Out of Shape: Peloton Reports Third Consecutive Quarterly Sales Decline

Peloton shares stumbled in early trading after the company reported a 13 percent year-over-year drop in revenue for the fiscal third quarter, marking the third straight quarter of declining sales.

Bloomberg reports that despite beating analyst estimates with a revenue of $624 million for the quarter ended March 31, Peloton’s shares dropped four percent in morning trading on Thursday to $6.70 based in part on a 13 percent drop in profit, the third consecutive quarter it has suffered a decline. The fitness equipment and subscription company has been struggling to maintain its pandemic-era growth as consumers return to pre-lockdown routines.

CEO Peter Stern, who took over in January, has been implementing cost-cutting measures and strategic changes to turn the company around. While operating expenses were reduced by 23 percent last quarter, mainly through decreased marketing and sales expenses, subscriber growth remains low, and deteriorating consumer sentiment continues to weigh on hardware sales.

Peloton’s revenue from hardware, such as its bikes and treadmills, fell 27 percent last quarter, while app subscription revenue dropped four percent. The company sources most of its hardware from Taiwan, which now faces 10 percent tariffs, further impacting its bottom line. Peloton expects tariffs to result in a $5 million free cash flow headwind during the fourth quarter.

Despite these challenges, Peloton has raised its annual revenue projection to $2.46 billion to $2.47 billion, slightly above its prior range. The company also expects adjusted EBITDA to be between $330 million and $350 million, crediting cost-cutting measures for the improvement in profitability.

Stern remains optimistic about Peloton’s position in the global fitness and wellness industry, stating, “During this period of economic uncertainty, we believe Peloton is well-positioned to maintain its leadership within the global fitness and wellness industry.”