Peloton Q3 earnings show huge revenue and membership spikes

Peloton bested Wall Street's high expectations, delivering a huge quarterly earnings report Wednesday that showed revenues climbing 66%. In after-hours trading, the connected fitness company's stock bounced around rising and dipping below the stock's previous all-time high.

The company posted total revenues of $524.6 million for the quarter, besting estimates of $488.5 million. The company detailed a loss of $.20 per share. Total members grew from 2.0 million in Q2 to 2.6 million in Q3, a 30% quarter-over-quarter increase. In March, the company announced it was extending the free trial period from 30 to 90 days for digital subscriptions not tied to the company bike or treadmill hardware.

The company sells a connected bike that retails for $2,245 and a treadmill that costs $4,295.

Peloton has proven to be one of the few public stocks to find an opportunity in the COVID-19 pandemic, as user growth surges due to gym closures and shelter-in-place orders. Peloton aimed to seize on the opportunity, boosting sales and marketing expenses by 53%, to $154.8 million in Q3.

The company has been negatively affected as well, being forced to close their showrooms and suspend production of live classes in their dedicated studios. In recent weeks, the company has shifted to at-home exercise classes live-streamed from their instructors' homes.

For investors, the big question is how much of this growth they'll be able to hold onto once the pandemic ends. Users with the company's hardware are obviously much less likely to churn from digital subscriptions, but Wall Street will undoubtedly be watching to see how many of those free trial users convert post-lockdown.