How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
In short
Peloton makes most of its money from recurring memberships rather than from selling bikes and treadmills. In fiscal 2026 (year to 30 June 2026), subscriptions brought in $1,675.6M, or 68.5% of $2,446.0M in revenue, at a 71.4% gross margin. Connected Fitness Products made $770.4M at an 11.7% margin.
Peloton is a media and exercise equipment company primarily making money making money via its fitness products (indoor cycle with a touchscreen monitor with a base price of $1,895, also known as the Bike Basics package). Other packages are also available, including the Bike Essentials ($2,045), Bike Works ($2,145), and Bike Family ($2,345).
Peloton has two reportable segments. Connected Fitness Products covers its bikes, treads and rowers, Precor commercial equipment, accessories, apparel, delivery and warranties. Subscription covers the monthly All-Access Membership for owners of Peloton hardware and the standalone app memberships (App+, App One, Strength+ and Breathwrk).
Peloton revenue by fiscal year, FY2022 to FY2026, from the company's filings. Chart: The Business Engineer.
Subscriptions earned $1,675.6M in fiscal 2026 and hardware earned $770.4M. Almost all the profit comes from subscriptions: they produced $1,196.3M of the $1,286.7M total gross profit, about 93% (calculated). Hardware produced $90.4M.
Peloton says 99% of Connected Fitness subscribers pay month to month, and that about 12% of these subscriptions own more than one type of Peloton device.
How Peloton compares
Against its own history, revenue has fallen four years in a row, from $3,582.1M in fiscal 2022 to $2,446.0M in fiscal 2026. In fiscal 2022 hardware was 61.1% of revenue. In fiscal 2026 it was 31.5%.
The two segments earn very different margins. The subscription gross margin was 71.4% and the Connected Fitness Products margin was 11.7%. Peloton says its low churn and high subscription gross profit give each subscriber a lifetime value well above the cost of acquiring them.
What changed in FY2026
Peloton reported net income of $63.2M, against a loss of $118.9M in fiscal 2025, and operating income of $160.7M, against a loss of $36.2M. Total operating expenses fell to $1,126.0M from $1,304.5M. General and administrative costs fell by $97.0M, partly because overhead is now charged to other expense lines.
Peloton revenue by line, prior year against FY2026, as reported. Chart: The Business Engineer.
Subscription revenue rose by $1.9M. Peloton puts this down to price increases that took effect in the quarter to 31 December 2025 and to higher content licensing, which more than offset the fall in subscriber numbers. Hardware revenue fell 5.7%, as lower sales of Peloton-branded products outweighed higher sales of Precor equipment.
Free cash flow was $377.6M (non-GAAP). In February 2026 Peloton repaid the remaining $199.0M of its 2026 convertible notes.
What to watch
The subscriber base is shrinking. Paid Connected Fitness subscriptions fell to 2.553M from 2.800M, and average net monthly churn rose to 1.7%, from 1.6% in fiscal 2025 and 1.4% in fiscal 2024. Paid app subscriptions fell to 0.503M from 0.552M.
Hardware margins are under pressure from tariffs and from the Original Series Bike+ seat post recall, which cost $13.5M. New Section 301 tariffs of 10% to 12.5% took effect on 24 July 2026.
Frequently asked questions
How does Peloton make money?
Mostly from subscriptions. In fiscal 2026 (year to 30 June 2026), subscription revenue was $1,675.6M, 68.5% of the $2,446.0M total. Hardware sales, Connected Fitness Products, brought in the remaining $770.4M.
How many paying subscribers does Peloton have?
There were 2.553 million Paid Connected Fitness Subscriptions and 0.503 million Paid App Subscriptions at 30 June 2026, against 2.800 million and 0.552 million a year earlier.
What is Peloton's churn rate?
Average net monthly churn on paid Connected Fitness subscriptions was 1.7% in fiscal 2026, up from 1.6% in fiscal 2025 and 1.4% in fiscal 2024.
Is Peloton profitable?
Yes, on a GAAP basis in fiscal 2026. Net income was $63.2M and operating income was $160.7M, against a net loss of $118.9M in fiscal 2025.
Peloton is a media and exercise equipment company founded in 2012 by Graham Stanton, Hisao Kushi, John Foley, Tom Cortese, and Yony Feng.
Peloton sells stationary bicycles and treadmills that enable customers to remotely participate in exercise classes streamed from Peloton studios. Due to the COVID-19 pandemic, this form of remote physical exercise has become extremely popular.
But in the early days of Peloton, John Foley spent three years pitching the idea to thousands of investors. He was largely unsuccessful, securing a small amount of capital through angel investors only. However, the idea gained major traction when customers were given the chance to ride the bike in a class scenario. A retail store selling bikes soon followed.
Today, the company has over 3 million subscribers with 1 million of those being connected fitness subscribers. By the end of 2021, these numbers are expected to double.
Peloton’s Value Proposition:
Premium Fitness Equipment: Peloton provides high-quality fitness equipment, including stationary bicycles and treadmills, equipped with a touchscreen monitor. These products offer an immersive and interactive exercise experience.
Live and On-Demand Classes: Subscribers gain access to a vast library of live and on-demand fitness classes conducted by experienced instructors. Customers can choose from various class types, including cycling, running, strength training, yoga, and more.
Convenience and Flexibility: Peloton’s platform allows users to work out at their own convenience, eliminating the need for fixed class schedules. Users can select classes based on their preferences, goals, and fitness levels.
Engaging Community: Peloton fosters a sense of community and motivation among its users. Customers can participate in live classes and compete with others, even if they are physically distant. Leaderboards and achievements add a competitive element.
Quality Apparel and Accessories: Peloton offers a range of fitness apparel and accessories under the Peloton Apparel brand, allowing users to enhance their workout experience with stylish and functional gear.
Competitive Pricing: While Peloton’s fitness equipment comes at a premium price, the value lies in the combination of top-notch hardware and access to a wide array of classes, making it a cost-effective alternative to boutique fitness studios.
Customer Segments:
Fitness Enthusiasts: Individuals who are passionate about fitness and prioritize regular exercise in their lives.
Busy Professionals: People with demanding schedules who seek convenience and flexibility in their workouts.
Tech-Savvy Consumers: Those who are comfortable with technology and appreciate the interactive and digital aspects of Peloton’s offerings.
Home Fitness Seekers: Individuals who prefer working out in the comfort of their homes but want a gym-like experience.
Community-Oriented Exercisers: Customers who value the sense of community and motivation that Peloton’s platform provides.
Distribution Strategy:
Direct Sales: The company sells its fitness equipment, including stationary bicycles and treadmills, directly to customers through its website and showrooms.
E-commerce: Peloton offers online purchasing of its fitness equipment, apparel, and accessories through its official website.
Retail Showrooms: Peloton has physical showrooms where potential customers can experience the products in person and receive guidance from sales representatives.
Subscription Model: Access to live and on-demand fitness classes is provided through a subscriptionmodel, which can be purchased through the Peloton app.
Marketing Strategy:
Digital Advertising: The company invests in digital advertising campaigns to reach a broad online audience, promoting its fitness equipment and classes.
Community Building: Peloton actively fosters its community of users through social media engagement, encouraging members to share their fitness journeys and successes.
Celebrity Partnerships: Peloton collaborates with celebrities and influencers to enhance its brand visibility and attract a broader audience.
Content Marketing: The company regularly produces content, including blog posts, videos, and fitness tips, to engage with its customer base and provide valuable information.
Personalized Recommendations: Peloton uses data analytics to recommend classes and workouts tailored to individual preferences and fitness levels.
Customer Testimonials: Positive testimonials and success stories from satisfied users play a significant role in Peloton’s marketing efforts.
Events and Challenges: Peloton organizes events and challenges to keep users engaged and motivated, fostering a sense of competition and achievement.
Referral Program: Customers are encouraged to refer friends and family to join the Peloton community, often through incentives like referral discounts.
Peloton revenue generation
Peloton makes money from three distinct sources. Let’s take a look at each.
Fitness products
The first and most obvious revenue source is fitness products. Peloton sells an indoor cycle with a touchscreen monitor with a base price of $1,895, also known as the Bike Basics package.
Several other packages are also available, including the Bike Essentials ($2,045), Bike Works ($2,145), and Bike Family ($2,345). These options offer the same indoor cycle with a host of accessories including riding shoes, a drink container, weights, headphones, and a heart rate monitor.
The company also sells a treadmill called the Peloton Tread. Like the indoor cycle, this also comes with a touchscreen and the ability to purchase added features. Peloton charges $2,495 for the Tread Basics package and $3,065 for the most expensive Tread Family package.
Both the indoor cycle and treadmill represent a significant source of income for Peloton. Some suggest the profitmargin on these products is as high as 43%.
Apparel and accessories
Peloton also sells fitness clothing under the Peloton Apparel brand, including gym bags, hats, leggings, and t-shirts.
This is a relatively small revenue generator for the company, but sales are growing at a year-on-year rate of 53%.
Subscriptions
While Peloton customers are exercising, they can purchase a subscription to exclusive sports content streamed directly to their monitor.
Here, there are two choices. The customer can either join a live class or choose from Peloton’s vast content library. In either case, the customer can view their progress against other program participants.
Peloton charges $39/month for the service, which it notes is a comparable price to a boutique fitness class run by Flywheel.
For those desiring a similar yet more affordable option, the Peloton Digital Membership is available for $12.99/month.
Peloton is leveraging AI to transform from a hardware-centric model to a data-driven fitness platform through its personalized recommendation engine. The company’s AI algorithms analyze user workout history, heart rate data, performance metrics, and even music preferences to curate individualized class suggestions and create dynamic playlists that adapt in real-time during workouts. For example, if a user consistently struggles with high-intensity intervals but excels at endurance rides, the AI will recommend classes with longer steady-state segments and suggest modifications during live sessions. This personalization increases user engagement and retention, allowing Peloton to reduce churn and maximize subscription revenue while minimizing reliance on expensive hardware sales. The AI-driven approach also enables Peloton to offer tiered subscription services based on the level of personalization, creating new revenue streams beyond their traditional bike and treadmill sales model.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
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