(Bloomberg) -- Peloton Interactive Inc. shares soared after the fitness company named Ford Motor Co. executive Peter Stern as its next chief executive officer and delivered improving profitability.
Stern — who is currently president of Ford Integrated Services and previously served as a vice president for Apple Inc. — will join Jan. 1, the company said Thursday. Peloton also released quarterly results and forecasts that showed its cost-cutting efforts are beginning to boost the bottom line, even as revenue continues to fall.
The shares gained as much as 27% to $8.47 in New York, Peloton’s biggest intraday rally in more than two months. The stock had been up 9.2% this year through Wednesday.
Peloton, which thrived during pandemic lockdowns, has been mired in a deep sales slump over the past three years. Tech veteran Barry McCarthy was hired in early 2022 to turn around the business — best known for its stationary bikes and online classes — but stepped down earlier this year. Board Chair Karen Boone and director Chris Bruzzo had been serving as interim co-CEOs while Peloton sought its new leader.
Ford had hired Stern last year to run a newly created division focused on car software services, such as a hands-free driving feature. Under Stern’s leadership, the automaker said it hoped to create a continuing revenue stream from software services that will smooth out the boom-and-bust cycles in the car business.
Stern was among a number of ex-Apple executives to shift to the auto industry. At Ford, he joined Doug Field, who was hired in 2021 as the automaker’s chief advanced technology and embedded systems officer. General Motors Co. hired Mike Abbott, former vice president of engineering for Apple’s Cloud Services division, to start a new software unit.
At Apple, Stern’s role as vice president of services was split between a number of other VPs.
As part of its earnings report, Peloton said that revenue will be $640 million to $660 million in the second fiscal quarter, which runs through December. The midpoint of that range would be down 13% from a year earlier and below the $663.5 million that analysts had projected.
Peloton also projected second-quarter subscriber numbers that were below analyst estimates, though its outlook for earnings before interest, taxes, depreciation and amortization was better than anticipated — a sign that cost cuts are bearing fruit. Peloton also pointed to improvements in free cash flow.
“We’re achieving our cost savings targets faster than we expected as a result of strong execution,” the New York-based company said in a letter to shareholders.
For the full year ending next June, Peloton forecast revenue of $2.4 billion to $2.5 billion, the midpoint of which is down 9% from a year earlier. Analysts estimated $2.46 billion. The company expects its connected fitness subscribers to fall 9% at the midpoint of its range to about 2.72 million. Analysts were anticipating 2.81 million.
Ebitda was also the bright spot in the full-year forecast. The midpoint of Peloton’s range is $265 million, well above the $232.4 million analysts had targeted.
In the first quarter, earnings amounted to $115.8 million by that measure. Analysts were predicting $56.6 million. Though revenue fell 2% to $586 million from a year earlier, that was better than the $573 million analysts were predicting.
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