Peloton Q3 2023 Earnings Report
Key Takeaways
Peloton's Q3 2023 showed positive year-over-year trends, including a 5% increase in connected fitness subscriptions, a 47% rise in gross profit, and substantial reductions in both Adjusted EBITDA and Free Cash Flow losses. The company also settled a patent license agreement with DISH Technologies, which is expected to impact Q4 cash flow.
Connected fitness subscriptions grew by 5% year-over-year.
Gross profit increased by 47% year-over-year.
Adjusted EBITDA loss decreased by $175 million year-over-year.
Free Cash Flow loss reduced by $691 million year-over-year.
Peloton
Peloton
Peloton Revenue by Segment
Forward Guidance
Peloton's Q4 FY23 outlook anticipates a decrease in ending connected fitness subscriptions and revenue, reflecting typical seasonality. Gross margin is expected to improve sequentially due to a mix-shift towards the Subscription segment, while connected fitness subscription churn is anticipated to increase modestly.
Positive Outlook
- Sequential gross margin improvement is expected.
- Improvement will be driven by a continued mix-shift of total revenues toward our Subscription segment.
- Progress toward achieving our financial targets for FY23.
- Progress on free cash flow which improved $691 million compared to one year ago.
Challenges Ahead
- Guidance range for end of period Connected Fitness Subscriptions reflects lower near-term visibility.
- Guidance range for revenue reflects lower near-term visibility.
- Typically the lowest volume quarter of our fiscal year.
- Anticipate a modest sequential increase in Connected Fitness subscription churn.
Revenue & Expenses
Visualization of income flow from segment revenue to net income