Peloton Announces Major Staffing Cuts, CEO Steps Down

Peloton staffing cuts CEO steps down
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Peloton staffing cuts CEO steps down
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Photo Credit: David Marioni

Peloton CEO Barry McCarthy has resigned as the company announced a 15% cut to its global workforce, impacting around 400 employees. The exercise company became a high-paying revenue stream for the music industry—but the post-pandemic return to gyms is killing demand for home exercise equipment.

McCarthy resigned on May 2 with a note shared to employees stating the company has to make cuts to survive in the post-pandemic world. “Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue,” the memo reads. “The company had to do that in order to generate sustainable positive free cash flow.”

Barry McCarthy assumed his position as CEO of Peloton in 2022 from Founder John Foley. McCarthy implemented several cost-cutting measures at the exercise company, including focusing on its software offering after demand for the expensive exercise equipment fell through. As part of the announcement, Peloton also revised its full-year forecast for connected fitness subscribers to between 2.96 million and 2.98 million—a decrease of 30,000 from previous estimates.

Peloton’s relationship with the music industry has been an interesting one. Its Peloton Music arm collaborates with composers to create custom music for its workouts. Meanwhile, according to the 2022 annual report, Peloton currently licenses rights to stream 4 million music tracks. Goldman Sachs estimates that Peloton contributed as much as $267 million in revenue to the music industry in 2022 alone.

Part of that success comes from Peloton’s ‘Artist Series’ classes, which feature stars including Taylor Swift, The Beatles, Bruce Springsteen, Ed Sheeran, and many more. While focusing on artists has traditionally brought a positive return for the company, it dropped Kanye in 2022 following his anti-Semitic outbursts online. Peloton instructor Alex Toussaint said he would no longer feature Kanye songs—which prompted the exercise company to drop the rapper’s music entirely.

“This means our instructors are no longer using his music in any newly produced classes and we are not suggesting any class that includes his music in our proactive recommendations to members,” Peloton said in a statement at the time.”