Peloton Pedals Past Q2 Sales Estimates, Stock Jumps On Solid Margins & Outlook

Peloton Interactive, Inc. PTON shares are trading higher on Thursday.

The company reported a second-quarter loss per share of 24 cents, missing the street view of an 18-cent loss. Quarterly sales of $673.90 million outpaced the analyst consensus estimate of $654.036 million estimate.

In the second quarter, the company recognized $20 million of Impairment and Restructuring expenses, of which $16.7 million was non-cash.

The quarterly sales comprised $253.4 million of Connected Fitness Products Revenue (down 21% year over year) and $420.6 million of Subscription Revenue (down 1%).

Gross profit increased by $19 million to $318.4 million, with a gross margin of 47.2%, up 700 basis points, driven by higher fitness product and subscription margins.

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Connected Fitness Products gross margin was 12.9%, up 860 basis points.

Adjusted EBITDA was $58.4 million in the second quarter, which was a $140.1 million improvement year over year.

The company ended the quarter with $829.0 million in unrestricted cash and equivalents.

The company said it progressed toward deleveraging its balance sheet, as net debt decreased $281.4 million or 30% year over year.

Outlook: Peloton expects FY25 revenue between $2.43 billion and $2.48 billion, compared to the $2.47 billion estimate. The company mentioned that this reflects a narrower range and an increase of $5 million at the midpoint.

For FY25, adjusted EBITDA is forecasted to be between $300 million and $350 million. For the third quarter, Peloton predicts revenues of $605 million to $625 million, compared to $652.21 million estimate.

The third quarter total gross margin guidance of 50% reflects a 280 basis point sequential increase, driven by a seasonal mix shift toward the Subscription segment.

In the conference call, Peloton’s CFO said no Peloton-branded hardware products are subject to tariffs from China.

Price Action: PTON shares are trading higher by 14.7% to $8.695 at last check Thursday.

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