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• Total Revenue: $674 million in Q2, comprising $253 million from Connected Fitness products and $421 million from subscriptions.

• Connected Fitness Subscription: 2.88 million paid subscriptions, a net decrease of 21,000 in the quarter.

• Average Net Monthly Paid Subscription Churn: 1.4% in Q2.

• Connected Fitness Products Gross Margin: 12.9%, reaching double digits for the first time in over three years.

• Total Gross Margin: 47.2% in Q2.

• Adjusted EBITDA: $58 million in Q2, a $140 million improvement year-over-year.

• Free Cash Flow: $106 million in Q2, an improvement of $143 million year-over-year.

• Net Debt Reduction: Decreased by $281 million or 30% year-over-year.

• Operating Expenses: $364 million in Q2, a $122 million or 25% reduction year-over-year.

• Sales and Marketing Expense: $153 million, a decrease of $78 million or 34% year-over-year.

• General and Administrative Expense: $131 million, a decrease of $29 million or 18% year-over-year.

• Research and Development Expenses: $60 million, a decrease of $20 million or 25% year-over-year.

• Impairment and Restructuring Expenses: $20 million in Q2, primarily related to retail showroom exits.

• Warning! GuruFocus has detected 7 Warning Signs with PTON.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Peloton Interactive Inc (NASDAQ:PTON) achieved a double-digit Connected Fitness products gross margin for the first time in over three years, reaching 12.9%.

• The company reported a significant improvement in adjusted EBITDA and cash flow, increasing roughly $140 million year-over-year.

• Peloton Interactive Inc (NASDAQ:PTON) exceeded its guidance on key metrics, including paid Connected Fitness subscriptions and total revenue.

• The company made meaningful progress in deleveraging its balance sheet, reducing net debt by over $280 million or 30% year-over-year.

• Peloton Interactive Inc (NASDAQ:PTON) reported exceptionally low churn rates, with an average net monthly paid Connected Fitness subscription churn of 1.4% in Q2.

Negative Points

• Peloton Interactive Inc (NASDAQ:PTON) experienced a net decrease of 21,000 paid Connected Fitness subscriptions in the quarter.

• The company faced inventory constraints due to higher-than-expected Tread+ sales, leading to longer delivery times and delayed revenue recognition.

• Third-party retail sales were lower than expected in Q2, partly due to reduced promotional discounts on the original Bike.

• Peloton Interactive Inc (NASDAQ:PTON) continues to see a mix shift towards the secondary market, which has a higher churn profile than direct sales.

• The company recognized $20 million of impairment and restructuring expenses in Q2, including noncash charges related to asset write-downs.