CEO Barry McCarthy is celebrating his one year anniversary as Peloton reveals its best quarterly performance since he took over the connected fitness company
The comeback mission of Peloton appears to be well underway this February, with its leadership shaking off its second-quarter loss, which narrowed to $335.4 million from $439.4 million, and instead focusing on its continued recovery.
While Peloton isn’t out of the woods yet, the fitness giant says recent results prove it’s experiencing a turning point.
“If you’ve been wondering whether or not Peloton can make an epic comeback, this quarter’s results show the changes we’re making are working,” Peloton CEO Barry McCarthy wrote in a letter to shareholders on February 1st.
The connected fitness company reports that for the third consecutive quarter, Peloton has generated more revenue from subscriptions than hardware sales, a trend that it says seems to likely continue.
“This was by far our best quarterly performance in my twelve months with Peloton. Most of the executive team is also relatively new to Peloton and new to their teams. Given what we’ve already accomplished, imagine what’s possible once the team finds its groove,” McCarthy wrote, adding that the timing of his letter to investors coincides with his one year anniversary at Peloton. McCarthy took over for former Peloton CEO John Foley, who has now transitioned to the rug industry.
Peloton notes that it had plans to sell Precor, but has had a change of heart.
“Precor meets a significant need in the commercial marketplace and is a well regarded brand, but over the two years we’ve owned it we’ve underinvested in its growth and leadership team to the detriment of Precor’s revenue growth and profitability,” McCarthy wrote. Peloton now says its decided to change course via new leadership and rightsizing Precor’s cost structure. At the close of 2022, Peloton reportedly appointed an interim CEO to the Seattle-based commercial cardio and weight machine manufacturer that it acquired in 2020.
The connected fitness company is also celebrating its free cash flow improvement and reiterated its goal to reach free cash-flow breakeven by year end.
“If this past year has been about restructuring Peloton’s business and stabilizing its financial performance (and it has been), then almost certainly the next twelve months will be about capturing the moment to restore Peloton’s growth as we lean into the future of Connected Fitness,” McCarthy stated.
In reviewing Peloton’s product strategy of late and partnerships with Amazon, Dick’s Sporting Goods, and Hilton, McCarthy notes that such changes have been directly connected to Peloton’s positive turnaround.
“You can expect us to continue leaning into these new initiatives,” he wrote.
In closing, McCarthy thanked the loyal Peloton community, and addressed that he’s aware of member issues like last mile delivery and member support. “I commit to you we are working hard to fix both,” he promised.
Last October, Peloton cut 500 positions as the connected fitness company imposed a six-month deadline to change course. “There comes a point in time when we’ve either been successful or not. If we don’t grow, we need to grow to get the business to a sustainable level,” McCarthy told The Wall Street Journal at the time.
Courtney Rehfeldt has worked in the broadcasting media industry since 2007 and has freelanced since 2012. Her work has been featured in Age of Awareness, Times Beacon Record, The New York Times, and she has an upcoming piece in Slate. She studied yoga & meditation under Beryl Bender Birch at The Hard & The Soft Yoga Institute. She enjoys hiking, being outdoors, and is an avid reader. Courtney has a BA in Media & Communications studies.