Peloton Reports $673.9 Million Revenue Decline and $92 Million Net Loss for December Quarter

Peloton Interactive, Inc. reported a total revenue of $673.9 million for the three months ended December 31, 2024, a decline of 9.4% compared to $743.6 million in the same period last year. The company's revenue from Connected Fitness Products decreased significantly, falling to $253.4 million from $319.1 million, while Subscription revenue remained relatively stable at $420.6 million, down slightly from $424.5 million. For the six-month period, total revenue also decreased by 5.9% to $1.259 billion, with Connected Fitness Products revenue down 17.3% and Subscription revenue up 0.9%.

The company reported a net loss of $92.0 million for the quarter, an improvement from a loss of $194.9 million in the prior year. This loss translates to a net loss per share of $0.24, compared to $0.54 in the same quarter last year. Peloton's gross profit increased to $318.4 million, up 6.3% from $299.4 million, driven by a significant reduction in the cost of revenue, which fell by 20% to $355.6 million. The gross margin for Connected Fitness Products improved to 12.9%, marking the first time it reached double digits in over three years.

In terms of operational metrics, Peloton reported a total of 2.879 million Paid Connected Fitness Subscriptions as of December 31, 2024, down from 3.004 million a year earlier. The company also noted a churn rate of 1.4% for its Connected Fitness subscriptions, slightly higher than the previous year's 1.2%. The number of Paid App Subscriptions also declined to 578,532 from 718,348, although the company saw a decrease in churn for these subscriptions as well.

Strategically, Peloton has been focusing on restructuring efforts to improve its cost structure and operational efficiency. The company has implemented a 2024 Restructuring Plan, which aims to reduce annual run-rate expenses by over $200 million by the end of fiscal year 2025. This plan includes a reduction in global headcount and the closure of retail locations. Peloton has also launched new products, including the Strength+ app, which has attracted over 220,000 monthly active users, and has expanded its partnerships with retailers like Costco to drive sales.

Looking ahead, Peloton remains cautious about market conditions and consumer demand. The company is focused on enhancing its product offerings and improving customer engagement to drive growth. Despite the challenges, Peloton's management believes that the ongoing restructuring initiatives and new product launches will position the company for sustained positive cash flow and profitability in the future.