peloton announced Thursday a strong outlook for the important holiday season, posting its second consecutive quarter of profit, with a relaunched product lineup as the engine for growth.
The connected fitness company posted a surprising net profit of $13.9 million for the three months ended Sept. 30, compared with a loss of $900,000 a year earlier.
LSEG said it expects revenue for this quarter, Peloton’s strongest in terms of hardware sales, to be between $665 million and $685 million, up slightly from the same period a year ago and well ahead of Wall Street’s expectations of $665 million.
Peloton also raised its full-year adjusted EBITDA guidance, expecting it to be between $425 million and $475 million, which is $25 million more than its previous guidance. Many of these estimates are higher than analysts’ expectations of $400 million to $450 million, according to Street accounts.
Shares rose about 11% in extended trading Thursday.
Despite the good news, Peloton is still dealing with past issues. The company announced early Thursday that it would begin a new recall of its initial product lineup. The Consumer Product Safety Commission announced that the company is recalling 833,000 original Bike+ devices after reports that the seatposts could break or come off during a ride. This is the same issue that caused a recall of the company’s base Bike model in 2023.
“We have received a small number of reports of Original Series Bike+ seatposts breaking during use, and as of today, we are aware of three such incidents,” Peloton CEO Peter Stern said during an earnings call Thursday.
Peloton’s latest recall cost the company $13.5 million during the quarter reported Thursday and contributed to a 0.3 percentage point decline in gross profit margin.
In its first quarter of fiscal 2026, reported Thursday, Peloton beat analysts’ expectations on revenue and bottom line.
Here’s how the fitness company’s first-quarter results compare to Wall Street expectations, based on a survey of analysts by LSEG.
Earnings per share: 3 cents vs. 0 cents expected Earnings: $551 million vs. $540 million expected
Sales were $551 million, down about 6% from $586 million in the same period last year.
Under Stern, who took the helm in January, the connected fitness company is refocusing its attention on growth as it finalizes cost reductions and is now generating regular free cash flow and returning to profitability.
“Our intention is to go far beyond (aerobic-related fitness)…We have strength, we have mental and spiritual health, we have nutrition and hydration, we have sleep and recovery,” Stern said. “We are focused on growth, but that growth has to be accompanied by profits…both in terms of top-line growth and profit growth associated with that business.”
Peloton last month relaunched its product lineup for the holiday season, introducing a line of commercial equipment and raising prices on both subscriptions and hardware.
Touching on the company’s bike, rowing machine, and treadmill products, this improved assortment includes new features such as AI-powered tracking cameras, speakers, 360-degree rotating screens, and hands-free controls.
“Announcing a completely new product lineup, the Cross-Training Series, is a great reason to talk to members and non-members alike,” Stern said.
Peloton expects consumers to spend big on products as fancy holiday gifts for themselves or loved ones. However, just over a month after its release, its performance remains unclear. The company’s first quarter ended the day before the new product launch.
Across the retail industry, the personal electronics sector is under pressure.
Peloton operates in its own category, but shoppers are holding back on other big-ticket purchases and becoming more cautious about where their money goes in a volatile economic environment.
After Peloton’s last recall, the company announced at the time that it had experienced higher-than-expected member attrition and resulting costs.
– CNBC’s Luke Fountain contributed to this report
