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PI

PELOTON INTERACTIVE, INC. (PTON)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue of $550.8M beat both S&P consensus by ~$9.7M* and exceeded the prior quarter’s high-end guidance by $6M; GAAP diluted EPS was $0.03, while S&P Primary EPS came in at $0.0604* .
  • Gross margin was 51.5%, 50 bps below Q1 guidance due to a $13.5M Bike+ seat post inventory accrual; Adjusted EBITDA was $118.3M, ~$18M above the high end of guidance .
  • Management raised FY26 guidance: Total Gross Margin to ~52% (from ~51%), Adjusted EBITDA to $425–$475M (from $400–$450M), and minimum Free Cash Flow to ≥$250M (from ≥$200M); FY26 revenue outlook maintained at $2.4–$2.5B .
  • Q2 FY26 outlook implies sequential top-line inflection (revenue $665–$685M) with gross margin ~49% and Adjusted EBITDA $55–$75M; subscription base expected at 2.64–2.67M with higher churn post pricing changes .

What Went Well and What Went Wrong

  • What Went Well

    • Outperformed on revenue and Adjusted EBITDA; “performance came in above the guidance range on most key financial metrics” and “continued momentum on bottom line performance” .
    • Raised FY26 Adjusted EBITDA, gross margin, and minimum FCF targets, citing tariff rate/timing favorability, mix shift to higher-margin products, and faster cost savings realization .
    • Engagement strengthening: Average workout time per connected fitness subscription rose ~5% YoY; strong early traction with Peloton IQ and Teams/Club Peloton features (“every kind of usage…per-member…is up” in October) .

  • What Went Wrong

    • Total gross margin missed guidance by 50 bps due to Bike+ seat post inventory accrual ($13.5M in Q1; total estimated $16.5M including prior quarter) .
    • Subscriptions declined: ending paid connected fitness subscriptions down 6% YoY to 2.732M; subscription revenue down 7% YoY to $398.4M .
    • Pricing changes expected to lift churn in Q2 before normalizing; Q2 ending subscriptions guided down 8% YoY to 2.64–2.67M .

Financial Results

MetricQ1 FY25Q4 FY25Q1 FY26
Total Revenue ($USD Millions)$586.0 $606.9 $550.8
GAAP Diluted EPS ($USD)— $0.05 $0.03
GAAP Net (Loss) Income ($USD Millions)$(0.9) $21.6 $13.9
Total Gross Margin %51.8% 54.1% 51.5%
Adjusted EBITDA ($USD Millions)$115.8 $140.0 $118.3

Segment breakdown

Segment MetricQ1 FY25Q4 FY25Q1 FY26
Connected Fitness Products Revenue ($USD Millions)$159.6 $198.6 $152.4
Connected Fitness Products Gross Margin %9.2% 17.3% 6.9%
Subscription Revenue ($USD Millions)$426.3 $408.3 $398.4
Subscription Gross Margin %67.8% 71.9% 68.6%
Subscription Contribution Margin %71.7% 75.4% 72.6%

KPIs and Cash Flow

KPIQ1 FY25Q4 FY25Q1 FY26
Members (Millions)6.2 6.0 5.9
Ending Paid Connected Fitness Subscriptions (Millions)2.896 2.800 2.732
Average Net Monthly CF Subscription Churn %1.9% 1.8% 1.6%
Ending Paid App Subscriptions (Millions)0.588 0.552 0.542
Net Cash Provided by Operating Activities ($USD Millions)$12.5 $117.1 $71.9
Free Cash Flow ($USD Millions)$10.7 $112.4 $67.4

Q1 FY26 actual vs guidance and vs S&P consensus

MetricCompany Guidance (mid)Company Actualvs Guidance MidS&P Consensus*vs S&P*
Total Revenue ($USD Millions)$535.0 $550.8 +$15.8$541.1*+$9.7*
Total Gross Margin %52.0% 51.5% −50 bps——
Adjusted EBITDA ($USD Millions)$95.0 $118.3 +$23.3——
Primary EPS ($USD)———$0.01*+$0.0504* (vs Primary EPS actual 0.0604*)

Values retrieved from S&P Global*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY26$2.4–$2.5 $2.4–$2.5 Maintained
Total Gross Margin %FY26~51.0% ~52.0% Raised
Adjusted EBITDA ($USD Millions)FY26$400–$450 $425–$475 Raised
Free Cash Flow ($USD Millions)FY26 Minimum≥$200 ≥$250 Raised
Total Revenue ($USD Millions)Q2 FY26—$665–$685 New
Total Gross Margin %Q2 FY26—~49.0% New
Adjusted EBITDA ($USD Millions)Q2 FY26—$55–$75 New
Ending Paid CF Subscriptions (Millions)Q2 FY26—2.64–2.67 New

Earnings Call Themes & Trends

TopicQ3 FY25 (Prior-2)Q4 FY25 (Prior-1)Q1 FY26 (Current)Trend
AI/Technology initiativesPersonalized Plans launched; ~500k members started; AI subtitles Strategy to broaden wellness and personalization Peloton IQ launched (AI + computer vision); usage up across modalities Increasing
Supply chain/tariffs/macroMinimal tariff impact in FY25 outlook FY26 outlook anticipates tariff headwind to FCF FY26 gross margin raised due to favorable tariff rates/timing Improving favorability
Product performance/mixMargin improvement from mix shift; CF margins rising CF GM 17.3%; Sub GM 71.9% (one-time royalty benefit) Mix shift toward premium Plus and Tread; CF GM ex accrual +660 bps YoY Positive
Retail footprintMicrostore test success; Amazon events help Plan to expand microstores to 10 Expanded to 10 microstores; new retail partners in U.S. and Australia Expanding
Commercial/B2BPrecor pilots in gyms; Hilton hotels content Unified commercial business unit strategy Pro Series roll-out; Precor Breakaway tread; broader B2B pipeline Strengthening
Regulatory/legal——Voluntary Bike+ seat post recall; accrual recorded; limited revenue impact Elevated risk
R&D executionNew cardio features; kettlebell programs FY26 innovation planned Full hardware refresh across Bike/Tread/Row Accelerating
Health features/wellnessDaily Meditation, Sleep & Recovery engagement up Wellness strategy emphasis Breathwrk acquisition; HSS partnership; Menopause program Broadening

Management Commentary

  • CEO Peter Stern: “Our team once again demonstrated the power of disciplined execution and focus…return Peloton to profitable growth, and extend Peloton’s lead in connected fitness and wellness.”
  • CFO Liz Coddington on margin miss: “Total gross margin was…50 bps below our guidance…negatively impacted by a $13.5 million accrual for Bike Plus C-Post inventory costs…excluding this…would have been 54%” .
  • CFO on guidance raises: “We are raising our full-year fiscal 2026 guidance for total gross margin to 52%…and for adjusted EBITDA to $425–$475M…driven by favorable tariff rates…mix…cost savings sooner than anticipated” .
  • CEO on Peloton IQ and engagement: “If we look at the month of October, every kind of usage on a per-member basis is up…recommendations…are starting to hit home” .

Q&A Highlights

  • Recall impact: Accrual of $13.5M in Q1 (total $16.5M including prior quarter); expected minor churn headwind from pauses in Q2 with majority unpausing in Q3; revenue impact immaterial and included in guidance .
  • Churn dynamics post price increase: Elevated cancellations in first week moderated; overall Q1 churn down; projecting flat churn for FY26 despite Q2 uptick .
  • Free cash flow timing: ~$30M vendor payment timing benefit in Q1; FY26 minimum FCF raised to ≥$250M with tariff rate/timing favorability and cost savings .
  • Demand environment: Connected fitness equipment category still declining YoY but decelerating to low-single digits; long-term bullish on broader wellness TAM .
  • Commercial opportunity: Precor + Peloton synergy; refocusing on profitable growth in B2B; expanded installation/service capabilities and new Pro Series .

Estimates Context

  • S&P Global consensus vs actual (Q1 FY26): Revenue $541.1M* vs actual $550.8M; Primary EPS $0.01* vs Primary EPS actual $0.0604*; beat on both. Target Price consensus mean ~$10.43*; Consensus Recommendation text unavailable* .
  • Forward (Q2 FY26): S&P Global consensus revenue ~$675.8M*; Primary EPS −$0.02* [GetEstimates].
  • Implication: Models likely raise FY26 gross margin and Adjusted EBITDA following guidance lift; short-term Q2 churn uptick may temper subscription trajectories, but tariff favorability and mix should support profitability .

Values retrieved from S&P Global*

MetricQ1 FY26Q2 FY26
Revenue Consensus Mean ($USD Millions)541.1*675.8*
Primary EPS Consensus Mean ($USD)0.01*−0.02*
Primary EPS Actual ($USD)0.0604*—
Target Price Consensus Mean ($USD)10.43*10.43*
Primary EPS – # of Estimates2*1*
Revenue – # of Estimates15*13*

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Profitability momentum: Adjusted EBITDA beat and FY26 guidance raise are meaningful de-risking signals; deleveraging continuing (gross leverage 3.8x; net leverage 1.1x) .
  • Near-term top-line inflection: Q2 revenue guide implies sequential growth; holiday mix and higher marketing spend expected; monitor LTV/CAC discipline .
  • Margin trajectory: FY26 GM raised to ~52% driven by tariffs and mix; recall accrual temporarily weighed on Q1 GM but ex-accrual performance strong .
  • Engagement and ecosystem: Peloton IQ and wellness partnerships are driving higher per-member usage and expanding addressable categories (strength, recovery, mental wellbeing) .
  • Subscriptions path: Expect Q2 churn uptick from pricing changes and recall-driven pauses, with normalization/rehabilitation into Q3; watch conversion from retail and secondary market channels .
  • Capital structure optionality: Cash balances rising; plan to retire ~$200M 0% converts due Feb 2026; evaluating refinance post 1% term loan call premium expiration (May 2026) .
  • Trading setup: Positive EBITDA/gross margin guidance revisions vs subscription softness; catalysts include holiday sell-through of new hardware, Peloton IQ adoption, and tariff policy updates .