Peloton Loses Money on Equipment, Shifts Focus to App

Peloton is losing money on its exercise equipment, but CEO Barry McCarthy is not phased.

According to CNBC, in the second quarter of 2023, Peloton lost $42.8 million on its connected fitness products resulting in the company’s division’s gross margin being negative 11.2%.

However, despite the negative margins, McCarthy is focusing on the positive aggregate margins produced by Peloton’s subscription revenue. “We take a holistic view of the revenue stream and the expenses associated with both the hardware and the subscription associated with it. So from my part, I don’t particularly care about the hardware margin,” McCarthy declared during an earnings call for the company.

The fact that subscription sales exceeded the company’s equipment sales for three consecutive quarters means it could be a possible “turning point,” McCarthy told CNBC.

The Peloton app, described by McCarthy as “its own endgame,” does not require any Peloton equipment and starts at $12.99 per month. The app compares to the company’s all-access membership that can be used on the connected fitness equipment and costs $44 a month.