Peloton (NASDAQ:PTON) is back to generating free cash flow and is edging within reach of profitability as the connected fitness company reins in costs and looks to improve the unit economics behind its hardware, it said Thursday.
Despite the progress, Peloton is expecting to lose more members and sell fewer bikes and treadmills than Wall Street analysts had expected during its all-important holiday quarter.
Still, the stock rose 10% in premarket trading Thursday after the quarterly update and the announcement of a new CEO.
In its fiscal first quarter, Peloton broke even, in comparison with an expected loss of 16 cents per share. Revenue proved $586 million vs. $574.8 million expected
The company’s reported net loss for the three-month period that ended Sept. 30 was $900,000, or effectively breakeven on a per-share basis, compared with a net loss of $159.3 million, or 44 cents per share, during the same period a year earlier.
Sales dropped to $586 million, down about 1.6% from $596 million a year earlier.
As Peloton prepares for its holiday quarter, which is typically its strongest for hardware sales, the company is expecting revenue to come in between $640 million and $660 million, below Wall Street expectations of $671.4 million.
It’s also expecting to have fewer paid app subscribers than analysts had forecast, reflecting its decision to shift marketing dollars toward product development and away from its low-priced app.
PTON shares raced $1.22, or 18.4%, to begin Thursday at $7.97.