Peloton CEO says generated more revenue from subscriptions vs. hardware sales

Barry McCarthy, CEO & President said, "This past quarter we significantly outperformed our expectations for Connected Fitness subs, Connected Fitness Unit orders, CFU deliveries, hardware revenue, subscription revenue, and Total Revenue, Adjusted EBITDA, and Free Cash Flow. Nine months ago we reported FCF of ($747M). This quarter we reported FCF of ($94M). But strip out the costs of paying suppliers to settle obligations for parts we don’t need, and we generated positive FCF of approximately $8 million in Q2. If you’ve been wondering whether or not Peloton can make an epic comeback, this quarter’s results show the changes we’re making are working. Despite seasonally strong hardware sales, for the third consecutive quarter, we generated more revenue from subscriptions than we did from hardware sales. This trend is gross margin accretive because subscription gross margins significantly exceed hardware gross margins. If this trend continues, which seems likely since we sell more hardware in Q2 than any other quarter of the fiscal year, it represents a structural shift toward improving GM’s in the business. This was by far our best quarterly performance in my twelve months with Peloton. Most of the executive team is also relatively new to Peloton and new to their teams. Given what we’ve already accomplished, imagine what’s possible once the team finds its groove."