Peloton PTON shares tumbled in pre-market trading after the connected fitness group forecast weaker-than-expected holiday quarter revenues that continue to test its turnaround plans under CEO Barry McCarthy.
Peloton said its adjusted loss for the three months ended in September, the group’s fiscal first quarter, was 44 cents a share down from the $1.20 loss reported over the same period last year but wider than the Street’s forecast of a 33 cents per share loss.
Group revenues Peloton said, fell 3% from last year to $595.5million but came in narrowly ahead of Street estimates. The group also noted current quarter sales would likely rise to between $715 million to $750 million, but that tally fell shy of analysts’ forecasts of a $770 million tally.
The group added its close to reaching a breakeven level in terms of free-cash flow, echoing comments from CFO Liz Coddington earlier this summer, with ‘substantial positive cash flow’ expected for the second half of its fiscal year.
Peloton said it ended the quarter with a paid subscriber base of 2.964 million, just ahead of its own forecasts but down 3.7% from the three months ending in June.
Subscriber base numbers are key to Peloton’s growth prospects, as paid subscriptions comprise around 70% of its total sales.
“We had a solid first and performed at or above our guidance. We were able to focus our attention on the performance of the business, putting the negative surprises and distractions of past quarters in the rearview mirror,” McCarthy said in his quarterly letter to shareholders. “And as we customarily do each time this year, we’ve been preparing for the seasonal holiday rush and cementing important partnerships we expect to drive increased brand relevance and growth.”
Peloton shares were marked 8.3% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $4.41 each.
Peloton’s most-recent partnership was signed with Lululemon LULU in late September, and will see the group become the exclusive content provider for Lululemon, in terms of its connected fitness classes and offerings. The sportswear group, meanwhile, will become Peloton’s primary athletic apparel partner on its website and in its retail stores.
