0001193125-26-219677
SEC filingRevenue declined 25% to $54.3M due to business model pivot, but profitability surged as cost restructuring drove operating income to $3.1M, the third consecutive profitable quarter.
Operating income improved significantly to $3.1 million from a loss of $3.7 million in Q1 2025, a 184.8% increase. This swing was driven by aggressive cost restructuring, including the elimination of Partner compensation and other selling and marketing cost reductions. The company's operating margin reached 5.7%, compared to a negative margin in the prior year, marking the third consecutive profitable quarter.
Gross profit decreased 24.3% to $39.0 million, but gross margin expanded to 71.8% from 71.2% in the prior year. The increase in digital gross margin was primarily due to decreased expenses, while nutrition and other gross margin declined due to inventory adjustments and a greater rate of revenue decline relative to cost reductions. The connected fitness cost of revenue decreased due to management's decision to cease bike inventory sales in Q1 2025.
Management continues to assess and efficiently manage working capital and expects to generate additional liquidity through continued cost control initiatives. The company's future capital requirements may vary materially depending on revenue growth and economic conditions. There can be no assurance that future developments will be those anticipated.