Photo Credit: Steve Jurvetson / CC by 2.0
Peloton lost nearly 200,000 members in a single quarter as losses continue to mount for the exercise company.
The company revealed its financial results for Q3 2022, ending the quarter with 6.7 members. That’s down from 6.9 million just the previous quarter. Peloton’s quarterly revenues were down 23% year-on-year to $616.5 million, while its net losses increased by 9% to $408.5 million.
It saw moderate growth in its ‘connected fitness subscriptions’ segment, which grew 19% year-on-year at under 3 million. However, the growth for that segment of Peloton’s business remained flat compared to the previous quarter.
“Peloton’s turnaround remains a work-in-progress, with $199M in 1Q23 reserves, restructuring, and impairment expenses. And not all the changes we’ve implemented are working as well as we’d like–especially as it relates to some last mile delivery and customer service issues,” reads a letter sent to Peloton investors alongside the financial results.
“Breakeven FCF is an objective but it is not a guaranteed outcome. There are risks we will underacheive our forecast, particularly in this economic climate and given the outsized important and uncertainty of the holiday selling season on overall performance. But the green shoots are numerous and undeniable.”
“Given macro economic uncertainties we believe near-term demand for connected fitness hardware is likely to remain challenged,” Peloton cautions investors. “Our forecast incorporates a seasonal mix-shift toward our Connected Fitness segment, expected holiday promotional activity, a mix-shift of sales toward our rental program, as well as the impact from expanding our third-party retail partnerships.”
Shares for Peloton plunged more than 16% in after-hours trading after the financial report dropped. Peloton stock is down -73% year to date and more than -62% from its initial offering price of around $25 per share back in 2019. Despite the poor financial outlook currently, Peloton remains a strong revenue generator for the music industry.
That’s because Peloton pays musicians around $0.03 per stream–but the caveat is that it accounts for less than 1% of global streams and 1.28% of industry revenue. Peloton has prioritized partnerships with artists like Beyonce, Nas, and Depeche mode to help create workout classes for its members. But it also got sued for $300 million for copyright infringement over using music that wasn’t licensed properly.