Peloton’s Q3 2025 Earnings Report
Peloton, the popular fitness company, has released its Q3 2025 earnings report, and the results are mixed. Despite the current economic uncertainty, Peloton is confident that its business model will remain resilient. The company’s CFO, Liz Coddington, noted that during the 2008-2009 GDP decline, the fitness industry continued to grow, suggesting that consumers are less likely to cut back on fitness spending during tough economic times.
Tariffs and Their Impact on Peloton
Peloton’s hardware is subject to 25% tariffs due to its use of aluminum, while its apparel is subject to tariffs levied on China. However, the company expects only a $5 million headwind on its free cash flow in Q4. Coddington emphasized that Peloton’s subscription-based model will help mitigate the impact of tariffs. The company offers zero percent interest financing, a bike rental program, and lower-priced refurbished models to make its products more affordable.
Pricing and Subscriptions
CEO Peter Stern stated that the company is taking a hard look at pricing, considering the impact of tariffs. However, he declined to comment on potential subscription price hikes, noting that it’s been nearly three years since the last increase. The company’s subscription revenue dropped 4% year-over-year, but Peloton remains confident in its loyal subscriber base.
Financial Performance
Peloton’s hardware sales fell 27% year-over-year, but the company raised its outlook from $247.6 to $247.7 million. Despite the decline in hardware sales, Peloton’s subscription business remains a significant contributor to its revenue. The company is focused on improving customer satisfaction and efficiency, with a new Chief Operating Officer, Charles Kirol, appointed to oversee supply chain logistics and cost management.
The Role of AI in Peloton’s Future
Peloton is investing heavily in artificial intelligence (AI) to improve customer satisfaction and efficiency. The company is using AI-powered translations for subtitling its classes, with over 3,300 classes subtitled in Q3. AI is also being used to assist customer support staff and create personalized plans for users. Stern believes that AI will give humans "superpowers" and is excited about the potential for AI to enhance the Peloton experience.
Conclusion
In conclusion, Peloton’s Q3 2025 earnings report shows a mixed picture, with declines in hardware sales and subscription revenue. However, the company remains confident in its business model and is investing in AI to improve customer satisfaction and efficiency. With a loyal subscriber base and a focus on affordability, Peloton is well-positioned to weather the current economic uncertainty. As CEO Peter Stern said, "The future is bright for Peloton members with AI."
