PELOTON INTERACTIVE, INC.PTON
PELOTON INTERACTIVE, INC. Stock Compensation Disclosure
Equity-Based Compensation
____________________________
2019 Equity Incentive Plan
In August 2019, the Board of Directors adopted the 2019 Equity Incentive Plan (the “2019 Plan”), which serves as the successor the 2015 Stock Plan. The 2019 Plan provides for the grant of stock options, restricted stock and restricted stock units to employees, directors and consultants.
Stock Options
The following summary sets forth the stock option activity under the 2019 Plan:
| Options Outstanding | |||||||||||||||||||||||
| Number of Stock Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
Outstanding — June 30, 2024 | 28,901,489 | $ | 20.14 | 4.7 | $ | 3.4 | |||||||||||||||||
| Granted | 1,036,395 | $ | 7.54 | ||||||||||||||||||||
| Exercised | (1,900,850) | $ | 2.79 | $ | 9.2 | ||||||||||||||||||
| Forfeited or expired | (7,078,277) | $ | 18.89 | ||||||||||||||||||||
Outstanding — June 30, 2025 | 20,958,757 | $ | 21.51 | 3.8 | $ | 6.8 | |||||||||||||||||
Vested and Exercisable— June 30, 2025 | 19,223,300 | $ | 22.56 | 3.5 | $ | 6.8 | |||||||||||||||||
Unvested option activity is as follows:
| Options | Weighted-Average Grant Date Fair Value | ||||||||||
Unvested - June 30, 2024 | 6,348,265 | $ | 17.24 | ||||||||
| Granted | 1,036,395 | $ | 5.53 | ||||||||
| Vested | (5,092,479) | $ | 17.37 | ||||||||
| Forfeited or expired | (556,724) | $ | 18.80 | ||||||||
Unvested - June 30, 2025 | 1,735,457 | $ | 9.39 | ||||||||
The aggregate intrinsic value of options outstanding and vested and exercisable, were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of June 30, 2025. The fair value of the common stock is the closing stock price of Class A common stock as reported on The Nasdaq Global Select Market. The aggregate intrinsic value of exercised options was $9.2 million, $12.7 million, and $85.1 million for the fiscal years ended June 30, 2025, 2024, and 2023, respectively.
For the fiscal years ended June 30, 2025, 2024, and 2023, the weighted-average grant date fair value per option was $5.53, $2.46, and $6.42, respectively. The fair value of each option was estimated at the grant date using the Black-Scholes method with the following assumptions:
| Fiscal Year Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Weighted average risk-free interest rate (1) | 4.3 | % | 4.5 | % | 3.3 | % | |||||||||||
Weighted average expected term (in years) (1) | 5.5 | 3.6 | 6.2 | ||||||||||||||
Weighted average expected volatility (1) | 87.0 | % | 87.5 | % | 81.4 | % | |||||||||||
Expected dividend yield (1) | — | — | — | ||||||||||||||
(1) Refer to 2019 Equity Incentive Plan within Note 2, Summary of Significant Accounting Policies for further details regarding how these assumptions are calculated.
Restricted Stock and Restricted Stock Units
The following table summarizes the activity related to the Company's restricted stock and restricted stock units:
| Restricted Stock Units Outstanding | |||||||||||
| Number of Awards | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding — June 30, 2024 | 55,811,463 | $ | 6.80 | ||||||||
| Granted | 35,743,345 | $ | 5.20 | ||||||||
| Vested and converted to shares | (27,674,455) | $ | 6.66 | ||||||||
| Cancelled | (8,578,635) | $ | 6.28 | ||||||||
Outstanding — June 30, 2025 | 55,301,718 | $ | 5.92 | ||||||||
For the fiscal years ended June 30, 2025, 2024, and 2023, the weighted-average grant date fair value per restricted stock unit was $5.20, $5.46, and $10.82, respectively.
Employee Stock Purchase Plan
The Black-Scholes option pricing model assumptions used to calculate the fair value of shares estimated to be purchased at the commencement of the ESPP offering periods were as follows:
| Fiscal Year Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Weighted average risk-free interest rate (1) | 2.5 | % | 2.1 | % | 0.9 | % | |||||||||||
Weighted average expected term (in years) (1) | 1.3 | 1.3 | 1.3 | ||||||||||||||
Weighted average expected volatility (1) | 91.0 | % | 93.0 | % | 88.2 | % | |||||||||||
Expected dividend yield (1) | — | — | — | ||||||||||||||
____________________________
(1) Refer to Employee Stock Purchase Plan within Note 2, Summary of Significant Accounting Policies for further details regarding how these assumptions are calculated.
During the fiscal years ended June 30, 2025, 2024, and 2023, the Company recorded Stock-based compensation expense associated with the ESPP of $4.6 million, $7.6 million, and $17.3 million respectively.
In connection with the offering periods that ended on August 31, 2024 and February 28, 2025, employees purchased 375,829 and 498,728 shares, respectively, of Class A common stock at a weighted-average price of $3.91 and $3.88, respectively, under the ESPP. As of June 30, 2025, total unrecognized compensation cost related to the ESPP was $3.9 million, which will be amortized over a weighted-average remaining period of 1.0 year.
Stock-Based Compensation Expense
The Company's total stock-based compensation expense was as follows:
| Fiscal Year Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | |||||||||||||||||
| Connected Fitness Products | $ | 9.3 | $ | 10.1 | $ | 14.3 | |||||||||||
| Subscription | 36.3 | 39.3 | 42.8 | ||||||||||||||
| Total cost of revenue | 45.7 | 49.5 | 57.1 | ||||||||||||||
| Sales and marketing | 16.4 | 19.7 | 28.9 | ||||||||||||||
| General and administrative | 121.9 | 177.1 | 167.2 | ||||||||||||||
| Research and development | 44.8 | 58.8 | 66.7 | ||||||||||||||
| Restructuring expense | 0.8 | 6.6 | 85.0 | ||||||||||||||
| Total stock-based compensation expense | $ | 229.6 | $ | 311.7 | $ | 405.0 | |||||||||||
As of June 30, 2025, the Company had $292.3 million of unrecognized stock-based compensation expense related to unvested stock-based awards that is expected to be recognized over a weighted-average period of 2.0 years.
During the fiscal year ended June 30, 2025, five employees who were eligible to participate in the Company’s Severance and Change in Control Plan (the “Severance Plan”) terminated employment. Certain modifications were made to equity awards, including the extension of the post-termination period during which the employee could exercise outstanding stock options from 90 days to one year (or the option expiration date, if earlier). In two instances during the fiscal year ended June 30, 2025, the employee transitioned to a non-executive advisory role. As a result of these modifications, the Company recognized incremental stock-based compensation expense of $4.2 million within General and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss.
During the fiscal year ended June 30, 2024, certain modifications were made to equity awards for four employees, who were eligible to participate in the Severance Plan, excluding the impact separately disclosed below, of the Company’s former President and Chief Executive Officer (“CEO”) who was also covered under the Severance Plan. For the fiscal year ended June 30, 2024, this included the extension of the post-termination period during which an employee may exercise outstanding stock options from 90 days to one year (or the option expiration date, if earlier). In one instance during the fiscal year ended June 30, 2024, the post-termination period during which an employee may exercise outstanding stock options was extended from 90 days to the earlier of the original expiration date or 3 years. This employee transitioned to a non-executive advisory role. As a result of these modifications, the Company recognized incremental stock-based compensation expense of $5.6 million for the fiscal year ended June 30, 2024 within Restructuring expense in the Consolidated Statements of Operations and Comprehensive Loss.
On February 7, 2022, the Board of Directors granted the Company’s former President and CEO, 8,000,000 shares of the Class A common stock (the "Option Award"). The Option Award had an exercise price of $38.77 per share, equal to the closing price of the Class A common stock on the CEO Commencement Date of February 9, 2022. The awards were to vest and become exercisable over four years, with 1/48th vesting on each monthly anniversary of the CEO Commencement Date, subject to the provision of the CEO’s continued service to the Company through each vesting date. The awards were to be exercisable through February 8, 2032. On May 2, 2024, Mr. McCarthy transitioned to a non-executive, strategic advisory role and was granted a new option award (the "Advisory Award") that vested in equal monthly installments through December 31, 2024. Mr. McCarthy also received one year of accelerated vesting on all outstanding stock options (other than the Advisory Award), which will remain exercisable until December 31, 2027. During the fiscal year ended June 30, 2024, in connection with the CEO transition, the Company recognized stock-based compensation expense of $41.9 million for the one year of accelerated vesting of the Option Award, which had an exercise price of $38.77 per share and a grant date fair value of approximately $167.6 million. In addition, the Company recognized incremental stock-based compensation expense of $5.4 million for the modification of stock option awards related to the extension of the exercise window through December 31, 2027. These expenses were recognized within General and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss.
During the fiscal year ended June 30, 2023, 13 employees of the Company who were eligible to participate in the Severance Plan terminated employment. Certain modifications were made to equity awards, including, in certain instances, the post-termination period during which an employee may exercise outstanding stock options was extended from 90 days to one year (or the option expiration date, if earlier), and extended
vesting was tied to certain consulting services that were deemed to be non-substantive. In one instance, the post-termination period during which an employee may exercise outstanding stock options was extended from 90 days to approximately 2.8 years. As a result of these modifications, the Company recognized incremental stock-based compensation expense of $49.6 million within Restructuring expense in the Consolidated Statements of Operations and Comprehensive Loss.
On July 1, 2022, the Compensation Committee of the Board of Directors of the Company approved a one-time repricing of certain stock option awards that had been granted to date under the 2019 Plan. The repricing impacted stock options held by all employees who remained employed through July 25, 2022. The repricing did not apply to the Company’s U.S.-based hourly employees (or employees with equivalent roles in non-U.S. locations) or its C-level executives. The original exercise prices of the repriced stock options ranged from $12.94 to $146.79 per share for the 2,138 total grantees. Each stock option was repriced to have a per share exercise price of $9.13, which was the closing price of Class A common stock on July 1, 2022. There were no changes to the number of shares, the vesting schedule or the expiration date of the repriced stock options. Incremental stock-based compensation expense resulting from the repricing was $21.9 million in the aggregate.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 7, 2025 | Showing above |
| 2021 | Aug 27, 2021 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.