This afternoon, Peloton hosted its Q3 earnings call following the release of its shareholders report. While the letter to shareholders gave zero update to the current controversy surrounding the safety of the Tread and Tread+, Peloton CEO John Foley cleared the air immediately.
Since the tragic death of a child at the hands of a Peloton Tread+ on top of numerous incidents of injury, much controversy has surrounded the device. This led Peloton to recently suggest that all owners cease using their Tread or Tread+ until the safety concerns can be amended.
Naturally, as shareholders and connected fitness writers like myself awaited Peloton’s quarterly report today, the question in the back of everyone’s mind was, “what does the future look like for Peloton’s treadmills?”
PeloBuddy was able to listen in on the call and reported that CEO John Foley immediately addressed the issue, stating that the company would continue the production of Tread classes, despite current sales being halted. According to Foley, the company has every intention of continuing to produce Tread content in anticipation of its relaunch/initial US launch.
Subscription update for Peloton Tread owners
As a result of the aforementioned incidents on Peloton’s Tread and Tread+, the U.S. Consumer Product Safety Commission (CPSC) recommended that all current owners immediately stop using their treadmills until the necessary fixes are approved and implemented.
To alleviate some of the inconvenience this is sure to cause current Treadmill owners, Peloton will be providing them three full months of All-Access subscription for free. Simultaneously, Peloton sent out the following email to current Tread and Tread+ owners with an update on the situation:
We are also proactively waiving three months of your All-Access Membership as a Tread+ owner. We hope you continue to enjoy our strength, yoga, running and other classes, which can all be accessed on the Peloton Bike, Bike+, any iOS or Android device, on the web, Apple TV, Fire TV, Roku TVs, Chromecast and Android TV. These waivers will appear on your subscription by early next week and will take effect starting with your next billing date after they are applied.
We have no plans to stop creating our great running and strength content, which can be used with or without a treadmill, either indoors or outdoors.
Peloton Tread update
Later in the call, Foley admitted that the launch of a lower cost tread in the US has been paused indefinitely. This Tread relaunch and initial US launch can only resume once the CPSC has received and reviewed Peloton’s proposed fixes for the issues currently affecting the Tread specifically.
In this instance, there has been a history of the treadmill’s video tablet detaching and falling on people. The CPSC has told Peloton that these reviews typically takes six to eight weeks, but it could be even longer. Due to this fluid timeframe, Peloton is unable to commit to a hard relaunch date for the Tread at this time, although the company hopes it will be available again some time in July.
Peloton Tread+ update
The safety concerns surrounding the Tread+ are not so easily fixed and may require more time and extra parts to ensure nothing – or no one – gets sucked underneath ever again. Peloton’s CEO stated this safety upgrade would include “additional physical hardware to further enhance safety.”
These parts will obviously take more time to develop, manufacture, test, and then implement. What’s more, is that the CPSC will then have to review and approve any and all changes before the Tread+ can be sold again. Peloton did not give any specific timeline on this process, but it’s fair to say it will take significantly longer to roll out than the standard Tread.
In a matter of days, current Tread and Tread+ devices will have new software based safety measures sent to them via over the air updates. One new measure will include a digital passcode required on the Tread touchscreen before it can become operational.
While Peloton’s Q3 earnings looked great on paper today, it is already anticipating a negative impact for Q4 given this recall. On the call, Peloton personnel mentioned an estimated $165 million loss on the horizon. This total was determined by totaling $105 million worth of anticipated lost sales, $10 million in free subscriptions, and an additional $50 million in refunds and pickup of products from current Tread & Tread+ owners.
Speaking of that, Peloton is currently estimating around 10% of Tread & Tread+ members will actually return their devices, but time will tell how realistic all of these estimated numbers are.
Subscribe to Connect the Watts on YouTube to stay in the loop with all the connected fitness news as it happens