Peloton Interactive Inc. (NASDAQ:PTON) rose 10% on premarket Thursday, after beating Street expectations for the fiscal fourth quarter. This indicates that the beleaguered connected fitness company is finally starting to overcome its struggles.
Exercise equipment manufacturer reported a loss of 8 cents per share on a revenue of $643,6 million for the Q4 period. Comparatively, analysts were expecting 17 cents per share on $628.47 millions.
However, the topline remained roughly flat on an annual basis. The financial distress of Peloton has been a major factor in the stock’s performance this year. It’s currently down almost 45% from the high of early January.
Peloton stock pops despite muted guidance
Peloton’s earnings announcement was not all roses and sunshine.
On Thursday, the management did not meet Street’s expectation for this quarter. The company guided up to $580 in Q1 revenue, compared with experts’ estimates of $602 million. PTON also missed today’s consensus estimate for the full year.
Peloton has lost $30.5m in the fourth quarter, as its paid subscriber base dropped from 6.5m to 6.4m.
Wall Street’s consensus rating for Peloton shares was “hold” before the results were released. Analysts’ average price targets, which currently stand at $4,000, represent a near 10% increase from the current level.
Peloton has committed itself to reducing its cost.
Peloton Interactive’s adjusted EBITDA improved significantly in the recently completed quarter, reaching $70.3 millions. The company said that it is “making progress towards right-sizing our costs structure” and will continue to optimize expenses.
A restructuring plan announced by the Nasdaq listed company in May saved it $15 million during Q4. This helped the firm achieve a positive free cash flow of $26 million in Q4 – up dramatically from last year.
Peloton’s stock may also be rewarded by investors because the company has reduced its debt by $200 million, and that “our average maturity has been extended until 2029”.
In a letter sent to its shareholders, Peloton Interactive said that the Bike+ programme, which it launched this year in the United Kingdom, is also exceeding expectations. PTON’s cash flow is still in the early stages and it does not yet pay dividends.
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