Peloton’s gamble on expensive new hardware has yet to pay off

Last fall, caller Peloton CEO Peter Stern made a bet. The institution announced a complete refresh of its full hardware lineup, complete pinch swivel screens and AI-powered features. Today, the first results of Stern’s stake are in. In its Q2 2026 net call, Stern noted that the hardware refresh hasn’t landed pinch existing Peloton users, resulting successful weaker-than-expected vacation income during what’s usually Peloton’s strongest quarter. As a result, Peloton stocks fell roughly 20 percent this morning.

Peloton besides announced its main financial serviceman Liz Coddington would beryllium leaving astatine the extremity of March. Last week, the institution announced yet different information of layoffs, cutting 11 percent of its unit from its engineering and endeavor efforts.

The Cross Training bid launched successful October and included a caller Bike, Bike Plus, Tread, Tread Plus, and Row Plus that added swivel screens, cameras for AI-powered spot training feedback, fans, and cushier seats. The caller Peloton IQ features besides included real-time shape correction, analysis, and AI-generated workout routines. However, Peloton besides raised prices of the caller hardware pinch the Tread Plus reaching a whopping $6,695. The institution besides hiked up subscription prices.

“Our installed guidelines of instrumentality is rather durable and personnel restitution is highly high,” Stern said connected the call, explaining why its new. “We judge these factors lend to a longer upgrade rhythm than we had anticipated.”

Stern went connected to statement that income to caller Peloton users met expectations. He besides stressed that existing Peloton users did bargain caller categories of hardware from the Cross Training bid (e.g., Bike owners buying a treadmill aliases rower.) He besides noted that the institution views Peloton IQ arsenic a success, saying 46 percent of users person engaged pinch the features since rollout.

Although Peloton users are loyal, galore were displeased pinch the Cross Training bid rollout. Several reached retired to The Verge to opportunity they were disappointed the institution offered nary trade-in programme to upgrade their existing equipment. That was further exacerbated erstwhile users recovered instructions for swapping retired aged screens successful the self-install kit for the Cross Training bid and some users felt this was the institution squeezing them for much money.

It wasn’t each bad news, however. Despite the summation successful subscription value and immoderate first cancellations, Peloton said that churn was little than expected for the period. That said, full gross fell 3 percent year-over-year astatine $657 million, pinch some hardware and subscription income falling short of expected targets.

Even so, Stern spent the net telephone wished to overgarment Peloton’s improvements successful operational costs and prioritizing early profitability. In that vein, Stern emphasized that Peloton isn’t a fittingness institution immoderate much but a wellness one. That intends doubling down connected partnerships pinch manner brands for illustration Respin, focusing connected menopause-related wellness content, arsenic good arsenic expanding spot training efforts. Regarding the latter, Stern identified heightened request for spot training arsenic dovetailing pinch accrued take of GLP-1 medications, which are known to origin musculus loss.

“Fitness and wellness isn’t a quarterly extremity for our members, and it shouldn’t beryllium for our business either,” Stern said. He ended the telephone urging analysts and investors to effort pilates and kettlebell classes.