Peloton, the exercise equipment maker and online fitness course provider, said it is laying off 15% of its workforce (about 400 people) as part of cost-cutting measures. The company also said its CEO, president, and board director, Barry McCarthy, would step down after two years in the role.
McCarthy, who was previously CFO at Spotify and Netflix, was coerced out of retirement in early 2022 when Peloton’s co-founder and then-CEO, John Foley, left the role alongside a major cost-cutting effort that saw 2,800 employees laid off. Foley remained as executive chair, but he left the company seven months later along with co-founder and chief legal officer, Hisao Kushi.
Peloton says it’s in the process of finding a successor to McCarthy, and current Peloton chairperson, Karen Boone, and director, Chris Bruzzo, would serve as interim co-CEOs through the transition.
Peloton went public in 2019 with an opening valuation of $6 billion, and saw its fortunes soar when the pandemic struck. As the world hunkered down at home, and people sought ways to stay healthy with home exercise equipment, the company’s bikes and online courses flew off the shelves, eventually earning it a market cap of $50 billion by early 2021.
But when the world returned to normality, so did Peloton’s shares, and its market cap came back down to $10 billion in January 2022, a year after its peak.
Today, the New York company’s market cap sits a little above $1 billion. Still, its shares went as high as 13.3% in pre-market trading on Thursday morning, seemingly buoyed by Peloton’s saying it would cut costs.
Aside from reducing its headcount by 15%, Peloton said that it also intends to continue reducing its brick-and-mortar footprint in retail showrooms, and double down on its international growth with a more “targeted and efficient” go-to-market strategy. All those steps are expected to help it reduce annual expenses by more than $200 million by the end of its fiscal year 2025.
These announcements came just before Peloton reported worse-than-expected Q3 2024 revenue and loss, and a 21% decline in paid app subscriptions compared to a year earlier. When the company reported second-quarter results in February, its shares tumbled 24% to a then-all-time low after reporting continued revenue declines and a dismal outlook for the coming months.