Peloton CEO doesn't care that its equipment is losing money, sees path forward in the app

Peloton CEO Barry McCarthy told investors Wednesday helium doesn't attraction that the institution is losing wealth connected its Bike, Tread and Row equipment. The business's "path to the committedness land," helium said, is its mobile app. 

Peloton posted antagonistic margins during the vacation 4th for its pricey connected fittingness products, but McCarthy said he's much acrophobic with aggregate margins, which were successful the affirmative thanks to the company's subscription revenue. 

"We instrumentality a holistic presumption of the gross watercourse and the expenses associated with some the hardware and the subscription associated with it. So from my part, I don't peculiarly attraction astir the hardware margin," McCarthy said during the company's net call. 

"I attraction astir it connected an aggregate basis, and I attraction astir the narration betwixt the beingness worth of the lawsuit comparative to the outgo of acquisition," helium said.

In Peloton's fiscal 2nd 4th 2023, ended Dec. 31, the workout instrumentality institution mislaid $42.8 cardinal connected its connected fittingness products, bringing the division's gross borderline to antagonistic 11.2%. 

The company's wide gross borderline of 29.7% was kept afloat by the $277.9 cardinal Peloton made from its subscription business, astatine a borderline of 67.6%. 

While subscription gross was efficaciously level 4th implicit quarter, it exceeded income from Peloton's connected fittingness products for the 3rd 4th successful a row. McCarthy told CNBC it signals a imaginable "turning point" for the company. 

When asked astir however the app, which features on-demand workout classes from the company's pseudo-celebrity instructors, fits into the workout instrumentality company's wide strategy, McCarthy said his superior extremity is to grow Peloton's full marketplace stock by reaching a idiosyncratic basal that it hasn't been capable to entree before.

The outgo of the app, which doesn't necessitate immoderate Peloton equipment, is $12.99 per period compared with the $44 monthly outgo for the company's all-access membership that tin beryllium utilized connected its connected fittingness equipment. 

"I deliberation of it arsenic its ain extremity game," McCarthy said.