Peloton Interactive Inc. (NASDAQ:PTON) reported mixed third-quarter results on Thursday, with revenue topping Wall Street expectations even as earnings came in slightly below forecasts.
Shares of the connected fitness company rose 4.23% in premarket trading following the earnings release as investors reacted positively to stronger guidance and improving financial performance.
Revenue exceeds expectations despite earnings miss
Peloton posted adjusted earnings of $0.06 per share for the quarter ended March 31, falling short of the analyst consensus estimate of $0.07 by $0.01.
Revenue reached $631 million, ahead of analyst expectations of $618.74 million and up 1% from $624 million reported in the same quarter last year.
The company said the stronger-than-expected revenue performance was mainly driven by higher sales of Connected Fitness equipment across both the Peloton and Precor brands.
Profitability and cash flow continue to improve
Adjusted EBITDA climbed 41% year-over-year to $126 million from $89 million.
Net debt declined 70% from the prior-year period to $173 million.
Peloton also generated $151 million in free cash flow during the quarter, representing a 59% increase compared with the same period last year.
On a GAAP basis, the company reported net income of $26 million, compared with a net loss of $48 million in the prior-year quarter.
CEO highlights member growth initiatives
“In Q3 we made great progress on deepening our relationships with our Members, growing our opportunities to reach new Members globally, diversifying our revenue streams, and planting new seeds for future growth,” said CEO Peter Stern.
Company raises fiscal 2026 revenue and cash flow outlook
Peloton increased its fiscal 2026 revenue guidance to a range of $2.42 billion to $2.44 billion.
The midpoint of $2.43 billion sits slightly above the analyst consensus estimate of $2.429 billion.
The company also raised its free cash flow target to approximately $350 million, representing an increase of $75 million from its prior minimum forecast.
Adjusted EBITDA guidance remained unchanged at $470 million to $480 million, with the midpoint implying 18% year-over-year growth.
Subscriber base remains in line with expectations
Paid Connected Fitness Subscriptions ended the quarter at 2.662 million, representing an 8% decline year-over-year.
However, the figure was in line with the company’s previously issued guidance.
More about Peloton
Peloton Interactive develops connected fitness products and subscription-based digital workout services. The company offers exercise equipment, including bikes and treadmills, alongside streaming fitness classes and wellness content for users globally.