Today Peloton, makers of expensive home bicycles and treadmills combined with on-demand fitness classes, submitted the S-1 detailing plans for the long-awaited public offering.
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In June, we reported on how the company had applied for the IPO in confidence. As we reported back then, this news is not shocking. In February, Alex reported on the financing history of the New York-based company before the big day. Since its inception in 2012, Peloton has raised nearly $ 1 billion. The most recent increase was a $ 550 million Series F announced last August at $ 4.1
Since its first debt raised in July through a Kickstarter campaign with seed capital of $ 307,332 (net of Kickstarter's market charge), in 2013, Peloton has raised nearly $ 995 million in private-sector funding.
In terms of growth, the company has so far named more than 1.4 million members, inspiring more than 58 million peloton workouts in fiscal year 2019. The portfolio consists of bicycles, treadmills and fitness and wellness equipment. Subscriptions that can be $ 39 per month. Digital subscribers pay $ 19.49 a month just to access peloton content from their smartphone.
Interestingly, the company posted an increase in Connected Fitness subscribers from 35,135 as of June 30, 2016, to 511,202 as of June 30, 2019. This represents an annualized growth of approximately 144.1 percent.
The metrics reported in the company's S-1 show that peloton users are also more concerned with the affiliate subscription service. For the fiscal year ended June 30, 2019, peloton subscribers recorded an average of 11.5 sessions per month, compared to an average of 7.5 sessions per month for the fiscal year ending June 30, 2017. This may suggest that Peloton has been in the care of a network of fitness coaches and the content they create has paid off.
The company's fastest-growing population is "consumers under the age of 35 and those with household incomes below $ 75,000," the S-1 states.
Peloton, The company to be listed on the Nasdaq under the ticker symbol "PTON" has experienced explosive growth over the years – and this is considered a risk factor. The company noted in its application that it grew from 443 employees in June 2017 to 1,950 employees in June 2019.
Inside The Gears Of Peloton's Business
In its filing, the company unveiled some impressive sales figures. For fiscal year 2019, Peloton reported sales of $ 915 million, up 110 percent from $ 435 million in fiscal 2018, more than quadrupling $ 218.6 million in fiscal 2017. (Peloton's financial year ends on June 30 of each calendar year.))
Over the same period, net losses also increased. According to
Peloton reported a net loss of $ 195.6 million for fiscal year 2019, after a net loss of $ 47.9 million in fiscal year 2018 and one of $ 71.1 million in fiscal 2017.  While this is commonplace for companies, if the company grows fast to see deficits, quadrupling net losses is not attractive. The sales and marketing costs of the company seem to be at fault. They increased from $ 151.4 million in fiscal 2018 to $ 324 million in fiscal 2019. That's more than double. The sales and marketing costs of Peloton also roughly doubled between 2017 and 2018.
The growth of peloton has not been cheap.
In fact, the company has evolved from generating cash from its business to a highly negative operating cash flow. In fiscal year 2018, Peloton's cash flow was $ 49.7 million. In fiscal 2019, this number increased to minus $ 108.6 million.
Combined with the company's increasingly negative cash flow (down $ 10.2 million, down $ 56.7 million and down $ 297.5 million in fiscal 2017, 2018 and 2019), Peloton is likely to go public to further refill his accounts. The Company reported cash and cash equivalents of $ 162.1 million and securities of $ 216 million at the end of fiscal year 2019. This will continue for a while, but not forever at the current pace of the company's liquidity consumption.
19659021] A key issue in the company's S-1 submission concerned its margins. What was the result of its mixed margin on total revenue and what kind of margin could it derive from hardware revenue or software revenue?
For the 2019 financial year, Peloton's mixed gross margin was approximately 42 percent. That's not bad at all given the company's rapid sales growth. Hardware ("Connected Fitness Products") achieved a gross margin of 43 percent in the fiscal year, better than we expected.
The company's revenue from recurring digital classes ("subscriptions"), however, also had a margin of around 43 percent. That's lower than we expected. Fortunately, selling bikes for Peloton is a better deal than expected and more than compensates for the more expensive subscription revenue.
Who owns what?
Finally, let us explain the facts and figures on ownership. In other words, which venture capital fund is celebrating its bet.
See page 132 of Peloton's S-1 for a breakdown of investors.
The CEO of Peloton, John Foley, received 15,169,568 Class B shares or 6.2% of the total. William Lynch, the president of the company, received half of it – 7,502,716 Class B shares or 3.1% of the shares.
This part of Peloton's S-1 featured three senior women: Jill Woodworth, Karen Boone, and Pamela Thomas-Graham. The company's CFO, Woodworth, received 3,500,000 shares, while Boone and Thomas-Graham each received 600,000 shares.
Jon Callaghan of True Ventures received 28,369,274 shares and Tiger Global Management 46,721,427 shares, more than any other investor or manager listed on the S-1 Stock Exchange.
Peloton brought Goldman Sachs, JP Morgan, Merrill Lynch and others under the umbrella of the IPO.
Illustration: Li-Anne Dias