Fitness company Peloton Interactive (PTON -0.55%) saw its business thrive in 2020 when many brick-and-mortar gyms were closed. This causes some investors to question whether this company can continue excelling into the future or whether it was just a pandemic-inspired flash in the pan. In this video clip from Motley Fool Backstage Pass, recorded on Sept. 3, contributor Jon Quast explains to Millionacres editor Deidre Woollard why he believes Peloton is a great business even without the unique circumstances created by the coronavirus pandemic.

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Deidre Woollard: Peloton, people talked about it, is one of those pandemic stocks. It had a heck of a run, everybody was home, everybody was on their bike competing with each other, but what's happening right now?

Jon Quast: Yes. Like you said, this was put in the basket of pandemic stocks. Really the reality is yes, they grew their revenue about 100% year over year during the pandemic season, the first four quarters of the pandemic, but that's what Peloton was doing before the pandemic as well, doubling their sales every year. This is a young company.

Let's zoom out for a second. Why might you want to hold onto Peloton right now? The stock is down, people are worried about slowing growth, they're worried about coming out of the pandemic, with the vaccine coming out people are going outside, not using their bikes as much maybe, the whole brand appeal is losing its luster.

But in reality, this is a young brand. They shipped their first bike in 2014, not even 10 years ago. Seven years ago, they shipped their first bike. Over that short amount of time, they've already been elevated to top-tier brand status. A company named Comparably, they just ranked brands out there. Peloton took the No. 1 brand spot right now ahead of companies like Amazon.

There's another brand survey called the Brand Awareness Index [Editor note: The speaker misspoke. He was referring to the Brand Relevance Index by a company called Prophet]. Peloton takes the No. 2 spot behind Apple. It's ranked ahead of things like KitchenAid, things like Lego as far as brand recognition. People love the Peloton brand.

Another thing that really bears this out is their net promoter score. A good net promoter score is anything above zero really and anything above 50 is excellent. Peloton comes in at 76. This is a very, very high net promoter score. People absolutely love their brand.

What happens because of this? Tons of people are buying the hardware, the bikes, but all of those things come with a subscription added on. People are paying 39 bucks a month.

At the time that Peloton went public, 2019, over the five years that they had been selling bikes, 92% of all of those bikes still had an active subscription five years later. You go to present day, we're still at a 92% retention over the past 12 months.

This is a lot higher-margin, too, it's currently about 70% gross margin for the subscription products. I think that's really the thesis here for Peloton. Can they attract new users over time? Yes. Can those hardware sales convert into subscription revenue? Yes. Is it sticky? Yes. Can that throw off good profits in time? Yeah, I really believe it can.