The group, citing faster-than-expected operating expense reductions and greater confidence in full-year hardware sales, has raised its FY25 outlook for adjusted Ebitda and free cash flow.
Peloton’s FY25 adjusted Ebitda range was raised by 21 to 25 percent to a range of $300-$350 million. The free cash flow target, meanwhile, was lifted by 60 percent to at least $200 million from $125 million previously.
In its quarterly shareholder letter, Peloton commented, “We see significant opportunities ahead, but we have a steep hill to climb to reach sustained, profitable growth.” Since Jan. 1, the group has been led by President and CEO Peter Stern, a Peloton member since 2016.
“We’re setting the stage to be able to grow while ensuring we can deliver meaningful adjusted Ebitda and free cash flow by rightsizing our expenses, which are down 25 percent year-over-year in Q2,” Stern told analysts. “…And while we’re pleased with progress that we’ve made, we do see further opportunities for cost optimizations, and we have built a culture of cost discipline into our company.”
Peloton is on track to deliver $200 million in cost savings this FY, Stern added.
In Q2, the company reported a net loss of $92.0 million against a loss of $194.9 million on a 9 percent rollback in total revenues to $673.9 million from $743.6 million. Subscription revenues dipped by 1 percent to $420.6 million as Connected Fitness product revenues declined by 21 percent to $253.4 million. International hardware and Connected Fitness sales exceeded expectations. Higher-than-forecast Tread+ sales prompted inventory constraints and temporary longer delivery times. Low-priced refurbished bikes also generated higher sales than expected.
The Connected Fitness gross margin improved by 860 basis points year-over-year to 12.9 percent. Peloton ended the period with 2.88 million paid Connected Fitness subscriptions, at the high end of guidance, helped by a favorable net churn rate.
