Peloton Posts Its First Profitable Year as Connected Fitness Splits in Two

Peloton has posted its first full year of positive GAAP net income: $63 million on $2.446 billion of revenue for fiscal 2026, the year ended 30 June. The repair job is as financial as it is commercial — adjusted EBITDA rose 16% to $468 million, free cash flow reached $378 million, and net debt was cut 80% to $93 million from $459 million. Fourth-quarter revenue of $608 million closed the year, with the Skōp connected-Pilates acquisition and a Spotify partnership folded in along the way.

The asterisk sits underneath: the subscriber base is still shrinking. Profitability arrived not because demand returned, but because the cost base was rebuilt around the demand that remains.

Garmin’s numbers frame the other half of the category. The device maker posted record full-year 2025 revenue of $7.25 billion, up 15% year over year, with record revenue in all five segments, and guided fiscal 2026 to about $7.9 billion — another 9% up. Where Peloton monetises a subscription attached to hardware, Garmin sells the hardware, and still grows.

Connected fitness has therefore split in two. Survivors with disciplined cost structures are turning into cash machines, while the growth premium has moved to the device-and-data layer. For gym operators, the signal is not that home fitness failed; it is that the home now runs on wearables and app ecosystems rather than $2,000 bikes — which changes what competing with the living room means in 2026.

What to watch: whether Peloton can hold the new margin structure while its subscriber base keeps shrinking, and whether modality acquisitions like Skōp widen the funnel beyond the core bike-and-treadmill base.