Platoon Inc. reported its second consecutive profitable quarter on Thursday, issuing strong forecasts for the crucial holiday shopping season, banking on its relaunched product assortment to drive growth.
The connected fitness company posted a surprise net profit of $13.9 million in the quarter ended September 30, compared with a loss of $900,000 a year earlier.
For the current quarter, Peloton’s strongest in hardware sales, the company expects revenue between $665 million and $685 million, up slightly from the year-ago period and well above Wall Street’s expectations of $665 million, according to LSEG.
Peloton also raised its full-year adjusted EBITDA outlook and now expects it to be between $425 million and $475 million, up $25 million from its previous outlook on both ends. Much of that forecast is higher than analysts’ expectations of between $400 million and $450 million, according to StreetAccount.
Shares jumped about 11% in extended trading Thursday.
Despite the good news, Peloton still struggles with issues from its past. Earlier Thursday, the company announced it was issuing another recall of its first line of products. The Consumer Product Safety Commission said the company is recalling 833,000 of its original Bike+ devices after receiving reports that the seat post can break and come loose during a ride – the same issue that led to the recall of its base Bike model in 2023.
“We have received a small number of reports of an Original Series Bike+ seat post breaking during use. To date, we are aware of three such incidents,” Peloton CEO Peter Stern said Thursday during the company’s earnings call.
Peloton’s latest recall cost the company $13.5 million in the quarter reported Thursday, contributing to a 0.3 percentage point decline in its gross margin.
For its fiscal 2026 first quarter reported Thursday, Peloton beat analysts’ expectations on both the high and low ends.
Here’s how the fitness company performed in its fiscal first quarter compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: 3 cents versus 0 cents expected
- Income: $551 million versus $540 million expected
Sales fell to $551 million, down about 6% from $586 million a year earlier.
Under the leadership of Stern, who took the reins in January, the connected fitness company finalized its cost cuts and turned its attention back to growth, now that it has returned to consistently generating free cash flow and operating profitably.
“Our intention is to go well beyond [cardio connected fitness]“We have strength, mental wellness, nutrition and hydration, sleep and recovery,” Stern said. “We’re focused on growth, but growth has to be profitable…both in terms of revenue growth and increased margins associated with that business.”
Last month, Peloton relaunched its product line, introduced a line of commercial equipment and raised prices on memberships and hardware ahead of the holiday shopping season.
The revamped assortment, which spans its bike, rower and treadmill products, includes an AI-powered tracking camera, speakers, a 360-degree rotating screen and hands-free control, among other new features.
“Launching a whole new product line with the cross-training series is a great reason for us to talk to our members and non-members,” Stern said.
Peloton is betting that consumers will be willing to spend big on products for flashy holiday gifts, whether for themselves or a loved one. But a little over a month after launch, we still don’t know how they’re performing. The company’s fiscal first quarter ended the day before the new products were launched.
Across the retail industry, the personal electronics category is under pressure.
While Peloton operates in a category of its own, shoppers have turned away from other big-ticket items and are more cautious about where their money goes in an unstable economic environment.
After Peloton’s latest recall, the company said at the time that it saw higher-than-expected churn and costs as a result.
– CNBC’s Luke Fountain contributed to this report