As we shared last week, Peloton has announced another round of layoffs. This is part of the company’s new $100 million cost restructuring plan, which they unveiled alongside their FY 2025 Q4 earnings results.
While Peloton has not shared the exact number of employees that will be laid off, this restructuring will impact approximately 6% of their global workforce. This is likely to be around 125 – 175 roles eliminated, based on recent estimations of the overall number of Peloton employees.
The “2025 Restructuring Plan” is aimed at reducing operating expenses, improving efficiency, and creating space to reinvest in the areas Peloton believes will fuel its growth; specifically equipment, software, and content. The initiative is expected to deliver at least $100 million in annualized run-rate savings by the end of FY2026 (which ends on June 30, 2026).
In the earnings letter, Peloton states:
Our operating expenses remain too high, which hinders our ability to invest in our future. Today, we are launching a cost restructuring plan intended to achieve at least $100 million of run-rate savings by the end of FY26 by reducing the size of our global team, paring back indirect spend, and relocating some of our work. This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business.
The company’s 10-Q filing further emphasized that the plan will focus on improving Peloton’s cost structure and operating efficiency while creating opportunities to “return to growth by reinvesting a portion of the savings into Peloton’s differentiating capabilities.”
CEO Peter Stern addressed the restructuring during the earnings call, stressing the importance of aligning spending with competitive advantages. He explained:
“To earn the right to grow, we must align our spending with areas of competitive advantage… while reducing costs in areas that do not differentiate us. To that end, we plan to capture an additional $100 million of run rate cost savings by the end of FY26 by optimizing indirect spend, reshaping our teams, and in some cases, the locations where we work, and parting ways with a number of our talented colleagues.”
Stern noted that decisions impacting people are “the most agonizing” the company makes and expressed gratitude for the contributions of departing employees, adding that Peloton is committed to supporting them through the transition.
Chief Financial officer (CFO) Liz Coddington shared that roughly half of the targeted savings have already been actioned through workforce reductions. The remainder will come from indirect spend optimization and potential workforce relocations over the coming year.
This marks yet another large-scale staff cut for Peloton in recent years. In May 2024, the company laid off around 400 employees as part of a $200 million restructuring plan, which was announced when then-CEO Barry McCarthy stepped down.
With this latest initiative, Peloton aims to streamline operations while positioning itself for future growth. The cost savings will be directed toward the company’s “differentiating capabilities” – which Peloton sees as its hardware devices, evolving software ecosystem, and library of instructor-led content.
While the changes are expected to strengthen Peloton’s long-term outlook, the immediate impact will be felt by the employees now leaving the company.
You can read more about Peloton’s FY 2025 Q4 earnings results and outlook via our overview article.
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