- Kimberly White/Getty Images for TechCrunch
- Peloton, a favorite of venture-capital investors, publicly released its S-1 paperwork for a public offering on Tuesday.
- The connected-fitness company has accumulated losses of more than $500 million.
- It will trade on the Nasdaq under the “PTON” ticker.
- Visit Business Insider’s homepage for more stories.
Peloton is going public.
The buzzy maker of expensive internet-connected stationary bikes and treadmills publicly released paperwork for an initial public offering on Tuesday, revealing a fast-growing business with revenue growth that’s far outpaced by spiraling losses.
Describing itself as both a media company and a global technology platform, Peloton said it planned to trade on the Nasdaq exchange under the “PTON” ticker.
Peloton did not say how much money it planned to raise in the offering or the valuation it is seeking. The filing pegs the IPO at $500 million, though that is just a placeholder number that will almost certainly change.
Peloton is the latest in a parade of richly valued, high-profile startups to list shares on the public markets this year, along with ride-sharing companies Uber and Lyft, social networking firm Pinterest and coworking startup WeWork, which filed its paperwork earlier this month. But it will face a tough public market, in which skeptical investors have sold off shares in high-flying startups like Uber, which now trades below its IPO price.
Peloton said it has more than 500,000 paying subscribers, who pay between $19 and $40 a month for access to live exercise classes featuring adrenaline-fueled instructors, thumping music, and flashy showlike production. Many of the members have also purchased the company’s $2,000 stationary bike.
“Peloton is so much more than a Bike,” CEO and founder John Foley wrote in a letter to potential shareholders in Tuesday’s S-1 filing. “We believe we have the opportunity to create one of the most innovative global technology platforms of our time. It is an opportunity to create one of the most important and influential interactive media companies in the world; a media company that changes lives, inspires greatness, and unites people.”
Peloton said it produces around 950 original “programs” every month and has thousands of programs in its archives, allowing subscribers to choose fitness classes according to everything from difficulty levels and instructors to musical genres.
Building out this exercise “media” platform is not cheap. With salespeople demonstrating its equipment in 74 showrooms, Peloton’s sales and marketing expenses more than doubled from $151 million in fiscal 2018 to $324 million in 2019.
Peloton’s costs of revenue for subscriptions, which include music-royalty payments, also surged in the past year. The company cited music payments as its largest variable subscription cost, while also flagging music as a risk because of the patchwork of music rights in different countries and the potential for infringement claims.
“The process of obtaining licenses involves identifying and negotiating with many rights holders, some of whom are unknown or difficult to identify, and implicates a myriad of complex and evolving legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed,” Peloton said in the filing.
According to the filing, Peloton saw its losses nearly quadruple over the course of a single fiscal year, from a $47.9 million net loss in 2018 to a $245.7 million net loss in fiscal 2019. In the same time period, revenue rose from $435 million to $915 million.
Another IPO with a dual-class stock structure
Since it was founded by Foley in 2012, the company has raked in a total of $994 million in venture capital and was most recently valued at $4 billion, according to Pitchbook data. The public filing released on Tuesday named CP Interactive Fitness, TCV, Tiger, True Ventures, and Fidelity as stakeholders that own at least 5% of the company.
Following in the footsteps of other recent high-flying private companies entering the public markets, Peloton has a dual-stock structure that concentrates the voting power in the hands of a small group of insiders. These insiders own class B shares that have 20 votes per share, compared with the one-vote-per-share class A common stock being sold in the offering.
The company reported a total stockholder’s deficit, or accumulated losses, of $539 million, with cash and short-term securities of roughly $380 million.
- Read more about Peloton:
- Peloton warns that its inability to license premium music for its at-home workout classes could be one of the major downfalls to its business model
- Peloton’s IPO filing is a huge milestone for direct-to-consumer brands. Here’s the marketing playbook it used to get there.
- Peloton’s sales are surging as it gears up for an IPO. Insiders and analysts think it may only be getting started.
- This startup just got $17 million to take on Peloton. Here’s why its founder thinks there’s a big opportunity in the home fitness market.