Peloton’s gamble on expensive new hardware has yet to pay off

Last fall, new Peloton CEO Peter Stern made a bet. The company announced a complete refresh of its entire hardware lineup, complete with swivel screens and AI-powered features. Today, the initial results of Stern’s bet are in. In its Q2 2026 earnings call, Stern noted that the hardware refresh hasn’t landed with existing Peloton users, resulting in weaker-than-expected holiday sales during what’s usually Peloton’s strongest quarter. As a result, Peloton stocks fell roughly 20 percent this morning.

Peloton also announced that chief financial officer Liz Coddington would be leaving at the end of March. Last week, the company announced yet another round of layoffs, cutting 11 percent of its staff from its engineering and enterprise efforts.

The Cross Training series launched in October and included a new Bike, Bike Plus, Tread, Tread Plus, and Row Plus that added swivel screens, cameras for AI-powered strength training feedback, fans, and cushier seats. The new Peloton IQ features also included real-time form correction, analysis, and AI-generated workout routines. However, Peloton also raised prices of the new hardware with the Tread Plus reaching a whopping $6,695. The company also hiked up subscription prices.

“Our installed base of equipment is quite durable and member satisfaction is extremely high,” Stern said on the call. “We believe these factors contribute to a longer upgrade cycle than we had anticipated.”

Stern went on to note that sales to new Peloton users met expectations. He also stressed that existing Peloton users did buy new categories of hardware from the Cross Training series (e.g., Bike owners buying a treadmill or rower). He also noted that the company views Peloton IQ as a success, saying 46 percent of users have engaged with the features since rollout.

Although Peloton users are loyal, many were displeased with the Cross Training series rollout. Several reached out to The Verge to say they were disappointed the company offered no trade-in program to upgrade their existing equipment. That was further exacerbated when users found instructions for swapping out old screens in the self-install kit for the Cross Training series and some users felt this was the company squeezing them for more money.

It wasn’t all bad news, however. Despite the increase in subscription price and some initial cancellations, Peloton said that churn was lower than expected for the period. That said, total revenue fell 3 percent year over year at $657 million, with both hardware and subscription sales falling short of expected targets.

Even so, Stern spent the earnings call determined to paint Peloton’s improvements in operational costs and prioritizing future profitability. In that vein, Stern emphasized that Peloton isn’t a fitness company anymore but a wellness one. That means doubling down on partnerships with lifestyle brands like Respin, focusing on menopause-related wellness content, as well as expanding strength training efforts. Regarding the latter, Stern identified heightened demand for strength training as dovetailing with increased adoption of GLP-1 medications, which are known to cause muscle loss.

“Fitness and wellness isn’t a quarterly goal for our members, and it shouldn’t be for our business either,” Stern said. He ended the call urging analysts and investors to try Pilates and kettlebell classes.