Peloton’s Q4/EOY earnings call will be on Thursday – and almost everyone expects the numbers reported to be very impressive. However, some reports from their manufactures are already giving us an idea of what to expect.
For context, Peloton has two main suppliers: Rexon, and Tonic. Peloton ended up acquiring Tonic in October of 2019 in order to streamline and have more control over production – as part of this, Tonic is building an entirely new manufacturing facility that is currently expected to come online by the end of the year. Peloton also relies on Rexon to help build both the bike & tread.
MoneyDJ.com has a report that analyzes some of the finances of Rexon (which is translated to Lishan in the article).
One thing that immediately jumps out from the report is that there are so many orders Rexon is literally building them around the clock to try and keep up.
Peloton is currently in a tight delivery situation and requires suppliers to increase shipments; it is understood that in response to strong customer demand Since the end of June, Lishan’s factory area has been changed to 24-hour production , and in July it also maintained full-day production.
The report goes on to note that Rexon delivered more bikes in July than they did in June, and expect to deliver even more in August. While the article doesn’t specify if these were record number of bike deliveries, it does specify that Rexon’s revenue is hitting record numbers. Peloton isn’t just keeping Rexon busy with bikes either – the report states that Lexon has increased their capacity from 2,000 treadmills to 8,000 treadmills.
In the US, average wait times for new orders of the Peloton bike or tread can currently take up to 2 months. When Peloton CEO John Foley appeared on the “How I Built This” podcast over the summer, he noted that the late fall and holiday season is when Peloton sales traditionally ramp up – however thanks to the pandemic, Peloton was seeing holiday-like number of sales over the spring & summer. Assuming demand continues to grow, and the traditional holiday season peak happens for Peloton, both Rexon & Tonic look to be in for a busy few more months.
With Peloton due to announce their upcoming lower cost “Tread”, and premium Peloton Bike+ soon, it will be worth keeping an eye on what happens to delivery estimates. Is Peloton able to catch up as both manufacturers bring more capacity online, or will the new products just cause the delivery backlog to continue to grow?
Thanks to John Mills of Run, Lift & Live for originally sourcing this article.
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