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What changed in PELOTON INTERACTIVE, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PELOTON INTERACTIVE, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+532 added−565 removedSource: 10-K (2025-08-07) vs 10-K (2024-08-22)

Top changes in PELOTON INTERACTIVE, INC.'s 2025 10-K

532 paragraphs added · 565 removed · 408 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

53 edited+22 added−20 removed12 unchanged
Biggest changeWe define a completed workout as either completing at least 50% of an Instructor-led class, Scenic ride, run, or row, or ten or more minutes of “Just Ride”, “Just Run”, or “Just Row” mode.
Biggest changeWe define workout engagement as either (i) completing the lesser of 50% or 10 minutes of Instructor-led classes, Scenic, and Lanebreak workouts; (ii) at least 10 minutes of any activity tracking workout (such as “Just Ride,” “Just Run,” or “Just Row”) or Entertainment workout; or (iii) at least 5 minutes of any Strength+ workout with 80% of sets marked complete.
Our Connected Fitness Products include: • Peloton Bike: The original Peloton Bike combines fitness, technology, and media to connect riders to live and on-demand workouts led by Peloton Instructors. The Peloton Bike also offers alternative workout experiences like Entertainment (video streaming), Scenic (guided, time, and distance based rides filmed in locations around the world), and Lanebreak (game inspired workout experience).
Our Connected Fitness Products include: • Peloton Bike: The original Peloton Bike combines fitness, technology, and media to connect riders to live and on-demand workouts led by Peloton Instructors. The Peloton Bike also offers alternative workout experiences like Peloton Entertainment (video streaming), Scenic (guided, time, and distance-based rides filmed in locations around the world), and Lanebreak (our game-inspired workout experience).
Our sales associates use customer relationship management tools to deliver an elevated, personalized, and educational purchase experience, regardless of channel of capture and conversion. • E-Commerce and Inside Sales: Our desktop and mobile websites provide an elevated brand experience where visitors can learn about our products and services and access product reviews.
Our sales associates use customer relationship management tools to deliver an elevated, personalized, and educational purchase experience, regardless of channel of capture and conversion. 6 • E-Commerce and Inside Sales: Our desktop and mobile websites provide an elevated brand experience where visitors can learn about our products and services and access product reviews.
In addition, it is possible that certain governments may seek to block or limit our products and services or otherwise impose other restrictions that may affect the accessibility or usability of any or all of our products and services for an extended period of time or indefinitely.
In addition, it is possible that certain governments may seek to block or limit our products and services or otherwise impose restrictions that may affect the accessibility or usability of any or all of our products and services for an extended period of time or indefinitely.
Designed to keep riders motivated and effortlessly moving from cardio to strength, yoga, and more, the Peloton Bike+ unlocks an even more seamless and integrated total workout experience. • Peloton Tread: The Peloton Tread combines a cutting-edge treadmill design with Peloton’s compelling Instructor-led running and Tread Bootcamp content, as well as Entertainment, Scenic and Lanebreak.
Designed to keep riders motivated and effortlessly moving from cardio to strength, yoga, and more, the Peloton Bike+ unlocks an even more seamless and integrated total workout experience. • Peloton Tread: The Peloton Tread combines a cutting-edge treadmill design with Peloton’s compelling Instructor-led running, walking, hiking, and Tread Bootcamp content, as well as Entertainment, Scenic, and Lanebreak.
We define a “Paid 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).
We define a “Paid Connected Fitness Subscription” as a person, household, or commercial property, such as a hotel or residential building, that 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).
We use a combination of leased and operated as well as contracted third-party logistics providers (“3PLs”) in our logistics and service network which primarily includes middle mile and last mile operations centers in the United States, Canada, Germany, the United Kingdom, Australia, and Austria.
We use a combination of (i) leased and operated, as well as (ii) contracted third-party logistics providers (“3PLs”) in our logistics and service network, which primarily includes middle mile and last mile operations centers in the United States, the United Kingdom, Canada, Germany, and Australia.
The information contained on, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this Annual Report on Form 10-K. Investors should not rely on any such information in deciding whether to purchase our Class A common stock.
The information contained on, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this Annual Report on Form 10-K or in any other report or document we file. Investors should not rely on any such information in deciding whether to purchase our Class A common stock.
The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding us and other companies that file materials with the SEC electronically. We use our Investor Relations website (https://investor.onepeloton.com/investor-relations) and Press Newsroom (https://www.onepeloton.com/press) as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding us and other companies that file materials with the SEC electronically. We use our Investor Relations website and Press Newsrooms (https://investor.onepeloton.com/news-and-events/news-releases and https://www.onepeloton.com/press) as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
The components used in our products are procured on our behalf using our designs by our contract manufacturers, according to our required design specifications and high standards, from a variety of suppliers.
The components used in our products are procured directly by Peloton or on our behalf using our designs by our contract manufacturers, according to our required design specifications and high standards, from a variety of suppliers.
The areas in which we compete include: • Consumers and Engagement: We compete for consumers to join our platform through Connected Fitness Subscriptions or Peloton App Subscriptions, and we seek to engage and retain them through an integrated experience that combines content, hardware, software, service, and community. • Product and App Offering: We compete with producers of fitness products, services, and apps and work to ensure that our platform maintains the most innovative technology and user-friendly features. • Business-to-Business (B2B) Clients and Employers: We compete with commercial fitness equipment manufacturers and wellness benefits providers to offer fitness products and services to B2B clients and employers. 7 • Talent: We compete for talent in every vertical across our company including technology, media, fitness, design, supply chain, logistics, content, marketing, finance, strategy, legal, and retail.
The areas in which we compete include: • Consumers and Engagement: We compete for consumers to join our platform through Connected Fitness Subscriptions, and we seek to engage and retain them through an integrated experience that combines hardware, software, human coaching, and community. • Product and App Offering: We compete with producers of fitness products, services, and apps and work to ensure that our platform maintains the most innovative technology and user-friendly features. 7 • Business-to-Business (B2B) Clients: We compete with commercial fitness equipment manufacturers to offer fitness products and services to B2B clients. • Talent: We compete for talent in every vertical across our company, including technology, media, fitness, design, supply chain, logistics, content, marketing, finance, strategy, legal, and retail.
Seasonality Historically, we have experienced higher Connected Fitness Products sales in the second and third quarters of the fiscal year compared to other quarters, due in large part to seasonal holiday demand, New Year’s resolutions, and cold weather. We also have historically incurred higher sales and marketing expenses during these periods.
Seasonality Historically, we have experienced higher Connected Fitness Products sales in the second and third quarters of the fiscal year compared to other quarters, due in large part to seasonal holiday demand and promotions, New Year’s resolutions, and colder weather in the Northern Hemisphere. We also have historically incurred higher sales and marketing expenses during these periods.
We generally enter into confidentiality agreements and invention or work product assignment agreements with our employees and consultants to control access to, and clarify ownership of, our proprietary information. As of June 30, 2024, we held 180 U.S. issued patents and had 82 U.S. patent applications pending.
We generally enter into confidentiality agreements and invention or work product assignment agreements with our employees and consultants to control access to, and clarify ownership of, our proprietary information. As of June 30, 2025, we held 178 U.S.-issued patents and had 93 U.S. patent applications pending.
As of June 30, 2024, we held 58 registered trademarks in the United States, including the Peloton mark and our “P” logo and also held 950 registered trademarks in foreign jurisdictions. We continually review our development efforts to assess the existence and patentability of new intellectual property.
As of June 30, 2025, we held 45 registered trademarks in the United States, including the Peloton mark and our “P” logo and also held 959 registered trademarks in foreign jurisdictions. We continually review our development efforts to assess the existence and patentability of new intellectual property.
“Paid App Subscriptions” include all App One and App+ subscriptions for which we are currently receiving payment. Our Products We provide Members with expert instruction and world class content to create impactful and entertaining workout experiences for anyone, anywhere, and at any stage in their fitness journey.
“Paid App Subscriptions” include all App+, App One, or Strength+ subscriptions for which we currently receive payment. Our Connected Fitness Products We provide Members with expert instruction and world-class content to create impactful and entertaining workout and wellness experiences for anyone, anywhere, and at any stage in their fitness journey.
We intend to continue to file additional patent applications with respect to our technology. Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed, or misappropriated.
We intend to continue to file additional patent applications with respect to our technology. Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property rights may and have been, in certain instances, challenged, invalidated, circumvented, infringed, or misappropriated.
Peloton, the Peloton logo, Peloton Bike, Peloton Bike+, Peloton Tread, Peloton Tread+, Peloton Guide, Peloton Row, Peloton Gym, Peloton App, and other registered or common law trade names, trademarks, or service marks of Peloton appearing in this Annual Report on Form 10-K are the property of Peloton.
Peloton, the Peloton logo, Peloton Bike, Peloton Bike+, Peloton Tread, Peloton Tread+, Peloton Guide, Peloton Row, our Peloton Apps, Peloton Strength+, Precor and other registered or common law trade names, trademarks, or service marks of Peloton appearing in this Annual Report on Form 10-K are the property of Peloton.
Government Regulation We are subject to many varying laws and regulations in the United States, the United Kingdom, the European Union and throughout the world, including those related to privacy, data protection, content regulation, intellectual property, consumer protection, e-commerce, marketing, advertising, messaging, rights of publicity, health and safety, environmental, social, and governance factors, employment and labor, product quality and safety, accessibility, competition, customs and international trade, and taxation.
Government Regulation We are subject to many varying laws and regulations in the United States, the United Kingdom, the European Union, Australia, and throughout the world, including those related to privacy, data protection, content regulation, intellectual property, consumer protection (including with regard to subscription services), e-commerce, marketing, advertising, messaging, rights of publicity, health and safety, environmental, social, and governance factors, employment, labor, and anti-discrimination, product quality and safety, accessibility, competition, customs and international trade (including tariffs and non-tariff trade barriers), and taxation.
The Tread includes fundamental design elements unique to Peloton, like dial control knobs, jump buttons, and an auto-incline feature. It has a 23.8” HD touchscreen. • Peloton Tread+: The Peloton Tread+ includes all Tread features and unlocks an elevated comfort experience with slat belt technology.
The Tread includes design elements unique to Peloton, like dial control knobs, jump buttons, and an auto-incline feature as well as an HD touchscreen. • Peloton Tread+: The Peloton Tread+ includes all Tread features and unlocks an elevated comfort experience with slat belt technology.
The core elements of our team member health and safety program include workplace injury reporting, site risk analysis, incident management, documented processes and standards, environmental programs, training, and occupational health programs, and we are continually striving to improve these processes.
The core elements of our team member health and safety program include workplace injury reporting, site risk analysis, incident management, documented processes and standards, environmental programs, training, and occupational health programs, and we are continually striving to improve these processes. Concerns about the health and safety of our team members must be reported through our PeloSafe portal.
We take a comprehensive view of the tools and programs we use to attract, reward, and retain top talent, including comprehensive health benefits, family and lifestyle services and 9 support, financial, legal and retirement benefits, product discounts, free App access, and studio rides. Our workforce is diverse – so our benefits must be too.
We take a comprehensive view of the tools and programs we use to attract, reward, and retain top talent, including comprehensive health benefits, family and lifestyle services and support, financial, legal and retirement benefits, product discounts, free App access, and studio rides.
Our content breadth and depth is vast, reaching a wide range of consumers. Fitness modalities include: Strength, Yoga, Meditation, Cardio, Stretching, Cycling, Outdoor, Running, Walking, Tread Bootcamp, Bike Bootcamp, Boxing, Pilates, Barre, Rowing, and Row Bootcamp. We have Scenic Content that includes Instructor-guided classes, as well as non-guided time and distance-based options, all shot in beautiful destinations.
Our content breadth and depth is vast. Fitness disciplines include: Cycling, Strength, Yoga, Running, Meditation, Cardio, Stretching, Outdoor, Walking, Tread Bootcamp, Bike Bootcamp, Boxing, Kettlebell, Pilates, Barre, Rowing, and Row Bootcamp. We have Scenic Content shot in beautiful destinations that includes Instructor-guided classes, exclusive partnership content, as well as non-guided time and distance-based options.
We also have game-inspired workout experiences like our Lanebreak feature, which allows Members to experience an animated workout as an alternative to Instructor-led programming. Lastly, we have a number of training programs, as well as collections of classes that are catered to our Members’ interests and fitness goals.
We also have a game-inspired workout, Lanebreak, which allows Members to experience an animated workout as an alternative to Instructor-led programming. Lastly, we have a number of training programs, as well as collections of classes that are catered to our Members’ interests and fitness goals. These are produced and developed using features that are exclusively available on Peloton.
It has a 21.5” HD touchscreen. • Peloton Bike+: The Peloton Bike+ includes all Bike features and unlocks an even more dynamic workout experience with a rotating screen improving the off-bike workout experience, as well as automatic resistance control with the Bike+ electronic braking system, and a 23.8” HD touchscreen.
It has an HD touchscreen. • Peloton Bike+: The Peloton Bike+ includes all Bike features and unlocks an even more dynamic workout experience with a rotating HD touchscreen to improve the off-bike workout experience, as well as automatic resistance control with the Bike+ electronic braking system, and a more refined design.
The All-Access Membership also offers advanced metrics and progress tracking features to help members reach their goals, and the ability to diversify their workout experience through Scenic content, game-inspired experiences including Lanebreak, and the ability to stream favorite TV shows, movies, and sports. • Peloton App Membership: 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 (App+ or App One).
The All-Access Membership also offers advanced metrics and progress tracking features to help members reach their goals, and the ability to diversify their workout experience through Scenic content, game-inspired experiences including Lanebreak, and the ability to stream favorite TV shows, movies, and sports through Peloton Entertainment (certain streaming services require separate subscriptions). • Rental Membership: The Peloton Rental Membership allows Members to rent a Peloton Bike+ with all the Membership benefits of an All-Access subscription for a bundled monthly price. • Peloton App Membership: Access to the Peloton Apps is available with an All-Access or Guide Membership for Members who have Connected Fitness Products or through a standalone App Membership (App+, App One, or Strength+).
We define a “Member” as any individual who has a Peloton account through a paid Connected Fitness Subscription or a paid Peloton App Subscription, and completes 1 or more workouts in the trailing 12 month period.
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+, App One and Strength+ Memberships (our “Peloton Apps”), and engages in one or more workouts in the trailing 12-month period.
With this membership, the entire household can create a unique profile to access the full library of classes and receive tailored content recommendations across many fitness and wellness modalities on the Peloton Bike, Bike+, Tread, Tread+, Row, Guide, and the Peloton App.
With this membership, the entire household can create individual profiles to access the full library of classes and receive tailored content recommendations across many fitness and wellness disciplines on the Peloton Bike, Bike+, Tread, Tread+, Row, Guide, as well as our Peloton Apps.
To market our products, we use a combination of brand and product specific performance marketing, which includes seasonal promotions to build brand awareness, generate sales of our Connected Fitness Products, and drive Paid Connected Fitness subscriptions and Paid App subscriptions. Manufacturing and Logistics We utilize third-party manufacturing partners for many of our new products.
To market our products, we use a combination of brand and product-specific performance marketing, including seasonal promotions to build brand awareness, generate sales of our Connected Fitness Products, and drive Paid Connected Fitness subscriptions and Paid App subscriptions.
Accordingly, investors should monitor our Investor Relations website and Press Newsroom in addition to following our press releases, SEC filings, and public conference calls and webcasts. 10
Accordingly, investors should monitor our Investor Relations website and Press Newsrooms in addition to following our press releases, 9 SEC filings, investor events and webcasts.
Concerns about the health and safety of our team members can be reported through our PeloSafe portal, and concerns about Peloton suppliers or business partners are reportable through our Integrity Helpline or online Integrity Portal, which is maintained through an external third-party platform and monitored by our Safety, Ethics, and Compliance Team.
Any concerns about Peloton suppliers or business partners should be reported through our Integrity Helpline available online and by telephone. The Integrity Helpline is maintained through an external third-party platform and monitored by our Safety, Ethics, and Compliance Team.
We are constantly building and evolving our content library and offering, which includes Instructor-led classes, Scenic content, Entertainment, Just Work Out, and game-inspired workout options. Tens-of-thousands of classes and content types are produced at our production studios in New York City and London, featuring our proprietary Instructors, across many fitness and wellness modalities.
We are constantly innovating and evolving our content library and offerings, which include Instructor-led audio-visual classes, Scenic content, Entertainment, Just Work Out, and a game-inspired workout option called Lanebreak. Tens of thousands of classes have been produced at our studios in New York City and London, featuring our proprietary Instructors, across many fitness and wellness disciplines.
We also held 429 issued patents in foreign jurisdictions and 119 patent applications pending in foreign jurisdictions. Our U.S. issued patents expire between February 9, 2025 and August 5, 2046.
We also held 477 issued patents in foreign jurisdictions and 91 patent applications pending in foreign jurisdictions. Our U.S. issued patents expire between December 28, 2026 and August 5, 2046.
At home, outdoors, traveling, or at the gym, we offer an immersive and personalized experience. With tens-of-thousands of classes available across many fitness modalities, Members can access Peloton content via our hardware or via the Peloton App, on their phone, tablet, or TV, allowing them to workout when, where, and how they want.
At home, outdoors, traveling, or at the gym, we offer an immersive and personalized experience. With a vast library of classes across many fitness disciplines, Members can access Peloton content via our hardware or our Peloton Apps, which can be accessed via phone, tablet, computer, or TV, allowing Members to work out when, where, and how they want.
These include, but are not limited to, programs focusing on Peloton’s approach to onboarding new team members, people and business leadership, dedicated coaching, function and role specific training offerings, and internal hiring and mobility to support personal and professional growth.
Training, Development, and Engagement We have a dedicated Global Talent Development Team that develops and delivers company-wide learning experiences across all functions. These include, but are not limited to, programs focusing on Peloton’s approach to onboarding new team members, people and business leadership, dedicated coaching, function specific training offerings, and internal hiring and mobility to support personal and professional growth.
These are produced and developed using features that are exclusively available on Peloton. Our Peloton Studios in New York City and London provide an in-person Peloton content experience. Regular studio member classes and events are held in these spaces combining a high-energy live production environment with fitness classes in seven active production studios.
Peloton Studios New York and Peloton Studios London provide an in-person Peloton fitness experience. Regular studio Member classes and events are held in these spaces combining a high-energy live production environment with fitness classes. We currently produce our content in three languages: English, German, and Spanish.
We’ve also launched a number of performance based features, including personalized pace targets on the Peloton Tread and Row, and continue to invest in the Peloton App to create a more social experience.
We’ve also launched a number of performance-based features, including personalized pace targets on the Peloton Tread and Row, and we continue to invest in the Peloton Apps to create a more social experience. Lastly, we use AI and machine learning (ML) to power proprietary personalization and discovery models across all our software platforms.
Employees As of June 30, 2024, we employed 2,322 individuals in the United States across our offices, retail showrooms, field operations warehouses, and remote roles, of which 2,257 were full-time employees. Internationally, we employed 596 individuals primarily across corporate, retail showrooms, and warehouse functions. We may also hire additional seasonal employees, primarily in our showrooms, during the holiday season.
Employees As of June 30, 2025, we employed 2,145 individuals in the United States across our offices, production studio facilities, warehouse and distribution facilities, retail showrooms, and remote roles, of which 2,094 were full-time employees. Internationally, we employed 511 individuals primarily across corporate, studio and warehouse functions.
Sales and Marketing We sell our products directly to customers through a multi-channel sales platform and via third parties. We also sell Peloton Connected Fitness Products to business-to-business (“B2B”) customers and provide the opportunity for employers, insurers, and other enterprise partners to offer their employees and members subsidized access to Peloton App subscriptions and All-Access Memberships.
Sales and Marketing We sell our products directly to customers through a multi-channel sales platform and via third parties. We also sell Peloton Connected Fitness Products to business-to-business (“B2B”) customers.
We currently produce our content in three languages: English, German, and Spanish. We also have classes featuring subtitles and a selection of classes that are dubbed in German. We have become noteworthy as a brand providing the opportunity for our Members to engage in a new way with the fitness modalities they love.
We are also creating a class library featuring AI-powered subtitling and dubbing in multiple languages. We have become noteworthy as a brand providing the opportunity for our Members to engage in a new way with the fitness experiences and wellness content they love.
While we believe we are changing the consumption patterns for fitness and over time growing the market, our main sources of competition include at-home fitness equipment and content, health and wellness apps, fitness clubs, and in-studio fitness classes.
We provide a superior value proposition with our Connected Fitness Subscriptions, giving us a competitive advantage versus traditional fitness and wellness products and services, and future potential entrants. While we believe we are changing the consumption patterns for fitness, our main sources of competition include at-home fitness equipment and content, health and wellness apps, in-studio fitness classes, and fitness clubs.
Our Inside Sales team engages with customers by phone, email, and online chat on our websites, and offers one-on-one sales consultations seven days a week. 6 • Peloton for Business: Peloton For Business is a unified portfolio of B2B well-being solutions for enterprise clients, offered across seven key verticals: Hospitality, Corporate Wellness, Multi-Family Residential, Education, Healthcare, Gyms and Community Wellness.
Our Inside Sales team engages with customers by online chat on our websites, phone, and email, and offers one-on-one sales consultations. • Peloton for Business: Peloton For Business is a unified portfolio of B2B fitness and well-being solutions for business clients to integrate Peloton into their customer and/or employee offerings.
Peloton App+ provides unlimited access to Peloton’s entire library of content, excluding Lanebreak and Scenic classes. Peloton App One is designed for Members who want unlimited access to thousands of classes across Strength, Yoga, Outdoor Running, HIIT, and more.
Peloton App+ provides unlimited access to Peloton’s entire library of content, excluding Lanebreak and Scenic classes.
We maintain ongoing connection with our team members through our company intranet, “Pelonet,” regular all-hands meetings and business performance reviews, team town halls, and company-wide engagement surveys throughout the year. Our Patent Incentive Program provides rewards and recognition to qualifying team members whose inventions are included in a patent application submitted by Peloton.
We stay closely connected through multiple channels—our company intranet, Pelonet, regular all-team meetings, team town halls, and company-wide engagement surveys. These touchpoints ensure that every team member’s perspective informs how we grow, learn, and lead, together. Our Patent Incentive Program provides rewards and recognition to qualifying team members whose inventions are included in a patent application submitted by Peloton.
It has a 23.8” HD rotating touchscreen. Our Connected Fitness Products also include certain Precor products. Financing options are available for most Peloton products. In select markets, we also provide the opportunity via the Peloton Rental program to rent certain Peloton products and access fitness content for one monthly fee.
In July 2025, we discontinued the sale of Peloton Guide. The Company will continue to support existing Guide features and Memberships. Financing options are available for most Peloton products. In select markets, we also provide the opportunity via the Peloton Rental program to rent Peloton Bike+ and access fitness content for one monthly fee.
We thoughtfully invest in research and development to enhance our platform, develop new products and features, and improve the speed, scalability, and security of our platform infrastructure. Our research and development organization consists of engineering, product, and design teams.
Guide Memberships are reflected in Paid Connected Fitness Subscriptions. Our Software Our content delivery and interactive software platform is critical to our Member experience. We thoughtfully invest in research and development to enhance our platform, develop new products and features, and improve the speed, scalability, and security of our platform infrastructure.
Lastly, we use AI/ML to power proprietary personalization and discovery models across all of our software platforms and unique fitness features. Content We create engaging, original fitness and wellness content in an authentic studio environment that is immersive and motivating, while also creating a sense of community.
Our Instructor-Led Content We create engaging, original fitness and wellness content in a studio environment that is available on demand. Our Instructor-led content is immersive and motivating, while also creating a sense of community.
We seek to continuously improve our Connected Fitness Products, as well as the Peloton App (including the Peloton mobile app, watch apps, and TV apps), through frequent software updates, iterations of feature enhancements, and innovations. For example, last year we launched Peloton Entertainment, where Members can watch sports, shows, and movies via certain entertainment platform partners while working out.
Our research and development organization consists of engineering, product, and design teams. We seek to continuously improve our Connected Fitness Products, as well as the Peloton Apps (including the Peloton mobile apps and watch apps), through frequent software updates, iterations of feature enhancements, and innovations.
It has an upgraded 32” touchscreen and powerful sound bar designed for the highest quality home workout experience. • Peloton Guide: Peloton’s first connected strength product, Peloton Guide, is an AI-powered personal trainer that connects to televisions and offers personalized strength training routines, as well as rep and progress tracking.
Peloton Row employs proprietary form assistance and form guidance technology for rowers and also features personalized pace target technology. It has a rotating HD touchscreen. • Peloton Guide: The Peloton Guide is an AI-powered personal trainer that connects to televisions and offers personalized strength training routines, rep and progress tracking, as well as form feedback.
Our pay equity study is in addition to any market-specific obligations we have to undertake pay gap analyses, such as our Gender Pay Gap Study in the United Kingdom. Team Member Safety We prioritize the health and safety of our team members, our Members, and the impact our operations have on the environment.
Team Member Safety We prioritize the health and safety of our team members, our Members, and the impact our operations have on the environment.
It features exclusive strength programs and workouts only available on Peloton Guide. • Peloton Row: Peloton Row combines the innovative software, premium hardware design, and exclusive Peloton content to deliver a unique low-impact, full-body cardio, and strength workout. Peloton Row employs proprietary form assistance and form guidance technology for rowers and also features personalized pace target technology.
It has an upgraded touchscreen and a powerful sound bar designed for the highest quality home workout experience. • Peloton Row: Peloton Row combines innovative software, premium hardware design, and exclusive Peloton content to deliver a unique low-impact, full-body cardio, and strength workout.
We frequently host Peloton community events in our showrooms, which help deepen brand engagement and customer loyalty. • Third Party Retailers: Our products are also available to purchase from a number of third party retailers, at times including Amazon, Dick’s Sporting Goods, John Lewis, and Fitshop.
We provide interactive product demonstrations, including the opportunity to take a “test class” on our Connected Fitness Products. • Third Party Retailers: Our products are also available to purchase from a number of third party retailers, at times including Amazon, Dick’s Sporting Goods, John Lewis, Fitshop and MediaMarkt, as well as through seasonal partners, such as Costco.
Peloton content is accessed via a Membership, and we have created a number of ways for consumers to engage with Peloton’s fitness experience. Monthly membership options include: 5 • All-Access Membership: The Peloton All-Access Membership is the most value-packed Peloton Membership.
Our Memberships Peloton content is accessed via a Membership billed on a monthly or annual basis through a Paid Connected Fitness Subscription or a Paid App Subscription. Membership options include: 5 • All-Access Membership: The Peloton All-Access Membership is the most value-packed Peloton Membership.
Item 1. Business Overview Peloton is a leading global fitness company with a highly engaged community of over 6.4 million Members as of June 30, 2024 across the United States, United Kingdom, Canada, Germany, Australia, and Austria.
We have a highly engaged community of approximately 6 million Members as of June 30, 2025, across the United States, United Kingdom, Canada, Germany, Australia, and Austria. As a category innovator at the nexus of fitness and wellness, technology, and media, we deliver experiences through our world-renowned Instructors, premium hardware and innovative software, personalization, and extensive modalities and content formats.
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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. Founded in 2012 and headquartered in New York City, Peloton continues to scale across the markets in which it operates.
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Item 1. Business Overview Peloton is a leading global fitness and wellness company that empowers its Members to live fit, strong, long, and happy by providing fitness and wellness products and services they can use anytime, anywhere.
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App One Members can also take a limited number of equipment-based cardio classes per month (Bike/Tread/Row). • Guide Membership: Includes App+ Membership and content exclusively for Guide. Our Integrated Fitness Platform Technology Our content delivery and interactive software platform is critical to our Member experience.
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Founded in 2012 and headquartered in New York City, Peloton aims to scale across the markets in which it operates.
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In addition, we recently added a new marathon training collection on Tread and Tread+, including featuring a series of Scenic classes filmed on a well known marathon course. In a first-of-its-kind experience, these classes provide Members the ability to train on a marathon course with auto-incline functionality that matches the course's gradient fluctuations.
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Peloton App One is designed for Members who want unlimited access to thousands of classes across Strength, Yoga, Outdoor Running, HIIT, Meditation, and more, but equipment-based cardio classes (Bike/Tread/Row) are limited to a few per month, and Members do not have access to classes via a Peloton Bike, Bike+, or Tread, and are not able to track their performance metrics.
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The full-service offering includes a range of equipment and content-based solutions. • Retail Showrooms: Our showrooms allow customers to experience and try our products. We provide interactive product demonstrations and select showrooms have private areas where customers can take a “test class” on our Bike, Bike+, Tread, Tread+, and Row products.
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Peloton Strength+ is an iOS mobile app with a standalone monthly membership. All-Access, App+, and Guide members get access to Strength+ for free. • Peloton Guide Membership: In July 2025, we discontinued both the sale of Peloton Guide and the offering of Guide Memberships to new Members. We will continue to support existing Guide Memberships.
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Competition We believe that our first-mover advantage, leading market position, brand recognition, best-in-class content, and integrated platform set us apart in the market for connected, technology-enabled fitness. We provide a superior value proposition with our Connected Fitness Subscription and App offerings, giving us a competitive advantage versus traditional fitness and wellness products and services, and future potential entrants.
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For example, last year we launched Personalized Plans, customized weekly workout plans matched to a Member’s goals, equipment, and preferences. We also launched Strength+, a new iOS mobile app for strength workouts at home or in the gym, including a customizable workout generator and new Strength training programs from Peloton Instructors.
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For example, in fiscal year 2024, our second and third quarters combined represented 60% of Connected Fitness Products revenue and 54% of our Total revenue.
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We serve seven key verticals: Hospitality, Multi-Family Residential, Gyms, Education, Corporate Wellness, Healthcare, and Community Wellness with a range of Connected Fitness, App, and engagement-based solutions.
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Human Capital Our Culture We’re fostering an environment that attracts extraordinary talent, helps every individual become their best self, and unlocks each person’s greatest potential, shaped by the following fundamental values: • Put Members First • Operate with a Bias for Action • Empower Teams of Smart Creatives • Together We Go Far • Be the Best Place to Work We live these values through our approach to human capital management, summarized below.
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In July 2025, Peloton for Business became part of our new commercial business unit, which is intended to combine the best of Precor with Peloton’s software, human coaching, and community. • Retail Showrooms: Our showrooms allow customers to experience and try our products.
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We are not signatories to any agreements with any labor organization, or a party to any collective bargaining agreements. Diversity, Equity, and Inclusion We cultivate a culture of inclusion by creating physiologically, emotionally, physically, and psychologically safe spaces so all team members feel valued, heard, and secure.
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Manufacturing and Logistics We primarily utilize a combination of third-party manufacturing partners for many of our new products and vertically integrated manufacturing for our refurbished Bike/Bike+.
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We’re proud of our concrete action plan to combat systemic inequities, the Peloton Pledge. Created in 2020, the Peloton Pledge is a multi-pronged, multi-faceted action plan to address Peloton’s internal culture and principles as well as a strategy to amplify change both in our company and our community.
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Competition We believe that our magic formula of best-in-class equipment, integrated software, human coaching, and the world’s most supportive fitness community allows us to improve our Member outcomes and sets us apart in the market for connected, technology-enabled fitness.
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We are pushing ourselves from the inside out and partnering with community-based organizations to deliver meaningful and measurable impact. Through the Peloton Pledge we are investing across five pillars: 8 • Pay Equity: We continue to offer competitive rates for our hourly workforce and equally competitive rates for equivalent roles in all markets.
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Human Capital Our Culture We foster an environment that attracts extraordinary talent, supports each person in becoming their best self, and unlocks the full potential of our team.
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We’re also committed to maintaining pay equity for our team and continue to conduct an annual global pay equity study. • Learning and Development: We offer content that supports internal mobility, individual growth, and ongoing skills development, and training around diversity, equity, and inclusion (DEI) topics. • Community Investments: We partner with leading action-oriented organizations addressing systemic racism through partnerships that drive real, sustainable transformation; • Democratizing Fitness: We continuously evaluate progress and apply learnings to do our part to democratize access to fitness and cultivate a diverse and inclusive Member community; • Long-Term DEI Strategy: We invest in various programs to support long-term DEI strategy, as further described below.
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This work is grounded in the values that define who we are and how we lead: • Believe — We believe in the Power of Peloton to change people’s lives for the better.
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The Peloton Pledge has sharpened our focus on delivering value-add, business-wide DEI programming. In our ongoing push for shared learning, we continue to create psychologically safe spaces for our team members to learn and grow together. For example, we have introduced specific learning programs for managers to support our ambition to be an anti-racist organization.
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This passion fuels our commitment to being all in, focused on what matters most, and accountable for doing what we say and delivering results. • Bring Your Best — We always bring our best. We put members first, delivering products and experiences of which we can be proud. We are action-oriented, taking initiative, and leading with appropriate urgency.
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We will continue to evolve our learning content to support our team members and managers while remaining relevant and engaged to the best practices in this space.
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Our commitment to excellence drives us to embrace challenges and relentlessly experiment, innovate, and improve. • Lift People Up — We lift each other up, knowing that together we go far. We’re approachable, both asking for help and giving help to those who need it. We’re collaborative, achieving shared success by fostering trust and open communication.
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We continue to offer support, engagement, and development opportunities to our team members through our Employee Resource Groups (“ERGs”) and Inclusion Forums, fostering a diverse and inclusive workplace and providing space to grow our team member ally population.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks we may face in connection with our integration of Precor include: • We may not realize the benefits we expect to receive from the transaction, such as anticipated synergies; • We may have difficulties managing Precor’s technologies and lines of business or retaining key personnel from Precor; • The acquisition may cause impairments to assets that we record as a part of an acquisition; • We may have failed to identify or assess the magnitude of (i) claims or liabilities related to Precor’s business, including, among others, claims from government agencies, terminated employees, current or former customers, consumers or business partners, users, or other third parties, unexpected litigation or regulatory exposure, or intellectual property disputes; (ii) pre-existing contractual relationships or lines of business of Precor that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business; (iii) unfavorable accounting treatment as a result of Precor’s practices; and (iv) other shortcomings or risks in Precor’s business; • Precor operates in segments of the commercial market that we have less experience with, including traditional gyms, multifamily residences, hotels and college and corporate campuses, and expansion of our operations in these segments could present various challenges and result in increased costs and other unforeseen challenges; • We may be unable to successfully integrate Precor and its operations into our control environment; and • Precor serves customers in more than 50 countries worldwide, and, as a result of the acquisition, our operations have expanded into new jurisdictions, which could present significant challenges and result in significant increased risks and costs inherent in doing business in international markets (see “— Expansion into international markets will expose us to significant risks ”).
Biggest changeWe intend to further integrate Precor into our business and risks we may face in connection with such efforts include: • We may not realize the benefits we expect to receive from the integration and ownership of Precor, such as anticipated synergies; • We may have difficulties managing Precor’s technologies and lines of business or retaining key personnel from Precor or from the Peloton for Business team; • In connection with our original acquisition of Precor, we may have failed to identify or assess the magnitude of (i) claims or liabilities related to Precor’s business, including, among others, claims from government agencies, terminated employees, current or former customers, consumers or business partners, users, or other third parties, unexpected litigation or regulatory exposure, or intellectual property disputes; (ii) pre-existing contractual relationships or lines of business of Precor that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business; (iii) unfavorable accounting treatment as a result of Precor’s practices; and (iv) other shortcomings or risks in Precor’s business; • Precor operates in segments of the commercial market that we have less experience with, including traditional gyms, multifamily residences, hotels and college and corporate campuses, and expansion of our operations in these segments could present various challenges and result in increased costs and other unforeseen challenges; • We may be unable to successfully integrate Precor and its operations into our control environment; and • Precor serves customers in more than 60 countries worldwide and our operations have therefore expanded into new jurisdictions, which could present significant challenges and result in significant increased risks and costs inherent in doing business in international markets (see “— Expansion into international markets will expose us to significant risks ”). 19 The occurrence of any of these risks could have a material adverse effect on our business, financial condition, and operating results.
We have had to educate consumers about our products and services through significant investment and provide quality content that is superior to the content and experiences provided by our competitors. Additionally, the fitness and wellness market at large is heavily saturated, and the demand for and market acceptance of new products and services in the market is uncertain.
We have had to educate consumers about our products and services through significant investment and provide content that is of superior quality to the content and experiences provided by our competitors. Additionally, the fitness and wellness market at large is heavily saturated, and the demand for and market acceptance of new products and services in the market is uncertain.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the rules and regulations promulgated thereunder by the SEC and any rules and regulations subsequently implemented by the SEC, the rules and regulations of the listing standards of The Nasdaq Stock Market LLC and other applicable securities rules and regulations.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the rules and regulations promulgated thereunder by the SEC and any rules and regulations subsequently implemented by the SEC, the listing standards of The Nasdaq Stock Market LLC and other applicable securities rules and regulations.
It is also possible that we may face reputational harm if we determine that any of our products contain minerals not determined to be free of conflict minerals or if we are unable to alter our products, processes, or sources of supply to avoid such materials.
It is also possible that we may face reputational harm if we determine that any of our products contain materials not determined to be free of conflict minerals or if we are unable to alter our products, processes, or sources of supply to avoid such materials.
If the information provided to us or obtained by such third parties does not comprehensively or accurately identify the ownership of musical compositions, if we are unable to determine which musical compositions correspond to specific sound recordings, or if the same party does not own administer, control or own all rights on a worldwide basis, it may become difficult or impossible to identify the appropriate rights holders to whom to pay royalties.
If the information provided to us or obtained by such third parties does not comprehensively or accurately identify the ownership of musical compositions, if we are unable to determine which musical compositions correspond to specific sound recordings, or if the same party does not administer, control or own all rights on a worldwide basis, it may become difficult or impossible to identify the appropriate rights holders to whom to pay royalties.
There are significant risks and costs inherent in doing business in international markets, including: • the difficulty of establishing and managing an international distribution network, including leveraging owned or third-party distribution, retail, local delivery service and customer service operations, and legal compliance costs associated with locations in different countries or regions; • the need to vary pricing and margins to effectively compete in international markets; 18 • the need to adapt and localize products and software for specific countries, including obtaining rights to third-party intellectual property, including music, used in each country; • increased competition from local providers of similar products and services; • the ability to protect and enforce intellectual property rights abroad; • the need to offer engaging content and customer support in various languages and across various cultures; • difficulties in understanding and complying with local laws, regulations, and customs in other jurisdictions; • compliance with anti-bribery laws, such as the U.S.
There are significant risks and costs inherent in doing business in international markets, including: • the difficulty of establishing and managing an international distribution network, including leveraging owned or third-party distribution, retail, local delivery service and customer service operations, and legal compliance costs associated with locations in different countries or regions; • the need to vary pricing and margins to effectively compete in international markets; • the need to adapt and localize products and software for specific countries, including obtaining rights to third-party intellectual property, including music, used in each country; • increased competition from local providers of similar products and services; • the ability to protect and enforce intellectual property rights abroad; • the need to offer engaging content and customer support in various languages and across various cultures; • difficulties in understanding and complying with local laws, regulations, and customs in other jurisdictions; • compliance with anti-bribery laws, such as the U.S.
See “— Our operating 16 results have been, and could in the future be, adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory .” Moreover, volatile economic conditions have made it and may continue to make it more likely that our suppliers and logistics providers may be unable to timely deliver supplies, or at all, and there is no guarantee that we will be able to timely locate alternative suppliers of comparable quality at an acceptable price.
See “— Our operating results have been, and could in the future be, adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory .” Moreover, volatile economic conditions have made it and may continue to make it more likely that our suppliers and logistics providers may be unable to timely deliver supplies, or at all, and there is no guarantee that we will be able to timely locate alternative suppliers of comparable quality at an acceptable price.
In addition, we may also face regulatory investigations with corresponding fines, civil claims including representative actions, and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities (including under laws such as in California that provide statutory damage remedies for certain types of breaches), as well as associated costs, diversion of internal resources, and reputational harm.
In addition, we may also face regulatory investigations with corresponding fines, civil claims including representative actions, and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities (including under laws such as in California that provide statutory damage remedies for certain types of breaches) or settlements, as well as associated costs, diversion of internal resources, and reputational harm.
Changes to our price structure, including with respect to delivery and installation pricing, product mix, the introduction by competitors of comparable products at lower price points, a maturing product lifecycle, a decline in consumer spending, or other factors (including factors disclosed herein) could result in a decline in our revenue derived from our Connected Fitness Products, which may have an adverse effect on our business, financial condition, and operating results.
Changes to our price structure, including with respect to delivery and installation pricing, product mix, the introduction by competitors of comparable products at lower price points, a maturing product lifecycle, a decline in consumer spending, or other factors (including factors disclosed herein) could result in a further decline in our revenue derived from our Connected Fitness Products, which may have an adverse effect on our business, financial condition, and operating results.
Our stock price could fluctuate due to trading activity associated with various announcements, developments, and share purchases over the course of an activist campaign or otherwise be adversely affected by the events, risks and uncertainties related to any such stockholder activism. Companies across all industries are facing increasing scrutiny related to their environmental, social and governance (“ESG”) practices and reporting.
Our stock price could fluctuate due to trading activity associated with various announcements, developments, and share purchases over the course of an activist campaign or otherwise be adversely affected by the events, risks and uncertainties related to any such stockholder activism. Companies across all industries are facing increasing scrutiny related to their environmental, social and governance practices and reporting.
The process of obtaining licenses involves identifying and negotiating with many rights holders, some of whom are unknown, or difficult to identify, or for whom we may have conflicting ownership information, and this can generate a myriad of complex and evolving legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed.
The process of obtaining licenses involves identifying and negotiating with many rights holders, some of whom are unknown, or difficult to identify, or for whom we may have conflicting ownership information, and this can generate myriad complex and evolving legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed.
Adverse outcomes with respect to any of these legal, government, or regulatory proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify our products or services, make content unavailable, or to stop offering certain products, components, or features, all of which could negatively affect our membership and revenue growth.
Adverse outcomes with respect to any of these legal, government, or regulatory proceedings may result in significant settlement costs, judgments or awards, penalties and fines, or require us to modify our products or services, make content unavailable, or to stop offering certain products, components, or features, all of which could negatively affect our membership and revenue growth.
Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another, and there can be no assurances that we will be successful in our efforts to comply with these obligations. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises Member data.
Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another, and there can be no assurances that we will be successful in our efforts to comply with these obligations. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises our data.
Our providers may also take actions beyond our control that could seriously harm our business, including discontinuing or limiting our access to one or more services, increasing pricing terms, terminating or seeking to terminate our contractual relationship altogether, or altering how we are able to process data in a way that is 32 unfavorable or costly to us.
Our providers may also take actions beyond our control that could seriously harm our business, including discontinuing or limiting our access to one or more services, increasing pricing terms, terminating or seeking to terminate our contractual relationship altogether, or altering how we are able to process data in a way that is unfavorable or costly to us.
Our inability to secure, protect, and enforce our intellectual property rights could seriously damage our brand and our business. We have been, and in the future may be, sued by third parties for alleged infringement of their intellectual property rights, including by music rights holders. There is considerable patent and other intellectual property development activity in our market.
Our inability to secure, protect, and enforce our intellectual property rights could seriously damage our brand and our business. We have been, and in the future may be, sued by third parties for alleged infringement of their intellectual property rights, including by music rights holders. 31 There is considerable patent and other intellectual property development activity in our market.
Defects may also exist in components and products that we source from third parties, or may arise from upgrades or changes to hardware that we or our third-party manufacturing partners may make in the ordinary course of a product’s lifecycle. Actual or perceived defects may not be identified until after a product is in market.
Defects may also exist in components and products that we source from third parties, or may arise from upgrades or changes to hardware that we or our third-party manufacturing partners may make in the ordinary course of a 26 product’s lifecycle. Actual or perceived defects may not be identified until after a product is in market.
Upon the occurrence of an event of 22 default, our lenders could elect to declare all amounts outstanding under its debt agreements to be immediately due and payable. In addition, our lenders would have the right to proceed against the assets we provided as collateral pursuant to the credit agreement and the security agreement.
Upon the occurrence of an event of default, our lenders could elect to declare all amounts outstanding under its debt agreements to be immediately due and payable. In addition, our lenders would have the right to proceed against the assets we provided as collateral pursuant to the credit agreement and the security agreement.
We have undergone three ownership changes in the past, and our NOLs arising before those dates are subject to one or more Section 382 limitations which may materially limit the use of such NOLs to offset our future taxable income. Our NOLs may also be impaired under state laws.
We have undergone ownership changes in the past, and our NOLs arising before those dates are subject to one or more Section 382 limitations which may materially limit the use of such NOLs to offset our future taxable income. Our NOLs may also be impaired under state laws.
In these countries, patents may provide limited or no benefit. 30 We spend significant resources to monitor and protect our brand and other intellectual property rights. Litigation brought to protect and enforce our intellectual property rights can be costly, time-consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property.
In these countries, patents may provide limited or no benefit. We spend significant resources to monitor and protect our brand and other intellectual property rights. Litigation brought to protect and enforce our intellectual property rights can be costly, time-consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property.
New taxes could also require us to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance, and audit requirements could have an adverse effect on our business, financial condition, and operating results.
New taxes could also require us to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional 23 costs associated with tax collection, remittance, and audit requirements could have an adverse effect on our business, financial condition, and operating results.
If the software used in our Connected Fitness Products or on our platform malfunctions and fails to accurately track, display, or record Member workouts and metrics, it could negatively impact our Members’ experience, and we could face claims alleging that our products and services do not operate as advertised.
If the software used in our Connected Fitness Products or on our platform malfunctions and fails to accurately track, display, record, or retain Member workouts and metrics, it could negatively impact our Members’ experience, and we could face claims alleging that our products and services do not operate as advertised.
Additionally, new laws or regulations, or changes to or re-interpretations of the laws and regulations that govern our collection, use, and disclosure of Member data could impose additional requirements with respect to the retention and security of Member data, could limit our marketing activities, and could have an adverse effect on our business, financial condition, and operating results.
Additionally, new laws or regulations, or changes to or re-interpretations of the laws and regulations that govern our collection, use, and disclosure of data could impose additional requirements with respect to the retention and security of our data, could limit our marketing activities, and could have an adverse effect on our business, financial condition, and operating results.
We may never receive any amounts from that subsidiary to satisfy amounts due under the Notes. 36 Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the Notes.
We may never receive any amounts from that subsidiary to satisfy amounts due under the Notes. Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the Notes.
Compliance with these rules and regulations has increased our legal and financial compliance costs and strains our financial and management systems, internal controls, and employees. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.
Compliance with these rules, regulations and standards has increased our legal and financial compliance costs and strains our financial and management systems, internal controls, and employees. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.
However, our efforts to protect our intellectual property rights may not be sufficient or effective, especially as incidents of infringement on the Peloton brand increase, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable.
However, our efforts to protect our intellectual property rights may not be sufficient or effective, especially as incidents of infringement of the Peloton brand increase, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable.
Many of our retail showrooms are leased pursuant to multi-year leases, and our ability to sublease to a suitable subtenant, or negotiate favorable terms to exit a lease early or for a lease renewal option, may depend on factors that are not within our control.
Many of our remaining retail showrooms are leased pursuant to multi-year leases, and our ability to sublease to a suitable subtenant, or negotiate favorable terms to exit a lease early or for a lease renewal option, may depend on factors that are not within our control.
Factors affecting the level of consumer spending for such discretionary items include general economic conditions, including inflation, rising interest rates, recessionary conditions, and other factors such as consumer confidence in future economic conditions, fears of recession, the availability and cost of consumer credit and spending power, levels of unemployment, and tax rates.
Factors affecting the level of consumer spending for such discretionary items include general economic conditions, including inflation, rising interest rates, recessionary conditions, and other factors such 22 as consumer confidence in future economic conditions, fears of recession, the availability and cost of consumer credit and spending power, levels of unemployment, and tax rates.
Our products may be subject to U.S. export controls and compliance with applicable regulatory requirements regarding the export of our products, technology and services may create delays in the introduction of our products and services in international markets, prevent our international Members from accessing our products and services, and, in some cases, prevent the export of our products, technology and services to some countries altogether.
Our products may be subject to U.S. export controls and compliance with applicable regulatory 29 requirements regarding the export of our products, technology and services may create delays in the introduction of our products and services in international markets, prevent our international Members from accessing our products and services, and, in some cases, prevent the export of our products, technology and services to some countries altogether.
If we become subject to such claims, although we expect our provider to indemnify us with respect to at least a portion of such claims, the litigation may be time consuming, divert management’s attention, and, if our provider failed to indemnify us, adversely impact our operating results.
If we become subject to such claims, although we expect our provider to indemnify us with respect to at least a 33 portion of such claims, the litigation may be time consuming, divert management’s attention, and, if our provider failed to indemnify us, adversely impact our operating results.
If we fail to successfully implement modifications and upgrades or expand the functionality of our information technology systems, we could experience increased costs associated with diminished productivity and operating inefficiencies related to the flow of goods through our supply chain.
If we fail to successfully implement 14 modifications and upgrades or expand the functionality of our information technology systems, we could experience increased costs associated with diminished productivity and operating inefficiencies related to the flow of goods through our supply chain.
Further, advances in computer capabilities, artificial intelligence and machine learning, new discoveries in the field of cryptography, inadequate facility security, or other developments may result in a compromise or breach of the technology we use to protect Member data.
Further, advances in computer capabilities, artificial intelligence and machine learning, new discoveries in the field of cryptography, inadequate facility security, or other developments may result in a compromise or breach of the technology we use to protect data.
As a result, you should not rely on our past quarterly operating results as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by companies in rapidly evolving markets.
As a result, you should not rely on our past quarterly operating results as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by companies in 18 rapidly evolving markets.
Our financial condition and operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: • the continued market acceptance of, and the growth of the connected fitness and wellness market; • evolving consumer demand and our ability to maintain and attract new Subscribers; • the continued development and upgrading of the Peloton experience and proprietary technology platform; • new product, service, feature, and content introductions by us or our competitors or any other change in our competitive landscape; • pricing pressure as a result of competition or otherwise; • delays or disruptions in our supply chain; • errors in our forecasting of the demand for our products and services, which could lead to lower revenue or increased costs, or both; • increases in marketing, sales, and other operating expenses; • short-term expenditures and initiatives we may undertake in furtherance of long-term cost savings, including the 2024 Restructuring Plan; • our reliance on third-party delivery and maintenance services for our Connected Fitness Products; • successful expansion into international markets; • seasonal fluctuations in subscriptions and usage of Connected Fitness Products by our Members, which may change; • diversification and growth of our revenue sources; • our ability to maintain gross margins and operating margins; 17 • constraints on the availability of consumer financing or increased down payment requirements to finance purchases of our Connected Fitness Products; • system failures or breaches of security or privacy; • adverse litigation judgments, settlements, or other litigation-related costs; • changes in the legislative or regulatory environment, including with respect to privacy, consumer product safety, and advertising, or enforcement by government regulators, including fines, orders, or consent decrees; • changes in our effective tax rate, including as a result of potential changes in tax laws; • changes in accounting standards, policies, guidance, interpretations, or principles; and • changes in business or macroeconomic conditions, including global supply chain issues, lower consumer confidence, inflation, foreign currency exchange rate fluctuations, rising interest rates, recessionary conditions, political instability, volatility in the credit markets, market conditions in our industry, increased unemployment rates, or stagnant or declining wages.
Our financial condition and operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: • the continued market acceptance of, and the growth of the connected fitness and wellness market; • evolving consumer demand and our ability to maintain and attract new Subscribers; • the continued development and upgrading of the Peloton experience and proprietary technology platform; • new product, service, feature, and content introductions by us or our competitors or any other change in our competitive landscape; • pricing pressure as a result of competition or otherwise, and changes in pricing by us or by our competitors, whether to connected fitness equipment, subscriptions, or both; • delays or disruptions in our supply chain; • errors in our forecasting of the demand for our products and services, which could lead to lower revenue or increased costs, or both; • increases in marketing, sales, and other operating expenses; • short-term expenditures and initiatives we may undertake in furtherance of long-term cost savings, including the Restructuring Plans; • our reliance on third-party delivery and maintenance services for our Connected Fitness Products; • successful expansion into international markets; • seasonal fluctuations in subscriptions and usage of Connected Fitness Products by our Members, which may change; • diversification and growth of our revenue sources; • our ability to maintain gross margins and operating margins; • constraints on the availability of consumer financing or increased down payment requirements to finance purchases of our Connected Fitness Products; • system failures or breaches of security or privacy; • adverse litigation judgments, settlements, or other litigation-related costs; • changes in the legislative or regulatory environment, including with respect to privacy, consumer product safety, and advertising, or enforcement by government regulators, including fines, orders, or consent decrees; • changes in our effective tax rate, including as a result of potential changes in tax laws; • changes in accounting standards, policies, guidance, interpretations, or principles; and • changes in business or macroeconomic conditions, including global supply chain issues, lower consumer confidence, inflation, foreign currency exchange rate fluctuations, rising interest rates, recessionary conditions, political instability, volatility in the credit markets, market conditions in our industry, increased unemployment rates, or stagnant or declining wages.
Our products and services are offered in a highly competitive market. We face significant competition in every aspect of our business, including at-home fitness equipment and content, fitness clubs, in-studio fitness classes, and health and wellness apps.
Our products and services are offered in a highly competitive market. We face significant competition in every aspect of our business, including from at-home fitness equipment and content, fitness clubs, in-studio fitness classes, and health and wellness apps.
We collect, store, process, and use personal data and other Member data, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business.
We collect, store, process, and use personal and other data, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business.
In addition, significant judgment is required in evaluating our tax positions and determining our provision for income taxes. 29 During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.
In addition, significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.
Furthermore, some providers, such as shipping vendors, have broad discretion to change and interpret the terms of service and other policies with respect to us, and those actions may be unfavorable to our business operations.
Furthermore, some providers, such as shipping and software vendors, have broad discretion to change and interpret the terms of service and other policies with respect to us, and those actions may be unfavorable to our business operations.
In addition, our credit agreement contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness.
In addition, our credit agreement contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital 37 or make payments under our other indebtedness.
If we are unable to access or use our studios or alternate venues, or if we are unable to attract and retain high-quality fitness instructors, we may not be able to generate interesting and attractive content for our classes.
If we are unable to access or use our studios or alternate venues, or if we are unable to attract and retain high-quality fitness Instructors, we may not be able to generate interesting and attractive content for our classes and audiences.
Violations of applicable privacy laws or cybersecurity incidents could impact our business in a number of ways, such as a temporary suspension of some or all of our operating and/or information systems, damage our reputation, our relationships with customers, suppliers, vendors, and service providers and the Peloton brand and could result in lost data, lost sales, increased insurance premiums, substantial breach-notification and other remediation costs and lawsuits, as well as adversely affect results of operations.
Violations of applicable privacy laws or cybersecurity incidents could impact our business in a number of ways, such as a temporary suspension of some or all of our operating and/or information systems, damage our reputation, our relationships with customers, suppliers, vendors, and service providers and the Peloton brand and could result in lost data, lost sales, increased insurance premiums, substantial breach-notification and other remediation costs and lawsuits and legal proceedings, as well as adversely affect results of operations.
Risks Related to the Ownership of Our Class A Common Stock 33 The stock price of our Class A common stock has been, and will likely continue to be, volatile and you could lose all or part of your investment.
Risks Related to the Ownership of Our Class A Common Stock The stock price of our Class A common stock has been, and will likely continue to be, volatile and you could lose all or part of your investment.
A decline in sales of our Connected Fitness Products would negatively affect our future revenue and operating results. Our Connected Fitness Products are sold in highly competitive markets with limited barriers to entry.
A further decline in sales of our Connected Fitness Products would negatively affect our future revenue and operating results. Our Connected Fitness Products are sold in highly competitive markets with limited barriers to entry.
Progressing towards our targets and commitments requires us to invest significant effort, resources, and management time, and circumstances may arise, including those beyond our control, that may require us to revise our timelines or our commitments.
Progressing towards our targets and commitments requires us to invest effort, resources, and management time, and circumstances may arise, including those beyond our control, that may require us to revise our timelines or our commitments.
If agreements are amended or new agreements are 31 entered into on more favorable terms, these most-favored nations provisions could cause our payment or other obligations to escalate substantially.
If agreements are amended or new agreements are entered into on more favorable terms, these most-favored nations provisions could cause our payment or other obligations to escalate substantially.
Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law.
Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under 36 Delaware law.
As we operate in numerous taxing jurisdictions, the application of tax laws can be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions.
As we operate in numerous taxing jurisdictions, the application of tax laws can be subject to diverging and sometimes conflicting interpretations by tax authorities of these 30 jurisdictions.
Also imperative to our success are our fitness instructors, who we rely on to bring new, exciting, and innovative fitness and wellness content to our platform, and who act as brand ambassadors.
Also imperative to our success are our fitness Instructors, whom we rely on to bring new, exciting, and innovative fitness and wellness content to our platform, and who act as brand ambassadors.
We track certain operational and business metrics, including Total Workouts and Average Monthly Workouts per Connected Fitness Subscription, with internal methods, which are not independently verified by any third party and, in particular for the Peloton App, are often reliant upon an interface with mobile operating systems, networks and standards that we do not control.
We track certain operational and business metrics, including Total Workouts and Average Monthly Workouts per Connected Fitness Subscription, with internal methods, which are not independently verified by any third party and, in particular for the Peloton Apps, are often reliant upon an interface with mobile operating systems, networks and standards that we do not control.
Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. 37 Item 1B. Unresolved Staff Comments Not applicable.
Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. 38 Item 1B. Unresolved Staff Comments Not applicable.
Bribery Act”), by us, our employees, and our business partners; • complexity and other risks associated with current and future legal requirements in other countries, including legal requirements related to sustainability disclosure, artificial intelligence, consumer protection, consumer product safety, and data privacy frameworks, such as the General Data Protection Regulation 2016/679; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs; • tariffs and other non-tariff barriers, such as quotas and local content rules, customs detentions, as well as tax consequences; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and • political or social unrest or economic instability in a specific country or region in which we operate, including, for example, escalating tensions, hostilities, or trade disputes between China and Taiwan which could have an adverse impact on our operations in such locations.
Bribery Act”), by us, our employees, and our business partners; • complexity and other risks associated with current and future legal requirements in other countries, including legal requirements related to sustainability disclosure, artificial intelligence, consumer protection, consumer product safety, content moderation, and data privacy frameworks, such as the General Data Protection Regulation 2016/679; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs; • tariffs and other non-tariff barriers, such as quotas and local content rules, customs detentions, as well as tax consequences; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and • political or social unrest or economic instability in a specific country or region in which we operate or in which our products are manufactured, including, for example, escalating tensions, hostilities, or trade disputes between China and Taiwan which could have an adverse impact on our manufacturing and operations in such locations.
Production of the fitness and wellness content on our platform is further reliant on the creativity of our fitness instructors who, with the support of our production team, plan and lead our classes.
Production of the fitness and wellness content on our platform is further reliant on the creativity of our fitness Instructors who, with the support of our production team, plan and lead our classes and other content.
In addition, we may not achieve sufficient revenue to attain or maintain positive cash flows from operations or profitability in any given period, or at all. Our success depends on our ability to maintain the value and reputation of the Peloton brand. We believe that our brand is important to attracting and retaining Members.
In addition, we may not achieve sufficient revenue to maintain positive cash flows from operations or attain net income profitability in any given period, or at all. Our success depends on our ability to maintain the value and reputation of the Peloton brand. We believe that our brand is important to attracting and retaining Members.
See Note 12 - Debt in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Third Amended and Restated Credit Agreement ” in Part II, Item 7 of this Annual Report on Form 10-K.
See Note 11, Debt in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Third Amended and Restated Credit Agreement ” in Part II, Item 7 of this Annual Report on Form 10-K.
Additionally, we have in the past been subject to intense media scrutiny, which exposes us to increasing regulation, government investigations, legal actions and penalties. For example, we are presently subject to litigation and disputes related to injury or damage claims by Members and others who used or purchased Connected Fitness Products.
Additionally, we have in the past been subject to intense media scrutiny, which exposes us to additional regulation, government investigations, legal actions and penalties. For example, we are presently subject to litigation and disputes related to injury or damage claims by Members and others who used or purchased Connected Fitness Products.
Because our future success is dependent on our ability to continue to enhance and introduce new products and services, we are particularly dependent on our ability to hire and retain qualified and skilled engineers, including with significant experience in designing and developing software and internet-related services, and with background in the areas of artificial intelligence and machine learning.
Because our future success is dependent on our ability to continue to enhance and introduce new products and services, we are particularly dependent on our ability to hire and retain qualified and skilled engineers, including with significant experience in hardware development, designing and developing software and internet-related services, and with background in the areas of artificial intelligence and machine learning.
We are passionate about continually enhancing the Peloton experience with a focus on driving long-term Member engagement through innovation, immersive content, technologically advanced Connected Fitness Products, multiple tiers of the Peloton App, and community support, which may not necessarily maximize short-term financial results.
We are passionate about continually enhancing the Peloton experience with a focus on driving long-term Member engagement through innovation, immersive content, technologically advanced Connected Fitness Products, multiple tiers of the Peloton Apps, and community support, which may not necessarily maximize short-term financial results.
If we cannot use these marketing tools in a cost-effective manner, if we fail to promote our products and services efficiently and effectively, or if our marketing campaigns attract negative media attention, our ability to acquire new Members and our financial condition may suffer and the price of our Class A common stock could decline.
If we cannot use these marketing tools in a cost-effective manner, if we fail to promote our products and services efficiently and effectively, or if our marketing campaigns attract negative media attention, our ability to acquire new Members and our financial condition may suffer and the price of our stock could decline.
With respect to musical compositions, in addition to obtaining the synchronization and reproduction rights, we also need to obtain public performance or communication to the public rights.
With respect to musical compositions, in addition to obtaining the synchronization and reproduction rights, we also obtain public performance or communication to the public rights.
A loss of any of these partners or an interruption or inability of these partners to satisfy our demand needs could negatively affect our business. We are solely reliant on contract manufacturers for all of our manufacturing needs. In some cases, we rely on only a single supplier for some of our products and components.
A loss of any of these partners or an interruption or inability of these partners to satisfy our demand needs could negatively affect our business. We are solely reliant on contract manufacturers for all of our manufacturing needs. In most cases, we rely on only a single supplier for our products and some critical components.
Determining reserves for pending litigation and other legal and regulatory matters requires significant judgment, and there can be no assurance that our expectations or estimates will prove correct. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive or equitable relief.
Determining reserves for pending litigation and other legal and regulatory 28 matters requires significant judgment, and there can be no assurance that our expectations or estimates will prove correct. Certain of these matters may include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive or equitable relief.
In addition, we may deem it necessary or advisable to renegotiate agreements with our supply partners in order to scale our inventory with demand.
In addition, we may deem it necessary or advisable to renegotiate agreements with our supply partners to scale our inventory with demand.
Consumer Product Safety Commission (“CPSC”) in response to reports of injuries associated with our Tread+ and in May 2023, in collaboration with the CPSC, we announced a voluntary recall of the original Peloton model Bikes (not Bike+) seat posts sold in the U.S. from January 2018 to May 2023.
Consumer Product Safety Commission (“CPSC”) in response to reports of injuries associated with our Tread+ and in May 2023, in collaboration with the CPSC, we announced a voluntary recall of the original Peloton model Bike seat posts sold in the U.S. from January 2018 to May 2023.
Additionally, our use of, and expansion of, other distribution channels and our increasing reliance on third-party Member support, third-party partners for in-home delivery and set up services, and Member self-assembly of certain of our Connected Fitness Products may challenge our ability to control Members’ 26 experience of such services.
Additionally, our use of, and expansion of, other distribution channels and our reliance on third-party Member support, third-party partners for in-home delivery and set up services, and Member self-assembly of certain of our Connected Fitness Products may challenge our ability to control Members’ experience of such services.
We are therefore vulnerable to service interruptions experienced by these providers, and we expect to experience interruptions, delays, or outages in service availability in the future due to a variety of factors, including infrastructure changes, human, hardware or software errors, hosting disruptions, and capacity constraints.
We are therefore vulnerable to service interruptions experienced by these providers, and we have in the past and expect in the future to experience interruptions, delays, or outages in service availability in the future due to a variety of factors, including infrastructure changes, human, hardware or software errors, hosting disruptions, and capacity constraints.
An adverse change to, loss of, or claim that we do not hold necessary licenses may have an adverse effect on our business, operating results, and financial condition. 15 Music is an element of the overall content that we make available to our Members.
An adverse change to, loss of, or claim that we do not hold necessary licenses may have an adverse effect on our business, operating results, and financial condition. Music is an element of the overall content proposition that we make available to our Members.
For additional information, see Note 13– Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Legal Proceedings ” in Part I, Item 3 of this Annual Report on Form 10-K.
For additional information, see Note 12, Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Legal Proceedings ” in Part I, Item 3 of this Annual Report on Form 10-K.
In addition, we may periodically change our equity compensation practices, which may include reducing the number of employees eligible for equity awards or reducing the size of equity awards granted per employee or undertaking other efforts that may prove to be unsuccessful retention mechanisms.
In addition, we may periodically change our equity compensation practices, which may include reducing the number of employees eligible for equity awards, reducing the size of equity awards granted per employee, varying the type of equity awards granted, or undertaking other efforts that may prove to be unsuccessful retention mechanisms.
We have limited control over our suppliers, contract manufacturers, and logistics partners, which subjects us to the following risks: • inability to satisfy demand for our Connected Fitness Products; • reduced control over delivery timing and related customer experience and product reliability; • reduced ability to monitor the manufacturing process and components used in our Connected Fitness Products; • limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions; • variance in the manufacturing capability of our third-party manufacturers; • price increases; • failure of a significant supplier, manufacturer, or logistics partner to perform its obligations to us for technical, market, or other reasons; • variance in the quality of services provided by our third-party last mile partners; • reliance on our partners to adhere to our supplier code of conduct; • difficulties in establishing additional supplier, manufacturer, or logistics partner relationships if we experience difficulties with our existing suppliers, manufacturers, or logistics partners; • shortages of materials or components; • misappropriation of our intellectual property; • exposure to natural catastrophes, including climate-related risks and extreme weather events, epidemics, political unrest, including escalating tensions, hostilities, or trade disputes between Taiwan and China, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries, in which our Connected Fitness Products are manufactured or the components thereof are sourced; • changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located; • the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and • insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
We have limited control over our suppliers, contract manufacturers, and logistics partners, which subjects us to the following risks: • inability to satisfy demand for our Connected Fitness Products; • reduced control over delivery timing and related customer experience and product reliability; • reduced ability to monitor the manufacturing process and components used in our Connected Fitness Products; • limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions; • variance in the manufacturing capability of our third-party manufacturers; • price increases; • product safety issues, including actual or perceived design or manufacturing defects; • failure of a significant supplier, manufacturer, or logistics partner to perform its obligations to us for technical, market, or other reasons; • variance in the quality of services provided by our third-party last mile partners; • lack of adherence to our supplier code of conduct; • difficulties in establishing additional supplier, manufacturer, or logistics partner relationships if we experience difficulties with our existing suppliers, manufacturers, or logistics partners; • shortages of materials or components; • misappropriation of our intellectual property; • exposure to natural catastrophes, including climate-related risks and extreme weather events, epidemics, political unrest, including escalating tensions, hostilities, or trade disputes between Taiwan and China, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries, in which our Connected Fitness Products are manufactured or the components thereof are sourced; • changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located; • the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and • insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
If the debt under our credit agreement was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.
If the debt under our credit agreement were to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.
Changes in interpretation of the insurance regulations or other laws and regulations concerning extended warranties on a federal, state, local, or international level may cause us to incur costs or have additional regulatory requirements to meet in the future.
Changes in interpretation of the insurance regulations or other laws and regulations concerning extended warranties and service plans on a federal, state, local, or international level may cause us to incur costs or have additional regulatory requirements to meet in the future.
See Note 13 - Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Legal Proceedings ” in Part I, Item 3 of this Annual Report on Form 10-K.
See Note 12, Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Legal Proceedings ” in Part I, Item 3 of this Annual Report on Form 10-K.
See Note 13 - Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Legal Proceedings ” in Part I, Item 3 of this Annual Report on Form 10-K.
See Note 12, Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K and the section titled “ Legal Proceedings ” in Part I, Item 3 of this Annual Report on Form 10-K.
There are a number of factors that could lead to a decline in Subscriber levels or that could prevent us from increasing our Subscriber levels, including: • our failure to introduce new features, products, or services that Members find engaging or our introduction of new products or services, or changes to existing products and services that are not favorably received; • harm to our brand and reputation; • pricing and perceived value of our offerings; • our inability to deliver quality products and functionality, content, and services; • actual or perceived safety concerns regarding our products; • unsatisfactory experiences with the delivery, installation, or servicing of our Connected Fitness Products, including due to delivery costs or prolonged delivery timelines and limitations on in-home installation, return, and warranty servicing processes; • our Members engaging with competitive products and services; • technical or other problems that affect the Member experience; • a decline in the public’s interest in indoor cycling or running, or other fitness disciplines that we invest most heavily in; • deteriorating general economic conditions or a change in consumer spending preferences or buying trends; • changes in consumer preferences regarding home fitness, whether as a result of the COVID-19 pandemic or otherwise; and • interruptions in our ability to sell or deliver our Connected Fitness Products or to provide or to create content and services for our Members.
There are a number of factors that could lead to a decline in Subscriber levels or that could prevent us from increasing our Subscriber levels, including: • our failure to introduce new features, products, or services that Members find engaging or our introduction of new products or services, or changes to existing products and services that are not favorably received; • harm to our brand and reputation; • pricing and perceived value of our offerings; • our inability to deliver quality products and functionality, content, and services; • actual or perceived safety concerns regarding our products; • unsatisfactory experiences with the delivery, installation, or servicing of our Connected Fitness Products, including due to delivery costs or prolonged delivery timelines and limitations on in-home installation, return, and warranty servicing processes; • our Members engaging with competitive products and services; • technical or quality problems that affect the Member experience; • a decline in the public’s interest in indoor cycling or running, or other fitness disciplines that we invest most heavily in; • deteriorating general economic conditions or a change in consumer spending preferences or buying trends; • changes in consumer preferences regarding home fitness; and • interruptions in our ability to sell or deliver our Connected Fitness Products or to provide or to create content and services for our Members.
Our limited operating experience at this scale, combined with the rapidly evolving nature of the market in which we sell our products and services, substantial uncertainty concerning how these markets may develop, and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue.
Our limited operating experience at this scale, combined with the rapidly evolving nature of the market in which we sell our products and services, substantial uncertainty concerning how these markets may develop, and other economic factors beyond our control, including tariffs, reduces our ability to accurately forecast quarterly or annual revenue and subscriptions.
For additional information, see Note 13 - Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
For additional information, see Note 12, Commitments and Contingencies in the Notes to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
In addition, any unexpected technological interruptions to our systems or websites would disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain, sell our Connected Fitness Products online, provide services to our Members, and otherwise adequately serve our Members.
In addition, any unexpected technological interruptions to our systems or websites would disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain, sell our Connected Fitness Products online, provide services to our Members, collect payment for our services, and otherwise adequately serve our Members.
As such, the actions we are taking under the 2024 Restructuring Plan and that we may decide to take in the future may not be successful in yielding our intended results and may not appropriately address either or both of the short-term and long-term strategy for our business.
As such, the actions we are taking under the Restructuring Plans and that we may decide to take in the future may not be successful in yielding our intended results and may not appropriately address either or both of the short-term and long-term strategy for our business.
We have been, and in the future may be, subject to claims, lawsuits, government inquiries or investigations, demands, disputes, and other proceedings involving product safety, product liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
We have been, currently are, or in the future may be, subject to claims, lawsuits, government inquiries or investigations, demands, disputes, and other proceedings involving product safety, product liability, competition and antitrust, intellectual property, privacy, data security, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
As we continue to develop our infrastructure, and particularly in light of the reductions in headcount that began as a part of our February 2022 restructuring initiatives and have continued with the 2024 Restructuring Plan, we may find it difficult to maintain valuable aspects of our culture.
As we continue to develop our infrastructure, and particularly in light of the reductions in headcount that began as a part of our February 2022 restructuring initiatives and have continued with the 2024 and 2025 Restructuring Plans, we may find it difficult to maintain valuable aspects of our culture.
Extended warranties are regulated in the United States on a state level and are treated differently by state. Outside the United States, regulations for extended warranties vary from country to country.
Extended warranties are regulated in the United States on a state level and are treated differently by state. Outside the United States, regulations for extended warranties and service plans vary from country to country.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor a discussion regarding risks from cybersecurity threats, see our risk factors, including the risk factors titled “–Any major disruption or failure of our information technology systems or websites, or our failure to successfully implement upgrades and new technology effectively, could adversely affect our business and operations”, “–Cybersecurity risks could adversely affect our business and disrupt our operations”, “–Our business is subject to the risk of earthquakes, fire, power outages, floods, hurricanes, public health crises, ransomware and other cybersecurity attacks, labor disputes, and other catastrophic events, and to interruption by man-made problems such as terrorism and international geopolitical conflicts”, “–We collect, store, process, and use personal data and other Member data, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business ”, under the heading “ Risk Factors—Risks Related to Our Business ” in Part I, Item 1A of this Annual Report on Form 10-K.
Biggest changeFor a discussion regarding risks from cybersecurity threats, see our risk factors, including the risk factors titled “–Any major disruption or failure of our information technology systems or websites, or our failure to successfully implement upgrades and new technology effectively, could adversely affect our business and operations”, “–Cybersecurity risks could adversely affect our business and disrupt our operations”, “–Our business is subject to the risk of earthquakes, fire, power outages, floods, hurricanes, public health crises, ransomware and other cybersecurity attacks, labor disputes, and other catastrophic events, and to interruption by man-made problems such as terrorism and international geopolitical conflicts”, “–We collect, store, process, and use personal data and other Member data, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business ”, “– Our growing use of artificial intelligence and machine learning technologies may present additional risks and challenges, which could result in reputational and competitive harm, legal liability and adversely affect our results of operations ”, under the heading “ Risk Factors—Risks Related to Our Business ” in Part I, Item 1A of this Annual Report on Form 10-K.
Our cybersecurity program is supported by other members of our senior management team as well, including our Chief Legal Officer and members of Peloton’s disclosure committee. Members of executive leadership are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management process.
Our cybersecurity program is supported by other members of our senior management team as well, including our Chief Legal Officer and members of Peloton’s disclosure committee. Members of executive leadership are informed about and monitor the prevention, mitigation, detection, and remediation of 39 cybersecurity incidents through their management of, and participation in, the cybersecurity risk management process.
The CISO also 38 provides updates to Peloton’s senior management regarding cybersecurity risks, and meets regularly with Peloton’s finance, enterprise technology, disclosure and internal audit teams.
The CISO also provides updates to Peloton’s senior management regarding cybersecurity risks, and meets regularly with Peloton’s finance, enterprise technology, disclosure and internal audit teams.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease retail properties in the United States, Canada, the United Kingdom, Germany, and Australia. Our retail locations and office space are used to support both of our reporting segments (Connected Fitness Products and Subscription) and are suitable and adequate for the conduct of our business.
Biggest changeWe lease retail properties in the United States, Canada, and Germany. However, we have continued to reduce our retail showroom presence as part of the Restructuring Plans. Our office space and retail locations are used to support both of our reportable segments (Connected Fitness Products and Subscription).
Item 2. Properties As of June 30, 2024, our principal properties included our corporate headquarter offices, field operations and distribution facilities, retail locations and production studio facilities. We are headquartered in New York City, where we occupy facilities totaling approximately 336,000 square feet under a lease that expires in 2035.
Item 2. Properties As of June 30, 2025, our principal properties included our corporate headquarters offices, warehouses and distribution facilities, production studio facilities, and retail locations. We are headquartered in New York City, where we occupy facilities totaling approximately 336,000 square feet under a lease that expires in 2035.
We lease our production studio facilities, which are located in New York City and London, and are used to support our Subscription segment. In addition, we lease and sublease field operations and distribution facilities primarily in North America and Europe, which are used to support our Connected Fitness segment.
We lease warehouse and distribution facilities primarily in North America, which are used to support our Connected Fitness segment. In addition, we lease our production studio facilities, which are located in New York City and London, and are used to support our Subscription segment.
In January 2024, the Company completed the sale of the Peloton Output Park building and a portion of the corresponding land and received net proceeds of approximately $31.9 million. 39
In January 2024, we completed the sale of the Peloton Output Park building and a portion of the corresponding land and received net proceeds of approximately $31.9 million, and in September 2024, we completed the sale of the remaining Peloton Output Park land parcel and received net proceeds of $4.2 million.
Refer to Note 19 in the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this Annual Report on Form 10-K for further details regarding our segments. In April 2024, as part of the 2024 Restructuring Plan, we announced the continued closures of certain of our retail locations.
Refer to Note 17, Segment Information in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further details regarding our segments.
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We also have certain head-lease obligations for corporate offices, warehouses and distribution facilities, and retail locations, that we are currently subleasing to third-parties, and do not support our day-to-day operations. We believe that our existing facilities are suitable and adequate for the conduct of our business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor a discussion of legal and other proceedings in which we are involved, see Note 13 - Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 40
Biggest changeFor a discussion of legal and other proceedings in which we are involved, see Note 12, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 40 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes an initial investment of $100 in our common stock at the market close on September 26, 2019, which was our initial trading day. Data for each index assumes reinvestment of dividends.
Biggest changeFor the current year only, comparisons of the Company’s returns to both the S&P 500 Index and the Russell 2000 Index are included in the graph. The graph assumes an initial investment of $100 in our common stock and each index at the market close on the last trading day for the fiscal year ended June 30, 2020.
We do not expect to pay dividends on our capital stock for the foreseeable future. Instead, we anticipate that all of our earnings for the foreseeable future will be used for the operation and growth of our business.
We do not expect to pay dividends on our capital stock for the foreseeable future. Instead, we anticipate that all of our earnings for the foreseeable future will be used for repayment of debt and for the operation and growth of our business.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Standard & Poor’s 500 Index, the Nasdaq Composite Index and the Nasdaq Computer Index.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Russell 2000 Index, Standard & Poor’s 500 Index, and the Nasdaq Computer Index.
The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 41 Item 6. [Reserved] 42
Data for each index assumes reinvestment of dividends. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 41 Item 6. [Reserved] 42
Our Class B common stock is not listed or traded on any stock exchange. Holders of Record As of July 31, 2024, there were 33 registered holders of our Class A common stock and 73 registered holders of our Class B common stock.
Our Class B common stock is not listed or traded on any stock exchange. Holders of Record As of July 30, 2025, there were 37 registered holders of our Class A common stock and 66 registered holders of our Class B common stock.
Removed
We have elected to replace the Nasdaq Composite Index with the Nasdaq Computer Index because we believe the new index is more aligned with our peer group and will provide a meaningful comparison of our stock performance going forward.
Added
We have elected to replace the S&P 500 Index with the Russell 2000 Index because we believe the new broad equity market index provides for a better comparison of returns with public companies of similar size and market capitalization. We are also a component of the Russell 2000 Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

120 edited+50 added−105 removed53 unchanged
Biggest changeRestructuring expense Fiscal Year Ended June 30, 2024 2023 % Change (dollars in millions) Restructuring expense $ 66.1 $ 189.4 (65.1)% Fiscal Years Ended June 30, 2024 and 2023 Restructuring expense decreased $123.3 million in the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023, primarily related to decreases of $78.5 million in stock-based compensation expense, primarily due to incremental stock-based compensation expense from exercise window modifications and the acceleration of certain restricted stock unit vesting schedules pursuant to severance arrangements during the prior fiscal year and decreases of $48.6 million in cash severance and other personnel costs.
Biggest changeRestructuring expense Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Restructuring expense $ 33.8 $ 66.1 (48.8)% Fiscal Years Ended June 30, 2025 and 2024 Restructuring expense decreased $32.2 million, or 48.8% for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024, primarily due to an $18.9 million decrease in personnel-related expenses, inclusive of severance and stock-based compensation expense, 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 fiscal year ended June 30, 2024. 50 Supplier settlements Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Supplier settlements $ 23.5 $ (2.6) *NM ___________________________ *NM - not meaningful Fiscal Years Ended June 30, 2025 and 2024 Supplier settlements increased $26.1 million for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 due to the settlement of disputes with a third-party supplier about certain alleged past and future commitments.
Some of these limitations are as follows: • Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Subscription Contribution and Subscription Contribution Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; and • Subscription Contribution and Subscription Contribution Margin exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.
Some of these limitations are as follows: • Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Subscription Contribution and Subscription Contribution Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; and 53 • Subscription Contribution and Subscription Contribution Margin exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.
Given that our legal proceedings, claims, and regulatory, tax, and government inquiries and investigations are subject to uncertainty, there can be no assurance that such legal proceedings, either individually or in the aggregate, will not have a material adverse effect on our business, results of operations, financial condition or cash flows. 64
Given that our legal proceedings, claims, and regulatory, tax, and government inquiries and investigations are subject to uncertainty, there can be no assurance that such legal proceedings, either individually or in the aggregate, will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
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.
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.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ equity, revenue, expenses, and related disclosures.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ equity (deficit), revenue, expenses, and related disclosures.
These contract manufacturers acquire components and build products based on demand forecast information we supply, which typically covers a rolling 12-month period. Consistent with industry practice, we acquire inventories from such manufacturers through blanket purchase orders against which orders are applied based on projected demand information and availability of goods.
These contract manufacturers acquire components and build products based on demand forecast information we supply, which typically covers a rolling 12-month period. Consistent with industry practice, we acquire inventories from such manufacturers through purchase orders against which orders are applied based on projected demand information and availability of goods.
For our Connected Fitness segment and Subscription segment, we evaluate long-lived tangible assets at the lowest level at which independent cash flows can be identified, which is dependent on the strategy and expected future use of our long-lived assets. We evaluate corporate assets or other long-lived assets that are not segment-specific at the consolidated level.
For our Connected Fitness Products segment and Subscription segment, we evaluate long-lived tangible assets at the lowest level at which independent cash flows can be identified, which is dependent on the strategy and expected future use of our long-lived assets. We evaluate corporate assets or other long-lived assets that are not segment-specific at the consolidated level.
Free cash flow reflects an additional way of viewing our liquidity that, we believe, when viewed with our GAAP results, provides 56 management, investors, and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows.
Free Cash Flow reflects an additional way of viewing our liquidity that, we believe, when viewed with our GAAP results, provides management, investors, and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows.
(6) Includes litigation-related expenses for certain patent infringement litigation, consumer arbitration, and product recalls for the fiscal years ended June 30, 2024, 2023 and 2022, that arise outside of the ordinary course of business and are nonrecurring, infrequent, or unusual.
(6) Includes litigation-related expenses for certain patent infringement litigation, consumer arbitration, and product recalls for the fiscal years ended June 30, 2024 and 2023, that arise outside of the ordinary course of business and are nonrecurring, infrequent, or unusual.
(3) This metric, effective as of the beginning of fiscal year 2024, is reported on a go-forward basis as it includes App One and App+ subscriptions that were not available during the fiscal year ended June 30, 2023 and 2022.
(3) This metric, effective as of the beginning of fiscal year 2024, is reported on a go-forward basis as it includes App One and App+ subscriptions that were not available during the fiscal year ended June 30, 2023.
Accordingly, a discount and debt issuance costs of $10.0 million and $2.3 million, respectively, will be amortized to Interest expense using the effective interest method over the term of the Third Amended and 59 Restated Credit Agreement.
Accordingly, a discount and debt issuance costs of $10.0 million and $2.3 million, respectively, will be amortized to Interest expense using the effective interest method over the term of the Third Amended and Restated Credit Agreement.
Some of these limitations are, or may in the future be, as follows: • Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy; • Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us; • Adjusted EBITDA does not reflect gains (losses) associated with refinancing efforts that we have determined are outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on factors such as the nature and strategy of the refinancing, as well as our frequency and past practice of performing refinancing activities. • Adjusted EBITDA does not reflect certain litigation expenses, consisting of legal settlements and related fees for specific proceedings that we have determined arise outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on the following considerations which we assess regularly: (1) the frequency of similar cases that have been brought to date, or are expected to be brought within two years; (2) the complexity of the case; (3) the nature of the remedy(ies) sought, including the size of any 54 monetary damages sought; (4) offensive versus defensive posture of us; (5) the counterparty involved; and (6) our overall litigation strategy.
Some of these limitations are, or may in the future be, as follows: • Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy; • Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest and other income (expense), or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (3) income taxes, which may represent a reduction in cash available to us; • Adjusted EBITDA does not reflect gains (losses) associated with refinancing efforts that we have determined are outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on factors such as the nature and strategy of the refinancing, as well as our frequency and past practice of performing refinancing activities; • Adjusted EBITDA does not reflect certain litigation expenses, consisting of legal settlements and related fees for specific proceedings that we have determined arise outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on the following considerations which we assess regularly: (1) the frequency of similar cases that have been brought to date, or are expected to be brought within two years; (2) the complexity of the case; (3) the nature of the remedy(ies) sought, including the size of any monetary damages sought; (4) offensive versus defensive posture of us; (5) the counterparty involved; and (6) our overall litigation strategy.
We make adjustments for product recall related matters that we have determined arise outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on factors including the nature of the product recall, our experience with similar product recalls at the time of such assessment, the impacts on us of the recall remedy and associated logistics, supply chain, and other externalities, as well as the expected consumer demand for such a remedy, and operational complexities in the design, regulatory approval and deployment of a remedy; • Adjusted EBITDA does not reflect reorganization, severance, exit, disposal, and other costs associated with restructuring plans; • Adjusted EBITDA does not reflect nonrecurring supplier settlements that are outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on factors such as the nature of the settlements, as well as our frequency and past practice of performing refinancing activities ; and • The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results and we may, in the future, exclude other significant, unusual expenses or other items from this financial measure.
We make adjustments for product recall related matters that we have determined arise outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on factors including the nature of the product recall, our experience with similar product recalls at the time of such assessment, the impacts on us of the recall remedy and associated logistics, supply chain, and other externalities, as well as the expected consumer demand for such a remedy, and operational complexities in the design, regulatory approval and deployment of a remedy; • Adjusted EBITDA does not reflect costs associated with restructuring plans; • Adjusted EBITDA does not reflect supplier settlements that are outside of the ordinary course of business and are nonrecurring, infrequent or unusual based on factors such as the nature of the settlements, as well as our frequency and past practice of performing refinancing activities ; and • The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results and we may, in the future, exclude other significant, unusual expenses or other items from this financial measure.
See “Risk Factors—Risks Related to Our Business—Our operating results have been, and could in the future be, adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory .” Off-Balance Sheet Arrangements We did not have any undisclosed off-balance sheet arrangements as of June 30, 2024.
See “Risk Factors—Risks Related to Our Business—Our operating results have been, and could in the future be, adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory .” Off-Balance Sheet Arrangements We did not have any undisclosed off-balance sheet arrangements as of June 30, 2025.
During fiscal 2022, 2023 and 2024, management identified various qualitative factors that collectively indicated that the Company had impairment triggering events, including (i) realignment of cost structure in connection with the restructuring initiatives, (ii) softening demand and (iii) significant decrease in the market price of certain long-lived asset groups.
During fiscal 2023, 2024 and 2025, management identified various qualitative factors that collectively indicated that the Company had impairment triggering events, including (i) realignment of cost structure in connection with the restructuring initiatives, (ii) softening demand and (iii) significant decrease in the market price of certain long-lived asset groups.
We maintain a valuation allowance on the majority of our deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be utilized. 48 Results of Operations The following tables set forth our consolidated results of operations in dollars and as a percentage of total revenue for the periods presented.
We maintain a valuation allowance on the majority of our deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be utilized. 46 Results of Operations The following tables set forth our consolidated results of operations in dollars and as a percentage of total revenue for the periods presented.
As of June 30, 2024, we had not drawn any amount under the Revolving Facility and as such did not have to test the financial covenants under the Third Amended and Restated Credit Agreement. We are required to pledge or otherwise restrict a portion of cash and cash equivalents as collateral for standby letters of credit.
As of June 30, 2025, we had not drawn any amount under the Revolving Facility and as such did not have to test the financial covenants under the Third Amended and Restated Credit Agreement. We are required to pledge or otherwise restrict a portion of cash and cash equivalents as collateral for standby letters of credit.
The 2026 Notes were issued pursuant to an Indenture (the “ 2026 Notes Indenture”) between us and U.S. Bank National Association, as trustee. The net proceeds from the offering were approximately $977.2 million, after deducting the initial purchasers’ discounts and commissions and our offering expenses.
The 2026 Notes were issued pursuant to an Indenture (the “2026 Notes Indenture”) between us and U.S. Bank National Association, as trustee. The net proceeds from the offering were approximately $977.2 million, after deducting the initial purchasers’ discounts and commissions and our offering expenses.
(6) Please see the section titled “Non-GAAP Financial Measures—Free Cash Flow” for a reconciliation of net cash used in operating activities to Free Cash Flow and an explanation of why we consider Free Cash Flow to be a helpful measure for investors.
(6) Please see the section titled “Non-GAAP Financial Measures—Free Cash Flow” for a reconciliation of net cash provided by (used in) operating activities to Free Cash Flow and an explanation of why we consider Free Cash Flow to be a helpful measure for investors.
These include recorded (benefits) costs in Connected Fitness Products cost of revenue associated with recall related matters of $(9.5) million, $64.1 million, and $8.1 million, adjustments to Connected Fitness Products revenue for actual and estimated future returns of $(4.5) million, $14.6 million and $48.9 million, and operating expenses of zero, $2.3 million and $5.4 million associated with recall-related hardware development costs, in each case for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
These include recorded (benefits) costs in Connected Fitness Products Cost of revenue associated with recall related matters of $(9.5) million and $64.1 million, adjustments to Connected Fitness Products Revenue for actual and estimated future returns of $(4.5) million and $14.6 million, and operating expenses of zero and $2.3 million associated with recall-related hardware development costs, in each case for the fiscal years ended June 30, 2024 and 2023, respectively.
We define a “Paid 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).
We define a “Paid Connected Fitness Subscription” as a person, household, or commercial property, such as a hotel or residential building, that 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).
The original lease terms are between one and 21 years, and the majority of the lease agreements are renewable at the end of the lease period. The Company has finance lease obligations of $0.1 million, also included above. 60 (2) We are subject to minimum royalty payments associated with our license agreements for the use of licensed content.
The original lease terms are between one and 21 years, and the majority of the lease agreements are renewable at the end of the lease period. The Company has finance lease obligations of $0.3 million, also included above. (2) We are subject to minimum royalty payments associated with our license agreements for the use of licensed content.
We continue to adjust adjusted EBITDA for historical patent infringement and consumer arbitration claims that were determined, prior to our change in practice, to be nonrecurring, infrequent, or unusual; • Adjusted EBITDA does not reflect transaction and integration costs related to acquisitions; • Adjusted EBITDA does not reflect impairment charges for goodwill and fixed assets, and gains (losses) on disposals for fixed assets; • Adjusted EBITDA does not reflect the impact of purchase accounting adjustments to inventory related to the Precor acquisition; • Adjusted EBITDA does not reflect costs associated with certain product recall related matters including adjustments to the return reserves, inventory write-downs, logistics costs associated with Member requests, the cost to move the recalled product for those that elect the option, subscription waiver costs of service, and recall-related hardware development and repair costs.
We continue to adjust Adjusted EBITDA for historical patent infringement and consumer arbitration claims that were determined, prior to our change in practice, to be nonrecurring, infrequent, or unusual; • Adjusted EBITDA does not reflect acquisition-related costs, including transaction and integration costs; • Adjusted EBITDA does not reflect impairment charges and gains (losses) on disposals of fixed assets; • Adjusted EBITDA does not reflect costs associated with certain product recall related matters including adjustments to the return reserves, inventory write-downs, logistics costs associated with Member requests, the cost to move the recalled product for those that elect the option, subscription waiver costs of service, and recall-related hardware development and repair costs.
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.
Our quarterly 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.
Because there is no payment on a paused subscription, effective as of the beginning of fiscal year 2024, we no longer include paused Connected Fitness Subscriptions in our Ending Paid Connected Fitness Subscription count.
Because there is no payment on a paused subscription, effective as of the beginning of fiscal year 2024, we do not include paused Connected Fitness Subscriptions in our Ending Paid Connected Fitness Subscription count.
Following a change in practice beginning during the fiscal year ended December 31, 2022, we no longer adjust adjusted EBITDA for costs from new patent litigation or consumer arbitration claims, unless we consider the matter to be nonrecurring, infrequent or unusual.
Following a change in practice beginning during the fiscal year ended June 30, 2022, we no longer adjust Adjusted EBITDA for costs from new patent litigation or consumer arbitration claims, unless we consider the matter to be nonrecurring, infrequent or unusual.
The effective interest rate upon issuance of the 2026 Notes was 0.45%, which is the effective interest rate as of June 30, 2024.
The effective interest rate upon issuance of the 2026 Notes was 0.45%, which is the effective interest rate as of June 30, 2025.
Average Monthly Paid App Subscription Churn 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 Monthly Paid App Subscription Churn When a Subscriber to our Peloton Apps 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).
Cost of revenue Connected Fitness Products Connected Fitness Products cost of revenue consists of our portfolio of Connected Fitness Products, related accessories, and branded apparel product costs, including third party manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging, warranty replacement and service costs, fulfillment costs, warehousing costs, costs related to our commercial business, depreciation of property and equipment, and certain costs related to management, facilities, and personnel-related expenses associated with supply chain logistics.
Cost of revenue Connected Fitness Products Connected Fitness Products Cost of revenue primarily consists of our portfolio of Connected Fitness Products, related accessories, Precor-branded fitness products, and branded apparel product costs, including third party manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging, warranty replacement and service costs, fulfillment costs, warehousing costs, costs related to our commercial business, depreciation of property and equipment, and certain costs related to management, facilities, and personnel-related expenses, including stock-based compensation expense, and expense associated with supply chain logistics.
Costs of product recalls and corrective actions are recognized in Connected Fitness Products cost of revenue, which may include the cost of the development of the product being replaced, logistics costs, and other related costs such as product scrap cost, inventory write-down and cancellation of any supplier commitments.
These costs are recognized in Connected Fitness Products Cost of revenue, which may include the cost of the development of the product being replaced, logistics costs, and other related costs such as product scrap cost, inventory write-down and cancellation of any supplier commitments.
These costs consist of both fixed costs, including studio rent and occupancy, other studio overhead, Instructor and production personnel-related expenses, depreciation of property and equipment as well as variable costs, including music royalty fees, third-party platform streaming costs, and payment processing fees for our monthly subscription billings.
These costs consist of both fixed costs, including Instructor, content, and production personnel-related expenses, including stock-based compensation expense, depreciation of property and equipment, studio rent and occupancy, and other studio overhead, as well as variable costs, including music royalty fees, third-party platform streaming costs, and payment processing fees for our monthly subscription billings.
As of June 30, 2024, our commitments to contract with third-party manufacturers for their inventory on-hand and component purchase commitments related to the manufacture of our products were estimated to be approximately $80.1 million.
As of June 30, 2025, our commitments to contract with third-party manufacturers for their inventory on-hand and component purchase commitments related to the manufacture of our products were estimated to be approximately $96.1 million.
Operating expenses Sales and marketing Sales and marketing expense consists of performance marketing media spend, asset creation, and other brand creative, costs to operate our retail showrooms including rent and occupancy charges, payment processing fees incurred in connection with the sale of our Connected Fitness Products, sales and marketing personnel-related expenses, expenses related to the Peloton App, and depreciation of property and equipment.
Operating expenses Sales and marketing Sales and marketing expense primarily consists of performance marketing media spend, asset creation, and other brand creative, sales and marketing personnel-related expenses, including stock-based compensation expense, costs to operate our retail showrooms including rent and occupancy charges, payment processing fees incurred in connection with the sale of our Connected Fitness Products, expenses related to the Peloton Apps, and depreciation of property and equipment.
Inventory write-downs and related obsolescence reserve expense are also included within Connected Fitness Products cost of revenue. Subscription Subscription cost of revenue includes costs associated with content creation and costs to stream content to our Members.
Inventory write-downs and related obsolescence reserve expense are also included within Connected Fitness Products Cost of revenue. 45 Subscription Subscription Cost of revenue primarily consists of costs associated with content creation and costs to stream content to our Members.
Income tax (benefit) expense for the fiscal year ended June 30, 2024 and 2023 of $(0.2) million and $3.7 million, respectively, was primarily due to state and international taxes.
Income tax expense (benefit) for the fiscal year ended June 30, 2025 and 2024 of $3.4 million and $(0.2) million, respectively, was primarily due to state and international taxes.
Restructuring expense Restructuring expense consists of severance and other personnel costs, including stock-based compensation expense, professional services, facility closures and other costs associated with exit and disposal activities. Supplier settlements Supplier settlements are payments made to third-party suppliers to terminate certain future inventory purchase commitments.
Restructuring expense Restructuring expense consists of severance and other personnel costs, including stock-based compensation expense, professional services, facility closures and other costs associated with exit and disposal activities. Supplier settlements Supplier settlements are payments made to third-party suppliers to terminate certain future inventory purchase commitments or settle disputes with suppliers about and to terminate certain alleged past and future commitments.
Components of our Results of Operations Revenue Connected Fitness Products Connected Fitness Products revenue consists of sales of our portfolio of Connected Fitness Products and related accessories, as well as Precor branded fitness products, delivery and installation services, rental lease arrangements, extended warranty agreements, branded apparel, and commercial service contracts.
Components of our Results of Operations Revenue Connected Fitness Products Connected Fitness Products Revenue primarily consists of sales of our portfolio of Connected Fitness Products and related accessories, as well as Precor-branded fitness products, delivery and installation services, Peloton Bike portfolio rental products, extended warranty agreements, branded apparel, and commercial service contracts.
During the fiscal years ended June 30, 2024 and 2023, we incurred total commitment fees of $1.3 million and $1.6 million, respectively, which are included in Interest expense in the Consolidated Statements of Operations and Comprehensive Loss.
During the fiscal years ended June 30, 2025 and 2024, we incurred total commitment fees of $0.5 million and $1.3 million, respectively, which are included in Interest expense in the Consolidated Statements of Operations and Comprehensive Loss.
(3) Represents charges incurred in connection with the 2022 Restructuring Plan and 2024 Restructuring plan, refer to Note 4 - Restructuring in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
(3) Represents charges incurred in connection with the Restructuring Plans, refer to Note 4, Restructuring in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
As of June 30, 2024, we had drawn the full amount of the Term Loan and had not drawn on the Revolving Facility, and we had $1,000.0 million total outstanding borrowings under the Third Amended and Restated Credit Agreement.
As of June 30, 2025, we had drawn the full amount of the Term Loan and had not drawn on the Revolving Facility, and we had $990.0 million total outstanding borrowings under the Third Amended and Restated Credit Agreement.
We capitalize certain qualified costs incurred in connection with the development of internal-use software that may also cause research and development expenses to vary from period to period. Goodwill impairment Goodwill impairment consists of non-cash impairment charges relating to goodwill.
We capitalize certain qualified costs incurred in connection with the development of internal-use software that may also cause research and development expenses to vary from period to period. Impairment expense Impairment expense primarily consists of non-cash impairment charges relating to long-lived assets.
Subscription Contribution and Subscription Contribution Margin We define “Subscription Contribution” as Subscription revenue less cost of Subscription revenue, adjusted to exclude from cost of Subscription revenue, depreciation and amortization expense, and stock-based compensation expense. Subscription Contribution Margin is calculated by dividing Subscription Contribution by Subscription revenue.
Subscription Contribution and Subscription Contribution Margin We define “Subscription Contribution” as Subscription Revenue less Subscription Cost of revenue, adjusted to exclude depreciation and amortization and stock-based compensation expenses included within Subscription Cost of revenue. Subscription Contribution Margin is calculated by dividing Subscription Contribution by Subscription Revenue.
Based on information that is currently available, management believes that the accruals are adequate. It is possible that substantial additional charges may be required in future periods based on new information, changes in facts and circumstances, and actions we may commit to or be required to undertake.
Based on information that is currently available, management believes that the product warranty and recall related provisions are adequate, however it is possible that substantial additional charges may be required in future periods based on new information, changes in facts and circumstances, and actions we may commit to or be required to undertake.
The accrued cost is based on management’s estimate of the cost to repair each affected product and the estimated number of products to be repaired based on actions taken by the impacted customers. Estimating both cost to repair each affected product and the number of units to be repaired is highly subjective and requires significant management judgment.
The accrued cost is based on management’s estimate of the cost to repair each affected product and the estimated number of products to be repaired based on actions taken by the impacted customers. Estimating future product warranty and recall related provisions is highly subjective and requires significant management judgment.
Total Other Expense, Net and Income Tax (Benefit) Expense Fiscal Year Ended June 30, 2024 2023 % Change (dollars in millions) Interest Expense $ (112.5) $ (97.1) 15.8% Interest Income 35.1 26.4 32.9% Foreign exchange (losses) gains — 7.0 (100.5)% Other income, net 0.7 2.9 (77.3)% Net gain on debt refinancing 53.6 — *NM Income tax (benefit) expense (0.2) 3.7 (105.5)% ___________________________ *NM - not meaningful 53 Fiscal Years Ended June 30, 2024 and 2023 Total other expense, net, was comprised of the following for the fiscal year ended June 30, 2024: • Interest expense primarily related to term loan, convertible notes, and deferred financing costs of $112.5 million; • Interest income from cash, cash equivalents, and short-term investments of $35.1 million; • Foreign exchange losses were minimal; • Other income, net of $0.7 million; and • Net gain on debt refinancing of $53.6 million, related to the 2026 Notes gain on extinguishment of debt of $69.8 million, partially offset by the Term Loan loss on extinguishment of $7.5 million and modification of debt of $8.7 million.
Total other expense, net and Income tax expense (benefit) Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Interest expense $ (134.5) $ (112.5) 19.6% Interest income 32.7 35.1 (6.7)% Foreign exchange gain (loss) 22.4 — *NM Other income, net 0.1 0.7 (90.8)% Net gain on debt refinancing — 53.6 *NM Income tax expense (benefit) 3.4 (0.2) *NM ___________________________ *NM - not meaningful Fiscal Years Ended June 30, 2025 and 2024 Total other expense, net, was comprised of the following for the fiscal year ended June 30, 2025: • Interest expense primarily related to our Term Loan (as defined below) and convertible notes, and deferred financing costs of $134.5 million; • Interest income from cash, cash equivalents, and short-term investments of $32.7 million; • Foreign exchange gains of $22.4 million; • Other income, net of $0.1 million; and Total other expense, net, was comprised of the following for the fiscal year ended June 30, 2024: • Interest expense primarily related to our Term Loan and convertible notes, and deferred financing costs of $112.5 million; • Interest income from cash, cash equivalents, and short-term investments of $35.1 million; • Foreign exchange losses were minimal; • Other income, net of $0.7 million; and • Net gain on debt refinancing of $53.6 million, related to the 2026 Notes gain on extinguishment of debt of $69.8 million, partially offset by the Term Loan loss on extinguishment of $7.5 million and modification of debt of $8.7 million.
If a Connected Fitness Subscription owns multiple, different Peloton Connected Fitness Products (e.g. owns a Peloton Bike and Peloton Tread) in the same household, the price of the Subscription remains $44 monthly. As of June 30, 2024, approximately 10% of our Connected Fitness Subscriptions owned multiple, different Connected Fitness Products.
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 June 30, 2025, approximately 12% of our Connected Fitness Subscriptions owned multiple, different Connected Fitness Products.
Subscription Subscription revenue primarily consists of revenue generated from our Connected Fitness Subscription and Peloton App Subscription, which are offered on a month-to-month or prepaid basis. As of June 30, 2024, 99% and 84% of our Connected Fitness Subscription and Paid App Subscription bases, respectively, were paying month-to-month.
Subscription Subscription Revenue primarily consists of revenue generated from our Paid Connected Fitness Subscriptions and Paid Peloton App Subscriptions, inclusive of the Strength+ App, which are offered on a month-to-month or prepaid basis. As of June 30, 2025, 99% and 82% of our Connected Fitness Subscription and Paid App Subscription bases, respectively, were paying month-to-month.
The following table presents a reconciliation of Free Cash Flow to Net cash used in operating activities, the most directly comparable financial measure prepared in accordance with GAAP, for each of the periods indicated: Fiscal Year Ended June 30, 2024 2023 2022 (in millions) Net cash used in operating activities $ (66.1) $ (387.6) $ (2,020.0) Capital expenditures and capitalized internal-use software development costs (19.7) (82.4) (337.3) Free Cash Flow $ (85.8) $ (470.0) $ (2,357.4) Liquidity and Capital Resources Our operations have been funded primarily through net proceeds from the sales of our equity and convertible debt securities, and term loan, as well as cash flows from operating activities.
The following table presents a reconciliation of Free Cash Flow to Net cash provided by (used in) operating activities, the most directly comparable financial measure prepared in accordance with GAAP, for each of the periods indicated: Fiscal Year Ended June 30, 2025 2024 2023 (in millions) Net cash provided by (used in) operating activities $ 333.0 $ (66.1) $ (387.6) Capital expenditures (9.3) (19.7) (82.4) Free Cash Flow $ 323.7 $ (85.8) $ (470.0) Liquidity and Capital Resources Our operations have been funded primarily through net proceeds from the sales of our equity and convertible debt securities, and our Term Loan (as defined below), as well as cash flows from operating activities.
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. Our revenue is generated primarily from recurring Subscription revenue and the sale of our Connected Fitness Products.
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.
However, we may not be able to realize the cost savings and benefits initially anticipated as a result of the 2022 Restructuring Plan and the 2024 Restructuring Plan, and costs may be greater than expected.
We may not be able to realize the cost savings and benefits initially anticipated as a result of the Restructuring Plans, and implementation and transition costs may be greater than expected.
General and administrative General and administrative expense includes personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal, human resources, IT functions and Member Support team.
General and administrative General and administrative expense primarily consists of personnel-related expenses, including stock-based compensation expense, and facilities-related costs, primarily for our executive, finance, accounting, legal, human resources, IT functions and Member support team.
Impairments are determined using management’s judgment about our anticipated ability to continue to use fixed assets in-service and under development, current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. Management disposes of fixed assets during the regular course of business due to damage, obsolescence, strategic shifts, and loss.
Impairments are determined using management’s judgment about our anticipated ability to continue to use fixed assets in-service and under development, current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements.
When our expectations indicate that the carrying value of inventory may exceed its NRV, we perform an exercise to calculate the approximate amount by which carrying value is greater than NRV and record additional cost of revenue for the difference. Once a write-off occurs, a new, lower cost basis is established.
When our expectations indicate that the carrying value of inventory may exceed its NRV, we calculate the approximate amount by which carrying value is greater than NRV and record a write-down for that difference as a component of Connected Fitness Products Cost of revenue. Once a write-down occurs, a new, lower cost basis is established.
Fiscal Year Ended June 30, 2024 2023 2022 (in millions) Consolidated Statement of Operations Data: Revenue Connected Fitness Products $ 991.7 $ 1,130.2 $ 2,187.5 Subscription 1,708.7 1,670.1 1,394.7 Total revenue 2,700.5 2,800.2 3,582.1 Cost of revenue (1)(2) Connected Fitness Products 943.0 1,328.8 2,433.8 Subscription 551.0 547.9 450.0 Total cost of revenue 1,494.0 1,876.7 2,883.8 Gross profit 1,206.5 923.5 698.4 Operating expenses Sales and marketing (1)(2) 658.9 648.2 1,018.9 General and administrative (1)(2) 651.0 798.1 963.4 Research and development (1)(2) 304.8 318.4 359.5 Goodwill impairment — — 181.9 Impairment expense 57.3 144.5 390.5 Restructuring expense (1) 66.1 189.4 180.7 Supplier settlements (2.6) 22.0 337.6 Total operating expenses 1,735.5 2,120.6 3,432.4 Loss from operations (529.0) (1,197.1) (2,734.0) Other expense, net: Interest expense (112.5) (97.1) (43.0) Interest income 35.1 26.4 2.3 Foreign exchange gain (loss) — 7.0 (31.8) Other income (expense), net 0.7 2.9 (1.5) Net gain on debt refinancing 53.6 — — Total other expense, net (23.2) (60.9) (74.1) Loss before income taxes (552.1) (1,258.0) (2,808.1) Income tax (benefit) expense (0.2) 3.7 19.6 Net loss $ (551.9) $ (1,261.7) $ (2,827.7) ____________________ 49 (1) Includes stock-based compensation expense as follows: Fiscal Year Ended June 30, 2024 2023 2022 (in millions) Cost of revenue Connected Fitness Products $ 10.1 $ 14.3 $ 20.2 Subscription 39.3 42.8 22.7 Total cost of revenue 49.5 57.1 42.9 Sales and marketing 19.7 28.9 30.5 General and administrative 177.1 167.2 152.4 Research and development 58.8 66.7 46.0 Restructuring expense 6.6 85.0 56.5 Total stock-based compensation expense $ 311.7 $ 405.0 $ 328.4 During the fiscal year ended June 30, 2024, in connection with the CEO transition, we recognized stock-based compensation expense of $41.9 million for one year of accelerated vesting of stock options, which had an exercise price of $38.77 per share and a grant date fair value of approximately $167.6 million.
Fiscal Year Ended June 30, 2025 2024 2023 (in millions) Consolidated Statement of Operations Data: Revenue Connected Fitness Products $ 817.1 $ 991.7 $ 1,130.2 Subscription 1,673.7 1,708.7 1,670.1 Total revenue 2,490.8 2,700.5 2,800.2 Cost of revenue (1)(2) Connected Fitness Products 705.9 943.0 1,328.8 Subscription 516.6 551.0 547.9 Total cost of revenue 1,222.5 1,494.0 1,876.7 Gross profit 1,268.3 1,206.5 923.5 Operating expenses Sales and marketing (1)(2) 421.6 658.9 648.2 General and administrative (1)(2) 527.3 651.0 798.1 Research and development (1)(2) 234.2 304.8 318.4 Impairment expense 64.1 57.3 144.5 Restructuring expense (1) 33.8 66.1 189.4 Supplier settlements 23.5 (2.6) 22.0 Total operating expenses 1,304.5 1,735.5 2,120.6 Loss from operations (36.2) (529.0) (1,197.1) Other expense, net: Interest expense (134.5) (112.5) (97.1) Interest income 32.7 35.1 26.4 Foreign exchange gain (loss) 22.4 — 7.0 Other income, net 0.1 0.7 2.9 Net gain on debt refinancing — 53.6 — Total other expense, net (79.3) (23.2) (60.9) Loss before income taxes (115.6) (552.1) (1,258.0) Income tax expense (benefit) 3.4 (0.2) 3.7 Net loss $ (118.9) $ (551.9) $ (1,261.7) ____________________ 47 (1) Includes stock-based compensation expense as follows: Fiscal Year Ended June 30, 2025 2024 2023 (in millions) Cost of revenue Connected Fitness Products $ 9.3 $ 10.1 $ 14.3 Subscription 36.3 39.3 42.8 Total cost of revenue 45.7 49.5 57.1 Sales and marketing 16.4 19.7 28.9 General and administrative 121.9 177.1 167.2 Research and development 44.8 58.8 66.7 Restructuring expense 0.8 6.6 85.0 Total stock-based compensation expense $ 229.6 $ 311.7 $ 405.0 During the fiscal year ended June 30, 2024, in connection with the CEO transition, we recognized stock-based compensation expense of $41.9 million for one year of accelerated vesting of stock options, which had an exercise price of $38.77 per share and a grant date fair value of approximately $167.6 million.
Research and Development Fiscal Year Ended June 30, 2024 2023 % Change (dollars in millions) Research and development $ 304.8 $ 318.4 (4.3)% As a percentage of total revenue 11.3 % 11.4 % Fiscal Years Ended June 30, 2024 and 2023 Research and development expense decreased $13.7 million, or 4.3% in the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023.
Research and Development Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Research and development $ 234.2 $ 304.8 (23.2)% As a percentage of total revenue 9.4 % 11.3 % Fiscal Years Ended June 30, 2025 and 2024 Research and development expense decreased $70.6 million, or 23.2% for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024.
The following table presents a reconciliation of Adjusted EBITDA to Net loss, the most directly comparable financial measure prepared in accordance with GAAP, for each of the periods indicated: Adjusted EBITDA Fiscal Year Ended June 30, 2024 2023 2022 (dollars in millions) Net loss $ (551.9) $ (1,261.7) $ (2,827.7) Adjusted to exclude the following: Total other (income) expense, net (1) 76.8 60.9 74.1 Net gain on debt refinancing (2) (53.6) — — Income tax (benefit) expense (0.2) 3.7 19.6 Depreciation and amortization expense 108.8 124.3 142.8 Stock-based compensation expense 305.2 319.9 271.8 Goodwill impairment — — 181.9 Impairment expense 57.3 144.5 390.5 Restructuring expense (3) 67.1 193.0 237.5 Supplier settlements (4) (2.6) 22.0 337.6 Product recall related matters (5) (14.0) 80.9 62.3 Litigation and settlement expenses (6) 10.8 102.8 118.6 Other adjustment items — 1.0 8.4 Adjusted EBITDA $ 3.5 $ (208.5) $ (982.7) ______________________ (1) Primarily consists of Interest expense of $112.5 million, $97.1 million, (43.0), and Interest income of $35.1 million, $26.4 million, $2.3 million, for the for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
Because of these limitations, Adjusted EBITDA should be considered along with other operating and financial performance measures presented in accordance with GAAP. 52 The following table presents a reconciliation of Adjusted EBITDA to Net loss, the most directly comparable financial measure prepared in accordance with GAAP, for each of the periods indicated: Fiscal Year Ended June 30, 2025 2024 2023 (in millions) Net loss $ (118.9) $ (551.9) $ (1,261.7) Adjusted to exclude the following: Total other expense, net (1) 79.3 76.8 60.9 Net gain on debt refinancing (2) — (53.6) — Income tax expense (benefit) 3.4 (0.2) 3.7 Depreciation and amortization expense 89.7 108.8 124.3 Stock-based compensation expense 228.8 305.2 319.9 Impairment expense 64.1 57.3 144.5 Restructuring expense (3) 33.8 67.1 193.0 Supplier settlements (4) 23.5 (2.6) 22.0 Product recall related matters (5) — (14.0) 80.9 Litigation and settlement expenses (6) — 10.8 102.8 Other adjustment items — — 1.0 Adjusted EBITDA $ 403.6 $ 3.5 $ (208.5) ______________________ (1) Primarily consists of Interest expense of $134.5 million, $112.5 million, $97.1 million, Interest income of $(32.7) million, $(35.1) million, $(26.4) million, and foreign exchange (gain) loss of $(22.4) million, zero, and $(7.0) million, for the fiscal years ended June 30, 2025, 2024, and 2023, respectively.
Significant judgment is required to determine both the probability and the estimated amount of loss. These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events.
These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events.
When a Connected Fitness Subscription payment method fails, we communicate with our Members to update their payment method and make multiple attempts over several days to charge the payment method on file and reactivate the subscription.
When a Connected Fitness Subscription payment method fails, we communicate with our Members to update their payment method and make multiple attempts over several days to charge the payment method on file and reactivate the subscription. We cancel a Member's Connected Fitness Subscription when it remains unpaid for two days after their billing cycle date.
Cash Flows Fiscal Year Ended June 30, 2024 2023 2022 (in millions) Net cash used in operating activities $ (66.1) $ (387.6) $ (2,020.0) Net cash provided by (used in) investing activities 26.8 (69.9) 153.3 Net cash (used in) provided by financing activities (94.4) 76.8 2,015.1 Operating Activities Net cash used in operating activities of $66.1 million for the fiscal year ended June 30, 2024 was primarily due to a net loss of $551.9 million and a net increase in operating assets and liabilities of $13.9 million, partially offset by non-cash adjustments of $499.7 million.
Cash Flows Fiscal Year Ended June 30, 2025 2024 2023 (in millions) Net cash provided by (used in) operating activities $ 333.0 $ (66.1) $ (387.6) Net cash (used in) provided by investing activities (5.1) 26.8 (69.9) Net cash provided by (used in) financing activities 1.7 (94.4) 76.8 Operating Activities Net cash provided by operating activities of $333.0 million for the fiscal year ended June 30, 2025 was primarily related to non-cash adjustments of $424.5 million and a net decrease in operating assets and liabilities of $27.4 million, partially offset by a net loss of $118.9 million.
An adverse change to, loss of, or claim that we do not hold necessary licenses may have an adverse effect on our business, operating results, and financial condition.” (3) Pursuant to the Third Amended and Restated Credit Agreement, we are required to pay a commitment fee of 0.500% on a quarterly basis based on the unused portion of the Revolving Facility.
An adverse change to, loss of, or claim that we do not hold necessary licenses may have an adverse effect on our business, operating results, and financial condition.” (3) Pursuant to the Third Amended and Restated Credit Agreement, we are required to pay a 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.
We define a “Member” as any individual who has a Peloton account through a paid Connected Fitness Subscription or a paid Peloton App Subscription, and completes 1 or more workouts in the trailing 12 month period.
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+, App One and Strength+ Memberships (our “Peloton Apps”), and engages in one or more workouts in the trailing 12-month period.
Furthermore, we expensed $8.7 million of debt issuance costs incurred and wrote-off $7.5 million of previously deferred debt discount and debt issuance costs, which are included within Net gain on debt refinancing on the Consolidated Statements of Operations.
Furthermore, we expensed $8.7 million of debt issuance costs incurred and wrote-off $7.5 million of previously 56 deferred debt discount and debt issuance costs, which was included within Net gain on debt refinancing on the Consolidated Statements of Operations and Comprehensive Loss for the fiscal year ended June 30, 2024.
The use of Free Cash Flow as an analytical tool has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, Free Cash Flow does not incorporate payments made for purchases of marketable securities, business combinations and asset acquisitions.
The use of Free Cash Flow as an analytical tool has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, Free Cash Flow does not incorporate payments made for purchases of marketable securities or principal repayments on our debt, which reduces cash available to us.
In addition, we recognized incremental stock-based compensation expense of $5.4 million for the modification of stock option awards related to extension of the exercise window through December 31, 2027. These expenses were recognized within General and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss.
In addition, we recognized incremental stock-based compensation expense of $5.4 million for the modification of stock option awards related to extension of the exercise window through December 31, 2027.
Product Recall Related Matters We accrue cost of product recalls and potential corrective actions based on management’s estimate of when it is probable that a liability has been incurred and the amount can be reasonably estimated, which occurs when management commits to a corrective action plan or when required by regulatory requirements.
Product warranty obligations are reviewed and adjusted quarterly to ensure that accruals are adequate to meet expected future warranty obligations. 59 We accrue cost of product recalls and other potential corrective actions based on management’s estimate of when it is probable that a liability has been incurred and the amount can be reasonably estimated, which occurs when management commits to either a corrective action plan or quality improvement plan, or when required by regulatory requirements.
Should our estimates used in these calculations change in the future, such as estimated selling prices or disposal costs, additional write-downs may occur.
These assumptions about future disposition of inventory are inherently uncertain and should our estimates used in these calculations change in the future, such as estimated selling prices or disposal costs, additional and potentially material write-downs may occur.
Inventory Valuation and Reserves We review our inventory to ensure that its carrying value does not exceed its net realizable value (“NRV”), with NRV based on the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal and transportation.
The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those noted below. 58 Inventory Valuation and Reserves We review our inventory to ensure that its carrying value does not exceed its net realizable value (“NRV”), with NRV based on the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal and transportation.
Cost of Revenue, Gross Profit, and Gross Margin Fiscal Year Ended June 30, 2024 2023 % Change (dollars in millions) Cost of Revenue: Connected Fitness Products $ 943.0 $ 1,328.8 (29.0)% Subscription 551.0 547.9 0.6 Total cost of revenue $ 1,494.0 $ 1,876.7 (20.4)% Gross Profit: Connected Fitness Products $ 48.8 $ (198.6) 124.6% Subscription 1,157.7 1,122.1 3.2 Total Gross profit $ 1,206.5 $ 923.5 30.6% Gross Margin: Connected Fitness Products 4.9 % (17.6) % Subscription 67.8 % 67.2 % Fiscal Years Ended June 30, 2024 and 2023 Connected Fitness Products cost of revenue for the fiscal year ended June 30, 2024 decreased $385.8 million, or 29.0%, compared to the fiscal year ended June 30, 2023.
Cost of Revenue, Gross Profit, and Gross Margin Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Cost of Revenue: Connected Fitness Products $ 705.9 $ 943.0 (25.1)% Subscription 516.6 551.0 (6.2) Total cost of revenue $ 1,222.5 $ 1,494.0 (18.2)% Gross Profit: Connected Fitness Products $ 111.2 $ 48.8 128.1% Subscription 1,157.1 1,157.7 (0.1) Total Gross profit $ 1,268.3 $ 1,206.5 5.1% Gross Margin: Connected Fitness Products 13.6 % 4.9 % Subscription 69.1 % 67.8 % Fiscal Years Ended June 30, 2025 and 2024 Connected Fitness Products Cost of revenue for the fiscal year ended June 30, 2025 decreased $237.1 million, or 25.1%, compared to the fiscal year ended June 30, 2024.
(4) Other purchase obligations include all other non-cancelable contractual obligations. These contracts are primarily related to cloud computing costs. (5) Refer to Note 12 - Debt in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further details regarding our 2026 Notes and 2029 Notes and Term Loan obligations.
(5) Refer to Note 11, Debt in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further details regarding our 2026 Notes and 2029 Notes and Term Loan obligations.
The following table presents a reconciliation of Subscription Contribution and Subscription Contribution Margin to Subscription Gross Profit and Subscription Gross Margin, respectively, which are the most directly comparable financial measures prepared in accordance with GAAP, for each of the periods indicated: Fiscal Year Ended June 30, 2024 2023 2022 (dollars in millions) Subscription Revenue $ 1,708.7 $ 1,670.1 $ 1,394.7 Less: Cost of Subscription 551.0 547.9 450.0 Subscription Gross Profit $ 1,157.7 $ 1,122.1 $ 944.7 Subscription Gross Margin 67.8 % 67.2 % 67.7 % Add back: Depreciation and amortization expense $ 34.6 $ 36.9 $ 26.8 Stock-based compensation expense 39.3 42.8 22.7 Subscription Contribution $ 1,231.6 $ 1,201.8 $ 994.2 Subscription Contribution Margin 72.1 % 72.0 % 71.3 % We believe continued growth of our Connected Fitness Subscription base will allow us to improve our Subscription Contribution Margin.
The following table presents a reconciliation of Subscription Contribution and Subscription Contribution Margin to Subscription Gross Profit and Subscription Gross Margin, respectively, which are the most directly comparable financial measures prepared in accordance with GAAP, for each of the periods indicated: Fiscal Year Ended June 30, 2025 2024 2023 (dollars in millions) Subscription Revenue $ 1,673.7 $ 1,708.7 $ 1,670.1 Less: Subscription Cost of revenue 516.6 551.0 547.9 Subscription Gross Profit $ 1,157.1 $ 1,157.7 $ 1,122.1 Subscription Gross Margin 69.1 % 67.8 % 67.2 % Add back: Depreciation and amortization expense $ 28.5 $ 34.6 $ 36.9 Stock-based compensation expense 36.3 39.3 42.8 Subscription Contribution $ 1,222.0 $ 1,231.6 $ 1,201.8 Subscription Contribution Margin 73.0 % 72.1 % 72.0 % Free Cash Flow We define Free Cash Flow as Net cash provided by (used in) operating activities less Capital expenditures.
Adjusted EBITDA We calculate Adjusted EBITDA as net (loss) income adjusted to exclude: other expense (income), net; income tax expense (benefit); depreciation and amortization expense; stock-based compensation expense; goodwill impairment; impairment expense; product recall related matters; certain litigation and settlement expenses; transaction and integration costs; reorganization, severance, exit, disposal and other costs associated with restructuring plans; supplier settlements; and other adjustment items that arise outside the ordinary course of our business.
Adjusted EBITDA We calculate Adjusted EBITDA as net (loss) income adjusted to exclude: other expense (income), net; net (gains) losses on debt refinancing; income tax expense (benefit); depreciation and amortization expense; stock-based compensation expense; impairment expense; restructuring expense; product recall related matters; certain litigation and settlement expenses; supplier settlements; and other adjustment items that arise outside the ordinary course of our business. 51 We use Adjusted EBITDA as a measure of operating performance and the operating leverage in our business.
See Ending Paid Connected Fitness Subscriptions definition below. (2) New reporting metric, effective as of the beginning of fiscal year 2024, replaced Average Net Monthly Connected Fitness Churn. See Average Net Monthly Paid Connected Fitness Subscription Churn definition below. Includes metrics that were not available during the fiscal year ended June 30, 2022.
(2) New reporting metrics, effective as of the beginning of fiscal year 2024, Ending Paid Connected Fitness Subscriptions replaced Ending Connected Fitness Subscriptions, and Average Net Monthly Paid Connected Fitness Subscription Churn replaced Average Net Monthly Connected Fitness Churn. See definitions below.
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.
We anticipate capital expenditures over the next 12 months to include investments in product development, content and our studios, systems implementation, and IT infrastructure. 54 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.
Non-operating income and expenses Other expense, net Other expense, net consists of interest (expense) income, unrealized and realized gains (losses) on investments, net gains relating to our refinancing activities, and foreign exchange gains (losses). Income tax provision The provision for income taxes consists primarily of income taxes related to state and international taxes for jurisdictions in which we conduct business.
Non-operating income and expenses Total other expense, net Total other expense, net primarily consists of interest (expense) income, unrealized and realized (losses) gains on investments, net gains relating to our refinancing activities, and foreign exchange gains (losses).
A discussion of our results of operations for our fiscal year ended June 30, 2023 compared to the year ended June 30, 2022 is included our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the SEC on August 23, 2023 (File No. 001-39058) under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Peloton is a leading global fitness company with a highly engaged community of over 6.4 million Members as of June 30, 2024.
A discussion of our results of operations for our fiscal year ended June 30, 2024 compared to the year ended June 30, 2023 is included our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC on August 22, 2024 (File No. 001-39058) under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Peloton is a leading global fitness and wellness company that empowers its Members to live fit, strong, long, and happy by providing fitness and wellness products and services they can use anytime, anywhere.
The modification resulted in incremental stock-based compensation expense of $21.9 million in the aggregate. ____________________ (2) Includes depreciation and amortization expense as follows: Fiscal Year Ended June 30, 2024 2023 2022 (in millions) Cost of revenue Connected Fitness Products $ 16.5 $ 18.7 $ 20.0 Subscription 34.6 36.9 26.8 Total cost of revenue 51.0 55.5 46.8 Sales and marketing 23.4 31.1 29.6 General and administrative 23.7 26.3 45.7 Research and development 10.7 11.4 20.7 Total depreciation and amortization expense $ 108.8 $ 124.3 $ 142.8 50 Comparison of the fiscal years ended June 30, 2024 and 2023 Revenue Fiscal Year Ended June 30, 2024 2023 % Change (dollars in millions) Revenue: Connected Fitness Products $ 991.7 $ 1,130.2 (12.2)% Subscription 1,708.7 1,670.1 2.3 Total revenue $ 2,700.5 $ 2,800.2 (3.6)% Percentage of revenue Connected Fitness Products 36.7 % 40.4 % Subscription 63.3 59.6 Total 100.0 % 100.0 % Fiscal Years Ended June 30, 2024 and 2023 Connected Fitness Products revenue decreased $138.4 million for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023.
These expenses were recognized within General and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss. ____________________ (2) Includes depreciation and amortization expense as follows: Fiscal Year Ended June 30, 2025 2024 2023 (in millions) Cost of revenue Connected Fitness Products $ 16.3 $ 16.5 $ 18.7 Subscription 28.5 34.6 36.9 Total cost of revenue 44.9 51.0 55.5 Sales and marketing 17.4 23.4 31.1 General and administrative 17.6 23.7 26.3 Research and development 9.7 10.7 11.4 Total depreciation and amortization expense $ 89.7 $ 108.8 $ 124.3 Comparison of the fiscal years ended June 30, 2025 and 2024 Revenue Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Revenue: Connected Fitness Products $ 817.1 $ 991.7 (17.6)% Subscription 1,673.7 1,708.7 (2.1) Total revenue $ 2,490.8 $ 2,700.5 (7.8)% Percentage of revenue Connected Fitness Products 32.8 % 36.7 % Subscription 67.2 63.3 Total 100.0 % 100.0 % Fiscal Years Ended June 30, 2025 and 2024 Connected Fitness Products Revenue decreased $174.6 million for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024.
Additionally, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the assets.
Impairment of Long-Lived Assets We review our long-lived asset groups for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. Recoverability of our long-lived asset groups are measured by comparing the undiscounted future cash flows expected to be generated from the asset group to the carrying value of the asset group.
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.
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.
Operating Expenses Sales and Marketing Fiscal Year Ended June 30, 2024 2023 % Change (dollars in millions) Sales and marketing $ 658.9 $ 648.2 1.7% As a percentage of total revenue 24.4 % 23.1 % Fiscal Years Ended June 30, 2024 and 2023 Sales and marketing expense increased $10.8 million in the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023.
Operating Expenses Sales and Marketing Fiscal Year Ended June 30, 2025 2024 % Change (dollars in millions) Sales and marketing $ 421.6 $ 658.9 (36.0)% As a percentage of total revenue 16.9 % 24.4 % Fiscal Years Ended June 30, 2025 and 2024 Sales and marketing expense decreased $237.3 million, or 36.0% for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024.
Our financial profile has been characterized by strong retention, recurring revenue, and efficient customer acquisition. O ur low Average Net Monthly Connected Fitness Churn, together with our high Subscription Gross Profit and Subscription Contribution Margin, yields an attractive lifetime value (“LTV”) for our Connected Fitness Subscriptions well in excess of our customer acquisition costs (“CAC”).
We believe that o ur low Average Net Monthly Paid Connected Fitness Subscription Churn, together with our high Subscription Gross Profit and Subscription Contribution Margin, yields an attractive lifetime value (“LTV”) for our Connected Fitness Subscriptions well in excess of our customer acquisition costs (“CAC”). Maintaining an attractive LTV/CAC ratio is a primary goal of our customer acquisition strategy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInflation Risk As a result of inflationary conditions, there have been and may continue to be additional pressures on the ongoing increases in supply chain and logistics costs, materials costs, and labor costs.
Biggest changeOur exposure to foreign currency exchange rates historically has been partially hedged as our foreign currency denominated inflows create a natural hedge against our foreign currency denominated expenses. 60 Inflation Risk As a result of inflationary conditions, there have been and may continue to be additional pressures on the ongoing increases in supply chain and logistics costs, materials costs, and labor costs.
Additionally, because we purchase component parts from our suppliers, we may be adversely impacted by their inability to adequately mitigate inflationary, industry, or economic pressures. 65
Additionally, because we purchase component parts from our suppliers, we may be adversely impacted by their inability to adequately mitigate inflationary, industry, tariffs, or economic pressures. 61
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We had Cash and cash equivalents of $697.6 million as of June 30, 2024. The primary objective of our investment activities is the preservation of capital, and we do not enter into investments for trading or speculative purposes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We had Cash and cash equivalents of $1,039.5 million as of June 30, 2025. The primary objective of our investment activities is the preservation of capital, and we do not enter into investments for trading or speculative purposes.
We are primarily exposed to changes in short-term interest rates with respect to our cost of borrowing under our Third Amended and Restated Credit Agreement. We monitor our cost of borrowing under our facilities, taking into account our funding requirements, and our expectations for short-term rates in the future.
We are primarily exposed to changes in short-term interest rates with respect to our cost of borrowing under our Term Loan. We monitor our cost of borrowing under our facilities, taking into account our funding requirements, and our expectations for short-term rates in the future.
A hypothetical 10% change in the interest rate on our Third Amended and Restated Credit Agreement for all periods presented would not have a material impact on our consolidated financial statements.
A hypothetical 10% change in the interest rate on our Term Loan for all periods presented would not have a material impact on our consolidated financial statements.
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have recently experienced the effects of inflation on our results of operations and financial condition.
The effect of U.S. and global tariffs may spur inflationary conditions and create further pressures on costs. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have recently experienced the effects of inflation on our results of operations and financial condition.
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Our exposure to foreign currency exchange rates historically has been partially hedged as our foreign currency denominated inflows create a natural hedge against our foreign currency denominated expenses.

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