Peloton CEO Barry McCarthy Exits Amid New Round of Layoffs

One year after a massive rebrand that hasn’t yet gone according to plan, the connected fitness giant is now on the hunt for a new leader

The search is underway for Peloton’s third CEO following news that Barry McCarthy is stepping down and will transition to a strategic advisor role through the remainder of the year. Peloton also announced significant layoffs as part of a cost-cutting strategy. Shares of PTON jumped nearly 9% Thursday morning in response.

The news comes as Peloton announced its Q3 2024 earnings, reporting total revenue of $717.7 million in the quarter ($279.9 million of connected fitness revenue and $437.8 million of subscription revenue) — a decline from $748.9 when compared to Q3 2023. 

The connected fitness company is laying off approximately 15% of its employees, impacting roughly 400 Peloton team members, as part of a restructuring strategy to reduce annual expenses by over $200 million. Peloton will also continue to close its retail showrooms, it said.

“You’ve often heard me talk about the importance of dealing with the world as it is and not as we want it to be. This is one of those moments,” McCarthy wrote in a letter to Peloton team members. “Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue.”

McCarthy has led the connected fitness company since the beginning of 2022, succeeding Peloton founder John Foley. A former Spotify and Netflix exec, McCarthy set out to revitalize the fitness brand and return it to its glory days of at-home fitness.

While Peloton embarks on a quest to find its next leader, Karen Boone, current Peloton chairperson, and Chris Bruzzo, a Peloton director, will serve as interim co-CEOs. 

credit: Peloton

Peloton ended the quarter with 674,000 paid app subscriptions, a net reduction of 44,000 in the quarter. As for its paid app subscriptions, Peloton saw a net increase of 52,000 in the quarter, ending Q3 with 3.06 million paid connected fitness subscriptions.

For its full-year outlook, Peloton is lowering its paid connected fitness subscriptions by 30,000 and its paid app subscriptions by 150,000. Peloton quietly ended its unlimited free app membership program earlier this month after the program failed to convert enough users into paid subscribers.

Peloton Bike rentals continue to show promise, with new rentals up 10% year-over-year. The connected fitness company also says it plans to “reimagine” its international go-to-market approach. 

Peloton and Hyatt announced this week that they’ve partnered to bring in-room video content and Peloton equipment to Hyatt properties so travelers could earn World of Hyatt points for using Peloton’s hardware during their stay.

Despite McCarthy’s efforts to course-correct Peloton over the last two years, the COVID-era darling has struggled to find its identity post-pandemic as fitness consumers return to the gym and in-person workouts in large numbers. BowFlex, which filed for bankruptcy in March before being sold to Johnson Health Tech Retail, has also been a casualty of the at-home fitness boom gone bust. 

Following a massive rebrand last year in an attempt to be viewed as more than just a Bike company, Peloton has led numerous experiments as it seeks to away from hardware sales in favor of fitness content on its app. The brand attempted a collegiate strategy that didn’t pan out, forged a partnership with Lululemon that seems to have been forgotten and tapped TikTok in a bid to appeal to the social media app’s young users. The latter partnership is showing promise, Peloton representatives have told Athletech News.

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