Peloton to Post Q2 Earnings: What's in the Cards for the Stock?

Core Viewpoint - Peloton Interactive, Inc. is set to report its second-quarter fiscal 2025 results on February 6, with expectations of a loss per share and declining revenues compared to the previous year [1][3]. Financial Performance - In the last reported quarter, Peloton achieved breakeven earnings per share, surpassing the Zacks Consensus Estimate of a loss of 15 cents [2]. - The Zacks Consensus Estimate for the upcoming quarter indicates a loss per share of 20 cents, widening from 19 cents, but represents a 63% improvement from a loss of 54 cents in the same quarter last year [3]. - Revenue expectations for the second quarter are approximately $655.2 million, reflecting an 11.9% decline from the previous year's figure [3]. Subscription Trends - Peloton anticipates a sequential decline of 50,000 in paid Connected Fitness subscriptions, bringing the total to between 2.84 million and 2.86 million [5]. - App subscriptions are projected to decrease by 12,000 due to reduced app media spending [5]. Revenue and EBITDA Projections - The company expects second-quarter revenues to range from $640 million to $660 million [5]. - Adjusted EBITDA is forecasted to be between $20 million and $30 million, a sequential decline of $91 million at the midpoint, primarily due to increased sales and marketing costs [6]. Gross Margin and Economic Factors - Peloton projects a total gross margin of 46.5%, indicating a sequential decline of 534 basis points, attributed to a shift towards lower-margin Connected Fitness Products during the holiday period [7]. - Macroeconomic factors such as inflation and higher interest rates are expected to negatively impact the company's performance [7]. Innovation and Strategic Focus - The company is focusing on product innovations, including app enhancements and personalized plans, which are likely to support performance in the fiscal second quarter [8]. - Investments in innovation across hardware, software, and content, along with optimizing retail footprint and reducing marketing expenses, are expected to aid earnings growth [8]. Earnings Prediction Model - The current model does not predict an earnings beat for Peloton, as it lacks a positive Earnings ESP and a favorable Zacks Rank [9][10].