Peloton’s Q4 2021 earnings didn’t go all that smoothly. Investors got a bout of double-trouble as the company warned of price cuts and an accounting mistake. Oof.
Peloton reiterated plans to slash the price of its “most popular bike” by $400. ✂️ Peloton hopes price cuts will make their products more accessible to buyers. They hope to make it up in revenue from digital subscriptions, which now accounts for roughly a third of the company’s revenue.
The accounting flub was a little more concerning than the price cut — an accounting audit found an issue with Peloton’s inventory accounting. Although the issue didn’t require the company to file new financial statements, “accounting problems” are two words that investors don’t want to hear.
Drama aside, Peloton’s revenue rose 54% YoY to $936.9 million. 💰 About two-thirds of that revenue came from selling physical fitness machines, like bikes and treadmills. The company posted an EPS loss of ($1.05) per share, a significantly higher loss YoY. Revenue was marginally better than analysts’ expectations, but EPS estimates sorely disappointed investors. Analysts were also unhappy to see Peloton revise earnings down for the coming quarter. Some of that can be attributed to the “return to business as usual.”
The company observed significant growth in their digital subscription segment. Subscriptions more than doubled in the quarter, with Peloton’s total member count approaching 6 million. You can get into the nitty-gritty by reading the company’s whole Q4 2021 report here.
$PTON plummeted 5.2% after hours.