Peloton Rises as Holiday Outlook Tops Estimates on Overhaul

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(Bloomberg) — Peloton Interactive Inc. shares rose as much as 12% after it shared a stronger-than-anticipated holiday quarter forecast, as it aims to reposition itself as a holistic wellness brand and regain profitability after its first hardware revamp in years. 

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The company said revenue will come in between $665 million and $685 million for the three month period concluding at the end of December. That beats Wall Street expectations of around $661 million for the company’s fiscal second quarter.

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“Our continued momentum on bottom line performance sets the stage for improvements on the top line as we progress through the fiscal year, fueled by our commitment to innovation and growing the Peloton community,” Chief Executive Officer Peter Stern said in a statement. 

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He added that he’s confident in the company’s ability to execute its “strategic plan, return Peloton to profitable growth, and extend Peloton’s lead in connected fitness and wellness.” 

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Earlier Thursday, Peloton issued a recall on about 877,800 units of its high-end Bike+ model in the US and Canada following reports that some seat posts broke, causing riders to fall off. The recall cost $13.5 million during the first quarter.

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Shares of Peloton closed at $6.71 in New York. They were down 22.9% so far this year through Thursday’s close.

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The company reported total revenue of $551 million for the first quarter, which ended Sept. 30, a 6% annual decline. That beats Wall Street estimates of $542.8 million. Earnings per share, or EPS, came in at $0.03, beating estimates of $0.02. 

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The company’s full fiscal year 2026 revenue outlook remains between $2.4 billion and $2.5 billion. In the second quarter, paid fitness subscriptions on first-party hardware are expected to decline about 8% on annual basis. They fell 6% in the first quarter to 2.732 million.

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Paid app subscribers, which allows users to access the platform without needing equipment, dropped 8% year-over-year to 542,000 and 2% from 552,000 last quarter.

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Free cash flow improved in the first quarter, climbing $57 million to $67 million, while net income improved by $15 million to $14 on an annual basis.

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Last month, Peloton unveiled a sweeping redesign of its product lineup under new management, part of a broader push to reverse a yearslong slump. The refresh includes updated versions of the Bike, Bike+, Tread, and Tread+, along with a new Row+ that replaces the previous rowing machine.

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Each model now features a Swivel Screen that pivots to support off-device activities such as yoga and pilates. The company also introduced Peloton IQ, an artificial intelligence platform that delivers personalized guidance, insights and coaching plans. 

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At the same time, Peloton raised prices across its portfolio — increasing hardware costs by an average of 11% and subscription fees by about 19%. The results of the current quarter, expected early next year, will offer the first look into whether the new strategy is gaining traction.

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Stern, a former Apple Inc. and Ford Motor Co. executive who joined in January, is seeking to revive growth following years of declining sales, multiple layoffs and a long gap in new product releases. In August, the company eliminated roughly 6% of its workforce.

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