The wheels continue to fall off at Peloton, as the company reports a A$1.72 billion operating loss for the fiscal fourth quarter of 2022.
Revenue fell 28 per cent during the quarter, to A$973.2 million, while memberships declined by 143,000 people.
Shares have since tumbled 18 per cent to US$11.01, down over 90 per cent in the last twelve months and a far cry from January 2021 highs of US$171.09.
New CEO Barry McCarthy, who took over the reigns from founder John Foley in February, notes in his shareholder letter that A$595 million of the operating losses were related to “restructuring charges”.
“The loss reflects the substantial progress we made this last quarter re-architecting the business to reduce the current and future inventory overhang, converting fixed to variable costs, and addressing numerous supply chain issues.
“This progress, plus the reduced cash flow burn, is the positive story behind the headline loss.”
After six straight quarters of consecutive losses, Peloton says it aims to aims to reach break-even cash flow on a quarterly basis in the first half of calendar 2023.
“The naysayers will look at our Q4 financial performance and see a melting pot of declining revenue, negative gross margin, and deeper operating losses. They will say these threaten the viability of the business.
“But what I see is significant progress driving our comeback and Peloton’s long-term resilience. Important milestones reached include new executive leadership, renegotiated supply contracts, and significantly reduced cash outflow.”
One bright spot for Peloton is its subscription revenue, which has increased 36 per cent from the same quarter last year, to A$550 million.
This marks the first quarter than subscription revenue overtook hardware revenue, the first signs that the pivot to a subscription model may bear fruit.
