Peloton Reports 2025 Q4 Profit, Forecasts 2026 Revenue Above Expectations

Peloton Interactive, a leading fitness platform, has reported a surprising turnaround in its fourth quarter of the 2025 fiscal year, achieving a year-over-year profit. The company also provided a revenue forecast for the 2026 fiscal year that exceeded market expectations. Peloton announced plans to reduce its global workforce by 6% as part of its ongoing efforts to cut costs and achieve profitability. This strategic move has contributed to a significant improvement in the company's financial performance.

In the fourth quarter, Peloton reported earnings of 5 cents per share, surpassing analysts' expectations of a 6 cents per share loss. The company's total revenue for the quarter, ending June 30, was 6.069 billion dollars, a 5.7% decrease from the previous year, but still above the average analyst estimate of 5.798 billion dollars. The company's revenue forecast for the 2026 fiscal year is projected to be between 24 billion dollars and 25 billion dollars, higher than the analyst consensus of 24.1 billion dollars. Peloton also anticipates that tariffs will reduce its free cash flow projection for 2026 by 65 million dollars and has indicated that it will adjust prices to offset the additional costs.

Peloton's cost-cutting measures, including reductions in marketing and research and development expenses, as well as optimizing its cost structure, have helped offset declines in sales from its hardware and subscription business segments. The company's new CEO, Peter Stern, who joined from Ford Motor Company in January, has initiated a transformation plan aimed at addressing the decline in sales of Peloton's high-end exercise bikes and treadmills. During the pandemic, there was a surge in demand for home fitness equipment, which had previously driven the company's strong performance.

One indicator of the effectiveness of Peloton's cost-reduction efforts is the 20% decrease in operating expenses and a 33% reduction in general and administrative expenses in the fourth quarter compared to the previous year. These cost savings have contributed to a net income of 21.6 million dollars, marking a year-over-year turnaround from a loss to a profit. The gross margin for Peloton's connected fitness products, which include technologically advanced home fitness equipment, increased by 900 basis points to 17.3%, driving an overall gross margin improvement of 560 basis points to 54.1%, exceeding the company's previous guidance by 380 basis points. The gross profit for this segment grew by 96% to 34.4 million dollars.

Peloton expects that further cost-cutting measures, including layoffs, reductions in indirect costs, and the relocation of some offices, will result in an additional 1 billion dollars in savings by the end of the next fiscal year. The company's cash flow situation has also improved, with free cash flow increasing from 26 million dollars in the previous year to 1.12 billion dollars. This positive trend reflects Peloton's successful efforts to streamline operations and enhance financial performance.