Fiscal third-quarter results from Peloton showed the company turning a $26.4 million profit, a sharp turnaround from the $47.7 million loss it recorded in the same period last year, with total revenue of $630.9 million clearing what analysts had anticipated. On a per-share basis, the company earned 6 cents, one cent below the 7-cent consensus estimate, according to CNBC.
The top line edged up roughly 1% against the prior-year comparable of $624 million, exceeding the company's own guidance midpoint by about $6 million and surpassing the $617.6 million Wall Street had forecast, per CNBC.
Subscription revenue was the primary driver of the improvement, rising 2% year over year to $428 million. The company raised prices on its subscription plans in the second quarter, and CEO Peter Stern told CNBC the timing was right. "We had added a tremendous amount of value over the succeeding three or four years since we previously made any change in our subscription prices," Stern said.
Connected fitness products revenue of $202.9 million represented a modest year-over-year decline from the $205.5 million recorded twelve months earlier. Ending paid connected fitness subscriptions fell to 2.662 million from 2.880 million a year prior, though the figure held in line with the midpoint of the company's guidance range.
Adjusted EBITDA reached $126.2 million, a 41% increase from $89.4 million in the same quarter last year. Free cash flow rose 59% year over year to $150.5 million. Net debt fell 70% year over year to $173 million.
Looking ahead to the full fiscal year, management updated its revenue outlook to a range of $2.42 billion to $2.44 billion, raising the floor of its prior guidance. The company also lifted its free cash flow target to about $350 million and maintained its adjusted EBITDA outlook of $470 million to $480 million.
Beyond its core subscription business, Peloton has been working to diversify its revenue streams. In April, the company launched a content licensing partnership with Spotify $SPOT, making more than 1,400 Peloton classes available to Spotify Premium subscribers across most of the platform's global markets. Peloton does not count Spotify users toward its subscriber totals. Stern noted that negotiations with Spotify had been ongoing long enough that the financial contribution was already baked into the company's guidance, and characterized the arrangement as a high-margin opportunity that broadens Peloton's international footprint.
The company also introduced its first Bike and Tread products designed for commercial, high-traffic environments, with its commercial business unit revenue growing 14% year over year in the quarter.