Peloton Continues Comeback With Strong Subscription Metrics

For Peloton, intensifying efforts to enhance its subscription-based model, reduce member churn and increase engagement are foremost among its goals for 2025.

While the company recorded a slight decline in overall subscriptions in its second-quarter results released Thursday (Feb. 6), it is making notable strides in reducing churn rates and improving its Connected Fitness gross margins — key factors that will drive its long-term success.

Peter Stern, who took over as CEO Jan. 1, offered his initial assessment to analysts during the earnings call.

Variety Drives Subscription Retention

“We need to focus on innovation on new products and experiences that lead to even better outcomes for members, presence in more places so we can meet members wherever they are, and more ways to connect members with Peloton and our uniquely supportive community,” he told analysts on an earnings call. “Like every Peloton workout, this will be part inspiration, part perspiration. There’s a lot of research that shows that engaging in multiple fitness disciplines improves member outcomes.”

Variety is critical for the business, Stern noted, “as it drives higher subscription retention. Churn is 60% lower for subscriptions where members engage with two or more disciplines per month versus just one. On the cardio side, we continue to elevate Tread, thanks to our marketing efforts. And with the release of our 10k training program in Q2, Peloton now offers training for all major race distances.”

Progress in Reducing Churn and Enhancing Member Retention

One of Peloton’s primary objectives is to improve member retention by reducing churn. The company made progress in this area during the second quarter, with its average monthly churn rate for Connected Fitness subscriptions dropping to 1.4%, a 50-basis point improvement compared to the previous quarter.

Stern also noted “meaningful improvements” in member happiness. Member loyalty, as measured by Net Promoter Scores (NPS), improved across Peloton’s core products, with all Bike and Tread products above 70 in Q2. Member support satisfaction reached 4.3, on a scale of one to five, up from 3.1 in Q2 FY24.

“We have strong NPS and that all adds up to healthy churn,” he said. “As someone who has spent many years in consumer tech and services businesses, I can tell you that this level of member love puts us in truly rarified air.”

Peloton ended Q2 with 2.88 million paid connected fitness subscriptions, which reflected a net decrease of 21,000 for the quarter, but the figure exceeded the high end of the company’s guidance range by 19,000 subscriptions.

During the second quarter, Peloton recorded a 12.9% connected fitness products gross margin, reaching double digits for the first time in more than three years. Total revenue was $673.9 million in the second quarter, comprising $253.4 million of connected fitness products revenue, and $420.6 million of subscription revenue, a decrease of 1%.

Total revenue was $13.9 million above the high end of the company’s guidance.

Expanding Cross-Discipline Engagement to Improve Retention

In addition to encouraging cross-discipline engagement, Peloton added new features designed to enhance the member experience, Stern said. One of the recent introductions, “Pace Targets” for the Tread, provides personalized running intensity levels, and nearly 60% of Tread users are now using this feature. Peloton is also expanding its offerings across strength training, running, yoga and high-intensity interval training.

The launch of Strength+ in Q2 reached 220,000 monthly active users, he added, largely from existing members, while new retail partnerships, like with Costco, have boosted Bike+ sales and expanded their reach to new members.

“Already over 300,000 members have trained for a running race with Peloton,” Stern said. “We’re also seeing the positive impact of innovative new software features like PACE targets, which offer running instruction with personalized intensity levels rather than treadmill speed.”

Reducing Operating Expenses

Peloton reduced its operating expenses by 25% year-over-year, which has contributed to improved financial performance and improved cash flow, Stern noted. By optimizing its operations and costs, Peloton is positioning itself for long-term financial stability while maintaining investments in product innovation and member engagement.

Stern wants to instill a sense of community for members.

“Few companies deliver a product where the more people consume it, the better they feel,” Stern said. “That’s Peloton. And the wonderful thing is that the healthier our members become, the more likely they are to stick around and recommend us to others, which makes our business stronger too. That’s Peloton’s virtuous cycle.”