Peloton Interactive, Inc.

Good day and welcome to the Peloton Interactive Fourth Quarter Fiscal Year 2025 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. James Marsh, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning and welcome to Peloton's fourth quarter fiscal year 2025 conference call. Joining today's call are Peloton Chief Executive Officer and President Peter Stern and Chief Financial Officer Liz Coddington. Our comments and responses to your questions reflect management's views as of today only and will include forward-looking statements related to our business 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. Please refer to our SEC filings and today's shareholder letter, both of which can be found on our investor relations website for discussion of the material risks and other important factors that could impact our results. 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. I'll now turn over the call to Peloton's Chief Executive Officer and President, Peter Stern.

Thank you, James. Good morning, everyone, and thank you for joining today's call. As we wrap up our fiscal year, Everyone at Team Peloton should take pride in our results and all that we accomplished. While Liz will review the results in more detail, our team exceeded all our key financial performance goals for Q4 and fiscal 2025. We delivered what we promised operationally and then some. And we reignited our innovation engine on every aspect of our magic formula of equipment, software, and human coaching. As we look to the future, our team is rounding out nicely. We recently welcomed two new hires to the leadership team, Chief Marketing Officer Megan Imbres, who joined us from Apple, and Chief Communications Officer Diana Krause, who joined us from Fleischmann Hillard. We have also completed the search for our CIO. Corey Farrell joined last week from Pearson and reports to our COO, Charles Kyrall. As I promised when I started at Peloton in January, in today's shareholder letter, I outlined Peloton's strategy. I won't reiterate that strategy in these remarks, but I will provide some highlights and color. Our strategy is grounded in our purpose, which is nothing short of delivering human impact at massive scale by empowering our members to live fit, strong, long, and happy. We already deliver on this purpose, in part, as the trusted fitness partner for approximately 6 million members in six countries. But we are just getting started. Let me explain by providing historical context. Over the past century or so, advances in medical science contributed to the prolonging of life here in the U.S. by a remarkable 30 years from 1900 to 2020. However, as lifespan has increased, health span, the quality as opposed to the quantity of those years, has failed to keep up. People are living longer, but they are also living sicker. In the U.S. alone, we now have the largest gap between lifespan and healthspan in history at over 12 years. Addressing healthspan requires a different approach from lifespan because healthspan depends less on medical interventions and more on our choices and behaviors regarding exercise, sleep, stress, and diet. This is where Peloton comes in. Cardio fitness is the foundation of wellness and is critical to maximizing healthspan. If it were a drug, it would be a miracle drug, available to everyone without negative side effects. But while cardio fitness is essential for healthspan, it is not enough by itself. With each passing year, we are coming to understand better the importance of strength, stress management, sleep, and nutrition to living our best lives. This creates the opportunity No, more than that, the mandate for Peloton to evolve from being a cardio fitness partner to become the world's most trusted wellness partner across the full array of behaviors that maximize health span. There is no company better positioned than Peloton to achieve this kind of human impact. Behavior change is hard, but we've spent over a decade helping millions of people start and maintain healthy habits by making it fun, and by creating a real sense of community and human connection. So with that backdrop, here's where we're taking the business with the goals of returning to sustained growth in revenues and members, and of sustaining our progress in achieving profitability. We plan to support our members' wellness journeys by expanding our offerings in strength, where we are already a category leader, mental wellbeing, sleep and recovery, and over time, nutrition, and hydration. While we're exploring new wellness areas, we will continue to build on our strengths in cardio, cycling, running, walking, and rowing, recognizing the centrality of cardio for human well-being. We recognize that our members come to us at various stages of their fitness journey, and so a one-size-fits-all approach fits no one. Determining what to do to meet your goals can be overwhelming, so we will employ advanced technologies like AI to enhance our ability to serve as personalized coaches, delivering individual insights, recommendations, and custom-tailored plans that make it easier and more efficient to achieve your goals. To grow our member community, we will increase our global presence through hotel partnerships, retail expansion, and the launch of new markets. An example of this is our successful microstore pilot in Nashville. Last month, we opened our second microstore, this one in Utah. And we plan to launch an additional eight stores in time for the busy holiday season. Here's another example. We launched Peloton Repowered, a platform for buying and selling used equipment to sellers nationwide last week following a successful beta in three U.S. metro areas. And yet another. In May, we launched a special pricing program that offers a discount on equipment to military personnel, healthcare workers, first responders, and educators. These purchases have already made a meaningful impact on first-party retail sales in Q4, while making Peloton more accessible to thousands of people we all count on for the quality of our lives. We also launched special pricing for students, offering them discounted access to our Peloton app subscriptions. Precor is a strong asset to Peloton, as it has a presence in more than 60 countries and 80,000 locations. we see a tremendous opportunity to expand our commercial presence and serve a broader range of gym operators by bringing the best of Precor and Peloton together. We have integrated Precor with Peloton for Business and formed a new commercial business unit under Chief Commercial Officer Dion Camp-Sanders, hiring Ian Reeves as his general manager. Dustin Groves, President of Precor, will be retiring, and we sincerely thank him for his leadership in returning the Precor business to growth. Our commercial business unit plans to expand on the success we've achieved with our Hilton and Hyatt partnerships. Peloton for Business currently operates in over 9,000 hotels, and Peloton is now a must-have amenity in quality hotels. Growing our member base also means expanding our online and in-person presence through social channels and events. In Q4, our instructors participated in over 40 events, more than three times the amount in Q4 of last year. When you purchase a piece of Peloton equipment, you aren't just getting a fitness tool. You're also joining a supportive community. We've experimented with ways to strengthen this community and foster more engagement through our social network, Teams. We have more features on the horizon to deepen connections and engagement among our members. We are also continuing to elevate the member lifecycle with new onboarding programs. and to recognize our most loyal and committed members. A core pillar of our strategy is ensuring our prices reflect the human impact we deliver to our members. We continue to improve our unit economics and will adjust prices to reflect the value we provide to our members and the costs of operating our business, including shipping, returns, tariffs, and other fees we pay. Peloton is at a critical juncture in our transformation. a moment to invest intentionally in our future. To earn the right to grow, we must align our spending with areas of competitive advantage, specifically our equipment, software, and content, while reducing costs in areas that do not differentiate us. To that end, we plan to capture an additional $100 million of run rate cost savings by the end of FY26 by optimizing indirect spend, reshaping our teams, and in some cases the locations where we work, and parting ways with a number of our talented colleagues. Decisions that impact our people are the most agonizing ones we make. We are deeply grateful for the contributions of our departing team members, and we are committed to supporting them through this transition. Making fundamental changes to the way our business operates takes sacrifice and hard work, but I'm even more confident in our team now than when I started. I will now turn it over to Liz to discuss our Q4 and full year 2025 results.