Shares of Peloton Interactive surged intraday Thursday after the fitness company announced the appointment of Ford's Peter Stern as its new chief executive while reporting better-than-expected fiscal first-quarter results. Revenue dipped to $586 million for the three months ending Sept. 30, down from $595.5 million the previous year, but it topped the average analyst estimate of $571.7 million on Capital IQ.
Subscription revenue rose by 3% year-over-year to $426.3 million, while connected fitness product sales saw a decline of 12%, dropping to $159.6 million. On a GAAP-earnings-per-share basis, the company broke even, in contrast to a $0.44 loss reported during the same period of fiscal 2024 and analysts' expectations for a $0.15 loss.
Peloton noted in a shareholder letter, "We're achieving our cost savings targets faster than we expected." Peloton's shares surged 25% during Thursday’s trading session. Earlier this year, Peloton initiated a restructuring plan aiming to cut annual run-rate expenses by over $200 million by the conclusion of fiscal 2025.
By the end of the first quarter, the company had implemented all necessary payroll-related changes to achieve more than $100 million in annualized savings, as stated by Chief Financial Officer Liz Coddington during a conference call with analysts. Additionally, Peloton announced that Ford executive Stern will take over as CEO on Jan.
1, succeeding Barry McCarthy, who stepped down in May. Stern currently holds the position of president of integrated services at Ford and has previously served in various roles at Apple. During the transition, Karen Boone and Chris Bruzzo took on the roles of interim co-CEOs and co-presidents in May.
Boone will continue as the sole interim CEO and president until the end of the year, while Bruzzo will exit his interim position on Nov. 1. Both will remain members of the Peloton board. In a filing, Ford disclosed Stern’s plan to resign, effective Dec. 15, after which Ford's Chief Enterprise Technology Officer Michael Amend will temporarily lead Ford Integrated Services. Peloton reaffirmed its fiscal 2025 revenue outlook within the range of $2.4 billion to $2.5 billion and increased its free cash flow target by $50 million to at least $125 million.
The consensus from Capital IQ anticipates revenue of $2.48 billion for the ongoing year. In the fiscal second quarter, the company expects revenue to range between $640 million and $660 million, indicating a sequential increase of $64 million at the midpoint. Analysts predict $665.2 million in revenue for the current quarter..