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PTON Peloton dismal Q2 results and announcing CEO shakeup

Connected fitness equipment maker Peloton (PTON) has now missed EPS expectations for three straight quarters.
The company also issued revenue guidance for Q3 and FY22 that was well below expectations, cementing the premise that demand continues to dramatically erode. The reopening of fitness centers, increasing mobility, and rising competition are a few factors that are battering PTON.
The mid-point of PTON’s Q3 revenue guidance is $975 mln, which equates to a projected yr/yr decline of 23%. That would mark the first time as a publicly traded company that PTON’s revenue declined on a yr/yr basis.

While PTON didn’t get acquired today, it did announce a major shakeup as Barry McCarthy was named CEO, replacing John Foley, who will become Executive Chair. McCarthy seems like a solid choice based on his past leadership positions at Netflix (NFLX) and Spotify (SPOT).

Additionally, PTON announced a restructuring program to help profitability and free cash flow, resulting in the reduction of 2,800 positions. As demand and margins continue to dive lower, significant cost-cutting actions are in order. In Q1, adjusted EBITDA was $(266.5) mln compared to $116.9 mln in the year-earlier period.

The main takeaway is that PTON’s business is still in freefall and that, after being pressured by activist investment firm Blackwells Capital, it’s taking some initial steps in executing a turnaround. An acquisition is still not out of the question either, as these moves may be a precursor to a future deal.