Peloton Interactive reported its second profitable quarter in a row in its fiscal first quarter, which ended September 30, while releasing strong guidance for the holiday shopping season. During an analyst call, CEO Peter Stern highlighted the potential of Peloton’s new equipment lineup, its new Peloton IQ app, and its recently announced retail collaboration with Johnson Fitness & Wellness.

Stern said the quarter’s performance came in above the guidance range on most key financial metrics, given this seasonally slower quarter for fitness equipment sales, with Peloton continuing to see year-over-year growth in average workout time per Connected Fitness Subscription.

“We believe we offer an unmatched ecosystem of products and experiences to help our members invest in their health and well-being,” Stern said on the call. “As we enter this important holiday season, Peloton is exceptionally well-positioned, with great new equipment, Peloton IQ, new wellness partnerships, expanded distribution, a resurgent commercial business unit, new loyalty features, successful monetization changes, and improvements in our financial performance.

Q1 FY2026 Financial Highlights

  • Total revenue was $551 million, a decrease of $35 million or 6 percent year-over-year and $6 million above the high end of its guidance range. Analysts’ consensus estimate had been $540 million.
  • Total gross margin was 51.5 percent, a decrease of 30 bps year-over-year and 50 bps below its guidance, driven by a $13.5 million accrual for Bike+ seat post inventory costs.
  • GAAP net income was $14 million. Adjusted EBITDA was $118 million, an increase of $2 million or 2 percent year-over-year and $18 million above the high end of its guidance range. EPS of 3 cents was ahead of analysts’ consensus estimate of break-even.
  • Ending paid Connected Fitness Subscriptions were 2.732 million, a decrease of 164,000 or 6 percent year-over-year and 2,000 above the high end of its guidance range.
  • GAAP net cash provided by operating activities was $72 million. Free cash flow was $67 million, an increase of $57 million year-over-year.

Recent Developments

  • Released the Peloton Cross Training Series, the first full hardware portfolio refresh across Bike, Tread and Row product lines, and announced the Peloton Pro Series, the first hardware lineup designed for Commercial environments.
  • Introduced Peloton IQ, delivering AI-powered personalized guidance and data-driven insights that amplify Peloton’s human Instructor-led classes.
  • Expanded footprint to 10 Peloton-operated micro stores, launched two new retail partnerships that bring its products to 100 independent fitness retail locations in the U.S., and 11 retail locations in Australia.
  • Closed the acquisition of Breathwrk, a wellness app that helps users achieve calm, energy, and focus, and announced partnerships with Twin Health, Respin Health, Hospital for Special Surgery, and HYROX to address more of its Members’ total wellness needs.
  • Increased Average Workout Time per Connected Fitness Subscription by 5 percent year-over-year.

Update on Growth Strategy
Stern updated analysts on Peloton’s four-pronged growth strategy, the first pillar being “improving member outcomes.”

Toward that end, Peloton on October 1 began shipping “the most significant product update in our history with an all-new equipment lineup,” the Peloton Cross Training Series and the Peloton Pro Series, that address a broader range of wellness goals beyond cardio. All Peloton products now feature advanced swivel screens, allowing members to easily transition between cardio and strength to complete floor workouts, including strength, yoga, Pilates, and stretching.

Also on October 1, Peloton launched Peloton IQ, which gives every Peloton member a personalized coach, regardless of whether they own Peloton’s new cross-training series, the original series, or work out with a Peloton app subscription. Stern said, “Since launching the cross-training series and Peloton IQ, we’ve observed a favorable mix shift toward our more premium products, including a mix shift toward tread sales and toward our Plus line of products, the latter of which we believe is driven by excitement around the advanced computer vision features.”

The second pillar, “to meet members everywhere,” includes making a bigger push into retail. Peloton now has 10 micro stores in the U.S., up from one before Q1, and it recently announced a new retail partnership with Johnson Fitness & Wellness, the nation’s largest independent fitness retailer with 100 locations across the U.S. Peloton now have a physical retail presence in 46 states, while in Australia, it launched a retail presence in 11 franchise locations throughout the country.

Stern said, “Our expanded retail footprint positions us well for the holiday season, providing opportunities for consumers to test and experience our new innovations.”

Stern also noted that Peloton’s commercial business unit continues to show strong performance and is a focus for innovation, citing the recent launch of Tread Plus Pro, Peloton’s first-ever commercial treadmill, as well as the Breakaway, a new commercial tread from Precor. Pelton has also recently become the primary fitness partner for Utah City, a 700-acre mixed-use development located outside of Salt Lake City.

As part of the third leg of Peloton’s strategy, “to make members for life,” the company launched Club Peloton, its first loyalty and recognition program, last month. Stern said, “As members engage with our platform, they progress through levels from bronze to legend, unlocking exclusive content, recognition, and rewards. Already, more than 500,000 members have engaged with Club Peloton.”

Peloton also launched “Teams” on October 1,” a new way for members to encourage each other, work towards goals together, and compete against each other. The teams, led by Peloton Instructors, so far include Move for Life, Menopause, High Rocks, and Cross Training. Stern said, “These teams provide a forum for members to connect, discuss goals, and learn from each other and from experts, further elevating Peloton’s community. Since October 1, engagement with teams is up nearly 50 percent.”

The fourth pillar, “commitment to operational discipline and business excellence,” is also making progress, with steps announced during its previous quarter to improve monetization, such as the introduction of expert assembly fees, which exceeded expectations during the fiscal first quarter. Cost reduction plans also remain on track.

Stern added, “Perhaps most important, we remain confident in our ability to inflect toward revenue growth as the fiscal year progresses, building on the actions we took in Q1 and on October 1. We continue to monitor and respond to evolving tariff policies and broader changes in the macro environment and consumer spending. While those external factors are real, our focus remains on execution and being the best fitness and wellness partner to our members.”

Q2 FY26 Outlook

  • Total revenue is expected to be in the range of $665 million to $685 million, representing an increase of $1 million or 0.2 percent year-over-year at the midpoint.
  • Total gross margin is expected to be approximately 49.0 percent, reflecting an increase of 180 bps year-over-year.
  • Adjusted EBITDA is expected to be in the range of $55 million to $75 million, representing an increase of $7 million or 11 percent year-over-year at the midpoint.
  • Ending paid Connected Fitness Subscriptions is expected to be in the range of 2.64 million to 2.67 million, representing a decrease of 220,000 or 8 percent year-over-year at the midpoint.

Image courtesy Peloton