1 00:00:02,520 --> 00:00:07,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,320 --> 00:00:09,080 Speaker 2: It's time now for the stock of the hour, and 3 00:00:09,160 --> 00:00:11,559 Speaker 2: it is Peloton. The shares are falling after the company 4 00:00:11,600 --> 00:00:14,960 Speaker 2: announced an overhaul of its hardware as well as raising prices. 5 00:00:15,240 --> 00:00:18,000 Speaker 2: This is Peloton's first major attempt under new leadership to 6 00:00:18,040 --> 00:00:20,160 Speaker 2: lift the company out of a multi year slump. So 7 00:00:20,520 --> 00:00:23,040 Speaker 2: perhaps there's no better timing than to bring in the CEO, 8 00:00:23,320 --> 00:00:25,960 Speaker 2: Peter Stern, who is behind this products revamp, and of 9 00:00:26,000 --> 00:00:28,800 Speaker 2: course Bloomberg Tech co host Caroline Hyde also joins us. 10 00:00:28,800 --> 00:00:29,040 Speaker 3: Now. 11 00:00:29,280 --> 00:00:31,840 Speaker 2: Peter, welcome to Bloomberg. Thank you for speaking with us. 12 00:00:32,800 --> 00:00:36,680 Speaker 2: Big hardware line, a big AI platform, Peloton IQ coming 13 00:00:36,680 --> 00:00:40,839 Speaker 2: out today. Long anticipated, but the market appears underwhelmed. And 14 00:00:40,920 --> 00:00:42,720 Speaker 2: I know that you don't follow this stock move on 15 00:00:42,760 --> 00:00:44,760 Speaker 2: a day to day, minute by minute basis, But what 16 00:00:44,880 --> 00:00:47,720 Speaker 2: my investors not fully appreciate about this announcement. 17 00:00:47,960 --> 00:00:50,440 Speaker 4: First of all, Scarla, thanks for having me here. And 18 00:00:50,520 --> 00:00:53,840 Speaker 4: I leave the day to day gyrations of the stock 19 00:00:53,920 --> 00:00:57,920 Speaker 4: to the experts, traders, the analysts, folks like yourselves. That 20 00:00:58,040 --> 00:01:01,600 Speaker 4: being said, if you look at the if you take 21 00:01:01,600 --> 00:01:04,760 Speaker 4: the long view, let's look back a year, our stock 22 00:01:04,840 --> 00:01:08,440 Speaker 4: is almost doubled. Look back a month way up, so 23 00:01:08,600 --> 00:01:10,479 Speaker 4: I wouldn't focus on day to day, but I would 24 00:01:10,480 --> 00:01:12,440 Speaker 4: focus on the news that we announced today because it's 25 00:01:12,480 --> 00:01:15,840 Speaker 4: pretty amazing what we just announced. Completely new lineup of equipment, 26 00:01:16,360 --> 00:01:21,000 Speaker 4: peloton Iq, our Ai powered personal trainer, big moves into 27 00:01:21,560 --> 00:01:25,679 Speaker 4: total wellness. So it'll play out over time as people 28 00:01:25,720 --> 00:01:28,720 Speaker 4: see the value and they start to embrace these things. 29 00:01:29,120 --> 00:01:31,760 Speaker 1: Who sees the value not just an investor, but your 30 00:01:31,800 --> 00:01:35,959 Speaker 1: stakeholder is me who owns Pelotine Bike, thinking about is 31 00:01:35,959 --> 00:01:37,720 Speaker 1: it me who's going to upgrade? Is it a whole 32 00:01:37,760 --> 00:01:40,560 Speaker 1: new cohort that comes in and buys these more pricey 33 00:01:40,600 --> 00:01:43,800 Speaker 1: products but with more built in cameras, more effective nature 34 00:01:43,840 --> 00:01:44,600 Speaker 1: of wellness. 35 00:01:44,600 --> 00:01:45,520 Speaker 3: I'm sure yeah. So. 36 00:01:45,680 --> 00:01:47,720 Speaker 4: Caroline, first of all, thanks so much for being a member. 37 00:01:47,760 --> 00:01:51,440 Speaker 4: It's great to have a fellow member here. And we 38 00:01:51,480 --> 00:01:55,760 Speaker 4: are focused both on existing members as well as non members. 39 00:01:55,880 --> 00:01:58,960 Speaker 4: For existing members, they're getting so much today. We are 40 00:01:59,000 --> 00:02:02,440 Speaker 4: introducing forever ever, regardless of when you bought your equipment, 41 00:02:02,440 --> 00:02:04,760 Speaker 4: the benefits of peloton Iq, and that's just included in 42 00:02:06,120 --> 00:02:10,000 Speaker 4: your membership. We are now including a new acquisition that 43 00:02:10,040 --> 00:02:12,360 Speaker 4: we did a company called breath Work, because we know 44 00:02:12,560 --> 00:02:14,880 Speaker 4: the power of breathing and how it can help people 45 00:02:14,919 --> 00:02:17,840 Speaker 4: with stress and anxiety and depression and improve heart rate 46 00:02:17,880 --> 00:02:20,320 Speaker 4: variability and improve blood pressure. 47 00:02:20,520 --> 00:02:21,680 Speaker 3: So everyone's getting that. 48 00:02:22,840 --> 00:02:25,359 Speaker 4: Major partnerships, for example, one with the Hospital for Special 49 00:02:25,400 --> 00:02:29,000 Speaker 4: Surgery to focus on injury prevention and rehabilitation. All of 50 00:02:29,040 --> 00:02:31,760 Speaker 4: these things happen for existing members, but if you're not 51 00:02:31,800 --> 00:02:34,760 Speaker 4: an existing member, there has never been a better time 52 00:02:34,800 --> 00:02:37,720 Speaker 4: to become one. With the launch of this all new 53 00:02:37,760 --> 00:02:41,320 Speaker 4: equipment lineup the Cross Training Series. Now we're delivering the 54 00:02:41,360 --> 00:02:45,600 Speaker 4: benefits of both cardio and strength because we know that 55 00:02:45,680 --> 00:02:48,440 Speaker 4: adults should be doing a couple of hours at least 56 00:02:48,600 --> 00:02:51,600 Speaker 4: a week of cardio and two days of strength training 57 00:02:51,680 --> 00:02:53,839 Speaker 4: every week. You can do that now, all with one 58 00:02:53,840 --> 00:02:55,800 Speaker 4: piece of equipment. That makes it super easy. 59 00:02:56,360 --> 00:03:00,280 Speaker 1: It's almost in many ways like Cross Training way that 60 00:03:00,320 --> 00:03:02,520 Speaker 1: which you're sort of identifying it. But if I look 61 00:03:02,520 --> 00:03:04,320 Speaker 1: at the analyst notes and maybe the reaction from the 62 00:03:04,320 --> 00:03:06,040 Speaker 1: stock is because a lot of this have been baked in, 63 00:03:06,200 --> 00:03:08,560 Speaker 1: you've already given us full year forecasts. Then in many 64 00:03:08,560 --> 00:03:11,920 Speaker 1: way talk about what churn you're expecting, but what subscriber growth, 65 00:03:12,120 --> 00:03:14,120 Speaker 1: what do you think this will spur in terms of sps. 66 00:03:14,680 --> 00:03:17,880 Speaker 4: So we knew, of course as we went into this 67 00:03:17,960 --> 00:03:19,440 Speaker 4: year what we were going to be launching, and we 68 00:03:19,440 --> 00:03:21,440 Speaker 4: were able, as you point out, Caroline, to bake all 69 00:03:21,480 --> 00:03:24,640 Speaker 4: of that into our guidance for the year. But we 70 00:03:24,760 --> 00:03:28,200 Speaker 4: also included in our guidance that as the year progresses, 71 00:03:28,520 --> 00:03:31,480 Speaker 4: we will be inflecting back toward growth. And that's a big, 72 00:03:31,680 --> 00:03:34,400 Speaker 4: big step for us as a company. 73 00:03:34,240 --> 00:03:35,960 Speaker 3: We had a couple of. 74 00:03:36,000 --> 00:03:40,080 Speaker 4: Years where we've been down as we have regrouped after 75 00:03:40,120 --> 00:03:42,280 Speaker 4: the pandemic, and we are now in such a good 76 00:03:42,360 --> 00:03:46,520 Speaker 4: place where you see us having reignited our innovation engine. 77 00:03:47,000 --> 00:03:50,600 Speaker 4: Of course, our customer love has never left us. Customers 78 00:03:51,160 --> 00:03:54,880 Speaker 4: really just appreciate what Peloton does for them, and in 79 00:03:54,880 --> 00:03:57,880 Speaker 4: particular have that deep connection with our instructors. So we're 80 00:03:57,880 --> 00:04:00,839 Speaker 4: building on that foundation and now feel more confident about 81 00:04:00,840 --> 00:04:02,000 Speaker 4: our future than ever before. 82 00:04:02,240 --> 00:04:04,480 Speaker 2: I like we said earlier about how existing members will 83 00:04:04,520 --> 00:04:06,400 Speaker 2: have the benefits of the new software, but will you 84 00:04:06,440 --> 00:04:10,480 Speaker 2: continue to support the existing hardware and software if customers 85 00:04:10,480 --> 00:04:13,200 Speaker 2: don't upgrade to the new equipment, Because down the road, 86 00:04:13,240 --> 00:04:15,680 Speaker 2: at some point, you want to get everyone to the 87 00:04:15,760 --> 00:04:17,919 Speaker 2: new model of Peloton equipment, don't. 88 00:04:17,720 --> 00:04:18,520 Speaker 3: You, Scarlett. 89 00:04:18,560 --> 00:04:23,440 Speaker 4: We build our products to last these the bikes that 90 00:04:23,480 --> 00:04:28,719 Speaker 4: we have today are still beautiful, even the original bikes, 91 00:04:28,760 --> 00:04:31,960 Speaker 4: they are absolutely beautiful, and they are fully functional. Our 92 00:04:32,000 --> 00:04:34,520 Speaker 4: treads are designed to last, the rose designed to last. 93 00:04:34,880 --> 00:04:37,839 Speaker 4: We're continuing to support them. We are not in the 94 00:04:37,880 --> 00:04:41,120 Speaker 4: obsolescence business. Whatever it takes for you to get and 95 00:04:41,160 --> 00:04:44,000 Speaker 4: stay fit, we want to support you on that journey. 96 00:04:44,920 --> 00:04:48,400 Speaker 1: You said about the growth trajectory, the inflection is that 97 00:04:48,440 --> 00:04:49,279 Speaker 1: profitable growth. 98 00:04:49,360 --> 00:04:50,080 Speaker 3: When are we going to get? 99 00:04:50,120 --> 00:04:54,080 Speaker 4: Absolutely so we you know, I'm so pleased that we 100 00:04:54,160 --> 00:04:59,000 Speaker 4: have now been able to deliver five consecutive quarters of 101 00:04:59,480 --> 00:05:03,279 Speaker 4: significant and free cash flow, and so this is now 102 00:05:03,320 --> 00:05:06,880 Speaker 4: a company that we're running in a very disciplined way 103 00:05:07,279 --> 00:05:10,440 Speaker 4: and we're delivering real profitability. And I think you can 104 00:05:10,480 --> 00:05:12,200 Speaker 4: see that in the year over year changes in the 105 00:05:12,200 --> 00:05:15,200 Speaker 4: stock price, where we're up considerably because people now feel 106 00:05:15,240 --> 00:05:16,760 Speaker 4: so confident about the future. 107 00:05:16,560 --> 00:05:19,200 Speaker 1: And you're confident in the price point. What's so interesting 108 00:05:19,240 --> 00:05:21,640 Speaker 1: is that what point do you see that elasticity? How 109 00:05:21,720 --> 00:05:24,159 Speaker 1: high can you push me when I've got loyalty to 110 00:05:24,279 --> 00:05:26,880 Speaker 1: a tounda to Cody Risby, how much do you think 111 00:05:26,880 --> 00:05:29,400 Speaker 1: that I will continue to add on price points? When 112 00:05:29,440 --> 00:05:31,240 Speaker 1: it comes to the bike to the tread to the subscription. 113 00:05:31,400 --> 00:05:34,400 Speaker 4: So we know that every dollar is precious and people 114 00:05:34,400 --> 00:05:36,440 Speaker 4: are considering how to spend their money these days, and 115 00:05:36,480 --> 00:05:38,800 Speaker 4: so we're very careful about what we do here. But 116 00:05:38,800 --> 00:05:41,840 Speaker 4: we're also looking at the value that we deliver, and 117 00:05:42,320 --> 00:05:44,599 Speaker 4: we know that, you know, if people are going to 118 00:05:44,640 --> 00:05:47,480 Speaker 4: invest in something, they should be investing in their health, 119 00:05:47,800 --> 00:05:50,800 Speaker 4: in their well being, in their longevity and how they 120 00:05:50,839 --> 00:05:55,200 Speaker 4: feel both physically and about themselves. And Peloton allows them 121 00:05:55,240 --> 00:05:57,479 Speaker 4: to get a great return on that investment. 122 00:05:57,720 --> 00:05:59,280 Speaker 3: So we did do a price increase. 123 00:05:59,520 --> 00:06:01,920 Speaker 4: It was the first change in our all access membership 124 00:06:01,960 --> 00:06:02,920 Speaker 4: in over three years. 125 00:06:02,960 --> 00:06:04,960 Speaker 3: We were very thoughtful about what that was. 126 00:06:05,440 --> 00:06:08,200 Speaker 4: And we hope that our members appreciate all of the 127 00:06:08,240 --> 00:06:10,920 Speaker 4: additional benefits that we've provided them over the last year, 128 00:06:11,000 --> 00:06:15,440 Speaker 4: for example, adding about twelve thousand more classes, forty more programs, 129 00:06:15,440 --> 00:06:18,880 Speaker 4: more modalities, things like weighted vest workouts, as well as 130 00:06:18,880 --> 00:06:21,359 Speaker 4: what we just announced today, which is the introduction of 131 00:06:21,360 --> 00:06:24,920 Speaker 4: Peloton Iq, which provides basically the benefits of a personal 132 00:06:24,920 --> 00:06:25,719 Speaker 4: trainer in your home. 133 00:06:26,080 --> 00:06:28,040 Speaker 2: I want to get your sense of the competitive landscape. 134 00:06:28,080 --> 00:06:30,520 Speaker 2: When you look at music streaming services, people usually have 135 00:06:30,560 --> 00:06:33,760 Speaker 2: only one they pick Spotify or they pick Apple Music 136 00:06:34,040 --> 00:06:37,599 Speaker 2: for actual streaming of television shows, maybe they have a 137 00:06:37,600 --> 00:06:39,800 Speaker 2: couple of them. When it comes to fitness and wellness, 138 00:06:39,960 --> 00:06:41,800 Speaker 2: what's your sense of how many people are willing to 139 00:06:42,120 --> 00:06:43,120 Speaker 2: hold on to and pay for. 140 00:06:43,520 --> 00:06:47,359 Speaker 4: Yeah, so, first of all, we're happy for you to 141 00:06:47,400 --> 00:06:50,200 Speaker 4: work out in whatever ways you choose to and in 142 00:06:50,240 --> 00:06:53,000 Speaker 4: as many ways as you do. But our focus is 143 00:06:53,040 --> 00:06:55,680 Speaker 4: on making sure that peloton can be the answer for you, 144 00:06:56,160 --> 00:07:00,640 Speaker 4: regardless of what aspect of total health you're focused on. Cardio, 145 00:07:00,680 --> 00:07:03,359 Speaker 4: of course, is where we started and we're known for 146 00:07:03,440 --> 00:07:07,119 Speaker 4: that between our row, our tread, and of course the bike. 147 00:07:08,200 --> 00:07:11,920 Speaker 4: But now strength is a huge area of focus for us. 148 00:07:12,160 --> 00:07:17,160 Speaker 4: We know people are recognizing the importance of strength training 149 00:07:17,680 --> 00:07:20,640 Speaker 4: in particular as we grow older in terms of building 150 00:07:20,680 --> 00:07:22,880 Speaker 4: a maintaining muscle mass and what it does, for example, 151 00:07:22,920 --> 00:07:24,600 Speaker 4: for our metabolic function. 152 00:07:25,000 --> 00:07:26,840 Speaker 3: So we're a great solution for that. 153 00:07:26,960 --> 00:07:31,040 Speaker 4: With the cameras that we launched today in our plus line, 154 00:07:31,200 --> 00:07:33,360 Speaker 4: we're able to count your reps, we're able to give 155 00:07:33,360 --> 00:07:35,760 Speaker 4: you feedback, we're able to suggest when you should be 156 00:07:35,880 --> 00:07:37,840 Speaker 4: up in your weights. Then we get to things like 157 00:07:37,920 --> 00:07:40,720 Speaker 4: mental well being. We talk about breath work, our meditations, 158 00:07:41,080 --> 00:07:42,360 Speaker 4: the work that we do with yoga. 159 00:07:42,480 --> 00:07:43,520 Speaker 3: All these things help. 160 00:07:43,800 --> 00:07:45,800 Speaker 1: So, I mean and I can see that the strength 161 00:07:45,800 --> 00:07:50,840 Speaker 1: halle Berry perimenopausal. You're thinking about a wellness trajectory very briefly. 162 00:07:50,920 --> 00:07:53,600 Speaker 1: P Five years from now, how do you see yourself 163 00:07:53,640 --> 00:07:54,680 Speaker 1: in the finest landscape. 164 00:07:54,760 --> 00:07:59,200 Speaker 4: Yeah, So we intend to be your essential partner in 165 00:07:59,240 --> 00:08:02,280 Speaker 4: the journey to feeling better about yourself and living your 166 00:08:02,280 --> 00:08:05,520 Speaker 4: best life. And that means not just focusing on the 167 00:08:05,640 --> 00:08:08,000 Speaker 4: quantity of years that you have on this planet. 168 00:08:07,840 --> 00:08:09,520 Speaker 3: But the quality of those years. 169 00:08:09,920 --> 00:08:13,560 Speaker 4: And we know that there are choices that we can make, 170 00:08:14,200 --> 00:08:16,520 Speaker 4: behavioral choices that we can make that make a difference 171 00:08:16,520 --> 00:08:19,280 Speaker 4: in the quality of those years. Those are am I 172 00:08:19,320 --> 00:08:22,040 Speaker 4: doing cardio? Am I doing strength? Am I taking care 173 00:08:22,120 --> 00:08:25,160 Speaker 4: of my mental well being? Am I eating right? If 174 00:08:25,160 --> 00:08:28,280 Speaker 4: I need supplements? Am I taking the right supplements? Am 175 00:08:28,360 --> 00:08:30,480 Speaker 4: I sleeping right? We can make a difference in every 176 00:08:30,520 --> 00:08:32,120 Speaker 4: one of those areas, and we intend to. 177 00:08:32,720 --> 00:08:34,960 Speaker 2: Peter Stern a pleasure. Thank you so much for joining 178 00:08:35,040 --> 00:08:37,640 Speaker 2: us today. CEO of Peloton, Peter Stern joining us along 179 00:08:37,679 --> 00:08:39,720 Speaker 2: with the Bloomberg Tech co host Caroline High