Peloton Interactive, Inc. — Q1 FY2027 Earnings Summary

Financial Performance:

• Total revenue for Q1 FY2027 was $559 million, an increase of $8 million (2%) year-over-year.
• GAAP net income was $96 million.
• Adjusted EBITDA was $168 million, an increase of $50 million (42%) year-over-year.
• GAAP net cash provided by operating activities was $146 million, an increase of $74 million (103%) year-over-year.
• Free cash flow was $143 million, an increase of $76 million (113%) year-over-year.
• Total gross margin was 61.3%, representing a year-over-year increase of 975 basis points.
• Subscription revenue was $410.7 million, up 3% year-over-year.
• Connected fitness products revenue was $148.5 million, down 3% year-over-year.
• Total operating expenses were $226.2 million, down 7% year-over-year.
• Net cash provided by operating activities increased 60% quarter-over-quarter from $91.0 million in Q4 FY2026.
• Free cash flow increased 62% quarter-over-quarter from $88.7 million in Q4 FY2026.

Guidance and Future Outlook:

• Q2 FY2027 total revenue is expected to be between $625 million and $650 million, representing a 3% year-over-year decrease at the midpoint.
• Q2 FY2027 total gross margin is expected to be approximately 50.0%, a 50 basis point decrease year-over-year.
• Q2 FY2027 Adjusted EBITDA is expected to be between $85 million and $100 million, representing a 14% year-over-year increase at the midpoint.
• Full-year FY2027 total revenue outlook is $2.30 billion to $2.40 billion, a 4% year-over-year decrease at the midpoint.
• Full-year FY2027 total gross margin outlook is approximately 54.0%, a 140 basis point increase year-over-year.
• Full-year FY2027 Adjusted EBITDA outlook is $475 million to $525 million, a 7% year-over-year increase at the midpoint.
• Full-year FY2027 free cash flow is expected to be at least $350 million.
• Ending paid connected fitness subscriptions for Q2 FY2027 are expected to be between 2.425 million and 2.445 million, a 9% year-over-year decrease at the midpoint.

Business Segments and Product Lines:

• Commercial Business Unit revenue grew double digits year-over-year in Q1.
• Announced a new Tread lineup including Tread Flex, the company's first space-saving and foldable treadmill.
• Announced new Peloton IQ features for runners, walkers, and hikers, including Run Analysis, IQ Pace Targets, and ReRuns.
• Debuted the "Let Yourself Run" marketing campaign starring Miley Cyrus in late September.
• Opened ten additional microstores in the U.S. since the beginning of Q1, bringing the total number of stores to 19.
• Ending paid connected fitness subscriptions were 2.475 million, a 9% decrease year-over-year.
• Ending paid app subscriptions were 0.487 million, a 10% decrease year-over-year.
• Average net monthly paid connected fitness subscription churn was 1.7%, a 10 basis point improvement year-over-year.

Market and Competitive Landscape:

• The company targets the multibillion-dollar at-home treadmill market with its best products and broadest price range.
• Management highlighted exceptional member retention as a key strength.
• The company is advancing digital personalized training through Peloton IQ.

Risks and Challenges:

• The press release includes a standard Safe Harbor Statement noting forward-looking statements are subject to risks including ability to execute strategy, maintain profitability, attract subscribers, manage inventory, and compete effectively.
• Risks include supply chain disruptions, component cost increases, product safety issues, and reliance on third-party licenses for music.
• Risks related to AI integration, cybersecurity, data privacy, and macroeconomic conditions such as inflation and rising interest rates are noted.

Management Commentary and Tone:

• CEO Peter Stern stated results underscore the strength of the business and the trajectory of the multi-year transformation, citing purposeful innovation and a pipeline of new products.
• CFO Sid Thacker noted the financial engine is operating efficiently, with solid fundamentals, healthy margins, and strong liquidity providing flexibility for strategic ambitions.
• Management expressed confidence in defining the future of connected fitness and wellness powered by an accelerating pipeline and strong brand.

Other Key Points:

• Reduced gross principal debt outstanding by nearly $500 million (32%) in calendar year 2026.
• Voluntarily paid down $280 million of the Term Loan following the close of Q1.
• Gross principal debt outstanding following the paydown is $1.048 billion, down from $1.534 billion as of December 31, 2025.
• Net debt as of September 30, 2026, was negative $43.2 million (cash and cash equivalents of $1,342.2 million exceeded total debt of $1,298.9 million).
• Gross leverage ratio for the trailing twelve months ended September 30, 2026, was 2.6x, down from 3.8x in the prior year period.
• Net leverage ratio for the trailing twelve months ended September 30, 2026, was 0.0x, down from 1.1x in the prior year period.
• A live webcast and conference call regarding the results were scheduled for November 5, 2026, at 8:30 a.m. ET.