PELOTON INTERACTIVE INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
PTON$5.61-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0001639825-25-000026
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001639825-25-000081
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 214 previous paragraphs and 218 current paragraphs.
145 unchanged; 50 reworded; 23 added; 19 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Improve Member Outcomes
Current report
Member happiness continued to improve in the three months ended March 31, 2025, as measured by Net Promoter Score (“NPS”) and Member Satisfaction Scores (“MSAT”). We achieved an NPS above 70 for all of our Cardio hardware products and above 80 for the Tread. Member Support MSAT was 4.3 in the three months ended March 31, 2025, reflecting an improvement of 1% quarter-over-quarter and 20% year-over-year, while Service & Repair MSAT was 4.5, an improvement of 5% quarter-over-quarter and 7% year-over-year.
Current report
We see an opportunity to be a more holistic wellness provider by offering solutions to our Members that address strength, mental well-being, sleep & recovery, and more. The mix of Member engagement in these categories is increasing, so we’re responding by creating even more experiences to serve these needs. Additionally, with so many classes to choose from, we want to help our Members reach their goals more easily by recommending the best workouts for them. In January, we launched Personalized Plans, which uses artificial intelligence and machine learning to enable Members to create workout plans tailored to their goals and preferences. Nearly half a million Members started a Personalized Plan in the three months ended March 31, 2025, and we’re pleased with the repeat engagement from Members using them.
Current report
Meet Members Everywhere
Current report
We recently launched a pilot program with Precor to bring a collection of Peloton Instructor-led tread classes to select Precor treadmills. Given the unique demands of gym operators and the duty cycles imposed on gym equipment, we've also engaged Precor to provide installation and maintenance support for Peloton equipment in gyms. Also in the three months ended March 31, 2025, we met nearly 1,000 first-time Peloton users in our recently launched Peloton workout space at the University of Texas at Austin, and we launched a new collection of on-demand Peloton workouts for Hilton’s Connected Room Experience across 2,400 Hilton hotels.
Current report
Retail presence in owned and third-party locations provides critical in-person touchpoints for prospective Members to try our hardware products. Our microstore test in Nashville, Tennessee, which has approximately one tenth the square footage and a much more flexible lease commitment, exceeded our average North American retail showroom’s in-store engagement and revenue during the three months ended March 31, 2025. Additionally, third-party retail enables us to capture incremental hardware sales by meeting Members where they already shop. Amazon’s seasonal sales events are a great example. We observed year-over-year growth in hardware sales from the Amazon Big Spring Sale in the U.S. in the three months ended March 31, 2025.
Current report
Meeting Members everywhere includes growing in our international markets, where we grew Paid Connected Fitness Subscriptions for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. We’ve taken a disciplined approach to right-sizing costs in our international business while deploying localized marketing strategies, including our Member Stories campaigns featuring popular TV personalities in the U.K. and Germany. A prerequisite to scaling internationally is cost-effectively translating our programming, especially given our enormous output – 3,300 new classes in the three months ended March 31, 2025 alone. In March, we launched AI-powered subtitles, starting with our existing languages of English, Spanish, and German, and we are now translating roughly 100 classes per day.
Current report
Create Members for Life
Current report
We are committed to delivering elevated experiences at each stage of the Member lifecycle, by optimizing the journey from point of purchase to delivery, installation, onboarding, and beyond. This quarter, we worked with our repair partners to pilot dedicated vans stocked with Peloton spare parts to increase first-visit repair resolution, and we are now extending that pilot to additional locations. We also introduced AI into our call centers, providing our agents with a powerful intelligent agent while still delivering the human interactions our Members expect.
Current report
We also expanded our Teams features in the three months ended March 31, 2025, launching Team Feed and Community Teams. Team Feed allows Members who have joined a team to share workout activity and react to activity from teammates. Community Teams are public, discoverable and recommended groups of up to 50,000 Members. Members have created nearly 100,000 teams and we’re seeing higher engagement from Members within the first month of joining a Team.
Current report
Operate with Business Excellence
Current report
We are focusing on operating more efficiently, which includes both lowering our operating expenses and optimizing our pricing and promotional strategy to improve our unit economics and expand gross margins. We have made significant progress in reducing costs and we continue to track ahead of our target to achieve $200 million of run-rate cost savings by the end of fiscal year 2025.
Current report
Other Developments
Current report
We have received a small number of reports that a Bike+ seat post broke during use. We are planning to offer certain Bike+ Members our newest seat post. We do not currently expect that the expenses associated with this plan will be material to our financial position. In the event we incur material expenses or face other challenges relating to the Bike+ seat post, including the implementation of other measures resulting from our engagement with governmental authorities on this matter, our results of operations, financial condition and reputation could be adversely affected.
Current report
(1) Beginning January 1, 2025, the Company migrated its subscription data model for reporting Ending Paid Connected Fitness Subscriptions, Average Net Monthly Paid Connected Fitness Subscription Churn, Ending Paid App Subscriptions, and Average Monthly Paid App Subscription Churn to a new data model that provides greater visibility to changes to a subscription's payment status when they occur. The new model gives the Company more precise and timely data on subscription pause and churn behavior. Prior period information has been revised to conform with current period presentation. The impact of this change in the model on Ending Paid Connected Fitness Subscriptions, Average Net Monthly Paid Connected Fitness Subscription Churn, Ending Paid App Subscriptions and Average Monthly Paid App Subscription Churn for the three months ended March 31, 2025 and 2024 is immaterial.
Current report
Connected Fitness Products Cost of revenue decreased $92.1 million, or 34.3%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was primarily driven by fewer deliveries across all Connected Fitness product categories, resulting from lower demand during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, as well as lower freight and warehousing costs and lower inventory write-downs.
Current report
Subscription Cost of revenue decreased $10.0 million, or 7.1% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to lower costs associated with music royalties, platform streaming, and content production.
Current report
Subscription Cost of revenue decreased $12.0 million, or 2.9% during the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily attributable to lower costs associated with content production and music royalties, a reduction in depreciation and amortization expense, and lower personnel-related expenses, inclusive of stock-based compensation expense, due to decreased average headcount.
Current report
General and administrative expense decreased $1.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, mainly driven by a decrease of $4.9 million in settlement costs and professional services fees (comprised of legal, accounting, and consulting fees), a decrease of $1.9 million in software and IT costs, and a decrease of $1.8 million in depreciation and amortization costs. These decreases were partially offset by a net increase of $7.0 million in personnel-related expenses, inclusive of stock-based compensation expense, for the three months ended March 31, 2025, primarily driven by $21.0 million of executive departure costs mainly due to acceleration of stock-based compensation and severance expense under our exits of individuals covered by the Change in Control Plan (the “Severance Plan”). Excluding the impact of these executive departures, general and administrative expense decreased $22.7 million or 14.8% year-over-year.
Current report
Impairment expense increased $11.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to $32.2 million in asset write-downs and write-offs related to plans to right-size portions of our corporate office footprint during the three months ended March 31, 2025. This increase was partially offset by a $20.4 million decrease in impairment expense related to the exit of retail showroom locations during the three months ended March 31, 2025.
Current report
•Foreign exchange gains of $10.3 million and $6.6 million, respectively; and
Current report
•Foreign exchange losses of $2.1 million and $0.2 million, respectively; and
Current report
•Other income, net of zero and $0.5 million, respectively.
Removed paragraphs (19)
Previous report
Innovating on Our Products and Experiences
Previous report
Innovating on our products and experiences so we can deliver even better outcomes for our Members is our most important long-term opportunity. Third-party research studies have shown that people benefit from engaging in multiple fitness disciplines. This variety is not only good for our Members but also for our business, as we believe it drives higher engagement and retention. Our monthly churn rate is roughly 60% lower for Connected Fitness subscriptions engaging with two or more disciplines per month versus those engaging with just one.
Previous report
While Peloton is best known for cardio workouts, and Cycling in particular, we are also a leader in Strength workouts 1. Inthe three months ended December 31, 2024, over 2.0 million unique Members completed a Strength workout, representing 735.0 million minutes of total workout time. Furthermore, the number of Strength workouts taken inthe three months ended December 31, 2024 equaled 75% of the total number of Cycling workouts taken. On the cardio side, we also continue to elevate our Tread products, achieving higher new subscription attach rates year over year inthe three months ended December 31, 2024, thanks to our marketing efforts. With the release of our 10K training program inthe three months ended December 31, 2024, Peloton now offers training options for all major race distances. Over 300,000 Members have already trained for a race with Peloton.
Previous report
We’re also seeing the impact of innovative, new software features like Pace Targets, which offer running instruction with personalized intensity levels. Nearly 60% of our Members who take Instructor-led workouts on our Tread products are using Pace Targets, and our we're seeing improved running paces as a result.
Previous report
Meeting Members in More Places
Previous report
Meeting Members in more places is another way to improve our service and grow our business. In December, we launched Strength+, a new app designed for gym-based strength workouts with audio guidance from expert coaches, as well as a custom strength workout generator. It reached over 220,000 monthly active users inthe three months ended December 31, 2024, the vast majority of whom were existing All-Access Members, and represents another value-add for our Members.
Previous report
Third-party retail enables us to meet more new Members in places where they already shop. Our new seasonal partnership with Costco drove more Bike+ unit sales than any other third-party retail partner duringthe three months ended December 31, 2024. We also remain focused on meeting more Members around the globe. We are encouraged by hardware sales in International markets inthe three months ended December
Previous report
1 Strength workouts include Strength, Bootcamp, Yoga, and Pilates classes, as well as non-class Strength and Yoga workouts taken on the Strength+ App or Peloton App
Previous report
31, 2024, which exceeded our expectations, as well as the continued growth in International Connected Fitness Subscriptions, which was accomplished with greater capital efficiency and improved unit economics.
Previous report
Deepening Connections Among Our Members
Previous report
As you may know, Peloton is named after the pack of cyclists who ride closely together to reduce their collective resistance, thereby going further, faster. And research shows that people achieve better fitness outcomes when they work out together. So we’re focused on deepening connections among our more than 6.0 million Members, both with Peloton and with our supportive community. In September, we launched Teams, which enables Members to share workouts and compete in challenges. 70,000 Teams have been created since launch, and Members who join them are more likely to work out. Inthe three months ended December 31, 2024, we hosted the 11th annual Thanksgiving Day Turkey Burn where over 50,000 Members worked out together live. This year’s Turkey Burn also brought "The Feast," our first Thanksgiving live Strength class and the largest live Strength class in Peloton’s history.
Previous report
Improving Our Unit Economics and Right-Sizing Our Costs
Previous report
We’ve discussed in recent quarters that improving our unit economics and right-sizing our costs are both critical to our long-term success. During this holiday quarter, we demonstrated continued progress on improving our hardware unit economics by selling a favorable mix of premium priced products and by aligning our discounts with the margins of our products. Inthe three months ended December 31, 2024, we achieved a 12.9% Connected Fitness Products Gross Margin, reaching double digits for the first time in over three years.
Previous report
Six Months Ended December 31, 2024 and 2023
Previous report
Connected Fitness Products Cost of revenue for the six months ended December 31, 2024 decreased $114.6 million, or 23.9%, compared to the six months ended December 31, 2023. This decrease was primarily driven by fewer deliveries across Bike, Tread, and Bike+ resulting from lower demand during the six months ended December 31, 2024 compared to the six months ended December 31, 2023. This decrease was partially offset by Tread+ deliveries during the six months ended December 31, 2024 as deliveries resumed during the third quarter of fiscal 2024, and higher Precor cost of revenue in line with the increased volume of Precor sales.
Previous report
•Foreign exchange losses of $18.5 million and $3.7 million, respectively, primarily driven by the remeasurement of certain intercompany balances; and
Previous report
•Other expense, net of $0.2 million and $0.1 million, respectively.
Previous report
•Foreign exchange gains of $9.6 million and $1.9 million, respectively; and
Previous report
We believe continued growth of our Connected Fitness Subscription base will allow us to improve our Subscription Contribution Margin. While there are variable costs, including music royalties, associated with our Connected Fitness Subscriptions, a significant portion of our content creation costs are fixed given that we operate with a limited number of production studios and Instructors. We expect the fixed nature of those expenses to scale over time as we grow our Connected Fitness Subscription base.
Reworded paragraphs (50)
Previous wording
Peloton is a leading global fitness company with a highly engaged community of 6.2 million Members as of December 31, 2024. A category innovator at the nexus of fitness, technology, and media, Peloton's first-of-its-kind subscription platform seamlessly combines innovative hardware, distinctive software, and exclusive content. Its world-renowned instructors coach and motivate Members to be the best version of themselves anytime, anywhere. We define a “Member” as any individual who has a Peloton account through a paid Connected Fitness Subscription or a paid Peloton App Membership, inclusive of a Strength+ App Membership, and completes one or more workouts in the trailing 12 month period. We define a completed workout as either completing (i) at least 50% of an instructor-led class, scenic ride, scenic run, or coach-led Strength+ program, (ii) ten or more minutes of “Just Ride”, “Just Run”, “Just Row”, or (iii) a custom Strength+ workout.
Current wording
Peloton is a leading global fitness company with a highly engaged community of 6.1 million Members as of March 31, 2025. A category innovator at the nexus of fitness, technology, and media, Peloton's first-of-its-kind subscription platform seamlessly combines innovative hardware, distinctive software, and exclusive content. Its world-renowned instructors coach and motivate Members to be the best version of themselves anytime, anywhere. We define a “Member” as any individual who has a Peloton account through a paid Connected Fitness Subscription or a paid App Subscription, inclusive of the Peloton App One and App+ Memberships and the Strength+ App Membership, and completes one or more workouts in the trailing 12 month period. We define a completed workout as either completing (i) at least 50% of an instructor-led class, scenic ride, scenic run, or coach-led Strength+ program, (ii) ten or more minutes of “Just Ride”, “Just Run”, “Just Row”, or (iii) a custom Strength+ workout.
Previous wording
Our Connected Fitness Products portfolio includes the Peloton Bike, Bike+, Tread, Tread+, Guide, Row and various Precor products. Access to the Peloton App is available with an All Access or Guide Membership for Members who have Connected Fitness Products or through a standalone App Membership with multiple Membership tiers. Access to the Strength+ App is available with an All Access, Guide, or App+ Membership or through a standalone Strength+ subscription. Our revenue is generated primarily from recurring Subscription revenue and the sale of our Connected Fitness Products. We are additionally focused on growing our Paid App subscribers, including through efforts such as our branding and App relaunch in May 2023 and launch of the Strength+ App in December 2024. We define a “Connected Fitness Subscription” as a person, household, or commercial property, such as a hotel or residential building, who has paid for a subscription to a Connected Fitness Product (a Connected Fitness Subscription with a successful credit card billing or with prepaid subscription credits or waivers).
Current wording
Our Connected Fitness Products portfolio includes the Peloton Bike, Bike+, Tread, Tread+, Guide, Row and various Precor products. Access to the Peloton App is available with an All Access or Guide Membership for Members who have Connected Fitness Products or through a standalone App Membership with multiple Membership tiers. Access to the Strength+ App is available with an All Access, Guide, or App+ Membership or through a standalone Strength+ subscription. Our revenue is generated primarily from recurring Subscription revenue and the sale of our Connected Fitness Products. We define a “Connected Fitness Subscription” as a person, household, or commercial property, such as a hotel or residential building, who has paid for a subscription to a Connected Fitness Product (a Connected Fitness Subscription with a successful credit card billing or with prepaid subscription credits or waivers).
Previous wording
Second Quarter Fiscal 2025 Update and Recent Developments
Current wording
Third Quarter Fiscal 2025 Update and Recent Developments
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Three Months Ended December 31, 2024 and 2023
Current wording
In the three months ended March 31, 2025, we continued to execute on our fiscal year 2025 operating goals. Operating expenses decreased 23% year-over-year, we generated over $90 million of GAAP Net Cash Provided by Operating Activities and non-GAAP Free Cash Flow, and our balance sheet is deleveraging quickly.
Previous wording
When a Subscriber to App One or App+ cancels their membership (a churn event) and resubscribes in a subsequent period, the resubscription is considered a new subscription (rather than a reactivation that is counted as a reduction in our churn count). Average Paid App Subscription Churn is calculated as follows: Paid App Subscription cancellations in the quarter, divided by the average number of beginning Paid App Subscriptions each month, divided by three months.
Current wording
When a Subscriber to App One, App+, or Strength+ cancels their membership (a churn event) and resubscribes in a subsequent period, the resubscription is considered a new subscription (rather than a reactivation that is counted as a reduction in our churn count). Average Paid App Subscription Churn is calculated as follows: Paid App Subscription cancellations in the quarter, divided by the average number of beginning Paid App Subscriptions each month, divided by three months.
Previous wording
If a Connected Fitness Subscription owns multiple, different Peloton Connected Fitness Products (such as a Peloton Bike and Peloton Tread) in the same household, the price of the Subscription remains $44 monthly. As of December 31, 2024, approximately 11% of our Connected Fitness Subscriptions owned multiple, different Connected Fitness Products.
Current wording
If a Connected Fitness Subscription owns multiple, different Peloton Connected Fitness Products (such as a Peloton Bike and Peloton Tread) in the same household, the price of the Subscription remains $44 monthly. As of March 31, 2025, approximately 12% of our Connected Fitness Subscriptions owned multiple, different Connected Fitness Products.
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Comparison of the Three and Six Months Ended December 31, 2024 and 2023
Current wording
Comparison of the Three and Nine Months Ended March 31, 2025 and 2024
Previous wording
Connected Fitness Products Revenue decreased $65.8 million and $86.7 million for the three and six months ended December 31, 2024, respectively, compared to the three and six months ended December 31, 2023. This decrease was primarily attributable to fewer deliveries driven by lower demand across all Connected Fitness product categories, except Tread+, which resumed sales during the third quarter of fiscal 2024. The decrease was also partially offset by growth in Precor revenue.
Current wording
Connected Fitness Products Revenue decreased $74.4 million and $161.1 million for the three and nine months ended March 31, 2025, respectively, compared to the three and nine months ended March 31, 2024. These decreases were primarily attributable to fewer Connected Fitness product deliveries driven by lower demand during the three and nine months ended March 31, 2025 when compared to the three and nine months ended March 31, 2024. The decrease for the nine months ended March 31, 2025 was partially offset by more Tread+ deliveries and improvements in Precor revenue during the nine months ended March 31, 2025.
Previous wording
Subscription Revenue decreased $4.0 million for the three months ended December 31, 2024 compared to the three months ended December 31, 2023, primarily due to decreases in Paid Connected Fitness and App Subscriptions, partially offset by improvements in content licensing revenue and Used Equipment Activation Fee revenue, which was introduced during the first quarter of fiscal 2025.
Current wording
Subscription Revenue decreased $19.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to decreases in Paid Connected Fitness and App Subscriptions. The decrease was partially offset by an increase in Used Equipment Activation Fee revenue, which was introduced during the first quarter of fiscal 2025.
Previous wording
Subscription Revenue increased $7.4 million for the six months ended December 31, 2024 compared to the six months ended December 31, 2023, primarily due to incremental content licensing revenue and lower churn during the period. This increase was partially offset by a decrease in Paid Connected Fitness and App Subscriptions.
Current wording
Subscription Revenue decreased $11.8 million for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily due to decreases in Paid Connected Fitness and App Subscriptions. This decrease was partially offset by an increase in content licensing revenue and incremental Used Equipment Activation Fee revenue, which was introduced during the first quarter of fiscal 2025.
Previous wording
Our Connected Fitness Products Gross Margin increased to 12.9% for the three months ended December 31, 2024 compared to 4.3% for the three months ended December 31, 2023. This increase was primarily driven by a mix-shift towards higher margin products, lower warehousing and transportation costs, a reduction in inventory reserves including the sale of certain fully reserved units, and lower payroll and rent expense in connection with restructuring efforts.
Current wording
Our Connected Fitness Products Gross Margin increased to 14.3% for the three months ended March 31, 2025 compared to 4.2% for the three months ended March 31, 2024. This increase was primarily driven by lower inventory write-downs, a mix shift towards higher margin products, and lower warehousing and transportation costs during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. These improvements were partially offset by changes in our warranty reserves.
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Subscription Cost of revenue and Gross Margin remained mostly consistent for the three months ended December 31, 2024 compared to the three months ended December 31, 2023.
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Subscription Gross Margin remained mostly consistent for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
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Connected Fitness Products Cost of revenue for the three months ended December 31, 2024 decreased $84.7 million, or 27.7%, compared to the three months ended December 31, 2023. This decrease was primarily driven by fewer deliveries across Bike, Tread, Bike+, and Row, resulting from lower demand during the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease was partially offset by Tread+ deliveries during the three months ended December 31, 2024, as deliveries resumed during the third quarter of fiscal 2024, as well as higher Precor cost of revenue in line with the increased volume of Precor sales.
Current wording
Connected Fitness Products Cost of revenue for the nine months ended March 31, 2025 decreased $206.7 million, or 27.6%, compared to the nine months ended March 31, 2024. This decrease was primarily driven by fewer Connected Fitness product deliveries, resulting from lower demand during the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, as well as lower freight and warehousing costs. The decrease was partially offset by increased Tread+ deliveries during the nine months ended March 31, 2025, which resumed during the third quarter of fiscal 2024.
Previous wording
Our Connected Fitness Products Gross Margin increased to 11.5% for the six months ended December 31, 2024 compared to 3.9% for the six months ended December 31, 2023. This increase was primarily driven by product mix-shifts towards higher margin products, lower warehousing and delivery costs, and a reduction in inventory reserves.
Current wording
Our Connected Fitness Products Gross Margin increased to 12.4% for the nine months ended March 31, 2025 compared to 4.0% for the nine months ended March 31, 2024. This increase was primarily driven a mix shift towards higher margin products, as well as lower inventory write-downs and lower warehousing and transportation costs during the nine months ended March 31, 2025 when compared to the nine months ended March 31, 2024. These improvements were partially offset by changes in our warranty reserves.
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Subscription Cost of revenue and Gross Margin remained mostly consistent for the six months ended December 31, 2024 compared to the six months ended December 31, 2023.
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Subscription Gross Margin remained consistent for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024.
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Sales and marketing expense decreased $77.6 million and $141.8 million for the three and six months ended December 31, 2024, respectively, compared to the three and six months ended December 31, 2023, primarily driven by a decrease of $64.4 million and $116.1 million in acquisition, brand, and creative marketing spend for the three and six months ended December 31, 2024, respectively, and a decrease of $4.8 million and $10.3 million in personnel-related expenses, inclusive of stock-based compensation expense, primarily due to decreased average headcount, for the three and six months ended December 31, 2024, respectively.
Current wording
Sales and marketing expense decreased $63.8 million and $205.6 million for the three and nine months ended March 31, 2025, respectively, compared to the three and nine months ended March 31, 2024, primarily driven by decreases of $51.8 million and $167.9 million in acquisition, brand, and creative marketing spend for the three and nine months ended March 31, 2025, respectively, and decreases of $3.8 million and $14.1 million in personnel-related expenses, inclusive of stock-based compensation expense, mainly due to decreased average headcount, for the three and nine months ended March 31, 2025, respectively.
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General and administrative expense decreased $29.5 million and $61.0 million for the three and six months ended December 31, 2024, respectively, compared to the three and six months ended December 31, 2023, primarily driven by a decrease of $20.5 million and $27.9 million in settlement costs and professional services fees (comprised of legal, accounting, and consulting fees), for the three and six months ended December 31, 2024, respectively, and a $5.7 million and $23.7 million decrease in personnel-related expenses, inclusive of stock-based compensation expense, primarily due to decreased average headcount, for the three and six months ended December 31, 2024, respectively.
Current wording
General and administrative expense decreased $62.7 million for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, mainly driven by a decrease of $32.8 million in settlement costs and professional services fees (comprised of legal, accounting, and consulting fees), a net decrease of $16.7 million in personnel-related expenses, inclusive of stock-based compensation and severance expense, primarily due to decreased average headcount, and a decrease of $5.0 million in software and IT costs for the nine months ended March 31, 2025.
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Research and development expense decreased $19.6 million and $39.8 million for the three and six months ended December 31, 2024 respectively, compared to the three and six months ended December 31, 2023, primarily driven by $12.3 million and $28.0 million decreases in personnel-related expenses, inclusive of stock-based compensation expense, primarily due to decreased average headcount, for the three and six months ended December 31, 2024, respectively, and $4.7 million and $8.7 million decreases in product development costs, primarily due to a reduction in contractor spend for the three and six months ended December 31, 2024, respectively.
Current wording
Research and development expense decreased $17.2 million and $57.0 million for the three and nine months ended March 31, 2025 respectively, compared to the three and nine months ended March 31, 2024, mainly driven by a $13.1 million and $41.0 million decrease in personnel-related expenses, inclusive of stock-based compensation expense, primarily due to decreased average headcount, for the three and nine months ended March 31, 2025, respectively, and a $2.6 million and $11.3 million decrease in product development costs, primarily due to a reduction in contractor spend for the three and nine months ended March 31, 2025, respectively.
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Impairment expense increased $13.1 million for the three months ended December 31, 2024 compared to the three months ended December 31, 2023, primarily due to incremental asset write-downs and write-offs in the quarter related to restructuring initiatives, including asset impairments related to the exit of retail showroom locations. Impairment expense decreased $6.1 million for the six months ended December 31, 2024 compared to the six months ended December 31, 2023, primarily driven by decreases in asset write-downs and write-offs related to restructuring initiatives, including impairments related to Peloton Output Park during the six months ended December 31, 2023, which was partially offset by increases in asset impairments related to the exit of retail showroom locations during the six months ended December 31, 2024.
Current wording
Impairment expense increased $5.6 million for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily due to $32.2 million in asset write-downs and write-offs related to plans to right-size portions of our corporate office footprint during the nine months ended March 31, 2025. This increase was partially offset by a $16.7 million decrease due to impairments related to Peloton Output Park during the nine months ended March 31, 2024, and a $7.5 million decrease in impairment expense related to the exit of retail showroom locations during the nine months ended March 31, 2025.
Previous wording
Restructuring expense decreased $10.1 million and $25.0 million for the three and six months ended December 31, 2024 compared to the three and six months ended December 31, 2023, primarily due to a $13.5 million decrease in personnel-related expenses, inclusive of stock-based compensation expense during the six months ended December 31, 2024, decreases in exit and disposal costs and professional fees of $6.6 million and $7.7 million for the three and six months ended December 31, 2024, respectively, and decreases in non-cash charges of $3.8 million during both the three and six months ended December 31, 2024 relating to the loss on sale of a manufacturing subsidiary in Taiwan during the three and six months ended December 31, 2023.
Current wording
Restructuring expense decreased $35.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a decrease of $33.4 million in cash severance and other personnel costs due to charges incurred during the three months ended March 31, 2024 in connection with the 2024 Restructuring Plan. For the nine months ended March 31, 2025, Restructuring expense decreased $60.2 million compared to the nine months ended March 31, 2024, primarily due to a $48.7 million decrease in personnel-related expenses, inclusive of severance and stock-based compensation expense during the nine months ended March 31, 2025, as well as decreases in exit and disposal costs, including non-cash charges of $3.8 million relating to the loss on sale of a manufacturing subsidiary in Taiwan during the nine months ended March 31, 2024.
Previous wording
Supplier settlements were flat for the three months ended December 31, 2024 compared to the three months ended December 31, 2023, and increased $25.0 million for the six months ended December 31, 2024 compared to the six months ended December 31, 2023 due to settlement of disputes with a third-party supplier about certain alleged past and future commitments.
Current wording
Supplier settlements were flat for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, and increased $25.9 million for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024 due to the settlement of disputes with a third-party supplier about certain alleged past and future commitments.
Previous wording
Total Other Expense, Net and Income Tax Expense
Current wording
Total Other Expense, Net and Income Tax Expense (Benefit)
Previous wording
Total other expense, net, was composed of the following for the three and six months ended December 31, 2024:
Current wording
Total other expense, net, was composed of the following for the three and nine months ended March 31, 2025:
Previous wording
•Interest expense primarily related to term loan, convertible notes, and deferred financing costs of $34.6 million and $70.0 million, respectively;
Current wording
•Interest expense primarily related to our term loan and convertible notes, and deferred financing costs of $32.6 million and $102.6 million, respectively;
Previous wording
•Interest income from cash, cash equivalents, and short-term investments of $7.7 million and $15.8 million, respectively;
Current wording
•Interest income from cash, cash equivalents, and short-term investments of $7.9 million and $23.7 million, respectively;
Previous wording
•Other income, net of $0.1 million and $0.4 million, respectively.
Current wording
•Other expense, net of $0.1 million and zero, respectively.
Previous wording
Total other expense, net, was composed of the following for the three and six months ended December 31, 2023:
Current wording
Total other expense, net, was composed of the following for the three and nine months ended March 31, 2024:
Previous wording
•Interest expense primarily related to term loan, convertible notes, and deferred financing costs of $27.7 million and $54.9 million, respectively;
Current wording
•Interest expense primarily related to our term loan and convertible notes, and deferred financing costs of $27.7 million and $82.6 million, respectively;
Previous wording
•Interest income from cash, cash equivalents, and short-term investments of $8.4 million and $16.9 million, respectively;
Current wording
•Interest income from cash, cash equivalents, and short-term investments of $9.3 million and $26.2 million, respectively;
Previous wording
Income tax expense for the three and six months ended December 31, 2024 of $0.7 million and $1.6 million, respectively, was primarily due to state and international taxes. Income tax benefit for the three and six months ended December 31, 2023 of $1.7 million and $1.0 million, respectively, was primarily due to state and international taxes.
Current wording
Income tax expense for the three and nine months ended March 31, 2025 of $0.8 million and $2.3 million, respectively, was primarily due to state and international taxes. Income tax expense (benefit) for the three and nine months ended March 31, 2024 of $0.6 million and $(0.3) million, respectively, was primarily due to state and international taxes.
Previous wording
(1) Primarily consists of Interest expense of $34.6 million and $70.0 million, foreign exchange losses of $18.5 million and $3.7 million, and Interest income of $(7.7) million and $(15.8) million, for the three and six months ended December 31, 2024, respectively. Primarily consists of Interest expense of $27.7 million and $54.9 million, foreign exchange gains of $(9.6) million and $(1.9) million, and Interest income of $(8.4) million and $(16.9) million, for the three and six months ended December 31, 2023, respectively.
Current wording
(1) Primarily consists of Interest expense of $32.6 million and $102.6 million, foreign exchange gains of $(10.3) million and $(6.6) million, and Interest income of $(7.9) million and $(23.7) million, for the three and nine months ended March 31, 2025, respectively. Primarily consists of Interest expense of $27.7 million and $82.6 million, foreign exchange losses of $2.1 million and $0.2 million, and Interest income of $(9.3) million and $(26.2) million, for the three and nine months ended March 31, 2024, respectively.
Previous wording
(3)Represents accrual for the six months ended December 31, 2024 related to settlement of disputes with a third-party supplier about certain alleged past and future commitments, which occurred due to part of an unusual, one-time effort to adjust the Company’s forecasted inventory during its fiscal years 2022 and 2023. With this settlement, we have substantially settled our purchase commitments related disputes with our suppliers that were linked to our one-time effort to evaluate and adjust the Company’s forecasted inventory needs with its suppliers during fiscal years 2022 and 2023. As such, we currently do not expect to add-back in the future any additional supplier settlements related to that effort.
Current wording
(3)Represents accrual for the nine months ended March 31, 2025 related to settlement of disputes with a third-party supplier about certain alleged past and future commitments, which occurred due to part of an unusual, one-time effort to adjust the Company’s forecasted inventory during its fiscal years 2022 and 2023. With this settlement, we have substantially settled our purchase commitments related disputes with our suppliers that were linked to our one-time effort to evaluate and adjust the Company’s forecasted inventory needs with its suppliers during fiscal years 2022 and 2023. As such, we currently do not expect to add-back in the future any additional supplier settlements related to that effort.
Previous wording
(4) Represents adjustments and charges primarily associated with our Tread+ and Bike Seat Post product recall related matters, as well as accrual adjustments. These include adjustments to Connected Fitness Products Revenue for actual and estimated future returns of $(2.3) million and $(3.9) million, respectively, for the three and six months ended December 31, 2023. These also include recorded benefits in Connected Fitness Products Cost of revenue associated with recall related matters of $(4.2) million and $(4.3) million, respectively, for the three and six months ended December 31, 2023.
Current wording
(4) Represents adjustments and charges primarily associated with our Tread+ and Bike Seat Post product recall related matters, as well as accrual adjustments. These include adjustments to Connected Fitness Products Revenue for actual and estimated future returns of $(3.9) million for the nine months ended March 31, 2024. These also include recorded benefits in Connected Fitness Products Cost of revenue associated with recall related matters of $(4.3) million for the nine months ended March 31, 2024.
Previous wording
(5) Includes litigation-related expenses for certain patent infringement litigation, consumer arbitration, and product recalls for the three and six months ended December 31, 2023, that arise outside of the ordinary course of business and are nonrecurring, infrequent, or unusual.
Current wording
(5) Includes litigation-related expenses for certain patent infringement litigation, consumer arbitration, and product recalls for the three and nine months ended March 31, 2024, that arise outside of the ordinary course of business and are nonrecurring, infrequent, or unusual.
Previous wording
Our operations have been funded primarily through net proceeds from the sales of our equity and convertible debt securities, and our term loan, as well as cash flows from operating activities. As of December 31, 2024, we had Cash and cash equivalents of approximately $829.0 million.
Current wording
Our operations have been funded primarily through net proceeds from the sales of our equity and convertible debt securities, and our term loan, as well as cash flows from operating activities. As of March 31, 2025, we had Cash and cash equivalents of approximately $914.3 million.
Previous wording
We believe our existing cash and cash equivalent balances and cash flow from operations will be sufficient to meet our working capital and capital expenditure needs for the next 12 months and beyond. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, timing to adjust our supply chain and cost structures in response to material fluctuations in product demand, timing and amount of spending related to acquisitions, the timing and amount of spending on research and development and manufacturing initiatives, the timing and financial impact of product recalls, sales and marketing activities, the timing of new product introductions, market acceptance of our Connected Fitness Products, timing and investments needed for international expansion, and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in further dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.
Current wording
We believe our existing cash and cash equivalent balances and cash flow from operations will be sufficient to meet our working capital and capital expenditure needs for the next 12 months and beyond. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, timing to adjust our supply chain and cost structures in response to material fluctuations in product demand, timing and amount of spending related to acquisitions, the timing and amount of spending on research and development and manufacturing initiatives, the timing and financial impact of product recalls, sales and marketing activities, the timing of new product introductions, market acceptance of our Connected Fitness Products, timing and investments needed for international expansion, and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in further dilution to our stockholders. The incurrence of debt financing would result in increased debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.
Previous wording
The Revolving Facility, when drawn, bears interest at a rate equal to, at our option, either the Alternate Base Rate (as defined in the Third Amended and Restated Credit Agreement) plus 4.00% per annum or the Term SOFR Rate (as defined in the Third Amended and Restated Credit Agreement) plus 5.00% per annum. We are required to pay an annual commitment fee of 0.50% per annum on a quarterly basis based on the unused portion of the Revolving Facility, provided that the commitment fee is subject to one 0.125% step-down after the delivery of the financial statements and related compliance certificate for the fiscal quarter ending on or after September 30, 2024 for which the First Lien Net Leverage Ratio (as defined in the Third Amended and Restated Credit Agreement) is less than 5.00 to 1.00.
Current wording
The Revolving Facility, when drawn, bears interest at a rate equal to, at our option, either the Alternate Base Rate (as defined in the Third Amended and Restated Credit Agreement) plus 4.00% per annum or the Term SOFR Rate (as defined in the Third Amended and Restated Credit Agreement) plus 5.00% per annum. We are required to pay an annual commitment fee of 0.500% or 0.375% per annum, depending on whether the First Lien Net Leverage Ratio (as defined in the Third Amended and Restated Credit Agreement) is greater or less than 5.00 to 1.00, on a quarterly basis based on the unused portion of the Revolving Facility.
Previous wording
The Term Loan initially bears interest at a rate equal to, at our option, either the Alternate Base Rate (as defined in the Third Amended and Restated Credit Agreement) plus 5.00% per annum or the Term SOFR Rate (as defined in the Third Amended and Restated Credit Agreement) plus 6.00% per annum. After the delivery of the financial statements and related compliance certificate for the fiscal quarter ending on or after September 30, 2024 for which the First Lien Net Leverage Ratio (as defined in the Third Amended and Restated Credit Agreement) is less than 5.00 to 1.00, the applicable rate for Alternate Base Rate loans or Term SOFR Rate loans will be subject to one 0.50% step-down. Any borrowing at the Alternate Base Rate is subject to a 1.00% floor and the Term SOFR Rate is subject to a 0.00% floor.
Current wording
The Term Loan initially bears interest at a rate equal to, at our option, either the Alternate Base Rate (as defined in the Third Amended and Restated Credit Agreement) plus 5.00% per annum or the Term SOFR Rate (as defined in the Third Amended and Restated Credit Agreement) plus 6.00% per annum. The applicable rate for Alternate Base Rate loans or Term SOFR Rate loans is subject to a 0.50% step down, depending on whether the First Lien Net Leverage Ratio is less than 5.00 to 1.00 as measured on a quarterly basis. Any borrowing at the Alternate Base Rate is subject to a 1.00% floor and the Term SOFR Rate is subject to a 0.00% floor.
Previous wording
During the three and six months ended December 31, 2024, we incurred total commitment fees of $0.1 million and $0.3 million, respectively, and $0.3 million and $0.7 million during the three and six months ended December 31, 2023, respectively, which are included in Interest expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Current wording
During the three and nine months ended March 31, 2025, we incurred total commitment fees of $0.1 million and $0.4 million, respectively, and $0.3 million and $1.0 million during the three and nine months ended March 31, 2024, respectively, which are included in Interest expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Previous wording
As of December 31, 2024, we had drawn the full amount of the Term Loan and had not drawn on the Revolving Facility, and we had $995.0 million total outstanding borrowings under the Third Amended and Restated Credit Agreement.
Current wording
As of March 31, 2025, we had drawn the full amount of the Term Loan and had not drawn on the Revolving Facility, and we had $992.5 million total outstanding borrowings under the Third Amended and Restated Credit Agreement.
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