PTON 10-K & 10-Q changes, risk factors and insider trading

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the accompanying notes and the information included elsewhere in this Annual Report on Form 10-K and our other public filings before deciding whether to invest in shares of our Class A common stock. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that adversely affect our business. If any of the following risks occur, our business, financial condition, operating results, and future prospects could be materially and adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.

We have incurred operating losses in the past, may incur operating losses in the future, and may not achieve or maintain profitability in the future.

WeAlthough we reported net income in fiscal year 2026, we have incurred significant operating losses each year since our inception in 2012prior periods and may continuenot be able to incursustain netprofitability losseson ina thequarterly future.or annual basis. Our operating expenses may increase in the future as we optimize and grow our business, including, for example, via our sales and marketing efforts, continuing to invest in researchgrowth, including product development, content, marketing, and development,international adding contentexpansion, and software features to our platform, expanding into new geographies, expanding the reach and use of the Peloton Apps, and developing new products and features. These potentialthese efforts and additional expenses may be more costly than we expect, and we cannot guarantee that we will be able to increase our revenue to offset our operating expenses.expect. Our revenue may also decline fordue ato, number ofamong other reasons, includingdecreased numbers of subscribers, reduced demand for our products and services,demand, increased competition, a decrease in the growth or reduction in sizecontraction of our overall market, or if we cannot capitalize on strategic opportunities.market. If our revenue does not grow at a greater rate than our operating expenses, we will not be able to achieve and maintainsustain profitability.

We may be unable to attract and retain Subscribers,Subscriptions, which could have an adverse effect on our business and rate of growth.

Our continued business and revenue growth ismay be dependent on our ability to continuously attract and retain Subscribers,Subscriptions, and we cannot be sure that we will be successful in these efforts, or that SubscriberSubscription retention levels will not materially decline. There are a number of factors that could lead to a decline in SubscriberSubscription levels or that could prevent us from increasing our SubscriberSubscription levels, including:

•unsatisfactory experiences with the delivery, installation, or servicing of our Connected Fitness Products, including due to delivery costs or prolonged delivery timelines and limitations on in-home installation, return, and warranty servicing processesProducts;

•deteriorating general economic conditions or a change in consumer spending preferences or buying trends; and

Additionally, any potential expansion into international markets can involve new challenges in attracting and retaining Subscribers that we may not successfully address. As a result of these factors, we cannot be sure that our SubscriberSubscription levels will be adequate to maintain or permit the expansion of our operations. A decline in SubscriberSubscription levels could have an adverse effect on our business, financial condition, and operating results.

To ensure adequate inventory supply, we must forecast inventory needs and expenses and place orders sufficiently in advance with our suppliers and contract manufacturers, based on our estimates of future demand for particular products and services. Our ability to accurately forecast demand could be affected by many factors, including changes in consumer demand for our and our competitors’ products and services, unanticipated changes in general market conditions, and the weakening of consumer confidence in future economic conditions. Failure to accurately forecast our inventory needs or consumer demand may result in manufacturing delays, reduced manufacturing efficiencies, increased costs, a shortage of products available for sale or an excess in inventory.

We have in recent periods experienced, and may continue to experience,experience a decreasedecreases in consumer demand, resulting in inventory write-downs or write-offswrite-offs, excess inventory, and the sale of excess inventory at discounted prices,product whichsales that lower our gross margins and could impair the strength and premium nature of our brand.margins. In periods whenof welow experience a decrease in demand for our products and an increase in inventory,demand, we may be unable to renegotiate oursupplier agreements with existing suppliers or partners on mutually acceptable terms and may be prevented from fully utilizingutilize firm purchase commitments.commitments, Although in certain instances our agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs, ourcreating loss contingencies may include liabilities for contractsnon-cancellable that we cannot cancel, reschedule or adjust with suppliers or partners. In addition, we may deem it necessary or advisable to renegotiate agreements with our supply partners to scale our inventory with demand.contracts. Disputes with our inventory supply partners regarding ourthese agreements have, in certain instances, resulted, and may in the future result in, litigation, which could result in adverse judgments, settlements or other litigation-related costs as well as disruptiondisruptors torequiring ourmanagement supplyattention. chainFurthermore, demand volatility and hasinventory andimbalances maycould trigger unexpected goodwill or long-lived asset impairment evaluations, potentially resulting in the future require management’s attention. Further, we are required to evaluate goodwill impairment on an annual basis and between annual evaluations in certain circumstances, and future goodwill impairment evaluations may result in a chargecharges to earnings.

We also continue to take actions intended to address the short-term health of our business as well as our long-term objectives based on our current estimates, assumptions and forecasts. These measures are subject to known and unknown risks and uncertainties, including whether we have targeted the appropriate areas for our cost-saving efforts and at the appropriate scale, and whether, if required in the future, we will be able to appropriately target any additional areas for our cost-saving efforts. As such, the actions that we are takingtook under the restructuring plans we announced in 2022, 2024, and 2025 (collectively, the “Restructuring Plans”), and that we may decide to take in the future may not be successful in yielding our intended results and may not appropriately address either or both of the short-term and long-term strategy for our business. Implementation of the Restructuring Plans and any other restructuring or cost-saving initiatives may be costly and disruptive to our business, the expected costs and charges may be greater than we have forecasted, and the estimated cost savings may be lower than we have forecasted. Additionally, certain aspects of the Restructuring Plans, such as severance costs in connection with reducing our headcount, could negatively impact our cash flows. In addition, our initiatives have resulted, and could in the future result in, personnel attrition beyond our planned reduction in headcount or reduced employee morale, which could in turn adversely impact productivity, including through a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods, or our ability to attract highly skilled employees. Unfavorable publicity about us or any of our strategic initiatives, including the Restructuring Plans, could result in reputationreputational harm and could diminish confidence in, and the use of, our products and services. See “— Our success depends on our ability to maintain the value and reputation of the Peloton brand.” The Restructuring Plans have required, and may continue to require, a significant amount of management’s and other employees’ time and focus, which may divert attention from effectively operating and growing our business. See Part 1,II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Restructuring.”

If we are unable to anticipate consumer preferences and successfully develop and offer new,new innovative, andor updated products and services in a timely manner, or effectively manage thetheir introduction of new or enhanced products and services,introduction, our business may be adversely affected.

We derive a substantial portion of our revenue from sales of our Connected Fitness Products. Our Connected Fitness Products are sold in highly competitive markets with limited barriers to entry. Our success in maintaining and/or increasing our Subscriber base depends on our ability to identify and originate trends as well asrespond to anticipate and react to changingevolving consumer demandspreferences, in a timely manner. Our products and services are subject to changing consumer preferences thatwhich cannot be predicted with certainty. If we are unable to introduce new or enhanced offerings in a timely mannermanner, or via thethrough appropriate channels, thenor in a way that resonates with consumers, our newSubscription orgrowth enhancedand offeringsretention may notcould be acceptednegatively byaffected. ourConsumer Subscribers. Our competitorspreferences may also introduce similar or more desirable offerings and at speeds that are faster than us, which could negatively affect our growth. Moreover, our new offerings may not receive consumer acceptance as preferences could shift rapidly to different types of fitness and wellness offerings, or away from these types of offerings altogether.altogether, Our future success depends in part onand our abilitycompetitors may introduce similar or more appealing alternatives faster than we can or at a lower cost. Failure to anticipate and respond to these changes. Failure to anticipate and respond in a timely manner to changing consumer preferencesshifts could leadresult to, among other things,in lower subscription rates, lowerreduced sales, pricing pressure, lower gross margins, discounting of our products and services, and excess inventory levels.

Any historical revenue growth should not be considered indicative of our future performance. In particular, we experienced a significant increase in our SubscriberSubscription base at the onset of the COVID-19 pandemic, which slowed down and since decreased as consumers were able to resume activity outside the home. Over the long term it remains uncertain how the impacts of the post-COVID-19 pandemic environment and other market constraints, including macro- and micro-economic factors such as inflation, tariffs and non-tariff barriers, interest rates, foreign currency exchange rate fluctuations, and increased debt and equity market volatility, will impact consumer demand for our products and services over the long term. Estimates of future revenue growth are subject to many risks and uncertainties, and our future revenue may differ materially from our projections. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by companies in rapidly changing industries, and our business may be adversely affected if we do not manage these risks successfully. In addition, we may not achieve sufficient revenue to maintain positive cash flows from operations or attain net income profitability in any given period, or at all.

We believe that our brand is important to attracting and retaining Members. Maintaining, protecting, and enhancing our brand depends on the success of a variety of factors, such as: our marketing efforts; our ability to provide consistent, high-quality products, content, services, features, content, and support, our ability to successfully secure, maintain, and enforce our rights to use the “Peloton” mark, our “P” logo, and other trademarks important to our brand; our ability to successfully respond to a negative event that impacts our brand; and our ability to meet shareholder and Member expectations. We believe that the importance of our brand will increase as competition further intensifies and brand promotion activities may require substantial expenditures. Our brand could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity. Unfavorable publicity about us, our strategic initiatives, such as our Restructuring Plans, or our products, services, pricing, technology, customer service, content, personnel, and suppliers could diminish confidence in, and the use of, our products and services. As discussed further in “Risks Related to Our Connected Fitness Products and Members” and “Risks Related to Laws, Regulation, and Legal Proceedings,” the legal proceedings in which we have been named, the regulators’ investigations, and any other claims or proceedings involving us or our products, actions we take to address these matters, and any further publicity regarding any of the foregoing could harm our brand. Such negative publicity could also have an adverse effect on the size, engagement and loyalty of our Member base and result in decreased revenue, which could have an adverse effect on our business, financial condition, and operating results. See “— Stockholder activism could disrupt our business, cause us to incur significant expenses, hinder execution of our business strategy, and impact our stock price.”

We rely on the Internet, as well as digital infrastructure, computing networks and systems, hardware and software to support our internal and Member-facing operations (collectively, “information technology systems” or “systems”). Certain of our information technology systems are designed and maintained by us while others are designed, maintained and/or operated by third parties. These systems are critical for the efficient functioning of our business, including the manufacture and distribution of our Connected Fitness Products, online sales of our Connected Fitness Products, and the ability of our Members to access content on our platform. Our growth over the past several years has, in certain instances, strained these systems. We continue to implement modifications and upgrades to our systems, and these activities subject us to inherent costs and risks associated with replacing and upgrading these systems, including, but not limited to, impairment of our ability to fulfill customer orders or collect payment from such orders, and other disruptions in our business operations. Further, our system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. If we fail to successfully implement modifications and upgrades or expand the functionality of our information technology systems, we could experience increased costs associated with diminished productivity and operating inefficiencies related to the flow of goods through our supply chain.

We are solely reliant on contract manufacturers for all of our manufacturing needs. In most cases, we rely on only a single supplier for our products and some critical components. In the event of interruption from any of our contract manufacturers or suppliers, we may not be able to increase capacity from other sources or develop alternate or secondary sources without incurring material additional costs and delays, since we do not currently have qualified alternative or replacement contract manufacturers beyond these key partners. Furthermore, a large number of our contract manufacturers’ primary facilities are located in Taiwan, China and Thailand. Our business could be adversely affected if one or more of our suppliers is impacted by tensions, hostilities, or trade disputes affecting the region, a natural disaster, an epidemic, or other interruption at a particular location. Such interruptions may be due to, among other things, temporary closures of the facilities of our contract manufacturers and other vendors in our supply chain; restrictions on or delays surrounding travel or the import/export of goods and services from certain ports that we use; and local quarantines or other public safety measures. We may also be impacted by contract manufacturing and supply chain disruptions due to contract manufacturer or supplier financial distress, particularly where we rely on a manufacturer or supplier that may depend on us for a significant proportion of its business. In such a case, we may be required to renegotiate the terms of our agreement or to pursue a strategic transaction or other alternative arrangement with that supplier or manufacturer or others. We may in the future increase our reliance on third-party suppliers, which could increase these risks.

If we experience a significant increase in demand for our Connected Fitness Products that cannot be satisfied adequately through our existing supply channels, if we need to replace an existing supplier, manufacturer or partner, or if we find we need to engage additional suppliers, manufacturers and partners to support our operations, we may be unable to supplement or replace them under our required timing, at a quality standard to our satisfaction, or on market terms that are acceptable to us, which may undermine our ability to deliver our products to Members in a timely manner and otherwise impact our Members’ experience. Identifying suitable suppliers, manufacturers, and logistics partners is an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance, and labor and other ethical practices. For example, if we require additional manufacturing support, it may take a significant amount of time to identify a manufacturer that has the capability and resources to build our products to our specifications in sufficient volume. Similarly, in times of decreased demand, or due to changes in our product portfolio or strategy, we have in the past and may in the future deem it necessary or advisable to renegotiate agreements with our supply partners in order to appropriately scale our inventory, which could impair our relationship with these counterparties if we are unable to arrive at mutually acceptable terms, and significantly increase our inventory position and working capital and/or negatively impact their viability. See “— Our operating results have been, and could in the future be, adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory.” Identifying suitable suppliers, manufacturers, and logistics partners is an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance, and labor and other ethical practices. Accordingly, aA loss of or poor performance by any of our significant suppliers, contract manufacturers, or logistics partners could have an adverse effect on our business, financial condition and operating results.

•variance in the manufacturing capability of our third-party manufacturers or in the quality of services provided by our third-party last mile partners;

Our products and services are offered in a highly competitive market. We face significant competition in every aspect of our business, including from at-home fitness equipment and content, fitness clubs, in-studio fitness classes, and health and wellness apps.apps, GLP-1s, and other weight-management treatments. We also face significant competition within the commercial fitness market, including in gym and hospitality environments. Moreover, we expect the competition in our market to intensify in the future as new and existing competitors introduce new or enhanced products and services that compete with ours.

Music is an element of the overall content proposition that we make available to our Members. To secure the rights to use music in our content, we enter into license agreements towith obtainthe licenses fromrelevant rights holdersholders, such as performing rights organizations, record labels, music publishers, collecting societies,societies (e.g., performing rights organizations), artists and songwriters, and other copyright owners (or their agents). We pay royalties to such parties or their agents aroundcovering the world.territories where Peloton is made available.

With respect to musical compositions, in addition to obtaining the synchronization and reproduction rights, we also obtain public performance or communication to the public rights. In the United States, public performance rights are typically obtained separately through intermediariescollecting societies known as performing rights organizations, or PROs, which (a) issue blanket licenses with copyright users for the public performance of musical compositions in their repertory, (b) collect royalties under those licenses, and (c) distribute such royalties to copyrighttheir owners.songwriter and publisher members. We have agreements with each of the following PROs in the United States: the American Society of Composers, Authors and Publishers, or ASCAP, Broadcast Music, Inc., or BMI, Global Music Rights, SESAC, and SESAC.AllTrack. The royalty rates available to us from the PROs today may not be available to us in the future. The royalty rates under licenses provided by ASCAP and BMI currently are governed by consent decrees, which were issued by the U.S. Department of Justice (“DOJ”) in an effort to curb anti-competitive conduct. Removal of or changes to the terms or interpretation of these agreementsconsent decrees could affect our ability to obtain licenses from these PROs on current and/or otherwise favorable terms, which could harm our business, operating results, and financial condition.

In other parts of the world, including in Canada and Europe, we obtain licenses forcovering both the reproduction and communication to the public of musical compositions through local collecting societies representing songwriters and publishers, and from certain publishers directly, or a combination thereof. Given the complex music licensing landscape in certain territories, together with the music ownership data problems faced by the industry as a whole, we cannot guarantee that our licenses with collecting societies and our direct licenses with publishers provide full coverage for all of the musical compositions we use in our service in the countries in which we operate, or that we may enter in the future.coverage. Publishers, songwriters, and other rights holders who choose not to be represented by major or independent publishing companies or collecting societies have, and could in the future, adversely impact our ability to secure licensing arrangements in connection with musical compositions thatin which such rights holders own ora control and could increase the risk of liability for copyright infringement.share.

Although we expend significant resources to seek to comply with applicable contractual, statutory, regulatory, and judicial frameworks, we cannot guarantee that we currently hold, or will always hold, every necessary right to use all of the music that is used on our service now or that may be used in our products and services in the future, and we cannot assure you that we are not infringing or violating any third-party intellectual property rights, or that we will not do so in the future. See “— Risks Related to Our Intellectual Property.”

AnyWe failureoperate towarehouse, maintainmanufacturing, aand safedelivery workplaceoperations couldthat resultinvolve inphysical employeelabor illnesses,and accidentscarry orinherent safety incidents, or may result in team discontent or lost productivity if we fail, or if it is perceived that we are failing, to protect the health and safety of our employees, contractors, and other visitors to our premises.risks. A workplace accident alsoor maysafety incident could result in injury to nonemployees,employees or third parties, and our liability insurance may not be adequate to cover fully all claims, and we may be forced to bear substantial losses from an accident or safety incident resulting fromclaims ourfully. operations. Additionally, ifIf our employees decide to join or form a labor union, we maycould become party to a collective bargaining agreement,agreements, which could result in higher employee costs and increased risk of work stoppages. It is also possible that aA union seekingorganizing to organize one subset of our employee populationeffort could also mount a corporate campaign, resultingresult in negative publicity andpublicity, reputational harmharm, or other impacts that require attention by our management teamdistraction. andAny ourof employees.these Negative publicity, work stoppages, or strikes by unionsoutcomes could haveadversely an adverse effect onaffect our business, prospects, financial condition, and operating results.

Our operating results and other operating metrics have fluctuated in the past and may continue to fluctuate from quarter to quarter. Additionally, our limited operating history makes it difficult to forecast our future results. As a result, you should not rely on our past quarterly operating results as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by companies in rapidly evolving markets. Our financial condition and operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

•evolving consumer demand and our ability to maintain and attract new SubscribersSubscriptions;

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. As discussed in the section titled "Special Note Regarding Forward LookingForward-Looking Statements," the following discussion and analysis contains forward lookingforward-looking statements that involve risks, uncertainties, assumptions, and other important factors that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward lookingforward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K.

A discussion of our results of operations for our fiscal year ended June 30, 2025 compared to the year ended June 30, 2024 is included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024,2025, filed with the SEC on August 22,7, 20242025 (File No. 001-39058) under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Peloton is a leading global fitness and wellness company that empowers its Memberspeople to live fit, strong, long, and happyhappy, by providingbringing integrated fitness and wellness productsexperiences andto servicesMembers they(as candefined usebelow) anytime, anywhere. WeFounded havein 2012 and headquartered in New York City, we offer a breadth of fitness and wellness solutions to consumers worldwide, including our highly engaged community of approximately 65.5 million Members as of June 30, 2025,2026, across the United States, United Kingdom, Canada, Germany, Australia, and Austria.Austria, and Commercial Business Unit customers in over 60 countries. As a category innovator at the nexus of fitness andfitness, wellness, technology, and media, we deliver integrated experiences through our world-renowned Instructors,instructors (“Instructors”), premium hardware and innovative software, personalization, and extensive modalities and an expansive content formats. Founded in 2012 and headquartered in New York City, Peloton aims to scale across the markets in which it operates.library.

We define a “Member” as any individual who has a Peloton account through a paidPaid Connected Fitness Subscription (as defined below) or a paidPaid App Subscription, inclusive of the Peloton App+, App OneOne, Strength+, and Strength+Breathwrk Memberships (our “Peloton Apps”), and engages in one or more workouts in the trailing 12-month period. We define workout engagement as either (i) completing the lesser of 50% or 10 minutes of Instructor-led classes, Scenic,Scenic (guided, time, and distance-based routes filmed in locations around the world), and Lanebreak workouts (our game-inspired workout experience); (ii) at least 10 minutes of any activity tracking workout (such as “Just Ride,Ride”, “Just Run,Run”, or “Just Row”), or Peloton Entertainment workout (video streaming); or (iii) at least 5 minutes of any Strength+ workout with 80% of sets marked complete.complete; or (iv) at least 10 minutes of any Breathwrk class.

Our Connected Fitness Products portfolio includes the Peloton Bike, Bike+, Tread, Tread+, Guide, Row and various Precor products. Access to the Peloton Apps is available with an All-Access or Guide Membership for Members who have Peloton-branded Connected Fitness Products or through a standalone App Membership (App+, App One, or Strength+, and Breathwrk). Access to the Strength+ App is available with an All-Access, Guide, or App+ Membership or through a standalone Strength+ subscription. Our revenue is generated primarily from recurring Subscription revenueRevenue and the sale of our Connected Fitness Products. We define a “Paid Connected Fitness Subscription” as a person, household, or commercial property, such as a hotel or residential building, that has paid for a subscription to a Connected Fitness Product (a Connected Fitness Subscription with a successful credit card billing or with prepaid subscription credits or waivers). “Paid App Subscriptions” include all subscriptions to our Peloton Apps for which we currently receive payment.payment (a successful credit card billing or prepaid with subscription credits or waivers).

In August 2025, the Companywe announced a new restructuring plan (the “2025 Restructuring Plan”), which includesincluded a reduction in global headcount and iswas intendeddesigned to improve the Company’sour cost structure, operating efficiency, and profitability, while providing us the opportunity to return to growth by reinvesting expected savings into our differentiating capabilities. The Company2025 expectsRestructuring Plan has been substantially implemented as of June 30, 2026. We do not expect to incur material additional cash or non-cash restructuring charges under the 2025 Restructuring Plan to be substantially implemented by the end of fiscal year 2026, which is subject to change.Plan.

We will continue to closely monitor changes in international trade policies, relations, legislation and regulations, including those related to tariffs, which could adversely impact the global economy and our business, financial condition, and operating results. The impact of any tariffs will depend on various factors, including whether thecertain tariffs are ultimately implemented, the timing of implementation, any nullification or repeal, and the amount, scope and nature of the tariffs.

______________________________ (1) Beginning January 1, 2025, the Companywe migrated itsour subscription data model for reporting Ending Paid Connected Fitness Subscriptions, Average Net Monthly Paid Connected Fitness Subscription Churn, and Ending Paid App Subscriptions, and Average Monthly Paid App Subscription ChurnSubscriptions to a new data model that provides greater visibility to changes to a subscription's payment status when they occur. The new model gives the Companyus more precise and timely data on subscription pause and churn behavior. Prior period information has been revised to conform with current period presentation. The impact of this change in the model on Ending Paid Connected Fitness Subscriptions, Average Net Monthly Paid Connected Fitness Subscription Churn, and Ending Paid App Subscriptions and Average Monthly Paid App Subscription Churn for the fiscal years ended June 30, 2026, 2025, 2024, and 20232024 is immaterial. Starting in fiscal 2026, we no longer report on Average Monthly Paid App Subscription Churn.

(53) Please see the section titled “Non-GAAP Financial Measures—Adjusted EBITDA” for a reconciliation of Net income (loss) to Adjusted EBITDA and an explanation of why we consider Adjusted EBITDA to be a helpful measure for investors.

Ending Paid Connected Fitness Subscriptions includes all Connected Fitness Subscriptions for which we are currently receiving payment (a successful credit card billing or prepaid subscription credit or waiver). Prior to fiscal year 2024, we included a Connected Fitness Subscription that is paused for up to three months as a Connected Fitness Subscription. Because there is no payment on a paused subscription, effective as of the beginning of fiscal year 2024, weWe do not include paused Connected Fitness Subscriptions in our Ending Paid Connected Fitness Subscription count.

We refer to any cancellation or pausing of a subscription for our All-Access Membership as a churn event. Because we do not receive payment for paused Connected Fitness Subscriptions, a paused Connected Fitness Subscription is now treated as a churn event at the time the pause goes into effect, which is the start of the next billing cycle. An unpause event occurs when a pause period elapses without a cancellation and the Connected Fitness Subscription resumes, and is therefore counted as a reduction in our churn count in that period. Consistent with our previous practice, ourOur churn count is shown net of reactivations and our new quarterly Average Net Monthly Paid Connected Fitness Subscription Churn metric averages the monthly Connected Fitness churn percentage across the three months of the reported quarter.

Ending Paid App Subscriptions includeincludes all subscriptions to our Peloton Apps for which we are currently receiving payment.payment (a successful credit card billing or prepaid with subscription credits or waivers). Starting in fiscal 2026, we no longer report on Average Monthly Paid App Subscription Churn.

Connected Fitness Products Revenue primarily consists of sales of our portfolio of Connected Fitness Products and related accessories, as well asincluding Precor-branded fitness products, delivery and installation services, Peloton Bike portfolio rental products, extended warranty agreements, branded apparel, and commercial service contracts. Connected Fitness Products Revenue is recognized at the time of delivery, except for extended warranty revenue that is recognized over the warranty period and service revenue that is recognized over the term, and is recorded net of sales returns and concessions, discounts and allowances, and third-party financing program fees, when applicable.

Subscription Revenue primarily consists of revenue generated from our Paid Connected Fitness Subscriptions and Paid Peloton App Subscriptions, inclusive of the Strength+ App, which are offered on a month-to-month or annual prepaid basis.basis, and revenue generated from content licensing arrangements.

IfA asingle Connected Fitness Subscription ownsprovides access to multiple, different PelotonPeloton-branded Connected Fitness Products (such as a Peloton Bike and Peloton Tread) in the same household, the price of the Subscription remains $44 monthly.household. As of June 30, 2025,2026, approximately 12% of our Connected Fitness Subscriptions owned multiple, different Connected Fitness Products.

Connected Fitness Products Cost of revenue primarily consists of our portfolio of Connected Fitness Products, related accessories, Precor-branded fitness products, and branded apparel product costs, including third partythird-party manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging, warranty replacement and service costs, fulfillment costs, warehousing costs, costs related to our commercial business, depreciation of property and equipment, and certain costs related to management, facilities, and personnel-related expenses, including stock-based compensation expense, and expense associated with supply chain logistics. Inventory write-downs and related obsolescence reserve expense are also included within Connected Fitness Products Cost of revenue.

Subscription Cost of revenue primarily consists of costs associated with content creation and costs to stream content to our Members. TheseFixed costs consistprimarily of both fixed costs, includinginclude Instructor, content, production, and productionmanagement personnel-related expenses, including stock-based compensation expense, as well as certain costs related to facilities, including depreciation of property and equipment, studio rent and occupancy, and other studio overhead,overhead. asVariable wellcosts asprimarily variable costs, includinginclude music royalty fees, third-party platform streaming costs, and payment processing fees for our monthly subscription billings.

Sales and marketing expense primarily consists of performance marketing media spend, asset creation, and other brand creative, sales and marketing personnel-related expenses, including stock-based compensation expense, costs to operate our retail showroomslocations, including rent and occupancy charges, payment processing fees incurred in connection with the sale of our Connected Fitness Products, expenses related to the Peloton Apps, and depreciation of property and equipment.

General and administrative expense primarily consists of personnel-related expenses, including stock-based compensation expense, and facilities-related costs, primarily for our executive, finance, accounting, legal, human resources, IT functionsfunctions, and Member support team. General and administrative expense also includes software and IT costs, fees for professional services principally comprising legal, audit, tax and accounting services, depreciation of property and equipment, insurance, and litigation settlement costs.

Total other expense, net primarily consists of interest (expense) income, unrealized and realized (losses) gains on investments, net gains relating to our refinancing activities, and foreign exchange gains (losses). gains.

Income tax expense (benefit) expense

During the fiscal year ended June 30, 2024, in connection with the CEOtransition transition,of our former CEO, we recognized stock-based compensation expense of $41.9 million for one year of accelerated vesting of stock options, which had an exercise price of $38.77 per share and a grant date fair value of approximately $167.6 million. In addition, we recognized incremental stock-based compensation expense of $5.4 million for the modification of stock option awards related to extension of the exercise window through December 31, 2027. These expenses were recognized within General and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss.Income (Loss).

Connected Fitness Products Revenue decreased $174.6$46.8 million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024. This decrease was2025, primarily attributable to fewerlower sales of certain Peloton-branded Connected Fitness productProducts, deliveriespartially drivenoffset by lowerhigher demandsales of Precor-branded fitness products during the fiscal year ended June 30, 2025, partially offset by improvements in Precor revenue and more Tread+ deliveries during the fiscal year ended June 30, 2025.2026.

Subscription Revenue decreasedincreased $35.0$1.9 million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024. This decrease was2025, primarily due to the subscription price increases that became effective during the three months ended December 31, 2025, and increases in content licensing revenue, partially offset by decreases in Paid Connected Fitness and App Subscriptions, partially offset by an increase in content licensing revenue and incremental Used Equipment Activation Fee revenue, which was introduced during the first quarter of fiscal 2025.Subscriptions.

Connected Fitness Products Cost of revenue decreased $26.0 million for the fiscal year ended June 30, 2025 decreased $237.1 million, or 25.1%,2026, compared to the fiscal year ended June 30, 2024.2025. This decrease was primarily driven by fewerlower sales of certain Peloton-branded Connected Fitness productProducts, deliveries, resulting fromand lower demandwarranty during the fiscal year ended June 30, 2025, as well as lower freight and warehousing costs. This decrease wasexpense, partially offset by higher Precorsales salesof Precor-branded fitness products, an increase in import tariff charges, and morethe Tread+$13.5 deliveriesmillion duringexpense incurred related to the fiscalOriginal yearSeries endedBike+ Juneseat 30,post 2025.recall.

Subscription Cost of revenue decreased $37.3 million for the fiscal year ended June 30, 2025 decreased $34.4 million, or 6.2%,2026, compared to the fiscal year ended June 30, 2024.2025. This decrease was primarily attributable to lower costs associated with contentmusic productionroyalties and musicplatform royalties,streaming, lowerand a reduction in depreciation and amortization expense, partially offset by an increase in personnel-related expenses, inclusive of stock-based compensation expense, primarily due to decreasedthe averageassignment headcount,of andexecutive acompensation reductionto the various expense captions beginning in depreciationfiscal and amortization expense.2026.

Sales and marketing expense decreased $237.3$21.3 million, or 36.0%million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024. The decrease was primarily due to a decrease in acquisition, brand, and creative marketing spend of $188.7 million, a decrease of $19.7 million in personnel-related expenses, inclusive of stock-based compensation expense, mainly due to decreased average headcount, and a decrease of $14.3 million in rent and occupancy and other retail related costs,2025, primarily driven by a reductiondecrease in ouracquisition retailmarketing showroom presence.spend.

General and administrative expense decreased $123.7$97.0 million, or 19.0%million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. TheThis decrease was mainly driven by aan $81.4 million decrease of $70.3 million in personnel-related expenses, inclusive of stock-based compensation expense, primarily relateddue to stock-based compensation expense recognized in connection with the CEO transition during the fiscal year ended June 30, 2024 and decreased average headcount,headcount and the assignment of executive compensation to the various expense captions beginning in fiscal 2026, a reduction$16.0 million decrease in rent and occupancy charges, primarily due to the assignment of $29.2other corporate overhead costs to the various expense captions beginning in fiscal 2026, and a $5.7 million decrease in settlement costs and professional services feesfees, (comprisedpartially ofoffset legal, accounting, and consulting fees), andby a reduction of $6.1$23.8 million increase in depreciationaccrued andlegal amortization expense.contingencies.

Research and development expense decreasedincreased $70.6$8.6 million, or 23.2%million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. TheThis decreaseincrease was primarilymainly duedriven toby a decrease of $49.5$6.6 million increase in personnel-related expenses, inclusive of stock-based compensation expense, and a $6.4 million increase in rent and occupancy charges, both primarily due to decreasedthe averageassignment headcount,of executive compensation and other corporate overhead costs, discussed above, partially offset by a decrease of $15.7$4.9 million decrease in product development costs, primarily due to a reduction in contractor spend.

Impairment expense increaseddecreased $6.8$29.4 million, or 11.9%million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. This increasedecrease was primarilymainly driven by ana increase of $31.4$10.3 million decrease in impairment expense related to manufacturing assets, a $9.5 million decrease in asset write-downs and write-offs related to plans to right-size portions of our corporate office footprint and an increase of $11.4 million in impairment expense related to other manufacturing assets, partially offset by a $16.7 million impairment charge related to Peloton Output Park during the fiscal year ended June 30, 2024, a $13.6 million decrease in impairment expense related to Connected Fitness assets,footprint, and a $6.9$5.0 million decrease in impairment expense related to the exit of retail showroom locations.

Restructuring expense decreased $32.2$16.0 million, or 48.8%million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024,2025, primarily due to an $18.9 milliona decrease in personnel-related expenses, inclusive of severance and stock-basedother compensationpersonnel expense, as well as decreasescosts in exitconnection and disposal costs, including non-cash charges of $3.8 million relating towith the lossRestructuring on sale of a manufacturing subsidiary in Taiwan during the fiscal year ended June 30, 2024.Plans.

Peloton is a leading global fitness and wellness company that empowers its Members (as defined below) to live fit, strong, long, and happy by providing fitness and wellness products and services they can use anytime, anywhere. We have a highly engaged community of nearly 5.8 million Members as of DecemberMarch 31, 2025,2026, across the United States, United Kingdom, Canada, Germany, Australia, and Austria. As a category innovator at the nexus of fitness and wellness, technology, and media, we deliver experiences through our world-renowned Instructors, premium hardware and innovative software, personalization, and extensive modalities and content formats. Founded in 2012 and headquartered in New York City, Peloton aims to scale across the markets in which it operates.

In October 2025, we launched the Cross Training Series, a refreshed portfolio of Connected Fitness Products, which includes the Cross Training Bike, Bike+, Tread, Tread+, and Row+. We also launched the Peloton Pro Series, a refresh of our portfolio of commercial-certified Peloton-branded products, which now includes the Bike+ Pro, Tread+ Pro, and Row+ Pro. In connection with the Cross Training Series launch, we discontinued the sale of our original series (the “Original Series”) Tread, Tread+, and Row; however we continue to sell the refurbished Original Series Bike and Bike+, as well as our Precor products (collectively,collectively with the Cross Training Series and the Peloton Pro Series, the "Connected Fitness Products").

We continue to closely monitor changes in international trade policies, relations, legislation and regulations, including those related to tariffs, which could adversely impact the global economy and our business, financial condition, and operating results. The impact of any tariffs will depend on various factors, including whether thecertain tariffs are ultimately implemented, the timing of implementation, and the amount, scope and nature of the tariffs.

As of DecemberMarch 31, 2025,2026, we have accrued $7.5$7.2 million to replace Original Series Bike+ seat posts, which is a reduction from our accrual of $16.5 million as of September 30, 2025. This reduction is primarily driven by the utilization of our previously established accrual. We have not established any incremental accruals since September 30, 2025. This accrual is based on an amount that we deem probable and estimable and is reflected in Connected Fitness Products Cost of revenue in our Condensed Consolidated Statements of Operations and Comprehensive Loss.Income (Loss).

______________________________ (21) Please see the section titled “Non-GAAP Financial Measures—Subscription Contribution and Subscription Contribution Margin” for a reconciliation of Subscription Gross Profit to Subscription Contribution and an explanation of why we consider Subscription Contribution and Subscription Contribution Margin to be helpful measures for investors.

(32) Please see the section titled “Non-GAAP Financial Measures—Adjusted EBITDA” for a reconciliation of Net income (loss) to Adjusted EBITDA and an explanation of why we consider Adjusted EBITDA to be a helpful measure for investors.

Connected Fitness Products Revenue primarily consists of sales of our portfolio of Connected Fitness Products and related accessories, as well asincluding Precor-branded fitness products, delivery and installation services, Peloton Bike portfolio rental products, extended warranty agreements, branded apparel, and commercial service contracts. Connected Fitness Products Revenue is recognized at the time of delivery, except for extended warranty revenue that is recognized over the warranty period and service revenue that is recognized over the term, and is recorded net of sales returns and concessions, discounts and allowances, and third-party financing program fees, when applicable.

As of DecemberMarch 31, 2025,2026, 99% and 76%77% of our Connected Fitness Subscription and Paid App Subscription bases, respectively, were paying month-to-month.

A single Connected Fitness Subscription provides access to multiple, different Peloton Connected Fitness Products (such as a Peloton Bike and Peloton Tread) in the same household. As of DecemberMarch 31, 2025,2026, approximately 11%12% of our Connected Fitness Subscriptions owned multiple, different Connected Fitness Products.

Income tax (benefit) expense

Comparison of the Three and SixNine Months Ended DecemberMarch 31, 20252026 and 20242025

SubscriptionConnected Fitness Products Revenue decreased $8.0 million and $35.9$2.6 million for the three and six months ended DecemberMarch 31, 2025, respectively,2026, compared to the three and six months ended DecemberMarch 31, 2024,2025, primarily due to decreaseslower insales Paidof certain Connected Fitness and App Subscriptions and decreases in content licensing revenue,products, partially offset by theimprovements subscriptionin pricePrecor increasesrevenue during the three months ended DecemberMarch 31, 2025.2026.

Our Connected Fitness Products GrossCost marginof decreasedrevenue toincreased 11.2%$3.8 million for the sixthree months ended DecemberMarch 31, 2025,2026, compared to 11.5% for the sixthree months ended DecemberMarch 31, 2024.2025. This decreaseincrease was primarily driven by thehigher $13.5sales millionof expensePrecor-branded incurredfitness related to the Original Series Bike+ seat post recallproducts, and an increase in import tariff charges, partially offset by alower mixsales shiftof towardscertain higherConnected marginFitness productsproducts, and lower warranty costs.expense.

SubscriptionOur Connected Fitness Products Gross margin increaseddecreased to 70.4%11.3% for the sixthree months ended DecemberMarch 31, 2025,2026, compared to 67.9%14.3% for the sixthree months ended DecemberMarch 31, 2024.2025. This increasedecrease was primarily driven by thehigher subscriptionpromotional pricediscounts, increasesa duringproduct themix sixshift monthstowards endedlower-margin December 31, 2025,products, and loweran musicincrease royaltiesin costsimport andtariff related reserves,charges, partially offset by decreaseslower inwarranty Paid Connected Fitness and App Subscriptions.expense.

Sales and marketing expense decreased $15.7$8.4 million for the sixthree and nine months ended DecemberMarch 31, 2025,2026, respectively, compared to the sixthree and nine months ended DecemberMarch 31, 2024,2025, primarily driven by a decrease in acquisition and brand marketing charges.spend.

General and administrative expense decreased $28.4$41.0 million and $47.1$88.1 million for the three and sixnine months ended DecemberMarch 31, 2025,2026, respectively, compared to the three and sixnine months ended DecemberMarch 31, 2024.2025. The decrease was mainly driven by a decrease of $20.0$32.0 million and $28.6$60.6 million in personnel-related expenses, inclusive of stock-based compensation expense, respectively, primarily due to decreased average headcount and the assignment of executive compensation to the various expense captions beginning in fiscal 2026, and a decrease of $4.4$4.0 million and $8.2$12.2 million in rent and occupancy charges, respectively, primarily due to the assignment of other corporate overhead costs to the various expense captions beginning in fiscal 2026, and a decrease of $3.2 million and $6.8 million in professional services fees, respectively.2026.

Research and development expense remained mostly consistent for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Research and development expense increased $4.7 million and $8.3$7.5 million for the three and sixnine months ended DecemberMarch 31, 2025, respectively,2026, compared to the three and sixnine months ended DecemberMarch 31, 2024,2025, mainly driven by ana increase of $3.8$7.2 million and $7.4 millionincrease in personnel-related expenses, inclusive of stock-based compensation expense, respectively, and ana increase of $1.4$4.6 million and $3.0 millionincrease in rent and occupancy charges, respectively, both primarily due to the assignment of executive compensation and other corporate overhead costs, discussed above.above, partially offset by a $2.7 million decrease in product development costs, primarily due to a reduction in contractor spend.

Impairment expense increaseddecreased $6.2 million and $9.7$27.3 million for the three and six months ended DecemberMarch 31, 2025, respectively,2026, compared to the three and six months ended DecemberMarch 31, 2024,2025, primarilymainly duedriven toby $22.9a $32.2 million decrease in asset write-downs and write-offs related to plans to right-size portions of our corporate office footprint during the three and six months ended December 31, 2025,footprint, partially offset by decreasesa of $16.2$7.9 million and $14.1 millionincrease in impairment expense related to the exit of retail showroom locations during the three and six months ended December 31, 2025, respectively.locations.

Restructuring expense increased $0.9$1.7 million for the sixthree months ended DecemberMarch 31, 2025,2026, compared to the sixthree months ended DecemberMarch 31, 2024,2025, primarily due to an increase in stock-basedseverance compensationand expenseother personnel costs in connection with the Restructuring Plans.

Supplier settlements decreased $23.5 million for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024,2025, due to accruals for the six months ended December 31, 2024 related to the settlement of disputes with a third-party supplier about certain alleged past and future commitments.commitments during the nine months ended March 31, 2025.

Total other expense, net and Income tax (benefit) expense

Total other expense, net comprised the following for the three and sixnine months ended DecemberMarch 31, 20252026:

•Other income,expense, net of $0.2 millionzero and $0.1$0.3 million, respectively.