Peloton Interactive, Inc. announced its fiscal second quarter 2025 results, reporting a net loss of $92 million, an improvement from a $195 million loss in the prior year. Sales for the quarter were $674 million, a decrease of 9% year-over-year, but exceeded analyst estimates of $654 million. The company achieved $58.4 million in adjusted EBITDA, more than double the $26.7 million expected by analysts.
Operating expenses were significantly reduced by 25% compared to the year-ago period, with sales and marketing costs down 34%, general and administrative expenses down 18%, and research and development spending down 25%. Connected Fitness gross margin reached 12.9%, marking the first time it achieved double digits in over three years. The seasonal partnership with Costco drove more Bike+ sales than any other third-party retailer during the holiday quarter.
Peloton raised its full-year fiscal 2025 adjusted EBITDA guidance to a range of $300 million to $350 million, an increase from the previous range of $240 million to $290 million. The company also increased its free cash flow target to at least $200 million, up from $125 million. Full-year revenue is projected to be between $2.43 billion and $2.48 billion.
For the fiscal third quarter 2025, Peloton anticipates revenue between $605 million and $625 million. Adjusted EBITDA for the third quarter is projected to be between $70 million and $85 million, exceeding Street estimates of $50.4 million. Connected Fitness Subscriptions stood at 2.88 million, a 4% decline year-over-year, while Paid App subscriptions were 579,000, a 19% decrease year-over-year.
CEO Peter Stern, in his first earnings call, emphasized that improving gross margins, reducing operating costs, and deleveraging the balance sheet are top priorities for fiscal 2025. He stated that the company is setting the stage for future growth by focusing on unit economics and right-sizing costs. Subscription churn improved to 1.4% from 1.9% in the previous quarter.
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