Peloton (PTON) Q3 2025 earnings summary

Executive summary

• Delivered Q3 results at or above guidance, with positive adjusted EBITDA and free cash flow, and improved unit economics.

• Revenue for Q3 FY2025 was $624.0M, down 13% year-over-year, with net loss improving to $47.7M from $167.3M in Q3 FY2024.

• Slight growth in paid connected fitness subscriptions in a seasonally strong quarter; continued cost discipline and strategic progress for FY26 and beyond.

• Strategic focus on improving member outcomes, expanding presence, deepening member engagement, and operational excellence.

• Member engagement and satisfaction improved, with NPS above 70 for Cardio products and above 80 for Tread.

Financial highlights

• Q3 total revenue was $624 million, $9 million above guidance midpoint; $205 million from connected fitness products and $419 million from subscriptions.

• Adjusted EBITDA reached $89.4 million, up from $5.8 million in Q3 FY2024 and $4 million above guidance.

• Free cash flow was $94.7 million in Q3, up $86 million year-over-year; $215.9 million generated fiscal year-to-date.

• Gross margin improved to 51%, up 780 basis points year-over-year, driven by mix shift and cost reductions.

• Operating expenses decreased 23% year-over-year to $351 million, reflecting restructuring progress.

Outlook and guidance

• Raised FY25 guidance for ending paid connected fitness subscriptions (2.77–2.79 million), total revenue ($2.455–$2.47 billion), and adjusted EBITDA ($330–$350 million).

• FY25 total gross margin guidance remains at 50%; free cash flow expected near $250 million, with a $5 million Q4 tariff headwind.

• FY25 paid app subscriptions guidance narrowed to 540,000–550,000, reflecting lower gross additions.

• Management expects restructuring plans to deliver over $200 million in annual run-rate expense reductions by end of FY2025.

• Capital expenditures over the next 12 months will focus on product development, content, and systems implementation.