On Peloton Interactive's IPO and more

Photo by  Quino Al

Photo by Quino Al

Last week, Peloton Interactive, Inc., as part of its IPO process, filed information about the company with the US Securities and Exchange Commission. Comments in the document included:

  • "We believe physical activity is fundamental to a healthy and happy life. Our ambition is to empower people to improve their lives through fitness.

  • "We are an innovation company at the nexus of fitness, technology, and media.

  • "We are a technology company that meshes the physical and digital worlds to create a completely new, immersive, and connected fitness experience. We are also:

  • "…a media company that creates engaging-to-the-point-of-addictive original programming with the best instructors in the world.

  • "…an interactive software company that motivates our Members to achieve their goals.

  • "…a product design company that develops beautiful and intuitive equipment that anticipates the needs of our Members.

  • "…a social connection company that enables our community to support one another.

  • "…a direct-to-consumer, multi-channel retail company that facilitates a seamless customer journey.

  • "…an apparel company that allows Members to display their passion for Peloton.

  • "…a logistics company that provides high-touch delivery, set up, and service for our Members.

  • "Consumer Trends in Our Favor … Increasing Focus on Health and Wellness Streaming Media is the Leading Channel of Consumption … Desire for Community and Shared Experiences … Demand for Convenience."

  • For fiscal 2019, the firm's revenue was $915.0 million (+110% Y/Y) with a net loss of $195 million (+235% Y/Y). Their platform has over 1.4 million members..


OUR TAKE

  • Peloton has executed well in 1) addressing a consumer need,2) establishing a strong brand and 3) building out its product delivery and subscription-based service.

  • Peloton's business challenges include: 1) demonstratingprofitability, 2) moving beyond a primarily US customer basethat is economically well-off and 3) addressing content issuessuch as a $150 million copyright infringement lawsuit from theNational Music Publishers Association related to using songs by Drake, Lady Gaga, Justin Timberlake and other artists.

  • While there are questions about the durability of Peloton's offering in the fitness market (which historically has been fad driven), the firm’s approach of blending of on-premises equipment and cloud-based services may be more broadlyadopted by other innovators in fitness, sports and beyond.

Paul Dravis