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United States securities and exchange commission logo
March 20, 2024
Elizabeth Coddington
Chief Financial Officer
Peloton Interactive, Inc.
441 Ninth Avenue, Sixth Floor
New York , New York, 10001
Re: Peloton
Interactive, Inc.
Form 10-K for the
Fiscal Year Ended June 30, 2023
File No. 001-39058
Dear Elizabeth Coddington:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended June 30, 2023
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Non-GAAP Financial Measures
Adjusted EBITDA, page 57
1. Please address the
following comments related to your Adjusted EBITDA presentation:
Provide us with
additional information regarding the "Supplier settlements"
adjustment,
including the nature and key terms of the underlying agreements. Clarify
if you enter into
purchase agreements with all material suppliers and if settlement
terms and amounts
are stipulated in your contracts or separately negotiated on an as
needed basis.
We note your
disclosure on page 56 regarding the nature of the "Litigation and
settlement expense"
items considered "outside of the ordinary course of business."
Provide us with
additional information regarding the nature of the items included in
this adjustment for
all periods presented. Specifically address how you determined
Elizabeth Coddington
FirstName LastNameElizabeth Coddington
Peloton Interactive, Inc.
Comapany
March NamePeloton Interactive, Inc.
20, 2024
March2 20, 2024 Page 2
Page
FirstName LastName
that all components, such as patent infringement and consumer
arbitration
matters, are outside the ordinary course of your business. Also
clarify how you assess
and segregate items for classification between the litigation
adjustment and the
product recall adjustment.
In regards to your "Product recall related matters" adjustment,
provide us with
a history of any material product recalls and explain how you
determine which
product recall costs to include. If all costs related to product
recalls have been
removed in your non-GAAP presentation for all periods presented,
tell us how you
determined such treatment was appropriate. Specifically address
why you believe it is
appropriate to exclude revenue adjustments related to actual and
estimated returns.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Cost of Revenue, page 77
2. We note that classify costs associated with content creation within
subscription cost of
revenues. Citing authoritative accounting guidance, please tell us and
disclose, to the
extent applicable, your accounting policy for content creation costs,
including the criteria
for capitalization and amortization lives and methods.
3. Revenue, page 81
3. Please address the following comments related to your revenue
recognition policies and
disclosures:
We note your disclosure on page 82 that you offer customers the
option to purchase
third-party extended warranty and service contracts that are
recognized on a gross
basis over the extended warranty coverage period. Please tell us
how you considered
the guidance in ASC 606, including ASC 606-10-55-36 through -40,
in determining
that the revenues should be recognized on a gross basis over time
as opposed to on a
net basis at the time the contracts are sold. In doing so,
describe to us the
pertinent terms of and parties involved with these extended
warranties, including the
nature of any third-party insurance companies, underwriters
and/or administrative
firms.
Tell us the amount of warranty and service revenues recognized
during the periods
presented and the consideration you gave to disclosing such
amounts pursuant to
ASC 606-10-50-5 and/or ASC 280-10-50-40. To the extent that
warranty revenues
contributed disproportionately, and materially, to your income
compared to your
other revenue streams, please advise.
12. Debt, page 91
4. Considering your Term Loan is interest-bearing, tell us why the
interest expense table on
Elizabeth Coddington
Peloton Interactive, Inc.
March 20, 2024
Page 3
page 94 does not reflect interest related to your borrowing rates.
13. Commitments and Contingencies
Legal and Regulatory Proceedings, page 95
5. We note your disclosure that there can be no assurance that your legal
proceedings, either
individually or in the aggregate, will not have a material adverse
effect on your business,
results of operations, financial condition or cash flows. To the
extent it is reasonably
possible you will incur losses in excess of recorded accruals related
to your contingencies,
please provide the applicable disclosures required by ASC 450-20-50-3
through -4,
including the amount or range of reasonably possible losses in excess
of recorded
amounts. If an estimate of reasonably possible additional losses can
be made and that
amount, both for each individual matter and in the aggregate, is not
material to your
consolidated financial position, results of operations or cash flows,
we will not object to a
statement to that effect. Alternatively, if no amount of loss in
excess of recorded accruals
is believed to be reasonably possible, please state this in your
disclosure. Although we
recognize that there are a number of uncertainties and potential
outcomes associated with
loss contingencies, please note that ASC 450 does not require
estimation of a reasonably
possible range of loss with precision or certainty.
15. Equity-Based Compensation, page 97
6. Please provide the disclosures required by ASC 718-10-50-2(a)(1-2) for
all stock-based
awards.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Please contact Charles Eastman at 202-551-3794 or Andrew Blume at
202-551-3254 with
any questions.
FirstName LastNameElizabeth Coddington Sincerely,
Comapany NamePeloton Interactive, Inc.
Division of
Corporation Finance
March 20, 2024 Page 3 Office of
Manufacturing
FirstName LastName