Peloton files for IPO: 4 things you must know before it lists

The listing at a glance

Peloton, the rapidly growing US-based fitness company officially filed its S-1 form with the SEC on August 27. In doing so, the company gave prospective investors better insight into its financial health ahead of its planned IPO.

Centrally, Peloton is looking to raise approximately $500m as part of its initial public offering – the date for which has yet to be set.

As revealed in its S-1 filing, while the company has seen both its revenues rise over 300% and user growth climb since 2017 – it has also seen its losses rise significantly.

Peloton: the 'Netflix of fitness'?

As has been the trend amongst tech companies over the last couple of years, Peloton may best be described as a subscription-based fitness company.

Or, as Peloton’s management self-describes, it is a ‘technology company that meshes the physical and digital worlds to create a completely new, immersive, and connected fitness experience.’

The S-1 contains further comments which maintain that Peloton is a ‘media company’, an ‘interactive software company’, a ‘logistics company’ and they also focus on ‘social connection’.

Labels aside, Peloton sells exercise equipment, bikes and treadmills at this stage, which cost between $2,245 and $4,295.

To complete the Peloton experience, for a monthly $39 subscription fee, users get access to a digital backlog of fitness-focused content, much of which is broadcast live or available on demand.

Finally and speaking to the scale of the market opportunity, Peloton's management believes roughly 67 million households across the globe are open to or interested in subscription-based fitness services, such as the one Peloton is offering.

Key Peloton metrics in focus

Peloton’s all-in-one, at home digital-gym experience has proven successful so far, buoyed by what the company describes as the ‘massive and growing global health and wellness industry.’

In FY19 for example, Peloton counted 1.4 million users as part of its ecosystem, saw 55 million workouts completed and boasted an impressive retention rate of 95%.

More substantially, Peloton’s S-1 filing paints the picture of a company expanding its market share strongly, though losses are also growing.

In the 2019 fiscal year, the company reported revenues of $915.0m, up 318% since FY17.

Net losses kept pace with this top-line growth however: in FY17 the company recorded losses of $71.1m, this subsequently blew-out to $195.6m this fiscal year.

Yet maybe most importantly for a company that relies on a subscription-based business model, the S-1 revealed that Peloton’s user growth remains robust. On this front, Connected Fitness Subscribers climbed from 107,708 in FY17 to 511,202 in FY19 – a 374% increase.

As with most companies touting explosive growth metrics, now that Peloton has filed for IPO, investors will likely be wondering: can the company continue to grow and turn a profit?

Such a question is maybe followed by a more important one, that is: how long will such an ambition take?

Final details of the IPO

Peloton is expected to list under the ticker ‘PTON’ on the NASDAQ; with Goldman Sachs and J.P. Morgan acting as the lead underwriters of the offering.

As mentioned at the beginning, no official date has been set for Peloton’s IPO.