Peloton CEO Barry McCarthy to step down, company to lay off 15% of staff as it looks to refinance debt

Peloton announced Thursday that CEO Barry McCarthy will be stepping down and the company will lay off 15% of its staff because it "simply had no other way to bring its spending in line with its revenue."

McCarthy, a former Spotify and Netflix executive, will become a strategic advisor to Peloton through the end of the year while Karen Boone, the company's chairperson, and director Chris Bruzzo will serve as interim co-CEOs. Boone most recently served as the CFO of Restoration Hardware while Bruzzo was a longtime executive at Electronic Arts. Peloton is seeking a permanent CEO.

The company also announced a broad restructuring plan that will see its global headcount cut by 15%, or about 400 employees. It plans to continue to close retail showrooms and make changes to its international sales plan.

The moves are designed to realign Peloton's cost structure with the current size of its business, it said in a news release. It's expected to reduce annual run-rate expenses by more than $200 million by the end of fiscal 2025. About half of those savings are going to come from payroll reductions, while the rest will come from lower marketing spending, a reduced retail store footprint, and reduced IT and software spending, said finance chief Liz Coddington.

The departments hit the hardest from the restructuring will be Peloton's research and development, marketing and international teams, Coddington said.

"This restructuring will position Peloton for sustained, positive free cash flow, while enabling the company to continue to invest in software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business," the company said.

Peloton's shares surged more than