A Peloton stationary bicycle inside a store in Palo Alto, California, US, on Monday, Aug. 5, 2024.
David Paul Morris | Bloomberg | Getty Images
Peloton on Thursday posted its second profitable quarter in a row as it released strong guidance for the crucial holiday shopping season, banking on its relaunched product assortment to drive growth.
The connected fitness company posted a surprise net income of $13.9 million in the three months ended Sept. 30, compared with a loss of $900,000 a year earlier.
For the current quarter, Peloton’s strongest for hardware sales, the company is expecting revenue to be between $665 million and $685 million, a slight increase from the year-ago period and largely better than Wall Street expectations of $665 million, according to LSEG.
Peloton also raised its full-year adjusted EBITDA outlook and is now expecting it to be between $425 million and $475 million, up $25 million from its previous outlook on both ends. Much of that forecast is ahead of analyst expectations of between $400 million and $450 million, according to StreetAccount.
Shares jumped about 11% in extended trading Thursday.
Despite the good news, Peloton is still dealing with issues from its past. Earlier on Thursday, it said it was initiating yet another recall from its early product lineup. The Consumer Product Safety Commission said the company was recalling 833,000 of its original Bike+ devices after receiving reports that the seat post can break and detach during a ride – the same issue that prompted a recall of its base Bike model in 2023.
Peloton’s latest recall cost the company $13.5 million during the quarter reported Thursday, contributing to a 0.3 percentage point decline in its gross margin.
For its first fiscal 2026 quarter reported Thursday, Peloton beat analyst expectations on the top and bottom lines.
Here’s how the fitness company did in its first fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: 3 cents vs. 0 cents expected
- Revenue: $551 million vs. $540 million expected
Sales dropped to $551 million, down about 6% from $586 million a year earlier.
Under the direction of new CEO Peter Stern, who took the helm in January, the connected fitness company has been finalizing its cost cuts and turning its attention back to growth now that it’s back to regularly generating free cash flow and operating profitably.
Last month, Peloton relaunched its product assortment, introduced a commercial equipment line and raised prices for both subscriptions and hardware ahead of the holiday shopping season.
The revamped assortment, touching its bike, rowing machine and treadmill products, features an AI-powered tracking camera, speakers, a 360-degree swivel screen and hands-free control, among other new features.
Peloton is betting consumers will be willing to spend big on the products for flashy holiday gifts, either for themselves or a loved one. But just over a month into the launch, it remains unclear how they’re performing. The company’s first fiscal quarter ended the day before the new products were launched.
Across the retail industry, the personal electronics category has been under pressure.
While Peloton operates in a category of its own, shoppers have been pulling back on other big-ticket items and being more careful about where their dollars are going in an unsteady economic environment.
During Peloton’s conference call at 5 p.m. ET, investors will be looking out for details on how the new products are performing so far, plus any additional color on how the latest recall will impact its financial results.
After Peloton’s last recall, the company said at the time that it saw higher-than-expected membership churn and costs as a result.
