Peloton reportedly plans to launch its integrated artificial intelligence (AI) platform and other new products as early as October.By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions .Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.The fitness company is set to roll ...

Industry Overview - The health and fitness industry has transformed into a significant market, driven by a cultural shift towards healthier living, with consumers actively seeking better nutrition and structured fitness plans [2] - The global health and wellness market is projected to reach $11 trillion by 2034, growing at a compound annual growth rate (CAGR) of 5.4% from 2025 [4] - Major tech companies like Apple and Amazon are reshaping consumer engagement in wellness through innovative products and services [3] Company Highlights Peloton Interactive - Peloton has developed a connected fitness platform that combines advanced equipment with immersive digital content, creating an interactive fitness experience [7] - The company has shifted its business model to a balanced mix of product and subscription revenues, with subscription services becoming a key driver of recurring income [8] - Peloton continues to innovate and expand its market reach through partnerships and international expansion, positioning itself for long-term growth in the fitness sector [10] Sprouts Farmers Market - Sprouts operates as a health-focused grocery retailer, offering a wide selection of fresh, natural, and organic products, with its private-label brand representing about 24% of total sales [11][12] - The company has embraced digital transformation, with online sales accounting for roughly 15% of total revenues, and has invested in community well-being initiatives [13] - Sprouts has expanded its store locations and created a proprietary distribution network to enhance product freshness and supply chain efficiency [12] SunOpta - SunOpta focuses on plant-based and fruit-based products, catering to the growing demand for health and wellness options [14] - The company has evolved into a high-growth platform centered on scalable, high-margin categories, particularly in oat-based beverages and fruit-based foods [15] - SunOpta integrates sustainability into its product development, enhancing its alignment with health and fitness values [16] The Beachbody Company - Beachbody has built a comprehensive health and fitness ecosystem that combines digital workouts, nutrition, and mindset coaching through its BODi platform [17] - The company has shifted its business model to a direct-to-consumer sales approach, enhancing flexibility in content access and reducing operating expenses [19] - Beachbody is expanding into physical retail and innovating with targeted wellness solutions, aligning with evolving health trends [20]

Financial Data and Key Metrics Changes - The company generated $324 million of free cash flow in fiscal year 2025, an increase of $49 million year over year [20] - Net debt was reduced by $343 million or 43% year over year, indicating significant deleveraging [20] - Total revenue for Q4 was $607 million, outperforming guidance by $21 million, primarily driven by higher hardware sales [22] Business Line Data and Key Metrics Changes - Paid Connected Fitness subscriptions decreased by 80,000 quarter over quarter, ending at 2.8 million, a 6% decrease year over year [21] - Connected Fitness products revenue decreased by $13 million or 6% year over year, while subscription revenue decreased by $23 million or 5% year over year [22][23] - Total gross profit for Q4 was $328 million, a 5% increase year over year, with total gross margin at 54.1%, up 560 basis points year over year [23] Market Data and Key Metrics Changes - The company plans to expand its global presence through hotel partnerships and retail expansion, with a successful MicroStore pilot in Nashville and a second store opened in Utah [13] - The commercial business unit, which includes Precor, operates in over 9,000 hotels, indicating a strong market presence [16] Company Strategy and Development Direction - The company aims to evolve from a cardio fitness partner to a comprehensive wellness partner, focusing on strength, mental well-being, sleep, recovery, and nutrition [11][12] - Plans include employing advanced technologies like AI for personalized coaching and insights [13] - The company is targeting $100 million in run rate cost savings by the end of fiscal year 2026 through optimizing indirect spend and restructuring [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a significant market opportunity in the U.S. for fitness and wellness, particularly among households with incomes over $75,000 [58] - The company anticipates a pivot towards revenue growth starting in Q2 of fiscal year 2026, driven by product innovations and seasonal trends [80] Other Important Information - The company has launched Peloton Repowered, a platform for buying and selling used equipment, enhancing accessibility [14] - The company is committed to generating meaningful free cash flow, targeting at least $200 million in fiscal year 2026, despite anticipated tariff exposure [32] Q&A Session Summary Question: How does Peloton see the opportunity for growth as Americans focus more on health and fitness? - Management noted that younger demographics are expanding their definition of wellness, leading to a strategy that incorporates a holistic approach to fitness, including strength and mental health [37] Question: What are management's thoughts on current levels of stock-based compensation? - Management acknowledged that while stock-based compensation aligns employee interests with shareholders, it has historically been too high, but they expect a reduction in fiscal year 2026 [41][42] Question: Can you go over the cadence of the $100 million cost savings? - Management indicated that half of the run rate savings have been actioned, with the remainder expected to be realized throughout the year, focusing on indirect spend optimization and workforce relocations [52] Question: What are the expectations for gross margin for 2026? - Management expects gross margin improvement across both subscription and hardware segments, driven by lower service costs and optimizations in content production [64]

INVESTOR PRESENTATION May 2024 Disclaimer The information contained in this presentation is being provided to you for informational purposes only and does not constitute legal, tax, investment, accounting or other advice by Peloton Interactive, Inc. ("Peloton", "we", "us" or the "Company") or any other party and may not be relied upon as such. This presentation does not constitute an offer to sell or a solicitation of an offer to make an investment in the Company, including the purchase of any securities of ...

Financial Data and Key Metrics Changes - Total revenue for Q3 was $624 million, exceeding guidance by $9 million, with Connected Fitness products revenue at $205 million and subscription revenue at $419 million [26][32] - Paid Connected Fitness subscriptions increased by 5,000 in the quarter, totaling 2,880,000, but represented a 6% decline year over year [24][26] - Adjusted EBITDA was $89 million, $4 million above guidance and an $84 million improvement year over year [30][32] - Free cash flow for Q3 was $95 million, a decrease of $11 million quarter over quarter but an increase of $86 million year over year [31][32] - Net debt reduced by $312 million or 35% year over year to $585 million [31][32] Business Line Data and Key Metrics Changes - Connected Fitness products revenue decreased by $74 million or 27% year over year, driven by lower sales across all product categories [26] - Subscription revenue decreased by $19 million or 4% year over year, impacted by lower paid Connected Fitness and app subscriptions [26] - Average net monthly churn for paid Connected Fitness subscriptions was 1.2%, consistent with the previous year [24][25] Market Data and Key Metrics Changes - The company observed year over year growth in running workouts by 5% and walking workouts by 11% [10] - Engagement with new features, such as pace targets on treadmills, improved significantly, with over 80% of tread users utilizing pace targets [10] Company Strategy and Development Direction - The company aims to improve member outcomes through better equipment, software, and instruction, while also focusing on member retention and operational excellence [6][7] - Plans to expand presence in retail, gyms, and international markets, with a pilot program launched with PRECORT to bring Peloton classes to commercial gyms [13][15] - The company is focusing on cost reduction, tracking ahead of a $200 million cost restructuring plan [22][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, highlighting the importance of improving unit economics and member satisfaction [5][32] - The company is raising guidance for ending paid Connected Fitness subscriptions, total revenue, and adjusted EBITDA for the fiscal year [32][33] - Management noted resilience in the subscription business despite macroeconomic uncertainties, with a focus on maintaining strong retention rates [68][70] Other Important Information - The company is implementing AI to enhance member support and personalize coaching experiences [39][42] - A new leadership team is being established to drive innovation and improve operational efficiency [21][60] Q&A Session Summary Question: How is AI being incorporated into Peloton's future? - AI is being used to enhance member support and improve translation capabilities, allowing for personalized coaching plans [39][42] Question: When will Peloton expand into new markets? - Current focus is on growing existing international markets before expanding further, with plans to explore adjacent markets next year [44][46] Question: What is the impact of broader consumer slowdown on the business? - The business remains resilient, with strong subscription retention despite some softness in sales [68][70] Question: How does the company plan to return to revenue growth? - The strategy includes improving member outcomes, expanding presence, and increasing member lifetime value [94][95] Question: What are the plans for the balance sheet going forward? - The company aims to continue deleveraging while exploring growth opportunities and maintaining sufficient cash reserves [98][99]