Peloton Interactive, amid a turnaround, has raised its FY25 adjusted Ebitda guidance and hired a new president and CEO who will begin leading the group on Jan. 1. Peter Stern, a former Apple and McKinsey senior executive who is currently president of Ford Integrated Services, will join the company already at work on reversing its recent difficult financial fortunes. Director Karen Boone, who has been serving as interim co-CEO with Chris Bruzzo, will serve as the sole interim President and CEO through Dec. 31.
In Q1 ended Sept. 30, the group reported a 2 percent drop in reported net revenues to $586.0 million from $595.5 million and a net loss of $900,000 against a year-ago loss of $159.3 million. Gross margin improved by 390 basis points to 51.8 percent from 47.9 percent, and adjusted Ebitda was $115.8 million against $9.1 million in the year-ago period. Free cash flow turned positive at $10.7 million versus a negative $83.2 million in Q1/24. During the period, recommended retail prices on the brand’s Peloton Bike and Peloton Bike+ products were raised in international markets, including in Germany, where the operation was shifted to a third-party retail and distribution model.
Additionally, work was done to reduce promotional activity around the brand’s hardware portfolio and put more effort behind the company’s higher-margin revenue streams such as Precor and bike rental products.
Peloton ended the period with 2.9 million paid connected fitness subscriptions, a net decline of 81,000 but ahead of guidance due to fewer subscription pauses that were partially offset by fewer gross additions. Also, Q1-end paid app subscriptions were 582,000, ahead of a forecast due to higher additions and a better churn rate (7.1%) than expected.
While the group continued its retail closure efforts in Q1, in November, it intends to begin evaluating a more cost-efficient retail model through a smaller store concept. Peloton is also moving forward with a strategy to expand its third-party retail channels. The Peloton Bike+ will be available at 300 Costco locations with special pricing for members and the warehouse club’s website for a limited time. In Germany, the company has shifted its retail and distribution model to Amazon and FitShop.
On the product development front, Peloton is working on products that will support long-term subscriber growth. These include a strength app, game-inspired fitness experiences, and personalized plans. Each of these initiatives is being developed to drive higher engagement among subscribing members through personalization, social engagement, and alternative workout experiences.
