Peloton Interactive reported profit improvement on flattish revenue in its fiscal fourth quarter ended June 30, but also issued soft revenue guidance for fiscal 2027 as subscriber losses continue to deepen.

For the full 2027 fiscal year, Peloton guided to total revenue of $2.3 billion to $2.4 billion, below the $2.43 billion consensus and a decline at the midpoint of 3.9 percent from $2,45 billion reported for FY26. Adjusted EBITDA is expected in the range of $475 million to $525 million, up 6.8 percent year-over-year at the midpoint, and total gross margin of approximately 54.0 percent, up 140 basis points year-over-year.

For the fiscal first quarter, Peloton guided to total revenue of $545 million to $565 million, below the $566.7 million consensus and $550.8 million reported in the year-ago quarter. It expects adjusted EBITDA of $135 million to $145 million, up 18.4 percent year-over-year at the midpoint, and total gross margin of approximately 57.0 percent, up 550 basis points year-over-year.

Shares of Peloton were trading down about 10 percent in pre-market trading on the weak guidance.

Q4 FY2026 Financial Highlights

  • Total revenue for Q4 was $608 million, an increase of $1 million year-over-year. Full Year FY26 Total Revenue was $2.446
    billion, $6 million above Peloton’s guidance range, primarily driven by outperformance in equipment sales across both Peloton and Precor brands.
  • Ending paid connected fitness subscriptions were 2.553 million, a decrease of 247,000 or 8.8 percent year-over-year and within
    its guidance range.
  • Total gross margin was 56.7 percent in Q4, and 52.6 percent for Full Year FY26, representing year-over-year increases of 260 basis points
    and 170 basis points, respectively, and in line with guidance.
  • GAAP net income was $62 million in Q4 and $63 million for Full Year FY26. Adjusted EBITDA* was $142 million in Q4 and
    $468 million in Full Year FY26, an increase of $2 million and $65 million, respectively, or 16 percent year-over-year on a full year
    basis, which was negatively impacted by a $23.8 million nonrecurring accrued legal contingency in Q4 related to patent
    litigation.
  • GAAP net cash provided by operating activities was $91 million in Q4 and $388 million for Full Year FY26. Free Cash Flow*
    was $89 million for the quarter and $378 million for Full Year FY26, an increase of $54 million year-over-year on a full year
    basis.

“Fiscal 2026 was a defining milestone as Peloton delivered its first full year of net profitability driven by our improved revenue
trajectory and substantial improvements in our cost structure” said Peter Stern, Peloton’s CEO and president. “While multi-year
transformations take time, our financial discipline has fundamentally reshaped our business and grants us greater flexibility to invest
in our core strengths of premium hardware, intelligent software, and human connection. We start the year with strong momentum
across every part of our business as we remain focused on our evolution into a connected wellness platform.”

Sid Thacker, Peloton’s chief financial officer, added, “In my short time at Peloton, my confidence in the company’s strategic direction
and future has only grown. In fiscal 2026, the company strengthened its financial foundation, delivered strong full year Adjusted
EBITDA growth and significant Free Cash Flow. We enter the new fiscal year with the same commitment to financial discipline, and
with a balance sheet and capital structure that provides us an enviable platform for investment in our future and to create sustained
value for our shareholders.”

Recent Business Highlights

  • Exceeded its plan to deliver more than $100 million of run-rate cost savings by the end of FY26.
  • Achieved positive net income and operating income on a full year basis in FY26, the first time in Peloton’s history.
  • Commercial business unit revenue grew double digits year-over-year in FY26.
  • Expanded its global digital reach through a strategic partnership with Spotify.
  • Completed the acquisition of Skōp, an innovator in Connected Pilates that will enable Pelton “ to create differentiated products and experiences that build on our industry-leading position in strength.”
  • Microstores outperformed internal sales goals, “delivering an efficient in-person first party retail channel.” Peloton plans to double its microstore fleet in FY27.
  • Launched the Pace Your Race Marathon Training Program and the Live Spring Cross-Training Plan, which had more than 850,000 completed workouts in Q4

Outlook for Q1 FY27

  • Total revenue outlook of $545 million to $565 million represents an increase of $4 million or 0.8 percent year-over-year at the
    midpoint.
  • Total gross margin outlook of approximately 57.0 percent reflects an increase of 550 basis points year-over-year.
  • Adjusted EBITDA outlook of $135 million to $145 million represents an increase of $22 million or 18.4 percent year-over-year at the midpoint
  • Ending Paid Connected Fitness Subscriptions are expected to be in the range of 2.455 million to 2.475 million, representing
    a decrease of 267,000 or 9.8 percent year-over-year at the midpoint.

Full Year FY27 Outlook

  • Total revenue outlook of $2.3 billion to $2.4 billion represents a decrease of $96 million or 3.9 percent year-over-year at the
    midpoint.
  • Total gross margin outlook of approximately 54.0 percent reflects an increase of 140 basis points year-over-year.
  • Adjusted EBITDA outlook of $475 million to $525 million represents an increase of $32 million or 6.8 percent year-over-year at the midpoint.
  • Free cash flow of at least $350 million, represents a minimum target for FY27.

Image courtesy Peloton