Why One of the Hottest IPOs of 2020 May Be Cooling Off

Peloton Interactive Inc. (NASDAQ: PTON) released its fiscal second-quarter earnings report after the closing bell Thursday. This was one of the hottest IPOs of last year, withstanding the pandemic. Despite the eye-popping numbers we saw this quarter, will these be enough to carry Peloton even higher?

The firm said that it had $0.18 in earnings per share (EPS) and $1.06 billion in revenue, which compares with consensus estimates calling for $0.09 in EPS and $1.03 billion in revenue. The same period of last year reportedly had a net loss of $0.02 per share and $466.3 million in revenue.

During the most recent quarter, total revenue increased 128% year over year. Connected Fitness Product revenue was $870.1 million, representing 124% year over year growth and 82% of total revenue. Subscription revenue was $194.7 million, a 152% year over year increase, and 18% of total revenue.

Peloton ended the quarter with 1.67 million Connected Fitness subscribers, an increase of 134% year over year. As of quarter’s end, 97% of Connected Fitness subscribers were on month-to-month payment plans. At the same time, the company boasted 625,000 Digital subscribers, up 472% from last year.

Connected Fitness Subscription Workouts grew 303% in the first quarter to over 98.1 million, averaging 21.1 Monthly Workouts per Connected Fitness Subscription, versus 12.6 in the same period last year.

Cash, cash equivalents and marketable securities totaled $2.1 billion at the end of the quarter. The firm also has additional liquidity of $250.0 million in the form of an undrawn revolving credit facility.

Looking ahead to the fiscal third quarter, the company expects to see total revenue reaching $1.1 billion and an adjusted EBITDA of $10 million. The consensus estimates are calling for $0.04 per share and $1.09 billion in revenue for the quarter.

Shares of Peloton closed Thursday at $157.53, in a post-IPO range of $17.70 to $171.09. The consensus price target is $155.42. Following the announcement, the stock was down 6% at $147.08 in the after-hours trading session on Thursday.