(Reuters) -Peloton Interactive Inc on Thursday forecast fourth-quarter revenue above Wall Street estimates, as the fitness equipment maker sees a recovery after expanding its sales channels to third-party platforms.
Shares of the company rose about 2% to $9.01 in premarket trading after Peloton’s third-quarter cash burn, a key milestone investors watch out for, also dropped to $55.3 million from $746.7 million a year earlier.
Under CEO Barry McCarthy, who is committed to returning to revenue growth and hit cash flow breakeven on a sustained basis in his second year in the role, Peloton has taken a series of measures to cut costs and lift sales that plummeted after people started returning to gyms as lockdowns were lifted.
Last year, Peloton ended selling exclusively through its own e-commerce site and put its equipment on Amazon.com Inc and Dick’s Sporting Goods Inc stores. It has also pivoted away from hardware to a software-first company.
“We intend to build on our successful Amazon partnership by expanding our product assortment and participating in major promotional events like Prime Day, which we expect to deliver meaningful Y/Y growth in unit sales and revenue,” McCarthy said in a letter to shareholders.
Subscription revenue surpassed hardware sales for three quarters in a row, signaling that McCarthy’s strategy of focusing on software-first was showing results.
Revenue from sale of connected fitness products fell 45.5% to $324.1 million in the third quarter from a year earlier, while subscription revenue was up 14.8% to $424.7 million.
Total revenue fell 22% to $748.9 from a year earlier.
Peloton said it expects fourth-quarter revenue to come in between $630 million and $650 million, above analysts’ average estimate of $607.7 million, according to Refinitiv data.
(Reporting by Kannaki Deka in Bengaluru; Editing by Shinjini Ganguli)
