Executive Summary
Peloton Interactive Inc reported a mixed performance for Q2 2025, with total revenue of $673.9 million, slightly exceeding guidance of $640-$660 million, driven by better-than-expected performance in premium product sales and subscription revenues. However, net income continues to reflect losses at $92 million, albeit improved year-over-year, highlighting the ongoing strategic shift towards profitability amid challenges in subscriber growth. Management expressed optimism about future growth and member retention strategies, focusing on innovation and deeper engagement within their community. The emphasis remains on achieving financial and operational goals while navigating challenges in the cyclical consumer fitness market.
Key Performance Indicators
QoQ: -467.20% | YoY:72.58%
QoQ: -10 122.22% | YoY:52.80%
QoQ: -9 900.00% | YoY:55.56%
Key Insights
**Revenue Performance:** Peloton’s revenue for Q2 2025 stood at $673.9 million, representing a year-over-year decline of 9.37%, yet an increase of 15% from previous quarter. The breakdown included $253 million from hardware sales (down 21% YoY) and $421 million from subscriptions (a slight decline of 1% YoY).
**Profit Margins:** Gross profit margin improved to 47.2%, up 70 basis points from guidance, highlighting effective cost management and sales of higher-margin products. EBITDA margin re...
Financial Highlights
Revenue Performance: Peloton’s revenue for Q2 2025 stood at $673.9 million, representing a year-over-year decline of 9.37%, yet an increase of 15% from previous quarter. The breakdown included $253 million from hardware sales (down 21% YoY) and $421 million from subscriptions (a slight decline of 1% YoY).
Profit Margins: Gross profit margin improved to 47.2%, up 70 basis points from guidance, highlighting effective cost management and sales of higher-margin products. EBITDA margin remains distressed at -5%.
Profitability: The operating income loss increased to -$45.9 million, while adjusted EBITDA improved to $58 million, showing increased operational efficiency and reduced costs in line with the restructuring plan.
Balance Sheet Health: Cash at the end of the quarter increased to $829 million. Net debt reduced by 30%, signaling a positive trend in deleveraging efforts with a current ratio of 2.06 indicating strong liquidity.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
673.90M |
-9.37% |
15.00% |
| Gross Profit |
318.40M |
11.95% |
4.81% |
| Operating Income |
-45.90M |
72.58% |
-467.20% |
| Net Income |
-92.00M |
52.80% |
-10 122.22% |
| EPS |
-0.24 |
55.56% |
-9 900.00% |
Key Financial Ratios
operatingProfitMargin
-6.81%
operatingCashFlowPerShare
$0.28
freeCashFlowPerShare
$0.28
Management Commentary
Innovation and Community Engagement: CEO Peter Stern emphasized that 'the more people consume our product, the better they feel', indicating a focus on leveraging Peloton's brand value through improved member outcomes. He cited that churn rates are 60% lower for members engaging in multiple disciplines monthly, underscoring the importance of product diversification.
Financial Discipline: CFO Liz Coddington highlighted that operating expenses have shrunk by 25%, and they are on track to exceed $200 million in cost savings due to targeted restructuring. ‘We achieved meaningful improvements in Q2; both adjusted EBITDA and free cash flow increased roughly $140 million year-over-year,’ she stated.
"A lot of research shows that engaging in multiple fitness disciplines improves member outcomes," said Peter Stern, CEO, highlighting the engagement benefits of their diversified fitness offerings.
— Peter Stern, CEO
"We are tracking ahead of our cost savings targets and have reduced our operating expenses significantly," noted Liz Coddington, CFO, indicating strong financial discipline amidst turbulent market conditions.
— Liz Coddington, CFO
Forward Guidance
Peloton raised its fiscal 2025 guidance for total revenue to $2.43 billion to $2.48 billion and adjusted EBITDA to between $300 million and $350 million. Management targets reducing churn further while adjusting for seasonal trends in hardware sales. They have also indicated a shift towards increasing subscription penetration relative to hardware sales as a long-term strategic focus. Investors should monitor executive clarity on product differentiation and metrics on new member acquisition rates closely.