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Peloton Interactive, Inc. (PTON) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

SEC Filings

PTON Quarterly Reports

Peloton Interactive, Inc.

CIK: 1639825 Ticker: PTON

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3Q FY2022 Shareholder Letter

May 10, 2022

Dear Shareholders,

Turnarounds are hard work. It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming. It’s a full-contact sport. That’s why I want to begin this Shareholder Letter with a shout out and sincere thank you to the employees of Peloton who are working hard to make this company successful. I also want to thank our 7 million Members whose passion for Peloton gives meaning and purpose to our work.

Turnarounds also are incredibly stimulating and engaging, the decisions never more consequential, the urgency ever present, the teamwork never more central to the mission.

That’s why I joined team Peloton, all these attributes plus its iconic brand, category leadership, fast growth, recurring revenue model, and for me, highly aligned corporate values and mission.

Ten years ago the launch of the original Peloton Bike introduced the world to the power of connected fitness. Peloton’s growth exploded during Covid when our subscribers grew from 700 thousand to nearly 3 million. Today Peloton is one of the country’s most admired brands, ranking second behind Apple and ahead of Spotify in the Prophet Brand Relevance index published in February 2022. Our users are highly engaged, and our subscriber churn rate is less than 1%, which is the best I’ve seen. The challenge and the opportunity today is to sustain and extend this success. We’ve already solved the hardest problem which is finding product/market fit. That begs the question, what’s next?

My goal for Peloton is to become a global connected fitness platform with 100 million Members. That’s equivalent to roughly half the world’s global gym memberships. It’s a long, long way from where we sit today. But we sit at the epicenter of technology enabled fitness, a long-term secular growth trend. Who doesn’t want to live a healthier, happier, longer life? We will share more about how we plan to participate in that growth in the months and years ahead.

In my experience, companies that don’t know where they’re going generally get there (that's not a typo). I’m determined not to be one of those companies. Connected fitness is a strategic choice. Strategy is always about choice, what to invest in and what not to. You won’t see us investing in or owning something that doesn’t serve our connected fitness strategy.

I’ve been in the CEO role of Peloton since February 9. During those three months I’ve focused on: 1. stabilizing the cash flow 2. getting the right people in the right roles and 3. growing again. We’re making progress on all three priorities.

Stabilizing the cash flow has been an exercise in balance sheet and P&L management.

The balance sheet challenge has been managing inventory. We have too much for the current run rate of the business, and that inventory has consumed an enormous amount of cash, more than we expected, which has caused us to rethink our capital structure (more on this in a moment). Fortunately, the obsolescence risk is negligible, and we believe the inventory will sell eventually, so this is primarily a cash flow timing issue, not a structural issue.

The other piece of good news is that Andy Rendich, our new head of supply chain, has the skills to manage our supply chain issues and, with the help of new Peloton BOD member Angel Mendez, is making great strides in getting this aspect of our business under control.

There likely will be other talent additions across the org in the coming months, particularly as we shift our focus from being hardware to software centric. Talent density is job one if we expect to perform at a high level, and we do. Building on our existing strengths is the goal, but, to be clear, I believe there is a solid foundation of talent at Peloton to build on.

Some of the challenges we face are systems related (there is substantial tech debt, not uncommon among successful fast-growing businesses) which tax our productivity and speed of decision making, as well as our speed of execution. And some of
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The following information was filed by Peloton Interactive, Inc. (PTON) on Tuesday, May 10, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Peloton Interactive, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2022 10-K Annual Report includes:

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  • Executive Team
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Inside Peloton Interactive, Inc.'s 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Cover Page
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (Parenthetical)
Condensed Consolidated Statements Of Cash Flows
Condensed Consolidated Statements Of Operations And Comprehensive (Loss) Income
Condensed Consolidated Statements Of Stockholders??? Equity
Acquisitions
Acquisitions - Narrative (Details)
Commitment And Contingencies (Tables)
Commitments And Contingencies
Commitments And Contingencies - Minimum Guarantee Royalty Payments Due (Details)
Commitments And Contingencies - Narrative (Details)
Debt
Debt (Tables)
Debt - Amended And Restated Credit Agreement (Details)
Debt - Components Of Convertible Debt (Details)
Debt - Convertible Notes And Indenture (Details)
Description Of Business And Basis Of Presentation
Equity-Based Compensation
Equity-Based Compensation (Tables)
Equity-Based Compensation - Narrative (Details)
Equity-Based Compensation - Summary Of Fair Value Assumptions (Details)
Equity-Based Compensation - Summary Of Restricted Stock And Restricted Stock Units (Details)
Equity-Based Compensation - Summary Of Sock-Based Compensation Expense (Details)
Equity-Based Compensation - Summary Of Stock Options Outstanding (Details)
Equity-Based Compensation - Summary Of Unvested Stock Option Activity (Details)
Fair Value Measurements
Fair Value Measurements (Tables)
Fair Value Measurements - Narrative (Details)
Fair Value Measurements - Other Financial Instruments (Details)
Goodwill
Goodwill (Tables)
Goodwill - Narrative (Details)
Goodwill - Schedule Of Changes In Carrying Value Of Goodwill (Details)
Income Taxes
Income Taxes - Narrative (Details)
Inventories
Inventories (Details)
Inventories (Tables)
Net (Loss) Income Per Share
Net (Loss) Income Per Share (Tables)
Net (Loss) Income Per Share - Narrative (Details)
Net (Loss) Income Per Share - Schedule Of Computation Of Basic And Diluted Net (Loss) Income Per Share (Details)
Net (Loss) Income Per Share - Schedule Of Potentially Diluted Securities Not Included In Calculation Of Diluted Shares Outstanding (Details)
Restructuring
Restructuring (Tables)
Restructuring - Narrative (Details)
Restructuring - Schedule Of Restructuring Charges (Details)
Restructuring - Schedule Of Restructuring Related Liabilities (Details)
Revenue
Revenue (Tables)
Revenue - Disaggregation Of Revenue (Details)
Revenue - Narrative (Details)
Revenue - Standard Product Warranty (Details)
Segment Information
Segment Information (Tables)
Segment Information - Reconciliation Of Segment Gross Profit To Consolidated (Details)
Segment Information - Schedule Of Key Performance Measures By Segment (Details)
Stockholders' Equity
Stockholders' Equity (Details)
Subsequent Events
Subsequent Events (Details)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (Details)
Summary Of Significant Accounting Policies (Policies)

Material Contracts, Statements, Certifications & more

Peloton Interactive, Inc. provided additional information to their SEC Filing as exhibits

Ticker: PTON
CIK: 1639825
Form Type: 10-Q Quarterly Report
Accession Number: 0001639825-22-000069
Submitted to the SEC: Tue May 10 2022 9:36:34 AM EST
Accepted by the SEC: Tue May 10 2022
Period: Thursday, March 31, 2022
Industry: Electronic And Other Electrical Equipment No Computer Equip

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