Peloton adjusts its full-year profit forecast, anticipating a weaker holiday quarter than previously predicted.

• Peloton's fiscal first-quarter results beat Wall Street's expectations.
• The fitness company revised its full-year adjusted EBITDA forecast but fell short of expectations in its holiday sales.
• The Bike and Tread maker also announced a new CEO.

The connected fitness company is now generating free cash flow and is close to achieving profitability as it reduces costs and improves the economics of its hardware, the company announced on Thursday.

Although progress has been made, Peloton anticipates selling fewer bikes and treadmills than predicted by Wall Street analysts during the holiday quarter.

The stock experienced a 10% increase in premarket trading on Thursday following the release of the quarterly update and the appointment of a new CEO.

In its fiscal first quarter, Peloton exceeded Wall Street's expectations, as indicated by a survey of analysts by LSEG.

• Earnings per share: zero cents vs. a loss of 16 cents expected
• Revenue: $586 million vs. $574.8 million expected

The company's net loss for the three-month period ending September 30 was $900,000, which is effectively breakeven on a per-share basis, compared to a net loss of $159.3 million, or 44 cents per share, during the same period in the previous year.

Sales decreased by approximately 1.6% to $586 million from $596 million the previous year.

According to StreetAccount, Peloton's revenue for its holiday quarter is expected to be between $640 million and $660 million, which is below Wall Street's expectations of $671.4 million.

The company is experiencing lower-than-expected paid app subscribers, which can be attributed to its decision to allocate more resources to product development and less to marketing its low-priced app, a priority of its former CEO Barry McCarthy.

In May, Peloton announced that McCarthy would be stepping down from the top job after about two years. On Thursday, the company announced that Peter Stern, an executive from Ford, would be taking over.

According to StreetAccount, the company anticipates having between 560,000 and 580,000 paid app subscribers by the end of the current quarter, which is lower than its initial expectation of 608,200.

In the first quarter of Peloton's fiscal year, the company reduced its operating expenses by 30% compared to the previous year, resulting in nearly $116 million in adjusted EBITDA and almost $11 million in free cash flow.

The company anticipates an adjusted EBITDA of between $20 million and $30 million in the current quarter, which is higher than the StreetAccount EBITDA estimates of $13.9 million.

Peloton has updated its full-year EBITDA guidance for fiscal 2025. The company now expects to generate between $240 million and $290 million in adjusted EBITDA, compared to its previous range of $200 million and $250 million. Peloton's revenue projection for the same period is between $2.4 billion and $2.5 billion, which is in line with analyst expectations of $2.46 billion, according to LSEG.

The company's cost-cutting plan and focus on improving hardware unit economics have resulted in gains.

In the first quarter of the fiscal year, Peloton raised the recommended retail price for its Bike and Bike+ in international markets and increased the price of its Row in North America, while also reducing discounts on its hardware products across all regions.

The connected fitness margin of the company increased by 6 percentage points to 9.2% in the most recent quarter due to its efforts and a better balance between its revenue streams.

This story is developing. Please check back for updates.