Peloton released its Q4 FY2024 earnings today, highlighting strong results and exceeding expectations. The upbeat tone of their shareholder letter suggests a potential positive shift for the company.
The stock rose by 16.7% in pre-market trading but has since fluctuated.
Investors and analysts are keenly awaiting news on Peloton’s new CEO search.
The letter indicated that the search is ongoing and remains a priority. Co-CEO Karen Boone stated they are moving swiftly to find the right candidate and hope to announce the new CEO by the next earnings call.
For the first time since Q2 FY2022, Peloton reported modest year-over-year revenue growth in Q4, reaching $644 million, up 0.2%. Subscription revenue contributed $31 million, a 2.3% increase from the previous year.
This revenue exceeded their guidance range of $618 million to $643 million. The company also completed refinancing its balance sheet, reducing debt by about $200 million and extending maturity to 2029.
Peloton’s Q4 performance met or exceeded all key metrics, and they plan to focus on innovation and enhancing the member experience. They discontinued the Bike rental program on August 1 due to low inventory but saw increased uptake for other cost-effective options.
The company expressed satisfaction with its partnership with Lululemon and is excited about a new licensing agreement with Google Fitbit, which will expand Peloton’s class offerings in several countries.
Peloton’s Tread business is a key focus, with treadmill revenue growing 42% year-over-year in Q4. They introduced new features like Pace Targets and launched a marketing campaign that increased web traffic to Tread product pages. There’s speculation about the Tread+ entering the UK market, but installation challenges might be a barrier.
Peloton will also introduce a $95 USD / $125 CAD activation fee for used bikes purchased on the secondary market to ensure quality onboarding and provide additional services.
The Precor division showed progress with over 20% revenue growth and improved gross margins, partly due to exiting North Carolina manufacturing operations.
Peloton has improved member satisfaction scores from 3.4 to 4.1 since December 2023, and ended the quarter with 2.98 million paid connected fitness subscriptions, though there was a net decrease of 75,000.
The company also saw a reduction in paid app subscriptions, with a churn rate of 8.4%.
