Peloton peddles to a record $1 billion in quarterly revenue as paid digital subscriptions grow 472%

Company is investing at least $100M in shipping over the next 6 months to curb delivery delays

Peloton Interactive Inc. notched its first-ever quarter with revenue above $1 billion, but its shares sank in after-hours trading Thursday after the company’s investments in shipping and other areas meant to address delivery delays weighed on its earnings outlook for the current period.

The maker of connected fitness equipment saw sales jump to $1.06 billion from $466 million a year ago in its fiscal second quarter, above the $1.04 billion that analysts tracked by FactSet had been projecting. Peloton continues to face inventory shortages “with longer-than-acceptable wait times for the delivery of our products” despite increased production of its two exercise-bike models in recent months, according to the company’s shareholder letter.

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Shares were off 6% in after-hours trading Thursday.

The company posted net income of $63.6 million, or 18 cents a share, versus a loss of $55 million, or 20 cents a share, in the year-earlier period. Analysts surveyed by FactSet expected 8 cents a share in GAAP earnings.

Peloton reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $116.9 million, versus a loss of $28 million a year prior and ahead of the FactSet consensus, which called for $78 million.

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The company had 1.67 million Connected Fitness subscribers as of the latest quarter and 625,000 paid digital subscriptions.

For the March quarter, Peloton expects revenue of $1.1 billion and adjusted Ebitda of $10 million. Analysts were modeling $1.08 billion in revenue and $66 million in adjusted Ebitda. The company also anticipates 1.98 million Connected Fitness subscribers, above the 1.65 million that analysts tracked by FactSet were projecting.

TickerSecurityLastChangeChange %
PTONPELOTON INTERACTIVE114.78-7.94-6.47%

The company plans to invest more than $100 million in “air freight and expedited ocean freight” in the next six months to improve its delivery times. Investments in shipping, research and development, and other categories “are impacting our near-term profitability,” Peloton said in its investor letter, but the company believes they will drive better customer satisfaction.

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Peloton continues to expect at least $300 million in Ebitda (earnings before interest, taxes, depreciation, and amortization) for the full fiscal year, and it raised its revenue outlook for the period to $4.075 billion from $3.9 billion.

Peloton shares have gained 33% over the past three months as the S&P 500 SPX has risen 12%.