Peloton soars 20% to record highs after earnings show people flocking to its bike as gyms are closed across the country
- Peloton soared as much as 20% Thursday morning after reporting earnings that topped analyst revenue estimates.
- The company has seen a surge in demand for its connected fitness bike as gyms across the country are closed due to the coronavirus pandemic.
- Peloton hiked its guidance and said it expects to have more than 1 million full-year connected fitness subscribers.
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Peloton soared as much as 20% Thursday morning to record highs after reporting fiscal third quarter earnings that topped analyst revenue and guidance estimates.
The company saw a surge in demand for its connected bike as gyms across the country are closed due to the coronavirus pandemic.
Here are the key numbers:
Revenue: $524.6 million, versus the $491.1 million estimate
GAAP earnings per share: -20 cents, versus the -19 cents estimate
Connected fitness subscribers: 866,000, versus the 857,000 estimate
Q4 revenue guidance: $500 million to $520 million, versus the $381 million estimate
Q4 Ebitda guidance: $55 million to $65 million, versus the -$25 million estimate
One of the most striking figures to come out of Peloton's third quarter earnings release was its churn rate of 0.46%.
This represents high engagement among its current user base, and mean less than half a percent of its customers stopped subscribing from the connected bike that offers live virtual cycling classes for a monthly fee.
Additionally, on an adjusted Ebitda basis, Peloton posted a profit of $23.5 million versus its own previous guidance range of -$35 million to -$25 million, suggesting that the strong results were even a surprise to Peloton executives.
Despite the strong adjusted Ebitda figures, Peloton still reported a net loss for the quarter of -$55.6 million.
There were signs that Peloton was on the verge of reporting blockbuster earnings just a couple weeks ago when it was reported that 23,000 Peloton members attended a single live virtual cycling class, setting records and suggesting customer engagement was near record highs as people are stuck at home.
Peloton expects this strength to last well into the next quarter.
The company said in a shareholder letter, "During the last few weeks of Q3, we saw a significant increase in demand for our bike, which has continued into Q4 so far."
Additionally, the company is not able to meet current demand and expects elongated wait times to last well into next quarter, a good problem to have as most businesses suffer from the coronavirus pandemic.
"We entered Q4 with a backlog of bike deliveries in all geographies and sales continue to surpass expectations in the first several weeks of Q4 due to COVID-19," the company said. "Unfortunately, the unexpected sharp increase in sales has created an imbalance of supply and demand in many geographies, causing elongated order-to-delivery windows for our customers."
Shares of Peloton traded up almost 40% year-to-date.