Peloton says it is investing more than $ 100 million in express shipping to increase delivery speeds.
Photo:
Adam Glanzman / Bloomberg News
Peloton Interactive‘s
PTON -7.80%
a high-quality problem is becoming an expensive problem.
A vendor of linked spinning bikes and treadmills reported strong results for its second fiscal quarter on Thursday afternoon. Revenue more than doubled year-over-year to $ 1.06 billion, with affiliate fitness membership rising 134% to about 1.7 million. And Peloton’s appeal doesn’t even entirely lie on those willing to cut the top dollar for its gear: Paid digital subscriptions to the company’s huge offering of real works went up 472% to around 625,000.
But some of those metrics look backwards. Since Peloton does not recognize revenue on its gear until it is in the hands of customers, revenue and memberships associated with these products largely reflect what it was able to achieve. company to get customers who were patient enough to wait for production restrictions. They didn’t seem to be easy: Peloton’s website still features an eight to 10 weeks wait time to fulfill orders, even as the company claims to have upgraded their manufacturing product. greatly increased.
This has tested customer tolerance, with many having turned to Facebook and other social media sites to complain about the delay. Peloton may be the most famous game in town, but other manufacturers of connected bikes are doing fast business. Peloton also saw slow growth in consumer investment growth and postponed revenue during the December quarter, which may reflect slow demand. The company reiterated their conference call that this is not the case and noted that “lower utilization of customer investments” will lead to the use of more payment options. Peloton’s share price fell more than 7% on Thursday night following the report, although the stock remains in a loose position with a 12-month gain of more than 370%.
Peloton is aiming to reduce his waiting times, but it will not be cheap. The company said Thursday that it is now investing more than $ 100 million in express shipping to increase delivery speeds. They also said they are delaying the US launch of their new treadmill from April to the end of May. They are still working to increase production. Its $ 420 million build of Precor, announced in December, was largely for leveraging domestic manufacturing capabilities to better serve North American customers. Precor facilities in North Carolina are expected to make Peloton equipment by the end of this calendar year.
Peloton’s application before then will be another question. The pandemic has plagued the company’s industry by making home-based workplaces almost the only option for people with fitness. With the release of Covid-19 vaccines this year the reopening of gyms will continue and could take away some of Peloton’s innovative application. Peloton’s expensive products create a natural form of lock-in; someone who spends more than $ 2,000 on a spinning bike is so likely to re-enter the world of shared dumbbells.
But at the same time, customers with options are unlikely to stay two months either.
Do you already have a bicycle? Nicole Nguyen from WSJ shows you the gear and software you need to turn it into an internet-connected stationery ring in a few simple steps. Photo by Dom Amatore for The Wall Street Journal; Photo: Zwift
Write to Dan Gallagher at [email protected]
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