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Jun 30, 2023
Peloton Q4 2023 Earnings Report
Peloton's Q4 2023 performance reflected a seasonal business with subscription growth offset by hardware sales slowdown and higher churn, though positive trends emerged towards the end of the quarter.
Key Takeaways
Peloton's Q4 FY2023 saw a 4% year-over-year increase in Connected Fitness subscriptions, but a sequential decline due to seasonal hardware sales slowdown and higher churn. Despite these challenges, the company achieved positive free cash flow (excluding the DISH legal settlement). The company is focused on growth initiatives, including new app subscription tiers and partnerships.
Connected Fitness subscriptions grew 4% year-over-year but declined sequentially due to seasonal factors and higher churn.
The seat post recall impacted sales and subscriptions, with approximately 750,000 requests for replacement seat posts.
The company achieved positive free cash flow (excluding the DISH legal settlement) for the second time in its turnaround.
New initiatives, including rental services and app subscription tiers, show early signs of success.
Revenue by Segment
Forward Guidance
Peloton anticipates revenue between $580 million and $600 million for Q1 FY24. Gross margin is expected to be between 46.5%. Adjusted EBITDA is projected to be between -$20 million and -$10 million.
Positive Outlook
- Continued improvements in cost structure and operational efficiency.
- Modest continued mix-shift in Q1 revenues to subscription versus hardware revenues.
- Modest sequential improvement to Average Net Monthly Paid Connected Fitness churn.
- New growth initiatives (such as our new App subscription tiers) are challenging to forecast.
- Paid App Subscription guidance reflects continued marketing investment to drive awareness and growth of our free app tier users.
Challenges Ahead
- App marketing spend will be relatively inefficient in driving Paid App subscriber gross additions in the near term.
- A substantial majority of costs incurred in connection with the development of internal-use software will not be eligible for capitalization and will be recognized as research and development expense.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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