Peloton announced on Thursday that it has managed to turn around its financial situation, achieving a slight increase in sales for the first time in nine quarters. The company, which is currently being led by two board members following the departure of former CEO Barry McCarthy earlier this year, saw a 0.2% growth in sales during its fiscal fourth quarter. This marks the first time Peloton has experienced year-over-year revenue growth since the 2021 holiday season.
Additionally, Peloton has expressed its commitment to prioritizing profitability over growth by making significant cuts to its marketing and sales expenses, while focusing on increasing free cash flow and adjusted EBITDA. As a result, the company’s shares surged by over 10% in premarket trading.
While Peloton’s latest results exceeded expectations, its outlook for the upcoming year was mixed. The company’s loss per share of 8 cents outperformed the anticipated 17 cents, while its revenue of $644 million surpassed the expected $631 million.
During the three-month period ending on June 30, Peloton saw a substantial reduction in losses, posting a loss of $30.5 million, or 8 cents per share, compared to a loss of $241.8 million, or 68 cents per share, in the previous year. Sales also increased to $643.6 million, up 0.2% from the previous year.
Looking ahead, Peloton plans to invest in its hardware and software to enhance user experience, but does not anticipate significant subscriber growth within the fiscal year. This shift in focus towards profitability and free cash flow is evident in the company’s reductions in sales and marketing spending, which have historically impacted its balance sheet negatively.
For the current quarter, Peloton expects lower sales than anticipated by Wall Street, but higher adjusted EBITDA. The company forecasts sales between $560 million and $580 million, with adjusted EBITDA projected to be $50 million to $60 million. Additionally, Peloton expects the number of connected fitness subscribers to be lower than initially projected.
For the full year, Peloton anticipates sales between $2.4 billion and $2.5 billion, falling short of estimates. These strategic shifts and financial improvements reflect Peloton’s ongoing efforts to strengthen its financial position and drive sustainable growth in the future.