Peloton (PTON) Stock Jumps on Earnings
Shares of Peloton (PTON) are up double digits this morning after the company delivered a better-than-expected Q2 fiscal 2025 report before this morning’s opening bell. This is a turnaround story so take the numbers in that context. Management is working to curb costs and lay the groundwork for a return to growth, not trying to grow right now.
There are a lot of metrics to share so I’m going to put them in bullet points rather than prose:
Q2 Fiscal 2025 Results
- Total revenue -9.4% to $673.9 million, 3.2% ahead of expectations.
- Adjusted EPS of -$0.04, $0.03 better than expected.
- Q2 Adjusted EBITDA significantly ahead of estimates.
- Ending Paid Connected Fitness Subscriptions came in below estimates at 2.88M, slightly below expectations of 2.95M, (-4% year over year and -1% quarter over quarter).
- Average Net Monthly Paid Connected Fitness (CF) Subscription Churn came in at 1.4% vs. estimates of 1.53%, (i.e., fewer subscribers canceled than expected).
Guidance
- Peloton raised fiscal 2025 guide for Adjusted EBITDA by $60 million (to $300 - $350 million), FCF (to at least $200 million), ending paid connected fitness subs (to 2.79 million).
- Fiscal 2025 revenue guide narrowed to $2.43 - $2.48 billion.
- Guidance signals continued improvements in profitability, largely due to expectations for gross margin expansion (50% in 2025) and continued operating cost savings.
Looking forward, management focused on:
- Innovative Product Development: New products to improve member outcomes.
- Expansion in New Markets: Meet potential members in various global markets.
- Enhanced Member Connection: Deepening relationships through community features and support.
- Strategic Marketing Adjustments: Tailored campaigns to reach diverse demographics effectively.
- Sustained Financial Discipline: Continued emphasis on cost management and margin improvement.
Takeaway
The quick read on results has analysts focused on Adjusted EBITDA beat, cost efficiencies, return to double-digit gross margins for Connected Fitness Products, and raised Fiscal 2025 guidance for Adjusted EBITDA and FCF.
Numbers are a little messy, but brand value is super strong. Management is still focused on subscriber retention, cost reduction and product mix. If they get this all right, they believe it will be a lot easier to grow.
Watching the stock closely. Keeping at buy half for now. BUY HALF
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