Peloton Turns Profit, Cuts Costs, and Shows Signs of Stabilization Amidst Ongoing Challenges

Peloton reported Q4 2025 earnings, beating expectations and turning a GAAP profit of $0.05 per share. Revenue was $606.9 million, down 6% YoY but ahead of forecasts. The company's leaner operation and broader vision are a positive sign, but the membership base and subscription numbers are still declining. Peloton has cut costs by 20% YoY and plans to reduce expenses by at least $100 million in FY2026. Despite the profit, the company's stock is down 20% for the year, indicating ongoing trust issues.

Peloton Interactive (PTON) reported its Q4 2025 earnings, surprising investors with a GAAP profit of $0.05 per share, surpassing analysts' expectations. The company's revenue for the quarter was $606.9 million, down 6% year-over-year (YoY) but ahead of forecasts. Peloton's cost-cutting measures and operational streamlining have led to a significant turnaround in its financial performance.

The company's new CEO, Peter Stern, who joined from Ford Motor Company in January, has implemented a restructuring plan aimed at addressing the decline in sales of Peloton's high-end exercise bikes and treadmills. The plan includes a 6% global workforce reduction and $1 billion in cost-cutting measures, contributing to a 20% reduction in operating expenses and a 33% decrease in general and administrative expenses compared to the previous year. These cost savings have helped offset declines in sales from the hardware and subscription business segments, resulting in a net income of $21.6 million.

Peloton's gross margin for connected fitness products increased by 560 basis points to 54.1%, with gross profit for this segment growing by 96% to $34.4 million. The company's free cash flow jumped to $1.12 billion, reflecting operational streamlining and margin improvements. Peloton expects further cost-cutting measures to result in an additional $1 billion in savings by the end of the next fiscal year.

Despite the positive earnings report, Peloton's membership base and subscription numbers continue to decline. The company expects a decline of approximately 6% in connected fitness subscriptions year-over-year to be between 2.72 million to 2.73 million in the current quarter. Total revenue is expected to drop 9% to be between $525 million to $545 million, below the $555 million estimates. For the full year 2026, Peloton expects revenue to decline 2% to $2.4 billion to $2.5 billion, with gross margin expected to increase 10 basis points to 51.0%.

Peloton's stock has been down 20% for the year, indicating ongoing trust issues among investors. The company's plans to reduce expenses by at least $100 million in FY2026 aim to address these concerns and improve its financial health.

References:
[1] https://www.ainvest.com/news/peloton-reports-2025-q4-profit-forecasts-2026-revenue-expectations-2508/
[2] https://seekingalpha.com/news/4481326-cost-discipline-puts-peloton-back-in-the-black-despite-weaker-sales