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Peloton is the largest interactive fitness platform in the world, with a loyal community of more than 3.1 million members. We pioneered connected, technology-enabled fitness and the streaming of immersive, instructor-led boutique classes to our members anytime, anywhere "
More About Peloton (PTON)
Overview Peloton is the largest interactive fitness platform in the world with a loyal community of over 3.1 million Members as of June 30, 2020. We pioneered connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes to our Members anytime, anywhere. We make fitness entertaining, approachable, effective, and convenient, while fostering social connections that encourage our Members to be the best versions of themselves. We are an innovation company at the nexus of fitness, technology, and media.
We have disrupted the fitness industry by developing a first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content, creating a product that our Members love. Driven by our Members-first mindset, we built a vertically integrated platform that ensures a best-in-class, end-to-end experience. We have a direct-toconsumer multi-channel sales platform, including 95 showrooms as of June 30, 2020, with knowledgeable sales specialists, a high-touch delivery service, and helpful Member support teams. Our world-class instructors teach classes across a variety of fitness and wellness disciplines, including indoor cycling, indoor/outdoor running and walking, bootcamp, yoga, strength training, stretching, and meditation.
We produce hundreds of original programs per month and maintain a vast and constantly updated library of thousands of original fitness and wellness programs. We make it easy for Members to find a class that fits their interests based on class type, instructor, music genre, length, available equipment, area of physical focus, and level of difficulty.
Our revenue is primarily generated from the sale of our Connected Fitness Products, the Peloton Bike, launched in 2014, and the Peloton Tread, launched in 2018, and associated recurring subscription revenue. We have experienced significant growth in sales of Connected Fitness Products, which, when combined with our strong Connected Fitness Subscription retention rates, has driven high growth in Connected Fitness Subscriptions. Our Connected Fitness Subscription base grew by 113% in fiscal 2020.
Our compelling financial profile is characterized by high growth, strong retention, recurring revenue, margin expansion, and efficient subscription acquisition. When we acquire new Connected Fitness Subscriptions, we are able to offset our subscription acquisition costs with the gross profit earned on our Connected Fitness Products. This allows for rapid payback of our sales and marketing investments and results in a robust unit economic model.
We have disrupted the fitness industry by developing a first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content, creating a product that our Members love. Driven by our Members-first mindset, we built a vertically integrated platform that ensures a best-in-class, end-to-end experience. We have a direct-toconsumer multi-channel sales platform, including 95 showrooms as of June 30, 2020, with knowledgeable sales specialists, a high-touch delivery service, and helpful Member support teams. Our world-class instructors teach classes across a variety of fitness and wellness disciplines, including indoor cycling, indoor/outdoor running and walking, bootcamp, yoga, strength training, stretching, and meditation.
We produce hundreds of original programs per month and maintain a vast and constantly updated library of thousands of original fitness and wellness programs. We make it easy for Members to find a class that fits their interests based on class type, instructor, music genre, length, available equipment, area of physical focus, and level of difficulty.
Our revenue is primarily generated from the sale of our Connected Fitness Products, the Peloton Bike, launched in 2014, and the Peloton Tread, launched in 2018, and associated recurring subscription revenue. We have experienced significant growth in sales of Connected Fitness Products, which, when combined with our strong Connected Fitness Subscription retention rates, has driven high growth in Connected Fitness Subscriptions. Our Connected Fitness Subscription base grew by 113% in fiscal 2020.
Our compelling financial profile is characterized by high growth, strong retention, recurring revenue, margin expansion, and efficient subscription acquisition. When we acquire new Connected Fitness Subscriptions, we are able to offset our subscription acquisition costs with the gross profit earned on our Connected Fitness Products. This allows for rapid payback of our sales and marketing investments and results in a robust unit economic model.
Peloton Products
Connected Fitness
Products
Peloton Bike and Bike+
Bike
Our current Bike features a carbon steel frame, a nearly silent belt drive, durable magnetic resistance, and a 22” high-definition touchscreen with built-in stereo speakers to stream live and on-demand classes, all in a compact, 4’ by 2’ footprint. Our Bike is available in the United States, Canada, the United Kingdom, and Germany.
Bike+
Our new Bike+ provides an immersive cardio experience and seamless transition to floor-based exercises with its 24”, 360 degree rotating display. Members can easily pivot and tilt the screen to add strength, yoga, and stretching to their routine or take our all new Bike Bootcamp class series. Resistance on Bike+ is controlled digitally allowing Members to “Auto Follow” their instructors’ class programs and control resistance from the touchscreen. A powerful built-in soundbar and subwoofer system offers an improved audio experience while the integrated Apple GymKit simplifies Apple Watch pairing. Bike+ is currently available for purchase in the United States, Canada, Germany, and the United Kingdom.
Peloton Tread and Tread+
We are renaming our already available Peloton Tread, “Peloton Tread+” and introducing a more compact “Peloton Tread”.
Tread
The newest addition to our Tread line has all the essential elements of the Tread+ experience but in a more affordable and compact form factor – maintaining ample running surface area and runner comfort. The Tread features a sleek belt drive, 24” touchscreen with integrated soundbar and subwoofer, and ergonomic pace and incline control knobs and jump buttons. With an immersive audio and video experience and heart rate monitor integration, Peloton Tread is designed for both on-Tread as well as floor-based bootcamp content. We anticipate that our new Peloton Tread will be available for sale in the United Kingdom starting December 26, 2020 with availability in the United States and Canada scheduled for early 2021 and availability in Germany scheduled for late 2021.
Tread+
Our already available Tread+ provides a one-of-a-kind experience for runners, strength trainers, and bootcamp enthusiasts. Designed for performance and comfort, Tread+ features a shock-absorbing rubber-slat belt and ball bearing system, ideal for low-impact training. Pace and incline ergonomic control knobs allow for seamless adjustments, and the 32” high-definition touchscreen features a 20-watt sound bar. Tread+ is only available in the United States. Through strategic partnerships, we are able to offer qualified customers in the United States a 39-month, 0% APR financing program, allowing them to purchase our Connected Fitness Products and pay in monthly installments.
Connected Fitness Subscriptions
Our Connected Fitness Subscriptions are on a month-to-month basis, allow for multiple household users, and provide unlimited access to all live and ondemand classes. Our Connected Fitness Subscription allows Members to access classes through our Connected Fitness Products, compete on our motivating leaderboard, track performance metrics, and connect and interact with the broader Peloton community. Our Connected Fitness Subscription also includes access to our content through Peloton Digital, our digital app, which is available through iOS and Android mobile devices and most tablets and computers. Our Connected Fitness Subscriptions allow up to five Members of a household to access our content simultaneously. On average, we had 2.3 Members per Connected Fitness Subscription as of June 30, 2020.
Peloton Digital
Peloton Digital began as a companion app for Connected Fitness Subscriptions to provide access to our classes while our Members were away from their Connected Fitness Products. A Peloton Digital Subscriber is an individual or household that has a paid Peloton Digital subscription with a successful credit card billing. Peloton Digital is included with all Connected Fitness Subscriptions. As of June 30, 2020, 67% of our Members on Connected Fitness Subscriptions used Peloton Digital to supplement their workout regimen. Peloton Digital also helps us attract new Connected Fitness Subscriptions by serving as an acquisition tool for new Members. In 2020, we repositioned Peloton Digital, broadening access to our Peloton community while greatly expanding our floor-based fitness content offerings. Connected Fitness Members engaging with floor-based content continues to grow rapidly, with our investment behind our Strength classes posting the most significant gains. Peloton Digital workouts include indoor/outdoor running and walking, bootcamp, strength training, stretching, yoga and meditation. Our Members have shown strong interest in these new verticals; in fiscal 2020, 38% of workouts completed were across non-cycling fitness verticals
Products
Peloton Bike and Bike+
Bike
Our current Bike features a carbon steel frame, a nearly silent belt drive, durable magnetic resistance, and a 22” high-definition touchscreen with built-in stereo speakers to stream live and on-demand classes, all in a compact, 4’ by 2’ footprint. Our Bike is available in the United States, Canada, the United Kingdom, and Germany.
Bike+
Our new Bike+ provides an immersive cardio experience and seamless transition to floor-based exercises with its 24”, 360 degree rotating display. Members can easily pivot and tilt the screen to add strength, yoga, and stretching to their routine or take our all new Bike Bootcamp class series. Resistance on Bike+ is controlled digitally allowing Members to “Auto Follow” their instructors’ class programs and control resistance from the touchscreen. A powerful built-in soundbar and subwoofer system offers an improved audio experience while the integrated Apple GymKit simplifies Apple Watch pairing. Bike+ is currently available for purchase in the United States, Canada, Germany, and the United Kingdom.
Peloton Tread and Tread+
We are renaming our already available Peloton Tread, “Peloton Tread+” and introducing a more compact “Peloton Tread”.
Tread
The newest addition to our Tread line has all the essential elements of the Tread+ experience but in a more affordable and compact form factor – maintaining ample running surface area and runner comfort. The Tread features a sleek belt drive, 24” touchscreen with integrated soundbar and subwoofer, and ergonomic pace and incline control knobs and jump buttons. With an immersive audio and video experience and heart rate monitor integration, Peloton Tread is designed for both on-Tread as well as floor-based bootcamp content. We anticipate that our new Peloton Tread will be available for sale in the United Kingdom starting December 26, 2020 with availability in the United States and Canada scheduled for early 2021 and availability in Germany scheduled for late 2021.
Tread+
Our already available Tread+ provides a one-of-a-kind experience for runners, strength trainers, and bootcamp enthusiasts. Designed for performance and comfort, Tread+ features a shock-absorbing rubber-slat belt and ball bearing system, ideal for low-impact training. Pace and incline ergonomic control knobs allow for seamless adjustments, and the 32” high-definition touchscreen features a 20-watt sound bar. Tread+ is only available in the United States. Through strategic partnerships, we are able to offer qualified customers in the United States a 39-month, 0% APR financing program, allowing them to purchase our Connected Fitness Products and pay in monthly installments.
Connected Fitness Subscriptions
Our Connected Fitness Subscriptions are on a month-to-month basis, allow for multiple household users, and provide unlimited access to all live and ondemand classes. Our Connected Fitness Subscription allows Members to access classes through our Connected Fitness Products, compete on our motivating leaderboard, track performance metrics, and connect and interact with the broader Peloton community. Our Connected Fitness Subscription also includes access to our content through Peloton Digital, our digital app, which is available through iOS and Android mobile devices and most tablets and computers. Our Connected Fitness Subscriptions allow up to five Members of a household to access our content simultaneously. On average, we had 2.3 Members per Connected Fitness Subscription as of June 30, 2020.
Peloton Digital
Peloton Digital began as a companion app for Connected Fitness Subscriptions to provide access to our classes while our Members were away from their Connected Fitness Products. A Peloton Digital Subscriber is an individual or household that has a paid Peloton Digital subscription with a successful credit card billing. Peloton Digital is included with all Connected Fitness Subscriptions. As of June 30, 2020, 67% of our Members on Connected Fitness Subscriptions used Peloton Digital to supplement their workout regimen. Peloton Digital also helps us attract new Connected Fitness Subscriptions by serving as an acquisition tool for new Members. In 2020, we repositioned Peloton Digital, broadening access to our Peloton community while greatly expanding our floor-based fitness content offerings. Connected Fitness Members engaging with floor-based content continues to grow rapidly, with our investment behind our Strength classes posting the most significant gains. Peloton Digital workouts include indoor/outdoor running and walking, bootcamp, strength training, stretching, yoga and meditation. Our Members have shown strong interest in these new verticals; in fiscal 2020, 38% of workouts completed were across non-cycling fitness verticals
Revenue generation for Peloton
The Company’s primary source of revenue is from sales of its Connected Fitness Products and associated recurring Subscription revenue. The Company determines revenue recognition through the following steps:
Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company's revenue is reported net of sales returns and discounts, as a reduction of the transaction price.
The Company estimates its liability for product returns based on historical return trends by product category, impact of seasonality, and an evaluation of current economic and market conditions and records the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of revenue. If actual return costs differ from previous estimates, the amount of the liability and corresponding revenue are adjusted in the period in which such costs occur. Some of the Company’s contracts with customers contain multiple performance obligations. For customer contracts that include multiple performance obligations, the Company accounts for individual performance obligations if they are distinct. The transaction price is then allocated to each performance obligation based on its standalone selling price. The Company generally determines standalone selling price based on prices charged to customers.
- Identification of the contract, or contracts, with a customer;
- Identification of the performance obligations in the contract;
- Determination of the transaction price;
- Allocation of the transaction price to the performance obligations in the contract; and
- Recognition of revenue when, or as, the Company satisfies a performance obligation.
Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company's revenue is reported net of sales returns and discounts, as a reduction of the transaction price.
The Company estimates its liability for product returns based on historical return trends by product category, impact of seasonality, and an evaluation of current economic and market conditions and records the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of revenue. If actual return costs differ from previous estimates, the amount of the liability and corresponding revenue are adjusted in the period in which such costs occur. Some of the Company’s contracts with customers contain multiple performance obligations. For customer contracts that include multiple performance obligations, the Company accounts for individual performance obligations if they are distinct. The transaction price is then allocated to each performance obligation based on its standalone selling price. The Company generally determines standalone selling price based on prices charged to customers.
Stock price history of Peloton (PTON) since their listing
While the stock of Peloton (PTON) has not been listed for very long the image below shows the stock price performance of Peloton (PTON) since their listing.
Next earnings release of Peloton (PTON)
It is expected that Peloton will release their 1st quarter 2021 earnings report in early December 2021
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