Peloton Interactive Inc. (NASDAQ:PTON) saw its shares fall about 11% after the connected fitness company reported second-quarter results that came in below expectations and revealed that Chief Financial Officer Liz Coddington will step down.
The company generated fiscal second-quarter revenue of $656.5 million, missing analyst forecasts of $675.13 million and marking a 3% decline compared with the same period last year. Peloton recorded an adjusted loss of $0.09 per share, wider than the $0.06 loss analysts had projected. The company said the weaker revenue performance was largely due to softer-than-anticipated sales of Connected Fitness Products to existing subscribers.
Despite the revenue shortfall, Peloton delivered adjusted EBITDA of $81 million, representing a 39% year-on-year increase. The company also raised its full-year adjusted EBITDA outlook to a range of $450 million to $500 million, compared with its previous forecast.
“Our second quarter represented the most substantial period of innovation at Peloton since our founding. At the same time, our financial performance demonstrated our continued operational discipline,” said CEO Peter Stern. “We’re driving positive momentum across the business.”
Paid connected fitness subscriptions declined 7% year-on-year to 2.661 million, although this figure slightly exceeded the midpoint of Peloton’s guidance. Meanwhile, gross margin improved to 50.5%, up 320 basis points from the prior year.
For the third quarter, Peloton expects revenue to range between $605 million and $625 million, implying a 1% year-on-year decline at the midpoint. The company also projects paid connected fitness subscriptions to end the quarter between 2.650 million and 2.675 million, representing an 8% annual decrease.
Further weighing on investor sentiment, Peloton confirmed that CFO Liz Coddington will leave the company in March to pursue a role outside the sector. The company has begun searching for a successor.