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Peloton Crushes Expectations, Resulting in First-Time Profit

By Danny Vena – Sep 10, 2020 at 6:29PM

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The home fitness company's results drove its stock to near all-time highs in after-hours trading.

Peloton (PTON 3.43%) reported blockbuster fiscal fourth-quarter results (ended Jun. 30) after the market close on Thursday, continuing to reap the rewards of the stay-at-home economy. The home fitness specialist reported revenue of $607 million, which soared 172% year over year, resulting in earnings per share of $0.27 -- the first time the company has generated a profit.

Strong customer adoption helped boost the robust results. Connected fitness subscriptions grew to over 1.09 million, up 113% year over, while paid digital subscriptions of 316,800 more than tripled. This resulted in total members that increased to 3.1 million, up from 1.4 million in the year-ago quarter.

A woman doing yoga in a living room with an instructor on the television.

Image source: Peloton.

Customers are more engaged than ever before, as the total number of connected fitness workouts grew 333% to 76.8 million, up from just 17.8 million during the same period last year. Subscribers are averaging 24.7 workouts per month, a new quarterly record, more than double the 12 workouts in the prior-year quarter. Peloton's trailing-12-month retention rate was 92%, while churn dipped to 0.52%.

Beyond its flagship stationary bike and treadmill offerings, Peloton's expanded content -- which includes strength training, yoga, meditation, and floor-based exercise like cardio -- helped boost member engagement levels to new all-time highs.

The company also touted its goal of "being on every screen in your hand and in your home," expanding to the four leading streaming TV platforms, including Roku (ROKU 0.69%), Apple's (AAPL 0.19%) Apple TV, Amazon's (AMZN -1.08%) Fire TV, and Alphabet's (GOOGL) (GOOG -0.17%) Android.

Peloton expects the good times to continue, forecasting revenue growth of 218% year over year at the midpoint of its guidance, and is expecting connected fitness subscriptions to grow about 135%.

This drove the stock to near all-time highs in after-hours trading, after hitting new highs earlier in the day.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares), Amazon, Apple, and Roku. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Peloton Interactive, and Roku and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

Stocks Mentioned

Peloton Interactive Stock Quote
Peloton Interactive
$11.77 (3.43%) $0.39
Apple Stock Quote
$148.31 (0.19%) $0.28
Alphabet Stock Quote
$100.99 (%) Stock Quote
$95.50 (-1.08%) $-1.04
Alphabet Stock Quote
$101.28 (-0.17%) $0.17
Roku Stock Quote
$59.78 (0.69%) $0.41

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