This morning, Peloton released their FY 2024 Q3 earnings, and held a call to discuss them.
These earnings came paired with the news that Peloton is laying off around 400 employees, and Barry McCarthy is stepping down as CEO, which we covered in detail here.
Peloton’s two new interim CEOs, Karen Boone and Chris Bruzzo, as well as Peloton’s CFO Liz Coddington fielded questions from investors. They were also joined James Marsh, Peloton’s new head of investor relations.
In the earnings, they shared that Peloton had achieved their first quarter of being free cash flow positive in over 13 quarters. This had been a goal former CEO Barry McCarthy had stated the company was working towards since he joined the company in 2022.
Peloton’s changes are expected to lower its annual run-rate expenses by more than $200 million by FY2025’s end and also includes closing retail locations. Since 2022, the company has laid off roughly 1700 employees globally.
Peloton’s total revenue declined 3% year over year but the good news is that subscription income increased 3%. They also reported a loss per share: 45 cents vs a loss of 37 cents per share expected and revenue of $718 million vs $723 expected.
Peloton is also lowering several forecasts for the fiscal year, including paid connected fitness subscriptions, app subscriptions and revenue.
While Peloton’s stock rose in pre-market trading on the news of the restructuring, it has quickly declined throughout the day, being down more than 10% at time of publishing.
In the investor letter they stated:
“We ended Q3 with 3.056 million Paid Connected Fitness Subscriptions and 1.2% Average Net Monthly Paid Connected Fitness Subscription Churn, demonstrating the loyalty of our Members and the instrumental role our connected fitness platform plays in achieving their fitness and wellness goals. Q3 also highlights the tremendous progress we have made in re-architecting our cost structure”
Some positive news from the call is that they reported that with the relaunch of Tread+ after more than three years off the market, their logistics and delivery teams have exceeded internal expectations of delivery times, and getting 67% of pre-orders delivered. Bike rental also outperformed expectations and new rentals up by 10% year over year with buyouts exceeding expectations as well.
Peloton Certified Refurbished and third party retail sales had strong growth year over year and also outperformed their internal expectations, and they recently announced that Peloton Tread and Peloton Row were being sold in the US on Amazon. Peloton has added a partnership with Hyatt that includes Peloton equipment in more than 800 Hyatt properties and access to Peloton classes on guest room TVs at nearly 400 of their hotels. Select Hyatt hotels in the US will also feature the Peloton Row.
The partnership with the New York Road Runners was mentioned twice on the call, with the addition of Scenic classes filmed on the New York Marathon course. This is the first-of-its-kind experience gives Members training on the historic course with auto-incline functionality the matches the course’s gradient. They also noted that they are experiencing growth in subscriber engagement with Entertainment, with more than one third of Tread and Tread+ subscribers com completing an entertainment workout this quarter.
Peloton has responded to Member feedback with new features that allow subscribers to hide tags and other profiles, which gives the Member greater control with their interactions with the community. They have also added Distance Tracking that allows members to input their metrics when running outdoors or on a third-party treadmill.
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