What happened

Peloton Interactive (PTON -7.32%) reported earnings results for its fiscal 2023 first quarter early Thursday morning, and its shares opened the day's session down more than 10%. 

For the period, which ended Sept. 30, the company missed estimates on both revenue and earnings, and management cautioned that it remains at risk of not reaching its turnaround objectives in 2023. As of 12:17 p.m. ET, the stock had recovered most of the early decline and was down by just 2.5% for the day. But Peloton still has a lot of work to do before the stock can begin to recover from its steep 70% decline year to date. 

So what

There were good signs of progress, including quarter-over-quarter improvements in free cash flow, gross profit margin, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). 

Still, other important metrics were down. Peloton ended the quarter with 6.7 million total members, down 3% from three months prior. Connected fitness revenue fell 31% year over year, offsetting the company's subscription revenue growth.

Total revenue fell 9% year over year, and management warned that the macroeconomic pressures on the consumer could hamper the company's turnaround plan in the near term.

Now what

In the quarterly letter to shareholders, CEO Barry McCarthy stated, "Breakeven [free cash flow] is an objective but it is not a guaranteed outcome." Traders seemed to focus on that statement Thursday. 

However, McCarthy also said that the substantial changes management has made to the business since the beginning of the year have put Peloton on pace to beat its one-year turnaround objectives. Perhaps that optimism, despite the near-term challenges, helped fuel the stock's partial rebound as the session progressed.

Nonetheless, Peloton still has a lot to do beyond simply reaching free-cash-flow breakeven. If its stock price is to meaningfully recover from its multiyear slide, the company will first need to prove it can consistently grow connected fitness subscriptions and revenue.