Peloton Q3 results showed improvements as Peloton adjusted its FY25 outlook and said sales have rebounded.
Peloton, the connected fitness company, amid a general slowdown in consumer spending and economic uncertainty fueled by potential tariffs, reported lower quarterly sales and another loss. But Q3 results did show some improvements as Peloton adjusted its FY25 outlook and said sales have rebounded some since early April under the leadership of new CEO Peter Stern.
The net loss improved by 72 percent year-over-year to a loss of $47.7 million versus $167.3 million in the year-ago quarter as total revenues slid by 13 percent to $624.0 million. Connected Fitness sales were down 27 percent to $205.5 million as subscription revenues tumbled by 4.4 percent to $418.5 million. But the year-over-year total gross margin increased a whopping 780 basis points to 51.0 percent.
The group is now forecasting annual revenues between $2.46 billion - $2.47 billion, up by $7.5 million from its prior forecast but down some 9 percent from the prior fiscal year. The adjusted Ebitda range is $330-$350 million with annual free cash flow estimated at about $250 million. FY Connected Fitness subscriptions are forecast to roll back 7 percent at the midpoint to 2.77-2.79 million. App-based subscriptions, meanwhile, are expected to decline by 30,000 at the midpoint.
In its quarterly shareholder letter, Peloton outlined four key objectives it’s focusing on for FY26. The are to improve member outcomes through better equipment, software, and coaching; meet members everywhere; create members for life; and operate with business excellence. The company intends to increase the brand’s commercial presence via gyms and hotels and test additional micro store locations like one its opened in Nashville, Tennessee.
On the international front where Q3 paid Connected Fitness subscriptions grew; the company is right-sizing costs while deploying local marketing strategies as it has already done in the UK and Germany. In March, Peloton initiated AI-powered subtitles in English, Spanish, and German that now encompasses about 100 classes daily.
