Peloton (PTON) Q1 2025 earnings summary

Executive summary

• Announced Peter Stern as incoming CEO and President, effective January 1, 2025, bringing experience from Apple, Ford, and Time Warner Cable.

• Q1 FY2025 revenue was $586 million, down 1.6% year-over-year, with a net loss of $0.9 million, a significant improvement from a $159.3 million loss in the prior year.

• Q1 results exceeded guidance on all key metrics, reflecting strong cost reduction, operational discipline, and improved gross margin.

• Focus remains on sustainable, profitable growth, innovation, and strategic investments in product, marketing, and content.

• Operating expenses fell sharply, with sales and marketing, G&A, and R&D down significantly due to restructuring and cost-saving initiatives.

Financial highlights

• Q1 revenue was $586 million, with $160 million from connected fitness products and $426 million from subscriptions.

• Adjusted EBITDA reached $116 million, up from $9.1 million in the prior year, and $56 million above guidance.

• GAAP operating income was $13 million; free cash flow was $11 million, marking the third consecutive positive quarter.

• Total gross margin was 51.9%, up from 48.0% year-over-year; subscription gross margin was 67.8%.

• Ended Q1 with $722 million in unrestricted cash and cash equivalents.

Outlook and guidance

• FY2025 revenue guidance remains $2.4–$2.5 billion; gross margin outlook unchanged at 49%.

• Raised FY2025 adjusted EBITDA guidance by $40 million to $240–$290 million.

• Free cash flow target increased to at least $125 million for FY2025.

• Management expects restructuring plans to reduce annual run-rate expenses by over $200 million by the end of FY2025.

• Q2 revenue guidance is $640–$660 million, with a sequential increase expected due to seasonal hardware sales.