12:51 PM EDT, 08/22/2024 (MT Newswires) -- Shares of Peloton Interactive ( PTON ) soared intraday Thursday after the fitness company unexpectedly increased fiscal fourth-quarter revenue while guiding for gross margin expansion in fiscal 2025 despite softer sales expected in the ongoing year.

Revenue edged up to $643.6 million for the three months ended June 30 from $642.1 million a year ago and beat the $627.4 million average analyst estimate on Capital IQ. Subscription revenue climbed 2% to $431.4 million while connected fitness product sales fell 4% to $212.1 million.

The company's per-share net loss narrowed to $0.08 from $0.68 year over year, compared with the Street's view for an $0.18 GAAP loss. Peloton's stock surged 33% in midday trade.

"Overall, our (fourth-quarter) performance reflects our continued leadership in the connected fitness category and the strength of our subscription business as well as the tremendous progress we have made in rearchitecting our cost structure," Chief Financial Officer Liz Coddington told analysts on a conference call, according to a Capital IQ transcript.

The company remains on track to achieve $200 million in run-rate cost savings by the end of fiscal 2025, according to Coddington. Peloton has narrowed its list of candidates to fill the chief executive role, though the company can't yet say when a new CEO will be named, interim co-CEO Karen Boone said on the call.

For fiscal 2025, Peloton guided revenue in the $2.4 billion to $2.5 billion range, implying a 9% decline at the mid-point from the year that just ended. The market view is for revenue of $2.68 billion for the ongoing year. The company expects hardware sales to decline year over year and average net monthly paid connected fitness churn to increase modestly. However, it sees gross margin expanding by 432 basis points year over year as the company streamlines costs.

First-quarter revenue is expected between $560 million and $580 million range, down 4% year over year at the midpoint. Four analysts surveyed by Capital IQ are modeling for revenue of $580.2 million in the current quarter.

"From a market perspective, the first quarter is typically a seasonally low quarter for hardware sales as consumers shift their discretionary spending toward categories like travel and sporting goods during the summer months," Coddington said. "We also expect continued sales headwinds as a result of an uncertain macroeconomic environment."

Price: 4.30, Change: +0.94, Percent Change: +27.98