Peloton Arranges $750 Million Term Loan After Losses Soar

Scott Peters
10 May, 2022
New York City

Peloton Interactive, Inc reported March quarter revenues declined 24% to $964.3 million and net loss soared eight-fold to $757.1 million. 

Diluted loss per share increased to $2.27 from 3 cents a year ago. 

The company is struggling with a surge in inventories as more workers return to office ending the pandemic era boom in orders. 

The equipment sales declined 42% to $594.4 million but subscription revenues increased 55% to $370 million.  

Gross profit fell 59% to $184.2 million after the company wrote down inventories, faced higher supply chain costs and lowered retail sale price. 

Subscription revenues in the quarter are 38.4% of total sales compared to 19% a year ago and the company is accelerating its business mix repositioning to higher margin business. 

Membership subscribers jumped 29% to 7.0 million and subscription revenues increased 42% to $3 million. 

New subscriber growth in the quarter declined 53% to 0.195 million from 0.42 million a year ago. 

Average monthly churn rate increased in the quarter to 0.75% from 0.3% a year ago. 

However, the company benefited from a growing acceptance of its digital app.

Digital app subscriptions increased 10% or 114,000 to 976,000 at the end of the quarter from a year ago. 

The company ended the quarter with $879.3 million in cash and cash equivalents and also has a $500 million revolving credit facility, which remains undrawn to date.

Guidance and Outlook 

The company estimated fourth quarter revenues between $675 million and $700 million. 

Gross margin estimated to increase to 31% from 27% in the fourth quarter a year ago. 

Adjusted operating loss to fall between $115 million and $120 million compared to a loss of $45 million a year ago. 

The company estimated subscriber base in the fourth quarter to increase to 2.98 million compared to 2.3 million a year ago, an increase of 28% from a year ago and 1% increase from the third quarter. 

Company and Stock 

Peloton is headquartered in New York City, New York and employs about 6,700 people. 

Peloton stock declined as much as 18% to $11.30 and has fallen 63% in the year so far.