Segment Information

9 Months Ended

Mar. 31, 2020

The Company applies ASC 280, Segment Reporting, in determining reportable segments for its financial statement disclosure. The Company has three reportable segments: Connected Fitness Products, Subscription and Other. Segment information is presented in the same manner that the Company’s Chief Operating Decision Maker (the “CODM”) reviews the operating results in assessing performance and allocating resources. The CODM reviews revenue and gross profit for each of the reportable segments. Gross profit is defined as revenue less cost of revenue incurred by the segment. No operating segments have been aggregated to form the reportable segments. The Company does not allocate assets at the reportable segment level as these are managed on an entity wide group basis and, accordingly, the Company does not report asset information by segment.

The Connected Fitness Product segment derives revenue from sale of the Bike, Tread and related accessories, delivery and installation services, and extended warranty agreements. The Subscription segment derives revenue from monthly Subscription fees. The Other segment primarily consists of apparel sales. There are no internal revenue transactions between the Company’s segments.

Key financial performance measures of the segments including Revenue, Cost of revenue, and Gross profit are as follows:


	Three Months Ended March 31,						Nine Months Ended March 31,
	2020		2019		2020		2019
	(in millions)
Connected Fitness Products:
Revenue	$	420.2	$	261.6	$	958.9	$	560.8
Cost of revenue	230.0		152.3		546.5		321.1
Gross profit	$	190.3	$	109.3	$	412.5	$	239.8
Subscription:
Revenue	$	98.2	$	51.1	$	242.5	$	120.1
Cost of revenue	41.4		38.0		103.3		74.6
Gross profit	$	56.8	$	13.1	$	139.2	$	45.5
Other:
Revenue	$	6.1	$	4.0	$	17.4	$	10.7
Cost of revenue	7.5		5.8		21.1		12.5
Gross profit	$	(1.3)	$	(1.8)	$	(3.7)	$	(1.8)
Consolidated:
Revenue	$	524.6	$	316.7	$	1,218.8	$	691.7
Cost of revenue	278.8		196.1		670.9		408.2
Gross profit	$	245.8	$	120.6	$	548.0	$	283.5

Reconciliation of Gross Profit

Operating expenditures, interest (income) and other expense, and taxes are not allocated to individual segments as these are managed on an entity wide group basis. The reconciliation between reportable segment gross profit to consolidated loss before tax is as follows:


	Three Months Ended March 31,						Nine Months Ended March 31,
	2020		2019		2020		2019
	(in millions)
Segment Gross Profit	$	245.8	$	120.6	$	548.0	$	283.5
Sales and marketing	(154.8)		(101.1)		(392.8)		(246.1)
General and administrative	(126.9)		(47.0)		(265.4)		(152.4)
Research and development	(22.5)		(13.8)		(60.6)		(37.8)
Total other income (expense), net	2.7		3.0		9.6		4.9
Loss before provision for income taxes	$	(55.7)	$	(38.4)	$	(161.2)	$	(148.0)