Peloton Pivots to Holistic Wellness Strategy, Announces Layoffs and AI Integration

Peloton pivots to wellness alongside another layoff

Peloton has pivoted many times over the past few years in its quest to return to profitability. The latest, as announced in its Q4 2025 earnings call, is leaning into health and wellness instead of "just" cardio fitness. "With each passing year, we are coming to understand better the importance of strength, stress management, sleep, and nutrition to living our best lives," CEO Peter Stern said during the call. "This creates the opportunity, no more than that, the mandate, for Peloton to evolve from being a cardio fitness partner to becoming the world's most trusted wellness partner across the full array of behaviors that maximize health demand." He went on the explain that the company will focus on "health span", or the period of life a person lives in good health. "Advances in medical science contributed to the prolonging of life here in the US by a remarkable 40 years from 1900 to 2020," Stern says. "However, as life span has increased, health span, the quality as opposed to quantity, of those years has failed to keep up. People are living longer but they're also living sicker in the U.S." Health span isn't a new concept. Whoop also just released a Health Span feature with its latest tracker earlier this summer. Peloton's take on improving wellness will reportedly involve investing more in its personalized training programs, the standalone Strength Plus app, as well as meditation and sleep features. Stern also said that Peloton would test and iterate on bringing nutritional content to its platform. In a shareholder letter, Stern highlighted using AI and integrating with health tracking devices as a means to provide "increasingly personal insights, plans, and recommendations" to its members. On the business side, Peloton exceeded investor expectations in all metrics. It posted $607 million in revenue, roughly $21 million above the top end of its expected guidance range. Connected paid fitness subscriptions and paid app subscriptions also exceeded targets, posting 2.8 million and 552,000, respectively. Peloton shares rose roughly 11 percent on the news, but Stern noted that the company's operating expenses were still too high. As a result, Stern says the company will undergo another cost restructuring plan that includes laying off about six percent of its workforce. "This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business," Stern writes in the shareholder letter. This marks the company's sixth round of layoffs, coming a little over a year after the company laid off 15 percent of its workforce and former CEO Barry McCarthy stepped down. Peloton also plans to adjust pricing. That includes a new assembly fee for its hardware, which was previously free with purchase. (There will still be a free option for self-assembly.) The company also plans to introduce a new Special Pricing program to make its products more affordable for teachers, military personnel, first responders, and medical professionals.

Peloton posts surprise profit, announces yet another round of layoffs impacting 6% of staff

Clothing inside a Peloton store in Palo Alto, California, US, on Monday, Aug. 5, 2024. Peloton posted a surprise profit for its fiscal fourth quarter on Thursday and outlined its strategy to return to growth under new CEO Peter Stern. Shares gained 10% in premarket trading. The connected fitness company, known for its stationary bikes and treadmills, posted a net income of $21.6 million, compared with a loss of $30.5 million in the year-earlier period. That's thanks to better than expected sales but also, Peloton's efforts to cut its operating expenses, which Stern said in a letter to shareholders remain too high. In fiscal year 2026, which began in July, the company plans to reduce run-rate expenses by another $100 million, on top of the $200 million it cut in fiscal 2025. Half of those cuts will come from indirect costs, like renegotiating contracts with suppliers, but the other half will come from cutting 6% of its staff, the company said. "Our operating expenses remain too high, which hinders our ability to invest in our future," Stern wrote in the letter to shareholders. "We are launching a cost restructuring plan intended to achieve at least $100 million of run-rate savings by the end of FY26 by reducing the size of our global team, paring back indirect spend, and relocating some of our work. This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business." The latest round of layoffs comes just over a year after the company announced plans to cut 15% of its staff. For the most recent quarter, Peloton beat Wall Street expectations on the top and bottom lines. Here's how the company did in its fourth fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG: The company's reported net income for the three-month period that ended June 30 was $21.6 million, or 5 cents per share, compared with a loss of $30.5 million, or 8 cents per share, a year earlier. Sales dropped to $607 million, down about 6% from a year earlier. Ever since its pandemic heyday, Peloton has been working to cut costs, stabilize its business and generate free cash flow to ensure its business can survive. Eight months into Stern's tenure as Peloton's latest top executive, those efforts are starting to bear fruit. For the full year, the company generated $320 million in free cash flow, ahead of its own internal expectations, and its guidance implies a path to revenue growth in the back half of the year. In its current quarter, it's expecting sales to be between $525 million and $545 million, weaker than the $560 million than analysts had forecast, according to LSEG. However, for the full year, its expecting sales of between $2.4 billion and $2.5 billion, in line with expectations of $2.41 billion, according to LSEG. The current quarter is forecast to be worse than expected, largely because it falls during the summer months when people tend to pause their subscriptions and pull back on new workout gear. But the remainder of the year implies improving sales patterns in the quarters ahead. During the most recent quarter, Peloton sold more bikes and treadmills than Wall Street expected, posting connected fitness revenue of $198.6 million, well ahead of the $170.3 million analysts had expected, according to StreetAccount. Subscription revenue came in a bit light at $408.3 million, behind forecasts of $411 million, according to StreetAccount. Improving top-line metrics, which allows Peloton to better leverage its fixed costs, led to a 5.6 percentage point increase to its gross margin, which was 54.1% during the quarter, compared to 48.5% in the year ago period. Now that cash flow and some metrics are starting to stabilize, Stern is ready to talk about growth and outlined his vision to get there in his letter to shareholders. To offset the high costs of acquiring customers online, Peloton is returning to physical retail but this time, it'll open up micro-stores, rather than the sprawling showrooms it had in its early days. Peloton plans to expand from one micro-store to 10, as well as grow its secondary marketplace for pre-owned hardware, Stern said. It also plans to increase the presence of its instructors at in-person events by three times this year, with the goal of increasing it by 10 times in fiscal 2027, he added. Stern said the company will also work more closely with Precor, the fitness company it acquired under founder John Foley, by creating a "unified commercial business unit." He also said the company will start building a plan to expand internationally - a goal that Peloton has long had but has failed to execute profitably. "Internationally, we plan to deliver local, in-language experiences using a mix of native instruction, AI dubbing, and more flexible approaches to music for thousands of classes," Stern wrote. "Through partnerships, we aim to introduce the Peloton brand and experiences to millions of people around the world. Together, we believe these actions lay the groundwork for future, cost-effective launches of the full Peloton offering in new geographies."

Peloton Is Cutting Jobs and Shifting Focus to Members' 'Entire Wellness Journey'

Peloton CEO Peter Stern thinks new wellness and AI features can save the company. Peloton, the struggling New York-based fitness tech company, announced today that it plans to cut roughly six percent of its workforce in an effort to save costs and turn the company around. Additionally, the company's new CEO, Peter Stern, told investors that the company would be expanding beyond its cardio roots and into the general health and wellness space. "This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business," wrote Stern in a letter to shareholders published along with the company's most recent quarterly earnings report. As of last summer, Peloton had about 2,300 employees, so these latest cuts could affect about 140 workers. The company previously laid off 15% of its workforce in May 2024 when it got rid of its previous CEO. Despite swinging a profit in the most recent quarter, Peloton reported that its sales dropped 6% and are expected to fall even further this year. Peloton launched in 2012 as a premium fitness brand, offering pricey exercise bikes, treadmills, and rowing machines with built-in screens that stream live and on-demand workout classes. The company really hit its stride during the covid-19 pandemic, when gyms were closed and people were scrambling for ways to stay active at home. Unfortunately, that wave didn't last. As life returned to normal after the pandemic, so did people's workout routines outside the home. The company's stock has dropped 95% from its early 2021 peak of nearly $170 a share to around $7 today. Stern joined the company earlier this year after stints leading services teams at Ford and Apple. Today, he told investors that he sees the company moving beyond just cardio exercise. "In our next chapter, we will build upon our leadership in cardio to support our Members' entire wellness journey, accelerating our progress in strength and mobility and exploring new frontiers in mental wellbeing, sleep and recovery, nutrition and hydration," Stern wrote in the letter. Stern told investors on a call Wednesday that this could include more personalized training programs, new meditation and sleep features, and potentially content focused on nutrition. He also added that AI could play a role in the company's comeback. Stern said that the company could leverage AI by linking its platform with users' personal health tracking devices to offer more personalized insights, action plans, and recommendations. Last week, Peloton also expanded one of Stern's other initiatives -- a new marketplace for users to resell their exercise equipment. At the Bloomberg Tech conference in June, Stern said the new marketplace is a key part of Peloton's turnaround strategy. He said the secondhand market was one of the most effective ways for the company to bring in new members.

Peloton Pivots to 'Healthspan' Strategy of Holistic Wellness | PYMNTS.com

"We are coming to understand better the importance of strength, stress management, sleep and nutrition to living our best lives," CEO Peter Stern said Thursday (Aug. 7) during the company's Q4 earnings call. "This creates the opportunity -- no, more than that, the mandate -- for Peloton to evolve from being a cardio fitness partner to become the world's most trusted wellness partner," said Stern, a former Apple Fitness+ executive who joined the company in January. The strategy reflects a shift toward supporting what the company calls "healthspan," referring to the quality, not just the length, of life. Peloton aims to move from a product-led business to one centered on personalized, tech-enabled wellness coaching across cardio, strength, mental well-being, sleep and eventually nutrition and hydration. Key to this transformation is the use of advanced technology, including artificial intelligence (AI), to deliver personalized coaching and recommendations. The company says it will tailor fitness and wellness plans to individual needs by integrating data from wearables and other sources. "We will employ advanced technologies like AI to enhance our ability to serve as personalized coaches," Stern said. The company is also targeting new distribution channels and audiences as part of its growth plan. It recently opened micro stores in Nashville and Utah, with eight more planned in time for the holiday season. A new resale platform, Peloton Repowered, lets customers buy and sell used equipment nationwide. Peloton also launched special pricing programs for students, educators, first responders, healthcare workers and military personnel, aiming to broaden accessibility and attract price-sensitive buyers. "These purchases have already made a meaningful impact on first-party retail sales in Q4," Stern said. To grow its enterprise customer business, Peloton has merged its Precor unit with Peloton for Business under a new commercial division, aiming to bring connected equipment and coaching into gyms, hotels and other facilities. The Precor brand operates in more than 60 countries and 80,000 locations, and Peloton for Business operates in over 9,000 hotels. Peloton is also investing in retention and community-building to ensure users stay engaged in the long term. That means using strategies like gamifying a member's first few weeks to build what Stern calls the "golden behaviors" -- frequency, breadth and depth of engagement. A loyalty rewards program is in development, and the company is rolling out new social features to deepen community ties through Teams and instructor-led engagement. "We recognize that our members come to us at various stages of their fitness journey, and so a one-size-fits-all approach fits no one," Stern said. See also: Peloton Takes Bike and Treadmill Resale Program Nationwide To support these initiatives, Peloton announced a new effort to save $100 million a year by the end of fiscal 2026. About half of the cost savings have already been achieved through job cuts. The remainder will come from reductions in general and administrative costs, sales and marketing, R&D and stock-based compensation. For the fourth quarter of fiscal 2025, Peloton posted net income of $21.6 million, or 5 cents per share, compared with a net loss of $30.5 million, or 8 cents per share, a year earlier. Adjusted EBITDA (earnings before interest, depreciation and amortization) doubled year over year to $140 million. Free cash flow rose to $112 million, up from $26 million a year ago. Total revenue came to $606.9 million, down 6% from the prior year. The results beat analysts' consensus expectations: a loss of 5 cents per share on revenue of $579.9 million, according to S&P Global Market Intelligence. Shares of Peloton were up 11% to $7.85 in morning trading. "The attitudes of younger people are a big reason for the strategy that we announced today," Stern said. "They're expanding their definition of what it means to live well, from a narrow focus on cardio as a tool for weight loss toward a more holistic approach that brings together cardio and strength, sleep, stress management and nutrition." "Peloton is at a critical juncture in our transformation, a moment to invest intentionally in our future," Stern added. Read more: Peloton Launches P2P Used Equipment Marketplace, 'Repowered' Peloton Continues Comeback With Strong Subscription Metrics