Peloton’s numbers don’t look great. In its Q4 2022 earnings release this morning, the company reported a $1.2 billion operating loss, a 28 percent revenue drop, a membership decline, and a monthly subscriber churn exceeding 1 percent for the first time in a long while. (Perhaps ever?) And that’s just the tip of the iceberg. In a nutshell, losses were greater than both Peloton and investors had anticipated.

And yet, Peloton CEO Barry McCarthy would have you believe the numbers actually paint a picture of “substantial progress” and the true start of Peloton’s comeback story.

“The naysayers will look at our Q4 financial performance and see a melting pot of declining revenue, negative gross margin, and deeper operating losses. They will say these threaten the viability of the business,” McCarthy says in his shareholder letter. But it’s clear he doesn’t agree. According to McCarthy, investors should be glad that a huge chunk of that $1.2 billion figure — $415 million, to be exact — is simply what it costs to get back on track.

Still, it’s hard to spin such a large loss as a win when it’s your sixth consecutive quarter of losses and you’ve declined to give an outlook for 2023 — which is perhaps why McCarthy invoked a dramatic metaphor involving speeding cargo ships and daring rescues on the Mediterranean.

To close out his shareholder letter, McCarthy writes:

In high school, I spent three summer months working on a cargo ship. After midnight on my second voyage, I was asleep when the alarm for general quarters woke me. My reporting station was on the bridge. Fear is a great motivator. I dressed while I ran. The 720 ft ship was doing 27 knots and the helm was hard alee. The ship was healing sharply to starboard and the steel hull was shuddering. The captain was trying to turn the ship around, but a ship that big, going that fast, takes miles and miles to change direction. We saved two mens’ lives that night. They’d been lost at sea, in the Mediterranean, for several days. A fortunate, happy ending.

Peloton is like that cargo ship. We’ve sounded the alarm for general quarters. Everyone’s at their station. We continue to add new inputs to evolve our go to market strategy to restore growth. When will the ship respond is the question. Our goal is FY23.

There is a kernel of truth somewhere in that convoluted metaphor. Peloton has made some significant recent changes to “get back on track,” including a third round of layoffs, hiking subscription costs, experimenting with product pricing, planning to shutter retail locations, scaling down its distribution and manufacturing network, and redesigning its bikes so that they can be self-assembled for easier shipping. All these efforts have led to some financial progress. Instead of burning $650 million in cash per quarter, that number has improved in Q4 to $412 million. As in, that $1.2 billion loss could’ve been worse.

And while overall churn was up, churn rates for its One Peloton Club pilot program were lower than expected at less than 3 percent. The program allows members to pay a flat $89 monthly fee to bundle together the cost of a bike and membership. In September, the company plans to start expanding marketing for the program nationwide. He also pointed to the fact that the program has been bringing in younger, more value-oriented shoppers.

That said, McCarthy was hesitant to commit to “really leaning into” bike rentals as a panacea for the company’s financial woes. That’s because the company has yet to figure out whether the program is a “nuclear bomb or the path to the promised land.”

Photo by Amelia Holowaty Krales / The Verge

Subscriptions were also less dire. They remained mostly flat from last quarter but up 27 percent from this time last year. Subscription revenue also increased 36 percent from last year to $383.1 million and overtook hardware revenue in the overall mix. McCarthy has been bullish on Peloton subscriptions as the key to success since day one — and it would seem like his efforts may be starting to pay off.

McCarthy also highlighted member enthusiasm for the reopened Peloton Studios in New York and London as a sign of continued engagement. Specifically, he name-dropped Lizzo in the shareholder letter as a superfan, saying a surprise studio drop-in from the singer led to 426,000 workouts and the “most participation of any cycle class within 7 days of its air date.”

It’ll take more than sheer optimism, barrel-scraping, and bombastic turns of phrase to convince investors, however. Peloton’s stock tumbled 13 percent despite jumping up 20 percent less than 24 hours earlier on news it was partnering with Amazon to sell its bikes. That said, McCarthy acknowledged that a lot of work remains and that the company likely won’t see the fruits of its efforts until 2023.