Peloton shared in its second quarter 2025 shareholder letter and during the Peloton 2nd Quarter Earnings Call, Fiscal Year 2025, that the financial outlook of the company has greatly improved. This was the first earnings call since Peter Stern, CEO, began his role at Peloton one month ago.  Liz Coddington, CFO, presented specific financial numbers during the call.  (Also, something new for the format of the shareholder letter – lots of charts including numbers/metrics/financial summaries, if you’re into that sort of thing!  If you’re like me and Excel sheets make your head spin, you can skip over them – or just read our summary!!)  Also, this shareholder letter included a “Highlights” section at the beginning of the letter – very helpful if you want a quick overall picture without reading the entire 15-page letter.

Also, kudos to Stern – it was a nice touch for him to quote Jess Sims during the call, pointing out that it’s “never easy, always worth it.”   He also specifically thanked Peloton’s investors.   (The market reaction is already up by 17.54% – Stern’s positivity and focus on real results was very refreshing and effective!)

CEO’S Long Term Goals

Stern says he still strives to improve member experience through innovation on new products and services, grow members and thus revenue, and deepen ties with members which should result in members staying on the platform longer.  

Good Financial Outlook, New Members and Member Experiences

The bottom line from a financial standpoint, as shared in the Peloton 2nd Quarter Earnings Call, is that Peloton reports lower operating expenses year to year and a decrease in total debt. The bottom line from a workout standpoint is that Peloton has focused on bringing more men onto the platform, increasing sales of Tread and Tread+ equipment, members finding new and varied ways to work out and including more than one modality in their workout plan, finding more places to sell equipment to Members, and finding more ways for Members to connect with Peloton and with each other.  

Progress in Financial Growth and Cost Savings

Coddington reported during the Peloton 2nd Quarter Earnings Call, Fiscal Year 2025, that the company has significantly reduced its media spend and operating costs. It has also leveraged the balance sheet. Paid subscriptions increased by 19,000 this quarter, and there were lower than expected subscription cancellations and pauses and higher reactivations of subscriptions.  Tread and Tread+ purchases were higher, although this caused a higher wait time for delivery, which could lead to members being less satisfied at the beginning of their Peloton journey, and some purchases of Tread and Tread+ do not result in the purchase of a membership.  Sales for refurbished bikes were high but sales of the original bike were low.  Overall there was a net decrease in the number of paid app subscriptions.  However, the good news is that there was, nonetheless, higher than expected revenue from both hardware and subscription sales in the second quarter.  Media spending was reduced.   Equipment sales at Costco have been higher than sales at other retailers.  Peloton has also obtained more members across the globe, as international hardware sales have grown, as have subscriptions from international markets.  

Peloton reported a total gross profit of 318 million dollars in Q2, with a 25% reduction year over year in total operating expenses.  Sales and marketing expense, which was a focus of the last earnings call, was reduced by 34% year over year, and personnel related expenses were also lowered.  General administrative expenses decreased by 29 million dollars, or 18%.  Q2 was the fourth consecutive quarter with positive free cash flow, with 829 million of unrestricted cash and cash equivalence.  Cash flow exceeded expectations.  

New Member Experiences

Stern reported an increase in Member satisfaction.  He credited this to personalized coaching (powerzone rides, pace targets on the Tread, and the personalized plans feature that was released last week).  He also mentioned the new race programs that focus on all types of races, saying that over 300,000 Members have trained using these programs, and pace target programs which offer running instruction.  The Strength+ App provides audio guidance so Members can enjoy Peloton while working out at the gym. Stern said that men have responded well to the partnership with TJ and JJ Watts. 

The Turkey Burn ride had over 70,000 members working out together, and The Feast (also live on Thanksgiving) was the largest strength class in Peloton history.  

Stern was excited about Peloton’s appearance in Marvel Studios Captain America:  Brave New World, which will be released on Friday (watch for special theme based workouts on the Peloton platform). He also encouraged members to connect with each other on Teams (over 70,000 teams have already been created), and he specifically mentioned the “Together We Go Long” Team.  Stern also said that Teams is only a taste of what’s to come in terms of member connectivity.  

Stern pointed out that participating in many different types of programs is the best way to maintain fitness and that Peloton’s strength platform is definitely getting a lot of use.  An increasing number of members are participating in two or more modalities of workouts rather than just one, and the monthly churn rate is roughly 60% lower for Members who engaged in two or more disciplines per month versus just engaging in one.

Stern credits the low membership churn rate to the fact that Peloton has a great deal of highly loyal, long time members and that Peloton is that “rare brand” that makes people healthier the more they use it.  Peloton’s goal is to have people use its product more, and the average monthly workout time per member has risen.  

Will We Have to Pay More for Peloton Products and Subscriptions?

Will there be potential price increases? Stern said that Peloton is taking a hard look at its pricing but that no details are available as to price adjustments at this time.  He said he is aware that subscription prices are important to members and that no raises in costs will be taken lightly.  The price of the rower in the U.S. and the Bike and Bike+ in the international market were raised in the first Quarter.  

Stern addressed the issue of whether tariffs would affect prices.  No Peloton hardware comes from China, Mexico or Canada.  If all 3 countries had tariffs put into place, the increase to COGS would be 1%  mostly due to apparel and Precor.

A Sound Financial Future, But Hills to Climb

Stern plans on being aggressive as far as costs and has a goal of 2 million dollars  of expense savings.   The company is exploring opportunities for reduction of costs in IT and IT licensing.  He also hopes to reduce corporate real estate expenses, which will take some time due to contractual commitments.  Another savings area is in interest expenses.  

Stern said that in connected fitness, people have to be reminded to “get back into the market,” so brand marketing will continue, along with performance marketing.  The impact of brand marketing is more difficult to measure, but Peloton will continue to focus on becoming more efficient with its marketing efforts.  

Finally, Stern wants to “super-serve” the members that Peloton already has.  On a five point scale, membership satisfaction has risen from 3.1 to 4.3, and the target goal is even higher.  Stern wants to do everything to ensure that every new customer loves Peloton as much as the ones they have retained in the past.  Peloton is working hard to launch new capabilities that add value to existing members. We’re excited to see what Peloton provides for us in the future!