A：The key executives mentioned in the conference call are Peloton's Chief Executive Officer and President Peter Stern and Chief Financial Officer Liz Coddington.

A：The core objectives of Peloton, as discussed by the CEO, are to improve member outcomes by enhancing equipment, software, and instruction; meet members where they shop and work out; create members for life by deepening connections; and operate with business excellence to optimize pricing, promotions, and reduce costs.

A：Peloton has made progress in member outcomes by delivering better cardio experiences, developing a holistic wellness ecosystem, and becoming a more personal coach to its members.

A：Peloton's approach to creating a holistic wellness ecosystem includes extending beyond cardio to offer a more comprehensive range of wellness classes and content, which is backed by science and is personalized to members' goals.

A：Peloton has introduced personalized plans tailored to a member's goals, which have been well received and show benefits in terms of increased workout frequency and variety. Peloton plans to iterate on these plans to make them more comprehensive and data-driven.

A：Peloton is meeting members where they are by expanding its presence in commercial gyms through a pilot program with Precor, opening branded facilities, and increasing its retail and online presence, including collaborations with third-party retailers like Amazon for incremental sales.

A：To grow its international markets, Peloton is focusing on translating its programming cost-effectively and launching AI-powered subtitles. The company is translating roughly one new class per day, and it has grown paid connected fitness subscriptions year over year.

A：The results of the repair service improvements included an increase in first visit repair resolution, a decrease in service and repair cycle times, an improved member satisfaction score, and the introduction of AI into call centers for more efficient interactions.

A：New features launched to enhance member engagement included Team Feed, enabling members to encourage and support each other, and community teams which have generated nearly 5000 teams as of Q3.

A：Changes to the leadership team included the recruitment of Charles Kroll to be COO and the designation of Dion Camp Sanders as the chief commercial officer.

A：The company has tracked ahead of its $100 million cost restructuring plan, which has led to a meaningful improvement in profitability and a swift pace in deleveraging the balance sheet.

A：The third quarter results exceeded guidance on key metrics, with an increase in paid connected fitness subscriptions, a decrease in churn, and improvements across revenue, LTV to CAC ratio, and profitability measures.

A：In the third quarter, average net monthly churn was 1.2%, and net additions were positive with a net decrease of 573000 paid app subscriptions, inclusive of Strength plus subscriptions.

A：Advertising and marketing expenses decreased 46% year over year, and the connected fitness products revenue decreased by a comparatively lower rate of 27% year over year, indicating successful marketing strategies.

A：Total revenue was $440 million, with connected fitness products revenue decreasing 27% and subscription revenue decreasing 4%, reflecting the revenue mix shift towards the subscription segment.

A：Gross profit was $318 million, an increase of 8 million or 3% year over year, with a gross margin of 51%, an increase of 788 basis points year over year, due to revenue mix shift and positive growth margin contributions.

A：Total operating expenses, including restructuring and impairment expenses, were $351 million, a decrease of $105 million or 23% year over year, driven by cost savings efforts and efficiencies in various expense categories.

A：Q3 recognized $33 million of impairment and restructuring expenses, of which $31 million was non-cash, primarily due to asset write downs related to plans to right-size portions of the corporate office.

A：In the third quarter, Adjusted EBITDA was $89 million, which was 4 million above the high end of the guidance range and an $84 million improvement year over year. Free cash flow for the third quarter was $95 million, a decrease of Ed Million from the previous quarter but an increase of Ed million year over year. For the fiscal year to date, free cash flow was $21100 million, and the company had ended the quarter with $914 million in unrestricted cash and cash equivalents, an increase of 85 million from the previous quarter.

A：Peloton has made progress toward deleveraging with a reduction of net debt three ly million or Lyn over year to 585 million as of Q3. The trailing 12 month adjusted EBITDA of $334 million reflects an improvement of 4 $35 million year over year. The company's third quarter performance showed a continuation of meaningful profitability improvement driven by higher growth margins and cost discipline, leading to positive adjusted EBITDA and free cash flow for the fifth consecutive quarter.

A：The financial outlook for the remainder of the fiscal year includes updated guidance for key metrics such as ending paid connected fitness subscriptions, total revenue, and adjusted EBITDA, with a maintained total gross margin guidance. The full year FY 25 guidance range for ending paid connected fitness subscriptions is 2.77 to 2.79 million, and for paid app subscriptions, it is 540000 to $550000. The total revenue outlook for full year FY 25 is $2.455 billion to $2.47 billion, and the total growth margin and adjusted EBITDA outlook remain unchanged at Ed and are raised to 330 million to $350 million, respectively.

A：Peloton expects its full year FY 25 free cash flow to be in the vicinity of $2 million, which incorporates a roughly equated free cash flow headwind in Qi from the impact of tariffs. The company's view on free cash flow is that it will continue reducing net debt and deleveraging the balance sheet despite the challenges posed by tariffs.

A：Peloton is incorporating AI to enhance member support by providing an intelligent agent to assist support agents, which improves their efficiency and allows them to focus on delivering a human touch to members. In terms of content translation, AI is enabling the production of classes in languages beyond those naturally spoken by the instructors, thus reaching a broader audience. Additionally, Peloton has launched personalized plans powered by AI, which aids members with creating workout programs.

A：Peloton's current focus for expansion is on growing within the 15 countries where they are already present, such as the UK, Canada, Germany, Austria, and Australia, where their penetration rates are lower than in the U.S. They are concentrating on the right mix of first-party versus partner-led growth and improving customer acquisition efficiency. Once they achieve meaningful scale and profitability, they plan to expand further internationally. They also see opportunities in adjacent markets to their current ones, especially for languages that are already spoken in those regions, and intend to explore these starting next year.

A：The key initiatives at Peloton include reducing operating costs, improving unit economics, acquiring new members more cost effectively, and increasing real cash flow. Progress includes a 14% reduction in operating costs year over year, unit economics up over 100 basis points year over year, and a target zone LTV to CAC ratio. Peloton also set objectives for the remainder of the fiscal year, such as winning market share in Tread and increasing the percentage of new members acquired through Tread sales.

A：The challenges to achieving growth at Peloton include innovating on hardware, meeting members in more retail locations cost effectively, increasing the number of real-life events, and increasing the lifetime value of existing members. Opportunities include these areas of focus, as well as continuing to up-level the quality of member support and creating reasons for members to stay loyal.

A：Peloton is addressing management changes by hiring Charles Kralle as COO to improve the pace of innovation, supply chain agility, product quality, and cost of connected fitness equipment. The company is also focusing on technological debt and is in the process of searching for a CIO. Management changes are aimed at delivering on the company's growth and cost reduction goals.

A：Peloton has seen some softness in sales, but they have since bounced back and feel good about the future. The business is considered resilient due to its subscription nature with high retention and a loyal member base. The company is aware that macroeconomic uncertainty could impact demand for connected fitness hardware sales but has strategies in place such as lower-priced entry options and financing to accommodate price-sensitive customers.

A：To manage through macroeconomic uncertainty, Peloton is leaning into lower-priced entry options such as 0% financing, Peloton certified refurbished bikes, and bike plus rental options. They also have a secondary market for customers to sell their hardware. These strategies are designed to make their products more accessible to price-sensitive customers.

A：Peloton's subscription business is highly resilient with strong retention. The All Access membership price of $44 a month is lower than many monthly gym memberships and individual classes at some boutique fitness studios. Historical GDP data analysis showed that the fitness industry continued to grow during the 2008-2009 economic decline, suggesting that fitness is less likely to be a sector consumers scale back on during tough times due to its value to personal fitness and wellness.

A：The strategies to improve unit economics and return to growth include super serving the member while ensuring product value is optimized, adjusting equipment pricing in North America and internationally, and considering the impact of tariffs. The company has also increased subscription prices in the past, but there are no current plans to make changes; however, they will comment when necessary.

A：The marketing strategy is being reevaluated by taking a holistic look at all aspects of marketing from awareness to customer life cycle, with an emphasis on subscriber acquisition and retention. The team is using sophisticated measurement methods and tools like media mix models and holdout tests to allocate marketing dollars efficiently and to ensure cost-effective member acquisition.

A：Fiscal 25 year-to-date free cash flow was $210 million, outperforming the previous guidance and the company's expectation of a minimum of $200 million for the full year. As a result, the company now expects to generate roughly $250 million in free cash flow for fiscal 25, representing a significant improvement from the prior year and two years ago.

A：The company's free cash flow performance in fiscal 25 was positively influenced by optimizing inventory levels, resulting in a networking capital tailwind. For fiscal 26, while the company expects a modest tailwind, it will not be as significant as in fiscal 2025. Nevertheless, the company anticipates generating meaningful, positive free cash flow in fiscal 26.

A：The company's strategy to return to positive top line trends includes three main components: 1) Improving member outcomes to increase average revenue per member, 2) Meeting members in more places by expanding into retail, gyms, commercial, international, and online, to drive membership growth, and 3) Creating 'members for life' by increasing longevity and reducing churn to enhance customer lifetime value. The company aims to increase the top line by multiplying average revenue per member, number of members, and years per member.

A：The company's balance sheet health has been improved through a $1.35 billion refinancing, resulting in a year-over-year increase of over $435 million in adjusted EBITDA and generation of over $230 million in free cash flow over the past 12 months. The net debt decreased by 312 million or 35% year over year as of Q3, and the company ended the quarter with 914 million in unrestricted cash and cash equivalents.

A：The company is aware of the approximately $200 million in convertible notes due in February but is confident in its ample cash reserves to cover this obligation. Early payment is not currently planned as the notes are 0% coupon. As the balance sheet continues to strengthen, the company may have more optionality regarding capital allocation.

A：The company's top priority is to continue deleveraging to increase optionality in capital allocation and reduce the cost of capital over time. This includes paying down debt, investing in strategic initiatives to grow the business, and potentially pursuing inorganic growth opportunities in the future. Eventually, restrictions from loan covenants permitting, the company may offer capital return alternatives through dividends and share buybacks.

A：The company does not see the total numbers declining at the same rate as the churn of subscriptions. There is consistency in the churn percentage, which has been strong, and the company benefits from the tenure effect due to loyal members. Positive signs include rising Net Promoter Scores (NPS) by double digits over last year, indicating the value delivered to members. The impact of app store members on overall membership and potential churn is also significant, as each subscriber within the app only has one member.

A：The used equipment activation fee is charged when a subscriber joins through the secondary market and purchases hardware from someone else instead of through Peloton or third-party retail partners. The fee adds revenue to the business, providing positive results for the company with slightly improved cohort churn among secondary subscribers due to their investment in the fee.

A：In addition to subscriber revenue, the company's subscription revenue includes content licensing revenue, such as partnerships with brands like Lululemon and music licensing. This diversifies the revenue streams beyond just the subscription fees.