Peloton Reports Improved Profitability, Reduced Losses in Q3 2024 Despite Revenue Decline

Peloton Interactive, Inc. reported its financial results for the three months ended September 30, 2024, revealing a slight decline in revenue but significant improvements in profitability metrics compared to the same period in the previous year. Total revenue for Q3 2024 was $586.0 million, down 1.6% from $595.5 million in Q3 2023. This decline was primarily attributed to a decrease in sales of Connected Fitness Products, which generated $159.6 million, down 11.6% from $180.6 million in the prior year. In contrast, Subscription revenue increased by 2.7% to $426.3 million, up from $415.0 million, reflecting a growing base of recurring revenue.

Despite the revenue decline, Peloton achieved a gross profit of $303.8 million, an increase of 6.4% from $285.4 million in Q3 2023. The company reported income from operations of $12.5 million, a notable recovery from a loss of $132.3 million in the same quarter last year. The net loss for the period was $(0.9) million, a substantial improvement from a net loss of $(159.3) million in Q3 2023. Adjusted EBITDA also saw a significant rise, reaching $115.8 million compared to $9.1 million in the previous year.

Peloton's operational efficiency improved, with total operating expenses decreasing to $291.2 million from $417.6 million in Q3 2023. This reduction was driven by lower sales and marketing expenses, which fell by $64.2 million, and a decrease in general and administrative expenses by $31.5 million. The company also reported a decrease in research and development expenses, down $20.1 million.

Strategically, Peloton is undergoing a restructuring plan initiated in February 2022, which was expanded in April 2024 to enhance operational focus and reduce annual run-rate expenses by over $200 million by the end of fiscal year 2025. The company has also been closing retail stores and testing a smaller retail model while expanding third-party retail channels. Notably, Peloton sold its Output Park land for net proceeds of $4.2 million during the quarter.

As of September 30, 2024, Peloton had cash and cash equivalents of $722.3 million, up from $697.6 million at the end of June 2024. The company continues to face challenges, including a material weakness in internal controls over financial reporting, which management is actively addressing. Additionally, Peloton is involved in various legal proceedings, including derivative litigations related to alleged breaches of fiduciary duties.

Overall, Peloton's financial results indicate a shift towards improved profitability and operational efficiency, despite a slight decline in overall revenue.