Peloton Interactive Stock

Peloton Interactive, Inc. (Peloton) operates as a global fitness company.

The company has a highly engaged community of over 6.5 million Members in the United States, the United Kingdom, Canada, Germany and Australia.

As a category innovator at the nexus of fitness, technology, and media, Peloton's first-of-its-kind subscription platform seamlessly combines innovative hardware, distinctive software, and exclusive content. Its world-renowned instructors coach and motivate Members to be the best version of themselves anytime, anywhere.

The company defines a ‘Member’ as any individual who has a Peloton account through a paid Connected Fitness Subscription or a paid Peloton App Membership, and completes one or more workouts in the trailing 12 month period. The company defines a completed workout as either completing at least 50% of an instructor-led class, scenic ride or run, or ten or more minutes of ‘Just Ride’, ‘Just Run’, or ‘Just Row’ mode.

The company defines a ‘Connected Fitness Subscription’ as a person, household, or commercial property, such as a hotel or residential building, who has either paid for a subscription to a Connected Fitness Product (a Connected Fitness Subscription with a successful credit card billing or with prepaid subscription credits or waivers) or requested a ‘pause’ to their subscription for up to three months.

Products

Peloton provides Members with expert instruction and world class content to create impactful and entertaining workout experiences for anyone, anywhere, and at any stage in their fitness journey. At home, outdoors, traveling, or at the gym, Peloton offers an immersive and personalized experience. With tens-of-thousands of classes available across 16 fitness modalities, Members can access Peloton content via the company’s hardware or via the Peloton App, on their phone, tablet, or TV, allowing them to workout when, where, and how they want.

The company’s Connected Fitness Products include:

Peloton Bike - The original Peloton Bike combines fitness, technology, and media to connect riders to live and on-demand workouts led by Peloton instructors.

Peloton Bike+ - The Peloton Bike+ unlocks an even more dynamic workout experience with indoor cycling riders having the option of on-and-off-bike content, as well as automatic resistance control with the Bike+ electronic braking system. Designed to keep riders motivated and effortlessly moving from cardio to strength, yoga, and more, the Peloton Bike+ unlocks an even more seamless and integrated total workout experience.

Peloton Tread - The Peloton Tread combines a cutting-edge treadmill design with Peloton’s compelling running and strength training content. The Tread includes fundamental elements unique to Peloton, like dial control knobs and jump buttons.

Peloton Tread+ - The Peloton Tread+ features slat belt technology that offers the optimal comfort experience when running. The Tread+ offers a combination of cardio and strength content, all streamed via a 32 inch touchscreen and a powerful sound bar, for a total body workout at home. On May 5, 2021, the company issued a voluntary product recall on Tread+, which it conducted in collaboration with the U.S. Consumer Product Safety Commission (CPSC), the company is seeking to resume sales of the Tread+ in the United States in 2024.

Peloton Guide - Peloton’s first connected strength product, Peloton Guide, is an AI-powered personal trainer that connects to televisions. Peloton Guide features personalized strength training routines, rep tracking, time tracking, and progress tracking. It features exclusive strength programs and workouts only available on Peloton Guide.

Peloton Row - Peloton Row combines the innovative software, premium hardware design, and exclusive Peloton content to deliver a unique low-impact, full-body cardio, and strength workout. Peloton Row employs proprietary form assistance and form guidance technology for rowers and also features personalized pace target technology.

Financing options are available for most Peloton products. In the United States and Canada, the company also provides the opportunity via the Peloton Rental program to rent Peloton Bikes and access fitness content for one monthly fee.

Peloton content is accessed via a Membership, and the company has created a number of ways, including a free option for consumers to engage with Peloton’s fitness experience. Monthly membership options include:

All-Access Membership: Includes App+ Membership and content exclusively for Peloton equipment.

Peloton App Membership: Access to the Peloton App is available with an All Access or Guide Membership for Members who have Connected Fitness Products or through a standalone App Membership with multiple Membership tiers:

Peloton App+: Designed for the user who wants unlimited access to Peloton’s entire library other than Lanebreak and Scenic classes. This tier includes all of App One’s offerings and unlocks access to thousands of equipment-based cardio classes to take on any indoor bike, treadmill, or rower. This tier also offers exclusive access to classes, featuring specialty content.

Peloton App One: Designed for the Member who wants unlimited access to thousands of classes across 9 of Peloton’s 16 modalities, including Strength, Meditation, Outdoor Walking, Yoga, and more, as well as all the classes included in the free tier. App One Members can also take up to three, equipment-based cardio classes per month (Cycling/Tread/Row). New, on-demand, and live classes are offered almost daily, as well as access to Peloton’s Challenges, Programs, and Collections.

Peloton App Free: Designed to supplement a user’s workout routine and to serve as a gateway to all Peloton has to offer a new user. The free tier provides more than 50 classes curated across 12 of Peloton’s modalities, enabling the user to pair workouts to meet their individual interests, even as their goals change over time. This tier includes a rotating set of featured classes that are refreshed on an ongoing basis.

Guide Membership: Includes App+ Membership and content exclusively for Guide.

Integrated Fitness Platform

Technology

The company’s content delivery and interactive software platform are critical to its Member experience. The company invests substantial resources in research and development to enhance its platform, develop new products and features, and improve the speed, scalability, and security of its platform infrastructure. The company’s research and development organization consist of engineering, product, and design teams. The company constantly improves its Connected Fitness Products, as well as the Peloton App, through frequent software updates, iteration of feature enhancements, and innovations, such as Peloton Lanebreak, its first game-inspired fitness experience. Additionally, Peloton continues to invest in AI/ML and Computer Vision technology to power proprietary personalization and discovery models across all of the company’s software platforms and unique fitness features like Guide Rep Counting.

Content

The company creates engaging, original fitness and wellness content in an authentic, live environment that is immersive and motivating while also creating a sense of community. The company has developed a diverse content library with tens-of-thousands of classes. Exclusively produced at the company’s production studios in New York City and London, featuring its 57 instructors, across 16 fitness and wellness modalities, including Strength, Yoga, Meditation, Cardio, Stretching, Cycling, Outdoor, Running, Walking, Tread Bootcamp, Bike Bootcamp, Boxing, Pilates, Barre, Rowing, and Row Bootcamp, its content breadth and depth is vast. The company has Scenic Content that includes instructor-guided classes, as well as non-guided time and distance-based options, all shot in beautiful destinations. The company also has a game-inspired workout experience with its Lanebreak feature, allowing Members to experience an animated workout as an alternative to instructor-led programming. The company’s Peloton Studios in New York City and London provide an in-person Peloton content experience. Regular studio member classes and events are held in these spaces combining a high-energy live production environment with fitness classes in seven active production studios.

The company produces its content in three languages: English, German, and Spanish. As it expands into other non-English-speaking countries, the company intends to produce classes in local languages from its existing studios and use subtitling for English-speaking users, continually expanding its content library while also being culturally relevant in the markets where it is serving Members.

The company has developed a proprietary music platform that allows its instructors to integrate curated playlists into its programming in a way that aligns with its Members’ musical tastes. The company works with music providers to ensure that its curated music is as diverse and dynamic as the Members it serves, delivering an exceptional workout experience created by instructors and music supervisors on its production team.

Peloton has become noteworthy as a brand providing the opportunity for the company’s Members to engage in a new way with the fitness modalities they love. The company has also taken a leading position in the fitness and wellness category by developing musical content partnership campaigns that feature some of the most recognizable global talent in the industry. This includes working with music providers on the development of the company’s signature Artist Series which celebrate the legacy and catalog of some of the most prominent names in the music business. The company also collaborates closely with artist teams to premiere new music exclusives available only on Peloton, and to arrange for guest appearances in its classes.

Sales and Marketing

The company sells its products directly to customers through a multi-channel sales platform and via third parties. It also sells Peloton Bikes to business-to-business (B2B) customers and provide the opportunity for employers, insurers and other enterprise partners to offer their employees and members subsidized access to Peloton App subscriptions. The company’s sales associates use customer relationship management tools to deliver an elevated, personalized, and educational purchase experience, regardless of channel of capture and conversion.

E-Commerce and Inside Sales: The company’s desktop and mobile websites provide an elevated brand experience where visitors can learn about its products and services and access product reviews. The company’s Inside Sales team engages with customers by phone, email, and online chat on its websites, and offers one-on-one sales consultations seven days a week.

Retail Stores: The company’s stores allow customers to experience and try its products. The company provides interactive product demonstrations and many of its stores have private areas where customers can take a ‘test class’ on its Bike, Bike+, Tread, and Row products. The company frequently hosts Peloton community events in its stores, which help deepen brand engagement and customer loyalty.

Third Party Retailers: The company’s products are also available to purchase from a number of third party retailers, including Amazon, Dick’s Sporting Goods, and John Lewis.

Peloton for Business: Peloton for Business is a unified portfolio of B2B well-being solutions for enterprise clients, offered across seven key verticals: Hospitality, Corporate Wellness, Multi-Family Residential, Education, Healthcare, Gyms and Community Wellness. The full-service offering includes a range of equipment and content-based solutions, delivering on Peloton's commitment to empower anyone, anywhere, anytime.

To market its products, the company uses a combination of brand and product specific performance marketing to build brand awareness, generate sales of its Connected Fitness Products and drive App subscriptions. In addition, in May 2023, the company relaunched the Peloton Brand, for anyone, anywhere, with a new brand identity and campaign and new content features. Following the brand relaunch, the company continues to diversify and maximize its marketing channel mix.

Manufacturing and Logistics

In July 2022, the company announced a shift from in-house manufacturing to utilizing third-party manufacturing partners for 100% of its products. The components used in the company’s products are procured on its behalf using its designs by its contract manufacturers, according to the company’s required design specifications and high standards, from a variety of suppliers. In order to account for technology evolution and market fluctuations, the company regularly reviews its relationships with its existing contract manufacturers and the components suppliers that they contract with, while evaluating prospective new partnerships. The company uses a combination of leased and operated, as well as contracted third-party logistics providers (3PLs) in its logistics and service network which includes middle mile and last mile operations centers in the United States, Canada, Germany, the United Kingdom, and Australia.

Intellectual Property

As of June 30, 2023, the company held 170 U.S. issued patents and had 83 U.S. patent applications pending. The company also held 393 issued patents in foreign jurisdictions and 146 patent applications pending in foreign jurisdictions. The company’s U.S. issued patents expire between September 15, 2023 and October 14, 2040. As of June 30, 2023, the company held 52 registered trademarks in the United States, including the Peloton mark and its ‘P’ logo and also held 844 registered trademarks in foreign jurisdictions.

Seasonality

Historically, the company has experienced higher Connected Fitness Products sales in the second and third quarters of the fiscal year (year ended June 2023) compared to other quarters, due in large part to seasonal holiday demand, New Year’s resolutions, and cold weather. The company also has historically incurred higher sales and marketing expenses during these periods. For example, in year ended June 30, 2023, the company’s second and third quarters combined represented 62% of Connected Fitness Products revenue and 55% of its Total revenue.

History

Peloton Interactive, Inc. was founded in 2012. The company was incorporated in 2015.