Peloton Interactive tops the leaderboard in connected fitness, but iFit Health & Fitness is trying to give it a run for the money—despite facing “adverse market conditions.”

IFit today postponed an initial public offering of stock in which it had hoped to raise up to $743 million. The company said it “made the decision based on adverse market conditions and will continue to evaluate the timing for the proposed offering.”

Peloton went public in 2019. Its stock jumped about 6% this morning after iFit’s announcement, though Peloton shares trade at barely half their early 2021 peak amid investor caution about Peloton’s prospects.

IFit, marketer of NordicTrack, ProForm, Weider and Freemotion equipment and the iFit interactive fitness platform, tripled worldwide ad spending to $379 million in the fiscal year ended May 2021.

That brought iFit’s spending close to Peloton, which boosted worldwide ad spending by 38% to $418 million in the fiscal year ended June 2021.

Revenue for both marketers has more than doubled during the pandemic. Peloton, run by CEO John Foley, a former Barnes & Noble and IAC/InterActiveCorp executive, is far ahead.

Peloton, which shipped its first stationary bike in 2014 and its first treadmill in 2018, has more than twice the revenue of iFit, which CEO Scott Watterson co-founded (under the name Weslo) in 1977. (Watterson had been in line for a $35 million bonus after the IPO.) 
 
Worldwide revenue for Peloton soared 120% to $4 billion in its latest fiscal year, while iFit’s revenue jumped 105% to $1.7 billion. But revenue growth rates for both companies have tumbled in the current fiscal year.

While connected fitness growth rates have slowed, the gym business—locked down during the pandemic—is showing some signs of revival. Life Time Group Holdings, a chain of upscale fitness centers, went public today on the New York Stock Exchange. (The IPO priced at the low end of Life Time’s planned range, and the stock fell in early trading.)

IFit had been on Nasdaq’s calendar to list its stock Oct. 6, but that was pushed back to today. IFit then postponed the IPO before the market opened today.

How iFit and Peloton stack up:

IFit has bulked up on advertising, with ad spending in its most recent fiscal year more than five times the level of just two years ago, according to disclosures in a filing for iFit’s now-postponed stock offering.

Peloton’s ad spending in its most recent fiscal year was roughly double the level of two years ago, according to its financial filings.

Peloton’s ad spending as percent of revenue—one measure of marketing efficiency—fell to 10% in the year ended June 2021 from 17% the previous year and 24% two years ago. (Peloton slashed ad and marketing spending early in the pandemic amid strong demand, but it resumed aggressive marketing spending in the six months ended June 2021.)

IFit is almost the mirror image: Ad spending as percent of revenue rose to 22% in the year ended May 2021 from 15% the previous year and 10% two years ago.

It wasn’t that long ago that iFit was a bigger company, but Peloton has out-pedaled its older rival in recent years. Peloton’s worldwide revenue doubled in each of the past three fiscal years.

IFit broke out only three years of revenue in its IPO filing. But historic filings show how the company’s revenue has seesawed over the decades. Revenue for the year ended May 2019 was about $700 million—well below the net sales reported by Icon Health & Fitness (the company’s old name) in annual filings for the year ended May 2004 ($1.1 billion) and below its net sales from 25 years ago ($748 million in the year ended May 1996).

Revenue for iFit and Peloton surged during the early months of the coronavirus pandemic amid lockdowns and gym closings, but post-pandemic growth prospects are uncertain.

IFit’s IPO filing reads: “Demand for at-home health and fitness solutions has increased as a result of gyms and fitness studio closures. While the adoption of at-home connected fitness has been accelerated by the pandemic, it is possible that increased demand levels could decline … as economies eventually normalize due to vaccine distribution and consumers spending less time at home.”

Peloton’s latest annual filing cautioned that its “revenue growth rate is likely to slow as our business matures,” adding: “Our historical revenue growth should not be considered indicative of our future performance.”

Peloton this summer cut the price of its original bike by $400 to $1,495 to help drive demand after reporting slowing revenue growth in the quarter ended June 30. The company in August forecast revenue growth of just 6% in the quarter ended September 2021. That's down from the 232% growth reported by Peloton in the same quarter a year ago. For the year ending June 2022, Peloton forecast revenue of $5.4 billion, up 34%.

IFit’s revenue growth in the quarter ended Aug. 31 versus a year earlier was in the range of 21% to 28%, according to its preliminary results, down from the 112% growth recorded in the same quarter a year earlier.

IFit declined to comment for this story, citing Securities and Exchange Commission guidelines for the quiet period around an IPO. Peloton's press team didn’t respond to a request for comment.

Both companies are heavily reliant on the U.S. (89% of revenue for Peloton and 84% for iFit in the most recent year).

Both marketers generate the bulk of revenue from product sales, but they are betting heavily on recurring revenue from subscriptions offering access to live and on-demand classes and content.

Subscriptions accounted for 22% of revenue at Peloton and 13% of revenue at iFit in the most recent year.

Peloton goes to market with its namesake brand, including stationary bikes, treadmills and a new apparel line, Peloton Apparel. (The company in August introduced an updated version of its treadmill following safety-related recalls of its treadmills earlier this year.) Peloton also markets Precor, a manufacturer of global commercial fitness equipment that it bought in April.

IFit generated more than half (53%) of revenue in its most recent fiscal year from NordicTrack, a premium at-home brand it bought out of bankruptcy in 1998. The rest of its revenue came from mass-market brand ProForm (27%), strength-training brand Weider (6%), commercial brand Freemotion (1%) and iFit subscriptions (13%). IFit in June 2021 bought Sweat Group, a digital fitness training platform for women that operates as a standalone brand.

Peloton and iFit each more than doubled their subscriber count in the most recent fiscal year. 

Peloton’s number of connected fitness subscriptions jumped 114% to 2.3 million as of June 2021 versus a year earlier.

Peloton charges $39 a month for a connected fitness subscription, which gives multiple household members access to live and on-demand classes. Subscriptions include Peloton Digital, an app for mobile devices, tablets and computers that lets members access classes and other workouts while away from their Peloton machines. The company also sells Peloton Digital subscriptions on a standalone basis for $12.99 a month.

Peloton reported 5.9 million members as of June 30. It defines a member as any individual who has a Peloton account through a paid connected fitness subscription or a paid Peloton Digital subscription.

IFit’s number of total fitness subscribers increased 111% to 1.1 million as of May 2021 versus a year earlier. IFit boosted its subscriber base in June with the acquisition of Sweat. If Sweat app subscribers are included, iFit had 1,569,127 subscribers as of May, a figure that grew only slightly—to 1,580,373—as of Aug. 31.

IFit charges $15 a month for individuals and $39 a month for families for access to its library of iFit live and on-demand content. IFit’s IPO filing noted: “We believe the combination of our proprietary software and experiential content connected with our interactive hardware creates a compelling value proposition for our rapidly growing member base and generates attractive recurring subscription revenue.”

IFit reported 5.7 million total members as of May 31 (or 6.1 million including Sweat). It defines total members as all individuals who have an active iFit account and/or Sweat subscription, including “Interactive Fitness Subscribers, their respective secondary members and members who consume free content.”

The companies spend heavily on content programming to retain and attract customers. In its annual 10-K regulatory filing, Peloton announced its on-camera instructors “are not only authorities in their respective areas of fitness, but also relatable, magnetic personalities who inspire passionate followings.”

In its IPO filing, iFit shared that its “world-class production teams, including Emmy award-winning talent and cinematographers, film iFit experiential content in more than 50 countries across seven continents, led by more than 180 iFit trainers, including Olympians, top female fitness icons and other elite athletes.” IFit earlier this year signed Olympic swimmer Michael Phelps as one of its trainers.

Connected fitness is a tech-driven play. Peloton’s latest 10-K filing declared: “We pioneered connected, technology-enabled fitness. … We are an innovation company at the nexus of fitness, technology and media.” In its IPO filing, iFit proclaims: “We are innovators—and consider ourselves the original pioneers—of connected health and fitness technology.”

IFit boasts a portfolio of more than 400 issued and pending patents in areas ranging from interactive streaming to adaptive fitness technology. About a fourth of iFit’s 2,500 employees work in research and development. The IPO filing said: “Our robust innovation pipeline is unique in the fitness industry and positions us to stay at the forefront of health and fitness technology.”

Peloton has about 200 issued and pending U.S. patents.

Peloton far outspends iFit on research and development.

IFit disclosed $36 million in R&D expenses, equivalent to 2% of revenue, in the year ended May 2021. In addition to that R&D expense, iFit spent $55 million in its last fiscal year to enhance the iFit platform, develop new products, content and features, and improve platform infrastructure.

Peloton reported $248 million in R&D expenses, or 6% of revenue, in its most recent fiscal year, and shows no signs of slowing down. Peloton’s annual filings in 2021 and 2020 noted: “We expect our research and development expenses to increase in absolute dollars in future periods … as we continue to hire personnel to develop new and enhance existing connected fitness products and interactive software.”