Peloton Surprises with Profit Amid Cost-Cutting Strategy

PALO ALTO, California – Peloton, the connected fitness company, posted a surprise profit of $21.6 million for its fiscal fourth quarter, significantly improving from a loss of $30.5 million during the same period last year. The company’s announcement on Thursday highlighted its ongoing strategy to return to growth while cutting costs.

The increase in net income came alongside a reduction in operating expenses, which Peloton CEO Barry Stern acknowledged remain too high. In a letter to shareholders, he stated, “Our operating expenses remain too high, which hinders our ability to invest in our future.” Peloton plans to reduce its annual expenditures by an additional $100 million through layoffs and renegotiating supplier contracts.

As part of these cuts, Peloton intends to shrink its workforce by 6%, which Stern described as a difficult decision impacting many talented team members. The company had previously cut $200 million in fiscal 2025 in its efforts to stabilize the business.

For the quarter that ended June 30, Peloton’s sales reached $607 million, a 6% decrease from the previous year. However, the company exceeded Wall Street’s expectations both in net income and revenue, an encouraging sign eight months into Stern’s leadership.

Peloton’s focus on cutting costs has begun to yield results, with the company showing $320 million in free cash flow for the full year. Analysts noted a 25% reduction in overall operating expenses and highlighted the significant cuts in sales and marketing, which had previously drawn criticism for being excessive.

Despite stronger performance in hardware sales, Peloton expects weaker sales for its current quarter, projecting revenues between $525 million and $545 million, lower than the $560 million analysts anticipated. The company is preparing for a seasonal dip as summer traditionally sees a pause in subscription services and purchases.

Stern also mentioned planned future enhancements in customer service, including optional expert assembly fees, which will help address the real costs of equipment installation. The company aims to expand its retail presence, shifting focus to smaller micro-stores and increasing its instructors’ presence at events.

Looking ahead, Peloton is working on international expansion plans, envisioning localized, in-language experiences to attract a global audience. “Through partnerships, we aim to introduce the Peloton brand and experiences to millions of people around the world,” Stern said.

Peloton’s ongoing efforts to balance costs and revenue growth set a hopeful trajectory for the company as it navigates post-pandemic challenges.