Peloton (PTON) Q3 2026 earnings summary

Executive summary

• Q3 FY2026 revenue reached $631 million, up 1% year-over-year and exceeding guidance, driven by strong Connected Fitness equipment sales and commercial growth.

• Adjusted EBITDA rose 41% year-over-year to $126 million, and free cash flow increased 59% to $151 million.

• Net debt reduced by 70% year-over-year to $173 million, with gross and net leverage ratios improving to 2.9x and 0.4x.

• Strategic shift to connected wellness, new content, and partnerships like Spotify expanded market reach and diversified revenue.

• Net income reached $26 million, a turnaround from a net loss of $47.7 million in Q3 FY2025.

Financial highlights

• Q3 gross profit was $327 million, up 3% year-over-year; gross margin was 51.9%, up 90 basis points year-over-year.

• Subscription revenue grew 2% year-over-year to $428 million; Connected Fitness Products revenue declined 1% to $202.9 million.

• Subscription gross margin reached 71.1%; contribution margin was 74.4%.

• Adjusted operating expenses fell 16% year-over-year to $267 million; total operating expenses decreased 22% to $274.8 million.

• Net cash provided by operating activities was $152.7 million, up 58% year-over-year.

Outlook and guidance

• FY2026 revenue outlook is $2.42–$2.44 billion, a 2% year-over-year decrease at midpoint but raised from prior guidance.

• FY2026 gross margin guidance is approximately 52.5%, up 160 basis points year-over-year.

• Adjusted EBITDA guidance for FY2026 is $470–$480 million, up 18% year-over-year at midpoint.

• Free cash flow for FY2026 expected to be around $350 million, $75 million above the previous minimum target.

• Paid Connected Fitness subscriptions for FY2026 expected to decline 8.6% year-over-year to 2.55–2.57 million.