Raphael Stevens

Peloton beat Wall Street’s expectations on the top and bottom lines, delivering a surprise profit that came in well ahead of forecasts.
The connected fitness company said it’s introducing another cost cutting plan to save $100 million in expenses, half of which will come from laying off 6% of staff.
In a letter to shareholders, CEO Peter Stern outlined his vision for growth, which includes working more closely with Precor and expanding internationally.

Clothing inside a Peloton store in Palo Alto, California, US, on Monday, Aug. 5, 2024.
David Paul Morris | Bloomberg | Getty Images

Peloton posted a surprise profit for its fiscal fourth quarter on Thursday and outlined its strategy to return to growth under new CEO Peter Stern. Shares rose in premarketing trading, swinging between gains of between 5% and 15%.
The connected fitness company, known for its stationary bikes and treadmills, posted a net income of $21.6 million, compared with a loss of $30.5 million in the year-earlier period. That’s thanks to better than expected sales but also, Peloton’s efforts to cut its operating expenses, which Stern said in a letter to shareholders remain too high. 

In fiscal year 2026, which began in July, the company plans to reduce run-rate expenses by another $100 million, on top of the $200 million it cut in fiscal 2025. Half of those cuts will come from indirect costs, like renegotiating contracts with suppliers, but the other half will come from cutting 6% of its staff, the company said. 
“Our operating expenses remain too high, which hinders our ability to invest in our future,” Stern wrote in the letter to shareholders. “We are launching a cost restructuring plan intended to achieve at least $100 million of run-rate savings by the end of FY26 by reducing the size of our global team, paring back indirect spend, and relocating some of our work. This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business.”
The latest round of layoffs comes just over a year after the company announced plans to cut 15% of its staff.
For the most recent quarter, Peloton beat Wall Street expectations on the top and bottom lines. Here’s how the company did in its fourth fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 5 cents vs. a loss of 6 cents expected
Revenue: $607 million vs. $580 million expected

The company’s reported net income for the three-month period that ended June 30 was $21.6 million, or 5 cents per share, compared with a loss of $30.5 million, or 8 cents per share, a year earlier. 

Sales dropped to $607 million, down about 6% from a year earlier.
Ever since its pandemic heyday, Peloton has been working to cut costs, stabilize its business and generate free cash flow to ensure its business can survive. Eight months into Stern’s tenure as Peloton’s latest top executive, those efforts are starting to bear fruit. 
For the full year, the company generated $320 million in free cash flow, ahead of its own internal expectations, and its guidance implies a path to revenue growth in the back half of the year. Overall, operating expenses were down 25% in fiscal 2025, with meaningful cuts to sales and marketing as well as research and development, metrics investors and analysts have long said were too high for the size of Peloton’s business.
For the fiscal fourth quarter, operating expenses were down 20% compared to the same quarter a year prior, led by a 28% decline in sales and marketing expenses, a 20% drop in research and development costs and a 33% decline in general and administrative costs.
Peloton has also made strides in reducing its debt, which it restructured last year to stave off an imminent liquidity crunch. In fiscal 2025, its net debt declined 43%, or by $343 million, compared to the year-earlier period, bringing net debt to $459 million when cash and cash equivalents are subtracted from its total debt of about $1.5 billion.

Road to profitability

For Peloton’s current quarter, it’s expecting sales to be between $525 million and $545 million, weaker than the $560 million than analysts had forecast, according to LSEG. However, for the full year, its expecting sales of between $2.4 billion and $2.5 billion, in line with expectations of $2.41 billion, according to LSEG. 
The current quarter is forecast to be worse than expected, largely because it falls during the summer months when people tend to pause their subscriptions and pull back on new workout gear. But the remainder of the year implies improving sales patterns in the quarters ahead. 
During the most recent quarter, Peloton sold more bikes and treadmills than Wall Street expected, posting connected fitness revenue of $198.6 million, well ahead of the $170.3 million analysts had expected, according to StreetAccount. Subscription revenue came in a bit light at $408.3 million, behind forecasts of $411 million, according to StreetAccount. 
Improving top-line metrics, which allows Peloton to better leverage its fixed costs, led to a 5.6 percentage point increase to its gross margin, which was 54.1% during the quarter, compared to 48.5% in the year ago period. 
Notably, its hardware segment, which has long been a drain on Peloton’s performance, is steadily getting more profitable. Peloton’s gross margin for hardware was 17.3%, a 9 percentage point increase from the year-ago period, driven by a shift toward more profitable products and decreases in service and repair, warehousing and transportation costs.
The company’s subscription gross margin grew by 3.7 percentage points to 71.9% but was helped by a one-time balance sheet adjustment related to music royalties costs. Excluding that benefit, subscription gross margin would have been 69.2%.
The gains that Peloton has made in improving its profits are expected to continue, but will be hampered by new 50% tariffs imposed by the Trump administration on products made with aluminum, as well as other duties that touch parts of the company’s supply chain. The company is expecting tariffs to impact free cash flow by $65 million in the year ahead and as a result, is expecting to generate $200 million in free cash flow in fiscal 2026, below what it achieved in fiscal 2025. 
In Stern’s letter to shareholders, there were no explicit plans to raise prices on subscriptions or hardware, but he said the company will rework its use of promotions and “adjust prices” to reflect its high costs. 
“For example, we will introduce optional expert assembly fees to reflect the real costs of installing our equipment, while extending free self-install to include our Tread and Row, thereby preserving Member choice and control,” Stern wrote. 
Now that cash flow and some metrics are starting to stabilize, Stern is ready to talk about growth and outlined his vision to get there in his letter to shareholders. To offset the high costs of acquiring customers online, Peloton is returning to physical retail but this time, it’ll open up micro-stores, rather than the sprawling showrooms it had in its early days. In fiscal 2025, it closed 24 retail showrooms, reducing its footprint of larger stores from 37 to 13 by the end of the fourth quarter.
Peloton plans to expand its micro-stores, from a count of one to 10, as well as grow its secondary marketplace for pre-owned hardware, Stern said. It also plans to increase the presence of its instructors at in-person events by three times this year, with the goal of increasing it by 10 times in fiscal 2027, he added.
Stern said the company will also work more closely with Precor, the fitness company it acquired under founder John Foley, by creating a “unified commercial business unit.” He also said the company will start building a plan to expand internationally – a goal that Peloton has long had but has failed to execute profitably. 
“Internationally, we plan to deliver local, in-language experiences using a mix of native instruction, AI dubbing, and more flexible approaches to music for thousands of classes,” Stern wrote. “Through partnerships, we aim to introduce the Peloton brand and experiences to millions of people around the world. Together, we believe these actions lay the groundwork for future, cost-effective launches of the full Peloton offering in new geographies.” More

Fifteen years ago this week, 40 of America’s richest families and individuals pledged to give away most of their wealth.
In the years since, the Giving Pledge has lost steam even as billionaire wealth and headcount has soared.
The Giving Pledge has shaped how the wealthy think about philanthropy, but its material impact is harder to measure.

Warren Buffett, Bill and Melinda Gates, in an interview on May 5, 2015

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
In June 2010, Bill Gates, Melinda French Gates and Warren Buffett started what could be described as the world’s most ambitious fundraising drive. After promising to give away the vast majority of their wealth, the trio asked their ultra-wealthy peers to pledge at least half of their assets to charity during their lifetimes or in their estates.

In two months, the Giving Pledge garnered signatures from 40 of America’s richest families and individuals to sign up. That first batch of pledgers, including Michael Bloomberg and David Rockefeller, was announced 15 years ago this week.
In the years since, the Giving Pledge has lost steam when it comes to enrollment. By the end of 2010, 57 signatories representing an estimated 14% of America’s billionaires had made the nonbinding commitment, according to a recent report by the Institute for Policy Studies. Currently, the pledge has commitments from 256 individuals, couples and families, including 110 American billionaires, per the progressive think tank. This group makes up 12% of the U.S. billionaire population as estimated by Forbes.
The annual number of sign-ups has also flagged since that first year. Even in 2020 when the pandemic spurred wealthy donors to give more, the Giving Pledge only earned 12 new signatories. This past May, the pledge welcomed 11 new members, a marked improvement over 2024’s record low of four.
Meanwhile, over the past 10 years, the number of billionaires worldwide has increased by more than half to 2,891, according to UBS. Their wealth also doubled by more than half to an estimated $15.7 trillion, UBS said.
“It’s disappointing in that you would hope more people would step up,” said Chuck Collins, program director at the IPS and great-grandson of the meatpacker Oscar Mayer.

Collins, a co-author of the report, said the rapid increase in wealth may be partly to blame. This surge in wealth has also made it challenging for the pledgers to give away their money fast enough.
“Some of this is fairly sudden, the wealth growth,” he said, “so you got to give people … a decade of slack, if you just land in the billionaire class to figure it out.”
Whether the Giving Pledge has been successful depends on whom you ask. The IPS report described the Giving Pledge as “unfulfilled, unfulfillable, and not our ticket to a fairer, better future” and identified only one living couple to have fulfilled the pledge, John and Laura Arnold.
A spokesperson for the Giving Pledge described the IPS report as “misleading,” and said the IPS used incomplete data and excluded “significant forms of charitable giving,” including gifts to foundations.
“For fifteen years, the Giving Pledge has helped create new norms of generosity and grown into a connected and active global learning community,” a spokesperson wrote in a statement to Inside Wealth.
Collins said the Giving Pledge has some merit, describing it as a “community of peers among a group who don’t have a lot of peers.”
Amir Pasic, dean of the Indiana University Lilly Family School of Philanthropy, said it has had a lasting impact on how the wealthy think about their giving.
“I still think that it was really important attempt to socialize the new wealth that was emerging early on in this century,” he said. “We can interestingly debate how successful it has or hasn’t been, but it’s become a feature of the high-net-worth philanthropic landscape.”
Though Giving Pledge enrollment has stagnated, other efforts to accelerate giving have emerged, said Pasic, citing the collective Blue Meridian Partners.
And while some billionaires, particularly younger ones, may be reluctant to associate themselves with the Gateses and Buffett, it doesn’t mean they aren’t contributing in their own way, Pasic said.
“Buffett is the senior representative of new wealth at the beginning of this century. New representatives have emerged since then,” he said.

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According to Collins, impact investing and other alternatives to traditional philanthropy have gained traction, especially among the new class of tech billionaires. He gave the example of Oracle’s Larry Ellison amending his pledge to focus his resources on technology research instead of traditional nonprofit organizations.
“I think there’s a little more blurring between for profit and nonprofit, charity versus impact investing,” Collins said.
Venture capital billionaire Marc Andreessen has gone so far as to declare that innovating technology — and amassing personal riches in the process — is philanthropic in and of itself.
“Who gets more value from a new technology, the single company that makes it, or the millions or billions of people who use it to improve their lives? QED,” he wrote in 2023.
Pasic said it is possible that Bill Gates’ recent commitment to give away virtually all of his wealth over the next 20 years may bring new urgency to the Giving Pledge.
“I think that remains to be seen,” he said, “whether it’s going to end up being more of a kind of a private club that becomes less relevant or if it’ll be the beginning of something broader, gaining new energy in this turbulent time and or spawning other kinds of groups … or other collectives.” More

E.l.f. Beauty beat Wall Street’s expectations on the top and bottom lines in its fiscal first quarter, but new China tariffs are weighing on its profits, which were down 30% from the year-ago period.
The cosmetics company’s sales grew 9%, marking the second quarter in a row in which revenue growth slowed to the single digits.
E.l.f. just closed its acquisition of Hailey Bieber’s beauty brand Rhode, and the effect that will have on its performance won’t be seen until later in the year.

E.l.f. cosmetic products are seen for sale in a store in Manhattan, New York City, on June 29, 2022.
Andrew Kelly | Reuters

E.l.f. Beauty’s profits fell 30% in its fiscal first quarter as new tariffs on Chinese imports begin to affect the cosmetic company’s bottom line.
In the three months that ended on June 30, E.l.f.’s net income fell to $33.3 million, down 30% from $47.6 million a year ago. The company, which sources about 75% of its products from China, also declined to provide a full-year revenue guide, citing the “wide range of potential outcomes” related to the new duties. 

Instead, the company only issued guidance for the first half of the fiscal year. E.l.f. said it is expecting sales growth to be above 9% in the first half of the year and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, margins to be 20%, compared with 23% in the first half of the previous fiscal year.
“We’re operating in a very volatile macro environment, obviously a great deal of uncertainty on tariffs, so until we have greater resolution on what the tariff picture looks like, we didn’t think it made sense to issue guidance,” CEO Tarang Amin told CNBC in an interview. “It’s the uncertainty around the tariffs that make things more difficult.” 
The company has already raised prices by $1 to offset tariff costs and is working to expand its business outside of the U.S. and diversify its supply chain. 
“We’re under 55% tariffs on goods coming from China, and we’ve planned against that,” Amin said. “So I’m just waiting for that other shoe to drop to see OK, where do they really settle out? I never thought I would see a day that I’m happy to see 55% tariffs, but it’s a lot better than 170%, so I think once we have that resolution, we’ll be in a better spot.”
Beyond profits, E.l.f. beat expectations on the top and bottom lines. 

Here’s how the cosmetics company performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 89 cents adjusted vs. 84 cents expected
Revenue: $354 million vs. $350 million expected

The company’s reported net income for the three-month period that ended June 30 was $33.3 million, or 58 cents per share, compared with $47.6 million, or 81 cents per share, a year earlier. Excluding one-time items related to stock-based compensation and other nonrecurring charges, E.l.f. saw adjusted net income of $51.3 million, or 89 cents per share.
Sales rose to $354 million, up 9% from $324 million a year earlier. That marks the second quarter in a row in which revenue growth slowed to the single digits, a pattern the company hasn’t seen since 2020. 
Over the past four years, E.l.f.’s sales have consistently grown in the high double digits, but that momentum has started to slow as the beauty category overall cools off following several years of outsized growth. 
Amin said growth is expected to improve in the current quarter. He pointed out that the quarter’s 9% sales growth is on top of 50% growth in the year-ago period but acknowledged the category at large — and the state of consumer spending — has been soft. 
“Sometimes people forget just how much we’ve been growing,” Amin said. “The category, the state of the consumer, is still challenged. There’s a lot of uncertainty with tariffs, inflation.” 
While the fiscal first quarter was slower than quarters past, Amin said Nielsen data shows the company is still taking market share and outperforming the overall category. 
A key aspect of the company’s growth comes from buzzy product launches, which are often “dupes” of higher-priced prestige products. It recently launched its Bright Icon Vitamin C + E Ferulic Serum at $17, which is thought to have been inspired by a similar product from SkinCeuticals, which retails for $185.
It also released a new sunscreen and just closed on its acquisition of Hailey Bieber’s beauty brand Rhode, which will launch in all Sephora stores in the U.S. and Canada in September. The effect Rhode will have on E.l.f.’s sales, and especially its launch in Sephora, won’t be seen in its results until later this year.

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