Peloton experienced massive growth during the COVID-19 lockdowns, reaching record-high sales, subscriptions, and stock value. Despite being founded just seven years earlier, it quickly became a pandemic-era success story.
However, the momentum didn't last forever. As restrictions eased and gyms reopened, the demand for at-home workout equipment declined sharply, causing Peloton's business to struggle since 2021.
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To rebound from these alarming declines and stabilize its business, the company has aggressively reduced costs.
In fiscal 2025, Peloton cut overall expenses by 25%, scaling back spending on sales, marketing, research and development, and administrative functions. It also closed 24 of its 37 retail showrooms, shrinking its physical footprint to 13 locations by the end of the fourth quarter.
Related: Peloton CEO believes cost-cutting can help reverse slide
Last year, Peloton took even more drastic steps by laying off around 15% of its global workforce to align its spending with its revenue.
The cost-cutting continued into the fourth quarter of fiscal 2025, during which the company trimmed expenses by 20% and slashed its debt by 43%.
Image source: Peloton Interactive, Inc.
Peloton posts profit but faces ongoing declines
After months of budget restructuring and layoffs, these efforts have begun to show improvements in Peleton's business.
Peloton (PTON) beat analysts' expectations and its own in its latest quarter, reporting a net income of $21.6 million, compared to a loss of $30.5 million the year prior. However, rebuilding a multi-million-dollar business is no easy task, and challenges remain.
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The company's total revenue dropped 6% year over year, driven by lower sales and deliveries, with Paid Connect Fitness Subscriptions decreasing 6%.
While Peloton has been progressing towards stability, these results show that more cuts are necessary to keep its business alive, which led it to make another difficult decision.
Peloton announces more layoffs to reduce costs
Peloton announced it will lay off around 6% of its workforce as part of its restructuring plan to minimize costs, as the expenses have begun to take a toll on the company's ability to invest in its future.
“Our operating expenses remain too high, which hinders our ability to invest in our future,” Peloton wrote in its shareholder letter. “Today, we are launching a cost restructuring plan intended to achieve at least $100 million of run-rate savings by the end of FY26 by reducing the size of our global team, paring back indirect spend, and relocating some of our work.”
Related: Peloton creates new way for consumers to get cheaper equipment
This move aligns with a wave of recent layoffs in the U.S.
According to Challenger, Gray & Christmas, 62,075 jobs were cut in July, up 29% from June and 140% higher than last year. So far this year, companies have announced over 806,000 job cuts, the highest since July 2020.
Peloton ended its letter stating, “This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business.”
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