In a letter to staff, McCarthy said the company needed to implement layoffs because it wouldn't be able to generate sustainable free cash flow with its current cost structure.
"Achieving positive [free cash flow] makes Peloton a more attractive borrower, which is important as the company turns its attention to the necessary task of successfully refinancing its debt," McCarthy said in the memo.
McCarthy had also expected Peloton to reach positive free cash flow by June — a goal the company said it reached early during its third quarter.
In a letter to shareholders, Peloton said it generated $8.6 million in free cash flow but it's unclear how sustainable that number is.
The company didn't provide specific guidance on what investors can expect with free cash flow in the quarters ahead but said it does expect to "deliver modest positive free cash flow" in its current quarter.
Persons:
Barry McCarthy, McCarthy, Karen Boone, Chris Bruzzo, Jay Hoag, It's, John Foley, hasn't, Goldman Sachs, Boone, Barry, Bruzzo, —, hadn't, Creditsafe, it's, Foley
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Interactive, Allen & Company Sun Valley Conference, Spotify, Netflix, JPMorgan, LSEG, outperformance, CNBC
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Sun Valley , Idaho, lockstep