Peloton (NASDAQ:PTON) has been riding higher all year as demand for home exercise and connected fitness solutions has skyrocketed amid the COVID-19 pandemic. Revenue skyrocketed by 172% last quarter, Connected Fitness subscriptions jumped 113% to 1.09 million, paid Digital subscriptions more than tripled to nearly 317,000, and engagement is off the charts.

But there's more growth where that came from. A lot more.

Man exercising on a Peloton Bike next to a bed in a bedroom

Image source: Peloton.

The path to 100 million

This week, Peloton virtually hosted its first investor and analyst day, laying out an ambitious target of reaching a whopping 100 million subscribers in the years ahead. That would be about half of the estimated 200 million gym goers that are currently in the market, according to CEO John Foley.

"When we say 100 million subscribers, it's grounded in people already paying," Foley said. "They're saying, 'I want to be fit,' they're saying, 'I'm willing to pay for it,' and we believe in the coming years they're going to become Peloton members."

Peloton currently has 3.1 million total members. As a reminder, a Connected Fitness subscription ($39 per month) requires Peloton hardware and can be used by multiple family members, while a Digital subscription ($13 per month) only covers a single user. At the end of June, there were 2.3 members per Connected Fitness subscription on average, according to the company's annual report.

Foley laid out six ways that Peloton will get to that lofty goal:

  1. U.S. growth
  2. Product innovation
  3. Geographic expansion
  4. Greater affordability
  5. Digital expansion
  6. Creating a welcoming work environment

Foley estimates that there are 35 million U.S. households that have treadmills, many of which are underutilized and collecting dust. Those "dumb" treadmills aren't as engaging as Peloton's Tread lineup and don't incentivize positive fitness behavior. The chief executive pointed to the recent product announcements to highlight innovation, while teasing that Peloton has "more cool stuff" in the pipeline.

Peloton is only in a handful of markets at present: the U.S., Canada, the U.K., and Germany. The consumer discretionary company plans to launch in new markets in the years ahead, but Foley declined to provide specifics. The recent announcements included more affordable equipment, and there are various ways that Peloton plans to continue addressing affordability. The company will continue working to make its platform more accessible to the masses, according to Foley.

In terms of digital expansion, Peloton has brought its app to major platforms including Roku, Amazon Fire TV, Apple TV, and Android TV. That type of cross-platform support will allow subscribers to access workout content from just about anywhere. On the last earnings call, Foley disclosed that Peloton runs its nascent Digital membership business at breakeven, but that segment serves as an important customer acquisition funnel, with more subscribers converting to Connected Fitness subscriptions than ever before. The chief executive's comments around creating "the best place to work in the world" were mostly standard fare.

Peloton didn't specify how long it might take for subscriptions to reach nine figures, but the company has laid out a detailed path that will serve as a multiyear growth runway.