Peloton has demonstrated immunity to the detrimental financial effects of COVID-19. Instead, they have benefited from a new market looking for fitness at home.
Peloton
Peloton Interactive Inc. is one of the few companies to increase their forecasts. The self-confessed 鈥淐ovid-proof鈥� fitness group has reported a surge in customers looking to exercise at home. They have experienced an increased demand for the internet-connected bikes. With bike packages starting at 拢1,990 and treadmills at nearly double the cost, the company is benefiting from people鈥檚 mission to get fit at home. In addition to up-front payments, their monthly instalment payment plans make this equipment a more affordable option for many consumers. Alongside the equipment, there is a membership fee for live-streamed classes.
Market Opportunity
Peloton has managed to capitalise on the global market as they are confined to their homes. In the quarter ending March 31st, they reported revenues up by two-thirds. They exceeded Wall Street鈥檚 already high expectations and demonstrated a 66% increase in revenues. Peloton鈥檚 total revenues for the quarter were $524.6 million (拢423.7 million), exceeding an estimated $488.5 million (拢394.5 million). Although they described a loss of $.20 per share, their increase in total members and surge in demand led to increased revenues. Total members increased by 30% between quarters growing from 2 million in Q2 to 2.6 million in Q3.
Continued Success for Peloton
Peloton extended the free trial period for digital subscriptions from 30 days to 90 days, encouraging more users. They predict that the success will continue into the next quarter. Their confidence is reflected in their sales and marketing expenses which they are boosting by 53% in Q3.
厂别迟产补肠办蝉听
Peloton is not without its setbacks. Despite their increased demand for at-home equipment, they were not fully resistant to the effects of COVID-19. The pandemic forced them to close down their showroom and cease production of live classes from their studios. However, given the figures the effects have not been too damaging. Their latest challenge is juggling the unexpected increase in demand. They need to assure both the supply itself and a timely delivery.
The question is whether this success can continue post-lockdown as many users inevitably return to their gyms. It will be interesting to see how many of the free-trial users will convert to paid users after the 90 day trial.
