UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
_______________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 10, 2020
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Peloton Interactive, Inc.
(Exact name of Registrant as Specified in Its Charter)
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| Delaware | 001-39058 | 47-3533761 | ||||||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
125 West 25th Street, 11th Floor New York, New York | 10001 | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s Telephone Number, Including Area Code: (866) 679-9129
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_______________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
| Class A Common Stock, $0.000025 par value per share | PTON | The Nasdaq Stock Market LLC | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 2.02 Results of Operations and Financial Condition.
On September 10, 2020, Peloton Interactive, Inc. (“Peloton” or the "Company") will hold a conference call regarding its financial results for the year ended June 30, 2020. Peloton also issued a letter to its stockholders announcing its financial results for the year ended June 30, 2020 (the “Shareholder Letter”). A copy of the Shareholder Letter is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished with this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Peloton is making reference to non-GAAP financial information in both the Shareholder Letter and the conference call. A reconciliation of GAAP to non-GAAP results is provided in the Shareholder Letter, as attached to this Current Report on Form 8-K.
Peloton uses its Investor Relations website (https://investor.onepeloton.com/investor-relations) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Exhibit Title or Description | |||||||
| 99.1 | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PELOTON INTERACTIVE, INC. | ||||||||
| Date: September 10, 2020 | By: | /s/ Jill Woodworth | ||||||
| Jill Woodworth | ||||||||
| Chief Financial Officer | ||||||||
Q4 2020 SHAREHOLDER LETTER
PELOTON INTERACTIVE, INC. FOURTH QUARTER & FY 2020 HIGHLIGHTS All financial comparisons are on a year-over-year basis unless otherwise noted. • Q4 and FY 2020 ending Connected Fitness Subscriptions • Q1 FY 2021 guidance: grew 113% to over 1.09 million and paid Digital – 1.32 million to 1.33 million ending Connected Fitness subscriptions grew 210% to over 316,800; total Members Subscriptions, growth of 135% at the midpoint grew to approximately 3.1 million – Average Net Monthly Connected Fitness Churn • Q4 total revenue grew 172% to $607.1 million; FY 2020 under 0.75% total revenue grew 100% to $1.8 billion – $720 million to $730 million total revenue, 218% • Connected Fitness Subscription Workouts grew 333% in growth at midpoint Q4 to over 76.8 million, averaging 24.7 Monthly Workouts per Connected Fitness Subscription, versus 12.0 in the – Gross Profit Margin of approximately 41% same period last year – $80 million to $90 million Adjusted EBITDA, 11.7% • Average Net Monthly Connected Fitness Churn was 0.52% Adjusted EBITDA Margin at the midpoint for Q4 and 0.62% for FY 2020; Q4 12-month retention rate was 92% • Full year FY 2021 guidance: – 2.05 million to 2.10 million ending Connected Fitness • Q4 Gross Profit Margin grew to 47.6%; Connected Fitness Subscriptions, growth of 90% at the midpoint Gross Margin was 45.3%, Subscription Gross Margin was 56.8%, and Subscription Contribution Margin was 64.1% – Average Net Monthly Connected Fitness Churn under 1.00% • Q4 Net Income was $89.1 million, $0.27 per diluted share; Q4 Adjusted EBITDA was $143.6 million, representing an – $3.50 billion to $3.65 billion total revenue, Adjusted EBITDA Margin of 23.7% 96% growth at midpoint – Gross Profit Margin of approximately 41% – $200 million to $275 million Adjusted EBITDA, 6.6% Adjusted EBITDA Margin at the midpoint CONNECTED FITNESS SUBSCRIPTIONS QUARTERLY TOTAL REVENUE 607.1 1,200 1,091 600 524.6 466.3 1,000 886 500 800 712 400 316.7 563 600 511 300 262.9 457 223.3 228.0 400 362 200 277 112.1 200 100 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2019 FY 2020 FY 2019 FY 2020 (in thousands) (in $ millions) QUARTERLY WORKOUTS AVG. MONTHLY WORKOUTS PER SUB 24.7 100,000 25 76,817 80,000 20 17.7 60,000 44,155 15 13.9 12.6 40,000 12.0 11.7 24,345 9.7 17,988 17,759 19,171 8.9 20,000 10 7,069 9,336 0 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2019 FY 2020 FY 2019 FY 2020 (in thousands) PELOTON Q4: 2020 | 2
Peloton Shareholders, As our global communities continue to battle the COVID-19 pandemic, we remain incredibly appreciative of the tireless efforts of all first responders, local health officials, and essential workers focused on the safe re-opening of our economy. We’re proud to play an important part in our Members’ lives during this time by providing a platform where our Members can maintain their physical and mental well-being, while we continue to expand the breadth of our content offering and broaden access to the Peloton platform. FY 2020 was a transformative year for Peloton. We made great progress in scaling our business, from manufacturing and logistics, to member support and field operations. We launched operations in Germany, our first foreign language market, and continued to grow our footprint in the United States, Canada, and the United Kingdom. By the end of FY 2020 our Peloton membership base grew to approximately 3.1 million, compared to 1.4 million Members in the prior year. Fueled in part by the challenges associated with COVID-19, Member engagement reached new highs with 164 million Connected Fitness Subscription workouts completed in FY 2020. PELOTON Q4: 2020 | 3
In FY 2020, we expanded our fitness and wellness content offerings in strength, yoga, meditation, and new floor-based categories such as Fit Family and Dance Cardio. Our Member engagement levels continued to increase in FY 2020 in part due to our Members’ use of floor-based content, led by Strength classes which posted the most significant year-over-year gains. In addition to broadening our content, we also improved the accessibility of our platform through our Digital offering. Paid Peloton Digital subscriptions grew 210% year-over-year as we reduced the price of Peloton Digital to $12.99 and extended our Digital free trial period to 90 days during March and April to give access to high-quality fitness content to those sheltering in place. With the goal of being on every screen in your hand and in your home, we launched integrations with the four leading over-the-top TV platforms including Amazon Fire TV, Android, Apple TV, and Roku. PELOTON Q4: 2020 | 4
OPERATIONS SHOWROOMS SIGNIFICANT CONSTRUCTION On June 15, 2020, we began re-opening select PROJECTS showrooms in the United States, United Following COVID-19 related delays, we have Kingdom, and Canada, following the re-opening resumed construction of our new headquarters of our German stores in late May. Our re-opening in New York City and our 11 Floral Street Studio schedule has been guided by state, local, and in London. Both are expected to be completed municipal guidelines and is accompanied by in Spring 2021. Our Floral Street Studio will extensive safety training for our retail team have three production studios, allowing us to members and stringent cleaning practices. significantly increase production of floor content To date, nearly all 103 showroom locations as well as foreign language classes for our have resumed normal operations or are taking growing community of Members in Europe. Lastly, customer appointments. we expect our new manufacturing plant located in Shin Ji, Taiwan to be completed by the end of this calendar year. The additional factory at Tonic will provide us with significant additional production capacity, helping us scale over the next few years. Showroom in Berlin, Germany PELOTON Q4: 2020 | 5
CONNECTED FITNESS PRODUCT a 24” touchscreen with a powerful built-in and PORTFOLIO EXPANSION integrated soundbar and subwoofer system as Earlier this week we announced an exciting well as ergonomic pace and incline control knobs new addition to our category-leading bike with jump buttons. With an immersive audio offering: Bike+. Offered at $2,495, Bike+ builds and video experience and heart rate monitor on our groundbreaking connected fitness bike integration, Peloton Tread is designed for both experience by offering a new 24” touchscreen on-Tread as well as floor-based bootcamp with a powerful built-in and integrated soundbar content. Peloton Tread will be available in the and subwoofer system. The 360-degree rotating United Kingdom starting December 26th, in the display allows Members to easily pivot and tilt United States and Canada starting early 2021, the screen adding strength, yoga, or stretching to and in Germany later in 2021. their routine or take our new Bike Bootcamp class series. Resistance on Bike+ is controlled digitally so Members can “Auto Follow” instructors’ class programs and control resistance from the touchscreen. In conjunction with the new Bike+ introduction, we reduced the price of our existing Bike to $1,895 (now $49 per month with our 39-month financing plan), broadening accessibility to the Peloton platform. Bike+ is currently available for purchase in the United States, Canada, United Kingdom, and Germany. We’re also thrilled to announce an important addition to our Tread line, “Peloton Tread” (our current Tread is “Peloton Tread+”). Offered at $2,495, Peloton Tread has all the essential elements of the Peloton Tread+ experience but in a more affordable and compact form factor. Despite the smaller size, the Peloton Tread has ample running surface area and provides running comfort on a sleek belt drive. It features PELOTON Q4: 2020 | 6
THE PELOTON PLEDGE Recent events have raised our collective commitment for a substantial increase in consciousness of the systemic inequities wages for our hourly employees, a $20 million existing across our society today. Peloton is investment in learning and development programs committed to being an anti-racist organization designed to expand opportunities for upward and to help achieve that goal, we have made mobility among our hourly wage employees, an important commitment to our Members, and a $20 million commitment to third party employees, and the communities we serve organizations fighting systemic inequities by pledging $100 million over the next four prevalent across the United States. While we have years across internal and external initiatives always believed Peloton and our community has to fight racism. The Peloton Pledge is focused embraced inclusiveness and diversity, we know on investing across three areas: a $60 million we can, and will, be doing more. “TOGETHER WE GO FAR, AND THIS IS JUST THE BEGINNING.” —JOHN FOLEY, PELOTON FOUNDER AND CEO PELOTON Q4: 2020 | 7
ESPN All-Star Ride graphic FITNESS PROGRAMMING TAGS On May 26th, we welcomed our instructors back We are continually inspired by our incredible to our new Peloton New York Studio (PSNY) to Member community, and look for ways to bring resume filming. Though classes remain closed to our Members closer together through interactive the public, the re-opening of our studios will allow social software features, such as “Tags”. us to increase the production of new classes to Launched in April, Tags is a simple yet highly pre-COVID-19 levels over time. flexible way for Members to express themselves, connect with others, and workout together. During the height of the pandemic in New York Members create Tags to represent their shared City, we began “Live from Home” class production interests like their favorite sports team, college, from our instructors’ homes. Over 9.8 million charity, employer, and more. With Tags, our Live from Home workouts have been taken, with Members have a new way to build, inspire, and one highlight being Alex Toussaint’s support of interact with their community while enhancing ESPN’s The Last Dance tribute to Michael Jordan, the discovery and workout experience. To date, which has logged 215,000 workouts. Other over 100,000 unique Tags have been created by highlights from the quarter include the launch of over 795,000 participating Members. our “No Equipment Needed” collection of Strength workouts, and our ESPN All-Star Partnership in July where 16 elite professional male and female athletes participated in a live broadcast cycling competition on the Peloton Bike. Our new workouts for families, Fit Family, provided welcome relief to those Members sheltering in place, with over 300,000 workouts completed between our April 3rd launch and the end of the quarter. Our new Dance Cardio classes were also an instant hit, with Member workouts CHELSEA JACKSON ROBERTS in the quarter surpassing 500,000. Offering themed music experiences remains a key Member request, and in the quarter we delivered eight new Artist Series, including Dolly Parton, BTS, Ricky Martin, and King Princess. During the quarter we also announced the addition of two world class fitness instructors, Chelsea Jackson Roberts and Adrian Williams. Chelsea adds additional depth to our growing team of Yoga and Meditation instructors, while Adrian is motivating Members through highly engaging Running, Strength, and Bootcamp classes. ADRIAN WILLIAMS PELOTON Q4: 2020 | 8
PELOTON INTERACTIVE, INC. FINANCIAL DISCUSSION Beginning this quarter we have folded “Other” segment (which primarily REVENUE consists of apparel) into the “Connected Fitness Product” segment. This $607.1 million realignment reflects how we manage our business. A table detailing how this change impacts prior reported quarters is provided in the 172% Y/Y Appendix of this letter. All periods presented as well as comparisons to prior periods reflect the change to our segment presentation. ENDING CONNECTED In Q4 we saw strong sustained momentum in Connected Fitness FITNESS subscriber and revenue growth due to COVID-19 while we SUBSCRIPTIONS continued to pause the majority of our media spend and kept most 1.09 million showrooms closed. 113% Y/Y AVG. NET MONTHLY REVENUE CONNECTED We generated total revenue of $607.1 million in Q4, representing FITNESS CHURN 172% year-over-year growth. Connected Fitness segment revenue 0.52% was $485.9 million in Q4, representing 199% year-over-year growth and 80% of total revenue. Growth of our Connected Fitness segment reflects both a significant carryover of undelivered Bikes from Q3 as well as continued strong organic demand due to the ongoing COVID-19 pandemic. Apparel sales growth also accelerated in the quarter, reflecting improved sell-through rates and our Memorial Day and Homecoming sales events in May. Subscription revenue grew to $121.2 million in Q4, representing 99% year-over-year growth and 20% of total revenue, driven by strong Connected Fitness Product sales and continued low Average Net Monthly Connected Fitness Churn of 0.52%. Our Connected Fitness Subscription base reached 1.09 million at the end of Q4, representing year-over-year growth of 113%. Our low churn was the result of continued high engagement with our platform and elevated subscription reactivations. As of June 30, 95% of our Connected Fitness Subscription base were on month-to-month plans. Member engagement grew in Q4 with 24.7 Average Monthly Workouts per Connected Fitness Subscription versus 12.0 Workouts in the same period last year. Members with a Connected Fitness Subscription worked out with us 76.8 million times, up from 17.8 million Workouts in the same period last year, representing 333% year-over-year growth. In addition, we ended the quarter with over 316,800 paying Digital subscriptions, up 210% year-over-year. PELOTON Q4: 2020 | 9
PELOTON INTERACTIVE, INC. FINANCIAL DISCUSSION GROSS PROFIT GROSS PROFIT Gross profit in Q4 was $288.8 million representing 188% year- $288.8 million over-year growth and a 47.6% gross margin, an improvement of 47.6% gross margin 275 basis points versus the prior year period. CONNECTED Connected Fitness segment gross profit was $220.0 million in FITNESS GROSS Q4, representing 223% year-over-year growth. Our Connected PROFIT Fitness segment gross margin was 45.3%, a 327 basis point increase versus last year. Compared to the year-ago period, our $220.0 million Connected Fitness gross profit margin benefited from a mix-shift 45.3% gross margin to Bike deliveries and product cost efficiencies, partially offset by expense growth in supply chain and logistics, including expedited SUBSCRIPTION shipping and COVID-19-related costs. GROSS PROFIT Subscription gross profit was $68.8 million in Q4, representing $68.8 million 116% year-over-year growth. Subscription gross margin was 56.8% gross margin 56.8%, up from 52.3% in the year-ago period. Subscription Contribution was $77.7 million in Q4, representing 112% year- SUBSCRIPTION over-year growth. Subscription Contribution Margin was 64.1%, CONTRIBUTION versus the prior year period of 60.0%. Year-on-year margin improvement was driven primarily by leverage against fixed $77.7 million content production expenses. 64.1% contribution margin For a reconciliation of non-GAAP financial measures to their corresponding GAAP measures, please refer to the reconciliation tables in the section below titled “Key Operating Metrics and Non- GAAP Financial Measures--Non-GAAP Financial Measures.” PELOTON Q4: 2020 | 10
PELOTON INTERACTIVE, INC. FINANCIAL DISCUSSION OPERATING EXPENSES TOTAL OPERATING Total operating expense was $198.8 million in Q4, and grew 33% EXPENSES year-over-year, representing 33% of total revenue versus the prior year period of 67%. $198.8 million 33% of revenue Sales and marketing expense was $84.2 million in Q4, and grew 8% year-over-year, representing 14% of total revenue versus the SALES AND prior year period of 35%. Given the robust organic demand due to MARKETING COVID-19 and strong brand awareness, we continued to pause the majority of our media spend through the end of the quarter. At the $84.2 million close of Q4, our global showroom count was 95, up from 74 in the 14% of revenue year prior. GENERAL AND General and administrative expense was $86.2 million in Q4, and ADMINISTRATIVE grew 58% year-over-year, representing 14% of total revenue versus the prior year period of 24%. Year-over-year growth was driven by $86.2 million continued investment in our teams and systems, public company 14% of revenue costs, legal expenses, and lease expense related to our new headquarters in New York City. RESEARCH AND DEVELOPMENT Research and development expense was $28.4 million in Q4, and grew 67% year-over-year, representing 5% of total revenue, $28.4 million versus the prior year period of 8%. This expense growth reflects 5% of revenue continued investments in new Connected Fitness Product development and software features. PELOTON Q4: 2020 | 11
PELOTON INTERACTIVE, INC. FINANCIAL DISCUSSION PROFITABILITY NET INCOME Net income for Q4 was $89.1 million versus a net loss of $(47.4) $89.1 million million in the same period last year. Q4 Adjusted EBITDA was $143.6 million, representing an Adjusted EBITDA Margin of ADJUSTED 23.7%, compared to (10.6)% in the same period last year. Basic EBITDA and diluted earnings per share in Q4 were $0.31 and $0.27, $143.6 million respectively. 23.7% margin BALANCE SHEET CASH AND MARKETABLE We ended Q4 with $1.8 billion in cash, cash equivalents, and SECURITIES marketable securities. We also have additional liquidity of $250.0 million in the form of a revolving credit facility, which remains $1.8 billion undrawn to-date. For fiscal year 2020, operating cash flow was $376.4 million. Capital expenditures were $156.4 million, the majority of which was related to the build out of our New York City headquarters, our new Peloton Studios in New York City and London, our new manufacturing facility in Taiwan, and new showrooms. PELOTON Q4: 2020 | 12
PELOTON INTERACTIVE, INC. Q1 AND FULL FISCAL YEAR 2021 BUSINESS OUTLOOK FY 2021 Q1 GUIDANCE FULL FISCAL YEAR 2021 GUIDANCE • 1.32 million to 1.33 million ending • 2.05 million to 2.10 million ending Connected Connected Fitness Subscriptions, growth of Fitness Subscriptions, growth of 90% at the 135% at the midpoint midpoint • Average Net Monthly Connected Fitness • Average Net Monthly Connected Fitness Churn under 0.75% Churn under 1.00% • $720 million to $730 million total revenue, • $3.50 billion to $3.65 billion total revenue, 218% growth at midpoint 96% growth at midpoint • Gross Profit Margin of approximately 41% • Gross Profit Margin of approximately 41% • $80 million to $90 million Adjusted EBITDA, • $200 million to $275 million Adjusted EBITDA, 11.7% Adjusted EBITDA Margin at the midpoint 6.6% Adjusted EBITDA Margin at the midpoint We entered Q1 FY 2021 with a backlog of $230 million invest in improving the variety, depth, and quality of our Bike deliveries in all geographies and sales continue fitness and wellness programming. While we expect some to surpass expectations in the first two months of the leveraging of the fixed costs of content production, these quarter. While we had expected demand to moderate, efficiencies will be largely offset by increases in variable the unexpected resurgence of COVID-19 cases in costs associated with continued high engagement of our many states has perpetuated the imbalance of supply Members, a mix shift to Digital subscriptions, and content and demand in many geographies, causing continued investments including new fitness verticals and increasing elongated order-to-delivery windows for our customers. our library of international and foreign language classes. While we have significantly increased our production Our long term target of achieving a 70%+ Subscription capacity in recent months and continue to grow our Contribution Margin remains intact. manufacturing capabilities, we do not expect to return to normalized order-to-delivery windows in the United States With strong sales flow-through, leveraging of fixed costs, prior to the end of Q2 FY 2021. and reductions to media spend, we expect Q1 FY 2021 Adjusted EBITDA of $80 million to $90 million, representing In Q1 FY 2021 and full year FY 2021, we expect a gross an Adjusted EBITDA Margin of 11.7% at the midpoint of the profit margin of approximately 41%, though we could see range. For FY 2021, we expect Adjusted EBITDA of $200 some fluctuation quarter to quarter based on product mix million to $275 million, representing an Adjusted EBITDA and other factors. We expect Connected Fitness Product Margin of 6.6% at the midpoint of the range. gross margin to decline year-over-year driven by the price reduction of our existing Bike, the mix shift to Peloton A reconciliation of non-GAAP guidance measures to Tread+ which carries a lower gross profit margin, and corresponding GAAP measures is not available on a further investments to scale our supply chain and logistics forward-looking basis without unreasonable effort due to operations. the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the We expect Subscription Contribution Margin in Q1 FY future. We have provided a reconciliation of GAAP to non- 2021 and full year FY 2021 to be flat year-over-year. With GAAP financial measures for the fourth quarter and for the the massive opportunity in front of us, we will continue to full year in the reconciliation tables at the end of this letter. PELOTON Q4: 2020 | 13
PELOTON INTERACTIVE, INC. Q1 AND FULL FISCAL YEAR 2021 BUSINESS OUTLOOK differ materially due to a variety of factors, including: WEBCAST our ability to attract and retain Connected Fitness We will host a Q&A session at 5:00pm ET on Thursday, and Digital Subscription base; our limited operating September 10, 2020 to discuss our financial results. To history; our ability to anticipate and satisfy consumer participate in the live call, please dial 1 (877) 667-0469 preferences; the effects of the highly competitive (US / Canada) or 1 (346) 406-0807 (international) and market in which we operate; market acceptance of provide conference ID 7223628. A live webcast of the our Connected Fitness Products, including our newly call will be available at https://investor.onepeloton. introduced products, Bike+ and Peloton Tread; our com/investor-relations/ and will be archived on our site ability to successfully develop and timely introduce following the call. new products and services; our ability to accurately forecast consumer demand and adequately manage As our communities continue to struggle with the global our inventory; our ability to maintain the value and pandemic and resulting macroeconomic issues, we reputation of the Peloton brand; a decrease in sales of are proud to provide a platform where our Members our Bike; the continued growth of the connected fitness can maintain their physical and mental well-being. We market; the loss of any one of our third-party suppliers, want to thank our entire Peloton Family for all their manufacturers, or logistics partners; our ability to hard work, especially our delivery, warehouse, sales, achieve the objectives of strategic and operational and Member experience teams who continue to work initiatives; litigation and related costs; the impact tirelessly in service to our Members. We are grateful for of privacy and data security laws; and other general our amazing Peloton community as a constant source market, political, economic, and business conditions. of inspiration for our teams as we continue to build the world’s best connected fitness experience. Additional risks and uncertainties that could affect our financial results and business are or will be included Together we go far, under the caption “Risk Factors” in our Annual Report Team Peloton on Form-K for the fiscal year ended June 30, 2020, our most recent Quarterly Report on Form 10-Q, and our other SEC filings, which are available on the Investor SAFE HARBOR STATEMENT Relations page of our website at https://investor. This shareholder letter includes forward-looking onepeloton.com/investor-relations and on the SEC statements, which are statements other than website at www.sec.gov. statements of historical facts and statements in the future tense. These statements include, but are not All forward-looking statements contained herein are limited to, statements regarding our future performance based on information available to us as of the date and our market opportunity, including expected financial hereof and you should not rely upon forward-looking results for the first quarter of fiscal year 2021 and full statements as predictions of future events. The events fiscal year 2021, the potential impact of COVID-19 on and circumstances reflected in the forward-looking the fitness and wellness industry in general as well statements may not be achieved or occur. Although as our business, our business strategy and plans, we believe that the expectations reflected in the our expectations regarding timing for completion forward-looking statements are reasonable, we cannot of our new headquarters, the opening of our Floral guarantee future results, performance, or achievements. Street Studio, and our new Tonic manufacturing plant, We undertake no obligation to update any of these and our objectives and future operations. Forward- forward-looking statements for any reason after the looking statements are based upon various estimates date of this shareholder letter or to conform these and assumptions, as well as information known to statements to actual results or revised expectations, us as of the date hereof, and are subject to risks except as required by law. Undue reliance should not be and uncertainties. Accordingly, actual results could placed on forward-looking statements. PELOTON Q4: 2020 | 14
PELOTON INTERACTIVE, INC. KEY OPERATING METRICS AND NON-GAAP FINANCIAL MEASURES In addition to the measures presented in our consolidated financial statements, we use the following key operating metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions. Three Months Ended June 30, Year Ended June 30, 2020 2019 2020 2019 Ending Connected Fitness Subscriptions 1,091,100 511,200 1,091,100 511,200 Average Net Monthly Connected Fitness Churn 0.52% 0.79% 0.62% 0.65% Total Workouts (in millions) 76.8 17.8 164.5 52.2 Average Monthly Workouts per Connected Fitness Subscription 24.7 12.0 17.9 11.5 Subscription Gross Profit (in millions) $ 68.8 $ 31.9 $ 208.0 $ 77.4 Subscription Contribution (in millions)(1) $ 77.7 $ 36.6 $ 232.1 $ 91.9 Subscription Gross Margin 56.8% 52.3% 57.2% 42.7% Subscription Contribution Margin(1) 64.1% 60.0% 63.8% 50.8% Net income (loss) (in millions) $ 89.1 $ (47.4) $ (71.6) $ (195.6) Adjusted EBITDA (in millions)(2) $ 143.6 $ (23.6) $ 117.7 $ (71.3) Adjusted EBITDA Margin(2) 23.7% (10.6)% 6.4% (7.8)% (1) Please see the section titled “Non-GAAP Financial Measures” for a reconciliation of Subscription Gross Profit to Subscription Contribution and an explanation for why we consider Subscription Contribution to be a helpful metric for investors. (2) Please see the section titled “Non-GAAP Financial Measures” for a reconciliation of net loss to Adjusted EBITDA and an explanation for why we consider Adjusted EBITDA to be a helpful metric for investors. CONNECTED FITNESS SUBSCRIPTIONS AVERAGE NET MONTHLY CONNECTED Our ability to expand the number of Connected Fitness FITNESS CHURN Subscriptions is an indicator of our market penetration We use Average Net Monthly Connected Fitness Churn and growth. We define a Connected Fitness Subscription to measure the retention of our Connected Fitness as a person, household, or commercial property, such Subscriptions. We define Average Net Monthly Connected as a hotel or residential building, who has either paid Fitness Churn as Connected Fitness Subscription for a subscription to a Connected Fitness Product (a cancellations, net of reactivations, in the quarter, divided Connected Fitness Subscription with a successful by the average number of beginning Connected Fitness credit card billing or with prepaid subscription credits or Subscriptions in each month, divided by three months. waivers) or requested a “pause” to their subscription for This metric does not include data related to our Digital up to 3 months. We do not include canceled or unpaid subscriptions for Members who pay a monthly fee for Connected Fitness Subscriptions in the Connected access to our content library on their own devices. Fitness Subscription count. PELOTON Q4: 2020 | 15
PELOTON INTERACTIVE, INC. KEY OPERATING METRICS AND NON-GAAP FINANCIAL MEASURES TOTAL WORKOUTS AND AVERAGE NON-GAAP FINANCIAL MEASURES MONTHLY WORKOUTS PER CONNECTED In addition to our results determined in accordance FITNESS SUBSCRIPTION with accounting principles generally accepted in the We review Total Workouts and Average Monthly United States, or GAAP, we believe the following non- Workouts per Connected Fitness Subscription to GAAP financial measures are useful in evaluating our measure engagement, which is the leading indicator operating performance. of retention for our Connected Fitness Subscriptions. We define Total Workouts as all workouts completed These non-GAAP financial measures have limitations during a given period. We define a Workout as a as analytical tools in that they do not reflect all of the Connected Fitness Subscription for Members either amounts associated with our results of operations completing at least 50% of an instructor-led or scenic as determined in accordance with GAAP. Because of ride or run or ten or more minutes of “Just Ride” these limitations, Adjusted EBITDA, Adjusted EBITDA or “Just Run” mode. We define Average Monthly Margin, Subscription Contribution, and Subscription Workouts per Connected Fitness Subscription as the Contribution Margin should be considered along with Total Workouts completed in the quarter divided by the other operating and financial performance measures average number of Connected Fitness Subscriptions presented in accordance with GAAP. in each month, divided by three months. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found below. PELOTON Q4: 2020 | 16
PELOTON INTERACTIVE, INC. ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN Adjusted EBITDA and Adjusted EBITDA Margin are key We calculate Adjusted EBITDA as net loss adjusted to performance measures that our management uses to exclude: other income, net; provision for income taxes; assess our operating performance and the operating depreciation and amortization expense; stock-based leverage in our business. Because Adjusted EBITDA and compensation expense; transaction costs; certain litigation Adjusted EBITDA Margin facilitate internal comparisons expenses, consisting of legal settlements and related fees of our historical operating performance on a more for specific proceedings that arise outside of the ordinary consistent basis, we use these measures for business course of our business; the ground lease expense related planning purposes. We also believe this information will to build-to-suit lease obligations under ASC 840; and non- be useful for investors to facilitate comparisons of our recurring incremental costs primarily consisting of hazard operating performance and better identify trends in our pay as a result of COVID-19. Adjusted EBITDA Margin is business. We expect Adjusted EBITDA Margin to increase calculated by dividing Adjusted EBITDA by total revenue. over the long-term as we continue to scale our business and achieve greater leverage in our operating expenses. Three Months Ended June 30, Fiscal Year Ended June 30, (dollars in millions) (dollars in millions) 2020 2019 2020 2019 Net income (loss) (1) $ 89.1 $ (47.4) $ (71.6) $ (195.6) Adjusted to exclude the following: Other income, net (2.8) (1.8) (12.4) (6.7) Income tax (benefit) expense 3.8 (0.1) 3.3 0.1 Depreciation and amortization expense 12.0 6.7 40.2 21.7 Stock-based compensation expense 32.5 13.5 88.8 89.5 Litigation and settlement expenses 1.1 2.3 60.1 12.1 Other adjustment items (2) 8.0 3.3 9.4 7.6 Adjusted EBITDA $ 143.6 $ (23.6) $ 117.7 $ (71.3) Adjusted EBITDA margin 23.7% (10.6)% 6.4% (7.8)% (1) Included in net loss are content costs for past use as follows: Three Months Ended June 30, Fiscal Year Ended June 30, (dollars in millions) (dollars in millions) 2020 2019 2020 2019 Content costs for past use (1) $ 0.6 $ – $ 1.6 $ 16.4 (1) From time-to-time, we execute music royalty agreements with various music rights holders. As part of these go-forward license agreements, we may also enter into agreements whereby we are released from all potential licensor claims regarding our alleged past use of copyrighted material in our content in exchange for a mutually-agreed payment. We refer to these payments as content costs for past use. Included in Adjusted EBITDA are content costs for past use. These costs had a negative basis point impact on Adjusted EBITDA Margin of 9 for each of the three months and fiscal year ended June 30, 2020, and zero and 180 for the three months and fiscal year ended June 30, 2019, respectively. (2) Includes incremental costs associated with COVID-19 of $8.5 million for the fiscal year ended June 30, 2020 and the ground lease expense related to build-to-suit lease obligations under ASC 840 of $7.2 million for the fiscal year ended June 30, 2019. PELOTON Q4: 2020 | 17
PELOTON INTERACTIVE, INC. SUBSCRIPTION CONTRIBUTION AND SUBSCRIPTION CONTRIBUTION MARGIN We use Subscription Contribution and Subscription Subscription Contribution and Subscription Contribution Contribution Margin to measure our ability to scale Margin in conjunction with financial measures prepared in and leverage the costs of our Connected Fitness accordance with GAAP for planning purposes, including the Subscriptions. The continued growth of our Connected preparation of our annual operating budget, as a measure Fitness Subscription base will allow us to improve our of our core operating results and the effectiveness of our Subscription Contribution Margin. While there are variable business strategy, and in evaluating our financial performance. costs, including music royalties, associated with our Connected Fitness Subscriptions, a significant portion We define Subscription Contribution as subscription revenue of our content creation costs are fixed given that we less cost of subscription revenue, adjusted to exclude from operate with a limited number of production studios and cost of subscription revenue, depreciation and amortization instructors. The fixed nature of those expenses should expense and stock-based compensation expense. Subscription scale over time as we grow our Connected Fitness Contribution Margin is calculated by dividing Subscription Subscription base. Contribution by subscription revenue. We believe that these non-GAAP financial measures are The following table presents a reconciliation of Subscription useful to investors for period-to-period comparisons Contribution to subscription gross profit, the most directly of our business and in understanding and evaluating comparable financial measure prepared in accordance with our operating results because our management uses GAAP, for each of the periods indicated: Three Months Ended June 30, Fiscal Year Ended June 30, (dollars in millions) (dollars in millions) 2020 2019 2020 2019 Subscription Revenue $ 121.2 $ 61.0 $ 363.7 $ 181.1 Less: Cost of Subscription (1) 52.4 29.1 155.7 103.7 Subscription Gross Profit $ 68.8 $ 31.9 $ 208.0 $ 77.4 Subscription Gross Margin 56.8% 52.3% 57.2% 42.7% Add back: Depreciation and amortization expense $ 4.9 $ 3.8 $ 16.6 $ 11.3 Stock-based compensation expense 3.9 0.8 7.5 3.2 Subscription Contribution $ 77.7 $ 36.6 $ 232.1 $ 91.9 Subscription Contribution Margin 64.1% 60.0% 63.8% 50.8% (1) Included in cost of subscription are content costs for past use as follows: Three Months Ended June 30, Fiscal Year Ended June 30, (dollars in millions) (dollars in millions) 2020 2019 2020 2019 Content costs for past use (1) $ 0.6 $ – $ 1.6 $ 16.4 (1) From time-to-time, we execute music royalty agreements with various music rights holders. As part of these go-forward license agreements, we may also enter into agreements whereby we are released from all potential licensor claims regarding our alleged past use of copyrighted material in our content in exchange for a mutually-agreed payment. We refer to these payments as content costs for past use. Included in Subscription Contribution and Subscription Contribution Margin are content costs for past use. These costs had a negative basis point impact on Subscription Contribution Margin of 47 and 44 for the three months and fiscal year ended June 30, 2020, and zero and 908 for the three months and fiscal year ended June 30, 2019, respectively. PELOTON Q4: 2020 | 18
PELOTON INTERACTIVE, INC. CONSOLIDATED BALANCE SHEETS (in millions, except share and per share amounts) ASSETS 06/30/2020 06/30/2019 Current assets: Cash and cash equivalents $ 1,035.5 $ 162.1 Marketable securities 719.5 216.0 Accounts receivable, net 34.6 18.5 Inventories, net 244.5 136.6 Prepaid expenses and other current assets 124.5 48.4 Total current assets 2,158.6 581.7 Property and equipment, net 242.3 249.7 Intangible assets, net 16.0 19.5 Goodwill 39.1 4.3 Restricted cash 1.5 0.8 Right-of-use assets, net 492.5 — Other assets 31.8 8.5 Total assets $ 2,981.8 $ 864.5 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 135.8 $ 92.2 Accrued expenses 225.9 104.5 Customer deposits and deferred revenue 363.6 90.8 Current portion of lease liabilities and other current liabilities 46.9 3.3 Total current liabilities 772.2 290.8 Deferred rent — 23.7 Build-to-suit liability — 147.1 Long term lease liabilities, net 508.2 — Other non-current liabilities 23.4 0.4 Total liabilities 1,303.8 462.0 Commitments and contingencies Redeemable convertible preferred stock, $0.000025 par value, zero and 215,443,468 shares authorized; zero and 210,640,629 shares — 941.1 issued and outstanding as of June 30, 2020 and June 30, 2019, respectively. Stockholders’ equity (deficit) Common stock, $0.000025 par value; 2,500,000,000 and zero Class A shares authorized, 237,518,574 and zero shares issued and outstanding as of June 30, 2020 and June 30, 2019, respectively; 2,500,000,000 and 400,000,000 Class B shares authorized, 50,538,538 and 25,301,604 shares issued — — and outstanding as of June 30, 2020 and June 30, 2019, respectively. Additional paid-in capital 2,361.8 90.7 Accumulated other comprehensive income 10.1 0.2 Accumulated deficit (693.9) (629.5) Total stockholders’ equity (deficit) 1,678.0 (538.6) Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $ 2,981.8 $ 864.5 PELOTON Q4: 2020 | 19
PELOTON INTERACTIVE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in millions, except share and per share amounts) Three Months Ended June 30, Fiscal Year Ended June 30, 2020 2019 2020 2019 Revenue: Connected Fitness Products $ 485.9 $ 162.3 $ 1,462.2 $ 733.9 Subscription 121.2 61.0 363.7 181.1 Total Revenue 607.1 223.3 1,825.9 915.0 Cost of revenue: Connected Fitness Products 265.9 94.1 833.5 427.8 Subscription 52.4 29.1 155.7 103.7 Total cost of revenue 318.3 123.2 989.1 531.4 Gross profit 288.8 100.1 836.7 383.6 Operating expenses: Sales and marketing 84.2 77.9 477.0 324.0 General and administrative 86.2 54.6 351.6 207.0 Research and development 28.4 17.0 89.0 54.8 Total operating expenses 198.8 149.5 917.6 585.5 Income (loss) from operations 90.0 (49.4) (80.8) (202.3) Other income, net: Interest income, net 3.5 1.8 16.2 7.0 Other expense, net (0.7) — (3.8) (0.3) Total other income, net 2.8 1.8 12.4 6.7 Income (loss) before provision for income taxes 92.8 (47.6) (68.4) (195.6) Income tax (benefit) expense 3.8 (0.1) 3.3 0.1 Net Income (loss) $ 89.1 $ (47.4) $ (71.6) $ (195.6) Net income (loss) attributable to Class A and Class B $ 89.1 $ (47.4) $ (71.6) $ (245.7) common stockholders Net income (loss) per share attributable to Class A $ 0.31 $ (2.07) $ (0.32) $ (10.72) and Class B common stockholders, basic Net income (loss) per share attributable to Class A $ 0.27 $ (2.07) $ (0.32) $ (10.72) and Class B common stockholders, diluted Weighted-average Class A and Class B common 284,501,249 22,907,234 220,952,237 22,911,764 shares outstanding, basic Weighted-average Class A and Class B common 330,894,767 22,907,234 220,952,237 22,911,764 shares outstanding, diluted Other comprehensive income: Net unrealized gains on marketable securities $ 7.1 $ 0.2 $ 3.9 $ 0.2 Change in foreign currency translation adjustment 0.2 (1.0) 6.0 — Total other comprehensive income (loss) 7.4 (0.8) 9.9 0.2 Comprehensive income (loss) $ 96.4 $ (48.2) $ (61.7) $ (195.4) PELOTON Q4: 2020 | 20
PELOTON INTERACTIVE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (CONTINUED) (in millions, except share and per share amounts) (1) Includes stock-based compensation expense as follows: Three Months Ended June 30, Fiscal Year Ended June 30, 2020 2019 2020 2019 Cost of revenue Connected Fitness Products $ 1.9 $ 0.2 $ 3.2 $ 0.3 Subscription 3.9 0.8 7.5 3.2 Total cost of revenue 5.9 1.0 10.7 3.5 Sales and marketing 9.4 1.2 15.3 8.4 General and administrative 14.3 9.5 52.4 70.5 Research and development 3.0 1.7 10.4 7.1 Total stock-based compensation expense $ 32.5 $ 13.5 $ 88.8 $ 89.5 (2) Includes depreciation and amortization expense as follows: Three Months Ended June 30, Fiscal Year Ended June 30, 2020 2019 2020 2019 Cost of revenue Connected Fitness Products $ 1.1 $ 0.4 $ 3.2 $ 1.2 Subscription 4.9 3.8 16.6 11.3 Total cost of revenue 6.0 4.3 19.9 12.6 Sales and marketing 2.8 1.3 9.3 4.0 General and administrative 3.1 1.1 10.6 5.2 Research and development 0.1 — 0.3 — Total depreciation and amortization expense $ 12.0 $ 6.7 $ 40.2 $ 21.7 PELOTON Q4: 2020 | 21
PELOTON INTERACTIVE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Fiscal Year Ended June 30, 2020 2019 Cash Flows from Operating Activities: Net loss $ (71.6) $ (195.6) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization expense 40.2 21.7 Stock-based compensation expense 88.8 89.5 Non-cash operating lease expense 47.7 — Other non-cash items 6.4 (1.4) Changes in operating assets and liabilities: Accounts receivable 11.3 (9.1) Inventories (96.8) (111.3) Prepaid expenses and other current assets (33.1) (30.3) Other assets (22.1) (5.5) Accounts payable and accrued expenses 133.4 117.3 Customer deposits and deferred revenue 272.3 2.2 Operating lease liabilities, net (23.6) — Other liabilities 23.5 13.8 Net cash provided by (used in) operating activities 376.4 (108.6) Cash Flows from Investing Activities: Purchases of marketable securities (1,199.6) (249.8) Maturities of marketable securities 435.4 36.0 Sales of marketable securities 224.3 — Cash paid for cost method investment (0.1) (0.6) Acquisition of business, net of cash acquired (45.0) (0.1) Purchases of property and equipment (156.4) (83.0) Net cash used in investing activities (741.3) (297.5) Cash Flows from Financing Activities: Proceeds from issuance of common stock upon initial public offering, net of offering costs 1,195.7 — Repurchase of common and convertible preferred stock, including issuance costs — (130.3) Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs — 539.1 Proceeds from employee stock purchase plan withholdings 7.0 — Debt issuance costs — (0.9) Proceeds from exercise of stock options 37.4 9.3 Net cash provided by financing activities 1,240.2 417.2 Effect of exchange rate changes (1.2) 0.2 Net change in cash, cash equivalents, and restricted cash 874.0 11.3 Cash, cash equivalents and restricted cash — Beginning of period 163.0 151.6 Cash, cash equivalents and restricted cash — End of period $ 1,037.0 $ 163.0 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 1.9 $ 1.1 Cash paid for income taxes $ 4.1 $ — Supplemental Disclosures of Non-Cash Investing and Financing Information: Conversion of convertible preferred stock to common stock $ (941.1) $ — Property and equipment accrued but unpaid $ 18.2 $ 12.6 Building — build-to-suit asset $ — $ 147.1 Stock-based compensation capitalized for software development costs $ 2.2 $ 0.8 PELOTON Q4: 2020 | 22
PELOTON INTERACTIVE, INC. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS — AS REALIGNED TO NEW SEGMENTS UNAUDITED (in millions) Three Months Ended Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30, 2020 2020 2019 2019 2019 2019 2018 2018 Revenue: Connected Fitness Products $ 485.9 $ 426.4 $ 389.1 $ 160.8 $ 162.3 $ 265.6 $ 225.5 $ 80.4 Subscription 121.2 98.2 77.1 67.2 61.0 51.1 37.3 31.7 Total Revenue 607.1 524.6 466.3 228.0 223.3 316.7 262.9 112.1 Cost of revenue: Connected Fitness Products 265.9 237.4 236.7 93.4 94.1 158.1 131.2 44.3 Subscription 52.4 41.4 32.4 29.5 29.1 38.0 20.3 16.3 Total cost of revenue 318.3 278.8 269.1 122.9 123.2 196.1 151.5 60.6 Gross profit $ 288.8 $ 245.8 $ 197.1 $ 105.1 $ 100.1 $ 120.6 $ 111.3 $ 51.5 Gross margin Connected Fitness Products 45.3 % 44.3 % 39.2 % 41.9 % 42.0 % 40.5 % 41.8 % 44.9 % Subscription 56.8 % 57.8 % 58.0 % 56.1 % 52.3 % 25.6 % 45.5 % 48.7 % Total gross margin 47.6 % 46.8 % 42.3 % 46.1 % 44.8 % 38.1 % 42.4 % 45.9 % Quarterly Consolidated Statements of Operations - As previously disclosed Three Months Ended Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30, 2020 2020 2019 2019 2019 2019 2018 2018 Revenue: Connected Fitness Products $ 475.5 $ 420.2 $ 381.1 $ 157.6 $ 158.4 $ 261.6 $ 221.3 $ 77.9 Subscription 121.2 98.2 77.1 67.2 61.0 51.1 37.3 31.7 Other 10.4 6.1 8.0 3.3 4.0 4.0 4.2 2.5 Total Revenue 607.1 524.6 466.3 228.0 233.3 316.7 262.9 112.1 Cost of revenue: Connected Fitness Products 257.5 230.0 226.7 89.8 89.7 152.3 126.5 42.2 Subscription 52.4 41.4 32.4 29.5 29.1 38.0 20.3 16.3 Other 8.4 7.5 10.0 3.6 4.4 5.8 4.6 2.1 Total cost of revenue 318.3 278.8 269.1 122.9 132.2 196.1 151.5 60.6 Gross profit $ 288.8 $ 245.8 $ 197.1 $ 105.1 $ 100.1 $ 120.6 $ 111.3 $ 51.5 Gross margin Connected Fitness Products 45.8 % 45.3 % 40.5 % 43.0 % 43.4 % 41.8 % 42.8 % 45.8 % Subscription 56.8 % 57.8 % 58.0 % 56.1 % 52.3 % 25.6 % 45.5 % 48.7 % Other 19.1 % (21.6) % 25.3 % (11.2) % (12.1) % (44.3) % (10.3) % 16.3 % Total gross margin 47.6 % 46.8 % 42.3 % 46.1 % 44.8 % 38.1 % 42.4 % 45.9 % PELOTON Q4: 2020 | 23