Peloton Swings to Surprise Profit. But CEO Say Operating Expenses Remain ‘Too High.’

Peloton posted a surprise profit of five cents a share in its fiscal fourth quarter. (Ezra Shaw/Getty Images)

Shares of Peloton Interactive charged higher Thursday after the maker of exercise bikes and fitness equipment swung to a surprise profit in its latest quarter.

Peloton posted a profit of five cents a share in the fiscal fourth quarter ended in June, smashing analysts’ estimates for a loss of seven cents a share, according to FactSet. The company reported a loss of eight cents a share in the same period last year.

While fourth-quarter revenue fell 5.7% to $606.9 million, it still came in above the $580 Wall Street had anticipated.

The surprise profit appeared to overshadow Peloton’s warning that operating expenses remained “too high,” hindering growth. The company said it was launching a cost restructuring plan intended to achieve at least $100 million of run-rate savings by the end of fiscal 2026.

The decision to reduce the size of its workforce, cut down on indirect spending, and relocate some jobs wasn’t one the company reached lightly, CEO Peter Stern said in the shareholder letter. However, “we believe it is necessary for the long-term health of our business,” Stern wrote.

Peloton is expecting fiscal-year revenue of $2.4 billion to $2.5 billion. The company said it expects sales of its fitness machines and subscriptions to continue to decrease.

Management also guided for gross margin of 51% and adjusted earnings before interest, taxes, depreciation, and amortization between $400 million and $450 million.

Shares climbed 3.5% to $7.32 on Thursday. The benchmark S&P 500 and Nasdaq Composite were down slightly and up 0.4%, respectively.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com