Peloton Interactive issued a muted revenue outlook for fiscal 2027 as subscriber losses continue to deepen, overshadowing fourth-quarter profit gains and virtually flat revenue.

The exercise equipment and media company on Thursday set its expectations for fiscal 2027, projecting a decline in revenue. Peloton expects revenue to come in between $2.3 billion and $2.4 billion, a 3.9% decline at the midpoint over the prior year.

The target range is below analyst forecasts, which according to FactSet, are expecting $2.44 billion for the year.

Gross margins are expected to rise 140 basis points to 54%, while adjusted earnings before interest, taxes, depreciation and amortization are projected to be between $475 million and $525 million, representing a 6.8% increase at the midpoint.

Peloton also set a minimum target of free cash flow to reach at least $350 million.

For the fiscal year's final three months ended June 30, Peloton posted a higher net income of $61.6 million, or 13 cents a share, compared with $21.6 million, or 5 cents a share, in the same quarter a year ago.

According to FactSet, analysts were expecting 12 cents a share.

Adjusted earnings before interest, taxes, depreciation and amortization rose to $142.3 million, up from $140 million, but below forecasts of $150.9 million, per FactSet.

Total revenue rose to $607.7 million from $606.9 million, but avoided the pullback that analysts were expecting, which had pegged revenue at $596.6 million.

The company lost about 247,000 paid fitness subscribers, or 8.8%, in the quarter, with total membership at 2.55 million.

Peloton expects the bleeding to continue. In the first quarter, the company expects to have between 2.46 million and 2.49 million paid subscribers to its fitness service, which at the midpoint represents a 9.8% decline year-over-year.

Looking ahead to the first quarter, the company expects revenue to be between $545 million and $565 million, which represents a 0.8% increase at the midpoint over the prior-year period.

Total gross margins are expected to rise 550 basis points to 57%, with adjusted Ebitda of between $135 million and $145 million, an 18.4% increase at the midpoint.