Peloton casts doubt over its accounting ahead of float
THE fitness company Peloton has said it is unable to guarantee the accuracy of its accounting as it becomes the latest in a series of highly anticipated but loss-making “unicorn” flotations.
The company, which sells static bikes and treadmills, and streams exercise classes through a video screen, said it had “identified material weaknesses” in its financial reporting.
It said this meant that errors in its financial statements might not be caught. “To address our material weaknesses, we have added personnel as well as implemented new financial systems and processes,” it said in documents submitted to the Securities and Exchange Commission, adding that it had not fixed the issue by the end of June, its latest accounts.
Peloton is expected to seek a valuation of $8bn (£6.6bn) to $10bn in the public markets, in a year in that many Silicon Valley unicorns, companies valued at more than $1bn, have also begun offering their shares to the public.
Uber, Lyft, Slack and Pinterest have gone public this year with high valuations despite being loss-making.
Peloton’s own financial documents revealed a loss of almost $196m in the year to June 30, more than four times the previous year’s figure, despite a rise in revenue to $915m.
Analysts also raised questions over its “churn” rate, a measure of how loyal its users are. The company reported churn as just 0.65pc of its user base each month, but this was based on a customer base that was partially pre-paid or locked into subscriptions, suggesting the true number could be higher.
Peloton sells its bike for $2,245, and customers then pay $39 a month for a subscription that lets them watch fitness trainers take them through exercises and compete with other users.
It has 1.4m members and said 92pc of its fitness products still had active monthly subscriptions.