Peloton Interactive Inc. reported mixed financial results for its fiscal second quarter of 2025, showcasing both strides and setbacks. The company posted a loss per share of 24 cents, wider than the anticipated 18 cents. However, it exceeded revenue expectations by generating $674 million, compared to the forecasted $654 million. Peloton’s adjusted EBITDA stood at an impressive $58.4 million, surpassing projections by more than double. Yet, the company faced a 9% year-over-year sales decline, while achieving a connected fitness gross margin of 12.9%, marking the first time in over three years it has reached double digits.
The recent appointment of Peter Stern as CEO on January 1 is a pivotal change for Peloton. Stern's previous experience in managing Ford's subscription business was a significant factor in his selection. Under his leadership, Peloton aims to emphasize its high-margin, recurring subscription revenue as its primary value proposition. The company has strategically reduced costs in marketing, administrative, and research and development areas to streamline operations and enhance profitability.
Peloton's net loss for the quarter ending December 31 was reported at $92 million, or 24 cents per share. Despite this, the company remains optimistic about future financial performance, forecasting adjusted EBITDA between $70 million and $85 million, significantly above the expected $50.4 million. While the sales outlook for the current quarter appears less promising than anticipated, Peloton projects a healthier cash flow and expects fiscal 2025 revenue to align closely with market expectations.
The company's efforts to curb expenses have been notable, with sales and marketing costs reduced by 34%, general and administrative expenses down by 18%, and research and development spending dropping 25%. Overall, Peloton managed to cut total operating expenses by 25% compared to the same period last year.
Peloton's financial performance in the second quarter reflects both its challenges and its potential. The company’s ability to exceed revenue expectations despite a wider-than-expected loss per share highlights its strategic cost-cutting measures and focus on subscription services. The increase in adjusted EBITDA suggests that these efforts may be yielding positive results, although the decline in year-over-year sales indicates that challenges remain.
The appointment of Peter Stern as CEO signals a strategic shift towards maximizing subscription-based revenue streams. Stern’s experience in subscription management is seen as a valuable asset in navigating Peloton through competitive market dynamics. His leadership will be crucial as the company seeks to strengthen its financial position while maintaining its market presence.
Looking ahead, Peloton's projection of better-than-expected cash flow and adjusted EBITDA offers a glimpse of optimism for investors. The company's commitment to aligning fiscal 2025 revenue with market expectations reflects its proactive approach to addressing financial challenges and capitalizing on growth opportunities.