Peloton Interative Inc. reported total revenue jumped 128 percent in the second quarter ended December 31, to $1.06 billion.

Peloton had projected sales of $1.0 billion in the quarter.

The gains were driven by strong demand for its Connected Fitness Products and sustained low churn levels. Peloton ended the quarter with 1.67 million Connected Fitness subscriptions, representing 134 percent year-over-year growth. Peloton had projected 1.63 million ending Connected Fitness Subscriptions.

Other key growth highlights include:

  • Paid Digital Subscriptions grew 472 percent year-over-year to approximately 625,000;
  • Q2 Connected Fitness Subscription Workouts grew 303 percent to over 98.1 million, averaging 21.1 monthly workouts per
    Connected Fitness Subscription, versus 12.6 in the year-ago period;
  • Q2 Average Net Monthly Connected Fitness Churn was 0.76 percent; Q2 12-month retention rate was 92 percent;
  • Total platform workouts—both Connected Fitness and Digital—grew to over 113 million in the quarter from 26 million in the year-ago quarter; and
  • In Q2, Peloton recorded its largest single day of member workouts with over 1.6 million.

Net income was $63.6 million, or 18 cents a share, against a loss of $55.4 million, or 20 cents, a year ago.

Gross Margin was 39.9 percent against 42.3 percent. Peloton had projected a gross profit margin of approximately 39 percent

Adjusted EBITDA was $116.9 million, or an 11.0 percent adjusted EBITDA margin. That compares to a year-ago margin of negative 6.1 percent. Peloton had projected $70 million in adjusted EBITDA with a 7.0 percent adjusted margin.

Peloton said in part in its shareholder letter, “We’re pleased to announce strong results for our second quarter. We continued to see robust demand for our connected fitness platform through the Holiday selling season, and member engagement gains continue to validate our hardware, software and content investments. Our new Peloton Tread officially debuted in the U.K. on December 26, and we look forward to extending distribution to additional geographies in the coming months.

“On December 21, 2020, we announced our agreement to purchase Precor, one of the world’s largest commercial fitness equipment providers. Precor has long been a leader in the commercial fitness industry and brings substantial domestic manufacturing capabilities and a deep bench of R&D and manufacturing talent to Peloton. With Precor, we see an opportunity to accelerate our plan to produce Peloton products domestically and further enhance our consumer and commercial offerings.

“The ongoing COVID-19 pandemic continues to present a challenging operating landscape, and we continue to work to address long order-to-delivery timeframes. However, our supply chain investments over the last several months are helping us better match our supply and demand going forward. Our manufacturing output has significantly increased, and we’ve officially begun ramping up production at our new Shin Ji factory in Taiwan. Unfortunately, well-publicized West Coast port delays and COVID-19-related factors continue to present challenges to returning our delivery times to pre-pandemic levels. We are making substantial additional investments in the near-term to address our extended delivery times and are hopeful that an acceleration in vaccine distribution and the broader opening of our economy will provide a tailwind to our efforts over the coming months.”

For the full fiscal year 2021, Peloton now expects:

  • 2.275 million or more ending Connected Fitness subscriptions;
  • Average Net Monthly Connected Fitness Churn under 0.80 percent;
  • $4.075 billion or more total revenue;
  • Gross profit margin of approximately 39 percent; and
  • $300 million or more adjusted EBITDA

Previously, full-year 2021 guidance had been:

  • 2.17 million or more ending Connected Fitness subscriptions;
  • Average Net Monthly Connected Fitness Churn under 0.90 percent;
  • $3.9 billion or more total revenue;
  • Gross profit margin of approximately 41 percent; and
  • $300 million or more adjusted EBITDA.

For the third quarter, guidance is:

  • 1.980 million ending Connected Fitness subscriptions;
  • Average Net Monthly Connected Fitness Churn under 0.75 percent;
  • $1.10 billion total revenue;
  • Gross profit margin of approximately 35 percent; and
  • $10 million adjusted EBITDA.

Photo courtesy Peloton