Connected fitness company Peloton Interactive reported second-quarter financial results before the market opened Tuesday. The company also announced several management changes.
Peloton is replacing embattled CEO John Foley and cutting about 20% of its workforce to help reinvigorate the flailing fitness company.
Blackwells Capital, an activist investor that owns less than 5% of Peloton, recently said it has “grave concerns” about Peloton’s performance and is calling on its board of directors to fire Foley and explore a sale.
Financial Highlights
It generated total revenue of $1,133.9 million, growing 6% year over year. Connected Fitness segment revenue, which includes the contribution from Precor, was $796.4 million, representing an 8% year-over-year decline and 70% of total revenue.
In Q2, Average Monthly Workouts per Connected Fitness Subscription were 15.5, below the pandemic-aided 21.1 figure last year. But representing 23% growth from engagement levels duringQ2 2020. Connected Fitness Subscribers worked out with us 123.2million times, up from 98.1 million workouts in the same period last year, representing 26% year-over-year growth.
Gross profit in Q2 was $280.2 million and 24.7% of revenue, representing a 34% year-over-year decline. Connected Fitness segment gross profit was $51.0 million in Q2, representing an 83% year-over-year decline.
Subscription gross profit was $229.3 million in Q2, representing 95% year-over-year growth. The subscription gross margin was 67.9%, up from 60.3% in the year-ago period.
Total operating expense was $705.9 million and grew 93% year-over-year, representing 62.3% of total revenue versus the prior-year period of 34.4%.
Sales and marketing expense was $349.6 million, and grew 97% year-over-year, representing 30.8% of total revenue versus the prior year period of 16.7%.
The general and administrative expense was $248.7 million, and grew 76% year-over-year, representing 21.9% of total revenue versus 13.2% in the prior year. Significant investments in teams, systems, and Member support accounted for the increased year-over-year spending.
Research and development expense was $100.0 million and grew 110% year-over-year, representing 8.8% of total revenue, versus 4.5% in the year-ago period. The year-over-year deleverage reflects the onboarding of several acqui-hires and the R&D team from Precor.
Net loss for Q2 was $(439.4) million versus net income of $63.6 million in the same period last year. Q2 Adjusted EBITDA was $(266.5) million representing an Adjusted EBITDA Margin of (23.5)% versus 11.0% in the same period last year.
Future Outlook
Approximately 2.93 million ending Connected Fitness Subscriptions.
$950 million to $1 billion total revenue.
The gross profit margin of approximately 23%.
$(140) million to $(125) million Adjusted EBITDA.
Peloton (PTON) reported its earnings Tuesday, slashing its fiscal 2022 revenue to $3.7 billion to $3.8 billion — a sharp decrease from its previously forecasted range of $4.4 billion to $4.8 billion. Shares rose about 30% in midday trading Tuesday.
