Peloton reported fourth-quarter and full-year results before Thursday’s open. Fiscal 2026 revenue was $2.446 billion, $6 million above the top of its own guidance range. Net income was $63.2 million against a loss of $118.9 million the year before — the first full year of net profit and operating income in the company’s history. Free cash flow was $378 million. Fourth-quarter earnings of 13 cents a share landed in line and quarterly revenue of $608 million beat. The stock fell about 14%.
The guide is why. For fiscal 2027, Peloton told investors to expect revenue of $2.3–$2.4 billion — down $96 million, or 3.9%, at the midpoint, against a Street looking for roughly $2.42 billion. It expects to end the year with 2.455–2.475 million paid connected fitness subscriptions, down 267,000, or 9.8%, at the midpoint. And it expects adjusted EBITDA of $475–525 million, up $32 million or 6.8%, on gross margin of roughly 54.0%, up 140 basis points.
Read those two paragraphs together. Peloton is guiding revenue down, subscribers down nearly 10%, and profit up. That isn’t a contradiction — it’s a strategy, and it just produced the first profitable year the company has ever had. It is also a strategy with an expiration date printed on it.
Our take: Peloton has stopped being a growth company and become a harvest. That’s a legitimate way to run a business, and management is running it well. But the number that decides the next five years isn’t EBITDA — it’s the rate of subscriber decline, and it went the wrong way. The paid base fell 8.8% in fiscal 2026; management is guiding it to fall 9.8% in fiscal 2027. An eroding base is survivable when the erosion is slowing. This one is speeding up. Margin is a lever you can pull three or four more times — gross margin is already 54% — while the subscriber line compounds against you every quarter. Investors didn’t sell the profit. They sold the denominator.
The revenue guide names its own cause
Management attributed the fiscal 2027 revenue decline to lapping the price increases it pushed through last fall. That’s a more revealing sentence than it looks. If higher prices are what held revenue flat in a year when the paying base shrank 8.8%, then fiscal 2026’s stability was purchased rather than earned — and the bill arrives when the comparison catches up. The company credited its full-year outperformance to equipment sales across the Peloton and Precor brands. Hardware is the one-time sale. The subscription is the annuity. The annuity is the part getting smaller.
Peloton had company. Zillow beat on both lines and fell about 12% on soft forward guidance and a 7% workforce cut. Sandisk beat and fell about 10%. Figma dropped about 14% on a light operating-income outlook. With the Dow at a record and the S&P 500 near flat, Thursday’s market spent its attention entirely on forward numbers — the same reflex that took a fifth of AppLovin a day earlier.
What to watch
- The quarterly subscriber run rate, not the annual guide. 9.8% is a midpoint in a plan. A decline that decelerates through the year is a turnaround; one that holds is a schedule.
- Where the EBITDA growth comes from. Guided gross margin of 54.0% does part of the work; operating cost does the rest. Mix is durable. Another round of cuts is not.
- Hardware versus subscription. Equipment drove the fiscal 2026 beat. If hardware keeps carrying the top line while subscriptions shrink, the recurring-revenue story is quietly being replaced by a retail one.
- Free cash flow. $378 million in fiscal 2026, with another positive year promised. Cash buys time to find a second act — and time is the only thing this plan generates.
Peloton spent four years being told to prove it could make money. On Thursday it proved it, and got marked down 14% for the trouble. The market has moved to the harder question: profitable on what? A company that earns more each year from fewer customers each year isn’t fixed. It’s being managed carefully toward a smaller version of itself. The plan is working. The plan is also finite.