Predicting an adjusted Ebitda loss of $325 million for the current financial year, ending in June 2022, Peloton Interactive told the Goldman Sachs Communacopia Conference that it will be a year of important new product releases as well as strong investments in marketing, supply chain and IT.
Notably, the company will focus its product development efforts on strength training and full-body workouts, after pursuing a successful strategy in the area of connected cardio training through its stationary bikes and treadmills. It will be using the large pivoting screen of its latest trademills as a portal for bootcamp-style strength workout programming with bodyweight and dumbells.
Peloton’s management explained its recent $400 price cut on its first Bike model, which is hurting profits, with the fact that it is meant to win over as many households as possible, offering a $39 subscription fee per household to later upsell customers to new equipment. The lifetime value of a connected fitness subscriber far exceeds the cost to acquire one, it said. Furthermore, Peloton’s new private label apparel line is an easy add-on purchase with high margins.
Meanwhile, the company is attacking the corporate wellness and hospitality markets. It is getting an enthusiastic response to a program under which companies pay for or subsidize their employees’ purchases or subscriptions with Peloton. Aided by Precor’s strong presence in the hospitality market, Peloton has already sold its bikes to thousands of hotels. Their guests can try on the equipment or, if they are Peloton subscribers, they can log in with their existing account.
