Peloton reported first quarter 2023 revenue of $616.5 million, a 23 percent decrease from first quarter 2022 and less than the $650.1 million analysts had anticipated.
Peloton’s non-standard fiscal first quarter ended Sept, 30, 2022.
Revenue for the second quarter, the holiday season, is expected to be weak, “given macro economic uncertainties,” the company reported on Nov. 3.
The company projected second quarter revenue of between $700 million and $725 million, which is less than the $874 million analysts expected.
Peloton CEO Barry McCarthy came on board in February to help turn around the company, overseeing several rounds of layoffs (the latest of which involved 500 people in October). On a call with analysts on the morning of Nov. 3, McCarthy said there will not be more layoffs but the company’s turnaround is still a work in progress.
Also under his leadership, the company exited owned-manufacturing in Taiwan and expanded relationships with its third-party partners. It entered deals with Dick’s Sporting Goods and Amazon to sell its products there. The company signed an agreement with Hilton to put Peloton bikes in 5,400 of its hotels. After testing a bike rental program in select cities, the company launched the program nationwide.
The company also secured $750 million in financing and maintained a liquid cash balance of about $1 billion.
“We’re driving the business towards a goal of breakeven free cashflow,” McCarthy said in the call.
McCarthy said the company is focusing on subscription growth, noting he anticipates the company could someday have 100 million subscribers. For the first quarter, the company reported 6.7 million subscribers, which was up from first quarter 2022 by 400,000 subscribers, but down by 200,000 from fourth quarter 2022.
First quarter subscription revenue rose to $412.3 million compared to $304.1 million during the same period last year.
More than offsetting the increase in subscription revenue was the connected fitness product revenue, which decreased from $501 million in first quarter 2022 to $204.2 million in the most recent quarter. The quarter included the release of Peloton Row, the company’s first rowing machine, which is set to begin shipping in December.
Despite that, the company’s gross margin improved from 4.4 percent in fourth quarter 2022 to 35.2 percent in the first quarter.