On February 25, Titanium Media App exclusively learned that Keep submitted a prospectus on the Hong Kong Stock Exchange and intends to be listed on the Main Board of Hong Kong. Once listed, Keep will become the first stock of Hong Kong sports technology.
According to the prospectus, in the first nine months of 2019, 2020 and 2021, the company's total revenue was RMB663 million, RMB1,107 million and RMB1,159 million, respectively, while gross profit was RMB273 million, RMB499 million and RMB494 million respectively.
Keep's fundraising will be used for technology and product innovation, fitness content innovation and development, marketing and publicity.
In the past two years, due to the impact of the epidemic, people's willingness to exercise has surged, and the Internet fitness platform has also ushered in a long-lost "spring" and returned to the sight of the capital market. Since 2020, a number of Internet fitness products such as Keep, Guang pig pen, Cool Entertainment, Gollum, and Leke have been financed.
In May 2020, Keep completed $80 million series E financing, and just half a year later, it received another $360 million series F financing. According to the statistics of Titanium Media App, since its establishment at the end of 2014, Keep has completed a total of eight rounds of financing, with a cumulative financing amount of 630 million US dollars.
Keep financing history, data collation @ titanium media app
After keeping eight rounds of financing, the rumors of listing have been endless, and this time it seems to have made up its mind to embrace the capital market.
So, keep, which is about to become the first stock in the domestic Internet fitness industry, how is the business performance? Benchmarking against the US fitness giant Peloton, what kind of business story can Keep tell to the capital market?
Keep's business experience
Keep was born in 2014, when there were only a few Internet fitness products in China, such as Gollum, Yue Running Circle, Yue Moving Circle, etc., they all started with running, and they were still in the "mengxin" stage of unstable foundation, how to cut into a subdivision fitness track to achieve corner overtaking, it became the top priority.
After some market research, Keep moved the free fitness course to the platform, attracting a large number of small white users, and then gradually increased the fitness course covering fat loss, muscle gain, shaping and other training content, and accumulated a lot of popularity through the content advantage.
At the same time, in order to attract and retain users, Keep also opened up the Weibo and address book functions, users can not only send pictures and texts of sports experience, feelings and experiences on the platform, but also PK through the friend leaderboard.
With the positioning of the "Sports Social + Free Fitness Course" platform, Keep has gained 1 million registered users in only 109 days of launch, and being selected as the App Store's 2015 annual selection app has brought it a huge voice. At that time, the Keep software was installed on all iPhone display machines in Greater China, and many people also noticed the fitness software.
In essence, Keep still started with traffic logic, on the one hand, relying on high-quality fitness content to continuously attract small white users to register, on the other hand, through the content community (social) to strengthen user stickiness, which also represented the typical Internet product operation thinking at that time.
A business observer told titanium media app that the most difficult thing to do for sports and fitness apps is user retention, "unlike social media such as WeChat and Weibo, which naturally have strong connections with users, and most fitness enthusiasts only open the App to use when they are working out, and the gap between usage habits is difficult to cross." ”
Business journalist Li Jing (pseudonym) told Titanium Media App that she used Keep intermittently for two years or as a fitness tool. "There was a time last year when I wanted to slim my legs, so I bought paid courses on Keep, trained with an online coach, and didn't look at it much after I reached my goal."
Due to the universality of the above situation, from the several product iterations of Keep, it is also seen that it attaches great importance to user stickiness.
In April 2016, Keep updated a blockbuster feature to provide running services for the whole population. At that time, a large number of running Apps on the market were homogenized, only staying on SERVICES such as GPS positioning, displaying sports roadmaps, and calorie consumption, and lacking effective product incentive mechanisms to stick users.
In addition to the basic functions, Keep has done a number of innovative iterations, including the development of "trajectory recording" and "data statistics" and other functions to unlock the user's sense of achievement; launched the "segmented fat burning" running tutorial to attract users to move; the unique "music running" function, and increased the fun of running... In just one or two years, it has become a national running app.
In 2017, Keep added a comprehensive fitness scene, the expansion of categories, and proposed the concept of "free sports field", in addition to bringing experience improvement to users, its scene applicability and frequency of use have also been greatly improved.
In fact, continuously improving user stickiness is also paving the way for commercialization. In 2016, Keep tried to sell sports peripheral products such as yoga mats and elastic bands on the online mall, but the repurchase rate of this category was low, and its commercialization has been stumbling.
Until March 2018, Keep abruptly accelerated its commercial layout, including the launch of smart hardware Keepkit, independent clothing brand KeepUp and independent light food brand KeepLite, and also opened an offline gym Keepland, which basically formed a profit model composed of three parts: membership subscription, online paid content and value-added services, advertising and other services, and private brand products (that is, consumer goods).
Starting with the commercialization of Keep, you can get a glimpse of the development of this Internet fitness unicorn.
1. Member subscription, online paid content and value-added services
As a basic business, Keep's charging standards are almost the same as other mainstream products.
In terms of membership fees, the monthly service fee is 19 yuan, and the annual membership service includes 248 yuan for annual card members, as well as joint members launched in cooperation with Maoyan, Mango TV, iQiyi, etc., with prices of 218 yuan and 248 yuan respectively.
In order to improve the retention rate of members, Keep can be described as sparing no effort.
In May 2020, Keep shifted from the original PGC model to THE PUGC mode, attracting sports superstars Pamela, Xiao Ma Ge, Saturday Ye, etc., and introducing 1,000 high-quality talents such as Zumba and Laimei to settle in and output content.
The prospectus discloses that as of December 31, 2021, the platform offers about 7,600 fitness classes produced by fitness gurus, fitness professionals and content providers.
At the same time, Keep continues to exert independent IP classes, launching high-quality content such as fat-burning parties, hot sweat yoga, and temperament ballet that focus more on the fitness demands of target groups, covering the diverse needs of members. In addition, Keep has also launched new products such as live classes and home intelligent spinning bicycles to attract new and old customers to keep to "kill time" to the greatest extent.
According to the prospectus, as of December 31, 2021, there were more than 10,000 recorded fitness classes and more than 13,000 live courses on the Keep platform.
"Keep's online courses are more systematic, as users still often see surprise course content, I think content is the core competitiveness of Keep, I am willing to pay for such good content." Li Jing told Titanium Media App.
The prospectus discloses that in 2021, keep's average monthly subscription membership will increase from 1.9 million in 2020 to 3.3 million, and the membership penetration rate will increase from 6.4% in 2020 to 9.5% in 2021. In the first three quarters of 2021, Keep membership and online paid content revenue was 380 million yuan, an increase of 52.6% from 249 million yuan in the same period last year.
It can be seen that Keep's membership subscription, online paid content and value-added service bureau are good, but as the number of members continues to increase, I am afraid that more refined operations will be needed in the future to retain customers.
2. Advertising and other services
In June 2019, Keep officially announced the overall marketing layout and planning. Specifically, brands can serve information flow ads, KOL promotions, and Keep's self-made content product implants, while brands can also participate in a series of content and event IP organized by Keep, including pop-up stores, marathons, campus runs, NBA co-brand courses, etc.
In addition, according to Keep's official, its synchronously developed data platform "No Dome" system allows advertisers to obtain real-time data feedback and delivery detail perception. At that time, Keep's official partners included BEATS, Coca-Cola, Guangda Bank, Lynk & Co and other brands.
The prospectus discloses that in 2019 and 2020, Keep's advertising and other services revenue reached 120 million yuan and 130 million yuan respectively, and the revenue in the first three quarters of 2021 was 140 million yuan.
Compared with the other two major businesses, advertising and other services have the lowest revenue, and this part of the revenue is related to the number of keep daily active users (DAU), monthly active users (MAU) volume and stability. Titanium Media App noted that during the epidemic in March 2020, Keep's DAU once exceeded 8.5 million, and after a year, it shrank by 43.1%, which is obviously not happy to see such violent fluctuations for brands.
However, from the perspective of advertising revenue in 2021, Keep is not much affected, and as the number of members increases, its monthly active activity is also growing. According to the prospectus, the average monthly active users of the Keep platform in 2020 and 2021 were 29.7 million and 34.4 million, respectively, of which the average number of monthly active users (MAUs) in the third quarter of 2021 reached 41.75 million.
In the case of more and more brand owners, Keep needs to balance the contradiction between brand owners and users, which is the real test of the keep business sector.
In the prospectus, Keep places Keepland in the "Other" business segment.
It is understood that Keepland is usually located in a community-based shopping mall, with an average site area of about 250 square meters, the venue design is relatively simple, and the large transparent window allows the passing crowd to clearly see the scene of the training of the students in the museum.
On the walls of the venue, there is a large screen that displays the calorie consumption data recorded by the bracelet worn by the students, which can monitor the physical condition of the students in real time, and see the real-time ranking after the end of the exercise, which is designed to enhance the interaction and social interaction between the students, as well as the enthusiasm for training.
In terms of offline courses, the museum opens a total of 23 courses in five categories of physical fitness, dance, fighting, static and trampoline every day, and students need to make an appointment in advance, each course only accommodates 6-15 people, and the price range of each lesson is 25 yuan to 79 yuan when it is just operated, and now the price is unified at 49 yuan / section.
Titanium Media App learned that Keepland has invested heavily in curriculum research and development, coaching team, etc., which leads to high back-end costs and the need for large-scale amortization. Affected by the epidemic in 2020, Keep once shelved the expansion of offline business.
Until February this year, Keep announced a comprehensive upgrade of its partnership with traditional gyms to launch the Keep Preferred Gym program. According to the plan, on February 21, all offline fitness venues of Keep will be upgraded to "Keep Preferred Fitness Gym", of which 9 keepland self-operated stores and 10 cooperative stores cover high-end gym brands such as Ogilvy Oxygen Tank, Muscle Dog, Yuanli Yueti, and Rongma Fitness. After the unified adjustment of pricing, all courses in all stores are reduced to 49 yuan per lesson, while the market price of group classes is generally hundreds of yuan.
This return, Keep obviously benchmarked the group class model of super orangutan and Leke, trying to make up for the offline fitness business. However, if the offline business wants to achieve good development, the price factor is only one of them, and the content of the group lesson, site selection, coaching resources, etc. are indispensable.
3. Private label products (i.e. consumer goods)
In 2016, Keep tested the water sports consumer business, which received a lot of attention from the industry. The prospectus discloses that Keep's own brand fitness products (consumer goods) achieved revenue of 390 million yuan, 640 million yuan and 640 million yuan in the first three quarters of 2019, 2020 and 2021, respectively.
As a sports enthusiast, Li Jing buys consumer products on Keep from time to time, including fitness product yoga mats, as well as light food products such as chicken breast, beef jerky, and konjac powder. She told titanium media app that Keep's light food products are still very tempting for girls.
"Like the core of weight loss, it is that the calories eaten are less than the calories consumed. Do training on Keep, each course will tell you how many calories to burn, after training, you can buy Keep's own light food products, the packaging is marked with calories, so that you will not eat more calories. ”
In terms of sports equipment, as of press time, in the Keep App mall, the monthly sales of smart sports bracelets priced at 169 yuan reached 7845, and the monthly sales of a 59 yuan body fat claimed to reach 2166 units; in the official flagship store of Keep Tmall, the products with sales of more than 100,000 are mainly concentrated in yoga fitness, body fat scales, gloves and other categories, of which the total sales of yoga mats within 100 yuan reach 1.54 million pieces; in the official flagship store of Jingdong, the user evaluation of this yoga mat has also exceeded 200,000.
As for a professional version of a dynamic bicycle priced at 2799 yuan, the monthly sales volume in the Keep App mall is about 445 units, the user evaluation volume of the Tmall flagship store exceeded 4,000, and the user evaluation volume of the flagship store of the Jingdong mall reached 5,000+.
Judging from the prospectus data, since 2019, the revenue share of consumer products has been higher than 55%, which is Keep's largest cash cow business, but its gross profit is not as high as online services, and the prospect of commercialization has yet to be explored.
Overall, Keep tells the capital market a story about ecology, and it will take time to bring answers to how far it will go next.
How to tell the business story of Peloton and Keep?
At the time when Keep submitted a prospectus to the Hong Kong Stock Exchange, Peloton, an American Internet fitness company that has always been named "keep originator", has also attracted people's attention again.
At the beginning of this year, Peloton's corporate restructuring plan and layoffs of 2800 people, a major change of management, founder John Foley stepped down as CEO, and the news of Barry McCarthy's new appointment put Peloton in the whirlpool of public opinion.
Subsequently, a number of foreign media sources said that Peloton is considering selling, and Amazon and Nike are evaluating bids on the company, which pushes Peloton to the cusp.
Over the past year, Peloton's stock price and market value have been like a roller coaster. The epidemic has brought about a home fitness boom, and its market value soared to a peak of nearly $50 billion at the end of 2020, but now it has fallen to less than $10 billion, shrinking by nearly 80%. At the same time, its stock price also fell below $25 at one point, falling below the issue price.
People can't help but ask, what happened to this star company known as "Fitness Netflix" and "Fitness Dale"?
Founded in 2012 and ringing the bell on the NASDAQ in 2019, Peloton peaked at a market value of more than $40 billion, which is 20 times the size of keep.
Founder John Foley, who once had a part-time job as an e-book hardware, when the company's business model was to sell hardware and make money from e-book content, which inspired him to start a business. In the initial stage, he also tried to "take advantage" to only do software without touching hardware, but after investigating the hardware products on the market, he felt that it was too bad, or decided to develop his own smart bicycle products.
In 2013, Peloton finally developed the first smart bicycle prototype with a screen, according to his vision, need to add fitness-related content to this device, he found offline fitness brands including Soulcycle to seek cooperation, but was ruthlessly rejected.
Peloton founder John Foley
In desperation, John Foley began recruiting and training a team of star fitness coaches, including models, former track and field athletes, and even the former dance partner of "Fruit Sister" Katie Perry. In order to promote the fitness coaches on the platform, Peloton not only carried out personal IP operations on social platforms such as Instagram and Facebook, but also let these coaches be interviewed on TV stations, and through the star operation, Peloton made a name for himself.
In 2014, Peloton launched a smart home electric bike, and the iOS app was postponed until 2015. After this set of equipment was introduced to the market, some fitness enthusiasts have said that it is more "addictive" than offline gym workouts, and Peloton has become a hit with word of mouth.
Image source @peloton official website
In September 2019, Peloton was officially listed on the NASDAQ with an issue price of $29, which is regarded by the industry as the "first stock listed on smart fitness".
In 2020, the COVID-19 pandemic ravaged, a large number of gyms were closed, and home fitness became mainstream, and Peloton also ushered in a soaring opportunity.
It is understood that Peloton's business model is quite simple, relying on software and hardware to sell money. There are two main types of hardware products, Peloton Bike and Peloton Tread, the bicycle price is $2245 / unit, the price of treadmill is $4295 / unit; there are also two kinds of software subscription products, users who have purchased hardware products want online fitness (including real-time guidance and teaching by instructors), need to pay $39 per month, and other users can buy $19.49/month online courses to exercise at home.
Peloton business model, image source @ Essence Securities Research Center
Through this "combination of soft and hard" model, Peloton's business continued to be hot, becoming a popular "fried chicken" in the fitness industry, with a market value of more than $50 billion at one point.
However, with the rapid growth of business volume, Peloton's production supply and transportation capabilities have gradually become "inadequate", and many impatient users have cancelled orders. At the same time, in 2021, a 3-year-old boy died after suffering a serious head blow on the Tread + treadmill produced by Peloton, exposing product defects, and Peloton's recall of 125,000 treadmills two months after the incident greatly damaged the brand's reputation.
In addition, with the normalization of the epidemic in the United States, many people have returned to offline gyms, and the demand for Peloton continues to be weak. Titanium media App noted that Peloton has lowered the price of Peloton Bike several times, from $2245 all the way to $1495, monthly payment is also reducing prices, some analysts said that it is to solve the problem of inventory backlog.
Under a series of blows, Peloton's former glory is no longer there, and even reduced to the point of "selling itself".
Similar to Peloton, Keep launched paid courses, sold sports consumer products, and later launched hardware products such as spinning bikes and treadmills, taking a "soft and hard combination" road.
In terms of hardware products, Keep's dynamic bicycle adopts the OEM model, and the gross profit margin is low, which has not been the main part of revenue. The prospectus discloses that as of December 31, 2021, about 67,000 Keep smart bicycles have been shipped through self-operated malls and third-party e-commerce websites. According to the China Insight Consulting report, as of December 31, 2021, the cumulative sales volume of Keep smart bicycles ranked first in China in terms of the total number of cumulative commodity transactions.
Peloton's "Waterloo" in this business can be said to wake up Keep, strengthen supply chain management, and continuously improve product quality, which will be the top priority of the development of the business.
Looking at the membership business, churn rate is an important indicator of user loyalty, according to Peloton's newly disclosed financial results for the second quarter of fiscal 2022, in the second quarter, Peloton's Connected Fitness subscriptions increased by 66% year-on-year to 2.77 million, and the churn rate was low, only 0.79%.
In contrast, Keep's membership loyalty needs to be slowly improved. In fact, this is not just a problem with Keep, but the general environment, the U.S. fitness industry is much more mature than in China, and its user churn rate has always been much lower than that in China.
According to the China Insight Consulting report, in 2021, the penetration rate of the fitness population in China (referring to the proportion of the fitness population in the total population in China) will be 21.5%, 48.2% in the United States, and 41.2% in Europe. In particular, China's gym membership penetration rate in 2021 was 3.2%, far lower than the 23.5% in the United States and 9.5% in Europe.
This gap can only be smoothed out by the huge domestic population base and the cost of time.
As an Internet fitness giant, the news that Keep is about to be listed will inevitably affect the attention of the market, and in the past year, new fitness forms have emerged, such as smart fitness mirrors have become the biggest outlet, attracting players such as Leke, Gudong, Huawei, Xiaomi, Baidu and so on, and a new battle has begun.
After landing on the capital market, what will be the next business story that Keep wants to tell? (This article was first published on the Titanium Media App, and the author |.) Liu Muzong)