Peloton gets lockdown boost as home workouts drive exercise bike sales

(Reuters) - Peloton Interactive Inc PTON.O raised its forecast for full-year revenue on Wednesday as "stay at home" orders led to a surge in sales of the company's exercise bikes and fitness subscriptions, sending its shares up 5%.

A Peloton logo is seen after the ringing of the opening bell for the company's IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019. REUTERS/Shannon Stapleton

The strong results validated heightened expectations after analysts hailed Peloton, known for its $2,200 exercise bikes, as one of the few companies to benefit from prolonged lockdowns and a shift in consumer behavior due to the COVID-19 pandemic.

With gyms and fitness clubs closed, Peloton has also become a hot topic across the internet. Online searches for “Peloton” nearly tripled since the end of February, according to Google Trends, while its stock price gained 36% in the same period.

Sales of Peloton’s electric bikes and other fitness equipment jumped nearly 61% to $420.2 million in its fiscal third quarter ended March 31. Its subscribers, who shell out $12.99 per month for live online exercise sessions, almost doubled to over 886,100.

“The extraordinary events taking place over the past two months have measurably expanded our market opportunity and accelerated the ongoing shift to connected fitness,” Chief Financial Officer Jill Woodworth said on a post earnings call.

Executives also added that the current norm of social distancing and working from home was permanently influencing consumer behavior.

The loss-making company said it entered the fourth quarter with a backlog of bike deliveries in all geographies, and that its sales continue to surpass expectations.

Peloton forecast fourth-quarter revenue of $500 million to $520 million, well above the average analyst estimate of $383.26 million, but said it would incur higher costs to expedite shipments of equipment that was delayed due to the unexpected sharp increase in demand.

For the full year, it forecast revenue to be in the range of $1.72 billion to $1.74 billion, compared with an earlier forecast of $1.53 billion to $1.55 billion.

The company also raised its outlook for Connected Fitness subscribers, or paid subscribers, for the year to 1.04 million to 1.05 million, from its previous estimate of 920,000 to 930,000.

In the reported third quarter, Peloton’s total revenue surged 65.6% to $524.6 million, handily beating analysts’ estimates of $487.7 million.

However, net loss attributable to Class A and Class B shareholders increased to $55.6 million, or 20 cents per share, in the quarter ended March 31, from $38.6 million, or $1.76 per share, a year earlier. Analysts were expecting the company to post a loss of 17 cents.

Reporting by Sanjana Shivdas and Devbrat Saha in Bengaluru; Editing by Saumyadeb Chakrabarty