PELOTON Interactive Inc, the home exercise startup, has filed for an initial public offering (IPO) that will likely be among the year's biggest.
The New York-based company listed its offering size as US$500 million in a filing Tuesday with the US Securities and Exchange Commission. That amount is typically a placeholder that will change.
Founded in 2012, Peloton describes itself as the "largest interactive fitness platform in the world" with more than 1.4 million members, according to the filing.
The company sells exercise bikes and treadmills that have television screens connected to the Internet for showing its own workout programmes. Its basic "connected fitness" subscription costs US$39 a month and the bikes start at US$2,000.
The offering is likely to be in the top tier of a strong year for IPOs. Almost US$39 billion has been raised in 125 listings on US exchanges in 2019, according to Bloomberg data. That's on track to be the best year since 2014 when Alibaba Group Holdings Ltd set the all-time global IPO record with its US$25 billion offering including the greenshoe allotment.
Listings this year have included several tech and tech-related unicorns - startups valued at more than US$1 billion. The biggest IPO of the year was ride-hailing giant Uber Technologies Inc's US$8.1 billion listing in May, followed by five others raising more than US$1 billion.
Like many of those companies, Peloton is unprofitable. The company lost US$196 million on sales of US$915 million during the 12 months ended June 30, according to its filing. That compared with a loss of US$48 million on US$435 million in sales during the same time period a year earlier.
The company warned in its filing that it may not turn a profit or maintain profitability in the future.
People familiar with Peloton's plans have said it is seeking a valuation of US$8 billion or US$10 billion. Peloton was valued at about US$4.15 billion when it raised US$550 million last year from backers including the venture capital firm TCV, Kleiner Perkins, Tiger Global Management and GGV Capital.
Peloton is hitting a big trend in fitness - group training enabled by technology. The most popular of its products is the Wi-Fi-enabled stationary bicycle that streams live and recorded classes from its New York-based studio.
Peloton contends its service is sticky and that 92 per cent of its connected fitness products it has sold still had an active subscription as of June 30.
The company has risen to prominence in a crowded fitness tech industry, which also includes class-based rivals SoulCycle and Flywheel Sports Inc.
Flywheel, in particular, has struggled to find its footing as companies look to monetise the specialty fitness craze.
Flywheel, which is bing sued by Peloton for patent infringement, is shutting down more than a quarter of its cycling locations after being taken over by its lender, Kennedy Lewis Investment Management LLC.
Peloton acknowledges that it operates in a young, brutally competitive market in the part of its IPO prospectus where it details the risks it faces. "We may be unable to attract and retain subscribers," it said. "The market for our products and services is still in the early stages of growth."
The tariffs stemming from the US-China trade war could also take a toll on its business, because its products include some parts from China, it added. BLOOMBERG