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Peloton Made Sales in Subscriptions and Beats Revenue Expectations in Q2 FY2023

New-York based exercise equipment and media company Peloton Interactive Inc (NASDAQ: PTON) saw its shares jump 26% following the release of its Q2 FY2023 financial result. The company wrote that it “significantly outperformed” its expectation in subscriptions revenue and total revenue. Additionally, Peloton recorded a strong performance for Connected Fitness Unit orders and deliveries, Connected Fitness subs, hardware revenue, Adjusted EBITDA, and Free Cash Flow (FCF).

Peloton Interactive in Q2 FY2023

Peloton said its subscription revenue was higher than sales of its connected fitness products for the third quarter in a row during Q2 FY2023. The total revenue for the quarter came in at $792.7 million, exceeding analysts’ expectations of $710 million. CEO Barry McCarthy referred to the results as a possible “turning point” for the company. The Peloton chief added that the financial performance was the best quarterly result in the one year he has spent with the exercise equipment maker.

The Peloton Q2 FY2023 Shareholder Letter reads:

“Despite seasonally strong hardware sales, for the third consecutive quarter, we generated more revenue from subscriptions than we did from hardware sales. This trend is gross margin accretive because subscriptions gross margins significantly exceed hardware gross margins. If this trend continues, which seems likely since we sell more hardware in Q2 than any other quarter of the fiscal year, it represents a structural shift toward improving GM’s in the business.”

Additionally, the company recorded a 98 cents loss per share while expectations were 64 cents per share. Peloton said net loss in Q2 FY2023 narrowed to $335.4 million compared to a loss of 439.4 million or $1.39 per share in the previous year. Although the company has reported losses for the past eight quarters, it has the narrowest loss in the last quarter since its 2022 fiscal Q4.

Peloton CEO: One-Year Anniversary at the Company

The investor letter came as the Peloton CEO celebrated his first-year anniversary at the company. The exercise equipment company also mentioned its launches of the year, such as rolling out third-party sales via Amazon (NASDAQ: AMZN) and Dick’s Sporting Goods.

At the end of FY Q2, Peloton had 6.7 million members and 3.03 million connected fitness subscriptions. The fitness subscription represents a 10% increase YoY. Also, the company’s app has 853,000 subscribers to its app during the period.

Looking ahead to its Q3 FY2023, Peloton aims to attract at least a million prospective members to trial its app.

At press time, Peloton stock is down 0.49% to $16.28. The company has been amassing gains since the year started, growing more than 106.05% in its YTD record.

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Peloton Made Sales in Subscriptions and Beats Revenue Expectations in Q2 FY2023