You put your notes out there, sort of saying that they're rolling along more broadly. What did you make of the fourth quarter versus the first quarter forecasts? Well, first of all, thanks for having me. I guess the results for the fourth quarter were pretty good, partly in our view, because the guidance itself was a bit conservative, but also because they did a lot of cost-cutting, and so it revenue egbeda, as well as connected fitness numbers, came in relatively in line or better, slightly softer connected fitness actually, but nothing to worry about. The guidance clearly was lower than expected on all fronts on the top line, but better on the EBITA, largely because of the restructuring. Our view is that this is going to be a very difficult transition. You can, we don't think that you can make growth by cutting costs. They'll have to eventually show top-line growth and that they are not dropping out of the market with a down 9% decline.

in year-over-year revenue for next year. That's not a good sign, whether it is macro or whether it is pulling back on their marketing spend because they have to and whether it is restrategizing as the new CEO comes in and there is this leadership change. It's just not a good sign. Where should they be leaning into? Is it more app users? Is it more online and subscription? Should they back away from the hardware or do they need to reach some of the marketing around the hardware, which for many, there have been too many recalls and worries over. Well, it's a very tough challenge. One is because their hardware is premium quality or premium priced. And so it's not for any average consumer, which is why they're going through with the rental as well as the refurbished. In our view, we think that they should focus more on the app subscription piece, even if the churn is higher just because of the margin profile.

If the app product experience is very, very good and it's superior to everything else in the market, even if it is a crowded market, they could gain share and show some real margin expansion while they deliver product expansion, whether it is in international markets or in North America. The other question with hardware is, is there any way they can bring their prices down for hardware, whether it is through supply chain changes or product innovation or technology innovation to drive greater adoption, because an average consumer, it could be prohibitive. And therein lies the issue is that suddenly it was a luxury one and everyone pivoted just very quickly. Shweta, CEO, you're expecting that any time soon. Yes, they are expecting to make an announcement before or at least during the next earnings quarter earnings call. So it'll be another quarter. We think that they may lean towards a retail CEO. I'm not sure and I don't want to speculate, but I wouldn't be surprised

Peloton's Turnaround Efforts Bears Fruit

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