Peloton Spent More Than $60MM In Litigation and Settlement Costs Over the Past Year

NMPA Files Motion to Dismiss Peloton's "Baseless Antitrust" Counterclaim

In late February, Digital Music News was first to report that Peloton had settled its ugly copyright-infringement lawsuit with 14 music publishers. The high-stakes legal battle didn’t come cheap for the exercise equipment company, however. According to financial documents just released, Peloton spent over $60 million on litigation and settlements during the past year.

Peloton revealed the staggering figure in a quarterly financial report submitted to the Securities and Exchange Commission (SEC), and a copy of the document was shared with Digital Music News.

According to the filing, Peloton spent $49.3 million to cover litigation and settlement expenses during this year’s first quarter (its third fiscal quarter) – not substantially less than the $59 million it spent for the same purpose throughout the nine-month-long period ending on March 31st.

Though Peloton didn’t disclose a specific breakdown of courtroom costs in its Q1 2020 financial report, the timing of the litigation and settlement uptick seems to suggest that the lion’s share of legal expenditures derived from the music publishers’ lawsuit.

However, it bears mentioning that the brand reached a “confidential” settlement with Flywheel Sports, an indoor cycling company, on January 30th of this year, besides addressing “litigation matters and claims which arise in the ordinary course of its business.”

These points certainly played a part in hiking quarterly litigation and settlement spending to $49.3 million, but the exact degree of their influence is unclear, once again.

While the domestic and global economies are struggling because of the coronavirus (COVID-19) crisis and its lockdown measures, Peloton has experienced a noteworthy increase in business – to the tune of a 66 percent sales jump from last year, to $524.6 million in revenue.

The reasons are fairly obvious: people trapped by social-distancing and self-quarantining are seeking innovative cycling solutions from the comfort of home, and evidently, many have turned to Peloton for their indoor-exercise needs.

At the time of this writing, Peloton’s stock, traded under the symbol PTON, was up nearly 16 percent on the day, to over $44 per share. In mid-March, as the coronavirus crisis began to affect the domestic market, Peloton was trading for around $27 per share.

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