Peloton Borrows $750M As Downward Cycle Spins

Peloton reported third-quarter revenue of $964.3 million, a 24% year-over-year drop from the $1.26 billion it posted the year prior, and a net loss of $757.1 million, a significant difference from last year’s third-quarter net loss of $8.6 million.

The fitness company is running out of cash.

Peloton ended the quarter with $879 million in unrestricted cash and cash equivalents. Earlier this week, the company signed an agreement with JPMorgan and Goldman Sachs — the banks that led Peloton’s IPO — to borrow $750 million in five-year term debt.

The company fell short of analysts’ revenue estimates of $972.9 million despite a net addition of 195,000 connected fitness subscribers during the quarter, a 42% year-over-year increase. 

With a total of 2.96 million connected fitness subscribers, Peloton expects its higher subscription prices will lower that number.

• Peloton announced in April that subscriptions will raise by a respective $5 and $6 in the U.S. and Canada starting June 1, but hardware prices will fall.
• Connected fitness products generated $594 million in sales during the quarter. Subscriptions brought in $370 million.

As of market close Tuesday, the company’s stock was down 8.7%.

Tough Turnaround

In his effort to get Peloton on the right track, CEO Barry McCarthy said third-party retailers will soon be a part of the mix.

Peloton expects fourth-quarter revenue to land between $675 million and $700 million, short of analysts’ expectations of $821.7 million.