Key Takeaways
- Shares of Peloton plummeted 12% to $5.76 following guidance for a sixth consecutive year of falling revenue
- Fourth-quarter adjusted earnings per share of $0.13 exceeded the $0.12 consensus; revenue of $607.7M beat the $596.6M estimate
- Full-year fiscal 2027 revenue forecast of $2.3B-$2.4B missed analyst projections of $2.44B
- Paying subscriber base declined 8.8% from the prior year to 2.55 million, with first-quarter outlook suggesting continued erosion
- Chief Executive Peter Stern highlighted upcoming product releases as key drivers for reversing revenue trajectory
Shares of Peloton tumbled 12% to $5.76 during Thursday’s trading session, marking the fitness equipment maker’s steepest one-day decline since February 5, 2026. The sharp downturn occurred even as the company delivered fourth-quarter results that exceeded Wall Street forecasts.
Peloton Interactive, Inc., PTON
The company posted adjusted earnings of $0.13 per share for the quarter, surpassing the analyst consensus estimate of $0.12. Total quarterly revenue reached $607.7 million for the period ended June 30, topping expectations of $596.6 million. Net profit improved significantly to $61.6 million compared with $21.6 million in the year-ago quarter.
However, the solid quarterly performance failed to satisfy market participants.
Management provided fiscal 2027 revenue guidance ranging from $2.3 billion to $2.4 billion. The midpoint of this forecast implies a 3.9% year-over-year decrease and trails the $2.44 billion analyst projection.
This outlook would represent the company’s sixth straight fiscal year of contracting sales. Peloton achieved peak revenue of $4.02 billion during fiscal 2021.
Subscriber Base Continues Shrinking
The company’s paid subscriber count fell to 2.55 million during the quarter, representing an 8.8% year-over-year contraction. Approximately 247,000 paid fitness subscribers were lost during this period.
Management expects this negative trend to persist. Peloton’s first-quarter outlook projects paid subscribers between 2.46 million and 2.49 million, implying a 9.8% year-over-year decrease at the midpoint.
First-quarter revenue is anticipated to land between $545 million and $565 million, essentially flat at the midpoint compared to the same period last year.
More encouraging signals emerged on the profitability front. Full-year gross margin is expected to reach 54%, expanding 140 basis points. First-quarter gross margin guidance of 57% represents a 550 basis point improvement.
Fiscal 2027 adjusted EBITDA is forecasted between $475 million and $525 million, representing a 6.8% increase at the midpoint. The company targets free cash flow of at least $350 million.
Management Emphasizes Product Pipeline
Chief Executive Peter Stern maintained an optimistic tone during the company’s earnings conference call. He emphasized that upcoming product introductions scheduled before calendar year-end would catalyze improvements in both equipment sales volume and overall revenue.
“The product introductions in fiscal 2027, combined with the entry into new categories in fiscal 2028 and beyond, provide the foundation for revenue acceleration,” Stern stated.
The connected fitness company has been executing a comprehensive turnaround strategy since Stern assumed the CEO role in October 2024. Last October, management implemented price increases, restructured its product portfolio, and introduced artificial intelligence enhancements.
Shares had climbed 56% from the all-time closing low of $3.71 reached on March 13, indicating investors had developed cautious optimism ahead of the quarterly report.
Thursday’s selloff wiped out a substantial portion of those recent gains.
Fourth-quarter adjusted EBITDA totaled $142.3 million, up from $140 million in the prior-year period, though falling short of the $150.9 million analyst estimate.
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