December 7, 2020NEW YORK ○ Revenue from Peloton’s exercise bikes,
treadmills, and services grew to $757.9 million through
September, an increase of 232% from the same period a
year earlier.Foley would like to stress that he’s rooting for an end to the
coronavirus pandemic, just like everyone else. That said,
his business has more than tripled in a year, so he’s trying
to figure out how to keep its hot streak going once gyms
are a thing again.
For the uninitiated, a Peloton stationary exercise bike
comes with a high-resolution touchscreen monitor that
can simulate city streets or mountain paths. What reallydistinguishes it, though, is that the screen can
also pipe in a prerecorded simulacrum of a pro-
fessional spin class or, for $39 a month, let
cyclers check out a wider range of recordings
and join live remote classes, with the instructors
barking motivation. More than 1.3 million Peloton
owners pay the subscription fee, roughly dou-
ble the number from a year ago, the company
says. There’s also a growing base of subscribers
who pay $13 a month to stream classes to their
phone, tablet, or TV in lieu of laying out $1,895 for
Peloton’s go-to bike or significantly more for one
of its treadmills. “Word has gotten out about what
Peloton is and why it’s special,” says Foley, whose
company is now valued at roughly $30 billion.
For much of 2020, the unprecedented demand
for Peloton’s products has collided with the lim-
its of pandemic supply chains, often leaving cus-
tomers griping about weekslong waits for their
bikes. “I think that for a long time we’re going to
be scrambling to increase our capacity,” Foley
says, adding that he hopes to resolve some out-
standing supply issues by April. For now, he says,
the company has slashed its ad spending to avoid
inflating expectations.
Foley shrugs off questions about Peloton’s
stamina and post-pandemic potential, noting that
the company has at least doubled its revenue each
year since its 2012 founding. At the center of his
bullish case is the degree to which Peloton’s pricey
hardware and gamified software can lock custom-
ers into the classes. Why go back to the gym in
2021, the thinking goes, now that you’ve already
got the bike and a digital spin instructor at home?
Indeed, Covid has made converts of tons
of people who swore they’d never spring for a
Peloton, leaving the company’s widely mocked ad
campaign from the 2019 holiday shopping season
a distant memory. Peloton expects to reach close
to $4 billion in annual revenue by the end of the
fiscal year in June. As for whether this is the peak,
he says, “I could see us with 20 or 30 million sub-
scribers in the not-too-distant future.”
Fitness brands like NordicTrack and Echelon have added
guided video instruction to their hardware and are eagerto
carve off some of Peloton’s success. So is Apple Inc., which
has said it will introduce an app with remote fitness classe
by yearend and charge $3 a month less than Peloton. Apple
most relevant hardware, though, is its health-monitorin
smartwatch. And Peloton’s early branding lead is formidabl
The more Peloton customers use their bikes, the morelike
it is that they’ll buy one of the company’s treadmills andcon
vert friends, says Laura Martin, an analyst for Needham& Co
an investment bank and financial adviser. “Thanks to Covid
she says, “Peloton has an eight-month lead.” —Mark GurmaJOHN FOLEY
CEO AND CO-FOUNDER,
PELOTON INTERACTIVE INC.
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