Peloton acquires Taiwanese supplier as financials show green shoots

Peloton Fitness has announced in its first earnings report since its IPO that it has completed the acquisition of its Taiwanese supplier Tonic Fitness.

This, says the indoor cycling business, gives the firm greater control over its supply chain, enabling a scaling of production, as well as speed of innovation. The deal was worth $47.4 million in cash.

Production too will need to step up as the firm looks toward more international expansion. Already a year in to its UK and Canadian business, the plan will now be to open more showrooms to introduce people to the product that has begun to be heavily advertised on television, among other channels.

Starting this month the firm will begin in the German market, said to be the third largest fitness market in the world behind the U.S. and UK. Germany will represent the first country to offer non English language content. It is expected that more showrooms will open across Germany’s metropolitan areas, while similar advertising plans deployed elsewhere will follow. A pot of $1.4 billion in cash raised by the business will help this progress along.

In the financials the main takeaways were better than expected revenues tallying $228 million, a 103% mark up from the year prior. Adjusted EBITDA saw a $1.29 share value, while analysts had predicted a loss of up to 39 cents.

As far as forecasting goes, full-year guidance sat between $1.45 billion to $1.50 billion, versus projections of $1.35 billion. The firm’s net losses improved too by $4.8 like-for-like.

Users are engaging well too, with average monthly workouts spiking from 8.9 a year ago to 11.9 a month. Likewise, the number of subscribers accessing the connected fitness platform rose. Gross profit margins on subscription revenue surged 763 bases points year-on-year.

The Peloton business has grown its subscriber base by around 200,000 since its IPO in late September, according to the financials.

A 30-day home trial was recently launched in a bid to get more people to try out the system in the comfort of their homes. Full refunds are offered should the customer not enjoy the experience.

Recently the business ran into legal difficulty with claims made that the business had not followed proper procedure in relation to music licences used on its platform.

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