Peloton Posted Its First Full Year of GAAP Profit. Rising Churn Sank the Stock 12%

Peloton reported fourth-quarter fiscal 2026 earnings of $0.13 per share on August 6, 2026, against an estimate of $0.12, on revenue of $608 million versus $597.83 million expected. For the full fiscal year, the company reported its first full year of GAAP net income, $63.2 million, on revenue of $2.446 billion — a genuine milestone for a company that has spent most of its public history unprofitable. The stock fell 12.3% in the fifteen minutes after the release.

The reaction centers on subscriber retention, not the profit milestone. Average net monthly churn rose to 2.2% in the quarter, up 40 basis points from a year earlier and 100 basis points from the prior quarter — an acceleration, not just a continuation of an existing trend. Peloton's guidance for the first quarter of fiscal 2027 implies connected fitness subscriptions down 9.8% year over year at the midpoint. For a subscription business, the size of the subscriber base sets the ceiling on future revenue; a shrinking base means this quarter's profit has to be weighed against a member count the company itself expects to keep shrinking.

Peloton also disclosed a $20.5 million patent-infringement verdict against it, awarded to NEC over content-streaming technology, adding a one-time cost on top of the churn concern. Reaching full-year profitability while churn accelerates and the subscriber base guide points lower is the kind of quarter where the backward-looking number and the forward-looking one point in opposite directions — and the market weighted the forward one more heavily.