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 subscription growth.

• Net income was $26.4 million, a turnaround from a net loss of $47.7 million in the prior year, supported by improved operating efficiency and cost controls.

• 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 $1.13 billion in cash at quarter end.

• Strategic evolution to connected wellness, new content, and partnerships like Spotify expanded market reach and engagement.

Financial highlights

• Q3 total revenue: $630.9 million, up 1% year-over-year; gross margin: 51.9%, up 90 bps year-over-year.

• Subscription revenue: $428 million, up 2% year-over-year; Connected Fitness Products revenue: $202.9 million, down 1% year-over-year.

• Subscription gross margin: 71.1%; Connected Fitness Products gross margin: 11.3%–17.3%.

• Adjusted EBITDA: $126 million, up 41% year-over-year; free cash flow: $151 million, up 59% year-over-year.

• Operating expenses decreased 21%–22% year-over-year, driven by cost discipline.

Outlook and guidance

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

• FY2026 gross margin guidance: ~52.5%, up 160 bps year-over-year.

• FY2026 adjusted EBITDA guidance: $470–$480 million, up 18% year-over-year.

• Free cash flow expected around $350 million, up 8% year-over-year and above previous targets.

• Ending Paid Connected Fitness Subscriptions expected to decline 8.6% year-over-year to 2.55–2.57 million.

• Management expects the 2025 Restructuring Plan to be substantially implemented by fiscal year-end 2026, targeting at least $100 million in run-rate savings.