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news
peloton bike - via facebook.PNGPeloton cuts cost of exercise bike by 20 per cent as losses worsen
Connected fitness brand Peloton has slashed the price of its core exercise bike after posting worsening losses for the fourth quarter of its 2020/21 financial year, with growth in revenue also slowing.
The price cut of around 20 per cent has been applied in all of the New York City-based companies markets including the UK, where the price drops by £400 to £1,350, as well as the US, Canada, Australia and Germany.
Access to the company’s online fitness classes remains payable by separate subscription, the company said as it updated shareholders on its fourth-quarter results for the year ended 30 June 2021.
“Today, we announced our latest step in making Peloton more attainable by lowering the price of our original, award-winning Peloton Bike across all of our markets to $1,495 USD, or $39 per month with our 39-month financing plan,” the company said.
“We know price remains a barrier and are pleased to offer our most popular product at an attractive everyday price point.”
During the final quarter of the year, the number of Connected Fitness Subscriptions grew 114 per cent to over 2.33 million and paid Digital Subscriptions grew 176 per cent to over 874,000, and the business, which benefited from lockdown laws in its core markets last year, now has 5.9 million subscribers. Revenue was $934.6 million.
However, it posted a net loss for the quarter ended 30 June of $313.2 million, and its bottom line was also hit by product recall costs following the death of a child who was pulled under one of its treadmills.
It is set to launch a redesigned and cheaper version of the treadmill in the coming days having addressed safety issues.
The company has also launched the Peloton Corporate Wellness programme, which will enable organisations to offer discounted products and subscriptions to their employees, with businesses already signed up including Samsung, SAP, Accenture Interactive and, in the UK, Sky.
“The corporate wellness market is large and growing, and we are uniquely positioned to add value through our proven ability to drive high engagement and member satisfaction, while also offering back-end enterprise features that reduce administrative load, including tools to measure program impact via a secure, easy-to-use portal,” Peloton said.
> The Shift Smart Trainer, that allows Peloton owners to use Zwift, launches on Kickstarter
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
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18 comments
You'd have thought the pandemic would have saved companies like Peloton. As it clearly didn't, I'd say they're f*****.
It looks like they tried to mix up business models. They went for stack it high sell it expensive. It seems that there aren't as many idiots in the world as they had hoped.
There are, but not all of them are rich...
If neither Zwift or Peloton can make a profit out of 18 months of lockdown there something wrong somewhere.
Though people assume startups are actually there to make a profit - they aren't. They are there to generate enough of a buzz to allow their founders and early investors to bail out with a profit either via sale or IPO - the future of the company is incidental.
Zwift makes a profit, shirley? 50,000+ members paying a monthly fee, minimal server overheads, minimal staffing, no sponsorship, no hardware...
I suppose their LA offices might be expensive but if they've not made a profit over lockdown then I think the staff need to count up how many superyachts are moored up by the founders' homes.
It has 441 employees and I'm guessing most will be high-end software staff, doubt the wage/benefits bill comes in much under $40M, doubt their server overheads are minimal given the vast amount of information flowing back and forth for subscribers, add in offices, advertising etc and I'd guess it's unlikely their costs come in under $100M, and their turnover last year was $68M. They've got over $1BN in corporate backing so somebody assumes they'll turn a profit sometime...
Zwift spend a crazy amount on advertising, probably in the 40m+ region, don't think they making a profit yet. That VC money seems to be going an developing their own hardware (and those ads), the current software only gets improvements slowly, they are playing a very long game I think.
Looking at some of the investment decks there are a few ways to cut the cake:
1: If we look at a 5 year time frame and assume investors in a growth stock need a 15% discount rate for future revenue. This would assume that the valuation needs to double in 5 years to ~$3 billion.
This would indicate that they would need to generate around $100 million in profit by 2026 at a price to earnings ratio of 30-1.
If we assume that there advertising, development and admin bill are actually pretty flat and that their Amazon Web Services (or similar)and other cost of goods sold costs simply scales with members at 50% of cost of goods sold.
This would mean that they only need $320 million of revenue or 1.7 million paying users to justify a $3 billion value.
2: If we do it by a ratio of revenue to value for a software as a service business these normally come out at around 7-1. This would mean that we would need revenues of around $430 million to justify a $3 billion future valuation or 2.4 million users.
I expect that their plans are somewhat more ambitious than this.
They are at the millions of downloads but more like the hundreds of thousands of subscribers.
As Peloton is still in difficulties, one wonders, would you still spend £1350 on one, and pay the monthly fees. If they go tits up, is the bike still useable with, say, Zwift? If not, it is an expensive risk.
The Bike isn't that great without power meter pedals.
The Bike+ is a full on Smart bike and works really well with Zwift. The Android version of Zwift can be side loaded onto both Pelotons screens though the weedy cpu makes the resolution not great.
DC Rainmaker has a good piece on Zwift on Peloton bike.
I see, I didnt know if it was only to be used on Peloton.
Actually I've just reread the DCR article and it's not as easy I recalled. You still need power meter pedals even with Bike+ and you don't get ERG mode either. Because Peloton uses a non-standard ant broadcast.
I've heard that they're thinking of branching out into other areas
You couldn't use the opportunity to reshow that terrible Peloton Woman ad from last year
(or the related one for gin/tequila/something)?
This one?
That's the one. And I was sure that some alcohol company jumped on and did a parody 'sequel' ad for it, too.
edit: found it. Aviation Gin, a brand owned by ("life moves pretty fast when you're") Ryan Reynolds. Implying she was driven to drink by the Peloton Husband...
Here it is: https://www.youtube.com/watch?v=ixODwP-xL44
And the wonderful parody Twitter feed!
https://twitter.com/ClueHeywood/status/1089705617718050817