On one level, Peloton's second-quarter financial results look miserable. Revenues fell 30% to $792.7 million, down from $1.13 billion in the prior year's comparable period. But compared to last quarter, sales gained 29%. And it trimmed its losses to $335.4 million, a 24% improvement from the $439.4 million loss in the prior-year period.
That encouraged investors so much that the stock rose as much as 26%, its highest in months.
"If you've been wondering whether or not Peloton can make an epic comeback, this quarter's results show the changes we're making are working," Barry McCarthy, president and chief executive officer, writes in its shareholders' letter.
"This was by far our best quarterly performance in my twelve months with Peloton."
He called out the success of some of the company's recent initiatives, including the launch of Row and related content, its Fitness as a Service offers, its Peloton Certified Refurbished initiative, and its move into third-party retail through Dick's and Amazon.
Analysts are also mildly encouraged. Brian Nagel, who follows the company for Oppenheimer, calls the results "a step in the right direction, but by no means an all-clear for the still struggling company…. while sales tracked better than planned, topline trends remain soft."
Those gains result from stepped-up marketing -- costs that weigh on profits.
Nagel continues to expect Peloton to outperform its competitors, but says that view is "longer term and highly speculative in nature."
And while he sees more bumps and declines ahead, "we more optimistically anticipate revenue growth to rebound to the upper-single/low-double digits."
Peloton says overall membership is flat at 6.7 million, with connected-fitness subscriptions up 10% to 3.03 million, tracking ahead of expectations.
It's forecasting soft results for App subscriptions "as we balance our effort to grow our current App subscription offering with our work toward the launch of a new Peloton App strategy."
The company continues its efforts to vary the classes it offers. In November, it launched "LOL Cody," a variety class with cycling instructor Cody Rigsby, inviting such celebrity guests as Mariah Carey, Carly Rae Jepsen, Bowen Yang, and Matt Rogers.