Peloton Interactive, Inc. (PTON Quick QuotePTON - Free Report) reported first-quarter fiscal 2026 results, with earnings and revenues beating the Zacks Consensus Estimate. The top line declined year over year, while the bottom line increased from the prior-year quarter's figure.
 
PTON reported better-than-expected profitability, driven by disciplined cost management and efficiency gains. Management highlighted the company’s disciplined execution and focus, particularly as it prepares for the launch of its new equipment lineup and Peloton IQ. It emphasized the strong momentum in bottom-line performance, positioning Peloton for top-line growth as the fiscal year progresses. The company raised its full-year adjusted EBITDA guidance, signaling confidence in sustained operational improvements.

Following the results, PTON shares gained 8.5% during after-hours trading yesterday.

PTON’s Q1 Earnings & Revenue Discussion

In the fiscal first quarter, the company reported adjusted earnings per share (EPS) of 3 cents, beating the Zacks Consensus Estimate of breakeven earnings. In the prior-year quarter, the company had reported breakeven earnings per share.

Quarterly revenues of $551 million topped the consensus mark of $541 million by 1.8%. The top line declined 6% year over year.

During the quarter, the Connected Fitness segment’s revenues came in at $152.4 million, compared with $159.6 million reported in the prior-year quarter. Subscription revenues came in at $398.4 million compared with $426.3 million reported in the prior-year quarter.

Q1 Operating Metrics

At the close of the quarter, Peloton recorded 2.73 million Ending Paid Connected Fitness Subscriptions, marking a 6% decline year over year. The average net monthly paid Connected Fitness subscription churn stood at 1.6%.

Concluding the quarter, it registered 542 thousand Peloton App subscribers, reflecting a net decrease of 8% year over year.

Peloton’s Q1 Margin Performance

During the quarter, operating expenses declined 17% year over year to $242.4 million. Gross profit totaled $283.7 million, down 7% year over year. Gross margin contracted 30 basis points (bps) year over year to 51.5%, owing to a $13.5 million inventory accrual related to Bike+ seat-post costs.

Subscription gross margin expanded 80 bps year over year to 68.6%, while the Connected Fitness Products margin slipped 230 bps year over year to 6.9%.

Adjusted EBITDA came in at $118.3 million, up 2% year over year. The metric exceeded the high end of management’s guidance by $18 million, supported by lower operating costs and improved execution.

Balance Sheet & Cash Flow

As of Sept. 30, 2025, Peloton held $1.10 billion in cash and cash equivalents, up from $1.04 billion at the end of fiscal 2025. Net debt during the quarter came in at $395.1 million compared with $777.3 million reported in the prior-year period.

Net cash provided by operating activities in the fiscal first quarter came in at $71.9 million compared with $12.5 million reported in the prior-year quarter.

Free cash flow during the quarter came in at $67.4 million compared with $10.7 million reported in the prior-year quarter.

Peloton’s Q2 & FY26 Outlook

For the second quarter of fiscal 2026, Peloton expects revenues between $665 million and $685 million, representing 0.2% year-over-year growth at the midpoint. The company expects paid connected fitness subscriptions to be in the range of 2.64M to 2.67M, indicating a fall of 8% year over year.

Peloton expects fiscal second-quarter gross margins to rise 180 bps year over year to 49%. It expects adjusted EBITDA to be between $55 million and $75 million, indicating a rise of 11% year-over-year at the midpoint.

For fiscal 2026, Peloton projects revenues between $2.4 billion and $2.5 billion, indicating a 2% year-over-year decline at the midpoint. It expects fiscal 2026 gross margins to rise 110 bps year over year to 52%. The company expects adjusted EBITDA to be in the range of $425-$475 million, indicating a rise of 12% year over year at the midpoint. It projects fiscal 2026 free cash flow to be $250 million, up from the prior expectation of $200 million.

PTON’s Zacks Rank

Peloton currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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