Peloton(US:PTON)2025-08-07 20:42Part I Business Peloton is a global fitness and wellness company integrating premium hardware, innovative software, and extensive instructor-led content for its approximately 6 million members - As of June 30, 2025, Peloton has a highly engaged community of approximately 6 million members across the United States, United Kingdom, Canada, Germany, Australia, and Austria23 - The company's sales strategy is multi-channel, utilizing e-commerce, inside sales, a B2B unit (Peloton for Business), retail showrooms, and third-party retailers like Amazon and Dick's Sporting Goods3544 - Manufacturing relies on a mix of third-party partners for new products and vertical integration for refurbished items, with logistics handled through owned and third-party provider (3PL) networks38 Intellectual Property Portfolio as of June 30, 2025 | Category | U.S. | Foreign | | :--- | :--- | :--- | | Issued Patents | 178 | 477 | | Pending Patent Applications | 93 | 91 | | Registered Trademarks | 45 | 959 | - As of June 30, 2025, Peloton employed 2,145 individuals in the United States and 511 internationally50 Risk Factors The company faces material risks related to its history of losses, subscriber retention, restructuring execution, product safety, and intense market competition - Business Risks: The company has a history of operating losses and may not achieve or maintain profitability, with success dependent on attracting subscribers and executing restructuring initiatives707172 - Product & Member Risks: Product safety issues and defects could lead to recalls, litigation, and reputational harm, as seen with the previous recalls of its Tread+ product and original Bike seat posts176179 - Legal & IP Risks: The business depends on third-party music licenses, and an adverse change could harm operations; the company is also subject to various legal proceedings110189216 - Cybersecurity & Technology Risks: The company relies on information technology systems vulnerable to cyber-attacks and faces new risks from its growing use of AI and machine learning technologies9399137 - Financial & Stock Risks: The dual-class stock structure concentrates voting control, limiting public stockholders' influence, and its indebtedness contains restrictive covenants that could impact operations156251275 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - Not applicable277 Cybersecurity The company manages cybersecurity risk through a program guided by the NIST framework, led by an experienced CISO and overseen by the Board's Audit Committee - The company's cybersecurity program is guided by industry standards from the National Institute of Standards and Technology (NIST)278 - The Board of Directors and its Audit Committee oversee cybersecurity matters, receiving quarterly presentations from the company's Senior Vice President, Chief Security and Trust Officer (CISO)284 - The CISO, who has over 20 years of experience, leads the information security team and reports regularly to the Audit Committee, the Board, and the executive team on cybersecurity risks and incidents284285 Properties Peloton's principal properties include leased corporate headquarters in New York and London, alongside a shrinking portfolio of retail and warehouse facilities - The company's corporate headquarters is in New York City, occupying approximately 336,000 square feet under a lease expiring in 2035288 - Peloton leases retail, warehouse, and production studio facilities in the U.S, Canada, Germany, and the U.K, but is actively reducing its retail showroom footprint as part of restructuring289290 - The planned U.S manufacturing facility, Peloton Output Park in Ohio, was sold, with the final land parcel sale completed in September 2024292 Legal Proceedings The company is involved in various legal proceedings arising in the ordinary course of business, with details referenced in the financial statement notes - For a detailed discussion of legal proceedings, the company refers to Note 12, Commitments and Contingencies, in the Notes to Consolidated Financial Statements293 Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable294 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Peloton's Class A common stock trades on Nasdaq as "PTON", and the company does not anticipate paying cash dividends in the foreseeable future - Class A common stock trades on The Nasdaq Global Select Market under the symbol "PTON"; Class B common stock is not publicly traded296297 - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, citing the need to retain earnings for debt repayment and business growth299 [Reserved] This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2025 saw revenue decline 7.8% to $2.49 billion, but cost-cutting measures significantly narrowed the Net Loss and turned Adjusted EBITDA and Free Cash Flow positive FY2025 vs. FY2024 Financial Highlights (in millions) | Metric | FY2025 | FY2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,490.8 | $2,700.5 | (7.8)% | | Connected Fitness Products Revenue | $817.1 | $991.7 | (17.6)% | | Subscription Revenue | $1,673.7 | $1,708.7 | (2.1)% | | Gross Profit | $1,268.3 | $1,206.5 | 5.1% | | Loss from Operations | $(36.2) | $(529.0) | 93.2% | | Net Loss | $(118.9) | $(551.9) | 78.5% | Key Operational Metrics (FY2025 vs. FY2024) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Ending Paid Connected Fitness Subscriptions | 2,799,943 | 2,976,265 | | Average Net Monthly Paid Connected Fitness Subscription Churn | 1.6% | 1.4% | | Ending Paid App Subscriptions | 552,451 | 621,432 | Non-GAAP Financial Measures (in millions) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Adjusted EBITDA | $403.6 | $3.5 | | Free Cash Flow | $323.7 | $(85.8) | - The company announced a new restructuring plan in August 2025 (the "2025 Restructuring Plan") intended to achieve at least $100 million of run-rate savings by the end of fiscal year 2026312315 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rates on its Term Loan, foreign currency fluctuations, and inflationary pressures on costs - Interest Rate Risk: The primary exposure is to short-term interest rate changes on the company's Term Loan, though a hypothetical 10% change is not expected to be material466 - Foreign Currency Risk: The company faces risk from international sales denominated in foreign currencies and from sourcing/manufacturing costs in currencies like the Taiwanese dollar467 - Inflation Risk: The company has experienced and may continue to experience inflationary pressures on supply chain, materials, and labor costs, which could adversely impact gross margins468 Financial Statements and Supplementary Data This section contains the audited consolidated financial statements for fiscal years 2023-2025 and an unqualified opinion from its independent auditor - The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal controls as of June 30, 2025474475483 Consolidated Balance Sheet Highlights (as of June 30, in millions) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,039.5 | $697.6 | | Inventories, net | $205.6 | $329.7 | | Total Assets | $2,125.3 | $2,185.2 | | Total current liabilities | $803.9 | $685.2 | | Convertible senior notes & Term loan (non-current) | $1,290.5 | $1,490.1 | | Total Liabilities | $2,539.1 | $2,704.3 | | Total Stockholders' Deficit | $(413.8) | $(519.1) | Consolidated Statement of Operations Highlights (Year Ended June 30, in millions) | Account | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Total revenue | $2,490.8 | $2,700.5 | $2,800.2 | | Gross profit | $1,268.3 | $1,206.5 | $923.5 | | Loss from operations | $(36.2) | $(529.0) | $(1,197.1) | | Net loss | $(118.9) | $(551.9) | $(1,261.7) | Consolidated Statement of Cash Flows Highlights (Year Ended June 30, in millions) | Account | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $333.0 | $(66.1) | $(387.6) | | Net cash (used in) provided by investing activities | $(5.1) | $26.8 | $(69.9) | | Net cash provided by (used in) financing activities | $1.7 | $(94.4) | $76.8 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None719 Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2025, having remediated prior material weaknesses - Management concluded that internal control over financial reporting was effective as of June 30, 2025722 - The previously reported material weakness related to inventory controls has been remediated as of June 30, 2025, through enhanced procedures and improved oversight723724725 - The previously reported material weakness related to the business process control environment at Precor has also been remediated as of June 30, 2025726728729 Other Information Several executive officers adopted pre-arranged stock trading plans under Rule 10b5-1 for the potential sale of company stock upon vesting of equity awards - CFO Liz Coddington entered into a Rule 10b5-1 trading plan on May 16, 2025, for the potential sale of shares upon vesting of RSUs and PSUs between September 2025 and November 2026734 - COO Charlie Kirol entered into a Rule 10b5-1 trading plan on May 29, 2025, for the potential sale of shares upon vesting of RSUs between July 2025 and July 2026735 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable737 Part III Directors, Executive Officers and Corporate Governance Required information will be incorporated by reference from the company's 2025 proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Stockholders740 Executive Compensation Required information will be incorporated by reference from the company's 2025 proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Stockholders741 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Required information will be incorporated by reference from the company's 2025 proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Stockholders742 Certain Relationships and Related Transactions, and Director Independence Required information will be incorporated by reference from the company's 2025 proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Stockholders743 Principal Accountant Fees and Services Required information will be incorporated by reference from the company's 2025 proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Stockholders744 Part IV Exhibit and Financial Statement Schedules This section lists the documents filed with the report, confirming that financial statements are included in Item 8 and all schedules are omitted - The company's consolidated financial statements are included in Part II, Item 8746 - All financial statement schedules have been omitted because they are not required, not applicable, or the information is included elsewhere747 Form 10-K Summary The company has not provided a summary for its Form 10-K - None754