Peloton beats estimates on revenue as higher subscription prices offer a boost

Peloton posted fiscal third-quarter earnings results Thursday that beat Wall Street expectations on revenue but fell slightly short on earnings per share.

The company touted better-than-expected equipment sales and subscription revenue as helping to drive its sales and profitability, with free cash flow up nearly 60%.

"The first order of business in earnings is reporting how you did financially, and we feel like that was a pretty good quarter in terms of where we are strategically," CEO Peter Stern told CNBC.

Here's how the company performed in its quarter ended March 31, compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

The company's net income for the quarter was $26.4 million, or 6 cents per share, up from a loss of $47.7 million, or 12 cents per share, in the year-ago period. Sales came in at $630.9 million, up roughly 1% from $624 million a year earlier.

For the full fiscal year, Peloton said it projects total revenue of between $2.42 billion and $2.44 billion, lifting the lower end of the guidance range it provided last quarter.

The company saw revenue for its connected fitness subscriptions come in at $202.9 million, down from $205.5 million a year prior but beating estimates of $196 million, according to StreetAccount. Subscription revenue also beat estimates and grew 2% year over year, reaching $428 million.

The connected fitness company has been struggling with weak performance and sluggish sales, previously projecting that performance to extend into this quarter. It's tried to revamp its product assortment and recently raised prices on both its equipment and subscription plans.

Stern said the company feels its pricing changes were appropriate.

"We're really sensitive to the fact that people feel stress in this economic environment, and it's impacting different people in really different ways," Stern told CNBC. "That being said, we feel like the price changes that we made in Q2 – it was time. We had added a tremendous amount of value over the succeeding three or four years since we previously made any change in our subscription prices."

"We're really excited about our deal with Spotify, that allows us to reach Peloton members in a lot more countries and is also a high margin revenue for us," Stern said.