Peloton Navigates Challenges with AI…

In its Q3 2025 earnings announcement, Peloton reported that it is not overly concerned about tariffs, emphasizing its status as “primarily a subscription business.” The company did, however, recognize that broader economic uncertainties might affect interest in its premium bikes and treadmills.

CFO Liz Coddington pointed out on the earnings call that data from the GDP decline of 2008-2009 indicated that consumer spending on fitness increased during that period. This suggests resilience within the fitness sector against external economic pressures. “Simply put, consumers are less likely to cut back on fitness expenses in tough times,” she added, highlighting that the majority of Peloton’s revenue stems from its loyal subscriber base.

In its shareholder letter, Peloton elaborated on how tariffs affect its operations. The company faces a 25 percent tariff on its hardware due to aluminum usage, along with potential tariffs on its apparel sourced from China. As a result, Peloton anticipates about $5 million in challenges to its free cash flow in Q4.

Despite playing down the tariff impact, Peloton’s products are not the most affordable on the market. Coddington emphasized the company’s zero percent interest financing options, a bike rental initiative, and the availability of lower-priced refurbished models. Additionally, CEO Peter Stern mentioned that Peloton has partnered with repair services to introduce dedicated vans stocked with spare parts to enhance customer satisfaction. He also announced the appointment of Charles Kirol as the new Chief Operating Officer, who will focus on improving supply chain logistics and cost management.

Stern noted that the company is reassessing its pricing strategies in light of tariff impacts. Regarding subscription pricing, he did not provide specifics but mentioned that it has been nearly three years since the last increase.

Overall, Peloton reported a decline in hardware sales by 27 percent year-over-year and a four percent dip in subscription revenue for the same period. Nonetheless, the company has slightly raised its revenue outlook from $247.6 million to $247.7 million.

Additionally, Stern took time to discuss how AI technology could enhance customer satisfaction and operational efficiency. “AI can empower our team, and that’s how we’re integrating it into our processes,” he stated. He explained that customer support staff now utilize an AI agent for note-taking during calls and that Peloton has begun employing AI for class subtitling, successfully translating 3,300 classes in Q3, with plans to translate approximately 100 classes per day.

Stern also mentioned that Peloton is implementing Google Gemini across its teams to enable them to focus on innovative ideas. The company is using AI to create personalized fitness plans, enhancing the experience by allowing human instructors to customize programs that feel more personal. Launched in Q3, this initiative has already seen half a million personalized plans created.

“The future looks promising for Peloton members with AI,” he affirmed.</