On August 6, Peloton Interactive (NASDAQ:PTON) reported results for its fiscal fourth quarter and full year ended June 30, and the headline number is one the company has chased for years: a full year of positive net income. Total revenue for fiscal 2026 came in at $2.446 billion, and quarterly revenue of $608 million ticked up $1 million from a year earlier. The bigger story sits beneath the top line, in a business that finally converted cost cuts into cash while its subscriber base kept shrinking.
A Balance Sheet Finally Working For Peloton
Fiscal 2026 marked the first time in Peloton’s history that the company posted positive net income and operating income for a full year, with GAAP net income landing at $63 million. Adjusted EBITDA rose 16% year over year to $468 million, even after absorbing a $23.8 million nonrecurring legal accrual tied to patent litigation in the fourth quarter. Free cash flow climbed to $378 million, up $54 million, and management used that cash to cut net debt by 80% to just $93 million from $459 million a year earlier. CEO Peter Stern credited the turnaround to an improved revenue trajectory paired with cost restructuring, and the company said it exceeded its own target of more than $100 million in run-rate savings by the end of the fiscal year.
Growth is showing up outside the core bike and treadmill business too. The Commercial Business Unit grew revenue by double digits for the year, Peloton expanded its digital footprint through a partnership with Spotify, and it closed the acquisition of Skōp to push further into connected Pilates. Microstores beat their internal sales goals as an efficient in-person retail channel, and Peloton plans to double that store fleet in fiscal 2027. New training programs also drove engagement, with the Pace Your Race Marathon Training Program and a Live Spring Cross-Training Plan generating more than 850,000 completed workouts in the fourth quarter alone.
The Subscriber Problem Has Not Gone Away
The profitability story cannot hide what is happening to the customer base. Ending Paid Connected Fitness Subscriptions fell 8.8% year over year to 2.553 million, and monthly churn rose to 2.2% in the fourth quarter from 1.8% a year earlier. Hardware sales are choppy too. Connected Fitness Products revenue dropped 14% year over year in the quarter to $171 million, and gross margin on that hardware segment swung to 13.4% from 17.3% a year ago before recovering some ground quarter over quarter. Peloton’s own guidance signals the subscriber slide is not over.
The company expects Ending Paid Connected Fitness Subscriptions to fall another 9.8% at the midpoint in the first quarter of fiscal 2027, and full-year fiscal 2027 revenue guidance of $2.3 billion to $2.4 billion represents a 3.9% decline at the midpoint. Total debt still sits at $1.3 billion, and while net debt has come down sharply, the company is managing that load while its core subscription base keeps contracting.
Wall Street Weighs A Cheaper, Smaller Peloton
Hedge fund ownership fell from 55 funds to 49 in the most recent quarter, a pullback that lines up with a subscriber base still shrinking. Short interest sits at 14.58% of float, a level that reflects real, organized skepticism rather than routine hedging. Against that backdrop, the stock trades at a forward P/E of just 4.55, a multiple that prices in very little future growth. That combination suggests that the market is treating Peloton’s profitability turn with real suspicion rather than rewarding it outright.
Where Peloton Goes From Here
Peloton has proven it can turn cost discipline into cash, cutting net debt by 80% and posting its first profitable full year. That is a real structural change from the company that was burning cash a few years ago. But the core subscriber engine that built Peloton’s valuation in the first place keeps contracting, and management’s own guidance points to more of the same in fiscal 2027. For the bull case to hold, the newer bets like commercial fitness, Precor, microstores, and Pilates need to grow fast enough to offset a shrinking home fitness base.
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