Peloton Interactive, Inc.

What they do

Peloton sells connected fitness products (Cross Training Series, Pro Series, refurbished Original Bikes, and Precor products) plus related accessories, delivery, and warranties, across the US, UK, Canada, Germany, Australia, and Austria. It generates revenue primarily from recurring Subscription Revenue and hardware sales, including through a Commercial Business Unit serving customers in over 60 countries. Members are defined as paid Connected Fitness or Paid App subscribers (App+, App One, Strength+, Breathwrk) who complete at least one workout in the trailing 12 months.

Revenue drivers

• Subscription Revenue — Recurring revenue from Paid Connected Fitness Subscriptions and Paid App Subscriptions; ending Paid Connected Fitness Subscriptions were 2.553 million at FY26, down 8.8% year-over-year.
• Connected Fitness Products — Hardware sales across the Cross Training Series (launched October 2025: Bike, Bike+, Tread, Tread+, Row+), Peloton Pro Series (Bike+ Pro, Tread+ Pro, Row+ Pro), refurbished Original Bike and Bike+, and Precor products.
• Commercial Business Unit — Serves commercial property customers such as hotels and residential buildings in over 60 countries; revenue grew double digits year-over-year in FY26.

Recent performance

Q4 FY2026 total revenue was $608 million, up $1 million year-over-year, and full-year FY26 revenue was $2.446 billion, $6 million above guidance on equipment sales outperformance. FY26 delivered the first full year of GAAP net income at $63 million and operating income positive, with Q4 GAAP net income of $62 million. Full-year Adjusted EBITDA was $468 million, up 16% year-over-year, though Q4 was negatively impacted by a $23.8 million nonrecurring accrued legal contingency. Q4 total gross margin was 56.7% and FY26 gross margin was 52.6%, up 260 and 170 basis points respectively. Ending Paid Connected Fitness Subscriptions fell 247,000 or 8.8% year-over-year to 2.553 million.

Strategy

Management is executing the 2025 Restructuring Plan, announced August 2025, which reduced global headcount and targets at least $100 million of run-rate savings by the end of FY26; the company exceeded that plan. Peloton launched the Cross Training Series and Pro Series in October 2025, discontinued Original Series Tread, Tread+, and Row, and continues selling refurbished Original Bikes and Precor products. It acquired Sk p, a Connected Pilates company, and expanded digital reach through a partnership with Spotify. Microstores outperformed internal goals, and the company plans to double its microstore fleet in FY27.

Risks

• Sustaining profitability — Peloton reported net income in FY26 after significant prior operating losses and may not sustain profitability on a quarterly or annual basis.
• Subscription declines — Ending Paid Connected Fitness Subscriptions fell 8.8% year-over-year to 2.553 million in FY26, and failure to attract or retain subscriptions could hurt growth.
• Product recalls and defects — The company has faced Original Series Bike and Bike+ seat post recalls, and actual or perceived product defects could lead to legal or regulatory claims.
• Supply chain reliance — Peloton depends on a limited number of suppliers, contract manufacturers, and logistics partners for its Connected Fitness Products, exposing it to component cost increases and shortages.

Outlook

For Q1 FY2027, Peloton guided total revenue of $545 million to $565 million, which represents an increase of $4 million at the midpoint versus the prior-year quarter. Management said FY26 was a defining milestone with its first full year of net profitability and that it enters FY27 with financial discipline and a balance sheet providing a platform for investment. The company intends to provide further details on its outlook during the earnings conference call; full FY27 guidance was not included in the excerpt provided.