Peloton Makes Something of a Recovery With Mixed Earnings, Has a 'Steep Hill To Climb' To Reach Profitability

Peloton reported its Q2 2025 fiscal earnings on Feb. 6 in a shareholder letter, largely defeating Wall Street expectations by cutting costs around marketing, administrative expenditures, and research and development to produce an impressive adjusted EBITDA of $58.4 million, versus $26.7 million expected by industry analysts, according to CNBC.

The shareholder letter indicated that Peloton had a "steep hill to climb" to reach sustained, profitable growth, particularly given the headwinds facing the company. Of note, as Retail Dive detailed:

• Q2 revenue dipped more than 9% year-over-year to rest at $673.9 million.
• Peloton's connected fitness (tech that brings interactive fitness equipment into people's homes) revenues tumbled 21% year-over-year to $253.4 million.
• Subscription revenue dipped 1% to $420.6 million.
• Peloton's member base declined by 4% year-over-year, as did paid connected fitness subscriptions.

On the other hand, Peloton — under the guidance of new CEO Peter Stern — managed to significantly trim its losses during Q2. Operating loss came in at $45.9 million versus $187.1 million the year prior, and net loss improved to $92 million from $194.9 million a year ago.

“While we are working on our long-term growth strategy for fiscal 26 and beyond, our financial goals for fiscal 25 and continued discipline toward improving gross margins, reducing operating costs and deleveraging our balance sheets are and will remain top priorities for me,” said Stern.

Peloton CEO Stern Charged With Leading the Brand to Profitability After Post-Pandemic Slump

Struggling to find the same wild growth that it enjoyed during the stay-at-home heyday of the COVID-19 pandemic, Peloton has since pivoted to focus on slashing unnecessary costs while bolstering the foundations of a healthier, more resilient subscription model. Subscriptions are falling, and many individuals who missed the gym during the lockdowns have returned to their usual routines at the local fitness center.

In October 2024, after outgoing CEO Barry McCarthy departed the post and two board members briefly took the helm, Peter Stern was charged with righting the ship. Stern, a former Ford exec and founder of Apple Fitness+, was selected — at least in part — due to his experience in executing and maintaining profitable subscription services.

“I want to take a beat on unit economics and right sizing our costs, because both of these are foundational for us to address before we can return to growth,” said Stern. “We’re setting the stage to be able to grow while ensuring ... we’ll have the financial capacity that we need to make investments that have strong returns.”

Under Stern's watch, sales and marketing costs were cut by 34%, general and administrative expenditures were slashed by 18%, and R&D spending dipped by 25%, creating a scenario in which 25% of all operating costs were cast to the wayside in the path to profitability.

Adjusted EBITDA is projected to come in — for the current quarter — at around $70 million to $85 million, per CNBC, significantly outpacing the $50.4 million analysts had previously anticipated.

Peloton CFO Liz Coddington spoke to the centrality of cost-cutting to the company's current game plan.

"While we’re pleased with this progress that we’ve made, we do see further opportunities for cost optimizations, and we’ve built a culture of cost discipline into our company. We know that our [operating expenses] as a percent of revenue is still too high overall for the long term, and especially that’s true within our [general and administrative] area,” Coddington told analysts, as CNBC detailed.

Peloton Expands Its Distribution Network via Partnerships With Costco, Nordstrom, and Target

Peloton certainly hasn't been resting on its laurels as it attempts to regain its financial footing.

For starters, Peloton partnered with Costco this past holiday season to sell an exclusive Bike+ combo at 300 of the warehouse club's locations between Nov. 1 and Nov. 15, which marked the first retail collaboration made by the fitness company on U.S. soil. The Bike+ bundle was offered at a price point of $1,999, or $2,199 delivered.

Next was a team-up with Nordstrom, as Peloton began offering its apparel through Nordstrom's digital marketplace. That collaboration kicked off in late November of 2024.

Finally, Peloton teamed up with Target last month to stock the latter's new third-party marketplace. Over 140 items from Peloton are on offer via Target Plus, ranging from men's and women's apparel to an array of accessories.

In the future, the company aims to expand its customer demographic to include running and strength training advocates. According to Peloton data, 2 million unique members completed at least one strength training exercise during Q2, and in December the company launched a strength training app that achieved 220,000 monthly active users in short order.

Further, the company sees less churn for users who participate in multiple different fitness activities.

“Our monthly churn rate is roughly 60% lower for Connected Fitness subscriptions engaging with two or more disciplines per month versus those engaging with just one,” Peloton said in its shareholder letter.