Peloton Lowers FY24 Guidance

Author: Benzinga Newsdesk | May 02, 2024 07:28am
Full Year Outlook We're lowering our full year outlook for Ending Paid Connected Fitness Subscriptions by 30 thousand, or 1%, at the guidance midpoint to 2.97 million. Our Paid Connected Fitness Subscription guidance reflects an updated outlook for hardware sales based on current demand trends and expectations for seasonally lower demand. Q4 is typically our most challenging quarter to grow, due to lower seasonal gross additions as we enter the warmer months of Spring and Summer. We also anticipate a seasonal increase in Average Net Monthly Paid Connected Fitness Subscription churn in Q4, in part due to seasonally higher subscription pause rates that we expect to come down in early fiscal year 2025. We're also lowering our outlook for Ending Paid App Subscriptions by 150 thousand, or 19%, at the guidance midpoint to 605 thousand. Our Paid App Subscription guidance reflects lower gross additions due to expectations that Q3 trends continue through Q4. We are maintaining our disciplined approach to App media spend as we evaluate our App tiers, pricing, and refine the Paid App subscription acquisition funnel. As a result of trends driving our outlook for Ending Paid Connected Fitness Subscriptions and Ending Paid App Subscriptions, we're lowering our full year Revenue guidance by $25 million, or 1%, at the guidance midpoint to $2.687 billion. We're raising our full year outlook for Total Gross Margin by 50 basis points, to 44.5%, primarily due to a revenue mix-shift toward our Subscription segment. We're also raising our outlook for full year Adjusted EBITDA by $37 million at the guidance midpoint to negative $13 million. This increase is largely driven by outperformance from Q3, combined with lower media spend and cost reductions from today's announced restructuring plan. While we are not providing any specific guidance on Free Cash Flow, we do expect to deliver modest positive Free Cash Flow in Q4. While our updated full year guidance reflects headwinds to subscriber growth in Q4, we remain optimistic about the investments we are making across the business. Our outlook reflects that our key growth initiatives are in progress and will take some time to gain traction. As a result, we are not expecting these initiatives to have a significant impact on our connected fitness hardware sales or subscriber growth in FY24. With our cost structure better aligned to the current size of our business, and a clear path to sustainable positive Free Cash Flow, we now have a solid foundation in place that we can build upon to drive long-term, profitable growth and shareholder value.

Posted In: PTON