscriptions of 3.05 million – 3.06 million.

Peloton now expects its business to generate positive free cash flow in the fourth quarter 2024 (vs. $(74) million in 4Q23) but to fall short of achieving its goal for the full year. 

Also Read: From Fitness Gear To Social Media, Peloton Partners With TikTok In A New Venture

Price Action: PTON shares are down 23.2% at $4.269 on the last check Thursday.

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