Strong Earnings and Peloton Recovery Spark CE 100 2.6% Bump

The tail end of Q2 earnings were good to several companies on the CE 100 this week. The Index ended the week of August 23 up 2.6%, led by the “Live” pillar up 3.7% and “Bank” at 2.7%. Many companies posted positive gains for the week, but none more than Peloton, which overcame a drop in subscription revenue announced in its quarterly earnings to go up more than 50% for the week. The companies who posted losses for the week were less dramatic, with Snowflake dropping 9.5%.

Peloton was the story of the week. The pandemic darling and once-soaring fitness company has pedaled its way out of a sales slump, recording its first revenue increase in nine quarters. This positive turn, coupled with better-than-expected earnings, sent its stock price on an impressive 28% climb, its best day in over a year and a half. The company’s strategic shift away from solely relying on hardware sales towards recurring revenue from app subscriptions appears to be gaining traction.

Despite challenges in maintaining subscriber growth and the ever-present shadow of economic uncertainty, Peloton’s recent performance signals a potential turning point. This report is the first since the departure of former CEO Barry McCarthy, leaving the company under the interim leadership of Karen Boone and Chris Bruzzo. While the road to full recovery may be long, Peloton’s recent success suggests that their turnaround efforts are starting to bear fruit.

The second biggest gainer in the CE 100, Zoom, also followed up a successful earnings report. It was up 20.8% for the week reporting modest revenue growth of 2.1% year-over-year in Q2, reaching $1.16 billion. While not explosive, the company showed strength in its enterprise segment, with revenue increasing 3.5%. Online revenue remained flat.

The earnings report highlighted Zoom’s focus on efficiency, with operating cash flow and free cash flow growing 33.7% and 26.2%, respectively. 

Key customer metrics pointed to a healthy enterprise business, with a 7.1% increase in large customers and a net dollar expansion rate of 98%. Online churn reached a record low, further solidifying Zoom’s customer base. Overall, Zoom’s Q2 performance was characterized by steady growth and operational efficiency. The company’s outlook for the rest of the fiscal year remains positive, with expectations of continued revenue growth and strong free cash flow generation. 

And while it wasn’t following earnings, LendingClub also posted a double-digit gain at 13%. On Thursday August 22 it launched LevelUp Savings, a high-yield savings account designed to incentivize regular monthly deposits. The account offers a LevelUp Rate of 5.30% APY for those who deposit at least $250 per month, significantly higher than the national average, and a Standard Rate of 4.80% APY for months when the deposit minimum is not met. The account has no fees or minimum balance requirements, provides convenient access to funds, and includes a free ATM card with fee rebates. It’s particularly aimed at helping borrowers transition into savers by offering attractive rates and removing barriers to entry.

As mentioned previously, cloud-provider Snowflake led the decreases for the week in the CE 100 Index, mostly due to a tepid sales outlook for the balance of the year. Snowflake’s Q2 earnings release exceeded revenue expectations with 30% year-over-year product revenue growth and a substantial 48% increase in remaining performance obligations. The company also highlighted significant customer expansion, particularly among large enterprises. Despite these positive indicators, Snowflake’s full-year outlook appears somewhat cautious, potentially signaling a moderation in growth expectations for the remainder of the fiscal year. While the company remains optimistic about its AI product advancements and overall market opportunity, investors interpreted the revised guidance as a sign of potential headwinds in the coming quarters.