Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: It's time now for the stock of the hour, and
Speaker 2: it is Peloton. The shares are falling after the company
Speaker 2: announced an overhaul of its hardware as well as raising prices.
Speaker 2: This is Peloton's first major attempt under new leadership to
Speaker 2: lift the company out of a multi year slump. So
Speaker 2: perhaps there's no better timing than to bring in the CEO,
Speaker 2: Peter Stern, who is behind this products revamp, and of
Speaker 2: course Bloomberg Tech co host Caroline Hyde also joins us.
Speaker 3: Now.
Speaker 2: Peter, welcome to Bloomberg. Thank you for speaking with us.
Speaker 2: Big hardware line, a big AI platform, Peloton IQ coming
Speaker 2: out today. Long anticipated, but the market appears underwhelmed. And
Speaker 2: I know that you don't follow this stock move on
Speaker 2: a day to day, minute by minute basis, But what
Speaker 2: my investors not fully appreciate about this announcement.
Speaker 4: First of all, Scarla, thanks for having me here. And
Speaker 4: I leave the day to day gyrations of the stock
Speaker 4: to the experts, traders, the analysts, folks like yourselves. That
Speaker 4: being said, if you look at the if you take
Speaker 4: the long view, let's look back a year, our stock
Speaker 4: is almost doubled. Look back a month way up, so
Speaker 4: I wouldn't focus on day to day, but I would
Speaker 4: focus on the news that we announced today because it's
Speaker 4: pretty amazing what we just announced. Completely new lineup of equipment,
Speaker 4: peloton Iq, our Ai powered personal trainer, big moves into
Speaker 4: total wellness. So it'll play out over time as people
Speaker 4: see the value and they start to embrace these things.
Speaker 1: Who sees the value not just an investor, but your
Speaker 1: stakeholder is me who owns Pelotine Bike, thinking about is
Speaker 1: it me who's going to upgrade? Is it a whole
Speaker 1: new cohort that comes in and buys these more pricey
Speaker 1: products but with more built in cameras, more effective nature
Speaker 1: of wellness.
Speaker 3: I'm sure yeah. So.
Speaker 4: Caroline, first of all, thanks so much for being a member.
Speaker 4: It's great to have a fellow member here. And we
Speaker 4: are focused both on existing members as well as non members.
Speaker 4: For existing members, they're getting so much today. We are
Speaker 4: introducing forever ever, regardless of when you bought your equipment,
Speaker 4: the benefits of peloton Iq, and that's just included in
Speaker 4: your membership. We are now including a new acquisition that
Speaker 4: we did a company called breath Work, because we know
Speaker 4: the power of breathing and how it can help people
Speaker 4: with stress and anxiety and depression and improve heart rate
Speaker 4: variability and improve blood pressure.
Speaker 3: So everyone's getting that.
Speaker 4: Major partnerships, for example, one with the Hospital for Special
Speaker 4: Surgery to focus on injury prevention and rehabilitation. All of
Speaker 4: these things happen for existing members, but if you're not
Speaker 4: an existing member, there has never been a better time
Speaker 4: to become one. With the launch of this all new
Speaker 4: equipment lineup the Cross Training Series. Now we're delivering the
Speaker 4: benefits of both cardio and strength because we know that
Speaker 4: adults should be doing a couple of hours at least
Speaker 4: a week of cardio and two days of strength training
Speaker 4: every week. You can do that now, all with one
Speaker 4: piece of equipment. That makes it super easy.
Speaker 1: It's almost in many ways like Cross Training way that
Speaker 1: which you're sort of identifying it. But if I look
Speaker 1: at the analyst notes and maybe the reaction from the
Speaker 1: stock is because a lot of this have been baked in,
Speaker 1: you've already given us full year forecasts. Then in many
Speaker 1: way talk about what churn you're expecting, but what subscriber growth,
Speaker 1: what do you think this will spur in terms of sps.
Speaker 4: So we knew, of course as we went into this
Speaker 4: year what we were going to be launching, and we
Speaker 4: were able, as you point out, Caroline, to bake all
Speaker 4: of that into our guidance for the year. But we
Speaker 4: also included in our guidance that as the year progresses,
Speaker 4: we will be inflecting back toward growth. And that's a big,
Speaker 4: big step for us as a company.
Speaker 3: We had a couple of.
Speaker 4: Years where we've been down as we have regrouped after
Speaker 4: the pandemic, and we are now in such a good
Speaker 4: place where you see us having reignited our innovation engine.
Speaker 4: Of course, our customer love has never left us. Customers
Speaker 4: really just appreciate what Peloton does for them, and in
Speaker 4: particular have that deep connection with our instructors. So we're
Speaker 4: building on that foundation and now feel more confident about
Speaker 4: our future than ever before.
Speaker 2: I like we said earlier about how existing members will
Speaker 2: have the benefits of the new software, but will you
Speaker 2: continue to support the existing hardware and software if customers
Speaker 2: don't upgrade to the new equipment, Because down the road,
Speaker 2: at some point, you want to get everyone to the
Speaker 2: new model of Peloton equipment, don't.
Speaker 3: You, Scarlett.
Speaker 4: We build our products to last these the bikes that
Speaker 4: we have today are still beautiful, even the original bikes,
Speaker 4: they are absolutely beautiful, and they are fully functional. Our
Speaker 4: treads are designed to last, the rose designed to last.
Speaker 4: We're continuing to support them. We are not in the
Speaker 4: obsolescence business. Whatever it takes for you to get and
Speaker 4: stay fit, we want to support you on that journey.
Speaker 1: You said about the growth trajectory, the inflection is that
Speaker 1: profitable growth.
Speaker 3: When are we going to get?
Speaker 4: Absolutely so we you know, I'm so pleased that we
Speaker 4: have now been able to deliver five consecutive quarters of
Speaker 4: significant and free cash flow, and so this is now
Speaker 4: a company that we're running in a very disciplined way
Speaker 4: and we're delivering real profitability. And I think you can
Speaker 4: see that in the year over year changes in the
Speaker 4: stock price, where we're up considerably because people now feel
Speaker 4: so confident about the future.
Speaker 1: And you're confident in the price point. What's so interesting
Speaker 1: is that what point do you see that elasticity? How
Speaker 1: high can you push me when I've got loyalty to
Speaker 1: a tounda to Cody Risby, how much do you think
Speaker 1: that I will continue to add on price points? When
Speaker 1: it comes to the bike to the tread to the subscription.
Speaker 4: So we know that every dollar is precious and people
Speaker 4: are considering how to spend their money these days, and
Speaker 4: so we're very careful about what we do here. But
Speaker 4: we're also looking at the value that we deliver, and
Speaker 4: we know that, you know, if people are going to
Speaker 4: invest in something, they should be investing in their health,
Speaker 4: in their well being, in their longevity and how they
Speaker 4: feel both physically and about themselves. And Peloton allows them
Speaker 4: to get a great return on that investment.
Speaker 3: So we did do a price increase.
Speaker 4: It was the first change in our all access membership
Speaker 4: in over three years.
Speaker 3: We were very thoughtful about what that was.
Speaker 4: And we hope that our members appreciate all of the
Speaker 4: additional benefits that we've provided them over the last year,
Speaker 4: for example, adding about twelve thousand more classes, forty more programs,
Speaker 4: more modalities, things like weighted vest workouts, as well as
Speaker 4: what we just announced today, which is the introduction of
Speaker 4: Peloton Iq, which provides basically the benefits of a personal
Speaker 4: trainer in your home.
Speaker 2: I want to get your sense of the competitive landscape.
Speaker 2: When you look at music streaming services, people usually have
Speaker 2: only one they pick Spotify or they pick Apple Music
Speaker 2: for actual streaming of television shows, maybe they have a
Speaker 2: couple of them. When it comes to fitness and wellness,
Speaker 2: what's your sense of how many people are willing to
Speaker 2: hold on to and pay for.
Speaker 4: Yeah, so, first of all, we're happy for you to
Speaker 4: work out in whatever ways you choose to and in
Speaker 4: as many ways as you do. But our focus is
Speaker 4: on making sure that peloton can be the answer for you,
Speaker 4: regardless of what aspect of total health you're focused on. Cardio,
Speaker 4: of course, is where we started and we're known for
Speaker 4: that between our row, our tread, and of course the bike.
Speaker 4: But now strength is a huge area of focus for us.
Speaker 4: We know people are recognizing the importance of strength training
Speaker 4: in particular as we grow older in terms of building
Speaker 4: a maintaining muscle mass and what it does, for example,
Speaker 4: for our metabolic function.
Speaker 3: So we're a great solution for that.
Speaker 4: With the cameras that we launched today in our plus line,
Speaker 4: we're able to count your reps, we're able to give
Speaker 4: you feedback, we're able to suggest when you should be
Speaker 4: up in your weights. Then we get to things like
Speaker 4: mental well being. We talk about breath work, our meditations,
Speaker 4: the work that we do with yoga.
Speaker 3: All these things help.
Speaker 1: So, I mean and I can see that the strength
Speaker 1: halle Berry perimenopausal. You're thinking about a wellness trajectory very briefly.
Speaker 1: P Five years from now, how do you see yourself
Speaker 1: in the finest landscape.
Speaker 4: Yeah, So we intend to be your essential partner in
Speaker 4: the journey to feeling better about yourself and living your
Speaker 4: best life. And that means not just focusing on the
Speaker 4: quantity of years that you have on this planet.
Speaker 3: But the quality of those years.
Speaker 4: And we know that there are choices that we can make,
Speaker 4: behavioral choices that we can make that make a difference
Speaker 4: in the quality of those years. Those are am I
Speaker 4: doing cardio? Am I doing strength? Am I taking care
Speaker 4: of my mental well being? Am I eating right? If
Speaker 4: I need supplements? Am I taking the right supplements? Am
Speaker 4: I sleeping right? We can make a difference in every
Speaker 4: one of those areas, and we intend to.
Speaker 2: Peter Stern a pleasure. Thank you so much for joining
Speaker 2: us today. CEO of Peloton, Peter Stern joining us along
Speaker 2: with the Bloomberg Tech co host Caroline High