So these are the areas and again going back to our partnership where you will see us continuing to invest and to drive relevance and engagement both on our current members that represent those demographics but also new for growth.
Eric Sheridan: Thank you.
Operator: Thank you. One moment for questions. Our next question goes from Lauren Schenk with Morgan Stanley. You may proceed.
Nathan Sheldon: Hey everyone, this is Nathan Sheldon on for Lauren. I guess can you give us an update on how rental churn has progressed and are you seeing that decline as we anticipated few months ago? And then how should we think about the range of outcomes you’re now considering for the kind of steady state of term there? Thank you.
Barry McCarthy: The question.
Leslie Berland: I can answer the first part of your question, Nathan, but we missed kind of the last part of your question about a little bit garbled if you wouldn’t mind repeating that.
Nathan Sheldon: Yes, just how can we think about the new range of outcomes to the steady state of churn rate kind of over the long-term? Thank you.
Leslie Berland: I can take this one. So, in terms of churn for our rental subscription model for FAS. We actually in Q4 we talked about the fact that we had an up to churn with regard to the seat post we call and we saw that for FAS as well but we have seen it come down substantially from the high in Q4 roughly by 100 points. But it is still higher than our all access regular member of churn. Now, your other question I think was about just churn in general. And what we did see if you remember, you know, we, we did see an uptick in churn regardless of regard to the bike seat post with the increase in pause numbers. We are seeing our, you know, we saw our churn come down as people are unpausing and then also with regard to seasonality and we expect to see our churn rate come down in Q2 and Q3 as well.
Barry McCarthy: Let me spend a minute and talk about the changing mix of the sub base rejoins and then the core all access members and growth in rental, so that as the mix changes over time people can.
Leslie Berland: Yes, so, so overall, we do see slightly different we see different churn rates for these different types of Peloton subscribers. So we’ve got our regular all access members who purchase new hardware from us. Then we’ve got the bike rental model for our rental subscribers. And then we have a third group which is secondary market, which is people who decide to buy their hardware from someone else on a marketplace that we are not facilitating that sale and it’s generally it’s used. We use hardware. So for our regular all access member base, we see the lowest churn rate in the low. It obviously varies a bit seasonally, but it’s the lowest closer to one point. I don’t have the exact number in front of me for that group.
This last quarter, yeah, probably 1.4, 1.5-ish little, little less. Then we have the secondary market group, which actually has a higher churn rate. They are more in the 2, 2.5-ish range. And then we have the bike rental group, which is more in the five to six-ish range over the seasonal seasonality of that group.
Barry McCarthy: It’s been a minute talking about secondary market that has grown pretty dramatically. And what’s the source? It’s a Peloton all access member who canceled. So they showed up in our churn numbers on average within six months a bike is sold. Let’s use a bike. A bike is sold in the secondary market. Someone purchases that bike and they come to us and become an all access member. And so, as our core business continues to grow, the secondary market is growing even faster. It means that the, let’s call it 1.4% churn rate on all access members actually really on a net basis is lower. And it means that one, two, it also means that our average churn rate, the reported average churn rate is going to go up. If the secondary market continues to grow faster than the new sales market, even if the individual cohorts are behaving the way they have historically.
