Platoon It posted its second consecutive profitable quarter on Thursday by releasing strong guidance for the crucial holiday shopping season, relying on its relaunched product assortment to drive growth.
The connected fitness company posted a surprise net income of $13.9 million in the three months ended Sept. 30, compared with a loss of $900,000 a year earlier.
For the current quarter, Peloton's strongest for hardware sales, the company expects revenue to be between $665 million and $685 million, up slightly from the year-ago period and largely better than Wall Street expectations of $665 million, according to LSEG.
Peloton also raised its full-year adjusted EBITDA outlook and now expects it to be between $425 million and $475 million, up $25 million from its previous outlook on both ends. Much of that forecast is above analyst expectations of between $400 million and $450 million, according to StreetAccount.
Shares rose about 11% in extended trading on Thursday.
Despite the good news, Peloton is still dealing with issues from its past. Earlier Thursday, it said it was initiating another recall of its initial line of products. The Consumer Product Safety Commission said the company was recalling 833,000 of its original Bike+ devices after receiving reports that the seat post can break and detach during a ride, the same issue that prompted the recall of its base Bike model in 2023.
“We have received a small number of reports of an original series Bike+ seatpost breaking during use. As of today, we are aware of three such incidents,” Peloton CEO Peter Stern said on the company's earnings conference call Thursday.
Peloton's latest recall cost the company $13.5 million during the quarter reported Thursday, contributing to a 0.3 percentage point decline in its gross margin.
For its fiscal first quarter of 2026 reported Thursday, Peloton beat analyst expectations in results.
Here's how the fitness company fared in its fiscal first quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: 3 cents versus 0 cents expected
- Revenue: $551 million vs. $540 million expected
Sales fell to $551 million, down about 6% from $586 million a year earlier.
Under Stern, who took the helm in January, the connected fitness company has been finalizing its cost cuts and turning its attention to growth now that it is back to generating regular free cash flow and operating profitably.
“Our intention is to go much further [cardio connected fitness]”…we have strength, we have mental well-being, nutrition, hydration, sleep and recovery,” Stern said. “We're focused on growth, but growth has to be profitable…both in revenue growth and the higher margins associated with that business as well.”
Last month, Peloton relaunched its product range, introduced a line of business equipment and raised prices on both subscriptions and hardware ahead of the holiday shopping season.
The revamped range, which includes bike, rowing machine and treadmill products, features an AI-powered tracking camera, speakers, a 360-degree rotating screen and hands-free control, among other new features.
“Our launch of an entirely new product line with the Cross Training Series is a great reason to talk to our members and non-members alike,” Stern said.
Peloton is betting that consumers will be willing to spend big on products to get eye-catching holiday gifts, whether for themselves or a loved one. But just over a month after launch, it's still unclear how they're performing. The company's first fiscal quarter ended the day before the launch of the new products.
Across the retail industry, the personal electronics category has been under pressure.
While Peloton operates in a category of its own, shoppers have been pulling out other big-ticket items and being more careful about where their dollars go in an unstable economic environment.
After Peloton's latest recall, the company said at the time that it saw higher-than-expected membership attrition and costs as a result.
– CNBC's Luke Fountain contributed to this report.
