PTON) Investors Ride a Wave of Gains on Q4 Earnings

August 22, 2024 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas, including sports and athletic apparel stocks reports on trading and news for Peloton Interactive, Inc. (Nasdaq:PTON).

The stock is trading at $4.6315, up $1.2715, gaining 37.8592%, with a day’s high of $4.65.

Peloton today announced its financial results for fourth quarter and full year fiscal 2024.

In their shareholder letter they said:

We ended the 2024 fiscal year with strong Q4 performance, meeting or exceeding our guidance on all key metrics and making continued progress on a number of our financial goals. With a stable financial foundation now in place, we can focus on innovation in a more strategic way, enhancing our Member experience and driving sustainable, profitable growth over the long term. In Q4 we continued to delight our Members, launching new and compelling content across our portfolio with a particular emphasis on Tread programming, as well as social tools designed to further build community on our platform.

We achieved modest Y/Y revenue growth in Q4 for the first time since Q2 FY22. Total revenue in the quarter was $644 million, up 0.2% Y/Y, and the subscription segment delivered $431 million of revenue, up 2.3% Y/Y. This recurring subscription revenue stream continues to deliver low churn with a strong gross margin of 68.2% in Q4, up 100 bps Y/Y.

We have improved our key profitability metrics. Our GAAP Net Loss for Q4 was $30 million, which was an improvement of $211 million Y/Y and $137 million Q/Q, and our Net Cash Provided By Operating Activities was $33 million, an increase of $88 million Y/Y and $21 million Q/Q.

We are especially proud of our outperformance across all of our Non-GAAP profitability metrics, which we believe are useful to investors for understanding and evaluating our operating results. We delivered positive Adjusted EBITDA* and Free Cash Flow* for the second consecutive quarter, something we haven’t accomplished since Q2 FY21. In Q4 we achieved $70 million of Adjusted EBITDA, up $105 million Y/Y and up $64 million Q/Q. We also achieved $26 million of Free Cash Flow, up $100 million Y/Y and tripling in comparison to last quarter. We’re making significant progress toward right sizing our cost structure and we’ll continue to optimize expenses.

Our improvement in profitability reflects our continued focus on aligning our costs with the size of our business. We have made substantial progress toward achieving over $200 million run-rate cost savings from our restructuring plan announced in May, delivering approximately $15 million in cost savings in the quarter. This initiative remains on-track to achieve the savings we originally anticipated by the end of FY25. In addition to our restructuring plan, we have also begun to allocate media investment with greater efficiency. In Q4, Sales & Marketing expense decreased $26 million, or 19% Y/Y. We expect continued Y/Y reductions in Sales & Marketing spend throughout FY25.

In May we successfully concluded a refinancing of our balance sheet, accomplishing the goals of deleveraging and extending our maturities with more flexible terms at a reasonable cost of capital. We decreased debt by roughly $200 million and our average maturity has been extended to 2029. With our expectation of sustainable positive Free Cash Flow, we are exploring how to best deploy excess cash on our balance sheet as part of an overall capital allocation strategy.

Aside from our financial improvements, we are making headway on a number of other fronts. In Q4 we launched the Bike+ rental program in the UK and early results have outperformed our expectations. Globally, our bike rental offering continues to drive incremental, and we’re pleased to see a continued improvement in retention, with average net monthly paid subscription churn for rental down 110 bps Y/Y in Q4. As we’ve shared previously, the ability to use refurbished inventory is key to achieving sustainable unit economics for our original Bike rental offering. As our refurbished inventory levels have come down, we no longer have sufficient refurbished inventory to support the original Bike rental program, so we ceased offering it as of August 1. Since then, we have seen higher take rates for our other offerings catered to cost conscious customers, including Bike+ rental, refurbished original Bike sales, as well as financed new Bike sales. These alternative programs have stronger unit economics than original Bike rental, with more cash paid upfront and a stronger retention profile.

Recent News

https://finance.yahoo.com/news/peloton-interactive-inc-reports-fourth-110100883.html

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