Potential Peloton (NASDAQ: PTON) killer iFIT was due to IPO this week but opted to postpone due to adverse market conditions. The stock markets are in flux just now as an accumulation of factors impact investor confidence. These include inflation concerns, higher energy costs, and Chinese company defaults.
iFIT says it will continue to evaluate the timing for its proposed offering.
Who is iFIT?
The owner of top health and fitness brands NordicTrack, ProForm, Sweat, Freemotion, Weider, Weslo, and 29029 has gone from strength to strength in recent years, and investors are excited to see if it can give Peloton a run for its money.
iFIT is a global fitness and well-being company manufacturing its own hardware and enjoying recurring revenue from a digital subscription model. The company has an impressive legacy dating back to 1977.
iFITs suite of recognizable brands are powered by its iFIT integrated health and fitness platform. In turn, this seamlessly connects its software, content, and interactive hardware.
While iFIT products and subscription technology are not cheap, it is primarily considered an affordable alternative to Peloton.
iFIT ups its game
While iFIT has been around for decades, it was trundling along inconspicuously until Peloton arrived on the scene. As Peloton’s star rose, the iFIT founders took note and agreed it was time to up their game.
Earlier this year, an example of this occurred when an extensive film crew took to far-flung locations to build a series of virtual workouts in inspirational settings. Locations include Mount Everest, Maui, the Grand Canyon, Mount Kilimanjaro, and the Swiss Alps.
At home, iFIT participants can participate in these virtual workouts on their touchscreen-enabled treadmills, bikes, rowers, and ellipticals. The equipment is geared to adjust to the terrain automatically.
Its subscription packages include an individual membership for $15 a month and a family package for $39 a month.
In its S-1 filing the company states:
We believe we are the only provider delivering a seamless solution of software, content and hardware with offerings across treadmills, bikes, ellipticals, rowers, climbers, strength equipment, fitness mirrors, yoga equipment, and accessories in the global market. We have a growing international presence with distribution in over 120 countries.
Soaring revenues, mounting losses
iFIT revenue has been climbing:
2019: $699m
2020: $851m
2021: $1.7bn
But, so have its losses:
2019: $56m profit
2020: -$98m loss
2021: -$516m loss
Thankfully, its subscription revenue is on the rise:
2019: $73m
2020: $123m
2021: $229m
In its S-1 filing iFIT also states:
We believe the breadth of our equipment range across modalities, brands, price points and distribution channels gives us the largest SAM (serviceable available market) among our primary competitors in the fitness industry.
Investor confidence
Billionaire businessman Bernard Arnault invested $200m in iFIT last year via private equity firm L Catterton. This deal gave iFIT a $7bn valuation.
When iFIT IPO’s, it’s expected to aim for a valuation of $6.7bn.
Its most recent financial results included distribution sales of 44% direct-to-consumer, 2% strategic partners, and 54% wholesale.
Competitors
Competition is mounting in the health, fitness, and wellness space. Indeed, Peloton is not the only competitor iFIT has to contend with. There are many private and publicly-listed companies vying for consumer attention from all corners of the globe.
Peloton has a market cap of $26bn.
Apple (NASDAQ: AAPL) is growing its fitness subscription revenues.
Nautilus (NYSE: NLS) has a $298m market cap.
Johnson Health Tech (TPE: 1736 ), listed in Taiwan, has a $500m market cap.
Anta Sports (HKG: 2020) is a Chinese fitness firm with a $45bn market cap.
Technogym (BIT: TGYM) is an Italian health company with a $2.3bn market cap.
And there are several more competitors to watch:
AI-powered fitness mirror startup Tempo which tailors programs to individual needs. Its built-in AI personal trainer gives the impression of being in the room with you. Tempo last raised $220m in a Series C funding round in April 2021.
Spin bike studio SoulCycle plans to launch its own at-home bike in October. Back in April, SoulCycle’s parent company Equinox Holdings, was rumored to be in talks with Chamath Palihapitiya to go public via SPAC. Those plans appear to have ended.
Tonal is another AI-powered health and fitness company that makes strength training machines. According to Crunchbase, Tonal has raised a total of $450M in funding over 6 rounds. Their latest funding was raised on Mar 31, 2021, from a Series E round.
Coveted yoga-wear brand Lululemon Athletica (NASDAQ: LULU) bought fitness device maker Mirror for $500m in June 2020.
American fitness and media company Beachbody Company (NYSE: BODY) went public via SPAC earlier this year. During its IPO it also merged with exercise bike maker Myx Fitness.
Is iFIT a good investment?
When a company launches at IPO there is often an initial bounce, followed by a dip in its share price. This means buying in at IPO is not always the most strategic move.
iFIT shows great potential in its growing revenues and subscription numbers but it faces considerable competition. With the world reopening there is a concern that the workout-at-home theme which dominated 2020 may be less prevalent going forward.
Nevertheless, iFIT is a well-established company with a suite of impressive brands and a management team dedicated to staying ahead of the curve.