Peloton's churn rose because the pandemic boom reversed and the sunk-cost effect of a $2,000 bike faded as equipment aged. Average net monthly churn reached 2.2% in Q4 of fiscal 2026, about three times the 0.73% the book cited, and paid subscriptions fell 8.8% to 2.553 million. Deep cost cuts and price rises still delivered $63.2 million of net income, its first profitable year.
Key takeaways
- Monthly churn went from 0.73% (2022) to 2.2% (Q4 FY2026). That's the difference between keeping about 92% and about 77% of members over a year.
- FY2026 revenue was $2.446 billion, roughly 40% below the figure in the book; paid connected fitness subscriptions fell 8.8% to 2.553 million.
- Peloton raised All-Access from $44 to $49.99 a month and posted $63.2 million net income, its first full profitable year.
- A low churn rate measured during a boom is not a moat. Sunk-cost loyalty wears off.
You spend $2,000 on a bike. It sits in the spare room. Every month, a subscription fee comes out of your account.
Would you cancel?
In 2022, most Peloton owners said no. I wrote in Chapter 5 of The Subscription Playbook that Peloton had "a minuscule 0.73 percent monthly churn rate. That's better than many enterprise software companies!" I credited its community, its build quality and a healthy dose of sunk-cost psychology: having paid for the bike, people didn't want to waste it.
Four years later, that number has tripled.
This is the most honest update in this whole series, because it's a case where my 2022 example didn't hold up the way I expected. Here's what happened, and what Peloton did about it.
The numbers: fiscal 2026 (to 30 June 2026)
| Metric | In the book (2022) | FY2026 (reported 6 Aug 2026) |
|---|---|---|
| Revenue | More than $4 billion a year | $2.446 billion (roughly 40% lower) |
| Monthly churn | 0.73% | 2.2% average net monthly churn in Q4 (1.8% a year earlier; 1.2% the quarter before) |
| Paid connected fitness subscriptions | – | 2.553 million, down 8.8% |
| Members | More than 7 million users | 5.5 million (from 6.0 million) |
| Net income | – | $63.2 million, the first full profitable year |
| All-Access price | – | Raised from $44 to $49.99 a month (Oct 2025) |
| FY2027 revenue guidance | – | $2.3 billion to $2.4 billion |
What does 2.2% churn actually mean?
Monthly churn numbers look small. They compound.
Worked example: 0.73% vs 2.2% over a year
Start with 1,000 members and no new sign-ups.
- At 0.73% monthly churn: 1,000 × (1 − 0.0073)¹² ≈ 916 left after a year. You lose about 84.
- At 2.2% monthly churn: 1,000 × (1 − 0.022)¹² ≈ 766 left. You lose about 234.
Average member lifetime goes from roughly 137 months (1 ÷ 0.0073) to about 45 months (1 ÷ 0.022). Same product, same price, a third of the lifetime value.
That's why a jump from "less than 1%" to "about 2%" matters so much. Try it with your own numbers in the churn calculator and then the LTV calculator.
Why did Peloton's churn rise?
Three things wore off at once.
The boom reversed. The 2022 numbers were measured at the peak of pandemic home fitness. Gyms reopened. The people who bought a bike because they had nowhere else to exercise had somewhere else to exercise.
The sunk cost faded. Sunk-cost loyalty is real, but it has a half-life. In year one, a $2,000 bike feels like an investment you must use. By year four it's furniture. The psychological pull of "I paid for this" gets weaker every month.
Fewer new bikes meant fewer new, enthusiastic members. New owners tend to be the most engaged. When hardware sales fall, the member base gets older, and older members churn more.
In the MOATS framework, I'd rescore Peloton today. The Audience (the community) is still real. But Toughness was weaker than it looked: a churn rate measured in a boom isn't a sustainable competitive advantage. It's a snapshot.
Where I got this one wrong
I treated 0.73% churn as a sign of a deep moat. It was partly a sign of unusual times. The lesson I'd add to the book: never judge a moat by its best year. Ask what the number looks like when the tailwind stops.
What is churn really costing you?
Work out customer and revenue churn, and what it costs you each year, with the free Churn Rate Calculator.
What did Peloton do next?
It stopped chasing growth and fixed profit first.
- Deep cost cuts, which turned the business to net income of $63.2 million in fiscal 2026, its first full profitable year.
- A hardware relaunch in October 2025, with AI camera tracking and a swivel screen, to give owners a reason to upgrade and new buyers a reason to start.
- A price rise tied to it. All-Access went from $44 to $49.99 a month (about 14%), and App+ from $24 to $28.99.
Notice the timing. Peloton raised prices alongside a visible upgrade, not on its own. That's how to make a price rise feel like new value. See how to raise prices without losing customers.
But watch the numbers that followed. Churn jumped from 1.2% in Q3 to 2.2% in Q4 of fiscal 2026. Peloton's results don't pin that on one cause, but a higher price rarely makes it easier to stay. Profit can be rebuilt with pricing and cost discipline. Growth still needs new customers, and Peloton is guiding revenue down again for fiscal 2027.
What the book said in 2022
Peloton was my example of a sustainable competitive advantage under the T in MOATS. More than 7 million users, more than $4 billion a year, 0.73% monthly churn, and a community where members share workouts, compete and push each other.
I still think the community insight is right. It's why Peloton has 5.5 million members, not zero. What I'd change is the confidence I put in one churn number taken at the top of a boom.
What's happened since
Revenue fell to $2.446 billion. Paid connected fitness subscriptions fell 8.8% to 2.553 million. Churn rose to 2.2% a month. And Peloton made money for a full year for the first time.
It's a smaller, more disciplined business. Whether it can grow again depends on winning new customers, not on squeezing the ones it has. For a calmer version of the same hardware-plus-subscription model, compare how GoPro's subscription held up as camera sales fell.
What you can steal from Peloton
- Don't extrapolate churn from your best year. When you model the future, assume churn rises as novelty and sunk cost fade. Plan for it.
- Track churn by cohort. Members who joined two years ago behave differently from those who joined last month. An aging base hides behind a healthy-looking average.
- Tie price rises to visible upgrades. New kit, new features, new classes. Then watch churn closely for the next two quarters. The price increase simulator shows how much churn a rise can absorb before it costs you money.
- Renew the sunk cost. Upgrades, anniversaries, milestones and new challenges give members fresh reasons to feel invested.
- Keep a steady flow of new members. Retention protects profit. Only acquisition creates growth.
Free Subscription Profit Review
Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:
- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
- how it could lift what your business is worth
No cost, no obligation. General information only until we understand your situation.
Your next step
Pull your churn rate for each of the last eight quarters. Is it flat, falling or quietly rising? Then split it by when customers joined.
If your oldest customers are leaving faster than your newest, you've found your Peloton problem early. My guide on how to reduce churn covers what to do about it, and the churn benchmarks show how your number compares.
Frequently asked questions
What is Peloton's churn rate in 2026?
Peloton reported average net monthly churn of 2.2% for Q4 of fiscal 2026 (the quarter to 30 June 2026). That was up from 1.8% a year earlier and 1.2% in the previous quarter. The Subscription Playbook cited 0.73% in 2022, so churn is roughly three times higher.
How many subscribers does Peloton have?
Peloton had 2.553 million paid connected fitness subscriptions at the end of fiscal 2026, down 8.8% for the year. Total members, including app-only users, fell from 6.0 million to 5.5 million. The book cited more than 7 million users in 2022.
How much is Peloton All-Access membership?
In October 2025 Peloton raised All-Access from $44 to $49.99 a month in the US, and App+ from $24 to $28.99, alongside a hardware relaunch with AI camera tracking and a swivel screen, according to CNBC. Check Peloton's site for current local pricing.
Is Peloton profitable?
Yes, for the first time on a full-year basis. Peloton reported net income of $63.2 million for fiscal 2026 (to 30 June 2026), after deep cost cuts. Revenue was $2.446 billion, and it guided fiscal 2027 revenue lower again, to $2.3 billion to $2.4 billion.
What is a good monthly churn rate for a subscription business?
It depends heavily on the industry and price point. Consumer subscriptions often run several percent a month, while sticky business software can be well under 1%. Compare yourself with businesses like yours, and track the trend, not just the number. See the churn benchmarks guide for ranges by industry.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Peloton, Q4 and fiscal 2026 financial results (6 Aug 2026)
- CNBC, Peloton revamps equipment, raises prices ahead of holidays (1 Oct 2025)
- The Clip Out, Peloton subscriber churn Q4 FY26 (Aug 2026)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.