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Peloton's AI Push Falters: Sales Miss Targets
5 Feb
Summary
- Holiday quarter sales missed expectations and internal targets.
- New AI-driven product line failed to boost customer demand.
- Company forecasts continued sluggish sales in the current quarter.
Peloton Interactive Inc. reported a weaker-than-expected holiday quarter ending December 31, with sales falling short of both analyst expectations and the company's internal targets. The launch of its new AI-driven product line, featuring advanced technology like AI-powered cameras and hands-free controls, failed to generate the anticipated surge in demand. Consequently, hardware revenue was $244 million and subscription sales reached $413 million, both below projections.
Despite the disappointing sales figures, Peloton is making strides in improving its profitability. The company generated $81 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter, surpassing analyst expectations of $73 million. Following recent layoffs, Peloton raised its full-year adjusted EBITDA guidance to between $450 million and $500 million, indicating strong operational discipline. The company also announced CFO Liz Coddington's departure, effective in March.
Looking ahead, Peloton forecasts continued sluggish sales for the current quarter, with revenue projected between $605 million and $625 million, falling short of the $638 million expected by LSEG. The company's stock saw a significant drop in premarket trading following the release of these results and soft guidance, signaling investor concerns about the effectiveness of its product overhaul strategy.
