The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, a lot that's changed over the past year. If we zoom forward a few years from today, interested to hear what's your vision
for what Peloton can become?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, if we bring it back to the present. I think the first step along that vision was the launch of your new cross-training series
and Peloton IQ. I guess what do you feel has been most impactful from the wide variety of updates that you announced? And how has the
early consumer receptivity been?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, despite all that positivity, new product has only been in the market for about two months. So it's still very early. So I guess,
how long is the traditional consideration cycle for your products? And we just got past the critical Black Friday and Cyber Monday selling
season. I guess, any early reads in performance there?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Well, that's great color. And along with all of the product changes you've made, you also increased subscription pricing, but encouragingly
guided to churn flat for the full year. I guess what have been the key drivers that have kept churn in check? And then how has churn compared
to the prior price increase?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, shifting over to distribution. You've been expanding in physical with a growing micro store footprint and various retail
partnerships. How are you thinking about the optimal mix between digital channels and physical presence over the next, let's call it, two,
three years? And what's the path to get there?
LSEG STREETEVENTS | www.lseg.com | Contact Us
consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.
DECEMBER 03, 2025 / 6:30PM, PTON.OQ - Peloton Interactive Inc at Morgan Stanley Global Consumer
& Retail Conference
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, one more on Peloton IQ, certainly a big part of the release two months ago. You already talked about some of the really
encouraging early adoption metrics and engagement patterns. I guess how does this impact your thinking on forward software development
priorities?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Well, a lot of encouraging stuff on the revenue side. Let's switch over to profitability. The company has really made remarkable
progress rightsizing the cost base over the past two years. Do you see additional opportunities to remove costs from the business? And if
so, where?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Well, on gross margin, you mentioned in the last call that you expect 2Q Connected Fitness gross margins to improve, at least as
compared to 1Q. What's driving that? Is it related to the new product line? And long term, where do you think Connected Fitness gross
margin can land?
Question: Nathan Feather - Morgan Stanley - Analyst
: Well, over the past two years, marketing has been another key area we've been able to find efficiencies with LTV to CAC rebounding off
lows. That being said, you're still seeing net subscriber attrition. What needs to happen for you to stabilize the sub base while maintaining
LTV to CAC in the targeted 2 to 3x range?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Now one of the company's other priorities in the past few years has been deleveraging in the balance sheet. With the prepayment
premium on your $1 billion term loan expiring in May, it sounds like you're going to be evaluating your potential options. I guess what's the
potential time line if you do decide to restructure the current debt load?
LSEG STREETEVENTS | www.lseg.com | Contact Us
consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.
DECEMBER 03, 2025 / 6:30PM, PTON.OQ - Peloton Interactive Inc at Morgan Stanley Global Consumer
& Retail Conference
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. And if you do refinance and have less restrictions on the use of cash in the balance sheet, how might you outline a potential
capital allocation framework? Could we see potentially some return to shareholders?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, two more for me. First, you recently changed your executive compensation structure to be more performance weighted.
Can you talk about the changes there? And then more broadly on the company's tighter control of stock-based compensation? How does
this align with potential capital allocation framework you mentioned earlier?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Well, this has been a great conversation, Peter. Let's wrap it up with one final thing. What are the one or two pieces you think investors
most underappreciate about the Peloton story?
Question: Nathan Feather - Morgan Stanley - Analyst
: Okay. Great. Well, thank you so much for being here.
| 
