Peloton's excess inventory forced the company to rethink its capital structure, Chief Executive Officer Barry McCarthy said in a letter to shareholders. Peloton finished the quarter"thinly capitalized" with $879 million in unrestricted cash and cash equivalents, he said.
To address this, the company earlier this week signed a binding commitment letter with J.P. Morgan and Goldman Sachs to borrow $750 million in 5-year term debt, according to the CEO. The two banks led Peloton's IPO in 2019. McCarthy said he is focused on stabilizing Peloton's cash flow, getting the right people in the right roles and growing the business again. Expanding subscription revenue is a centerpiece of McCarthy's strategy, something he takes from his prior experiences at Spotify and Netflix. He also said Peloton will soon be selling its products through third-party retailers, a step the company has not taken before.
Here's how Peloton did in the three-month period ended March 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:Peloton's losses widened in the quarter to $757.1 million, or $2.27 per share, from a net loss of $8.6 million, or 3 cents a share, a year earlier. That came in larger than the per-share loss of 83 cents that analysts had been looking for.