John Foley on Peloton's Growth in the Pandemic
John. Thanks for joining me today. I'm excited to be here. Thanks John. Appreciate it last time I saw was in the offices this was right before. was declared and we all went home, and so that's been several months but think it's fair to say that we could tell things were getting serious about cove nineteen at that point but couldn't have imagined what was going to happen over the course of the next month and full blown pandemic. In the way, it would hit your business in our business in every business in between. That's right. Twenty, twenty twenty what a what a wild year so far so far. One of the consequences for Peleton was having Jaeger critical new product launch and I really WanNa get into that and talk in depth about what's coming. But let's look backward a little bit not inconsequential at all is telling me you know what's gone on in these nearly last six months what they've been like running a business people lobby spent hunkering down in their homes and gyms have been closed and you offer these livestream workouts right in the home with the device, and early in the pandemic in fact, you guys were reported in the ninety four percent jump in your over your subs. I know there's been hiccups and it'll you've had a hard time immediately filling orders for instance, but it has has the pandemic Ben. Good. For Peleton. Well, it's hard to say good in the same sense with pandemic. At all but to your point, John It's definitely been wind in our sails as far as our bike sales and tread sales, and we've just been frankly happy to be there for our members are existing numbers in our new members who are buying bikes and threads and still getting them delivered, and we were also pretty excited to be able to innovate and bring the the live studio content from not from our studios anymore of for the for a couple of months but from the homes of our instructors. we continue our live format and connection with our with community through the crisis. So it was to your point a lot lots to do was a wild time for us like like everybody, but your business has been has been strong for sure also a little bit. You've got extensive background in ECOMMERCE and you know a number of different technology platforms and then legacy business like Barnes and noble once upon a time where the head of ECOMMERCE. Obviously everybody going into the pandemic lot of uncertainty in a lot of unknowns. And probably a moment of what's this going to do to our fledgling business? But when did it go from that to we have this enormous opportunity. That we're going to have to walk through and we're going to have to do it quickly and as you know as as as as successfully as we can. It happened very quickly John. I mean I I think it was Friday the thirteenth ironically in March when. Found of everyone stopped going to work and working from home and it became obvious and evident that this pandemic was upon us and it was going to be meaningful. Within a week or two of that, we saw a massive surge in our sales and we knew that this was a moment that people are going to Peleton in their home, and we we did see it as an opportunity to be totally opportunistic. We right away started giving away our digital content for ninety day, free trial which wasn't the best business because we still had to pay our music partners but we didn't care. We wanted to do our part for our communities and to help people stay saying in the pandemic so We were at one point I mean we're obviously in parallel scaling our supply chain or manufacturing and trying to make more bikes and tries as fast as possible. But we also have the pure software and digital content platforms across any one of your devices whether it's your phone, your IOS or android phone, or any of your television screens through Apple, TV android, TV fire, TV Roku, all these other platforms that you can engage with our content and do strengthen yoga and all the different stuff. So in that world, it wasn't dependent on our honor scaling supply chain. So we decided to give that ninety days away for free to new members, and we saw a massive explosion in that as well. So You know you alluded to this already and and it's it's a big topic of conversation and focus for investors is this growth curve in these growth big growth that you're planning? Because the addressable market for exercise gear is so large and the shifting dynamics of not being able to go you know at your whim to the local gym and use theirs is fueling even more enthusiasm but also pressure, and then you've got on top of this, you'll start about this virtual community where people can used gear but they can also use the community with people that they're getting to know or or somebody recognizable in the instructor. So you're about to test whether there's an appetite for a wider range. Of Palestine products, I'd like you to talk about what's coming out and how it's different than what the company already offers. You have a twenty two hundred dollar bike right now in a forty, three, hundred dollar treadmill, which are the main staples from what we know if we're going to A. Showroom on the website. So so what's coming in what's different about what you already offer? Yes. So we have two main lines of business as you know John and it's a stationary bike platform and then ate a treadmill platform. And the current bike is who have been called the best cardio machine on the planet the original Peleton bike, and what we're announcing is our Peleton plus and it's a new platform with a bigger screen that swivels now and allows from that bike platform our members to engage in all of our content whether it's the yoga or the strength or the boot camp or all of the different styles of content that we offer. They can now engage in that in a much more convenient easy to consume experience on the Peleton bike plus platform. In parallel, we've been working on a new treadmill platform, our original peleton tread, plus is the forty, five, hundred dollar but product that is kind of the Rolls Royce of the category because it has the Slat belt technology and it's one of the best running surfaces in the world if not the best running surface. And what we're bringing to market this month is a lower price tread that in a really open up the market and make it much more affordable for people to get a Peleton tread and take our boot camp classes and are running classes from home and really do full body workouts. Now whether it's on the less expensive treadmill that has a belt technology or with our Peleton bike plus which now allows you to consume. All of our content and not just the great cardio, but also the strength and the full body content on that. So the summary John is that we now have a portfolio on the bike side and on the trade side, a bike and a bike plus and a tread and tread plus. So depending on how much you're looking to spend and what you're looking to do we have now four options for you to engage pelivan platforms.