PTON Raises EBITDA View, Can Profit Momentum Offset Subscription Drop?

Peloton Interactive, Inc. PTON delivered a stronger-than-expected start to fiscal 2026, supported by disciplined cost management and favorable product mix trends. The company raised its full-year adjusted EBITDA guidance to $425-$475 million, reflecting improved gross profit execution and faster realization of cost savings. Management also highlighted solid free cash flow progress and a stronger balance sheet position, with net leverage meaningfully reduced.

However, the encouraging profitability momentum comes alongside continued weakness in subscriptions. Peloton ended the quarter with 2.73 million Paid Connected Fitness Subscriptions, down 6% year over year, and subscription revenues fell 7% amid lower app and connected fitness subscribers. The company acknowledged that recent price increases and ongoing recall-related disruptions are expected to temporarily elevate churn in second-quarter fiscal 2026. Still, Peloton expects full-year churn to remain roughly flat, supported by a more tenured and engaged member base.
 
The key strategic question is whether Peloton’s renewed emphasis on product innovation and wellness ecosystem expansion can offset declining subscription momentum. The rollout of Peloton IQ personalized coaching, expanded retail distribution and integration of new wellness experiences are intended to lift engagement and broaden the addressable market. Early indicators, including increased usage of strength workouts and community participation, are encouraging.
 
Yet, sustained revenue growth remains contingent on reversing subscriber contraction. Profit improvements are meaningful, but long-term recovery depends on stabilizing and reigniting subscription growth. Peloton is showing real operational progress — now it must prove that engagement initiatives can translate into lasting subscription retention and expansion.

Competition in the Connected Fitness & Wellness Market

Planet Fitness PLNT: Unlike Peloton’s at-home subscription-centric model, Planet Fitness operates a low-cost gym network appealing to value-driven consumers seeking in-person exercise environments. As Peloton works to retain members amid pricing changes, Planet Fitness benefits from stable membership growth and a recurring-fee structure with broad demographic appeal. Its physical presence and affordability position Planet Fitness as a strong alternative for consumers reconsidering at-home fitness spending.

Xponential Fitness XPOF: Xponential offers boutique studio concepts such as Pure Barre, Rumble and Club Pilates, targeting consumers seeking group-oriented, instructor-led specialty workouts. While Peloton aims to deepen engagement through community and AI coaching, Xponential leverages social connection and localized studio culture. As Peloton expands into wellness and strength categories, it increasingly competes with Xponential for members interested in structured training programs and varied modalities. Both players emphasize lifestyle branding, making customer loyalty and experience differentiation critical.

PTON’s Price Performance, Valuation and Estimates

Peloton’s shares have gained 12.2% in the past six months against the industry’s decline of 1.8%.

Price Performance

From a valuation standpoint, PTON trades at a forward price-to-sales ratio of 1.22X, down from the industry’s average.

P/S (F12M)

The Zacks Consensus Estimate for PTON’s 2025 and 2026 earnings implies a year-over-year uptick of 123.3% and 50%, respectively. 

PTON currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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