This morning, Peloton released their second quarter fiscal year 2026 earnings data – and the results were mixed. While the company continued to improve its profitability, revenue came in below both Wall Street expectations and Peloton’s own guidance, raising questions about how well the new Cross Training Series is resonating with consumers.
Peloton’s stock dropped nearly 25% after the markets opening following the results.
This was the first full quarter that included sales from the new Cross Training Series devices that launched on October 1st. While CEO Peter Stern called it “the most substantial period of innovation at Peloton since our founding,” the hardware sales numbers suggest shoppers may not be adopting the AI-driven product line as quickly as hoped.
Peloton also announced that CFO Liz Coddington will be leaving the company to “pursue an opportunity outside the industry.” She will stay on through March while Peloton searches for her replacement.
Here’s how Peloton did compared to what Wall Street was expecting:
- Loss per share: 9 cents vs. 6 cents expected
- Revenue: $656.5 million vs. $674 million expected
Peloton reported total revenue of $656.5 million for the quarter – not only below analyst expectations, but also $8 million below their own guidance range of $665-$685 million. On the earnings call, Stern explained the shortfall was due to two factors: the company expected existing members would purchase more Cross Training products than they did, and delivery interruptions also impacted sales.
Hardware sales drove $244 million in revenue during the quarter, while subscriptions saw $413 million in sales – both below analyst expectations of $253 million and $424 million, respectively. Third-party equipment sales were also lower than expected. Despite higher prices following the October membership increase, revenue for both segments came in lower than expected, indicating unit sales have been weak.
The company’s net loss for the quarter was $38.8 million, or 9 cents per share – still a significant improvement from the $92 million loss (24 cents per share) in the year-ago period.
Peloton’s subscriber base continues to decline. The company ended the quarter with 2.661 million paid connected fitness subscribers – a decrease of 214,000 (or 7%) year-over-year. However, this was actually 6,000 above the midpoint of Peloton’s own guidance, as churn following the October membership price increase was better than expected.
While Peloton’s top line might be disappointing to investors, the company is still making gains in improving its profitability. Adjusted EBITDA came in at $81 million – better than the $73 million analysts expected and up 39% year-over-year.
This comes after Peloton announced plans to lay off 11% of its staff last week. The company expects to generate between $120 million and $135 million in adjusted EBITDA next quarter, better than the $119 million analysts had expected.
Total gross margin came in at 50.5%, up 320 basis points year-over-year. Peloton also raised their full-year Adjusted EBITDA guidance to $450-$500 million, up from their previous range of $425-$475 million.
One bright spot in the data: average workout time per connected fitness subscription increased by 7% year-over-year. Peloton also highlighted success with their content offerings:
- Turkey Burn 2025 saw a 6% year-over-year increase in live workouts, including Peloton’s largest live Strength class ever
- Three new instructors were added to teach Yoga Sculpt and Pilates classes – a move that correlates with the growing popularity of GLP-1 medications, as users of weight-loss drugs are increasingly focused on strength training to maintain muscle mass
On the earnings call, Stern noted that Peloton IQ was the most engaging feature for members this quarter.
The Club Peloton loyalty program, which launched in October, is also showing early traction. 24% of members are now using Club Peloton, and those members drove 50% of Peloton’s apparel sales in Q2.
Peloton also noted they completed a menopause study with Respin Health, finding that 84% of participating women experienced overall symptom improvement through a tailored 60-day program.
Peloton’s integrated Commercial Business Unit achieved double-digit revenue growth year-over-year. The company introduced the Peloton Pro Series for fitness facilities, signaling their continued push into the B2B market.
Peloton expects sluggish sales to continue into the current quarter. The revenue guidance of $605-$625 million came in below analyst expectations of $638 million – another sign that Peloton expects hardware demand to remain soft.
In the earnings release, CEO Peter Stern focused on the profitability improvements, stating: “Our second quarter represented the most substantial period of innovation at Peloton since our founding. At the same time, our financial performance demonstrated our continued operational discipline, resulting in 39% year-over-year growth in Adjusted EBITDA and reducing Net Debt by 52% year-over-year, proving we can simultaneously innovate and increase our profitability.”
He added: “Our subscription base is highly committed, our integrated Commercial Business Unit is growing and well-positioned to continue doing so, and Member engagement with Peloton IQ is encouraging.”
Peloton’s app subscriptions dropped to 522,000 – down 11% year-over-year and 4% from last quarter. This continues the trend of declining app-only subscribers, as their connected fitness subscribers drop as well.
Total members (which includes all users across all products) stood at 5.8 million, down from 5.9 million last quarter and 6.2 million in Q2 FY2025.
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