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Sep 30, 2023
Peloton Q1 2024 Earnings Report
Peloton had a solid Q1 FY24, performing at or above guidance and focusing on business performance and growth initiatives.
Key Takeaways
Peloton's Q1 FY24 revenue was $595.5 million, with a gross profit of $285.4 million and a gross margin of 47.9%. The company reported a net loss of $159.3 million and free cash flow of $(83.2) million. Peloton ended the quarter with 2.96 million paid connected fitness subscriptions and 763 thousand paid app subscriptions.
Total revenue was $595.5 million, within the guidance range of $580 million to $600 million.
Total Gross profit was $285.4 million, yielding a gross margin of 47.9%, ahead of the 46.5% guidance.
Ended the quarter with 2.96 million Ending Paid Connected Fitness Subscriptions and 763 thousand Peloton App subscribers.
Net cash used in operating activities was $(79.2) million and free cash flow was $(83.2) million, including $(23.5) million associated with the Bike seat post recall.
Peloton
Peloton
Peloton Revenue by Segment
Revenue by Segment
Connected Fitness Products Revenue
CapyFin.comSubscription Revenue
CapyFin.com Forward Guidance
Peloton anticipates seasonal growth in hardware sales and modest improvement in Paid Connected Fitness Subscription churn in Q2. They also expect a sequential improvement in Paid App gross additions, offset by increased churn due to the expiration of legacy content access. A sequential decline in Q2 total gross margin and Adjusted EBITDA is expected due to a mix-shift toward Connected Fitness and higher sales and marketing expenses.
Positive Outlook
- Seasonal growth in hardware sales is expected in Q2.
- Modest sequential improvement to Paid Connected Fitness Subscription churn is anticipated.
- Sequential improvement in Paid App gross additions is expected due to improvements to the conversion funnel.
- Revenue growth acceleration in the second half of the fiscal year, fueled, in part, by the expected relaunch of Tread+.
- Continued growth of our Bike rental program and strong growth in our International markets.
Challenges Ahead
- Uncertain macroeconomic environment.
- Sequential increase in Paid App Subscription churn due to the expiration of legacy content access.
- Sequential decline in Q2 total gross margin as a result of a seasonal mix-shift toward our Connected Fitness segment.
- Sequential decline in Q2 Adjusted EBITDA due to higher sales and marketing expense.
- Uncertainty related to the performance of the Tread+ relaunch and our ability to efficiently grow Paid App subscribers.
Revenue & Expenses
Visualization of income flow from segment revenue to net income