Peloton posts $1 BILLION sales for second quarter but shares fall 8%

Peloton posts $1BILLION sales for second quarter and forecasts four times that in 2021 as gym enthusiasts turn to home fitness equipment amid lockdowns – but shares plunge 8% as firm struggles to keep up with demand

  • Peloton announced its second quarter fiscal 2021 financial results Thursday 
  • It recorded quarterly sales growth of 128% taking single quarter revenue over $1 billion for the first time in the company’s nine-year history 
  • Net income also surged to $63.6 million or 18 cents a share, up from a $55.4 million loss in the previous year 
  • It has upped its sales forecast for the fiscal year from $3.9 billion to $4.08 billion 
  • But shares plunged by more than 8% in extended trading Thursday as the fitness firm admitted it is still struggling to keep up with the increased demand
  • Peloton will invest more than $100 million in air freight and ocean freight over the next six months to speed up deliveries to frustrated consumers 
  • Peloton emerged one of the winners during the coronavirus pandemic as gyms shuttered and people switched to working from home 
  • It’s a major turnaround for the firm after its value plummeted by more than $1 billion in the wake of its ‘sexist’ and ‘dystopian’ Christmas 2019 ad

Peloton has posted $1 billion in sales for its fiscal second quarter and increased its sales outlook for 2021 to $4 billion as gym enthusiasts continue to turn to the at-home fitness equipment maker while the pandemic rumbles on.

The company announced its second quarter fiscal 2021 financial results Thursday recording quarterly sales growth of 128 percent and taking single quarter revenue over $1 billion for the first time in its nine-year history. 

This marks a major turnaround for the high-end exercise bike firm just one year after its value plummeted by more than $1 billion in the wake of its ‘sexist’ and ‘dystopian’ Christmas 2019 advertising campaign.  

Peloton emerged from the scandal to become one of the winners during the coronavirus pandemic as gyms shuttered and people switched to working from home.  

But despite sales and earnings growth, shares plunged by more than 8 percent in extended trading Thursday as Peloton admitted it is still struggling to keep up with the increased demand. 

The company announced it will invest more than $100 million in air freight and ocean freight over the next six months to tackle the issues in its supply chain and speed up deliveries to frustrated consumers.

Peloton has posted $1 billion in sales for its fiscal second quarter and increased its sales outlook for 2021 to $4 billion as gym enthusiasts continue to turn to the at-home fitness equipment maker while the pandemic rumbles on

Peloton recorded revenue of $1.06 billion in the fiscal quarter ending December 31, inching past its projected revenue of $1.03 billion.

This marked a 128 percent increase on sales of $466.3 million in the same period last year.   

Of this, $870.1 million revenue came from its equipment, while $194.7 million was from subscriptions to its at-home workouts. 

Net income also surged dramatically from the same period in the fiscal 2020 year, standing at $63.6 million or 18 cents a share, up from a loss of $55.4 million and 20 cents a share. 

With the company beating its forecasts for the fiscal second quarter, it has now revised its sales forecast for the full fiscal year to $4.08 billion.

This is up from the previous projection of $3.9 billion as Peloton expects to continue on its growth trajectory. 

‘Our revised forecast anticipates slow but steady progress in narrowing our order-to-delivery windows over the remainder of the fiscal year,’ the company said.  

Its connected fitness subscriptions – where consumers pay a monthly fee for classes to sync to their Peloton equipment – increased 134 percent to 1.67 million from the previous year. 

And the company predicts this number will grow even further to 2.28 million users by the end of the fiscal year, beating previous predictions of 2.17 million. 

But despite sales and earnings growth, shares plunged by more than 8 percent in extended trading Thursday as Peloton admitted it is still struggling to keep up with the increased demand

Digital subscriptions for people participating in classes on their smartphones or other devices also increased 472 percent to 625,000 with more than 4.4 million users projected by the end of the fiscal year.   

The company also recorded strong signs of customer retention suggesting people are sticking with the brand and its subscriptions several months after buying bikes during lockdown.

Its average net monthly connected fitness churn was 0.76 percent in the latest quarter.

While this marked a slight increase from 0.65 percent in the same period last year, Peloton predicts churn rate will fall below 0.75 percent in the current quarter and will close out below 0.8 percent for the whole year.

Workouts on its equipment skyrocketed more than 300 percent to 98.1 million in the quarter, with the average user doing 21.1 workouts each month – up from less than 13 in the same quarter in the 2020 fiscal year.  

Peloton bounced back from its reputational damage at the end of 2019 when the pandemic hit. 

Gyms closed, stay-at-home orders and a move to home working meant people turned to at-home fitness. 

While gyms have now reopened across parts of the US, the quarterly financials point to Peloton’s apparent staying power. 

The company announced its second quarter fiscal 2021 financial results Thursday recording quarterly sales growth of 128 percent and taking single quarter revenue over $1 billion for the first time in its nine-year history. Pictured CEO John  Foley 

But the firm has struggled to keep up with its sudden surge in demand. 

‘West Coast port delays and Covid-related factors continue to present challenges to returning our delivery times to pre-pandemic levels,’ Peloton said in Thursday’s earnings statement. 

The company announced major investment in its supply chain to tackle the ‘longer than acceptable wait times’ facing customers but conceded that this will dampen profits in the short term. 

More than $100 million investment is being pumped into air and expedited ocean-based delivery over the next six months.

‘While this investment will dampen our near-term profitability, improving our Member experience is our first priority,’ the company said. 

This sent shares falling 8.11 percent or 12.78 points to $144.75 in after hours trading Thursday. 

This came after the stock had closed up 7.04 percent or 10.36 points at $157.53. 

Chief Executive John Foley said Thursday he is ‘hopeful’ that the company will benefit from the rollout of the coronavirus vaccine and the economy reopening over the coming year.  

Overall, share price has increased 3.8 percent so far in 2021 after soaring by roughly 500 percent in 2020.  

Peloton has become one of the winners during the coronavirus pandemic as gyms shuttered and people switched to working from home

Its strong 2020 came as a shock after the company faced a boycott toward the end of 2019 over its Christmas 2019 ad.

The ad featured a woman being given a Peloton as a gift from a man.

Critics panned it calling it ‘sexist,’ ‘dystopian’ and ‘elitist’ and saying it showed a man controlling his female partner.    

Peloton’s valuation plunged by more than $1billion off the back of the ad as investors sold off stock.  

In December 2020, Peloton announced it was buying fitness equipment provider Precor for $420million, marking its biggest acquisition to date and coming off the back of its successful year.

The purchase of Precor, a company whose fitness machines populate hundreds of commercial and hotel gyms, gives the company its first manufacturing capacity in the US which could also go some way to speeding up deliveries.   

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