Peloton announced Thursday that fiscal fourth quarter sales rose 172% as the high-tech stationary bike and treadmill became two of the hottest products for people to walk from home during the coronavirus pandemic want to exercise.
The fitness equipment maker also offered Wall Street a breathtaking outlook for the current quarter and fiscal 2021, with sales of its motorcycles not expected to decline anytime soon.
But that also means a greater burden on the supply chain. In a letter to shareholders, Peloton said it expected demand to become "moderate" but a recent resurgence in Covid-19 cases has "kept supply and demand imbalanced". It is not expected to return to "normalized delivery time windows" in the US before the end of fiscal second.
Shares rose more than 7% after close of trading.
Peloton has also proven that once a new customer attracts them, they tend to stick with them. The average monthly net fitness churn was 0.75% over the last period. And churn is forecast to stay below 1% in fiscal 2021.
Here's how Peloton performed for the fourth quarter ended June 30, compared to analyst expectations based on Refinitive data:
Earnings per share: 27 cents versus 10 cents expected Revenue: $ 607.1 million versus $ 582.5 million expected
It posted earnings of $ 89.1 million, or 27 cents per share, compared to a loss of $ 47.4 million, or $ 2.07 per share, last year. At 17 cents, earnings per share were above analysts' expectations.
Revenue increased 172% from $ 223.3 million a year ago to $ 607.1 million, beating forecast of $ 582.5 million.
Peloton announced that the quarter closed with more than 1.09 million connected fitness subscribers, up 113% year over year, and a total of approximately 3.1 million members, including those who pay for the digital subscription only. Affiliate Fitness Subscribers are people who pay to sync exercise classes with their Peloton devices instead of accessing the programs separately on a phone or tablet.
Peloton said fiscal first quarter revenue should be in the range of $ 720 million to $ 730 million, up 218% year over year – well above expectations of $ 506 million, according to Refinitiv estimates.
Peloton is calling for sales of between $ 3.5 billion and $ 3.65 billion in fiscal year 2021, which in the middle of this range would be 96% above the previous year's figure – and thus again significantly the estimates of $ 2.7 billion surpasses.
Earlier this week, Peloton announced the introduction of two new items: a cheaper, high-tech treadmill and a more expensive bike option with a rotating screen. Analysts believe this should bode well for the business to continue to evolve by attracting additional members and encouraging current customers to upgrade.
Peloton's new Bike +, which retails for $ 2,495, is already on sale. The cheaper tread, which will retail for $ 2,495, hits the UK on December 26, the US and Canada in early 2021, and Germany later next year. The price of the original Peloton bike has dropped from $ 2,245 to $ 1,895, which coincides with the introduction of the more expensive version. Peloton's more expensive and original treadmill, the Tread +, is priced at $ 4,295.
Peloton's users work harder too. The affiliated fitness subscribers exercise an average of 24.7 workouts per month, up from 12 last year.
There was also less money spent on advertising in the quarter, citing "robust organic demand due to … strong brand awareness". It said it continued to pause most of its media spending until the end of the period.
Peloton ended the quarter with $ 1.8 billion in cash and marketable securities on its balance sheet.
At the close of trading on Thursday, Peloton shares were up more than 211% this year. The market capitalization is around $ 25 billion.
The full Peloton press release and letter to shareholders can be found here.
Watch Peloton CEO John Foley in an exclusive interview on CNBC's "Squawk Box" on Friday at 7:45 am ET to discuss the latest results.