Peloton Interactive Q2 2026 Peloton Interactive Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Peloton Interactive Inc Earnings Call
Speaker #1: Participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.
Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded.
Speaker #1: I would now like to hand the conference over to your speaker, Mr. James Marsh, Senior Vice President of Investor Relations. Please go ahead.
Speaker #2: Thank you, operator. Good morning and welcome to PELOTON's second quarter fiscal year 2026 conference call. Joining today's call are PELOTON Chief Executive Officer and President, Peter Stern, and Coddington.
Speaker #2: Our comments and Chief Financial Officer, Liz responses to your questions reflect management's views as of today related to our business under federal securities law.
Speaker #2: Actual results may differ materially from those contained in or implied by these forward-looking statements, due to risks and uncertainties associated only and will include forward-looking statements Please refer to our SEC filings and today's press release both of which can be found on the Investor Relations website for a discussion of the material risks and other important factors that could impact our results.
Speaker #2: with our business.
Speaker #2: During this call, we will discuss both measures, a reconciliation of GAAP GAAP and non-GAAP financial provided, and today's press to non-GAAP financial measures is also release.
Speaker #2: I'll now turn it over to Peter.
Speaker #2: I'll now turn it over to Peter.
Speaker #3: significant progress on our multi-year James. This quarter, we made strategy of evolving PELOTON from a connected fitness company to a Thanks, connected wellness company.
Speaker #3: An ambition anchored in the societal shift from a focus on lifespan to health span, PELOTON's platform, equipment, and beloved brand position us to capture more market share within the growing $7 trillion global wellness economy and to deliver ever greater human impact.
Operator: Good day, and welcome to Peloton's Q2 fiscal year 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. James Marsh, Senior Vice President of Investor Relations. Please go ahead.
Operator: Good day, and welcome to Peloton's Q2 fiscal year 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. James Marsh, Senior Vice President of Investor Relations. Please go ahead.
Speaker #1: Good day and welcome to PELOTON second quarter fiscal year 2026 conference call. At this time, all participants are on a listen-only mode. After the speaker presentation, there will be a question-and-answer session.
Speaker #3: As I shared in my annual shareholder letter last on expanding our leadership in cardio plus month, our path forward is focused commercial footprints, and using AI-driven personalization to help our members across a wider array of fitness and strength, growing our global wellness domains.
Speaker #1: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker #1: To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. James Marsh, Senior Vice President of Investor Relations.
Speaker #3: As we begin the new calendar year, we are more prepared for this evolution than ever. As we have built a strong financial foundation, our cost discipline has enabled us to reduce our net debt by 52% year over improve our balance sheet enables us to both invest in our long-term growth and, as the year progresses, put in place an anticipated lower year.
Speaker #1: Please go ahead.
Speaker #2: Thank you, Operator. Good morning and welcome to PELOTON second quarter fiscal year 2026 conference call. Joining today's call are PELOTON Chief Executive Officer and President, Peter Stern, and Chief Financial Officer, Liz Coddington.
James Marsh: Thank you, operator. Good morning, and welcome to Peloton's Q2 fiscal year 2026 conference call. Joining today's call are Peloton Chief Executive Officer and President, Peter Stern, and Chief Financial Officer, Liz Coddington. Our comments and responses to your questions reflect management's views as of today only and will include forward-looking statements related to our business under federal securities law. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business. Please refer to our SEC filings in today's press release, both of which can be found on the investor relations website, for a discussion of the material risks and other important factors that could impact our results. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is also provided in today's press release.
James Marsh: Thank you, operator. Good morning, and welcome to Peloton's Q2 fiscal year 2026 conference call. Joining today's call are Peloton Chief Executive Officer and President, Peter Stern, and Chief Financial Officer, Liz Coddington. Our comments and responses to your questions reflect management's views as of today only and will include forward-looking statements related to our business under federal securities law. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business. Please refer to our SEC filings in today's press release, both of which can be found on the investor relations website, for a discussion of the material risks and other important factors that could impact our results. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is also provided in today's press release.
Speaker #2: Our comments and responses to your questions reflect management's views as of today only and will include forward-looking statements related to our business under federal securities law.
Speaker #3: structure. In The hard work we've done to the second quarter, we unveiled a number of exciting updates to our magic formula of industry-leading AI, and unmatched human instruction.
Speaker #2: Actual results may differ materially from those contained in or implied by these forward-looking statements, due to risks and uncertainties associated with our business. Please refer to our SEC filings in today's press release; both of which can be found on the Investor Relations website for a discussion of the material risks and other important results.
Speaker #3: This included the PELOTON cross-training series, our first-ever hardware portfolio refresh, PELOTON IQ, our AI-powered personalized equipment, intuitive software powered by software, and new strength, yoga, and Pilates instructors, focused on innovative of this going into our peak offerings.
Speaker #2: During this call, we will discuss both GAAP and non-GAAP financial measures, a reconciliation of GAAP to non-GAAP financial measures is also provided in today's press release.
Speaker #3: holiday sales period, which delivered 39% adjusted EBITDA growth year over year in Q2. We launched all and reduced operating efforts. This of our subscription business.
James Marsh: I'll now turn it over to Peter.
James Marsh: I'll now turn it over to Peter.
Speaker #2: To Peter. I'll now turn it over.
Speaker #3: Thanks, James. This quarter, we made significant progress on our multi-year strategy of evolving Peloton from a connected fitness company. An ambition-anchored company to a connected wellness in the societal shift from a focus on lifespan to health span, Peloton's platform, equipment, and beloved brand position us to capture more market share within the growing $7 trillion global wellness economy and to deliver ever greater human impact.
Peter Stern: Thanks, James. This quarter, we made significant progress on our multi-year strategy of evolving Peloton from a connected fitness company to a connected wellness company, an ambition anchored in the societal shift from a focus on lifespan to healthspan. Peloton's platform, equipment, and beloved brand position us to capture more market share within the growing $7 trillion global wellness economy and to deliver ever greater human impact. As I shared in my annual shareholder letter last month, our path forward is focused on expanding our leadership in cardio plus strength, growing our global commercial footprints, and using AI-driven personalization to help our members across a wider array of fitness and wellness domains. As we begin the new calendar year, we are more prepared for this evolution than ever, as we have built a strong financial foundation.
Peter Stern: Thanks, James. This quarter, we made significant progress on our multi-year strategy of evolving Peloton from a connected fitness company to a connected wellness company, an ambition anchored in the societal shift from a focus on lifespan to healthspan. Peloton's platform, equipment, and beloved brand position us to capture more market share within the growing $7 trillion global wellness economy and to deliver ever greater human impact. As I shared in my annual shareholder letter last month, our path forward is focused on expanding our leadership in cardio plus strength, growing our global commercial footprints, and using AI-driven personalization to help our members across a wider array of fitness and wellness domains. As we begin the new calendar year, we are more prepared for this evolution than ever, as we have built a strong financial foundation.
Speaker #3: As we enjoyed strong member retention, churn was lower than expected during a quarter with a quarter also highlighted the resilience price increase, underscoring the high value members place on our integrated experience.
Speaker #3: Revenue for We continue to drive higher margins guidance. Primarily, due to fewer-than-expected equipment sales of the cross-training series to members. However, we were encouraged by the mix of existing members who existing Q2 came in below equipment as more than 70% of cross-training series equipment sales to existing bike owners were tread and row purchased a new category of products.
Speaker #3: As I shared in my annual shareholder letter last month, our path forward is focused on expanding our leadership in cardio plus strength, growing our global commercial footprints, and using AI-driven personalization to help our members across a wider array of fitness and wellness domains.
Speaker #3: As we begin the new calendar year, we are more prepared for this evolution than ever. As we have built a strong financial foundation, our cost discipline has enabled us to reduce our net debt by $52% year over year.
Speaker #3: Our installed base of equipment is quite durable, and member satisfaction is extremely high, as evidenced by our consistently high net promoter scores and low churn.
Peter Stern: Our cost discipline has enabled us to reduce our net debt by 52% year-over-year. The hard work we've done to improve our balance sheet enables us to both invest in our long-term growth and, as the year progresses, put in place an anticipated lower cost and more flexible capital structure. In Q2, we unveiled a number of exciting updates to our magic formula of industry-leading equipment, intuitive software powered by AI, and unmatched human instruction. This included the Peloton Cross Training Series, our first-ever hardware portfolio refresh, Peloton IQ, our AI-powered personalized software, and new instructors focused on innovative strength, yoga, and Pilates offerings. We launched all of this going into our peak holiday sales period, which delivered 39% Adjusted EBITDA growth year-over-year in Q2. We continued to drive higher margins and reduced operating expenses, thanks to our cost restructuring efforts.
Peter Stern: Our cost discipline has enabled us to reduce our net debt by 52% year-over-year. The hard work we've done to improve our balance sheet enables us to both invest in our long-term growth and, as the year progresses, put in place an anticipated lower cost and more flexible capital structure. In Q2, we unveiled a number of exciting updates to our magic formula of industry-leading equipment, intuitive software powered by AI, and unmatched human instruction. This included the Peloton Cross Training Series, our first-ever hardware portfolio refresh, Peloton IQ, our AI-powered personalized software, and new instructors focused on innovative strength, yoga, and Pilates offerings. We launched all of this going into our peak holiday sales period, which delivered 39% Adjusted EBITDA growth year-over-year in Q2. We continued to drive higher margins and reduced operating expenses, thanks to our cost restructuring efforts.
Speaker #3: We believe these factors upgrade cycle than we had anticipated. In contrast, with sales to new members, coming roughly in line with our expectations for the our product lineup featuring the new likely contribute to a longer cross-training series will continue to attract new quarter, we remain confident that members.
Speaker #3: The hard work we've done to improve our balance invest in our long-term growth and, as the year progresses, put in place an anticipated lower cost and more flexible capital structure.
Speaker #3: In the second quarter, we unveiled a number of exciting updates to our Magic Formula of industry-leading equipment, intuitive software powered by AI, and unmatched human instruction.
Speaker #3: We are also encouraged to see sales of the cross-training plus line for our bikes indicating that its premium features series lean more towards the and camera vision-based personal coaching are important purchase drivers for marketing focus is on product education, helping both discover the full power of what we've built.
Speaker #3: Swivel screens on all hardware products, more comfortable saddles on our bikes, as well as plus line feature upgrades, including the movement tracking camera that provides form feedback, rep tracking, and Reviewers from trusted publications have praised the reinvention of our product weight suggestions.
Speaker #3: Our peak holiday sales period, which delivered 39% adjusted EBITDA growth year over year in Q2. We continue to drive higher margins and reduced operating expenses thanks to our cost restructuring efforts.
Speaker #3: lineup, including the Wall Street Health, PC Mag, and more. We also scaled our retail footprint to 10 micro stores by the end of environments that showcase our hardware October, offering and educate consumers on the cross-training series.
Speaker #3: This quarter also highlighted the resilience of our subscription member retention, churn was lower than expected during a quarter with a price increase, underscoring the high value members place business.
Peter Stern: This quarter also highlighted the resilience of our subscription business as we enjoyed strong member retention. Churn was lower than expected during a quarter with a price increase, underscoring the high value members place on our integrated experience. Revenue for Q2 came in below guidance, primarily due to fewer than expected equipment sales of the Cross Training Series to existing members. However, we were encouraged by the mix of existing members who purchased a new category of equipment, as more than 70% of Cross Training Series equipment sales to existing bike owners were Tread and Row products. Our installed base of equipment is quite durable, and member satisfaction is extremely high, as evidenced by our consistently high Net Promoter Scores and low churn. We believe these factors likely contribute to a longer upgrade cycle than we had anticipated.
Peter Stern: This quarter also highlighted the resilience of our subscription business as we enjoyed strong member retention. Churn was lower than expected during a quarter with a price increase, underscoring the high value members place on our integrated experience. Revenue for Q2 came in below guidance, primarily due to fewer than expected equipment sales of the Cross Training Series to existing members. However, we were encouraged by the mix of existing members who purchased a new category of equipment, as more than 70% of Cross Training Series equipment sales to existing bike owners were Tread and Row products. Our installed base of equipment is quite durable, and member satisfaction is extremely high, as evidenced by our consistently high Net Promoter Scores and low churn. We believe these factors likely contribute to a longer upgrade cycle than we had anticipated.
Speaker #3: Revenue for Q2 came in below, as we enjoyed strong experience. Primarily, this was due to fewer than expected equipment sales of the cross-training series to existing members.
Speaker #3: In Q2, micro stores drove more sales on average than our legacy showrooms, and more than eight times the legacy consumers. Our current capital-efficient, PELOTON-managed showroom on a sales per square foot basis.
Speaker #3: However, we were encouraged by the mix of existing members who purchased a new category of equipment, as more than 70% of cross-training series equipment sales were to existing Bike and Row product owners.
Speaker #3: In contrast, our third-party retail sales lagged expectations so we are working with our distribution partners to share best practices in Q3 and growing our commercial offerings and our brand touchpoints outside the existing and prospective members home.
Speaker #3: Our installed base of equipment is owners were tread, and quite durable, and member satisfaction is extremely high, as evidenced by our consistently high net promoter scores and these factors likely contribute to low churn.
Speaker #3: Our commercial Journal, Women's Health, Men's beyond. We're committed to more market share by leveraging the strength of both the pre-core and PELOTON business unit is well positioned to capture brands.
Speaker #3: a longer upgrade cycle than we had We believe anticipated. In contrast, with sales to new members, coming roughly in line with our expectations for confident that our product lineup featuring the quarter, we remain the new cross-training series will continue to attract new members.
Peter Stern: In contrast, with sales to new members coming roughly in line with our expectations for the quarter, we remain confident that our product lineup, featuring the new Cross Training Series, will continue to attract new members. We are also encouraged to see sales of the Cross Training Series lean more towards the Plus Line for our bikes, indicating that its premium features and camera vision-based personal coaching are important purchase drivers for consumers. Our current marketing focus is on product education, helping both existing and prospective members discover the full power of what we've built. Swivel screens on all hardware products, more comfortable saddles on our bikes, as well as Plus Line feature upgrades, including the movement tracking camera that provides form feedback, rep tracking, and weight suggestions.
Peter Stern: In contrast, with sales to new members coming roughly in line with our expectations for the quarter, we remain confident that our product lineup, featuring the new Cross Training Series, will continue to attract new members. We are also encouraged to see sales of the Cross Training Series lean more towards the Plus Line for our bikes, indicating that its premium features and camera vision-based personal coaching are important purchase drivers for consumers. Our current marketing focus is on product education, helping both existing and prospective members discover the full power of what we've built. Swivel screens on all hardware products, more comfortable saddles on our bikes, as well as Plus Line feature upgrades, including the movement tracking camera that provides form feedback, rep tracking, and weight suggestions.
Speaker #3: Commercial showed strong performance, achieving 10% revenue growth year over year across US and international and exceeding expectations markets. In Q2, we continue to make meaningful progress in improving member 7% year-over-year increase in outcomes.
Speaker #3: We are also encouraged to see sales of the cross-training series lean more towards the plus line for our bikes, indicating that its premium features and camera vision-based personal coaching are important purchase drivers for consumers.
Speaker #3: that our content and programming workout time per connected fitness We saw a continue to resonate with our members and contributed to our member retention.
Speaker #3: Our current marketing focus is on product education, helping prospective members discover the full power of both existing products and what we’ve built. Swivel screens on all hardware products, more comfortable saddles on our bikes, as well as Plus line feature upgrades, including the movement tracking camera that provides form feedback, rep tracking, and weight suggestions.
Speaker #3: We also see rapid adoption of PELOTON IQ, which makes personal training more accessible and impactful by providing dynamic coaching that's responsive to subscription, a clear indication each member's goals.
Speaker #3: 46% of active members engaged with their performance insights and recommendations during the first quarter since its rollout, and all access member engagement with personalized plans was up more than 10% from Q1.
Speaker #3: Reviewers from trusted publications have praised the reinvention of our product lineup, including the Wall Street Journal, Women's Health, Men's Health, PC Mag, and more.
Peter Stern: Reviewers from trusted publications have praised the reinvention of our product lineup, including The Wall Street Journal, Women's Health, Men's Health, PCMag, and more. We also scaled our retail footprint to 10 Micro Stores by the end of October, offering capital-efficient, Peloton-managed environments that showcase our hardware and educate consumers on the Cross Training Series. In Q2, Micro Stores drove more sales on average than our legacy showrooms, and more than 8 times the legacy showroom on a sales per square foot basis. In contrast, our third-party retail sales lagged expectations, so we are working with our distribution partners to share best practices in Q3 and beyond. We're committed to growing our commercial offerings and our brand touchpoints outside the home. Our commercial business unit is well-positioned to capture more market share by leveraging the strength of both the Precor and Peloton brands.
Peter Stern: Reviewers from trusted publications have praised the reinvention of our product lineup, including The Wall Street Journal, Women's Health, Men's Health, PCMag, and more. We also scaled our retail footprint to 10 Micro Stores by the end of October, offering capital-efficient, Peloton-managed environments that showcase our hardware and educate consumers on the Cross Training Series. In Q2, Micro Stores drove more sales on average than our legacy showrooms, and more than 8 times the legacy showroom on a sales per square foot basis. In contrast, our third-party retail sales lagged expectations, so we are working with our distribution partners to share best practices in Q3 and beyond. We're committed to growing our commercial offerings and our brand touchpoints outside the home. Our commercial business unit is well-positioned to capture more market share by leveraging the strength of both the Precor and Peloton brands.
Speaker #3: Based on our post-purchase research, PELOTON IQ was ranked the most compelling feature by those who purchased the cross-training series Bike Plus, Tread, and Tread Plus.
Speaker #3: We also scaled our retail footprint to 10 microstores by the end of October, offering capital-efficient, PELOTON-managed environments that showcase our hardware and educate consumers on the cross-training microstores drove more sales on series.
Speaker #3: We expect member engagement to increase further as we refine and evolve PELOTON IQ to domains. As strength continues to grow in to the broader adoption of popularity, in part due GLP-1s, we will continue to evolve our programming to support both cardio and strength.
Speaker #3: average than our legacy showrooms, and more than eight times In Q2, the legacy showroom on a sales basis. In contrast, per square foot our third-party retail sales lagged expectations, so we are working with our distribution partners to share best practices in Q3 and beyond.
Speaker #3: We welcomed three new strength instructors, all of whom premiered in December, teaching yoga sculpt, and content, we have a as robust R&D agenda in the strength category well.
Speaker #3: We're committed to growing our commercial offerings and our brand touchpoints outside the home. Our Commercial business unit is well-positioned to capture more market share by leveraging the strength of both the Precor and Peloton brands.
Speaker #3: This Thanksgiving, we celebrated one of PELOTON's most beloved traditions, the Pilates. In addition to our classes throughout Thanksgiving 12th Annual Turkey Burn. increase in completed live workouts year over year.
Speaker #3: Commercial showed strong performance, achieving 10% revenue growth year over year and exceeding expectations across US and international markets. In Q2, we continue to make meaningful progress in improving member outcomes.
Peter Stern: Commercial showed strong performance, achieving 10% revenue growth year-over-year and exceeding expectations across US and international markets. In Q2, we continued to make meaningful progress in improving member outcomes. We saw a 7% year-over-year increase in workout time per connected fitness subscription, a clear indication that our content and programming continue to resonate with our members, and contributed to our member retention. We also see rapid adoption of Peloton IQ, which makes personal training more accessible and impactful by providing dynamic coaching that's responsive to each member's goals. 46% of active members engaged with their performance insights and recommendations during the first quarter since its rollout, and all access member engagement with Personalized Plans was up more than 10% from Q1.
Peter Stern: Commercial showed strong performance, achieving 10% revenue growth year-over-year and exceeding expectations across US and international markets. In Q2, we continued to make meaningful progress in improving member outcomes. We saw a 7% year-over-year increase in workout time per connected fitness subscription, a clear indication that our content and programming continue to resonate with our members, and contributed to our member retention. We also see rapid adoption of Peloton IQ, which makes personal training more accessible and impactful by providing dynamic coaching that's responsive to each member's goals. 46% of active members engaged with their performance insights and recommendations during the first quarter since its rollout, and all access member engagement with Personalized Plans was up more than 10% from Q1.
Speaker #3: The feast, our strength class featuring six instructors, had live workouts year over year, and was a 24% increase in our biggest live strength class of all time.
Speaker #3: We saw a 7% year-over-year increase in workout time per Connected Fitness subscription, a clear indication that our content and programming continue to resonate with our members and contributed to our member retention.
Speaker #3: Our commitment to health outcomes is further evident in morning and saw a 6% the strategic partnerships we initiated. In October, we announced a partnership deliver personalized guidance with recommended PELOTON content to We produced a full slate of live improve metabolic health and reverse Several thousand Twin Health members are engaging with our cardio, strength, yoga, and meditation programming.
Speaker #3: We also see rapid adoption of PELOTON IQ, which makes personal training more accessible and impactful by providing dynamic coaching that's responsive to each member's goals.
Speaker #3: 46% of active members engaged with their performance insights and recommendations during the first quarter since its access member engagement with personalized rollout, and all plans was up more than 10% from Q1.
Speaker #3: Focusing on women's health, we collaborated with ReSpin Health on a 60-day study with more than 200 PELOTON members experiencing menopause symptoms. Results from the program, which included cardio and strength workouts by PELOTON, an online community and coaching sessions, showed that 84% of women improvement, including relief from brain fog, lack of energy, weight gain, and poor memory.
Speaker #3: Based on our post-purchase research, Peloton IQ was ranked the most compelling feature by those who purchased the cross-training and Tread series—Bike+, Tread, and Tread+.
Peter Stern: Based on our post-purchase research, Peloton IQ was ranked the most compelling feature by those who purchased the Cross Training Series Bike+, Tread, and Tread+. We expect member engagement to increase further as we refine and evolve Peloton IQ to encompass more fitness and wellness domains. As strength continues to grow in popularity, in part due to the broader adoption of GLP-1s, we will continue to evolve our programming to support both cardio and strength. We welcomed three new strength instructors, all of whom premiered in December, teaching yoga sculpt, and Pilates. In addition to our content, we have a robust R&D agenda in the strength category as well. This Thanksgiving, we celebrated one of Peloton's most beloved traditions, the 12th annual Turkey Burn. We produced a full slate of live classes throughout Thanksgiving morning and saw a 6% increase in completed live workouts year-over-year.
Peter Stern: Based on our post-purchase research, Peloton IQ was ranked the most compelling feature by those who purchased the Cross Training Series Bike+, Tread, and Tread+. We expect member engagement to increase further as we refine and evolve Peloton IQ to encompass more fitness and wellness domains. As strength continues to grow in popularity, in part due to the broader adoption of GLP-1s, we will continue to evolve our programming to support both cardio and strength. We welcomed three new strength instructors, all of whom premiered in December, teaching yoga sculpt, and Pilates. In addition to our content, we have a robust R&D agenda in the strength category as well. This Thanksgiving, we celebrated one of Peloton's most beloved traditions, the 12th annual Turkey Burn. We produced a full slate of live classes throughout Thanksgiving morning and saw a 6% increase in completed live workouts year-over-year.
Speaker #3: We expect member engagement to increase further as we refine and evolve PELOTON IQ to encompass more fitness and wellness domains. As strength continues to grow in popularity, in part due to the broader adoption of GLP-1s, we will continue to evolve our programming to support both cardio and strength.
Speaker #3: This further validates the health strategy remains meeting members the official fitness partner of F1's Grand Prix in Las Vegas, and filmed a first-of-its-kind class series on-site, bringing the high-energy race vibe to members experiences.
Speaker #3: We welcomed three new strength instructors, all of whom premiered in December, teaching yoga sculpts and Pilates. In addition to our content, we have a robust R&D agenda in the strength category as well.
Speaker #3: These classes performed well above individual class benchmarks. And according to a search list study, the activation led to a 10% increase in brand outcomes.
Speaker #3: This Thanksgiving, we celebrated one of Peloton's most beloved traditions, the 12th annual Turkey Burn. We produced a full slate of live classes throughout Thanksgiving morning, and saw a 6% increase in completed live workouts year-over-year.
Speaker #3: sentiment and an 11% rise in purchase intent as online conversation pivoted toward our world-class content A pillar of our instructors and excitement for the partnership.
Speaker #3: The feast, our strength class featuring six instructors, had a 24% increase in live workouts year over year, and was our biggest live strength class of all commitment to health outcomes is further time.
Speaker #3: Turning to our strategy of through on-demand content and immersive creating members for life, new loyalty program, Club PELOTON, which is designed to reward our members for their engagement and we're strengthening member ties through our consistency.
Peter Stern: The Feast, our strength class, featuring 6 instructors, had a 24% increase in live workouts year-over-year and was our biggest live strength class of all time. Our commitment to health outcomes is further evident in the strategic partnerships we initiated. In October, we announced a partnership with Twin Health to deliver personalized guidance with recommended Peloton content to improve metabolic health and reverse Type 2 diabetes. Several thousand Twin Health members are engaging with our cardio, strength, yoga, and meditation programming. Focusing on women's health, we collaborated with Respin Health on a 60-day study, with more than 200 Peloton members experiencing menopause symptoms. Results from the program, which included cardio and strength workouts by Peloton, an online community, and coaching sessions, showed that 84% of women experienced overall symptom improvement, including relief from brain fog, lack of energy, weight gain, and poor memory.
Peter Stern: The Feast, our strength class, featuring 6 instructors, had a 24% increase in live workouts year-over-year and was our biggest live strength class of all time. Our commitment to health outcomes is further evident in the strategic partnerships we initiated. In October, we announced a partnership with Twin Health to deliver personalized guidance with recommended Peloton content to improve metabolic health and reverse Type 2 diabetes. Several thousand Twin Health members are engaging with our cardio, strength, yoga, and meditation programming. Focusing on women's health, we collaborated with Respin Health on a 60-day study, with more than 200 Peloton members experiencing menopause symptoms. Results from the program, which included cardio and strength workouts by Peloton, an online community, and coaching sessions, showed that 84% of women experienced overall symptom improvement, including relief from brain fog, lack of energy, weight gain, and poor memory.
Speaker #3: Since launching on October 1st, 24% of active members engaged with Club PELOTON, exceeding our 20% internal target. Benefits thus Apparel discounts and access to exclusive live rides.
Speaker #3: Evident in the strategic partnerships we initiated. In October, we announced a partnership with Twin Health to deliver personalized guidance with recommended Peloton content to improve metabolic health and diabetes.
Speaker #3: Depending on the member's tier, members using their exclusive Club PELOTON Apparel discounts drove nearly 50% of apparel purchases in launched four new official teams.
Speaker #3: Several thousand Twin and reverse type 2 Health members are engaging with our cardio, strength, yoga, and meditation programming. Focusing on Women's Health, we collaborated with Respin Health on a 60-day study with more than 200 PELOTON members, experiencing menopause symptoms.
Speaker #3: Menopause Health, High Rocks, Move for Life, and Cross Q2. We also 25,000 members joining one or more of them in the quarter. Business excellence P&L.
Speaker #3: Results from the program, which included cardio and strength workouts by PELOTON, an online community, and coaching sessions, showed that 84% of women experienced overall symptom improvement, including relief from brain fog, lack of energy, weight gain, and poor memory.
Speaker #3: We Training with million dollar run rate savings goal by the remains a top priority and it end of fiscal year 2026. As we shared in August, we're achieving this by evolving our global operating model, thereby enabling us to competitive advantage and, most invest in areas that give us a directly, support our long-term growth.
Speaker #3: This further validates the impact PELOTON can have on health outcomes. meeting members everywhere. PELOTON was the official fitness partner of F1's Grand Prix in Las Vegas, and filmed a first-of-its-kind class series on-site.
Peter Stern: This further validates the impact Peloton can have on health outcomes. A pillar of our strategy remains meeting members everywhere. Peloton was the official fitness partner of F1's Grand Prix in Las Vegas and filmed a first-of-its-kind class series on site, bringing the high-energy race vibe to members through on-demand content and immersive experiences. These classes performed well above individual class benchmarks, and according to a SearchLift study, the activation led to a 10% increase in brand sentiment and an 11% rise in purchase intent as online conversation pivoted toward our world-class content, instructors, and excitement for the partnership. Turning to our strategy of creating members for life, we're strengthening member ties through our new loyalty program, Club Peloton, which is designed to reward our members for their engagement and consistency.
Peter Stern: This further validates the impact Peloton can have on health outcomes. A pillar of our strategy remains meeting members everywhere. Peloton was the official fitness partner of F1's Grand Prix in Las Vegas and filmed a first-of-its-kind class series on site, bringing the high-energy race vibe to members through on-demand content and immersive experiences. These classes performed well above individual class benchmarks, and according to a SearchLift study, the activation led to a 10% increase in brand sentiment and an 11% rise in purchase intent as online conversation pivoted toward our world-class content, instructors, and excitement for the partnership. Turning to our strategy of creating members for life, we're strengthening member ties through our new loyalty program, Club Peloton, which is designed to reward our members for their engagement and consistency.
Speaker #3: We recently entered into a relationship with a leading global business services provider. To support and deliver some of our operational work, while also expanding PELOTON's presence in lower-cost locations.
Speaker #3: Bringing the high-energy race vibe to immersive experiences. These classes members through on-demand content and performed well above individual class benchmarks. And according to a search lift study, the activation led to a 10% increase in brand sentiment and an 11% rise in purchase intent as online conversation pivoted toward our world-class content instructors and excitement for the partnership.
Speaker #3: The progress we've made in optimizing our cost structure shows in our meaningful free cash flow generation and continued deleveraging. Optimizing capital allocation is one of our top priorities as we believe it is critical to achieving our growth goals.
Speaker #3: While our updated full-year revenue guidance does not turn remain on track to achieve our 100 positive for the year, our trajectory reflects a meaningful improvement compared to the declines PELOTON sustained last year.
Speaker #3: Turning to our life, we're strengthening member ties through our new loyalty strategy of creating members for program, Club PELOTON, which is designed to reward our members for their engagement and consistency.
Speaker #3: More important, we are making this progress while improving unit economics and profitability demonstrating our discipline in pursuing sustainable and profitable growth. By are doing what is right in the long term for our shareholders and our community of loyal members.
Speaker #3: Since launching on October 1st, 24% of active members engaged with Club PELOTON, exceeding our 20% internal target. Benefits thus far have included PELOTON apparel discounts and access to exclusive live rides.
Peter Stern: Since launching on 1 October, 24% of active members engaged with Club Peloton, exceeding our 20% internal target. Benefits thus far have included Peloton Apparel discounts and access to exclusive live rides, depending on the member's tier. Members using their exclusive Club Peloton Apparel discounts drove nearly 50% of apparel purchases in Q2. We also launched 4 new official teams: Menopause Health, HYROX, Move for Life, and Cross Training, with 25,000 members joining one or more of them in the quarter. Business excellence remains a top priority, and it shows in our balance sheet and P&L. We remain on track to achieve our $100 million run rate savings goal by the end of fiscal year 2026.
Peter Stern: Since launching on 1 October, 24% of active members engaged with Club Peloton, exceeding our 20% internal target. Benefits thus far have included Peloton Apparel discounts and access to exclusive live rides, depending on the member's tier. Members using their exclusive Club Peloton Apparel discounts drove nearly 50% of apparel purchases in Q2. We also launched 4 new official teams: Menopause Health, HYROX, Move for Life, and Cross Training, with 25,000 members joining one or more of them in the quarter. Business excellence remains a top priority, and it shows in our balance sheet and P&L. We remain on track to achieve our $100 million run rate savings goal by the end of fiscal year 2026.
Speaker #3: Depending on the member's tier, members using their exclusive Club PELOTON apparel discounts drove nearly 50% of apparel purchases in Q2. We also launched four new official teams.
Speaker #3: I will now pass it over to Liz, financial results and guidance for the remainder of fiscal
Speaker #3: who will share more details about our Q2
Speaker #2: are proud of our profitability performance
Speaker #2: this quarter as total growth
Speaker #3: Menopause Health, Hyrox, Move for Life, and Cross Training, with 25,000 members joining one or more of them in the quarter. Business Excellence remains a top priority and it shows in our balance sheet and P&L.
Speaker #2: margin and adjusted EBITDA prioritizing business excellence, we outperformed our guidance. 2026. members with Q2 ending paid connected fitness subscriptions coming in above Thanks, Peter.
Speaker #2: range. Q2 We total revenue was $8 million below our guidance. In addition to the lower-than-expected equipment sales, primarily to existing members, revenue was also to benefit from the loyalty of our impacted by roughly $4 million of revenue recognition into Q3.
Speaker #3: We remain on track to achieve our $100 million run rate savings goal by the end of fiscal year 2026. As we shared in August, we're achieving this by evolving our global operating model, thereby enabling us to invest in areas that give us a competitive advantage and most directly support our long-term growth.
Peter Stern: As we shared in August, we're achieving this by evolving our global operating model, thereby enabling us to invest in areas that give us a competitive advantage and most directly support our long-term growth. We recently entered into a relationship with a leading global business services provider to support and deliver some of our operational work, while also expanding Peloton's presence in lower-cost locations. The progress we've made in optimizing our cost structure shows in our meaningful Free Cash Flow generation and continued deleveraging. Optimizing capital allocation is one of our top priorities, as we believe it is critical to achieving our growth goals. While our updated full-year revenue guidance does not turn positive for the year, our trajectory reflects a meaningful improvement compared to the declines Peloton sustained last year.
Peter Stern: As we shared in August, we're achieving this by evolving our global operating model, thereby enabling us to invest in areas that give us a competitive advantage and most directly support our long-term growth. We recently entered into a relationship with a leading global business services provider to support and deliver some of our operational work, while also expanding Peloton's presence in lower-cost locations. The progress we've made in optimizing our cost structure shows in our meaningful Free Cash Flow generation and continued deleveraging. Optimizing capital allocation is one of our top priorities, as we believe it is critical to achieving our growth goals. While our updated full-year revenue guidance does not turn positive for the year, our trajectory reflects a meaningful improvement compared to the declines Peloton sustained last year.
Speaker #2: We ended the second quarter with $2.661 million paid the midpoint of our guidance longer-than-expected delivery times, delaying connected fitness subscriptions, reflecting a decrease of 7% $6,000 above the midpoint of our guidance range.
Speaker #3: We recently entered into a relationship with a leading global business services provider to support and deliver some of our operational work. While also expanding PELOTON's presence in locations.
Speaker #2: Q2 is typically a seasonally stronger quarter for hardware sales, and seasonally lower quarter for churn, however, we expected elevated churn in Q2 due to our subscription pricing changes announced on October
Speaker #3: The progress we've lower-cost made in optimizing our cost structure shows in our meaningful free cash flow generation and continued deleveraging. Optimizing capital allocation is one of our top priorities as we believe it is critical to achieving our growth updated full-year revenue guidance does not turn positive for the goals.
Speaker #2: 1st. Following the announcement of those pricing changes, we observed a short-term lift in cancellations that quickly stabilized, resulting in year over year and stronger-than-expected retention.
Speaker #2: Average net monthly paid connected fitness subscription churn was 1.9% in the quarter, an increase of 50 basis points year over demonstrates the underlying health and resilience of our high-margin subscription business and reinforces the value and human impact year.
Speaker #3: reflects a meaningful improvement compared to the declines PELOTON sustained last year. More important, we are making this progress while improving unit economics and profitability, demonstrating our discipline in While our pursuing sustainable and profitable growth.
Peter Stern: More important, we are making this progress while improving unit economics and profitability, demonstrating our discipline in pursuing sustainable and profitable growth. By prioritizing business excellence, we are doing what is right in the long term for our shareholders and our community of loyal members. I will now pass it over to Liz, who will share more details about our Q2 financial results and guidance for the remainder of fiscal 2026.
Peter Stern: More important, we are making this progress while improving unit economics and profitability, demonstrating our discipline in pursuing sustainable and profitable growth. By prioritizing business excellence, we are doing what is right in the long term for our shareholders and our community of loyal members. I will now pass it over to Liz, who will share more details about our Q2 financial results and guidance for the remainder of fiscal 2026.
Speaker #2: we deliver for our millions of Our churn performance members. Our better-than-expected performance on churn was partially offset by lower growth additions, which were primarily impacted by longer equipment delivery and activation times that delayed growth additions to Q3.
Speaker #3: By prioritizing business excellence, we are doing what is right in the long term for our shareholders and our community of loyal members. I will now pass it over to Liz, who will share more details about our Q2 financial results and guidance for the remainder of fiscal 2026.
Speaker #2: As well as lower-than-expected equipment sales in third-party retail channels. Total revenue was $657 million in Q2, comprising products revenue, and revenue. Connected fitness products revenue decreased $9 million or 4% year over $244 million of connected fitness year, driven by lower equipment sales and deliveries, partially offset by a 10% increase in commercial business unit revenue and higher average selling prices for products in our cross-training series.
Elizabeth Coddington: Thanks, Peter. We are proud of our profitability performance this quarter, as total gross margin and Adjusted EBITDA outperformed our guidance. As Peter mentioned, we continue to benefit from the loyalty of our members, with Q2 ending paid connected fitness subscriptions coming in above the midpoint of our guidance range. Q2 total revenue was $8 million below our guidance. In addition to the lower-than-expected equipment sales, primarily to existing members, revenue was also impacted by longer-than-expected delivery times, delaying roughly $4 million of revenue recognition into Q3. We ended the second quarter with 2.661 million paid connected fitness subscriptions, reflecting a decrease of 7% year-over-year and 6,000 above the midpoint of our guidance range. Q2 is typically a seasonally stronger quarter for hardware sales and seasonally lower quarter for churn.
Elizabeth Coddington: Thanks, Peter. We are proud of our profitability performance this quarter, as total gross margin and Adjusted EBITDA outperformed our guidance. As Peter mentioned, we continue to benefit from the loyalty of our members, with Q2 ending paid connected fitness subscriptions coming in above the midpoint of our guidance range. Q2 total revenue was $8 million below our guidance. In addition to the lower-than-expected equipment sales, primarily to existing members, revenue was also impacted by longer-than-expected delivery times, delaying roughly $4 million of revenue recognition into Q3. We ended the second quarter with 2.661 million paid connected fitness subscriptions, reflecting a decrease of 7% year-over-year and 6,000 above the midpoint of our guidance range. Q2 is typically a seasonally stronger quarter for hardware sales and seasonally lower quarter for churn.
Speaker #2: Peter. We are proud of our Thanks, profitability performance this quarter, as total gross margin and adjusted EBITDA outperformed our guidance. And as Peter mentioned, loyalty of our members with Q2 ending paid connected fitness subscriptions coming in above the midpoint of our guidance range.
Speaker #2: Q2 total revenue was $8 million below our guidance. In addition to the lower-than-expected equipment sales, primarily to existing members, revenue was also impacted by times.
Speaker #2: Subscription $413 million of subscription revenue decreased $8 million or 2% year over year, primarily driven by lower-ending paid connected fitness and app subscriptions, and lower content offset by the benefit of subscription price increases, which contributed a partial quarter benefit due to the licensing revenue.
Speaker #2: Delaying roughly $4 million of revenue recognition into Q3. We ended the second quarter with $2.661 million paid connected fitness subscriptions, reflecting a decrease of 7% year over year and $6,000 above the midpoint of our guidance range.
Speaker #2: each month. As we discussed last quarter, in Q1 of fiscal Partially overhead expenses associated with timing of billing cycles, which are spread throughout our corporate facilities across the P&L.
Speaker #2: Q2 is typically a seasonally stronger quarter for hardware sales, and seasonally lower quarter for churn, however, we expected elevated churn in Q2 due to our subscription pricing changes announced on October 1st.
Speaker #2: executive compensation and other corporate As we focus on driving functional level, prior 2026, we began assigning to fiscal 2026, these costs were all recorded in G&A but are now assigned to cost of goods sold, sales and marketing, G&A, and changes discussed today are referencing last year on an as-reported basis.
Elizabeth Coddington: However, we expected elevated churn in Q2 due to our subscription pricing changes announced on 1 October. Following the announcement of those pricing changes, we observed a short-term lift in cancellations that quickly stabilized, resulting in stronger-than-expected retention. Average net monthly paid Connected Fitness subscription churn was 1.9% in the quarter, an increase of 50 basis points year-over-year. Our churn performance demonstrates the underlying health and resilience of our high-margin subscription business and reinforces the value and human impact we deliver for our millions of members. Our better-than-expected performance on churn was partially offset by lower growth additions, which were primarily impacted by longer equipment delivery and activation times that delayed growth additions to Q3, as well as lower than expected equipment sales in third-party retail channels.
Elizabeth Coddington: However, we expected elevated churn in Q2 due to our subscription pricing changes announced on 1 October. Following the announcement of those pricing changes, we observed a short-term lift in cancellations that quickly stabilized, resulting in stronger-than-expected retention. Average net monthly paid Connected Fitness subscription churn was 1.9% in the quarter, an increase of 50 basis points year-over-year. Our churn performance demonstrates the underlying health and resilience of our high-margin subscription business and reinforces the value and human impact we deliver for our millions of members. Our better-than-expected performance on churn was partially offset by lower growth additions, which were primarily impacted by longer equipment delivery and activation times that delayed growth additions to Q3, as well as lower than expected equipment sales in third-party retail channels.
Speaker #2: Following the announcement of those pricing changes, we observed a short-term lift in cancellations that quickly stabilized, resulting in stronger-than-expected retention. Average net monthly paid connected fitness subscription churn was 1.9% in the quarter, an increase of 50 basis points year over year.
Speaker #2: Total gross profit was $331 million in Q2, an increase of $13 million or 4% year over year. Total gross margin was $50.5%, an increase of $320 basis points year over points above our guidance of 49%.
Speaker #2: Our churn performance demonstrates the underlying health and resilience of our and reinforces the value and human impact we deliver for our millions of members.
Speaker #2: Our better-than-expected performance on churn was partially offset by lower gross additions, which were primarily impacted by longer equipment delivery and activation in Q3, as well as times that delayed gross additions due to lower-than-expected equipment sales in third-party retail channels.
Speaker #2: Margin outperformance relative to guidance was driven by a larger R&D. All of the year-over-year mix of subscription revenue and higher subscription gross products gross margin was $13.9%, an increase margin.
Speaker #2: of 100 basis points year over year. Primarily driven by lower warranty Connected fitness costs and a mixed shift toward higher margin products, partially offset by increases in tariff import charges and inventory reserves.
Speaker #2: Total revenue was $657 million in Q2, comprising $244 million of connected fitness products revenue, and $413 million of subscription revenue. Connected fitness products revenue decreased $9 million or 4% year over year, driven by lower equipment sales and deliveries, partially offset by a 10% increase in commercial business unit revenue, and higher average selling prices for products in our cross-training million or 2% year over year, primarily driven by series.
Elizabeth Coddington: Total revenue was $657 million in Q2, comprising $244 million of Connected Fitness products revenue and $413 million of subscription revenue. Connected Fitness products revenue decreased $9 million or 4% year-over-year, driven by lower equipment sales and deliveries, partially offset by a 10% increase in commercial business unit revenue and higher average selling prices for our products in our Cross Training Series. Subscription revenue decreased $8 million or 2% year-over-year, primarily driven by lower ending paid Connected Fitness and app subscriptions, and lower content licensing revenue, partially offset by the benefit of subscription price increases, which contributed a partial quarter benefit due to the timing of billing cycles, which are spread throughout each month.
Elizabeth Coddington: Total revenue was $657 million in Q2, comprising $244 million of Connected Fitness products revenue and $413 million of subscription revenue. Connected Fitness products revenue decreased $9 million or 4% year-over-year, driven by lower equipment sales and deliveries, partially offset by a 10% increase in commercial business unit revenue and higher average selling prices for our products in our Cross Training Series. Subscription revenue decreased $8 million or 2% year-over-year, primarily driven by lower ending paid Connected Fitness and app subscriptions, and lower content licensing revenue, partially offset by the benefit of subscription price increases, which contributed a partial quarter benefit due to the timing of billing cycles, which are spread throughout each month.
Speaker #2: Subscription gross margin was $72.1%, an increase of $420 basis points year over year. Subscription gross margin benefited from a 9.7 million reduction to accrued music royalties.
Speaker #2: this non-recurring benefit, Excluding subscription gross margin would have been $69.7%, an increase of 180 basis points year over year, of which 100 basis points of favorability was driven by subscription pricing changes net of churn.
Speaker #2: app subscriptions, and lower content licensing revenue. Partially offset by the benefit of subscription price increases, which Subscription revenue decreased $8 contributed a partial quarter benefit due to the timing of billing cycles, which are spread throughout each month.
Speaker #2: Total operating expenses excluding restructuring, impairment, and were $320 million supplier settlement expenses in Q2, a decrease of 24 million or 7% year over year, reflecting the continued progress we've made in right-sizing our cost structure.
Elizabeth Coddington: As we discussed last quarter, in Q1 of fiscal 2026, we began assigning executive compensation and other corporate overhead expenses associated with our corporate facilities across the PNL as we focus on driving more accountability for costs at a functional level. Prior to fiscal 2026, these costs were all recorded in G&A, but are now assigned to cost of goods sold, sales and marketing, G&A, and R&D. All of the year-over-year changes discussed today are referencing last year on an as-reported basis. Total gross profit was $331 million in Q2, an increase of $13 million or 4% year over year. Total gross margin was 50.5%, an increase of 320 basis points year over year, and 150 basis points above our guidance of 49%.
Elizabeth Coddington: As we discussed last quarter, in Q1 of fiscal 2026, we began assigning executive compensation and other corporate overhead expenses associated with our corporate facilities across the PNL as we focus on driving more accountability for costs at a functional level. Prior to fiscal 2026, these costs were all recorded in G&A, but are now assigned to cost of goods sold, sales and marketing, G&A, and R&D. All of the year-over-year changes discussed today are referencing last year on an as-reported basis. Total gross profit was $331 million in Q2, an increase of $13 million or 4% year over year. Total gross margin was 50.5%, an increase of 320 basis points year over year, and 150 basis points above our guidance of 49%.
Speaker #2: As discussed last quarter, in Q1 of fiscal 2026, we began assigning executive compensation and other corporate overhead expenses associated with our corporate facilities across the P&L.
Speaker #2: Sales and marketing expenses were $152 million in Q2, a decrease of 1 million or 0.4% year over year, inclusive of the cost assignment changes from G&A I mentioned before, that began this fiscal year.
Speaker #2: As we look at costs at a functional level, prior to fiscal 2026, these costs were all recorded in G&A, but are now assigned to cost of goods sold, sales and marketing, G&A, and R&D.
Speaker #2: Driven by decreases in fixed costs for retail stores and IT and software expenses. As of the end of Q2, we year, and $150 basis and 10 micro stores, down from 28 showrooms at the end of Q2 of last year.
Speaker #2: All of the year-over-year changes discussed today are referencing last year on an as-reported basis. Total gross profit was $331 million in Q2, an increase of $13 million or 4% year over year.
Speaker #2: Research and development expenses were $65 million in Q2, an increase of 5 million or 8% year over year, driven by increases inclusive of stock-based compensation and rent expense.
Speaker #2: Total gross margin was 50.5%, an increase of $320 basis points year over year, and $150 basis points above our guidance of 49%. Margin outperformance relative to guidance was driven by a larger mix of subscription revenue, and higher subscription gross margin.
Speaker #2: These increases are primarily driven by cost assignments from G&A that began this year. General and administrative expenses were $103 million in Q2, a decrease of 28 million or 22% year over in personnel-related expenses year.
Elizabeth Coddington: Margin outperformance relative to guidance was driven by a larger mix of subscription revenue and higher subscription growth margin. Connected Fitness products growth margin was 13.9%, an increase of 100 basis points year-over-year, primarily driven by lower warranty costs and a mix shift toward higher-margin products, partially offset by increases in tariff import charges and inventory reserves. Subscription growth margin was 72.1%, an increase of 420 basis points year-over-year. Subscription growth margin benefited from a $9.7 million reduction to accrued music royalties. Excluding this non-recurring benefit, subscription growth margin would have been 69.7%, an increase of 180 basis points year-over-year, of which 100 basis points of favorability was driven by subscription pricing changes net of churn.
Elizabeth Coddington: Margin outperformance relative to guidance was driven by a larger mix of subscription revenue and higher subscription growth margin. Connected Fitness products growth margin was 13.9%, an increase of 100 basis points year-over-year, primarily driven by lower warranty costs and a mix shift toward higher-margin products, partially offset by increases in tariff import charges and inventory reserves. Subscription growth margin was 72.1%, an increase of 420 basis points year-over-year. Subscription growth margin benefited from a $9.7 million reduction to accrued music royalties. Excluding this non-recurring benefit, subscription growth margin would have been 69.7%, an increase of 180 basis points year-over-year, of which 100 basis points of favorability was driven by subscription pricing changes net of churn.
Speaker #2: Connected fitness products gross margin was 13.9%, an increase of 100 basis points year over year, primarily driven by lower warranty costs and a mixed shift toward higher margin products, partially offset by increases in tariff import charges and inventory reserves.
Speaker #2: Driven by decreases in fiscal expenses, in part driven by cost assignments to other functional areas that began this fiscal year, as well as a decrease in professional recognized 26 million of which 24 million was impairment and restructuring expenses of primarily related to plans to right-size portions of our corporate office stock-based compensation and rent footprint while the remaining 2 million of cash restructuring charges were primarily related to exit and disposal costs and professional fees.
Speaker #2: Subscription gross margin was 72.1%, an increase of $420 basis points year over year, subscription gross margin benefited from a 9.7 million reduction to accrued Music royalties.
Speaker #2: Excluding this non-recurring benefit, subscription gross margin would have been 69.7%, an increase of 180 basis points year over year, of which 100 basis points of favorability was driven by subscription pricing changes net of operating expenses excluding churn.
Speaker #2: Adjusted EBITDA was $81 million in Q2, which was an improvement of 23 million or 39% year over year, and $6 million fees. This quarter, we personnel-related costs inclusive of above the high end of our guidance range.
Elizabeth Coddington: Total operating expenses, excluding restructuring, impairment, and supplier settlement expenses, were $320 million in Q2, a decrease of $24 million or 7% year-over-year, reflecting the continued progress we've made in right-sizing our cost structure. Sales and marketing expenses were $152 million in Q2, a decrease of $1 million or 0.4% year-over-year, inclusive of the cost assignment changes from G&A I mentioned before that began this fiscal year, driven by decreases in fixed costs for retail stores, IT, and software expenses. As of the end of Q2, we had 7 legacy retail showrooms and 10 micro stores, down from 28 showrooms at the end of Q2 of last year.
Elizabeth Coddington: Total operating expenses, excluding restructuring, impairment, and supplier settlement expenses, were $320 million in Q2, a decrease of $24 million or 7% year-over-year, reflecting the continued progress we've made in right-sizing our cost structure. Sales and marketing expenses were $152 million in Q2, a decrease of $1 million or 0.4% year-over-year, inclusive of the cost assignment changes from G&A I mentioned before that began this fiscal year, driven by decreases in fixed costs for retail stores, IT, and software expenses. As of the end of Q2, we had 7 legacy retail showrooms and 10 micro stores, down from 28 showrooms at the end of Q2 of last year.
Speaker #2: We generated $71 million of free cash flow in Q2, exceeding our internal expectations and year over year, primarily driven by a greater inventory tailwind to networking capital in Q2 of last reflecting a decrease of 35 million year.
Speaker #2: expenses were $320 million in Q2, a Total 7% year over year, decrease of 24 million or reflecting the continued progress we've made in right-sizing our cost structure.
Speaker #2: Sales and marketing expenses were $152 million in Q2, a decrease of $1 million or 0.4% year over year, inclusive of the cost assignment changes from G&A I mentioned before that began this fiscal year, driven by decreases in fixed costs for retail stores and IT and software expenses.
Speaker #2: Free cash flow non-cash. The non-cash charges were performance in Q2 of this year included roughly $25 million of timing benefits in the quarter. We $1,180,000,000 in unrestricted cash and cash equivalents, an increase of 76 million quarter over ended Q2 with quarter.
Speaker #2: As of the end of Q2, we had seven legacy retail showrooms and 10 microstores, down from 28 showrooms at the end of Q2 last year.
Speaker #2: Net debt was $319 million, a decrease of 351 million or 52% year over year. Overall, our second quarter profitability performance has enabled us to continue deleveraging our balance sheet.
Speaker #2: Research and development expenses were $65 million in Q2, an increase of $5 million or 8% year over year, driven by increases in personnel-related expenses inclusive of stock-based compensation and rent expense.
Elizabeth Coddington: Research and development expenses were $65 million in Q2, an increase of $5 million or 8% year-over-year, driven by increases in personnel-related expenses, inclusive of stock-based compensation and rent expense. These increases are primarily driven by cost assignments from G&A that began this fiscal year. General and administrative expenses were $103 million in Q2, a decrease of $28 million or 22% year-over-year, driven by decreases in personnel-related costs, inclusive of stock-based compensation and rent expenses, in part driven by cost assignments to other functional areas that began this fiscal year, as well as a decrease in professional fees. This quarter, we recognized $26 million of impairment and restructuring expenses, of which $24 million was non-cash.
Elizabeth Coddington: Research and development expenses were $65 million in Q2, an increase of $5 million or 8% year-over-year, driven by increases in personnel-related expenses, inclusive of stock-based compensation and rent expense. These increases are primarily driven by cost assignments from G&A that began this fiscal year. General and administrative expenses were $103 million in Q2, a decrease of $28 million or 22% year-over-year, driven by decreases in personnel-related costs, inclusive of stock-based compensation and rent expenses, in part driven by cost assignments to other functional areas that began this fiscal year, as well as a decrease in professional fees. This quarter, we recognized $26 million of impairment and restructuring expenses, of which $24 million was non-cash.
Speaker #2: Our gross leverage ratio, defined as our gross principal debt outstanding divided by was 3.6 in Q2, a substantial improvement from 6.2 trailing 12-month adjusted EBITDA, in Q2 of last ratio, defined as gross principal debt year.
Speaker #2: These increases are primarily driven by cost assignments from G&A that began this fiscal year. General and administrative expenses were $103 million in Q2, a decrease of 28 million or 22% year over year.
Speaker #2: divided by trailing 12-month adjusted Similarly, our net leverage EBITDA, was 0.8 in Q2, down from 2.9 in Q2 of last outstanding less cash and cash equivalents year.
Speaker #2: personnel-related costs inclusive of Driven by decreases in stock-based compensation and rent expenses, in part driven by cost assignments to other functional areas that began this fiscal year, as well as a decrease in professional fees.
Speaker #2: We believe we than we need to run the business, and our evaluating opportunities to optimize our capital structure. We will pay down roughly $200 million of 0% convertible notes this month as they come due.
Speaker #2: This quarter, we recognized 26 million of impairment and restructuring expenses of which $24 million was non-cash. The non-cash charges were primarily related to plans to right-size portions of our corporate office footprint, while the remaining 2 million of cash restructuring charges were primarily related to exit and disposal costs and professional fees.
Speaker #2: Our $1 billion term loan has a 1% prepayment penalty through May of 2026. We are mindful of this timing of when this prepayment penalty expires as we evaluate our capital allocation strategy.
Elizabeth Coddington: The non-cash charges were primarily related to plans to rightsize portions of our corporate office footprint, while the remaining $2 million of cash restructuring charges were primarily related to exit and disposal costs, and professional fees. Adjusted EBITDA was $81 million in Q2, which was an improvement of $23 million or 39% year-over-year, and $6 million above the high end of our guidance range. We generated $71 million of free cash flow in Q2, exceeding our internal expectations and reflecting a decrease of $35 million year-over-year, primarily driven by a greater inventory tailwind to net working capital in Q2 of last year. Free cash flow performance in Q2 of this year included roughly $25 million of timing benefits in the quarter....
Elizabeth Coddington: The non-cash charges were primarily related to plans to rightsize portions of our corporate office footprint, while the remaining $2 million of cash restructuring charges were primarily related to exit and disposal costs, and professional fees. Adjusted EBITDA was $81 million in Q2, which was an improvement of $23 million or 39% year-over-year, and $6 million above the high end of our guidance range. We generated $71 million of free cash flow in Q2, exceeding our internal expectations and reflecting a decrease of $35 million year-over-year, primarily driven by a greater inventory tailwind to net working capital in Q2 of last year. Free cash flow performance in Q2 of this year included roughly $25 million of timing benefits in the quarter....
Speaker #2: We expect a refinancing to deliver a lower cost of capital and more flexibility over time. Next, I'd like to share context for our financial outlook have more cash on the balance sheet today fiscal year.
Speaker #2: Adjusted EBITDA was $81 million in Q2, which was an improvement of 23 million or 39% year over year, and $6 range. We million above the high end of our guidance generated $71 million of free cash flow in Q2, exceeding our internal expectations and reflecting a decrease of $35 million year over year, primarily driven by a greater inventory tailwind to networking capital in Q2 of last year.
Speaker #2: Our full-year fiscal 2026 total revenue outlook of $2.40 to $2.44 billion reflects a decrease of $30 million compared to a prior guidance and a 3% revenue decrease year over year at the midpoint.
Speaker #2: The decrease relative to lower equipment sales to existing for Q3 and the remainder of the members observed in Q2. Our Q3 total revenue outlook of $605 to $625 million reflects a decrease of 1% year over year at the midpoint and a decrease of 6% quarter over quarter, as a result of seasonally lower equipment sales expected in Q3, partially pricing recognized across the full quarter.
Speaker #2: Free cash flow performance in Q2 of this year included roughly $25 million of timing benefits in the quarter. We ended Q2 with $1.18 billion in unrestricted cash and cash equivalents, an increase of $76 million quarter over quarter.
Elizabeth Coddington: We ended Q2 with $1.18 billion in unrestricted cash and cash equivalents, an increase of $76 million quarter-over-quarter. Net debt was $319 million, a decrease of $351 million or 52% year-over-year. Overall, our second quarter profitability performance has enabled us to continue deleveraging our balance sheet. Our growth leverage ratio, defined as our growth principal debt outstanding, divided by trailing twelve-month Adjusted EBITDA, was 3.6 in Q2, a substantial improvement from 6.2 in Q2 of last year. Similarly, our net leverage ratio, defined as gross principal debt outstanding, less cash and cash equivalents, divided by trailing twelve-month Adjusted EBITDA, was 0.8 in Q2, down from 2.9 in Q2 of last year.
Elizabeth Coddington: We ended Q2 with $1.18 billion in unrestricted cash and cash equivalents, an increase of $76 million quarter-over-quarter. Net debt was $319 million, a decrease of $351 million or 52% year-over-year. Overall, our second quarter profitability performance has enabled us to continue deleveraging our balance sheet. Our growth leverage ratio, defined as our growth principal debt outstanding, divided by trailing twelve-month Adjusted EBITDA, was 3.6 in Q2, a substantial improvement from 6.2 in Q2 of last year. Similarly, our net leverage ratio, defined as gross principal debt outstanding, less cash and cash equivalents, divided by trailing twelve-month Adjusted EBITDA, was 0.8 in Q2, down from 2.9 in Q2 of last year.
Speaker #2: Net debt was $319 million, a decrease of $351 million, or 52% year over year. Overall, our second quarter profitability performance has enabled us to continue deleveraging our balance sheet.
Speaker #2: 2026 guidance for total gross We are raising our full-year fiscal margin to roughly basis points from our prior guidance and an improvement of 210 basis points year over year.
Speaker #2: Our gross leverage ratio, defined as our gross principal debt outstanding divided by trailing 12-month adjusted EBITDA, was 3.6 in Q2—a substantial improvement from 6.2 in Q2 of last year.
Speaker #2: Primarily driven by a larger mix of 53%, which is an increase of 100 subscription revenue, as well as higher gross margin is expected to be roughly 54%, an increase of 300 basis points year over year, due to a larger mix of subscription margin.
Speaker #2: Similarly, our net leverage ratio defined as gross principal debt outstanding less cash and cash equivalents divided by trailing 12-month adjusted EBITDA was 0.8 in Q2, down from 2.9 in Q2 of last year.
Speaker #2: segments. We are raising our full-year fiscal 2026 guidance for adjusted EBITDA to revenue as well as favorable gross $450 million to $500 margins in both million.
Speaker #2: We believe we have more cash on the balance sheet today than we need to run the business, and our evaluating opportunities to optimize our capital structure.
Elizabeth Coddington: We believe we have more cash on the balance sheet today than we need to run the business and are evaluating opportunities to optimize our capital structure. We will pay down roughly $200 million of zero percent convertible notes this month as they come due. Our $1 billion term loan has a 1% prepayment penalty through May 2026. We are mindful of this timing of when this prepayment penalty expires. As we evaluate our capital allocation strategy, we expect a refinancing to deliver a lower cost of capital and more flexibility over time. Next, I'd like to share context for our financial outlook for Q3 and the remainder of the fiscal year.
Elizabeth Coddington: We believe we have more cash on the balance sheet today than we need to run the business and are evaluating opportunities to optimize our capital structure. We will pay down roughly $200 million of zero percent convertible notes this month as they come due. Our $1 billion term loan has a 1% prepayment penalty through May 2026. We are mindful of this timing of when this prepayment penalty expires. As we evaluate our capital allocation strategy, we expect a refinancing to deliver a lower cost of capital and more flexibility over time. Next, I'd like to share context for our financial outlook for Q3 and the remainder of the fiscal year.
Speaker #2: An increase of 25 million Q3 total from our prior guidance and an improvement year at the midpoint. The by expected favorability to gross profit and operating expenses including recalibrating media spend in response to equipment sales trends.
Speaker #2: $200 million of 0% convertible notes will be paid down this month as they come due. Our $1 billion term loan has a 1% prepayment in 2026.
Speaker #2: We are mindful of this timing of when this prepayment penalty penalty through May of expires, as we evaluate our capital allocation strategy. We expect a refinancing to deliver a lower cost of capital and more flexibility over time.
Speaker #2: We also anticipate additional upside by realizing cost savings sooner than previously anticipated. Our Q3 outlook for adjusted EBITDA of $120 to $135 million reflects an increase of 43% year over year at the of 18% year over midpoint.
Speaker #2: Next, I'd like to share context for our financial outlook for Q3 and the remainder of the fiscal year. Our full-year fiscal 2026 total revenue outlook of $2.40 to $2.44 billion reflects a decrease of $30 million compared to a prior guidance and a 3% revenue decrease year over year at the midpoint.
Speaker #2: And an increase of improvement relative to prior guidance is driven 57% quarter over quarter, primarily due to seasonally lower sales and marketing spend in Q3 relative to connected fitness subscriptions of $2.650 to Q2.
Elizabeth Coddington: Our full year fiscal 2026 total revenue outlook of $2.40 to 2.44 billion reflects a decrease of $30 million compared to prior guidance and a 3% revenue decrease year-over-year at the midpoint. The decrease relative to prior guidance is primarily driven by lower equipment sales to existing members observed in Q2. Our Q3 total revenue outlook of $605 to 625 million reflects a decrease of 1% year-over-year at the midpoint, and a decrease of 6% quarter-over-quarter as a result of seasonally lower equipment sales expected in Q3, partially offset by the benefit of higher subscription pricing recognized across the full quarter.
Elizabeth Coddington: Our full year fiscal 2026 total revenue outlook of $2.40 to 2.44 billion reflects a decrease of $30 million compared to prior guidance and a 3% revenue decrease year-over-year at the midpoint. The decrease relative to prior guidance is primarily driven by lower equipment sales to existing members observed in Q2. Our Q3 total revenue outlook of $605 to 625 million reflects a decrease of 1% year-over-year at the midpoint, and a decrease of 6% quarter-over-quarter as a result of seasonally lower equipment sales expected in Q3, partially offset by the benefit of higher subscription pricing recognized across the full quarter.
Speaker #2: The decrease relative to prior guidance is primarily driven by lower equipment sales to existing members, observed in Q2. Our Q3 total revenue outlook of $605 to $625 million reflects a decrease of 1% year over year at the midpoint and a decrease of 6% quarter over quarter as a result of seasonally lower equipment sales expected in Q3, partially offset by the benefit of higher subscription pricing recognized across the full quarter.
Speaker #2: $2.675 million reflects a decrease of 8% year over year at the midpoint. Average net monthly paid Our Q3 guidance for ending paid connected fitness subscription churn is expected to improve both year over year and quarter over quarter, with the subscription cancellations following pricing changes announced in sequential improvement due to elevated Q2 that have since stabilized, in addition to Q3 as a historically seasonally lower that our net churn rate will be roughly flat year over year in full-year fiscal churn quarter.
Speaker #2: Our guidance reflects an expectation 2026. While gross additions are expected to decrease year over year as a result of lower equipment sales. Generating meaningful free cash flow remains a top priority for us.
Speaker #2: We are raising our full-year fiscal 2026 guidance for total gross margin to roughly 53%, which is an increase of $100 basis points from our prior guidance and an improvement of $210 basis points year over year.
Elizabeth Coddington: We are raising our full-year fiscal 2026 guidance for total gross margin to roughly 53%, which is an increase of 100 basis points from our prior guidance and an improvement of 210 basis points year-over-year, primarily driven by a larger mix of subscription revenue as well as higher subscription gross margin. Q3 total gross margin is expected to be roughly 54%, an increase of 300 basis points year-over-year, due to a larger mix of subscription revenue as well as favorable gross margins in both segments. We are raising our full-year fiscal 2026 guidance for adjusted EBITDA to $450 million to $500 million, an increase of $25 million from our prior guidance and an improvement of 18% year-over-year at the midpoint.
Elizabeth Coddington: We are raising our full-year fiscal 2026 guidance for total gross margin to roughly 53%, which is an increase of 100 basis points from our prior guidance and an improvement of 210 basis points year-over-year, primarily driven by a larger mix of subscription revenue as well as higher subscription gross margin. Q3 total gross margin is expected to be roughly 54%, an increase of 300 basis points year-over-year, due to a larger mix of subscription revenue as well as favorable gross margins in both segments. We are raising our full-year fiscal 2026 guidance for adjusted EBITDA to $450 million to $500 million, an increase of $25 million from our prior guidance and an improvement of 18% year-over-year at the midpoint.
Speaker #2: Primarily driven by a larger mix of subscription revenue as well as higher subscription gross margin. Q3 total gross margin is expected to be roughly 54%, an increase of $300 basis points year over year, due to a larger mix of subscription revenue as well as favorable gross margins in both segments.
Speaker #2: We are raising our full-year fiscal 2026 minimum free cash flow target by $25 million to at least $275 million reflecting our continued progress in lowering operating expectation for a roughly $45 million impact from tariff exposure, in line with our expectations last quarter.
Speaker #2: full-year fiscal 2026 guidance for adjusted EBITDA to $450 million to $500 We are raising our million and increase of $25 million from our prior guidance and an improvement of 18% year over year at the midpoint.
Speaker #2: Tariffs remain a dynamic situation that may change in the guidance reflects continued improvement in profitability and progress inflecting toward revenue growth. While our full-year guidance reflects a 3% year over year revenue decline at the expenses.
Speaker #2: The improvement relative to prior guidance is driven by expected favorability to gross profit and operating expenses including recalibrating media spend in response to equipment sales trends.
Elizabeth Coddington: The improvement relative to prior guidance is driven by expected favorability to gross profit and operating expenses, including recalibrating media spend in response to equipment sales trends. We also anticipate additional upside by realizing cost savings sooner than previously anticipated. Our Q3 outlook for Adjusted EBITDA of $120 to 135 million reflects an increase of 43% year-over-year at the midpoint, and an increase of 57% quarter-over-quarter, primarily due to seasonally lower sales and marketing spend in Q3 relative to Q2. Our Q3 guidance for ending paid Connected Fitness subscriptions of 2.650 to 2.675 million reflects a decrease of 8% year-over-year at the midpoint.
Elizabeth Coddington: The improvement relative to prior guidance is driven by expected favorability to gross profit and operating expenses, including recalibrating media spend in response to equipment sales trends. We also anticipate additional upside by realizing cost savings sooner than previously anticipated. Our Q3 outlook for Adjusted EBITDA of $120 to 135 million reflects an increase of 43% year-over-year at the midpoint, and an increase of 57% quarter-over-quarter, primarily due to seasonally lower sales and marketing spend in Q3 relative to Q2. Our Q3 guidance for ending paid Connected Fitness subscriptions of 2.650 to 2.675 million reflects a decrease of 8% year-over-year at the midpoint.
Speaker #2: last year's revenue decline, of moderating significantly compared to 8% year over year. We are balancing our pace of Our free cash flow target reflects an inflection toward growth with remaining disciplined about unit economics.
Speaker #2: We also anticipate additional upside by realizing cost anticipated. Our savings sooner than previously Q3 outlook for adjusted EBITDA of $120 to $135 million reflects an increase of 43% year over year at the midpoint.
Speaker #2: Ensuring the customers we acquire are profitable and continuing to optimize our enabling us to invest costs. responsibly and deliver on a path All of which are towards sustainable, profitable growth over the long term.
Speaker #2: And an increase of 57% quarter over quarter primarily due to seasonally lower sales and marketing spend in Q3 relative to Q2. Our Q3 guidance for ending paid connected fitness subscriptions of $2.650 to $2.675 million reflects a decrease of 8% year over year at the midpoint.
Speaker #2: We still expect to achieve the important milestone of positive operating income on a full-year basis in fiscal
Speaker #1: Okay. Before we move to Q&A, I want to address the news that we announced this morning regarding Liz, who will be leaving at the end of March to pursue an opportunity at a private clean tech energy company.
Speaker #2: Average net monthly paid connected fitness subscription churn is expected to improve both year over year and quarter over quarter with a sequential improvement due to elevated subscription cancellations following pricing changes announced in Q2 that have since stabilized in addition to Q3 as a historically seasonally lower churn quarter.
Elizabeth Coddington: Average net monthly paid Connected Fitness subscription churn is expected to improve both year-over-year and quarter-over-quarter, with the sequential improvement due to elevated subscription cancellations following pricing changes announced in Q2 that have since stabilized, in addition to Q3 as a historically seasonally lower churn quarter. Our guidance reflects an expectation that our net churn rate will be roughly flat year-over-year in full-year fiscal 2026, while gross additions are expected to decrease year-over-year as a result of lower equipment sales. Generating meaningful free cash flow remains a top priority for us. We are raising our full-year fiscal 2026 minimum free cash flow target by $25 million to at least $275 million, reflecting our continued progress in lowering operating expenses.
Elizabeth Coddington: Average net monthly paid Connected Fitness subscription churn is expected to improve both year-over-year and quarter-over-quarter, with the sequential improvement due to elevated subscription cancellations following pricing changes announced in Q2 that have since stabilized, in addition to Q3 as a historically seasonally lower churn quarter. Our guidance reflects an expectation that our net churn rate will be roughly flat year-over-year in full-year fiscal 2026, while gross additions are expected to decrease year-over-year as a result of lower equipment sales. Generating meaningful free cash flow remains a top priority for us. We are raising our full-year fiscal 2026 minimum free cash flow target by $25 million to at least $275 million, reflecting our continued progress in lowering operating expenses.
Speaker #1: Because of significantly stronger company today than when she arrived in foundation and a world-class a comprehensive search for Liz's successor who will have very 2022.
Speaker #2: Our guidance reflects an expectation that our net churn rate will be roughly flat year over year in full-year fiscal 2026. While gross additions are expected to decrease year over year as a result of lower equipment sales.
Speaker #1: team. big shoes to We've launched fill. Liz, I'd love for you to share a few
Speaker #2: Thank you, Peter. It
Speaker #2: Generating meaningful free cash flow remains a top priority for us. We are raising our full-year fiscal 2026 minimum free cash flow target by $25 million to at least $275 million reflecting our continued progress in lowering operating expenses.
Speaker #2: serve as CFO of 2026. PELOTON. I am incredibly proud of the work we have done together to dramatically improve our financial profile put in place a winning strategy and position the business for the future.
Speaker #2: Our free cash flow target reflects an expectation for a roughly $45 million impact from tariff exposure in line with our expectations last quarter. Tariffs remain a dynamic situation that may change in the future.
Elizabeth Coddington: Our free cash flow target reflects an expectation for a roughly $45 million impact from tariff exposure, in line with our expectations last quarter. Tariffs remain a dynamic situation that may change in the future. Overall, our guidance reflects continued improvement in profitability and progress inflecting toward revenue growth. While our full-year guidance reflects a 3% year-over-year revenue decline at the midpoint, this rate of decline is moderating significantly compared to last year's revenue decline of 8% year-over-year. We are balancing our pace of inflection toward growth with remaining disciplined about unit economics, ensuring the customers we acquire are profitable, and continuing to optimize our costs, all of which are enabling us to invest responsibly and deliver on a path towards sustainable, profitable growth over the long term.
Elizabeth Coddington: Our free cash flow target reflects an expectation for a roughly $45 million impact from tariff exposure, in line with our expectations last quarter. Tariffs remain a dynamic situation that may change in the future. Overall, our guidance reflects continued improvement in profitability and progress inflecting toward revenue growth. While our full-year guidance reflects a 3% year-over-year revenue decline at the midpoint, this rate of decline is moderating significantly compared to last year's revenue decline of 8% year-over-year. We are balancing our pace of inflection toward growth with remaining disciplined about unit economics, ensuring the customers we acquire are profitable, and continuing to optimize our costs, all of which are enabling us to invest responsibly and deliver on a path towards sustainable, profitable growth over the long term.
Speaker #2: so with mixed emotions, knowing that PELOTON's best days lie When I leave in a couple of months, I will do ahead. And I really want to take this moment to thank Peter, our entire board, and opportunity to serve as your
Speaker #2: CFO. Thanks for everything,
Speaker #2: our guidance reflects continued improvement Overall, in profitability and progress inflecting toward revenue growth. While our full-year guidance reflects a 3% year over year revenue decline at the midpoint, this rate of decline is moderating significantly compared to last year's revenue decline, of 8% year over year.
Speaker #3: Our first question comes Russell. His question is, "Do you from LeaderboardName Trav expect hotel partners to upgrade to PELOTON Pro products as
Speaker #3: assets reach end of life? And how should we think about the pipeline for new hospitality and enterprise
Speaker #3: assets reach end of life? And how should we think about the pipeline for new hospitality and enterprise relationships?" questions.
Speaker #2: We are balancing our pace of inflection toward growth with remaining disciplined about unit economics. Ensuring the customers we acquire are profitable and continuing to optimize our costs.
Speaker #1: Russell. In short, yes. We launched the PELOTON Pro series so that we would have products designed for light commercial environments like hotels. And this is the first time we've actually designed PELOTON equipment for commercial use at all, and it's our first ever tread that enables use outside the home.
Speaker #2: All of which are enabling us to invest responsibly and deliver on a path towards sustainable, profitable growth over the long term. We still expect to achieve the important milestone of positive operating income on a full-year basis in fiscal 2026.
Elizabeth Coddington: We still expect to achieve the important milestone of positive operating income on a full year basis in fiscal 2026.
Elizabeth Coddington: We still expect to achieve the important milestone of positive operating income on a full year basis in fiscal 2026.
Speaker #1: And we also have an exciting roadmap of commercial equipment as we look ahead. Including commercial-grade equipment designed for heavy-use use environments like commercial gyms.
Speaker #2: Okay. Before we move to Q&A, I want to address the news that we announced this morning regarding Liz. Who will be leaving at the end of March to pursue an cleantech energy company?
Peter Stern: ... Okay, before we move to Q&A, I want to address the news that we announced this morning regarding Liz, who will be leaving at the end of March to pursue an opportunity at a private clean tech energy company. Because of Liz's leadership, we are a significantly stronger company today than when she arrived in 2022. Liz is leaving us with a solid financial foundation and a world-class team. We've launched a comprehensive search for Liz's successor, who will have very big shoes to fill. Liz, I'd love for you to share a few words.
Peter Stern: Okay, before we move to Q&A, I want to address the news that we announced this morning regarding Liz, who will be leaving at the end of March to pursue an opportunity at a private clean tech energy company. Because of Liz's leadership, we are a significantly stronger company today than when she arrived in 2022. Liz is leaving us with a solid financial foundation and a world-class team. We've launched a comprehensive search for Liz's successor, who will have very big shoes to fill. Liz, I'd love for you to share a few words.
Speaker #1: One thing to keep in mind is that we've transitioned the management of our commercial technical support and our field service from PELOTON's residentially focused organization to Precor given Precor's expertise in providing maintenance and other services for higher-use of the products that are already out a really healthy pipeline of categories.
Speaker #2: Because of Liz's leadership, we are a significantly stronger company today than when she arrived in 2022. Liz is leaving us with a solid financial foundation and a world-class team.
Speaker #1: locations. You can see that in last relationships across So that should help extend the life growth. And our expectations ahead with regard to quarter's 10% year over year revenue hospitality in research shows for continued growth looking that many consumers particular, we are make the choice of where to stay based on whether they have PELOTON equipment.
Speaker #2: We've launched a comprehensive search for Liz's successor, who will have very big shoes to fill. Liz, I'd love for you to share a few words.
Speaker #1: Thank you, Peter. It has truly been a privilege to serve as CFO of PELOTON. I am incredibly proud of the work we have done together to dramatically improve our financial profile, put in place a winning strategy, and position the business for the future.
Elizabeth Coddington: Thank you, Peter. It has truly been a privilege to serve as CFO of Peloton. I am incredibly proud of the work we have done together to dramatically improve our financial profile, put in place a winning strategy, and position the business for the future. When I leave in a couple of months, I will do so with mixed emotions, knowing that Peloton's best days lie ahead. And I really wanna take this moment to thank Peter, our entire board, and our team members for the opportunity to serve as your CFO.
Elizabeth Coddington: Thank you, Peter. It has truly been a privilege to serve as CFO of Peloton. I am incredibly proud of the work we have done together to dramatically improve our financial profile, put in place a winning strategy, and position the business for the future. When I leave in a couple of months, I will do so with mixed emotions, knowing that Peloton's best days lie ahead. And I really wanna take this moment to thank Peter, our entire board, and our team members for the opportunity to serve as your CFO.
Speaker #1: When I leave in a couple of months, I will knowing that PELOTON's best days lie ahead. And I really want to take this moment to thank do so with mixed emotions, Peter, our entire board, and our team members for the opportunity to serve as your
Speaker #1: We have very strong in thousands of their hotels relationships with Hyatt and Hilton, and we're there. But our commercial business unit has the. Plus strength solution in a really compact what we can do for
Speaker #1: CFO. Thanks for everything,
Peter Stern: Thanks for everything, Liz. Now, let's open it up for questions.
Peter Stern: Thanks for everything, Liz. Now, let's open it up for questions.
Speaker #2: Liz. Now let's open it up for questions.
Speaker #3: Our first question comes from Leaderboard name Trav Russell. His question is, do you expect hotel partners to upgrade to PELOTON Pro products as assets reach end of life?
James Marsh: Our first question comes from Leaderboard name, Trav Russell. His question is: Do you expect hotel partners to upgrade to Peloton Pro products as assets reach end of life? And how should we think about the pipeline for new hospitality and enterprise relationships?
James Marsh: Our first question comes from Leaderboard name, Trav Russell. His question is: Do you expect hotel partners to upgrade to Peloton Pro products as assets reach end of life? And how should we think about the pipeline for new hospitality and enterprise relationships?
Speaker #3: Great. Thank you, Peter. Our next question comes from LeaderboardName Steve C109. Steve asks, "How does PELOTON think about creating new revenue streams and deeper monetization of the brand beyond the core subscription and hardware sales?" For example, are there opportunities in sponsorship, ads,
Speaker #3: And how should we think about the pipeline for new hospitality and enterprise
Speaker #2: Thanks, Trav Russell. In short, yes. We launched the PELOTON Pro series so that we would have products designed for light commercial environments like hotels.
Peter Stern: Thanks, Trav Russell. In short, yes. We launched the Peloton Pro series so that we would have products designed for light commercial environments like hotels. And this is the first time we've actually designed Peloton equipment for commercial use at all, and it's our first ever tread that enables use outside the home. And we also have an exciting roadmap of commercial equipment as we look ahead, including commercial-grade equipment designed for heavy-use environments like commercial gyms. One thing to keep in mind is that we've transitioned the management of our commercial technical support and our field service from Peloton's residentially focused organization to Precor, given Precor's expertise in providing maintenance and other services for higher use locations. So that should help extend the life of the products that are already out there.
Peter Stern: Thanks, Trav Russell. In short, yes. We launched the Peloton Pro series so that we would have products designed for light commercial environments like hotels. And this is the first time we've actually designed Peloton equipment for commercial use at all, and it's our first ever tread that enables use outside the home. And we also have an exciting roadmap of commercial equipment as we look ahead, including commercial-grade equipment designed for heavy-use environments like commercial gyms. One thing to keep in mind is that we've transitioned the management of our commercial technical support and our field service from Peloton's residentially focused organization to Precor, given Precor's expertise in providing maintenance and other services for higher use locations. So that should help extend the life of the products that are already out there.
Speaker #3: brick-or-mortar expansion?
Speaker #2: And this is the first time we've actually designed Peloton equipment for commercial use at all. And it's our first ever Tread that enables use outside the home.
Speaker #1: Thanks, worldwide. And Steve. For that question, I think the crux of your question is whether we can create meaningful new revenue streams and deeper monetization leveraging our brands and our relationships.
Speaker #2: And we also have an exciting roadmap of commercial equipment as we look ahead. Including commercial-grade equipment designed for heavy-use environments like commercial is that we've transitioned the management gyms.
Speaker #1: And we believe the answer to that's yes. While we're not exploring advertising on our platform, which was one of the ideas you just raised, we do see additional ways to monetize our content and our brand for example, through content licensing.
Speaker #2: of our commercial technical support and our field service from PELOTON's residentially focused organization to Precor given Precor's expertise in providing One thing to keep in mind maintenance and other services for higher-use locations.
Speaker #1: The largest examples of that to date have been what we've done with Lululemon Studio and with Google and the Fitbit app. But we're actively pursuing additional opportunities.
Speaker #2: So that should help extend the life of the products that are already out there. But our commercial business unit has a really healthy pipeline of relationships across categories.
Speaker #1: mentioned in-person events and We also you brick-and-mortar expansion. Those are less about new revenue streams. They're more about making more of the revenue streams that we have.
Peter Stern: But our commercial business unit has a really healthy pipeline of relationships across categories. You can see that in last quarter's 10% year-over-year revenue growth and our expectations for continued growth looking ahead. With regard to hospitality, in particular, our research shows that many consumers make the choice of where to stay based on whether they have Peloton equipment. We have very strong relationships with Hyatt and Hilton, and we're in thousands of their hotels worldwide. And the plus strength solution in a really compact footprint. So we feel great about what we can do for travelers.
Peter Stern: But our commercial business unit has a really healthy pipeline of relationships across categories. You can see that in last quarter's 10% year-over-year revenue growth and our expectations for continued growth looking ahead. With regard to hospitality, in particular, our research shows that many consumers make the choice of where to stay based on whether they have Peloton equipment. We have very strong relationships with Hyatt and Hilton, and we're in thousands of their hotels worldwide. And the plus strength solution in a really compact footprint. So we feel great about what we can do for travelers.
Speaker #2: You can see that in last quarter's 10% year-over-year revenue growth, and our expectations for continued growth looking ahead. With regard to hospitality in particular, we are research shows that many consumers make the choice of where to stay based on whether they have PELOTON equipment.
Speaker #1: that as part of our strategy to And we're doing meet members everywhere. So for in-person events in Q2 past quarter, our instructors appeared at more than three times the number of just this in in Q2 of the year before.
Speaker #1: of events that they were presence to 46 expand our brick-and-mortar retail And we were able to our micro stores and our relationships. I spoke another vector for growth states in Q2, including third-party here is one that I just spoke about, that's an area where the combination of both Precor but also the PELOTON brand is we hear from gym operators is that the one brand unit.
Speaker #2: We have very strong relationships with Hyatt and Hilton, and we're in thousands of their hotels worldwide. And the plus strength solution in a really compact footprint.
Speaker #2: So, we feel great about what we can do for travelers.
Speaker #3: Great. Thank you, Peter. Our next question comes from Leaderboard name Steve C109. Steve asks, how does PELOTON think about creating new revenue streams in deeper monetization of the brand beyond the core subscription and hardware sales?
James Marsh: Great. Thank you, Peter. Our next question comes from Leaderboard named Steve C109. Steve asks: How does Peloton think about creating new revenue streams and deeper monetization of the brand beyond the core subscription and hardware sales? For example, are there $100 million-plus revenue opportunities in sponsorship, ads, in-person events, and/or brick-and-mortar expansion? Peter?
James Marsh: Great. Thank you, Peter. Our next question comes from Leaderboard named Steve C109. Steve asks: How does Peloton think about creating new revenue streams and deeper monetization of the brand beyond the core subscription and hardware sales? For example, are there $100 million-plus revenue opportunities in sponsorship, ads, in-person events, and/or brick-and-mortar expansion? Peter?
Speaker #1: that people ask for by And name is PELOTON. And so that's another way that we can create revenue streams and deeper monetization of the PELOTON brand.
Speaker #1: that people ask for by And name is PELOTON. And so that's another way that we can create revenue streams and deeper monetization of the PELOTON really compelling.
Speaker #3: For example, are there $100 million plus revenue opportunities in sponsorship, ads, in-person events, and/or brick-or-mortar expansion? Peter?
Speaker #1: significant additional opportunities to expand our connected fitness business Because what with hardware and software innovation. So those will be additional drivers of growth. And our internal market research shows that consumers have a lot of demand and trust in us in other categories.
Speaker #2: Thanks, Steve. For that question, I think the crux of your question is whether we can create meaningful new revenue streams and deeper monetization leveraging our brands and our relationships.
Peter Stern: Thanks, Steve, for that question. I think the crux of your question is whether we can create meaningful new revenue streams and deeper monetization, leveraging our brands and our relationships, and we believe the answer to that is yes. While we're not exploring advertising on our platform, which is one of the ideas you just raised, we do see additional ways to monetize our content and our brand, for example, through content licensing. The largest examples of that to date have been what we've done with lululemon Studio and with Google and the Fitbit app, but we're actively pursuing additional opportunities. We also. You mentioned in-person events and brick-and-mortar expansion. Those are less about new revenue streams.
Peter Stern: Thanks, Steve, for that question. I think the crux of your question is whether we can create meaningful new revenue streams and deeper monetization, leveraging our brands and our relationships, and we believe the answer to that is yes. While we're not exploring advertising on our platform, which is one of the ideas you just raised, we do see additional ways to monetize our content and our brand, for example, through content licensing. The largest examples of that to date have been what we've done with lululemon Studio and with Google and the Fitbit app, but we're actively pursuing additional opportunities. We also. You mentioned in-person events and brick-and-mortar expansion. Those are less about new revenue streams.
Speaker #1: we've talked about extensively. Strength, Mental well-being, nutrition, hydration. Sleep and recovery, those are all areas we'll share more about when we're
Speaker #2: yes. While And we believe the answer to that's we're not exploring advertising on our platform, which was one of the ideas you just raised, we do see additional ways to monetize our content and our brand for example, through content licensing.
Speaker #1: ready. Great.
Speaker #3: Thanks, Peter. Operator, can you open the line for Q&A now?
Speaker #4: Yes. Thank you so much. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker #2: The largest examples of that to date have been what we've done with Lululemon Studio and with Google and the Fitbit app. But we're actively pursuing additional opportunities.
Speaker #4: question, press star 11 again. Due to time restraints, we ask that you To withdraw your please limit yourself to one question and one we compile the Q&A roster.
Speaker #2: We also—you mentioned in-person events and brick-and-mortar expansion. Those are less about new revenue streams; they're more about making more of the revenue streams that we have.
Speaker #4: And our first question will come from the line of Youssef Squali with Truist. follow-up question. Please stand by while Your line is open.
Peter Stern: They're more about making more of the revenue streams that we have, and we're doing that as part of our strategy to meet members everywhere. So for in-person events, in Q2 of this, just this past quarter, our instructors appeared at more than 3 times the number of events that they were in, in Q2 of the year before. And we were able to expand our brick-and-mortar retail presence to 46 states in Q2, including our micro stores and our third-party relationships. Oh, I spoke... Another vector for growth here is one that I just spoke about, which is our commercial business unit.
Peter Stern: They're more about making more of the revenue streams that we have, and we're doing that as part of our strategy to meet members everywhere. So for in-person events, in Q2 of this, just this past quarter, our instructors appeared at more than 3 times the number of events that they were in, in Q2 of the year before. And we were able to expand our brick-and-mortar retail presence to 46 states in Q2, including our micro stores and our third-party relationships. Oh, I spoke... Another vector for growth here is one that I just spoke about, which is our commercial business unit.
Speaker #2: And we're doing that as part of our strategy to meet members everywhere. So for in-person events in Q2 of just this past quarter, our instructors appeared at more than three times the number of events that they were in in Q2 of the year before.
Speaker #5: I agree. Thank you very much. Good morning, guys. Hi, Peter. And Elizabeth of Luck in your next endeavor. Maybe to the Peter, so the story looks great from a lot.
Speaker #2: And we were able to expand our brick-and-mortar retail presence to 46 states in Q2, including our microstores and our relationships. I spoke third-party another vector for growth here is one that I just spoke about, which is our commercial business unit.
Speaker #5: But top-line growth remains perspective, also from a balance sheet perspective. You guys have done top-line report this elusive as you kind of showed in your the elements you have in place that gives you the confidence that growth is around the corner?
Speaker #2: And that scenario where the combination of both Precor but also the PELOTON brand is really compelling. Because what we hear from gym operators is that the one brand that people ask for by name is PELOTON.
Speaker #5: I think a profitability, from a gross margin your 26 guide morning. Can you maybe talk about implies some growth. I mean, if my math is right, the high end of but still some positive growth in then I guess the myth on the top line seems to be related to existing customers not upgrading in period rather than new customers.
Peter Stern: That's an area where the combination of both Precor, but also the Peloton brand, is really compelling, because what we hear from gym operators is that the one brand that people ask for by name is Peloton. So that's another way that we can create revenue streams and deeper monetization of the Peloton brand. We see significant additional opportunities to expand our connected fitness business with hardware and software innovation, so those will be additional drivers of growth. Our internal market research shows that consumers have a lot of demand and trust in us in other categories, strength we've talked about extensively, mental well-being, nutrition, hydration, sleep, and recovery. Those are all areas we'll share more about when we're ready.
Peter Stern: That's an area where the combination of both Precor, but also the Peloton brand, is really compelling, because what we hear from gym operators is that the one brand that people ask for by name is Peloton. So that's another way that we can create revenue streams and deeper monetization of the Peloton brand. We see significant additional opportunities to expand our connected fitness business with hardware and software innovation, so those will be additional drivers of growth. Our internal market research shows that consumers have a lot of demand and trust in us in other categories, strength we've talked about extensively, mental well-being, nutrition, hydration, sleep, and recovery. Those are all areas we'll share more about when we're ready.
Speaker #2: And so that's another way that we can create revenue streams and deeper monetization of the PELOTON brand. We see significant additional opportunities to expand our connected fitness business with hardware and software innovation.
Speaker #5: Not buying, which is good. Can you maybe flesh that out a little baked in the new guide as far as that's concerned? Thank
Speaker #5: you.
Speaker #1: Thanks,
Speaker #1: Youssef. There are a bunch of pieces to that. So let me try to address them all. One, we are super proud of the work that we've done on profitability and improving the balance sheet.
Speaker #2: So those will be additional drivers of growth. And our internal market research shows and trust in us in other categories. Strength we've talked about extensively: mental well-being, nutrition, hydration.
Speaker #1: And those are foundational for us second part of your question, which growth. It's clear from your question is relating to that you'd like us to do better on growth.
Speaker #2: Sleep and recovery, those are all areas we'll share more about when
Speaker #2: we're ready.
Speaker #3: Great.
Speaker #3: Thanks, Peter. Operator, can you open the line for Q&A now?
James Marsh: Great. Thanks, Peter. Operator, can you open the line for Q&A now?
James Marsh: Great. Thanks, Peter. Operator, can you open the line for Q&A now?
Speaker #1: And I'm with you on that. I will not be satisfied until this company is back to healthy sustained top-line growth. And while we didn't quarter, I will note guidance that we just announced that the full-year of the 3% decline at the reach that this midpoint compares favorably with last includes Q1's minus 6%.
Operator: Yes. Thank you so much. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster. And our first question will come from the line of Youssef Squali with Truist. Your line is open.
Operator: Yes. Thank you so much. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster. And our first question will come from the line of Youssef Squali with Truist. Your line is open.
Speaker #4: As a reminder to ask a question, please Yes. press star 11 on your telephone and wait for Thank you so much. question, press star 11 your name to be announced.
Speaker #4: To withdraw your again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster.
Speaker #4: And our first question will come from the line of Youssef Squali with Truist. Your line is open.
Speaker #1: So as we start to look at the trajectory here, you got last year at minus 8. year's 8% and 6. You have this at minus year progresses.
Speaker #4: open. Hey, great.
Speaker #5: Thank you very much. Good morning, guys. Hi, Peter. And Liz, best of luck in your next endeavor. Maybe two of the Peter, so the story looks great from a profitability, from a gross margin perspective.
Youssef Squali: Great. Thank you very much. Good morning, guys. Hi, Peter and Liz. Best of luck in your next endeavor. Maybe to the Peter, so the story looks great from a profitability, from a gross margin perspective, also from a balance sheet perspective. You guys have done a lot, but top line growth remains elusive, as you kinda showed in your top line report this morning. Can you maybe talk about the elements you have in place that gives you the confidence that growth is around the corner? I think if my math is right, the high end of your 26 guide implies some growth, anemic, but still some positive growth in Q4.
Youssef Squali: Great. Thank you very much. Good morning, guys. Hi, Peter and Liz. Best of luck in your next endeavor. Maybe to the Peter, so the story looks great from a profitability, from a gross margin perspective, also from a balance sheet perspective. You guys have done a lot, but top line growth remains elusive, as you kinda showed in your top line report this morning. Can you maybe talk about the elements you have in place that gives you the confidence that growth is around the corner? I think if my math is right, the high end of your 26 guide implies some growth, anemic, but still some positive growth in Q4.
Speaker #1: Again, not 3. Obviously, that implies continued enough, but progress. Let me talk about the path back to growth. And there are a number of points to that.
Speaker #5: Also, from a balance sheet perspective, you guys have done a lot. But top-line growth remains elusive. As you kind of showed in your top-line report this morning, can you maybe talk about the elements you have in place that give you the confidence that growth is around the corner?
Speaker #1: The first one is we are developing a more across the right array of fitness and wellness categories and with the complete set of product offerings right price points.
Speaker #1: I'm not here to share our product roadmap today. And this is a hardware business. So it takes time. But we're making real rapid this.
Speaker #5: I think if my math is right, the high end of your 26 guide implies some growth. And they make, but still some positive growth in Q4.
Speaker #1: And if you want to proofpoint of our were shipping a completely revamped product lineup. So this is an organization that is capable of of last year.
Speaker #1: And within months, we doing hard things and side. Second thing is that we got to make producing quality products on the hardware think it went according to plan, if not we've got to keep the members that we've got.
Speaker #5: And then I guess the myth on the top line seems to be related to existing customers, not upgrading in period, rather than new customers.
Youssef Squali: And then I guess the, the miss on the top line seems to be related to existing customers, not upgrading in period rather than new customers, not buying, which is good. Can, can you maybe flesh that out a little bit, and what's baked in, in the new guide as far as that's concerned? Thank you.
Youssef Squali: And then I guess the, the miss on the top line seems to be related to existing customers, not upgrading in period rather than new customers, not buying, which is good. Can, can you maybe flesh that out a little bit, and what's baked in, in the new guide as far as that's concerned? Thank you.
Speaker #5: Not buying, which is good. Can you maybe flesh that out a little bit? And what's baked in the new guide as far as that's concerned?
Speaker #5: Thank
Speaker #5: you. Thanks,
Speaker #2: Yusef. There are a bunch of pieces to that. So let me try to address them all. One, we are super proud of the work that we've done on profitability and improving the balance sheet.
Peter Stern: Thanks, Youssef. There are a bunch of pieces to that, so let me try to address them all. One, we are super proud of the work that we've done on profitability and improving the balance sheet, and those are foundational for us addressing. The second part of your question, which is relating to growth. It's clear from your question that you'd like us to do better on growth, and I'm with you on that. I will not be satisfied until this company is back to healthy, sustained top line growth. And while we didn't reach that this quarter, I will note that the full year guidance that we just announced of the 3% decline at the midpoint compares favorably with last year's 8% and includes Q1's -6%.
Peter Stern: Thanks, Youssef. There are a bunch of pieces to that, so let me try to address them all. One, we are super proud of the work that we've done on profitability and improving the balance sheet, and those are foundational for us addressing. The second part of your question, which is relating to growth. It's clear from your question that you'd like us to do better on growth, and I'm with you on that. I will not be satisfied until this company is back to healthy, sustained top line growth. And while we didn't reach that this quarter, I will note that the full year guidance that we just announced of the 3% decline at the midpoint compares favorably with last year's 8% and includes Q1's -6%.
Speaker #1: In order to get to growth. So we have to sure that we've got appropriate pricing keep improving our net better. Third piece, our results and our remarks, we're projecting net churn flat this year despite the pricing action.
Speaker #2: And those are foundational for us addressing the second part of your question, which is relating to growth. It's clear from your question that you'd like us to do better on growth.
Speaker #1: are absolutely heading in the right exploit new avenues for growth. I talked about the commercial business unit. That's generate new forms of growth, in this case, we grew 10% in the there.
Speaker #1: are absolutely heading in the right exploit new avenues for growth. I talked about the commercial business unit. That's generate new forms of growth, in this case, we grew 10% in the last quarter on the top line And then, of course, coming back to the first part of your question, we've got to demonstrate that we can do all of this have a positive return on our sales and our marketing investments efficiently.
Speaker #2: And I'm with you on that. I will not be satisfied until this company is back to healthy, sustained top-line growth. And while we didn't reach that this quarter, I will note that the full-year guidance that we just announced of the 3% decline at the midpoint compares favorably with last year's 8%, and includes Q1's minus 6%.
Speaker #2: So as we start to look at the trajectory here, like you got last year at minus 8, you have Q1 minus 6, you have this at minus 3.
Peter Stern: So as we start to look at the trajectory here, like you got last year at -8, you have Q1 -6, you have this at -3. Obviously, that implies continued improvement as the year progresses. Again, not enough, but progress. Let me talk about the path back to growth, and there are a number of points to that. The first one is we are developing a more complete set of product offerings across the right array of fitness and wellness categories and with the right price points. I'm not here to share our product roadmap today, and this is a hardware business, so it takes time, but we're making real, real rapid progress on this.
Peter Stern: So as we start to look at the trajectory here, like you got last year at -8, you have Q1 -6, you have this at -3. Obviously, that implies continued improvement as the year progresses. Again, not enough, but progress. Let me talk about the path back to growth, and there are a number of points to that. The first one is we are developing a more complete set of product offerings across the right array of fitness and wellness categories and with the right price points. I'm not here to share our product roadmap today, and this is a hardware business, so it takes time, but we're making real, real rapid progress on this.
Speaker #1: growth, it's real sustainable So we have to have growth. And you can see that we're on track to deliver against So the underlying trends here adjusted EBITDA guidance, so that when we deliver the 40%.
Speaker #2: Obviously, that implies continued improvement as the year progresses. Again, not progress. Let me talk about the path back to growth. And there are a number of points to that.
Speaker #1: Now, let me go to the question, which happening with members and the versus existing is to explain what's our expectations for the quarter. But I don't think it's a direction.
Speaker #2: The first one is we are developing a more complete set of product offerings across the right array of fitness and wellness categories and with the right price points.
Speaker #1: members. members have and the satisfaction, which I've spoken
Speaker #2: I'm not here to share our product roadmap today. And this is a hardware business, so it takes time. But we're making real, rapid progress on this.
Speaker #1: reflection on the new generation So yes, revenue missed reflection on our old equipment. So what Fourth, we have to overestimated the rate with which existing only historical data point we had as a company on this was when we launched Bike Plus.
Speaker #1: of our equipment.
Speaker #2: And if you want to prove point of our ability to do that, I joined in January of last year. And within months, we were shipping a completely revamped product lineup.
Peter Stern: And if you want a proof point of our ability to do that, I joined in January of last year, and within months, we were shipping a completely revamped product lineup. So this is an organization that is capable of doing hard things and producing quality products on the hardware side. Second thing is that we got to make sure that we've got appropriate pricing for our subscriptions. We took the key step on that in Q2, and I think it went according to plan, if not better. Third piece, we've got to keep the members that we've got in order to get to growth. So we have to keep improving our net churn. And as you can see from our results and our remarks, we're projecting net churn flat this year despite the pricing action.
Peter Stern: And if you want a proof point of our ability to do that, I joined in January of last year, and within months, we were shipping a completely revamped product lineup. So this is an organization that is capable of doing hard things and producing quality products on the hardware side. Second thing is that we got to make sure that we've got appropriate pricing for our subscriptions. We took the key step on that in Q2, and I think it went according to plan, if not better. Third piece, we've got to keep the members that we've got in order to get to growth. So we have to keep improving our net churn. And as you can see from our results and our remarks, we're projecting net churn flat this year despite the pricing action.
Speaker #1: happened here is we simply
Speaker #2: So this is an organization that is capable of doing hard things and producing quality products on the hardware side. Second thing is that we got to make sure that we've got appropriate pricing for our subscriptions.
Speaker #1: A few years members would want to upgrade their bike. And so we did not, as it turns out, see the same fundamental reinvention of the entire frame of the members.
Speaker #1: A few years members would want to upgrade their bike. And so we did not, as it turns out, see the same fundamental reinvention of the entire frame of the ago.
Speaker #2: We took the key step on that in Q2. And I think it went according to plan, if not better. Third piece, we've got to keep the members that we've got.
Speaker #1: rate of upgrade from existing I think that just speaks to the quality and durability of the existing equipment that our And that was a really of over about at length, with that equipment.
Speaker #2: In order to get to growth. So we have to keep improving our net churn. our results and our remarks, And as you can see from we're projecting net churn flat this year despite the pricing action.
Speaker #1: coin, though, is that our sales to our new members met our third part of your expectations. And so it shows that our customers. And if we step back on this, products do resonate the existing members that sales that impacts our revenue but it doesn't impact our with prospective subscribers.
Speaker #2: So the underlying trends here are absolutely heading in the right direction. Fourth, we have to exploit new avenues for growth. I talked about the commercial business unit.
Peter Stern: So the underlying trends here are absolutely heading in the right direction. Fourth, we have to exploit new avenues for growth. I talked about the commercial business unit. That's, again, a proof point of our ability to generate new forms of growth. In this case, we grew 10% in the last quarter on the top line there. And then, of course, coming back to the first part of your question, we've got to demonstrate that we can do all of this efficiently. So we have to have an appropriate overhead structure. We have to have a positive return on our sales and our marketing investments so that when we deliver the growth, it's real sustainable growth.
Peter Stern: So the underlying trends here are absolutely heading in the right direction. Fourth, we have to exploit new avenues for growth. I talked about the commercial business unit. That's, again, a proof point of our ability to generate new forms of growth. In this case, we grew 10% in the last quarter on the top line there. And then, of course, coming back to the first part of your question, we've got to demonstrate that we can do all of this efficiently. So we have to have an appropriate overhead structure. We have to have a positive return on our sales and our marketing investments so that when we deliver the growth, it's real sustainable growth.
Speaker #2: That's again a proof point of our ability to generate new forms of growth, in this case, we grew 10% in the last quarter on the top line there.
Speaker #1: Because they're already existing members. So the consequence of that is that our subscriber performance was strong. And we performed the sales to existing 6,000 or so subscriptions above the midpoint as a
Speaker #2: And then, of course, coming back to the first part of your this efficiently. So question, we've got to demonstrate that we can do all of we have to have an appropriate overhead structure.
Speaker #1: result. reflecting the year-over-year increase
Speaker #5: I was just going to add one
Speaker #5: about how the existing member sales myths influences our guidance for
Speaker #2: We have to have a positive return on our sales and our marketing investments so that when we deliver the growth, it's real sustainable growth.
Speaker #2: And you can see that we're on track to deliver against that, including with the full-year adjusted EBITDA guidance, reflecting the year-over-year increase of over 40%.
Peter Stern: You can see that we're on track to deliver against that, including with the full year Adjusted EBITDA guidance, reflecting the year-over-year increase of over 40%. Now, let me go to the third part of your question, which is to explain what's happening with the sales to existing members and versus existing members. So, oh, yes, revenue missed our expectations for the quarter, but I don't think it's a reflection on the new generation of our equipment. I think that's a reflection on our old equipment. So, what happened here is we simply overestimated the rate with which existing members would want to upgrade their existing equipment to new equipment.
Peter Stern: You can see that we're on track to deliver against that, including with the full year Adjusted EBITDA guidance, reflecting the year-over-year increase of over 40%. Now, let me go to the third part of your question, which is to explain what's happening with the sales to existing members and versus existing members. So, oh, yes, revenue missed our expectations for the quarter, but I don't think it's a reflection on the new generation of our equipment. I think that's a reflection on our old equipment. So, what happened here is we simply overestimated the rate with which existing members would want to upgrade their existing equipment to new equipment.
Speaker #5: Q2 from lower sales to existing any of the softness that we observed in the back half of the year. And I just want to clarify that our guidance doesn't assume launch, and our subscription pricing changes behind to revenue for the rest of the fiscal
Speaker #5: Q2 from lower sales to existing any of the softness that we observed in the back half of the year. And I just want to clarify that our guidance doesn't assume launch, and our subscription pricing changes behind to revenue for the rest of the fiscal second half.
Speaker #5: Q2 from lower sales to existing any of the softness that we observed in the back half of the year. And I just want to clarify that our guidance doesn't assume launch, and our subscription pricing changes behind to revenue for the rest of the fiscal second half. thing.
Speaker #2: Now, let me go to the third part of your question, which is to explain what's happening with existing members and the versus existing members.
Speaker #2: Now, let me go to the third part of your question, which is to explain what's happening with existing members versus the sales. So yes, revenue missed our expectations for the quarter, but I don't—generation of our equipment.
Speaker #5: guidance reflect the sales myth from see any of it in the You had asked
Speaker #5: prior
Speaker #5: guidance. members. year. And then that is partly offset Shweta Khajuria with Wolf Research. And really, the changes in our
Speaker #5: guidance. members. year. And then that is partly offset Shweta Khajuria with Wolf Research. And really, the changes in our
Speaker #6: That's great. Thank you
Speaker #7: question. And that will come from the line of moment for our next both.
Speaker #7: question. And that will come from the line of moment for our next One open.
Speaker #2: I think think it's a reflection on the new that's a reflection on our old equipment. So what happened here is we simply overestimated the rate with which existing members would want to upgrade their existing equipment to new equipment.
Speaker #8: Okay. Thanks for taking my questions.
Speaker #8: There's some noise and media coverage around the clarify how much Your line is at all? And what is already accounted guidance? And then the for in the second question is for Peter on recent headcount reduction. commercial business opportunity.
Speaker #8: There's some noise and media coverage around the clarify how much Your line is at all? And what is already accounted guidance? And then the for in the second question is for Peter on recent headcount reduction.
Speaker #2: The only historical data point we had as a company on this was when we launched BIKE+ a few really fundamental reinvention of the entire frame of the bike.
Speaker #2: The only historical data point we had as a company on this was when we launched BIKE+ a few really fundamental reinvention of the entire frame of the years ago.
Peter Stern: The only historical data point we had as a company on this was when we launched Bike+, a few years ago, and that was a really fundamental reinvention of the entire frame of the Bike. And so we did not, as it turns out, see the same rate of upgrade from existing members. I think that just speaks to the quality and durability of the existing equipment that our members have and the satisfaction which I've spoken about at length with that equipment. The other side of this coin, though, is that our sales to our new members met our expectations, and so it shows that our products do resonate with prospective customers. And if we step back on this, the existing members, that impacts our revenue, but it doesn't impact our subscribers, because they're already existing members.
Peter Stern: The only historical data point we had as a company on this was when we launched Bike+, a few years ago, and that was a really fundamental reinvention of the entire frame of the Bike. And so we did not, as it turns out, see the same rate of upgrade from existing members. I think that just speaks to the quality and durability of the existing equipment that our members have and the satisfaction which I've spoken about at length with that equipment. The other side of this coin, though, is that our sales to our new members met our expectations, and so it shows that our products do resonate with prospective customers. And if we step back on this, the existing members, that impacts our revenue, but it doesn't impact our subscribers, because they're already existing members.
Speaker #2: see the same rate of upgrade from existing members. I think that just speaks to the quality and durability of the existing equipment that our members have and the satisfaction which I've spoken about at length with that equipment.
Speaker #8: How do you view that in terms of where you see the biggest So could you please Peloton equipment? Or is it a lead gen where you
Speaker #2: The other side of this coin, though, is that our sales to our new members met our expectations. And so it shows that our products do resonate with prospective customers.
Speaker #8: churn because those who use Peloton are
Speaker #2: And if we step back on this, the existing members that sales that impacts our revenue but it doesn't impact our subscribers. Because they're already existing members.
Speaker #8: lot.
Speaker #5: Yeah. So let me address the first part of the achieve our $100 million of annualized run announced in August our goal to had last week.
Speaker #5: question. First, around our
Speaker #2: So the consequence of that is that our subscriber performance was strong and we performed 6,000 or so subscriptions above the midpoint as a result.
Peter Stern: So, the consequence of that is that our subscriber performance was strong, and we performed 6,000 or so subscriptions above the midpoint as a result.
Peter Stern: So, the consequence of that is that our subscriber performance was strong, and we performed 6,000 or so subscriptions above the midpoint as a result.
Speaker #5: rate cost savings by the end of fiscal business partner. And doing all workforce. As well as shifting work to lower always part of that plan.
Speaker #5: 26, this action that we took So when we
Speaker #3: add one thing. You had asked I was just going to about how the existing member sales miss influences our guidance for the back half of the year.
Elizabeth Coddington: I was just gonna add one thing. You had asked about how the existing member sales mix influences our guidance for the back half of the year. And I just want to clarify that our guidance doesn't assume any of the softness that we observed in Q2 from lower sales to existing members is timing, and that we will see any of it in the second half. So, you know, with the holidays, the Cross Training Series launch, and our subscription pricing changes behind us, we feel we have greater visibility to revenue for the rest of the fiscal year. And really, the changes in our guidance reflect the sales mix from Q2 to existing members, and then that is partly offset by favorable subscription revenue relative to our prior guidance.
Elizabeth Coddington: I was just gonna add one thing. You had asked about how the existing member sales mix influences our guidance for the back half of the year. And I just want to clarify that our guidance doesn't assume any of the softness that we observed in Q2 from lower sales to existing members is timing, and that we will see any of it in the second half. So, you know, with the holidays, the Cross Training Series launch, and our subscription pricing changes behind us, we feel we have greater visibility to revenue for the rest of the fiscal year. And really, the changes in our guidance reflect the sales mix from Q2 to existing members, and then that is partly offset by favorable subscription revenue relative to our prior guidance.
Speaker #5: in just last week was actioned the remainder of our run rate savings
Speaker #3: And I just want to clarify that our guidance doesn't assume any of the softness that we observed in Q2 from lower sales to existing we will see any of it members.
Speaker #5: And so as of last week, we've moving some work to a global percentage of Let me try two, please. plan with changes in our revenue.
Speaker #3: It's timing and that in the second half. So with the holidays, the cross-training series launch, and our subscription pricing changes behind us, we feel we have greater year.
Speaker #5: and sales and marketing as a percentage of reducing both G&A to deliver against our $100
Speaker #5: And that's enabling us to
Speaker #3: And really, the changes in our guidance reflect the sales visibility to revenue for the rest of the fiscal members. And then that is miss from Q2 to existing relative to our prior.
Speaker #5: reinvest more into R&D
Speaker #5: And with these actions, we are on track
Speaker #3: guidance. That's great.
Speaker #5: million cost savings of this from a P&L perspective, we're target.
James Marsh: That's great. Thank you both.
Youssef Squali: That's great. Thank you both.
Speaker #2: Thank you, partly offset by favorable subscription revenue.
Speaker #2: both.
Speaker #6: question about the CBU. And then Shweta, thanks for the The first one
Speaker #1: One moment, for our next
Operator: One moment for our next question. That will come from the line of Shweta Khajuria with Wolfe Research. Your line is open.
Operator: One moment for our next question. That will come from the line of Shweta Khajuria with Wolfe Research. Your line is open.
Speaker #1: question. And that will come from the line of Shweta Khajuria with Wolf Research. Your line is open.
Speaker #6: Peloton first acquired it. revenue.
Shweta Khajuria: Okay, thanks for taking my questions. Let me try two, please. The first one for Liz. There's some, you know, noise and media coverage around the recent headcount reductions. So could you please clarify how much of that is incremental, if any, at all, and what is already accounted for in the guidance already? And then the second question is for Peter on the commercial business unit. So, commercial business opportunity, how do you view that in terms of where you see the biggest impact? Is this a retention sort of a driver, where you improve net churn because those who use Peloton are gonna choose hotels and places that have Peloton equipment? Or is it a lead gen, where you are better positioned to get new subscribers? Thanks a lot.
Shweta Khajuria: Okay, thanks for taking my questions. Let me try two, please. The first one for Liz. There's some, you know, noise and media coverage around the recent headcount reductions. So could you please clarify how much of that is incremental, if any, at all, and what is already accounted for in the guidance already? And then the second question is for Peter on the commercial business unit. So, commercial business opportunity, how do you view that in terms of where you see the biggest impact? Is this a retention sort of a driver, where you improve net churn because those who use Peloton are gonna choose hotels and places that have Peloton equipment? Or is it a lead gen, where you are better positioned to get new subscribers? Thanks a lot.
Speaker #4: questions. Let me try too, please. The first Okay. Thanks for taking my one for Liz. There's noise and media coverage around the recent headcount reduction.
Speaker #6: was done for essentially supply was first purchased, it
Speaker #4: So could you some clarify how much of that is incremental, please if any, at all? And what is already accounted for in the guidance?
Speaker #6: essentially a way of new subscribers for residential business. But today, company. that it Then subsequently, there was a belief we've realized that the opportunity
Speaker #4: Already. And then the second question is for Peter on the commercial business unit. opportunity. How do you view that in terms So commercial business of where you see the biggest impact?
Speaker #4: a retention sort of a driver where you improve net churn because those who use Peloton are going to choose hotels and places Is this that have Peloton equipment?
Speaker #6: multi-billion dollar market. And we have a relatively low share there. And we're now demonstrating the profitably. And CBU primarily as a is extremely large.
Speaker #6: ability to not only grow that like we know just adding back value for our the Peloton let's call it focused on key accounts, salespeople, getting more will help grow the business.
Speaker #4: Or is it a lead gen where you are better positioned to get new subscribers? Thanks a
Elizabeth Coddington: Yeah. So, let me address the first part of the question, first around our OpEx, and the announcement that we had last week. So when we announced in August, our goal to achieve our $100 million of annualized run rate cost savings by the end of fiscal 2026, you know, well, this action that we took in January, just last week, was always been part of that plan. And so as of last week, we've actioned the remainder of our run rate savings plan, with changes in our workforce, as well as shifting work to lower cost locations, including moving some work to a global business partner.
Elizabeth Coddington: Yeah. So, let me address the first part of the question, first around our OpEx, and the announcement that we had last week. So when we announced in August, our goal to achieve our $100 million of annualized run rate cost savings by the end of fiscal 2026, you know, well, this action that we took in January, just last week, was always been part of that plan. And so as of last week, we've actioned the remainder of our run rate savings plan, with changes in our workforce, as well as shifting work to lower cost locations, including moving some work to a global business partner.
Speaker #6: basis. And let me just talk a It's a multi, driving Some of that's just blocking and tackling the company and to generate bit about some of those opportunities.
Speaker #6: We new vector for profitable growth for also have the potential to shareholders on a standalone so we're approaching the relationships team's existing operators. And then we also have an opportunity in 60 countries the Peloton Pro Series.
Speaker #3: We took in just last week was 26, this action that plan. And so as of last week, we've actioned the remainder of our run rate savings plan, with changes in our workforce as well as shifting work to—including moving some work to a global business partner.
Speaker #3: And perspective, we're reducing both G&A and sales and marketing as a percentage of doing all of this from a P&L reinvest more into revenue.
Elizabeth Coddington: Doing all of this from a P&L perspective, you know, we're reducing both G&A and sales and marketing as a percentage of revenue, and that's enabling us to reinvest more into R&D while still reducing total OpEx as a percentage of revenue. With these actions, we are on track to deliver against our $100 million cost savings target.
Elizabeth Coddington: Doing all of this from a P&L perspective, you know, we're reducing both G&A and sales and marketing as a percentage of revenue, and that's enabling us to reinvest more into R&D while still reducing total OpEx as a percentage of revenue. With these actions, we are on track to deliver against our $100 million cost savings target.
Speaker #6: to reinvest in pre-course product roadmap. For example, gym And also using the pre-core treadmill. And the pre-orders on first slatted belt expectations. And we're also seeing strong performance in pre-course strength equipment both on the plate-loaded and sustainable driver of growth on a standalone basis that know that our Peloton and with tens of thousands of for Peloton the free weight side.
Speaker #3: R&D while still reducing total revenue. And with these actions, we are OPEX as a percentage of on track to deliver against our And that's enabling us to $100 million cost savings target.
Speaker #2: And then Shweta, thanks for the question about the CBU. There's been an interesting evolution in our goals regarding the pre-core business since Peloton first acquired it.
Peter Stern: And then, Shweta, thanks for the question about the CBU. There's been an interesting evolution in our goals regarding the Precor business since Peloton first acquired it. When it was first purchased, it was done so. It was done for essentially supply augmentation for the company. Then subsequently, there was a belief that it was essentially a way of driving new subscribers for the Peloton, let's call it, residential business. But today we've realized that the opportunity in commercial fitness is extremely large. It's a multi-billion dollar market, and we have a relatively low share there. And we're now demonstrating the ability to not only grow that business, but to grow that business profitably.
Peter Stern: And then, Shweta, thanks for the question about the CBU. There's been an interesting evolution in our goals regarding the Precor business since Peloton first acquired it. When it was first purchased, it was done so. It was done for essentially supply augmentation for the company. Then subsequently, there was a belief that it was essentially a way of driving new subscribers for the Peloton, let's call it, residential business. But today we've realized that the opportunity in commercial fitness is extremely large. It's a multi-billion dollar market, and we have a relatively low share there. And we're now demonstrating the ability to not only grow that business, but to grow that business profitably.
Speaker #2: When it was first purchased, it was done for essentially supply augmentation. For the company. Then subsequently, there was a belief that it was essentially a way of driving new subscribers for the Peloton let's call it residential business.
Speaker #6: equipment into gyms is a So we think this is a new relationships and awareness of our product so I would view travel. those as And that getting Peloton an ancillary, but important benefit CBU that we're aiming of us achieving the success with our all being said, we for.
Speaker #6: equipment into gyms is a So we think this is a new relationships and awareness of our product so I would view travel. those as And that getting Peloton an ancillary, but important benefit CBU that we're aiming of us achieving the success with our all being said, we
Speaker #2: that the But today, we've realized fitness is extremely large. It's a multi, multi-billion dollar market. And we have a relatively low share there. And we're now demonstrating the ability to not only grow opportunity in commercial business profitably.
Speaker #8: Okay. Thanks, One moment for
Speaker #8: Thanks,
Speaker #8: Liz.
Speaker #7: our next that exceeded
Speaker #7: And that will come from Thank you so
Speaker #2: That business, but to grow that. And so we're approaching a new vector for profitable— the CBU primarily as growth for the company and to generate value for our standalone basis.
Speaker #7: the line of Arpine
Speaker #7: Kocharyan with UBS Investments.
Speaker #7: is Hi. question.
Speaker #7: is
Speaker #7: open.
Speaker #7: open.
Peter Stern: And so, we're approaching the CBU primarily as a new vector for profitable growth for the company and to generate value for our shareholders on a standalone basis. And let me just talk a bit about some of those opportunities. Some of that's just blocking and tackling, like we know, just adding back salespeople, getting more focused on key accounts, will help grow the business. We also have the potential to bring Peloton equipment to commercial customers through new products like the Peloton Pro series, and also using the Precor team's existing relationships in 60 countries and with tens of thousands of gym operators. And then we also have an opportunity to reinvest in Precor's product roadmap.
Peter Stern: And so, we're approaching the CBU primarily as a new vector for profitable growth for the company and to generate value for our shareholders on a standalone basis. And let me just talk a bit about some of those opportunities. Some of that's just blocking and tackling, like we know, just adding back salespeople, getting more focused on key accounts, will help grow the business. We also have the potential to bring Peloton equipment to commercial customers through new products like the Peloton Pro series, and also using the Precor team's existing relationships in 60 countries and with tens of thousands of gym operators. And then we also have an opportunity to reinvest in Precor's product roadmap.
Speaker #5: much, for taking my question and good morning. you had also talked about slatted churn for So churn you're reiterating that guidance together with was overall better than what you had year?
Speaker #2: shareholders on a opportunities. Some of that's just blocking and tackling, like we know just adding back salespeople, getting more focused on key accounts, will help grow the business.
Speaker #5: talked about earlier for the quarter. But terrific way for us to
Speaker #5: the year and it seems like today guidance. year. So we've talked about our Q3 Peter.
Speaker #5: you maybe update us now all, I do want to reiterate the fact that our churn was lower than we were we have been Q3, our outlook year.
Speaker #2: We also have the potential to bring Peloton equipment to commercial customers through new products like the Peloton Pro Series. And also using the pre-core team's existing relationships in 60 countries and with tens of thousands of gym operators.
Speaker #5: Sure. So we don't actually we a decreasing growth heads, which was
Speaker #2: And then we also have an opportunity to reinvest in pre-cores product roadmap. For example, we just pre-launched treadmill. And the pre-orders on that exceeded pre-cores first slatted belt expectations.
Peter Stern: For example, we just relaunched Precor's first slatted belt treadmill, and the pre-orders on that exceeded expectations. We're also seeing strong performance in Precor's strength equipment, both on the plate loaded and the free weight side. So, we think this is a sustainable driver of growth on a standalone basis. That all being said, we know that our Peloton members are looking for Peloton equipment when they travel. And that getting Peloton equipment into gyms is a terrific way for us to generate new relationships and awareness of our product. So I would view those as an ancillary but important benefit of us achieving the success with our CBU that we're aiming for.
Peter Stern: For example, we just relaunched Precor's first slatted belt treadmill, and the pre-orders on that exceeded expectations. We're also seeing strong performance in Precor's strength equipment, both on the plate loaded and the free weight side. So, we think this is a sustainable driver of growth on a standalone basis. That all being said, we know that our Peloton members are looking for Peloton equipment when they travel. And that getting Peloton equipment into gyms is a terrific way for us to generate new relationships and awareness of our product. So I would view those as an ancillary but important benefit of us achieving the success with our CBU that we're aiming for.
Speaker #5: able to update our expectations around Q3 is typically a of 218,000 year over we shared that as is
Speaker #2: And we're also seeing strong performance in pre-cores strength equipment, both on the plate-loaded and the free weight side. So we think this is a sustainable driver of growth on a standalone basis.
Speaker #5: well. increase of 2,000 subs Q3, just to give you a little bit for new about our guidance for that, that
Speaker #5: 2.65 to 2.675 million paid
Speaker #2: That all being, Peloton members are looking for Peloton equipment when they travel. And that getting Peloton equipment into gyms is a terrific way for us to generate new relationships and awareness of our product, so I would view those as an ancillary but important benefit of us achieving the success with our CBU that we're aiming for.
Speaker #5: connected fitness.
Speaker #5: churn. It's also a seasonally stronger quarter seasonally low quarter for
Speaker #5: And that is that's just something that we
Speaker #5: winter months in the northern hemisphere. lower third-party sales, but
Speaker #5: winter months in the northern hemisphere. lower third-party sales, but
Speaker #1: Moment, for our next question. And that will come from the line of Arpine, Coach Orion, with UBS Investments. Your line is open.
Operator: One moment for our next question. That will come from the line of Arpine Kocharyan with UBS Investments. Your line is open.
Operator: One moment for our next question. That will come from the line of Arpine Kocharyan with UBS Investments. Your line is open.
Speaker #6: I'll just
Speaker #6: jump in a moment on you specifically asked about
Speaker #1: open. Hi.
Speaker #6: that. And reiterating
Speaker #5: Thank you so much for taking my question. So, churn was overall better than what you had talked about earlier for the quarter, but you had also talked about slated churn for the year. It seems like today you're reiterating that guidance, together with a decreasing growth edge, which was also expected.
Arpine Kocharyan: Hi, thank you so much for taking my question, and good morning. So churn was overall better than what you had talked about earlier for the quarter, but you had also talked about flattish churn for the year, and it seems like today you're reiterating that guidance together with a decrease in gross adds, which was also expected. Could you maybe update us, now that you have a quarter behind you, post price increase and kind of better churn than expected, where you're thinking gross adds trajectory could end up for the year?
Arpine Kocharyan: Hi, thank you so much for taking my question, and good morning. So churn was overall better than what you had talked about earlier for the quarter, but you had also talked about flattish churn for the year, and it seems like today you're reiterating that guidance together with a decrease in gross adds, which was also expected. Could you maybe update us, now that you have a quarter behind you, post price increase and kind of better churn than expected, where you're thinking gross adds trajectory could end up for the year?
Speaker #6: But if we look at the last improve year over year in Q3.
Speaker #6: with what we activations were our equipment sales were roughly in line
Speaker #6: had slightly basically delayed by just delayed and that it was the holidays and people were And so that's kind of what activate. that in the quarter.
Speaker #5: Could you maybe update us now that you have a quarter behind you post-price increase and kind of better churn than expected? Where you were thinking growth edge trajectory could end up for the year?
Speaker #6: delivery dates and then some sense slightly higher first-party
Speaker #3: Sure. So we don't actually we aren't providing guidance on subscribers or on growth additions for the year. Q3 guidance. So we've talked about our For, first of all, I do want to reiterate the fact that our churn was lower than we expected in Q2.
Elizabeth Coddington: Sure. So we don't actually. We aren't providing guidance on subscribers or on gross additions for the year, for the year. So, you know, we've talked about our Q3 guidance. For... First of all, you know, it's, I do wanna reiterate the fact that our churn was lower than we expected in Q2. And as a result of that, you know, we were, you know, we were. We have been able to update our expectations around subscriptions for the end of the year and for Q3, our, our outlook, you know, we, we shared that as well. Q3, just to give you a little bit about our guidance for that, that is, you know, 2.65, our, our, our subscriber guidance is 2.65 to 2.675 million paid connected fitness subs.
Elizabeth Coddington: Sure. So we don't actually. We aren't providing guidance on subscribers or on gross additions for the year, for the year. So, you know, we've talked about our Q3 guidance. For... First of all, you know, it's, I do wanna reiterate the fact that our churn was lower than we expected in Q2. And as a result of that, you know, we were, you know, we were. We have been able to update our expectations around subscriptions for the end of the year and for Q3, our, our outlook, you know, we, we shared that as well. Q3, just to give you a little bit about our guidance for that, that is, you know, 2.65, our, our, our subscriber guidance is 2.65 to 2.675 million paid connected fitness subs.
Speaker #6: So that had some impact on But that was Liz talked about the revenue impact of
Speaker #6: So that had some impact on But that was Liz talked about the revenue impact of
Speaker #6: into Q3.
Speaker #6: into Q3. Yeah.
Speaker #5: I just want to But then our line, he meant sales to new members were sales.
Speaker #5: With I mentioned earlier, they have affordable threat
Speaker #3: we were And as a result of that, we have been able to update our expectations around subscriptions for the end of the year. And for Q3, our outlook we shared that as well.
Speaker #5: underperformance coming from our third-party retail
Speaker #3: Q3, just to give you a little bit about our guidance for that, that is 2.65 our subscriber guidance million paid connected fitness of that is 2.65 to 2.675 reflects an increase of 2,000 subs quarter over quarter.
Elizabeth Coddington: That reflects an increase of 2,000 subs quarter-over-quarter, and a decrease of 218,000 year-over-year. Q3 is typically a seasonally low quarter for churn, and it's also a seasonally stronger quarter for new sub additions. And that is, you know, that's just something that we tend to say, you know, tend to see every year, especially with the winter months in the Northern Hemisphere. Now, we're not guiding for Q3 net churn, but we do expect churn to improve year-over-year in Q3. And as Peter said earlier, we do expect it to be flat, relatively flat on a year-over-year basis.
Elizabeth Coddington: That reflects an increase of 2,000 subs quarter-over-quarter, and a decrease of 218,000 year-over-year. Q3 is typically a seasonally low quarter for churn, and it's also a seasonally stronger quarter for new sub additions. And that is, you know, that's just something that we tend to say, you know, tend to see every year, especially with the winter months in the Northern Hemisphere. Now, we're not guiding for Q3 net churn, but we do expect churn to improve year-over-year in Q3. And as Peter said earlier, we do expect it to be flat, relatively flat on a year-over-year basis.
Speaker #3: And a decrease of 218,000 year over year. Q3 is typically a seasonally low quarter for churn. And it's also a seasonally stronger quarter for new sub-additions.
Speaker #1: thinking about the timing of reiterate that when Peter said sales weren't in taking some time to
Speaker #1: a separate strength
Speaker #1: product?
Speaker #6: Yeah. demonstrated the ability to produce
Speaker #3: something that we tend to say tend to see every year, especially with the winter months in the northern And that is that's just expect churn to improve year over year in Q3.
Speaker #3: And as Peter said earlier, we do expect it to be flat relatively flat on Q3 net churn, but we do a year-over-year
Speaker #3: basis. And Arpine, this is
Speaker #2: Peter. I'll just jump in a moment on growth ads because you specifically asked about that. And reiterating, Liz's point, we don't guide to it, but if we look at the last quarter, our equipment sales were roughly in line with what we expected.
Peter Stern: Arpine, this is Peter. I'll just jump in a moment on gross adds, because you specifically asked about that. Reiterating Liz's point, we don't guide to it, but if we look at the last quarter, our, you know, our equipment sales were roughly in line with what we expected. And we had slightly lower third-party sales, but slightly higher first-party sales. And so that's kind of what comprised the sales piece. But then our activations were delayed, and Liz talked about the revenue impact of that in the quarter, but that was basically delayed by just delivery dates and then some sense that it was the holidays, and people were taking some time to activate. So that had some impact on gross adds in Q2 that then should flow into Q3.
Peter Stern: Arpine, this is Peter. I'll just jump in a moment on gross adds, because you specifically asked about that. Reiterating Liz's point, we don't guide to it, but if we look at the last quarter, our, you know, our equipment sales were roughly in line with what we expected. And we had slightly lower third-party sales, but slightly higher first-party sales. And so that's kind of what comprised the sales piece. But then our activations were delayed, and Liz talked about the revenue impact of that in the quarter, but that was basically delayed by just delivery dates and then some sense that it was the holidays, and people were taking some time to activate. So that had some impact on gross adds in Q2 that then should flow into Q3.
Speaker #6: said, hardware time that being
Speaker #6: only to design and engineer it, but to make equipment in a very short period of very confident that we will be able to make some from first-party sales orders, is it takes time not the outperformance really coming of our sure we test it hardware product announcement.
Speaker #6: because this is the kind of equipment that I remain incredibly impressed by the capabilities and they engage in other physical really high-quality months. And that those Peloton.
Speaker #2: And we had slightly lower third-party sales, but slightly higher first-party sales. And so that's kind of what comprised the sales piece. But then our activations were delayed and Liz talked about the revenue impact of that in the quarter, but that was basically delayed by just delivery dates and then some sense that it was the to activate.
Speaker #6: activity with regard to this equipment. And so we have to And as hardware engineering teams here at Absolutely, Eric. announcements in the next 12 to 18 is delivering even more experiences.
Speaker #6: activity with regard to this equipment. And so we have to And as hardware engineering teams here at Absolutely, Eric. announcements in the next 12 to 18 is delivering even more experiences. innovations with the cross-training differentiated cardio be meaningful
Speaker #6: incredibly careful about
Speaker #2: So, that had some holidays and people were taking some time, impact on growth ads in Q2, that then we should slow into Q3.
Speaker #3: Yeah. I just want to reiterate that when Peter said sales were in line, he meant sales to new members were in line overall with our expectations, with the outperformance really coming from first-party sales orders.
Elizabeth Coddington: Yeah. I just want to reiterate that when Peter said sales were in line, he meant sales to new members-
Elizabeth Coddington: Yeah. I just want to reiterate that when Peter said sales were in line, he meant sales to new members-
Peter Stern: Thank you.
Elizabeth Coddington: were in line overall with our expectations, with the outperformance really coming from first-party sales orders, again, with that delay, and then the underperformance coming from our third-party retail partners.
Peter Stern: Thank you.
Elizabeth Coddington: were in line overall with our expectations, with the outperformance really coming from first-party sales orders, again, with that delay, and then the underperformance coming from our third-party retail partners.
Speaker #7: Your line is of course, beginning to
Speaker #3: Again, with that delay, and then the underperformance coming from our partners.
Speaker #5: That's very helpful. Thank you. And one quick follow-up. And I know it's probably hard to speak of exact timelines given you just introduced a bunch of new
Arpine Kocharyan: That's very helpful. Thank you. One quick follow-up, and I know it's probably hard to speak of exact timelines, given you just introduced a bunch of new products this fall. But I was wondering if, Peter, you could talk about your broad sort of takeaways or thoughts around new hardware product roadmap that you're looking at over the next, I don't know, 12 to 18 months, and how you are thinking about the timing of a separate strength SKU, as well as your thoughts around more affordable tread product.
Arpine Kocharyan: That's very helpful. Thank you. One quick follow-up, and I know it's probably hard to speak of exact timelines, given you just introduced a bunch of new products this fall. But I was wondering if, Peter, you could talk about your broad sort of takeaways or thoughts around new hardware product roadmap that you're looking at over the next, I don't know, 12 to 18 months, and how you are thinking about the timing of a separate strength SKU, as well as your thoughts around more affordable tread product.
Speaker #5: products this fall, but I was wondering if, Peter, you could talk about your broad sort of takeaways or thoughts around new hardware product roadmap that you're looking at over the next 12 to 18 months and how you were thinking about the timing of a separate strength third-party retail skew as well as your thoughts around more affordable tread products.
Speaker #2: Yeah. Arpine, I think an earnings call is not where we would make a major new hardware product announcement. But what I can say is that I remain incredibly impressed by the capabilities of our hardware engineering teams here at Peloton.
Peter Stern: Yeah, Arpine, I think an earnings call is not where we would make a major new hardware product announcement, but what I can say is that I remain incredibly impressed by the capabilities of our hardware engineering teams here at Peloton. As I mentioned earlier, they have demonstrated the ability to produce really high-quality equipment in a very short period of time. That being said, hardware is, you know, it takes time not only to design and engineer it, but to make sure we test it, because this is the kind of equipment that, you know, that people run on it and they engage in other physical activity with regard to this equipment, and so we have to be incredibly careful about it.
Peter Stern: Yeah, Arpine, I think an earnings call is not where we would make a major new hardware product announcement, but what I can say is that I remain incredibly impressed by the capabilities of our hardware engineering teams here at Peloton. As I mentioned earlier, they have demonstrated the ability to produce really high-quality equipment in a very short period of time. That being said, hardware is, you know, it takes time not only to design and engineer it, but to make sure we test it, because this is the kind of equipment that, you know, that people run on it and they engage in other physical activity with regard to this equipment, and so we have to be incredibly careful about it.
Speaker #6: You could see that in our One moment for our create new opportunities for us as a that I'm prioritizing. launched on October 1. The that acquisition we did with breath One second area
Speaker #2: And as I mentioned, earlier, they have demonstrated the ability to produce really high-quality equipment in a very short period said, of time, that being hardware is it takes time not only to design and engineer it, but to make sure we test it because this is the kind of equipment that people run on it and they engage in other physical activity with regard to this equipment.
Speaker #6: work. And then, Sachs.
Speaker #2: And so, we have to be incredibly careful about it. So, with all of that said, I feel very confident that we will be able to make some meaningful announcements in the next 12 to 18 months.
Speaker #6: every member. And Peloton IQ takes personalize our offerings for plans to the next level there. So that's another way for us to be able series and the pro to add value for our personalized our members and Surgery.
Peter Stern: So, with all of that said, I feel very confident that we will be able to make some meaningful announcements in the next 12 to 18 months, and that those will start to create new opportunities for us as a company.
Peter Stern: So, with all of that said, I feel very confident that we will be able to make some meaningful announcements in the next 12 to 18 months, and that those will start to create new opportunities for us as a company.
Speaker #2: And that those will start to create new opportunities for us as a company.
Speaker #6: encourage them to try for example, more Mental well-being building on who are categories of content like getting people principally focused on cardio to do more with strength, which we know is good for the member and good for us.
Speaker #5: Thank you very much.
Arpine Kocharyan: Thank you very much.
Arpine Kocharyan: Thank you very much.
Speaker #1: One moment for our next question, from Eric Sheridan with Goldman Sachs. Your line is open.
Operator: One moment for our next question. That will come from the line of Eric Sheridan with Goldman Sachs. Your line is open.
Operator: One moment for our next question. That will come from the line of Eric Sheridan with Goldman Sachs. Your line is open.
Speaker #6: about Peloton is providing a I am incredibly proud of the fact IQ, one, let me just start with this. that the Wall Street Journal when they In the AI fitness coaching from Apple beat them at our game.
Speaker #6: much for taking the question. And
Eric Sheridan: Thanks so much for taking the question, and wishing you the best going forward, Liz. Building on some of the comments you've made so far, Peter, would love to understand what you prioritize from a strategy perspective. When you think about building increased value across the member base, how should we be thinking about investments and product changes around content and the services layer, and maybe even going a little bit deeper in what some of the early signals you've gotten with respect to IQ and the adoption rate there? Thanks so much.
Eric Sheridan: Thanks so much for taking the question, and wishing you the best going forward, Liz. Building on some of the comments you've made so far, Peter, would love to understand what you prioritize from a strategy perspective. When you think about building increased value across the member base, how should we be thinking about investments and product changes around content and the services layer, and maybe even going a little bit deeper in what some of the early signals you've gotten with respect to IQ and the adoption rate there? Thanks so much.
Speaker #6: wishing you the best going forward, Liz. Building on some of the comments you've made so far, Peter, we'd love to understand what you prioritize from a strategy perspective when you think about building And that will come from increased value across the member base.
Speaker #6: and Google, we came out on But it's still gratifying given that these are some pretty top. against. As we mentioned earlier on And as a dedicated fitness company, I'd expect to well-resourced companies to be members engaged compared the call, nearly half of our active recommendations during the quarter.
Speaker #6: How should we be thinking about investments and product games around content and the services layer and maybe even going a little bit deeper in what some of the early signals you've gotten with respect to IQ and the adoption right there?
Speaker #6: personalized experiences. And that was the first quarter that Peloton IQ was with their performance insights and their plans among our members with connected fitness engagement with personalized equipment increased 10% quarter over quarter.
Speaker #6: Thanks so much.
Speaker #2: Absolutely, Eric. And thank you for the question. So here are some of the things that I'm prioritizing. One is delivering even more experiences you could see differentiated cardio that in our innovations with the cross-training series, and the Pro Series, both of which we announced and launched on October 1.
Peter Stern: ... Absolutely, Eric. And thank you for the question. So here are some of the things that, you know, I'm prioritizing. One is delivering even more differentiated cardio experiences. You could see that in our innovations with the Cross Training Series, and the Pro Series, both of which we announced and launched on October 1. The second area is providing a much more full array of fitness and wellness experiences. So that's, of course, leaning into strength. Some of the things that we're doing with sleep and recovery, you could see that with our partnership with the Hospital for Special Surgery. Mental well-being, building on that acquisition we did with Breathwork. And then, of course, beginning to personalize our offerings for every member, and Peloton IQ takes our personalized plans to the next level there.
Peter Stern: Absolutely, Eric. And thank you for the question. So here are some of the things that, you know, I'm prioritizing. One is delivering even more differentiated cardio experiences. You could see that in our innovations with the Cross Training Series, and the Pro Series, both of which we announced and launched on October 1. The second area is providing a much more full array of fitness and wellness experiences. So that's, of course, leaning into strength. Some of the things that we're doing with sleep and recovery, you could see that with our partnership with the Hospital for Special Surgery. Mental well-being, building on that acquisition we did with Breathwork. And then, of course, beginning to personalize our offerings for every member, and Peloton IQ takes our personalized plans to the next level there.
Speaker #6: is it's much more full Another thing that changing the purchasing patterns bought what they bought, Peloton IQ was ranked the most compelling feature by those who customers.
Speaker #6: we ask customers why they even out there. And the better. Because we plan to expand tread plus. And all of this is just going Thank you, operator.
Speaker #2: The second area is providing a much more full array of fitness and wellness experiences. So that's, of course, leaning into strength. Some of the things that we're doing with sleep and recovery—you could see that with our partnership with the Hospital for Special Surgery.
Speaker #6: strength. Great.
Speaker #2: Mental well-being, building on that acquisition we did with Breathworks. And then, of course, beginning to personalize our offerings for every member, and Peloton IQ takes our personalized plans to the next level there.
Speaker #6: I think we're going to of our wrapped up before market open. Thank you for joining series bike plus tread and to keep getting besides us today.
Speaker #6: Oh, wrap up the call at this stage so we can get this So when closing remarks,
Speaker #6: Peter?
Speaker #5: words. Before we wrap
Speaker #5: up, fitness and wellness isn't a quarterly goal for our members. And it shouldn't be for our business either. Peloton IQ to cover more domains With Peloton's disciplined operational focus, we're providing the foundation necessary to fuel continued innovation.
Speaker #2: So that's another way for us to be able to add value for our members and encourage them to try for example, more categories of content like getting people who are principally focused on cardio to do more with strength, which we know is good for the member and good for us.
Peter Stern: So that's another way for us to be able to add value for our members and encourage them to try, for example, more categories of content, like getting people who are principally focused on cardio to do more with strength, which we know is good for the member and good for us. In terms of your question about Peloton IQ, one, let me just start with this. I am incredibly proud of the fact that The Wall Street Journal, when they put Peloton IQ up against the AI fitness coaching from Apple and Google, we came out on top. And as a dedicated fitness company, I'd expect to beat them at our game, but it's still gratifying given that these are some pretty well-resourced companies to be compared against.
Peter Stern: So that's another way for us to be able to add value for our members and encourage them to try, for example, more categories of content, like getting people who are principally focused on cardio to do more with strength, which we know is good for the member and good for us. In terms of your question about Peloton IQ, one, let me just start with this. I am incredibly proud of the fact that The Wall Street Journal, when they put Peloton IQ up against the AI fitness coaching from Apple and Google, we came out on top. And as a dedicated fitness company, I'd expect to beat them at our game, but it's still gratifying given that these are some pretty well-resourced companies to be compared against.
Speaker #5: We remain committed to returning the business to sustainable
Speaker #5: growth. And we're encouraged by our steady we're seeing Peloton IQ do
Speaker #2: In terms of your question, about Peloton IQ, one, let me just start with this. I am incredibly proud of the fact that the Wall Street Journal when they put Peloton IQ up against the AI Fitness Coaching from Apple and Google, we came out on top.
Speaker #5: progress. I want to highlight a few in. Between now classes and programs that you may be interested Rebecca Kennedy launched HYLIT, which is a four-week high-intensity, low-impact cross-training program.
Speaker #5: For those of you who are looking to take up running this year, Kirsten Ferguson can help you with her call yourself a runner program, which we also released a few weeks ago.
Speaker #2: And as a dedicated fitness company, I'd expect to beat them at our game, but it's still gratifying given that these are some pretty well-resourced companies to be compared against.
Speaker #5: And if you haven't tried our new strength instructors, I encourage you to take a sculpt and the next call, first, flow, Pilates, or kettlebell class with Greta, Johanna, or Zacharias.
Peter Stern: So, as we mentioned earlier in the call, nearly half of our active members engaged with their performance insights and their personalized recommendations during the quarter, and that was the first quarter that Peloton IQ was even out there. And the engagement with Personalized Plans among our members with connected fitness equipment increased 10% quarter-over-quarter. Another thing that we're seeing Peloton IQ do is it's changing the purchasing patterns of our customers. So when we ask customers why they bought what they bought, Peloton IQ was ranked the most compelling feature by those who purchased the Cross Training Series, Bike+, Tread, and Tread+. And all of this is just going to keep getting better, because we plan to expand Peloton IQ to cover more domains besides strength.
Peter Stern: So, as we mentioned earlier in the call, nearly half of our active members engaged with their performance insights and their personalized recommendations during the quarter, and that was the first quarter that Peloton IQ was even out there. And the engagement with Personalized Plans among our members with connected fitness equipment increased 10% quarter-over-quarter. Another thing that we're seeing Peloton IQ do is it's changing the purchasing patterns of our customers. So when we ask customers why they bought what they bought, Peloton IQ was ranked the most compelling feature by those who purchased the Cross Training Series, Bike+, Tread, and Tread+. And all of this is just going to keep getting better, because we plan to expand Peloton IQ to cover more domains besides strength.
Speaker #2: As we mentioned earlier in the call, nearly half of our active members engaged with their performance insights and their personalized recommendations during the quarter.
Speaker #5: Okay, with that, we look forward to seeing you on the leaderboard. Thank you.
Speaker #2: And that was the first quarter that Peloton IQ was even out there. And the engagement with personalized plans among our members with connected fitness equipment increased 10% quarter over quarter.
Speaker #2: Another thing that we're seeing Peloton IQ do is it's changing the purchasing patterns of our customers. So when we ask customers why they bought what they bought, Peloton IQ was ranked the most compelling feature by those who purchased the cross-training series Bike+, Tread, and Tread+.
Speaker #2: And all of this is just going to keep getting better. Because we plan to expand Peloton IQ to cover more domains besides strength.
Speaker #3: Great. Thank you, Operator. I think we're going to wrap up the call at this stage so we can get this wrapped up before market open.
James Marsh: Great. Thank you, operator. I think we're gonna wrap up the call at this stage so we can get this wrapped up before market open. Thank you for joining us today. Oh, closing remarks, Peter?
James Marsh: Great. Thank you, operator. I think we're gonna wrap up the call at this stage so we can get this wrapped up before market open. Thank you for joining us today. Oh, closing remarks, Peter?
Speaker #3: Thank you for joining us today. Oh, closing remarks,
Speaker #3: Peter? Yeah.
Speaker #2: I'll just say a couple of words. Before we wrap up, fitness and wellness isn't a quarterly goal for our members, and it shouldn't be for our business either.
Peter Stern: I'll just say a couple of words before we wrap up.
Peter Stern: I'll just say a couple of words before we wrap up.
Speaker #2: With Peloton's disciplined operational focus, we're providing the foundation necessary to fuel continued innovation. We remain committed to returning the business to sustainable growth, and we're encouraged by our steady progress.
Speaker #2: I want to highlight a few classes and programs that you may be interested in. Between now and the next call, first, Rebecca Kennedy launched HiLIT, which is a four-week high-intensity, low-impact cross-training program.
Speaker #2: For those of you who are looking to take up running, there's the Call Yourself a Runner program, which we also released a few weeks ago.
Speaker #2: And if you haven't tried our new strength instructors, I encourage you to take a Sculpt Flow, Pilates, or Kettlebell class with Greta, Johanna, or Zacharias.
Speaker #2: Okay, with that, we look forward to seeing you on the leaderboard. Thank you.
