Peloton Interactive, Inc. (NASDAQ:PTON) Q2 2023 Earnings Call Transcript

Peloton Interactive, Inc. (NASDAQ:PTON) Q2 2023 Earnings Call Transcript February 1, 2023

Operator: Good day, and thank you for standing by. Welcome to the Peloton Interactive Second Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Peter Stabler, Head of Investor Relations. Please go ahead.

Peter Stabler: Good morning, and welcome to Peloton's fiscal second quarter conference call. Joining today's call are CEO, Barry McCarthy; and CFO, Liz Coddington. Our comments and responses to your questions reflect management's views as of today only and will include statements related to our business that are forward-looking statements under federal securities laws. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business. For a discussion of the material risks and other important factors that could impact our results, please refer to our SEC filings and today's shareholder letter, both of which can be found on our Investor Relations website. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's shareholder letter. I'll now turn the call over to the Barry.

Barry McCarthy : Want to do something a little bit out of the ordinary just to kick off today's call if you'll indulge me. A good friend of mine and Gail Tifford once best summarize what's special about Peloton? I think when she described the brand is golden and the members community is platinum. And what makes that possible is incredible work done by our content team and by the instructors who give it life. And because of that, and in particular, I want to welcome back to the platform today one of our Instructors in London by the name of Leanne Hainsby, who after disclosing her recent battle with cancer, and her announcement that she's cancer free, is today, once again back on the platform, and started her class just coincidentally happens to coincide with the start of this earnings call. So welcome Leanne. And thank you for all you do for us. And with that, let me turn the call back to the operator and take her first question.

Courtesy of Peloton

Q - Doug Anmuth: Thanks for taking the questions. Barry, you wrote about how the new initiatives across rentals and retail partnerships and just changes in the overall go-to market drove 19% of CFU volume in the quarter. So, if you could talk more about how you think that will progress over the next 12 months? And which of these initiatives you expect to be most impactful to drive growth going forward? Thanks.

Barry McCarthy: Well, based on the last quarter performance and quarter to-date, I think perhaps and the preowned business will be the most significant on a quarter-over-quarter basis, last quarter to the quarter before, our pass has doubled by way of example, and is continuing to grow rapidly this quarter. And a large, very large percentage 63% I think with a 95% confidence is incremental to the business. They are tend to be slightly higher at household income, who -- but to the fact that don't have to make a tricycle commitment would not have come onto the platform. Now, one, two, what about the third-party retail? It has less incrementality. But we don't have enough data to be confident that we know how much of the revenue is incremental, meaning, whether we would have sold it on our own platform, but for the fact that that we partnered with third parties.

It did outperform our expectations in the quarter. But of course, we had no history going into the quarter. So it's difficult for us to know as with FaaS and CPO how exactly to forecast it. So, we continue to be optimistic. We're quite pleased with the performance during the quarter. Uncertain about the incrementality, although we are invested in continuing to grow it and no more secret progressing.

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