Peloton (PTON) Q2 2025 earnings

Peloton told investors Thursday it still has a “steep hill to climb” to achieve profitable growth under its new CEO, but the connected fitness company beat holiday sales expectations, thanks in part to its partnership with Costco. 

The bike maker posted mixed fiscal second-quarter results, as it topped Wall Street’s sales estimates but lost more than expected as it continued its efforts to make its costly hardware business more profitable.

The company also cut costs in three key areas that it has faced criticism for spending too much on – marketing, administrative costs, and research and development – leading it to blow away analyst expectations for adjusted EBITDA. 

Peloton shares climbed more than 13% in premarket trading Thursday.

Peloton forecast worse-than-expected sales in the current quarter, but it projected better-than-expected cash flow and perhaps a recovery in revenue by the end of the year. 

During the current quarter, Peloton expects sales to be between $605 million and $625 million, worse than the $652 million analysts had expected, according to LSEG. However, it anticipates adjusted EBITDA will be between $70 million and $85 million, far better than the $50.4 million Wall Street expected, according to StreetAccount.

Peloton expects fiscal 2025 revenue to be roughly in line with expectations. It’s forecasting sales to be between $2.43 billion and $2.48 billion, compared to estimates of $2.47 billion, according to LSEG. 

Here’s how Peloton performed in its fiscal 2025 second quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Loss per share: 24 cents vs. 18 cents expected
• Revenue: $674 million vs. $654 million expected

The company’s reported net loss for the three-month period that ended Dec. 31 was $92 million, or 24 cents per share, compared with $195 million, or 54 cents per share, a year earlier. 

Sales dropped to $674 million, down more than 9% from $744 million a year earlier. Peloton’s holiday quarter is typically its strongest for hardware sales, but most of its revenue decline came from that side of the business, as sales fell about 21%. 

Still, it is making more than it used to from selling its pricey stationary bikes and treadmills, which have long been a money losing business. During the quarter, its connected fitness gross margin came in at 12.9%, the first time it’s reached double digits in more than three years, the company said. 

Peloton also saw big gains from its seasonal partnership with Costco, which drove more Bike+ sales during its holiday quarter than any other third-party retailer it works with, such as Amazon and Dick’s Sporting Goods. 

In October, Peloton announced that Peter Stern, a former Ford executive and the co-founder of Apple Fitness+, would be its next CEO and president after Barry McCarthy stepped down earlier in the year and two board members briefly took the helm. 

Stern was selected in part because of his experience running Ford’s subscription business, indicating Peloton was tripling down on its main value proposition: its high-margin, recurring subscription revenue. 

Stern started in the role on Jan. 1 and is slated to make his public debut to investors during the company’s earnings call scheduled for 8:30 a.m. ET. 

He’s expected to continue Peloton’s efforts to cut costs and chart a path to profitability but also try to improve the member experience to reduce churn and bring on new customers. 

At the moment, Peloton is attracting a different class of investors that are more interested in seeing the company leverage its high-margin subscription revenue to boost profits over growing sales so their focus has turned to its ability to generate free cash flow and EBITDA. 

During the quarter, Peloton blew away adjusted EBITDA expectations. It posted $58.4 million in adjusted EBITDA, more than double the $26.7 million that analysts had expected, according to StreetAccount. It managed to eke out the number even with a higher-than-expected loss per share by reducing costs in areas that investors and analysts have said Peloton was overspending in. 

Sales and marketing costs were down 34%, general and administrative expenses fell 18% and research and development spending dropped 25%, leading total operating expenses to be down 25% compared to the year-ago period.