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- **Product Recall Management**: $13.5M charge for Bike+ seat post recall, with minimal revenue impact and replacement parts available. 
- **New Product Momentum**: Cross Training Series and Peloton IQ launch driving 23% Q2 revenue growth, 500K+ Club Peloton adoption. 
- **Financial Resilience**: $67M Q1 free cash flow vs. prior negative guidance, full year EBITDA $425-475M. 
- **Commercial Expansion**: Precor partnership targeting 60+ countries, Q2 gross margin 49% (down 250bps QoQ). 
- **Churn Stability**: Annual churn flat YoY despite Q2 2% increase, 50% team engagement growth. 
- **Long-Term Targets**: 20%+ Connected Fitness gross margin, $250M+ free cash flow. 
- **Debt Optimization**: Gross leverage 3.8x (down 13.5pts YoY), $1.1B cash on hand. 
- **Tariff Benefits**: $45M+ free cash flow from lower tariffs. 
- **AI Differentiation**: Peloton IQ adoption driving 50%+ strength workout growth. 
- **Wellness Expansion**: Breathwrk, HSS partnerships, menopause research. 
- **Liquidity**: $200M convertible notes due Feb 2026, $1B term loan refinancing consideration.

**【CEO Summary Section】**
- Announced voluntary recall of 833,000 Original Series Bike+ units due to 3 reported incidents, with replacement seat posts available. 
- Launched new Cross Training Series equipment featuring advanced AI-powered Peloton IQ, which provides personalized workout recommendations and form correction. 
- Expanded wellness offerings with acquisition of Breathwrk app for breathing exercises and partnership with Hospital for Special Surgery for injury prevention classes. 
- Introduced Club Peloton loyalty program, with over 500,000 members participating and 50% increase in team engagement. 
- Expanded commercial business unit with Precor partnership, offering commercial-grade equipment with Peloton software. 
- Projected Q2 revenue growth of 23% YoY, driven by holiday season hardware sales and new product launches. 

**【CFO Financial Commentary】**
- Q1 revenue $551M (vs. guidance $545M), with Connected Fitness products revenue $152M (down 5% YoY due to recall-related costs). 
- Gross margin 51.5% (down 300bps YoY) due to $13.5M recall-related inventory charge. 
- Free cash flow $67M (vs. prior expectation of negative), driven by lower tariffs and cost savings. 
- Full year 2026 guidance: Revenue $2.4-2.5B, EBITDA $425-475M, free cash flow ≥$250M. 
- Q2 gross margin expected 49% (down 250bps QoQ due to seasonal product mix). 

**【Q&A Highlights】**
- Recall financial impact: $16.5M total accrual, with minimal revenue impact as affected units no longer sold. 
- Churn rate 1.6% Q1 (down 20bps YoY), with Q2 expected 2% YoY increase due to price hikes but flat annual churn. 
- Commercial business unit targeting 2x-4x EBITDA leverage ratio, with focus on Peloton-Pro hybrid solutions. 
- New product gross margin target 20%+ long-term, with Q2 Connected Fitness margin improvement to 15.8% (up 660bps YoY).

Peloton Interactive, Inc. (PTON) Q1 2026 Earnings Call Transcript

Revenue

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PTON

PTON fundamentals

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