Photo by Amelia Holowaty Krales / The Verge

When Barry McCarthy stepped up as Peloton’s new CEO last quarter amid news the company had laid off 2,800 employees, it was clear he had his work cut out for him. Since then, McCarthy has been vocal about shifting the company’s focus from hardware to software. That new direction can be explained by looking at today’s Q3 earnings release, which paints a tough financial picture for Peloton. The company continued to post larger than expected losses, and stock prices subsequently plunged more than 20 percent.

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