Shares of Peloton Interactive
Peloton has been hurting badly as it struggles to right itself after consumer demand for at-home fitness products dropped significantly as COVID-19 restrictions waned, with this being the sixth consecutive quarter that the company has reported a loss.
The bleak earnings report also happened to follow an announcement from Peloton that it would begin selling its products on Amazon
The partnership announcement gave Peloton shares a 10.5% boost in pre-market trading on Wednesday, with shares grabbing an additional 8.9% gain during trading hours. The release of Q4 earnings on Thursday saw an immediate reversal, with shares dropping 21% through the end of the week.
Peloton's Dour Quarter in Numbers
Peloton's total revenue came in at roughly $679 million, a 30% drop compared to Q3 2022's $964 million. That figure came in well short of Wall Street's estimate of $718 million.
The company's total gross margin slipped into the red, sitting at -4.4%, a considerable drop compared to last quarter's margin of 19.1%. Peloton's subscription gross margin modestly declined from 68.1% to 67.9%, though the gross margin on connected fitness products drastically dropped from -11.4% to -98.1%.
Peloton suffered a net loss of $1.2 billion, a substantial 64% drop from last quarter. Losses per share came in at $3.68, compared to a $1.05 loss the previous quarter.
Subscriptions remained flat compared to the previous quarter, though the number of total members decreased from 7 million to 6.9 million, with Peloton giving a rough figure of 143,000 members lost.
Peloton did not offer any financial guidance for the upcoming 2023 fiscal year.
It's Been a Rocky Turnaround for Peloton
To the credit of Peloton and CEO Barry McCarthy, the company hasn't taken its situation lightly. A few analysts have taken a positive stance on McCarthy, commending his far-reaching decisions to stop the company's losses.
Peloton has outsourced much of its customer support, laid off workers, and shuttered in-house production of its exercise equipment as part of cost cutting measures affected by McCarthy. The company slashed the price of its exercise bikes while raising subscription prices in a move to attract customers.
None of the company's changes have produced any tangible results yet. While analysts have recognized McCarthy's efforts, not many appear to have a favorable outlook for the company's future.
Peloton faces a growing number of competitors that have begun to employ a similar product model, diluting any chances it has at a full comeback. In addition to newer companies like Equinox Fitness, established fitness brands have developed their own subscription-based platforms to offer virtual training, such as Nordictrack iFIT.
