Beating analysts’ projections for an annual turnover of $3.63 billion, Peloton Interactive is projecting revenues of $3.9 billion or more for the current financial year, generating adjusted Ebitda of $300 million, after an impressive first quarter, compared with sales of $1.82 billion and adjusted Ebitda of $117.7 million in the past fiscal year. It had previously guided for a turnover of $3.50 billion to $3.65 billion.
The American fitness company’s revenues jumped by 232 percent to $757.9 million in the three months ended on Sept. 30, with increases of 274 percent to $601.4 million in connected fitness equipment and 133 percent to $156.5 million in subscription revenues. The number of digital subscribers grew by 137 percent to 1.33 million, leading to total memberships of 3.6 million.
The big sales boom in the first quarter led the company to book adjusted Ebitda of 118.9 million for the period, against a loss of $21 million in the year-ago quarter. It also led to a net profit of $69.3 million as compared with a net loss of $49.8 million.
The growth in equipment sales was due partly to a large backlog of orders for its Bike product taken in previous months. This has led the company to start using air freight and to consider setting up a manufacturing facility in the U.S. Lead times for deliveries of the basic bike model are expected to return to a window of four to six weeks only in April.
The gross margin declined by 2.46 percentage points to 43.4 percent in the latest quarter because of a price reduction for the basic bike – a move to gain market share and build up subscriptions ahead of the launch in September of the upgraded Bike+ model. The company is encouraging customers to resell their basic bikes while ordering the higher-end version.
Peloton has started a German website after receiving a good response to its business model in Germany as well as in the U.K. It plans to invest more in marketing going forward.
