© Reuters. FILE PHOTO: A Peloton exercise bike is seen after the opening bell for the company’s IPO rings at the site of the Nasdaq exchange in New York City, September 26, 2019. REUTERS/Shannon Stapleton/Photo archive
by Priyamvada C
(Reuters) – Peloton Interactive Inc forecast revenue above expectations for the current quarter on Wednesday, in an early sign that its efforts to boost sales, including by selling on third-party platforms, were starting to pay off.
Shares of the fitness equipment maker rose as much as 22.4% after it also reported a slowdown in cash burn on a series of cost-cutting measures.
Peloton (NASDAQ:) was all the rage among fitness enthusiasts during the COVID-19 shutdowns, with the company hitting a peak market value of nearly $50 billion in early 2021. But with people returning to gyms, the company saw demand for its equipment decline.
In response, the company had announced plans to sell its fitness equipment on e-commerce giant Amazon.com (NASDAQ:) and Dick’s Sporting Goods (NYSE:) Inc.
Peloton CEO Barry McCarthy, in a letter to investors, outlined goals of returning to revenue growth and breaking even cash flow on a sustained basis in his second year in office.
Analysts, however, say it’s likely to be a bumpy ride for Peloton in the coming months, and some aren’t all that impressed with the latest quarterly report.
“The business model still has a lot to prove and more time is needed to assess whether it is viable or on the way to further decline,” said Neil Saunders, managing director of GlobalData.
For the third quarter, Peloton forecast revenue between $690 million and $715 million, above expectations of $689.1 million, according to Refinitiv data.
The company maintained its goal of breaking even free cash flow by the end of fiscal 2023, a key milestone investors are watching.
However, Peloton said difficult economic conditions were affecting consumer spending patterns and near-term demand for connected fitness hardware is likely to remain a challenge.
Meanwhile, the company’s net loss narrowed to 98 cents a share in the second quarter, but was higher than expectations for a 64-cent loss.
Cash burn fell to $94.4 million from $546.7 million.
