The beleaguered fitness company Peloton Interactive, once one of the hottest stocks of the pandemic, has revealed its second-quarter results for the fiscal year 2023. Announcing the results, Peloton CEO Barry McCarthy said, “If you’ve been wondering whether or not Peloton can make an epic comeback, this quarter’s results show the changes we’re making are working.”
These are the main highlights of Peloton’s Q2 2023:
- Total revenue: $792.7 million
- Loss per share: 98 cents
- Free cash flow: $ –94 million
While making a loss per share of 98 cents isn’t something to be celebrated, it’s lower than the loss per share of $1.39 a year earlier. But perhaps even more important is what’s hidden inside the total revenue number of $792.7 million, $381.4 million of which came from Connected Fitness devices. In other words, a majority—$411.3 million—came from subscriptions. This is good news since subscription services have higher margins than hardware.
“Despite seasonally strong hardware sales, for the third consecutive quarter, we generated more revenue from subscriptions than we did from hardware sales,” McCarthy said in a letter to investors. “This trend is gross margin accretive because subscription gross margins significantly exceed hardware gross margins. If this trend continues, which seems likely since we sell more hardware in Q2 than any other quarter of the fiscal year, it represents a structural shift toward improving GM’s in the business.”
Peloton usage—and its market value—skyrocketed during the early pandemic years as lockdown kept people from exercising in communal spaces. But as lockdowns ended, Peloton was hit hard as people were eager to return to fitness activities outdoors and at gyms. The stock went from a high of $151 in December 2020 to lows of under $7 per share by September 2022.
At the time of this writing, Peloton stock (ticker PTON) is up over 7.5% to $13.90 a share in premarket trading.
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