Peloton Q3 FY2026 Earnings: Record Profit

Peloton Q3 FY2026 earnings, reported on May 7, 2026, delivered the clearest financial evidence yet that CEO Peter Stern’s restructuring strategy is working. Revenue came in above the company’s own guidance, profitability hit an all-time high, and Peloton posted positive net income for the first time across a full trailing twelve-month period. The story behind the numbers, though, is less about a single quarter and more about where the company is headed.

Peloton Q3 FY2026 Earnings by the Numbers

Total revenue for the quarter reached $631 million, up 1% year-over-year and $6 million above guidance, driven by stronger-than-expected connected fitness equipment sales across both Peloton and Precor brands. Subscription revenue came in at $428 million, growing 2% year-over-year and beating estimates.

Adjusted EBITDA hit $126 million, a 41% year-over-year increase. Free cash flow reached $151 million, up 59% from the same quarter in fiscal 2025. GAAP net income for the quarter was $26.4 million, compared to a loss of $47.7 million a year earlier.

The balance sheet shift is equally notable. Net debt dropped 70% year-over-year to $173 million. The gross leverage ratio fell from 4.6x a year ago to 2.9x, and net leverage now sits at just 0.4x. For the trailing twelve months, Peloton achieved positive net income for the first time in company history.

For the full fiscal year, Peloton now projects total revenue of $2.42 billion to $2.44 billion, adjusted EBITDA of $470 million to $480 million (up 18% at the midpoint), and free cash flow of approximately $350 million.

Subscriber Decline Is Part of the Plan

Ending paid connected fitness subscriptions came in at 2.662 million, down 7.6% year-over-year. Peloton projects that number will continue to decline, settling between 2.55 million and 2.57 million by fiscal year end.

Stern addressed this directly on the earnings call. The company pulled back on promotional activity following a heavier-than-usual Q3 promotional push the prior year, and it raised subscription prices. When adjusted for those price increases, net churn is actually improving, reaching 1.2% in the quarter.

The strategic argument: revenue can grow even as subscriber counts shrink, because Peloton now has multiple revenue streams that don’t depend on household hardware sales. Commercial partnerships, content licensing, and selling additional equipment to existing members are all part of that equation.

The Spotify Deal and the Commercial Bet

The Spotify content licensing partnership, launched in April, puts more than 1,400 Peloton classes on Spotify’s platform across most countries where the service operates. The class library spans strength training, pilates, barre, yoga, stretching, meditation, floor cardio, and outdoor workouts. Peloton does not count Spotify users toward its own subscriber metrics, and the deal is structured as high-margin, low-overhead revenue reaching hundreds of millions of Spotify users without requiring them to own any Peloton equipment.

Member engagement with fitness content is already reflecting the broader range of what Peloton offers. Pilates workouts grew 48% year-over-year in Q3, driven in part by Rebecca Kennedy’s HiLit Training Plan, which drew 400,000 members during the quarter. Peloton also released Andy Speer’s 5-day Advanced Split as its first AI-dubbed program, produced in German and Spanish, signaling an intent to scale global content efficiently.

On the commercial side, revenue grew 14% year-over-year. Peloton now serves more than 80,000 facilities across more than 60 countries. The company launched a Commercial Series bike and treadmill in March, purpose-built for high-traffic gym environments, with a Q2 FY2027 broader rollout expected. With an estimated 3% share of the commercial fitness equipment market, leadership sees significant runway.

What’s Coming Next

Peloton signaled new consumer equipment arriving this fall across existing product categories, with price accessibility cited as a priority. Leadership highlighted strength and resistance training as a key focus area, with pilates, barre, and related formats grouped into what it called a broader “all resistance training” opportunity.

Longer term, the company flagged nutrition, sleep, recovery, and mental wellbeing as future revenue areas as it evolves toward what it describes as “connected wellness.” Sarah Robb O’Hagan, most recently CEO of Exos and a former executive at Nike, Gatorade, and Equinox, joined Peloton on April 1 as Chief Content and Member Development Officer, with a mandate to deepen engagement and strengthen member loyalty across its global community.

On tariffs, Peloton noted that equipment manufactured in the United States is not subject to tariff exposure. Total tariff exposure for the company stands at approximately $30 million, but Peloton expects a net benefit when rebates and mitigation strategies are factored in, reducing actual costs by an estimated $15 million.

The prepayment penalty on Peloton’s existing debt expires this month, which opens the door to a formal capital allocation strategy. Stern said the company will pursue a credit rating before making major decisions, which could include debt repayment, buybacks, or acquisitions. After years of financial restructuring, Peloton is now in a position where those are real choices, not aspirational ones.

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