Peloton drops after posting another quarter of falling sales
Equipment sales sank 27% as the fitness company posted a third straight year-over-year decline in revenue.
Peloton’s shares were feeling the burn in early trading on Thursday after the company reported its third straight year-over-year decline in sales in its Q3 results.
Wall Street’s analysts achieved that rare thing: predicting the connected fitness company’s $624 million revenue on the number, while gross profit came in at $318 million, above the $314 million consensus compiled by FactSet. But despite technically meeting sell-side expectations, investors seemed uncomfortable with the continued decline in sales, which dropped 13% year over year. The company’s equipment sales dropped significantly, down 27%.
Peloton’s all-important high-margin subscription service was a bright spot in the print, reaching 2.88 million paid subscriptions. But growth for that business looks unlikely, with company guidance implying at its midpoint that the number of subscriptions will have dropped 7% by the end of fiscal year 2025, relative to 2024.
Shifting gears
After years of trying to convince customers to splurge thousands on its indoor bikes, Peloton has pivoted to focus on profitability, specifically its money-making services business — including hiring a new CEO known for managing subscription services at Apple and Ford, and rolling out more on-demand member events. This quarter, a whopping 91% of the company’s gross income came from its subscription segment, marking Peloton’s 16th straight quarter of making most of its money from its members, not machines.
