Nautilus Shares Slide After Q4 Results, Provides FY23 Guidance

Nautilus, Inc. NLS reported a fourth-quarter net sales decline of 41.9% year-over-year to $119.72 million, missing the consensus of $121.57 million.

The gross margin fell by 2,084 bps to 17.5%, reflecting increased product costs, logistics, and discounting (-16 ppts) and increased investments in JRNY (-5 ppts).

The company recorded an operating loss of $21.92 million in Q1, compared to an operating profit of $39.71 million in 4Q21.

EPS was $(0.58) in line with consensus of $(0.58). Adjusted EBITDA loss for the quarter was $16.87 million.

Total liquidity, defined as cash, investments, and available borrowing under the company’s line of credit, was $80 million as of March 31, 2022.

Inventory was $111.2 million, down from $128.1 million as of December 31, 2021, but up to $68.1 million as of March 31, 2021.

Nautilus, Inc. continues to enhance the JRNY platform, creating differentiated connected-fitness experiences for its Members3, which numbered 325k at March 31, 2022. Of these members, 111k were Subscribers.

For Fiscal 2023, Nautilus expects to return to a more typical pre-pandemic seasonality, with the 2nd half of the year contributing more of the full year’s revenue.

1Q23 Outlook: NLS expects Q1 sales of $45 million and $55 million and Adjusted EBITDA loss of $(22) million and $(27) million.

2H and FY23 Outlook: The company expects FY revenue of $380 million and $460 million.

NLS expects the 2nd half of the year to represent between 65% and 70% of full-year sales, slightly higher than the pre-pandemic 2nd half seasonality of ~60%. Gross margins for the second half of the year are expected to be 27% to 30%.

The company expects to deliver positive adjusted EBITDA for the 2nd half of Fiscal 2023. As a result, It expects Full Year Adjusted EBITDA loss of $(25) million and $(35) million.

Price Action: NLS shares are trading lower by 16.10% at $2.09 during the post-market session on Monday.