By Kannaki Deka
(Reuters) -Exercise equipment maker Peloton Interactive (NASDAQ:PTON) Inc on Thursday forecast revenue below estimates for the all-important holiday quarter and posted a bigger-than-expected quarterly loss, as sticky inflation keeps discretionary spending in check.
The company said it expects second-quarter revenue between $715 million and $750 million, compared with analysts' average estimate of $763.3 million, according to LSEG data.
"Our Q2 guidance reflects what I believe to be a balanced view based on the macro economic outlook. And the fact that there is some uncertainty around the performance in holiday season," Chief Marketing Officer Leslie Berland said on a call with analysts.
The company's shares climbed 8.8% to $5.24 in morning trade.
The shares have lost about 40% of their value this year as demand for the company's connected home fitness equipment has plummeted after a surge during the pandemic and a return to positive cash flow by fiscal 2023 was delayed.
Meanwhile, Peloton is pivoting from hardware and transforming into a software-focused company under CEO Barry McCarthy, leading to subscription revenue surpassing hardware sales for the fifth quarter in a row.
"We recognize there are several reasons for optimism later this FY around management growth initiatives including the relaunch of Tread+, continued growth of the Bike rental program, early momentum with key partnerships, and international expansion," Canaccord Genuity analyst said in a note.
Peloton reported a net loss of 44 cents per share, compared with analysts' expectations of a loss of 34 cents, according to LSEG data.
The New York-based company said it expects holiday quarter connected fitness subscriptions to be between 2.97 million and 2.98 million, in line with FactSet estimates of 2.98 million, and flat from the prior year.