"Self-discipline gives me freedom," is the slogan of keep, the sports social platform.
On the evening of February 25, Keep officially submitted a prospectus to the Hong Kong Stock Exchange to sprint to the "first stock of sports technology".
According to the prospectus information, from 2019 to 2020, Keep's total revenue increased from 660 million yuan to 1.11 billion yuan. In the first three quarters of 2021, Keep achieved a total revenue of 1.16 billion yuan, an increase of 41.3% year-on-year. In 2021, Keep's average monthly active users were 34.4 million. In 2019 and 2020, Keep's adjusted net loss was $366 million and $106 million, respectively. In the nine months ended September 30, 2021, the adjusted net loss was 696 million yuan, which is equivalent to a loss of 2.55 million yuan per day last year.
According to the data released in March this year, the cumulative users of the Keep platform reached 300 million people, and the proportion of 19-45-year-olds was as high as 93.68%, relying on these 300 million people to support Keep, how will it go after the IPO?
Prospectus: Loss of nearly 700 million yuan in the first nine months of 2021
Founded in 2015, Keep is the largest online fitness platform in China and around the world. As a sports technology company, Keep mainly provides one-stop solutions covering the entire fitness life cycle for sports and fitness users through online fitness content, intelligent fitness equipment and supporting sports products.
According to HKEx documents, Keep formally submitted a prospectus to the Hong Kong Stock Exchange on February 25, with Goldman Sachs and CICC as joint sponsors.
According to the prospectus information, from 2019 to 2020, Keep's total revenue increased from 660 million yuan to 1.11 billion yuan. In the first three quarters of 2021, Keep achieved a total revenue of 1.16 billion yuan, an increase of 41.3% year-on-year. In 2021, Keep's average monthly active users were 34.4 million. In 2019 and 2020, Keep's adjusted net loss was $366 million and $106 million, respectively. For the nine months ended September 30, 2021, the adjusted net loss was $696 million.
The following is a summary of the financial data of the Keep prospectus:
Revenue – Revenue was RMB663 million in 2019 and RMB1.107 billion in 2020, an increase of 66.9%. Revenue for the nine months ended September 30, 2020 was RMB820 million, and revenue for the nine months ended September 30, 2021 was RMB1,159 million, an increase of 41.3%.
Gross profit – Gross profit was RMB273 million in 2019 and RMB499 million in 2020, an increase of 83.2%. Gross profit for the nine months ended September 30, 2020 was RMB385 million, compared to RMB494 million for the nine months ended September 30, 2021, an increase of 28.2%.
Loss – Loss was RMB735 million in 2019 and widened to RMB2.2 billion in 2020. Loss of RMB1.5 billion for the nine months ended 30 September 2020 and RMB2.5 billion for the nine months ended 30 September 2021.
Adjusted Net Loss – Adjusted Net Loss, non-IFRS financial indicators were RMB366 million in 2019 and RMB106 million in 2020. For the nine months ended September 30, 2020 and September 30, 2021, the adjusted net losses were RMB15.545 million and RMB696 million, respectively.
Revenue structure - private label product revenue, Revenue was $396 million in 2019, increased to $637 million in 2020 and $638 million for the nine months ended September 30, 2021, membership subscription and online paid content revenue was $151 million in 2019, $338 million in 2020, $380 million for the nine months ended September 30, 2021, and $116 million for 2019, $132 million for 2020, and $140 million for the nine months ended September 30, 2021.
In terms of operational data, in 2020 and 2021, the average monthly active users of the Keep platform were 29.7 million and 34.4 million, respectively, and in 2021, the average number of monthly paid members was 3.3 million. Private label fitness products achieved revenue of RMB396 million, RMB637 million and RMB639 million in the quarters of 2019, 2020 and the first three quarters of 2021, respectively. In the first three quarters of 2021, Keep membership and online paid content revenue was 380 million yuan, an increase of 32.8% year-on-year.
In terms of shareholding, before the IPO, Keep founder and CEO Wang Ning held 18.61%, co-founder Peng Wei held 2.26%, Linhe founder Liu Dong held 1.18%, co-founder Wen Chunpeng held 1.16%, GGV Jiyuan Capital held 16.14%, SoftBank held 10.39%, and other investors held 50.25%.
Established in 7 years of financing 8 rounds, Keep has become the largest dark horse in the field of fitness
According to the data of Tianyancha, Beijing Calorie Technology Co., Ltd., the company to which Keep belongs, was established in 2014, and the actual controller is Wang Ning.
Keep has completed eight rounds of funding, the most recent of which is the $360 million F round of financing completed in January this year, and the investors include Coachue Management, GGV Jiyuan Capital, Tencent Investment, Times Capital, Wuyuan Capital and BAI Capital.
Among them, BAI Capital has participated in 6 rounds of financing of Keep, Tencent Investment has participated in the last 4 rounds of financing consecutively, and Times Capital, Wuyuan Capital and GGV Jiyuan Capital are also old financial owners who have participated in the investment many times.
After completing series F financing, Keep's valuation has reached $2 billion, doubling in just half a year — when the $80 million Series E funding was completed in the middle of last year, the valuation had just crossed the $1 billion mark.
In the history of Keep7, 2019 is reportedly an important watershed. Before 2019, Keep financing was favored by capital, and user growth also soared, becoming the biggest dark horse in the fitness field.
Keep was officially launched in 2015, when O2O was one of the hottest entrepreneurial outlets in the market. A large number of O2O entrepreneurial projects have emerged in the fitness field, such as Keep's biggest competitor Super Orangutan, Huang Xiaoming's investment in hot fitness, FitTime Ruijian Era, citywide hot refining, Bear Run, Burning, About Coach, RenMa Jun, etc., all of which were established during that time. According to incomplete statistics, in the application market, there are more than 1500 mobile sports apps.
But to stand out from more than 1,500 apps and gain the first 1 million users, Keep took only 105 days. From 1 million users to surpass the three mountains such as "Big Aunt, Grapefruit, and Xiaomi Sports", Keep took 2 years. In March 2017, Apple CEO Tim Cook became Keep's 80000001 user. In August 2017, the number of registered users exceeded 100 million, becoming the fitness app with the highest user activity.
Around 2018, Keep can be described as full of spirits, all the way through the barriers, growing into a unicorn in the field of fitness. In the period of enterprise growth and rise, Keep completed two adjustments from fitness tools to fitness platforms to sports consumer brands in its own strategic direction, from online to offline, from tools to platforms to e-commerce, the ecology continues to add, and the boundaries are constantly broken.
The underlying logic of strategic adjustment is that if Keep is only used as a fitness tool, the ceiling is obvious, the monetization method is relatively single, mostly relying on advertising, and the business model exploration of the platform and even consumer goods e-commerce obviously has a richer imagination space.
Keep founder Wang Ning tried to build a "closed loop of the technology movement" that covers the user's eating and wearing practice. Therefore, fitness products, paid courses, offline space keepland, light food delivery and other products came into being. "We did Keepkit around the family, and made treadmills, home fat scales and other products; created Keekland around the urban scene, we hope that KeepLand can become the infrastructure of the city, like post offices, banks, convenience stores; we have built a sports brand like KeepApp around the lifestyle of young people, hoping to penetrate into all young people through Keep's clothing and peripherals, and show the brand value of Keep through these."
The scale of online users continues to grow, and the sales of fitness products such as fitness classes and treadmills are growing.
In addition, Keep has also seized the offline market, and Keepland has rapidly expanded from Beijing to Shanghai. In less than two years, Keep has opened 13 Keeplands in the bustling areas of Beijing and Shanghai.
Profit realization faces challenges Many times Caught in the storm of complaints
However, with the increase in financing rounds and the accumulation of user traffic pools, the pressure to keep profits is increasing.
In 2017, Keep launched smart hardware products such as treadmills, yoga mats, smart bracelets and other fitness equipment and related products. On the day of the sale of 618 this year, Keep was the first in the trading index of five categories such as spinning bikes, treadmills, yoga mats, health racks, and yoga pulls.
Although Keep's sports consumer products account for more than half of the total revenue, they do not constitute a moat in the competition of e-commerce channels such as Taobao and JD.com, such as Xiaomi and Huawei are strong competitors. Xiaomi has capital, traffic and technology has long begun to lay out the field of smart fitness, as of September 2020, Xiaomi has launched a number of smart products such as Mijia walker and Mijia bracelet NEXGIM fitness car through its own brand and ecological chain company. In terms of intelligent hardware, cost performance and mature management capabilities constitute a moat.
In April 2019, Keep only launched the new smart hardware Keep smart sports bracelet, walking machine, etc., and the Xiaomi bracelet has been launched in 2014. In the face of absolute giants, the pressure keep faces is a big mountain.
Keep's offline gym business is also not satisfactory, last April, keepland in shanghai after only surviving for one year, it officially announced the withdrawal of the Shanghai market, the remaining stores, all located in Beijing, and the number of stores in Beijing is currently only one-tenth of the leke founded in the same period.
From 2019 to the present, Keep has closed some offline stores in succession, whether it is location or epidemic, which has caused great frustration to Keep. Offline stores have less than one-tenth of their revenue.
In addition, the catering involved in Keep did not go well.
In 2019, Keep launched a mini program, focusing on light salad takeaway, and then suspected of violating the law because there was no physical store. Nowadays, for non-members, Keep's catering is only reflected in the information flow, providing a variety of scenes, cuisines, types and other categories of menus. The menu belongs to the category of knowledge, Baidu and other software can be found in one-click search, so it seems that there is really no competitiveness.
In addition to the above industries, Keep also cooperated with coaches to do live streaming with goods; do high-quality content to prepare to achieve knowledge payment that even Zhihu, Xiaohongshu and other predecessors have not yet succeeded; also find celebrities to jointly endorse and promote their own intelligent hardware... Unfortunately, despite all the tricks and frequent changes, none of the commercialization paths that Keep has found seem to have worked.
The bad news is much more than that.
According to the data released in March this year, the cumulative number of users of the Keep platform reached 300 million, and the DAU reached 6 million. Among them, the number of users in the age group of 26 to 35 years old is the largest, the proportion of 19-45 years old is as high as 93.68%, and the proportion of male and female users is 47.91% and 52.09% respectively. However, Keep was exposed this year to a scandal of illegal collection of user information: on June 11, the Cyberspace Administration of China (CAC) reported the results of the detection of the collection and use of personal information of some apps that are widely used by the public such as sports and fitness, news information, webcasting, app stores, and women's health, which showed that 129 apps such as Keep illegally collected and used personal information and were urged to rectify.
This is extremely fatal for tool products with strong substitution, or it will make the irritated member users gradually deviate from the platform, so that Keep loses its biggest user advantage.
At the same time, on the black cat complaint platform, we have seen a large number of complaints about Keep, including forced renewal, non-refund, refund and other issues.
What does "American Keep" Peloton bring to Keep?
Industry data shows that the penetration rate of the mainland fitness population in 2020 is 5.02%, compared with 15.2% and 8.1% in the United States and Europe in the same period, which is obviously a lower proportion.
However, with the development of social economy and the progress of the times, the rise in the proportion of domestic fitness population has become an unstoppable trend.
According to the "2021 China Sports and Fitness Population Insight Report" launched by the Mob Research Institute in December last year, the number of people who regularly participate in physical exercise in China continued to rise, rising from 406 million to 428 million from 2016 to 2019, and the state continued to promote the national fitness program, and the number is expected to reach 560 million in 2030.
It can be seen that the domestic fitness market has a bright future, so how to go after keeping it?
The performance of Peloton, a star company known as the "fitness world Netflix", after listing, may give Keep some references:
Peloton was founded in 2012 by John Foley, a former executive at Barnes & Noble, the largest bookstore chain in the United States. Relying on a business model that mimics Kindle's "smart hardware + content", Peloton applied it to the fitness field and created a unique fitness service model through the subscription model.
Shortly after its listing in 2019, it experienced a break, but under the wave of home caused by the epidemic in 2020, the stock price of the American company that focuses on home fitness soared. In a year, the price per share soared from $17.70 to a maximum of $167.37, an annual increase of more than 4 times. Peloton's market performance has also spurred the growth of the domestic home fitness track.
However, in 2021, Peloton's stock price has experienced a roller coaster, and its market value has fallen from a peak of $56.7 billion at the beginning of the year to the current $10.1 billion, a decline of more than 80%. Compared with the peak, Peloton's market value will evaporate by nearly $45 billion (a total of about 290 billion yuan) in 2021.
According to fiscal fourth quarter 2021 financial report (ending June 30, 2021), Peloton achieved total revenue of $937 million, a 54% increase year-over-year, higher than Wall Street expectations. However, Peloton can't avoid the pressure on profitability: a net loss of $313 million in the fourth quarter, compared with a net profit of $89.1 million in the same period last year, seems to be a flash in the pan under the blessing of the epidemic.
Today's Peloton is living and dying: poor performance, stock prices plummeting, layoffs, top executive resignations, and rumors of selling themselves.
Still, Peloton's stock price has held firm and is now stable around $90, with its market capitalization ballooning from $7 billion at the beginning of the listing to nearly $40 billion today.
According to industry analysis, Peloton's performance is a two-sided revelation for investors who are looking forward to keep listing:
On the one hand, the online fitness industry is in the growth stage, the capital market has a high tolerance for industry leaders, and the prospect of stock prices after listing is worth looking forward to. Zhang Yi, CEO of Ai Media Consulting, has also analyzed that Keep's current user data is significantly ahead, the financial data is relatively good-looking, and it has its own listing value.
But on the other hand, Peloton has sent us a signal with its personal experience: although it has a large number of users, the commercial monetization of online fitness apps is not easy, and the pressure on profitability is not small, which may affect its long-term valuation.
In this regard, an investor said that the new fitness track belonging to China still has optimistic prospects, and the development space left for the enterprises on the track is still worth looking forward to.
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