Where next for Peloton shares as Covid-19 boosts home workouts?

• Peloton shares up 182% year-to-date and set to climb even higher
• The exercise equipment and media company saw sales surge amid Covid-19
• Peloton benefitting from coronavirus driving interest in home workouts

Peloton Interactive continues to see its share price move higher after its full-year results revealed a signifcant surge in sales due to the coronavirus increasing peoples interest in home workout equipment and remote exercise sessions.

‘Demand... remains strong and member engagement remains elevated, despite improving weather and the gradual reopening,’ Peloton CEO John Foley said on an analyst call after the company’s full year results last week.

The company has also said that it plans to reduce the cost of its bikes and treadmills to help make their products more accessible to a wider audience. However, the announcement was followed by plans to launch premium versions of its equipment that will sell at a higher price point.

‘By the end of FY 2020 our Peloton membership base grew to approximately 3.1 million, compared to 1.4 million members in the prior year,’ the company said in its full-year results. ‘Fuelled in part by the challenges associated with COVID-19, Member engagement reached new highs with 164 million Connected Fitness Subscription workouts completed in FY 2020.’

Peloton shares are up 5% on Tuesday at the time of publication, with the stock up 182% year-to-date.

Peloton full-year 2020 earnings: key figures

• Revenue up 172% year-on-year (YoY)to $607.1 million

• Connected Fitness subscriptions up 113% YoY to $1.09 million

• Average net monthly connected fitness churn at 0.52%

• Gross profit: $288.8 million (47.6% gross margin)

• Total operating expenses sit at $191.8 million (33% of revenue)

Peloton expects to deliver a strong FY 2021

‘We entered Q1 FY 2021 with a backlog of $230 million Bike deliveries in all geographies and sales continue to surpass expectations in the first two months of the quarter,’ the company said in a statement.

The unexpected resurgence of Covid-19 cases in many states has led to an imbalance of supply and demand in many geographies, causing continued elongated order-to-delivery windows for many of its customers.

‘While we have significantly increased our production capacity in recent months and continue to grow our manufacturing capabilities, we do not expect to return to normalized order-to-delivery windows in the US prior to the end of Q2 FY 2021,’ it added.

Peloton: FY 2021 forecast

• 2.05 million to 2.10 million ending Connected Fitness Subscriptions, growth of 90% at the midpoint

• Average Net Monthly Connected Fitness Churn under 1.00%

• $3.50 billion to $3.65 billion total revenue, 96% growth at midpoint

• Gross Profit Margin of approximately 41%

• $200 million to $275 million Adjusted EBITDA, 6.6% Adjusted EBITDA Margin at the midpoint

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