Peloton Interactive, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Peloton's fourth quarter fiscal year 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your touchtone telephone. Please be advised that today's conference may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Head of Investor Relations, Peter Stabler.

Good afternoon, and welcome to Peloton's fiscal fourth quarter conference call. Joining today's call are John Foley, our co-founder and CEO, President William Lynch, and CFO Jill Woodworth. Our comments and responses to your questions reflect management's views as of today only. and will include statements related to our business that are forward-looking statements under federal securities law. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business. For discussion of the material risks and other important factors that could impact our actual results, please refer to our SEC filings and today's shareholder letter, both of which can be found on our investor relations website. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's shareholder letter. With that, I'll turn the call over to John.

Thank you, Peter. Good afternoon, everyone, and thanks for joining us today. Our fourth quarter brought a remarkable year to a close. We finished the year with $4.02 billion of revenue, up 120 percent year-on-year, and up 340% versus fiscal 2019. We added over 1.2 million connected fitness subscribers in fiscal 2021, and digital subscriptions ended the year up 176% versus a year ago. We introduced new products and software features, greatly expanded and enhanced our content library, and launched in Australia, which was no small feat given COVID pandemic complexities. We invested aggressively in supply chain and logistics, allowing us to bring product wait times back to pre-pandemic levels. Even with the significant investments we made in manufacturing capacity and expedited shipping, this level of growth drove far more EBITDA profitability than we had anticipated or intended to achieve at this point in our growth cycle. We recognize, of course, that there is a great debate about the growth prospects of our industry post-COVID. Therefore, I think it's worthwhile to spend a minute reflecting on the year and our path forward before we review the quarter and our outlook for fiscal 2022. Over the past two years, you've heard us speak regularly about the connected fitness opportunity we see for Peloton, how the combination of our world-class fitness hardware and software and streaming media is fundamentally disrupting an industry that has seen little in terms of true innovation in the past 40 years. How our highly engaging, motivating, and entertaining world-class fitness content is consumed in the comfort of your home, creating an unparalleled workout experience at an exceptional value. How the magic of network software and streaming media enables a near-constant innovation cycle where your experience on Peloton platform is incrementally better every time you use it. What happens when we put member engagement at the center of our business strategy and and adopt a members-first mindset across every part of our operation, the benefits that come with high subscriber retention and the advantage of industry-leading net promoter scores, and the power of the Peloton community that motivates and encourages millions of people in their pursuit of physical and mental wellness. We believe that we are still in the first inning of Connected Fitness industry growth, and we have the opportunity to extend our leadership as the pioneer of this category. our strategy remains constant. We will continue to invest aggressively behind new hardware products, software experiences, and content offerings for both cardio and strength training, the two pillars of physical fitness. We will continue to prioritize subscription growth over near-term profitability as it's still very early days in the consumer migration to connected fitness in the home. We will continue to expand our geographic footprint while leveraging additional distribution channels like commercial and corporate wellness. And we will continue to drive supply chain efficiencies via a focused hardware portfolio. From our beginnings, we have also consistently sought to make our products and content more accessible, lowering a key barrier to purchase. In 2017, we began offering a 0% financing option. In 2019, we introduced our no-risk 30-day home trial. Last year, with the introduction of Bike Plus, we lowered the price of our original bike. Earlier this year, we reduced the price of our digital app for frontline healthcare workers, active military, first responders, and full-time students. And just a few weeks ago, we introduced Peloton Corporate Wellness, further increasing the accessibility of our products through subsidy, relationships with corporate partners, and healthcare providers. Today we announce our latest step on the journey to broaden the accessibility of our products. We are lowering the price of our original bike by $400 to $1,495. Applying our 39-month 0% APR financing option, this equates to a hardware cost of just $39 per month. Adding our all-access membership comes to just $78 per month, a monthly spend that scales across an entire household, creating an incredible value versus almost any other fitness offering. For a two-person household, inclusive of the all-access membership, that's under $40 per person per month during the finance period and less than $20 per person per month thereafter. Today, we are also introducing revised financing options for our Bike Plus and Tread products, extending our 39-month option to 43-month option equating to a monthly payment of approximately $59 per month during the finance period. As before, we will continue to offer 12-month and 24-month options as well. Democratizing access to our platform has always been our goal for our team. With our supply constraints largely solved now, We're seizing this opportunity today to continue to deliver against one of our key strategic priorities. Now turning to some highlights for the quarter. Our community has now passed 5.9 million members globally, up 93% year-on-year and over 320% from the year ending fiscal 2019. Total platform workouts in the quarter reached 154.5 million, up 86% year-on-year and reflecting roughly eight times the number of workouts completed in Q4 of fiscal 2019. In Q4, we averaged 19.9 monthly workouts per Connected Fitness subscription versus 24.7 in the year-ago period. As expected, engagement levels were lower sequentially and on a year-over-year basis as typical seasonal trends associated with improved weather and consumer mobility have reemerged. Last year's engagement benefited significantly from lockdown orders, work from home mandates, and gym closures. On a two-year basis, monthly workouts per Connected Fitness subscription increased 66% from 12.0 in Q4 of fiscal 2019, validating our significant software and content investments. As a result of our efforts to keep our members engaged, connected fitness retention rates remain very strong, with average connected fitness monthly churn of 0.73% in Q4 and 0.61% for fiscal year 2021. Moving on to TREAD. As we announced on Tuesday of this week, we are thrilled to commence U.S. sales and resume U.K. and Canada sales on August 30th, finally bringing this incredible product to market in the U.S. ahead of the key holiday selling season. Similar to how we reimagined what a stationary bike workout can be, our new tread experience brings game-changing full-body workouts into the home. The early consumer reception supports our enthusiasm with a net promoter score for our all-new tread of 85 in our initial U.K. and Canada launch markets, an incredible result for a brand-new product. and to be sure the software and content is only getting better. As we have said, we believe the opportunity for our new tread is two to three times the size of the bike category. Sales of our Slat Belt Tread Plus product, which has only been available in the U.S., remain paused as we continue to work on a retrofittable hardware modification to further enhance Tread Plus' safety profile. As the category leader, we see a clear opportunity and frankly, a responsibility to innovate on safety, and we are encouraged by the progress being made across our teams. Now I'll hand it over to Jill to review our Q4 financial results and outlook for fiscal 2022. Thanks, John.