Morning all.
I don’t normally share thoughts on earnings but I just came away very bullish after listening to John Foley & co and felt compelled to share my take on it.
It was another super impressive quarter. They were all oozing confidence and excitement about Peloton which can only mean one thing about growth to come.
I don’t think there needs to be any concerns about hardware sales falling off. They have such a small customer base right now, they are only just expanding beyond US shores but also in the US their core members have been the die hard cyclists, they have so much TAM to tap into in the general fitness category.
In regard to RafesUserNames concern on margins, on the call they said “we are incurring outsized additional shipping related expenses in Q2 in order to alleviate some of the delays ahead of the holiday period” but state this is temporary. But more importantly, as their member base scales significantly, content costs start to thin out so I’m fairly confident we’ll see improvement in margins as they go.
Call highlights for me:
The new Peloton tread, that John Foley describes as a “game changing product” will be coming to market in 2021 and they are extremely bullish about the sales of this, and the opportunity to upsell once a new cohort of customers join Peloton at a lower price point.
Partnership with Chase, who are going to provide credit for the digital subscription for their Sapphire members.
Existing members are barely trading in their old bikes for the new Bike+, instead keeping them in the family. Extreme customer satisfaction/value.
Remember that Q1 covers the warm summer months, we’re about to go into a Winter + lockdown, I can only see outperformance on all their metrics.
I like this statement a lot from Jill Woodward, the CFO “We are focused on telling the market about Bike+ but we haven’t really gone out broadly yet on our original bike and the price reduction which is now $49 a month on financing and so as we get through that crucial period of getting those order to delivery dates down we’re really excited to tell the world about the value proposition of the bike”
Port delays are baked into FY21 forecasts, so another opportunity to outperform once they resolve
Their quarterly revenue history… they’ve just done 758 million, Q1, 20 was 228 and Q1, 19 112 million, so a 7x growth. Not yet reflected in the share price.
Lets not forget, this is a PROFITABLE business, growing revenue at an insane level…
All in all, I’m really happy about the future for Peloton. I topped up Peloton with the market wobble and is currently a 25% position for me.