- Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Peloton Interactive First Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Peter Stabler, Head of Investor Relations. ahead. go Please

Peter Stabler

welcome and fiscal quarter first Good to call. conference morning, Peloton’s

McCarthy; are Liz call today’s and CEO, Joining Barry CFO, Coddington.

to with will Our forward-looking risks comments as statements forward-looking and views materially federal may these securities those reflect questions our that laws. uncertainties related statements and include Actual under and responses by of contained to to today in statements your implied our business. due are business associated differ results management’s from only or

and today’s risks Investor our can material important both the factors to impact of discussion on Relations a which could other results, our that For our of found be SEC shareholder refer website. please filings and letter,

financial I’ll operator for During call discuss financial GAAP this the A non-GAAP now over we in to question. first and both will today’s shareholder is turn measures provided to the letter. reconciliation call, non-GAAP the measures. of GAAP

Operator

the JPMorgan. [Operator come will Doug from Instructions] of from first Our line Anmuth question

Your line is open.

Doug Anmuth

Barry, to far? clear give made we update and But Thanks FaaS an for cash about and it’s and the loss. particular, that’s model can you’ve how in the rental growth taking on plan progress your cost how so think flow should us free structure drive questions. progressing you the on Thanks.

Barry McCarthy

when morning. we has driving and is believe our our variable – when again already of is, this will begin will a the questions which made good end my letter framing transition. to a strategies free we business of of grow, how I certified expense pursuit ago I’m business. the question we this of growth, take come for the job what a cash not team, With margin number and million this we’ve those the kind business And Doug, articulated, relaunching business. focus of answers of year that retail that have expansion on like our the begin later And the driving come users, already towards there Thanks look app costs question joined into in our pre-owned goal our in digital Fitness-as-a-Service shape the to growth. leadership of breakeven of of flow. the longer cost that into quarter, – Well, that business, talked the and lean The my rightsizing of goal at as commercial on we Hey time we in and year to we first Clearly, case. the into that structure, XXX third-party about, to one as I the which focus We’ll ensure our focus question. lean life viability is to at the structure the any no partners, business was see the growth fast Because lean doubt. as and will be? into I

it relates about less really it’s a sign-ups. was to new of fast third As growing FaaS,

we’ve and day. have I’ve it over – still growth. of which XXX viable for web be to just about because early last only there’s long-term. kind about it’s average make will weeks an financially But us doing it’s leaning to absolutely to are not only incrementality We’re or the sign-ups the questions a We’ve on whether the and to subscriber our work begun what in demo, two and unanswered able of to we There’s learned been – popular out we previously it from a we is how users access. growth attracting figure base, to considerable with have not that it, enormously us for

So it’s expanding TAM. our

will options. probably, And the want the anything we time adjust to understand which will to option you look to to at over price, drives buyer exercise focusing we time what respect we on of bike. about do summary over way the Liz, FaaS. that with need the is more out the add by buy need percentage monthly the underlying we So, and churn, to my both economics and

Liz Coddington

think No, only that the was is think different margin we revenue from note, say business. of to that’s about will that FaaS and core something – profile is if that I thing our bit the little a I profile you the growth about important gross business, – the

longer in that the the period And of be so the the time. Connected income FaaS not the Fitness of we’ll get from grows, as hardware over because take we’re that rental – to revenue see benefit we’ll will purchase getting the

So just highlighting that for everyone.

Doug Anmuth

kind And early, you target I over it’s as what represent or is think could FaaS outlook any – of of on sales know but still any of there kind time?

Barry McCarthy

base? the user Of

Doug Anmuth

Or just subscribers? new

Barry McCarthy

XX% or a installed the base. subscribers. no new on that than there’s more basis because of More across churn net effectively

of percentages the So be a gross bit would versus quite different. net

Doug Anmuth

Okay. both. Great. Thank you

Operator

question. next One you. for Thank our moment

Piper will line from Edward the of Sandler. question come next from Yruma Our

is line open. Your

Edward Yruma

Hey, the Guide questions. towards some morning good I noted bit guess, Two though, you Row. and insight results; softer app, to you. then construct Thank growth. on rotate the little your for a which Barry, Thanks the newer want vectors I think I saw guys. view maybe modalities of guys taking some and any like into of this you

Barry McCarthy

would payback additional Coming comment. Doug, one Yes. My then FaaS between we XX to months. that somewhere back and in year and Nirvana a a in see Guide moment. be Row? And for attractive

but not years. the the as is two product think I drive it’s viable,

buyout Deemphasized tweak monthly it churn, talk the little a growth how I product, app. digital it’s price of helpful. thinking in when the the and viability sort bit. financial lens, that’s Edward, that of directionally if so And and through about of we’re option, about we but

digital tiered is to currently. content value is – strategy. be the strategy will content a relaunch Year. it price It our different Our be in associated the strategy app opportunity with a pricing There’ll new than New a

is About – really never current has to else’s actually We business access grown someone case. business We’re hardware. app gain the connected one product bigger to digital use chasing competitive users that platforms. never here use paid half a users. hardware digital of on than another are million. million strategy at the content We’ve overarching or XXX app, The users, our the time connected marketed

to at of our lean the end The into going kind We’re has funnel. come of app it. marketing digital

We’re going to move to it up and into opportunity. growth try top lean the to a offer premium that with

saw XX. in product Guide. low line scores purchasing Customer In really are than unaided terms are the based products, The products the sense[ph] I higher on some And brand any is or of our sat to really high. scores relative like other other higher awareness overnight. of research

opportunity leaned into. think market to don’t haven’t effectively. really I out figured we’ve it quite an So we it’s how

So Fitness been metrics at the and units working Row would fiscal having it’s least inventory content. this nearly respect sell, to moment, for Connected as doing news for just it’s do issues. well Row critically news we’re to would the proud But on I year, reinvented and okay, address have be the category have as bike but Row, to justifiably the than be to you category expect think bad good The those we constrained it we is more With well can they will received. Cortese about in quite described. like based the demand I they Tom and reinvented it’s team not doing the his think with and

a number, all our XX. just of We as limited showrooms yesterday, out it of through like rolled have in

And so about to people’s the as continue exposure what’s demand it expect to we and I it. opportunity grow and on for mass to try Row the increase see get and

Edward Yruma

you. Thank

Operator

next question. Thank moment you. our for One

line the from come will from of of question next Bank America. Our Justin Post

Your line open. is

Justin Post

for elevated is the how in rowers reopening kind the that Or one future subs. then bit How holiday Can kind and you we of does Great. at And slightly to promotion some all this XQ churn? you. thinking still got you And one the year? different then Is of context. that Fitness-as-a-Service. that retail it context be its just about in, macro the its challenges And may time. Maybe I – than immaterial contributing kicking in it do on a this being talk put are think kind Thank obviously guide? What year quick plans? sub years? point? of overall the about of growth little of your put in you’ve and XX,XXX mean kind

Barry McCarthy

have point. just churn both. but me the do basis be piece does churn, it’s higher immaterial, It Let a it like would

a then is add? to flow ought ignore in can we news a holiday ambitious see year-over-year like And is good good growth, want equation right to But plan purposes. it Liz and bad guess I growth. other I is in substantial to think could on which make think and churn on what foreseeable over there’s We is, perspective, we’ll it’s could the not And comment and future. it want from is decrease to effect I’ll quite cash I anything there’s have And of limited target. of significantly spending, the to Liz, a it and we very news want for on there I growth happens. sub we’d – on side that news sequential be then that be to spend higher, you’re basis. the number. basis more you the downtime to that. turn about more, the the in the So, FaaS paced during The by

Liz Coddington

it economy business indicates seen Yes. many for connected is that, I the an other And we is was as have just going demand. is that headwind that to certainly hardware a near-term us on say impact some having for research companies. that

Justin Post

that. about Sorry [Technical Difficulty].

Operator

for our One next question. moment

Goldman from Our Sachs. next line come from Eric will question of Sheridan the

Your line is open.

Eric Sheridan

on Thanks retail. up Justin’s for the question. taking following Maybe on

light environment distribution thinking some may the countervailing evolve into quarter? be you December beyond should in retail we those terms from the we the should dampened which in the as about the demand turn calendar they short how supporting factors partners sort the what help narrative you’re XXXX? how Thanks. distribution end widening strategy we out think name? of growth can Just calendar around just new about remain contribution And think of of of term, How

Barry McCarthy

was comes at we’re launched the our where on only we happens. far? are. be see so successes strategy But what Well, felt business flex any our me questions. will same to the order sure. some has what for strategy the customers model have to some We’ve broadened successful has cost to it We losses. be margin. minimize and Let our based learning, just It this the retail on we gone to know outperformed it way capitalize because exporting lean say of how of into it actually important those. the Amazon in expectations How and then And is

expectations that? to want add it it over Liz, time. be to for high to you have perform remains it, seen will how but We anything

Liz Coddington

No.

the apologize fire covered prior that went middle a question want think the but got do call, off off. unfortunate. it, for I alarm the in our I to of back which that I second is go cut to

still So to I and we our forecast Barry’s faster FaaS going sub. XXXX that per in guidance the helps for us, guidance do about being on expect which we’re been wanted But forecast revenue if out are seasonality do year the for ability in and in around the quarter and goals context bit folks any do a But the what our to to that economy may question have because as want to, last on CPO, to but revenue for with that said again, of have QX, have activations overly of we that do CPO, delivering overall or or balance now. Fitness-as-a-Service macroeconomic headwind point continuing to was we back guidance for forecast. that do not full well. if grow a aggressive market we for guidance we’ll QX. not providing the point, year to In QX creating we sort trends. our grow grow we to that have And we we another trying terms to fiscal I do us the our of that the to not I say been in we and modeling. secondary and see. other cash that flow want are many right fast to on able still businesses talking revenue holds year, of opportunity quarter, with we the us for on confidence resemble be latest little our strength also, the incorporates we may subscribers

Barry McCarthy

comment. additional one add on comment Just

talking into grown for on it healthy touched we’re subscription market Liz active over has So And the secondary operating leverage that I and lean significantly in the that viable. ensure can to we That a growth source last is about how year. ecosystem us, be of and expect activation. and

became their who is a home. So bike. sold potted going in it in It secondary someone They owned market. the plant this a doubt, to

subscriber Someone bought someone cost subscription becomes to activates us. the and it to a monthly and

Peter Stabler

Next question please, Victor.

Operator

next Thank you. One moment question. for our

Our next question Lauren of Schenk from from Morgan come Stanley. line will the

Your line is open.

Lauren Schenk

you. thank Great,

Barry McCarthy

welcome. You’re

Lauren Schenk

Can me? you hear

Barry McCarthy

Yes. Lauren. ahead, Go

Lauren Schenk

excluding back On Thank the the to restructuring what’s time line behind the into negative positive XX%, Connected needs the guess to still Fitness recall us, for with impact. even get that gross margin, rough what happen that? changes I And territory? you. largely

Liz Coddington

So you’re correct.

First of we margin. have a would yes, Tread+ you’re all, right. at for the we adjust If gross negative been XX.X% recall,

QX. We to, that want sorry, want first of seen start talking our I – highlight from even to improvement we’ve highlight, expecting to margin the about see I are increases in before quarter-over-quarter all, gross I to

mile our to example. for logistics our to for that FaaS, margin, put are over expecting that, improvement XX%. One as and improvement. mile. pressure In our We’ll to continued a for those middle gross we final not be expecting improve though see are Fitness, it’s and we thing you like costs So things continue improve Connected on around time. guiding see we’re things we’re overall to gross then margin, And but tremendous QX,

because So the the upfront. channels on consider for contra then with of grow, are as as expense continues cost pressure do put associated they expense marketing that gross delivery those FaaS as the to revenue. such retail of take do we fact pressure we our bike put economics that the will that third-party of margins that also the And

the So adjusted out improvement positive our gross I are business and thing towards is we managing generating overall generating then and in want key point cash to that flow EBITDA. an that margin also positive

may a a margin, but we in – some but profile That we’re that overall, just of out look structure P&L. the and margin, and different gross programs to at that have we makes elsewhere these also cost So see some we bear it want we impact sense. realize to gross have any need to benefit

Barry McCarthy

you their long middle tease sheet If for those things way comment Could on kinds you just could reduction I out mile final that cost in nuance. balance the the through and into takes mile find of additional one think freight P&L. it how our

Liz Coddington

seeing I little more the that think going a every of is quarter, gaining to we this benefit more is something and bit take but traction. time, are

specifics. year, I think we want I So, don’t – much by probably hopefully, the that. by spot in the should end a us to be of give on But better

Barry McCarthy

[ph]. Just trying to tease out the average pricing versus buy

Lauren Schenk

Okay. Thank you.

Barry McCarthy

decline is their for only costs middle point that way our and the restructure P&L. mile our going The mile, and to as the to for last find a we those it’s account we inventory, economy and take while way of the freight into because benefits

benefit. we We have don’t P&L the but see benefit, the cash

Liz Coddington

other expensive. we our The storage as of inventory then costs Yes. to have the is will point was will And way some is piece that freight through That the our on, continue the that to when decline more we like around. cost, have work its brought inventory inventory. that that

also year will will through end be be our inventory we as of probably XXXX into the ongoing That and things benefits FY those well. lower So the as position.

Barry McCarthy

And have very our costs been storage significant.

Lauren Schenk

Understood. Thank you.

Operator

One moment next for you. question. Thank our

next ISI. come from Our the question Evercore of is Shweta line from Khajuria

is line open. Your

Shweta Khajuria

Hilton, So work? mentioned my Goods partnerships Okay. how a should you about, revenue? it. these how Liz, Thanks terms for how there And subscribers Amazon accounting much a in aspect lot – or is questions. think whether contra does actually accounting the third-party Sporting Dick’s then of taking you’re retail of How also for for we revenue it’s or

second how now leadership that. the the organized and you if is understand be growth. could would it company the about And great is, team talk Barry, So for then to

you. growth managed So on are long-term initiatives as reports how segments team you are the internally Thank for leadership to focused which and growth?

Liz Coddington

as So go, we work models of do have that use couple third-party the we far as to a different them. with retailers

have we wholesale of a So case in Amazon, model. the

sell to us and rather And from inventory the come that recognition revenue will then resell come actually time the customer. later. buy will we when sell the them will the inventory they even subscriber will they Amazon it the So than at our to and it,

sell So sub the the It and has they to bike delivered has the to then subscriber. to activate. have get to

So There gets the models. from we timeframe longer think activation. about to the will Dick’s, when be actually types inventory being timing we when disconnect wholesale that have some a subscriber in sold see a of there. With

So, model. we a drop also have ship

or and order walks a customer. where send then somebody then So orders that’s they bike to the fulfill Sporting and Goods, a and the deliver case to the the signal us it tread, we into

at we case, sales. regular like that web the we revenue in recognize time delivery the our in So do of

And timing be subscription. their and when when get we expect and revenue received so similar they the the – activation get we record from will we as bikes,

different the But models over So time, we an could – Connected they models in different is a subscription impact – growth there see we have going they’re couple out model now, how the there. on on how growth revenue of as these Fitness. to small they’re but right comparison out

Barry McCarthy

was question there about part of then revenue. the contra a And

Liz Coddington

Well, happens in – – Yes. particularly – we it’s financials up in those with agreements show our with do that revenue. marketing basically we some Amazon. are what expenses reduction with that that as way The a have our is – to

line. up is – it’s just than a that And in – model the it so different marketing expense doesn’t show

Barry McCarthy

quarter, to business or substantial effort. leadership There’s it’s leader restructured we market. Thanks the for the virtually composition we – growth, approach a in And respect the piece reorganized the Last the in no been to that the haven’t the in form of leadership team fashion. change and that. With I team. lead our of some

new marketing business; quite time The various group interim. by by the equally leading complicated. complicated. we’re This process quite Certified rolled I’m the as of the Amazon, of Marketing business of in way and out of spending search for virtually on business grow proud also launch. result, of team we work in how It’s no wasn’t of the I’m is the complicated. the function complexity to is pre-owned that people reporting across our focused how team’s amount a FaaS is in we launch with initiatives. that the left And a is to of we me. Head Some the certain touched a describe performance functional example. the equally

taking. So it’s precision with speed and executing and about risk

Shweta Khajuria

Thanks, Barry. Liz. Thanks,

Operator

One for next you. question. our moment Thank

question next Wolfe Deepak line from comes of Our the from Mathivanan Research.

Your open. line is

Deepak Mathivanan

for Thanks question. Great. the taking

churn, distribution making So around that partnerships curious or strategic kind channel first little for is with But one. through you now? explored Can something lot either The model with that color customers your think XX after kind have XX profile these you of love have more other Barry, the much. if a content about so makes but are of to X.X%. opportunities question, certainly Thanks on better a some I fitness the than hear Peloton are you expansion levels for second and the you like adjustments And we churning Canada say, that. brand leverage It’s kind give under in-person, comfortable of next the studios? to franchise then And would and of thoughts sense. a maybe to in-person as of on months? months XQ, right

Barry McCarthy

in and is reason of And on team, product one – say the Deepak, aspects four by focus and large screen I experience, is improving was leaning What have Tom a no churning. into is works Jen no. on in because is be a deeply broken. on focus a well the an on. that the by focus improvements Cortese’s Churn current My I of trying of will already the my it’s to with Connected even are who’s digital app. There with it a Fitness not I just primarily in churn am and any engagement area. the operating the group is with leverage user of versus remotely business, reduced there we improved content it the in team both a going of shy along happen. that basis device don’t personalization. to pre-COVID continue made happened question will It’s don’t think had, short The Cotter’s and about part process, Tom’s to focused period on number in color are answer with of the We’ve belief points. team personalized to see XX% not – your couple that And on on improvements Jen’s experience, we see first just quarter. in is more –

was mean signal be will can but I So, better have growth more that better still, because we believe we the grow was subscribers. at if I it think we and lower I Netflix. cost saw at delighted and to will we phenomenon that engagement is more it because saw phenomenon don’t Spotify, have issues, we’ll that the still because organic Don’t faster think that have a we at

is this on churn. comments my So

commercial fitness, to to doing I a about I’m this. through brand in-person higher. thinking commercial digital case what it As is I that I And as split application. trying better it and to be considerably pay revenue-sharing consequence leveraging way quite think would having app. a this businesses than relates And our a a that of strategy is We bit attack to it trying think time the becoming spend it with with right go-to-market use negotiate the other of use

TAM us have house, for be be a wherever in digital home, could the and structure your margin our a to has I’d your to take you and running. engage gym, for sell friend’s could you could outside us. So, want take to rather That’s what could better a much you be you’re it app be larger content,

Deepak Mathivanan

Very it. Got helpful.

Peter Stabler

you. Thank

question please? Next

Operator

moment One question. you. Thank next for our

line come will of Citi. question Ron next the Josey Our from from

is open. line Your

Ron Josey

free back question. Thanks to about the the maybe wanted to just Barry, flow taking walk Great. cash I around turn and for guidance. here

breakeven in letter the talked near about think XXXX. I reaching

half. and little makes the a beating the also here just on more questions the And and receptivity better year that beating time any Thank us and flow Obviously, line the help feel to investments So about So, of the talking bit guidance here you to quarter, campaign. what for one cash getting just goal mid-September. you. the if you breakeven? the could on saw it we campaign? breakeven back I on ad but we holiday the then about know think in update curious in free

Barry McCarthy

I’m ask repeat cash to hard ask I the guidance, the you and the talk going it. to Liz free about part flow of might second to time sorry. a then hearing question, I’m I had

Liz Coddington

quarter So second a specifically all, breakeven second haven’t our guided while able talked goal. of some to guaranteed cash flow before not free for prior remain And and that. of see from cash reduced not in a certain. outcome. It’s about our or risk. number There’s free by achieve you to at – goal we the the our on year. we we the breakeven But reaching the significantly quarter always that cash this half to can burn quarter, being track the It’s – flow near we

that we So, of making goal. to towards focused And remain amount continue a on it. are we progress tremendous

that’s, to live So that on to our and able be goal, continuing it. we’ll maintain that’s we’re

Barry McCarthy

recent a based cash increasingly that last to is, in – I flow few free over couple our of on confident I’ve would the our quarters. One things. add ability grown performance forecast

progress. considerable So have we’ve job team her and and a done Liz quite made good there,

of year, that or was also we it. because understood first suppliers true, headwind, to inventory realized time our had that is that think two replace point settlement in with committed contractually the and more we across of netted and when that there And we didn’t A least was I inventory had on ago, back out March one. we’ve liquidated of color That inventory those impression had the the to kind two cash at payments we little got two we frame. but Point a have the entire big half flow. the than in big the a as So year. tailwind pay negotiated is that we we a a that’s quarter lot

business, to the immaterial I think million, well make that, want the so sure there’s to understood. a just order entirely it’s was in net that, nuance $XX like benefit I something of and that

Liz Coddington

any for down And offset. the quarter, is in settlements true is see by offset that that supplier inventory this you that certainly more inventory than sure benefits with balances quarter, QX, coming for

Barry McCarthy

roughly make to The heads is rightsizing eliminated We cost our of with recently order want restructuring. to of last business. XXX in to respect point complete I the structure the

So, in out done humble no we to be there business. are are my opinion, And the now. more of taken heads

a forecast. from perform needs more of rest need perform, to we’re The meaning less our our so meet going performance. cash we working flow capital aligned business And perspective, be with to the dynamics the as our expect or business to to

with Our Cost aligned to more or growth our needs be less with to be aligned our forecast. for inventory forecast. needs

of and be – out And be get clear I reducing want expenses. to about employees going that. investors there business by with to be want clear additional our operating I that, taking the I not heads just to want to We’re with about

is This the done. are team. We go-forward

Liz Coddington

still is for retail we through The caveat are I will just Barry working to our first-party one showrooms. thing that that, that completeness.

And out of get of is we takes of – some one leases. processes those are so that time that to the just showroom

And have fiscal will and of so end still as fiscal piece that into well. we XXXX the the be one likely through ongoing that XXXX will

Barry McCarthy

already. well As

Thanks ongoing. clarification. the Now’s been for

Peter Stabler

you And the Ron, didn’t campaign. it. understand advertising We repeat could your about question

Ron Josey

Yes. flow. Thanks cash on Peter free answers the and the appreciate

of recent started least mid-September of seeing But family the understood have products. holiday campaign we we’re a at saw the ad we this just Just that Peloton guidance campaign on for started new it quarter. think receptivity broader campaign, and the for I here the at curious on

Thank So any insights there helpful. would you. be

Barry McCarthy

because of hit let’s everywhere, Germany, about Ron, Hard intent, brand intent the honestly. is for slight to where taken purchase or not? Well, it’s think a except up in of terms campaign the for say advertising it slightly purchase

the Second were advertising make few than about going considerably. our point would lot current and not because I advertising months are in market specifically dollars a that market a generally is ago the the farther environment, they softened has campaign

more be And were into to seen we than translates for tailwind, is media the to spent first But in in coming growth. the Nice acquire expecting we that holiday long-term. dollars we’ve impressions were so into how it season. able that marketplace the seen,

Ron Josey

Thank you, Barry.

Peter Stabler

Victor. Next please, question

Operator

Thank One you. moment.

question Aneesha from from of Our will come Sherman next Bernstein. line

open. Your line is

Aneesha Sherman

Yes. my question. Thanks for taking morning. Good

Liz, give if seems margin? up? some this color could scales it So color where where sub basis? the gross hardware one-off an trajectory. you can like music and underlying the And It some – gave you you you things on And margins gross wonder had do about go on and the I as costs think what that. could talk great like on was some on it you

rest et I are we where rate? you. another you and FaaS, that what points modeling underlying? cetera. $XXX Obviously, down mean year inventory. was $XXX Thank I good run And Is you’re could inventory? And then where it have million existing scales you the question distribution the it have million. of It is more on lot a kind through as So a of through as then up? go your work

Liz Coddington

take the the of question part first. around I’ll Okay. subscription margin

are with down in on subscription the that. bit a see did of margin, couple prior QX, from There some a line of particularly quarter, this year. drivers we pressure roughly in So,

licensing music just to One for of and those. guarantees, related subscriber minimum and reserves reserving higher was just them for growth that’s our

vesting and costs acceleration. repricing comp also equity related specifically and QX, to had our some We for was elevated that stock-based

so margin it from don’t on we expect expect where to subscription any for go term substantially But near wouldn’t very them right up now. we it’s at And forward. going pressure further

inventory. about question other The

do we thing rower buy, a some year. One it’s inventory sequential the over to point So, the and work we out like want of inventory related need inventory and as have I beyond. it to have of much specifically to the expect to see declines decline do that we decline necessarily we quarter-by-quarter. year continued to how is, do course – but through view in will the we I throughout going don’t

Aneesha Sherman

on the And one-offs one ex Do follow-up. Okay. subs color any you quarter? those this was have what margin

Liz Coddington

could that. repeat couldn’t that? I’m I hear – part of sorry, couldn’t the quite quite first you I

Aneesha Sherman

quarter? Do those point. subs been quick clarification had Sorry. one-off where you the ex margin have color would have a this costs I on the any just on subs

Peter Stabler

margin Sub ex.

Liz Coddington

you, don’t going to came – was it that down where specific a from we’re it’s not in it I for say QX. have number – but

much where You how percentage where that be in – is related minimum each we’ll I to of a to you the for piece. give could But say would now that say rough reasonable approximation exact while. of it’s guarantees a at hard of we’re

Aneesha Sherman

Okay, thank you.

Operator

you. next moment Thank question. our for One

Barclays. Our line next Mario Lu question of from from the comes

line Your open. is

Mario Lu

terms rest just to follow seasonality the Fitness up the the revenue of of Great. question. just Thanks or the confirm, of for I just year? revenue revenue earlier you to related comment is for made for year. rest the wanted wanted Thanks. the to in Connected taking I on that total

Liz Coddington

That would be total revenue.

Mario Lu

likely this mentioned digital on a potential about And hardware. if to time? talk right Can of be you subs And only you may it. of gating uplift now the bit classes be understand gated classes? telecom I convert strategy over digital the subs of a then significant telecom some that Barry, in using could half the currently Got else’s to future. devices. guys is owners somebody classes of Row

Barry McCarthy

than say on I’m out, it strategy roll compound. off there to until we the going component to be have digital a will and will premium hold that other gated it talking about

Mario Lu

Thanks. Great.

Operator

last come Thank of Andrew line question. And JMP our moment will Boone from One the you. from question next Securities. for our

Your line is open.

Andrew Boone

questions. so my for Thanks much taking

provide detail any help bit kind is items are that’s to On the self-assembly reception you guide, gone? so a and next around think Thanks And talk there? And consumer may slow about little terms it can we more understood like and feels starting declines involved but as Can of about G&A. headcount to quarter. R&D be much. of you in how that then the other stable, OpEx

Barry McCarthy

Sorry, what? reaction the consumer to

Liz Coddington

Self-assembly.

So reduction made were with force the we those that regard the to of QX some in the changes OpEx, regarding events.

EBITDA see R&D holiday timing. that’s of guidance QX, will quarters. we our be adjusted as fact the in more declines and So, the promotion we you’ll G&A that of both What the and will coming is spending part kind some marketing on reflected quarter-over-quarter see over in in

for there, So quarter into I implies will be that’s you’re declines there G&A the and spending addresses the the some by still higher for that to looking and at marketing. that offset – so what question. back trying R&D, sales to in some that extent that and guidance hope

Barry McCarthy

fixed. map when come want G&A, the And significant become fixed, comment got way. It’s to to [Technical From to structurally there they’re can And just the self-assembly? reduction. will the cost that say, a clear. see of broken road percent just to would revenue, path then they Difficulty] longer-term to things an down be a along towards as I number you of be There currently. I do are it. perspective, fixing additional some IT on be need spending

Liz Coddington

hasn’t No. of about I that aside complaints lot from fact haven’t seen self-assembly that. there been the a about much

not ratings extent thing. will it, complaining are it’s on good about are the the Amazon. a to be And – that we star so yes, good that So customers getting

confidence gives self-assembly again, is that, So the working. that

Andrew Boone

you. Thank

Operator

all the conference and you for have Thank we today’s today, this call. for Q&A that’s And you. Thank does time conclude participating.

Everyone, You a day. great may now disconnect. have

Peloton Interactive (PTON) 3 Nov 222023 Q1 Earnings call transcript