(Bloomberg) -- Peloton Interactive Inc. reported profit that surpassed Wall Street’s expectations in the first quarterly results under new management, showing cost cuts are bolstering its bottom line even as its revenue continues to shrink.

The fitness company also said Thursday that it expects adjusted earnings before interest, taxes, depreciation and amortization to total $70 million to $85 million in the fiscal third quarter, which runs through March. Analysts had estimated $51.8 million on average, according to data compiled by Bloomberg.

Revenue, however, will fall about 14% to a range of $605 million to $625 million, a steeper decline than Wall Street had anticipated. Analysts projected sales of $653.4 million. 

The numbers show the challenge facing new Chief Executive Officer Peter Stern, a former Ford Motor Co. and Apple Inc. executive who started on Jan. 1. Though investors have cheered Peloton’s efforts to slash expenses, the company is showing no signs of returning to the growth it enjoyed during the days of pandemic lockdowns. 

“We see significant opportunities ahead, but we have a steep hill to climb to reach sustained, profitable growth,” Peloton said in a letter to shareholders.

Shares were up 15% in premarket trading in New York on Thursday. 

During the second quarter, revenue fell 9% to $674 million. Analysts predicted $652.1 million. Adjusted Ebitda rose to $58.4 million, topping estimates. For the full year, Peloton boosted its guidance for Ebitda and free cash flow.

Revenue from app subscriptions fell 1% last quarter, while subscription sales tied to the content that runs on Peloton’s bikes, treadmills and other hardware products declined 21%.

Stern is looking to improve the business in a number of ways, including the development of new products, holding more member events and making further cost cuts.

The executive is known for his expertise managing subscription services. Peloton has been seeking to get more people to subscribe to its mobile app — rather than just focusing on the customers who buy its exercise bikes and other equipment. 

But hanging on to those subscribers has been a challenge. In the current quarter, the New York-based company expects its app subscriptions to fall 15%. Subscriptions tied to hardware will decline 6%.

--With assistance from Amy Thomson.

(Adds premarket share move in sixth paragraph)

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