Peloton Interactive (PTON 0.30%) continues to grow rapidly, albeit at a much slower pace than in recent quarters. After market close on Thursday, the connected-fitness company posted fiscal fourth-quarter results.
Revenue during the period came in ahead of estimates, but the company swung from a profit in the year-ago period to a significant loss, sending shares of the growth stock lower in after-hours trading. The company rolled out a 20% price cut to its original Peloton Bike, which was also concerning.
Here's a closer look at these must-see items from the quarter, along with some other key insights.
Peloton's revenue grew 54% year over year to $937 million. This beat analysts' average forecast for revenue of $927 million.
Notably, however, the growth rate was far below levels in fiscal Q3, when revenue surged 141% year over year. As the stay-at-home catalyst waned amid a reopening economy, decelerating growth came as no surprise. The company was also up against an incredibly tough comparison: Peloton's revenue surged 172% in the year-ago period.
Lower user engagement
Though the company's connected-fitness subscriptions rose 114% year over year to 2.33 million and increased from 2.08 million in the prior quarter, average monthly workouts per connected-fitness subscription sank. The key engagement metric came in at 19.9 monthly workouts per connected-fitness subscription, down from 24.7 in the year-ago period. But management says this was expected.
Negatively impacting the quarter was improved weather, compared to the year-ago period, and re-emerging "consumer mobility."
To Peloton's credit, monthly workouts per connected-fitness subscription were up 66% from engagement levels in the fourth quarter of fiscal 2019.
A huge price cut
In a surprise announcement, Peloton said in its fiscal fourth-quarter report that it was lowering the price of its Peloton Bike by 20% to $1,495. This puts the monthly price of ownership, based on the company's 39-month financing plan, at $39 a month.
"We know price remains a barrier and are pleased to offer our most popular product at an attractive everyday price point," management said in the company's fiscal fourth-quarter report.
But Peloton seems to feel confident about demand for its bike and its other products and services, as management guided for full-year fiscal 2022 revenue of $5.4 billion -- more than the $5.3 billion in fiscal 2022 revenue analysts were expecting.
A narrowing gross profit margin
Peloton's bottom like took a hit during the quarter as gross margin fell 12.1 percentage points to 27.1%. Weighing on gross profit was a previous Peloton Bike price cut in September of 2020, costs associated with its recent voluntary recall of its treadmills, and higher supply-chain and logistics expenses.
All of this led to a net loss of $313 million during the quarter. This compares to a profit of $89.1 million in the same period last year.
Overall, it was a tough quarter for Peloton. But there's clearly still significant demand for the company's products and services. After all, it's not an easy feat to post 54% revenue growth when you're up against a year-ago comparison of 172% growth. Further, the company's fiscal full-year outlook captures management's bullish view for the future.