As Peloton sees its revenue fall, the connected fitness company is looking to capture businesses’ corporate wellness spending to drive subscription growth.
The company reported in its second-quarter fiscal 2024 financial results, released Thursday (Feb. 1), that total revenue was down 6% year over year for the quarter, even as subscription revenue rose by 3%.
On a call with analysts, Liz Coddington, the firm’s chief financial officer, noted that the quarter saw the company’s subscription business face new challenges, with existing offers expiring. Now, Peloton is focusing on revitalizing the growth of this sector, and B2B can be a key way to do that.
“Our Peloton for Business offerings and our corporate wellness space — that’s a great opportunity for us,” Coddington said. “Those deals … do take time, … [but] those could be a great accelerant in app subscription growth for us.”
Peloton President and CEO Barry McCarthy added that the company is looking to be at the forefront of the rise in B2B spending on health and wellness perks.
“Corporate wellness … is having a moment in corporate America for sure, where companies are investing at the margin increasingly in fitness, nutrition, mental wellness,” McCarthy said, “and I think we’re well positioned to participate in that.”
Among consumers, there is significant demand for digitally connected health and wellness options, especially for those living in cities. PYMNTS Intelligence’s study “The ConnectedEconomy™ Monthly Report: The Urban-Rural Health Divide Edition,” which drew from responses from nearly 2,500 U.S. consumers, reveals that 60% of urban consumers engaged digitally to get their wellness needs met, while only 29% of suburban consumers and 19% of those in rural areas do the same.
Additionally, Peloton is also looking to grow engagement with younger consumers, having recently partnered with TikTok to offer its workout content to users of the social media platform in the United States, the United Kingdom and Canada, creating a fitness hub called #TikTokFitness.
McCarthy noted that, in these first three weeks, the company has seen a “substantial increase” in content.
“If we compare to week one, I think it was about a 50% increase, and we’ve seen a 3x increase in total views, but it’s much too early to know where that’s going to land,” he said. “We’re reaching a demo that’s much younger, and TikTok is proving to be an enormously effective platform to help us do that.”
Social media presents additional monetization opportunities. The study “Tracking the Digital Payments Takeover: Monetizing Social Media,” a PYMNTS Intelligence and AWS collaboration drawing from a survey of nearly 3,000 U.S. consumers, reveals that 43% of consumers browse social media to find goods and services. Plus, 15% had browsed for, purchased and/or looked up reviews of products on TikTok in the previous month.
As Peloton looks to bounce back from its revenue decline, the company is focusing on B2B subscription growth opportunities and on driving engagement with Gen Z, aiming to solidify its position as a leading player in the connected fitness industry.