In 2014, Wang Ning, a computer student, encountered a break-up with his girlfriend before graduation. He decided to keep fit and lose weight. By collecting various weight loss and fitness materials on the Internet and constantly trying, he reduced his weight to 130 kg. Successful experience inspired Wang Ning, which gave birth to a company called calorie. In 2015, the company launched keep online fitness platform.
In 2020 and 2021, during the epidemic period, the average monthly active users of keep increased from 29.7 million to 34.4 million. Membership penetration increased from 3.5% to 9.5%.
On February 25, 2022, keep, an online fitness platform, submitted a prospectus at the Hong Kong stock exchange. According to the prospectus, the revenue of the platform in 2019 was RMB 663 million, that in 2020 was RMB 1.1 billion, a year-on-year increase of 66.9%, and that in the first three quarters of 2021 was RMB 1.2 billion, a year-on-year increase of 41.3%.
But keep is still losing money. Keep explained that this is because the platform has strategically increased spending on traffic acquisition and brand promotion to further acquire, activate and retain users. From 2019 to the first three quarters of 2021, keep has accumulated a net loss of 1.168 billion yuan.
Keep said that the fund-raising will be used for technology and product innovation, innovation and development of fitness content, marketing and publicity. Goldman Sachs and China International Capital Corporation Limited(601995) are the co sponsors of the IPO.
Some industry experts said that from the perspective of financial data, keep belongs to bleeding listing. If the financial data can not be improved, the market value performance after listing will be worrying.
epidemic catalysis + capital support: "become the world's largest intelligent fitness platform"
According to the keep prospectus, after the establishment of Beijing calorie Technology Co., Ltd. in 2014, the company launched the keep online fitness platform the following year, and the monthly active users of the platform soon reached one million. In 2016, the monthly active users of the platform reached 10 million. In 2018, keep expanded its products to include intelligent fitness equipment and supporting sports products under keep brand. In the same year, the membership subscription system was launched. In 2019, keep subscribers reached one million. In 2020, keep launched an interactive live fitness course. In 2021, the number of monthly active users of keep platform reached 40 million.
According to Ding Daoshi, an Internet analyst, the basis for keeping alive is that fitness is a relatively high threshold industry. The emergence of keep and other platforms has made this kind of projects and courses that once needed a certain degree of professionalism and various fitness training civilian and inclusive, thus greatly improving the user group and market scale of the whole fitness. "The epidemic has further catalyzed the Internet fitness platform represented by keep and others."
Keep stressed in the prospectus that it has developed comprehensive fitness solutions, covering the whole fitness life cycle of keeper, from planning fitness goals to accessing fitness courses, to selecting fitness equipment and healthy food, and tracking measurement data such as weight and heart rate. Products include online fitness content, intelligent fitness equipment and supporting sports products.
This kind of ecological construction is inseparable from the support of capital. From September 2014 to December 2021, keep conducted a total of nine rounds of financing. The cumulative financing amount exceeded 600 million US dollars. In January 2021, keep received a round f financing of US $360 million, led by Softbank vision fund, followed by Hillhouse capital, GGV Jiyuan capital and Tencent investment. At this time, keep's valuation reached $2 billion.
In March last year, some media reported that keep would sprint for IPO and apply for listing in the United States as soon as the second quarter of 2021. But at that time, keep public relations personnel told the media, "at present, we have not received the listing news." At that time, insiders revealed that keep had appointed CFO and recruited investor relations director in multiple channels. The source also revealed that the management, including Wang Ning, the founder and CEO of keep, hopes that keep will be listed as early as 2021 and as late as 2022.
However, due to regulatory factors, keep's IPO plan in the United States ran aground. Later, there was the news of "moving to Hong Kong for listing".
Now, listing rumors have taken a substantive step. According to the consulting report, in 2020 and 2021, the average monthly active users of keep platform were 29.7 million and 34.4 million respectively. In 2021, the platform recorded about 1.7 billion times of exercise. "Calculated by the number of monthly active users and exercises completed by users, keep is the largest online fitness platform in China and the world."
According to the burning knowledge consulting report, the scale of China's fitness market is expected to increase from 786.6 billion yuan in 2021 to 1479.3 billion yuan in 2026, with a CAGR of 13.5%.
Based on the average number of monthly active users and average reading subscription members in 2021, keep ranks first in China's online fitness platform, and the average number of monthly active users and subscription members is more than twice that of competitors. In addition, in terms of the number of exercises in 2021, the company also ranked first in the online fitness platform.
"Our vision is to become the world's largest intelligent fitness platform". In order to make the prospectus more diversified, keep means to increase the income of the members; Provide advanced fitness packages for users seeking on-demand personal services. Effective management of costs and expenses as a percentage of total revenue, etc.
loss reason: marketing investment for growth
Keep has multiple revenue segments, including member subscriptions, online paid content, private label products, advertising and other services. More than half of its revenue share is contributed by its own brand products. Taking the first three quarters of 2021 as an example, the revenue of its own brand products accounted for 55.1% of the total revenue of the year, member subscriptions and online paid content accounted for 32.8% of the total revenue of the year, and advertising and other services accounted for 12.1% of the total revenue of the year.
Keep said in the prospectus that the revenue growth of the platform mainly comes from the increase in the revenue of private brand products and member subscriptions and online paid content.
For the loss, keep said that this is because the platform gives priority to the customization of strategic path and the optimization of business model. Mainly due to changes in the fair value of preferred shares, and "the increase in the fair value liabilities of convertible redeemable preferred shares is mainly due to the increase in our valuation." Keep said that the company strategically increased spending on traffic acquisition and brand promotion to further acquire, activate and retain users.
Sales and marketing expenses account for the largest part of keep's operating expenses. According to the prospectus, in 2019 and 2020, keep's sales and marketing expenses were 296 million yuan and 302 million yuan respectively, accounting for 44.6% and 27.3% of the total revenue respectively. In the first nine months of 2021, the expenses soared to 818 million yuan, accounting for 70.6% of the total revenue.
"Looking ahead, we expect to continuously evaluate and monitor the effectiveness and efficiency of our promotional activities and marketing expenses."
Marketing investment has indeed brought growth. According to the prospectus, the average monthly active users of keep in 2020 and 2021 were 29.7 million and 34.4 million respectively. Its subscription members increased from 800000 in 2019 to 3.3 million in 2021, and the member penetration increased from 3.5% to 9.5%. In 2021, an average of 74.1% of the total number of monthly active users providing age information were under the age of 30. In addition, in 2021, an average of 52.2% of the total number of monthly active users providing location information came from China's first tier, new first tier and second tier cities.
As of September 30, 2021, keep had cash and cash equivalents of RMB 1.668 billion. According to the prospectus, before the IPO, Wang Ning, chairman and CEO of keep company, held 18.61%, and Peng Wei, Liu Dong and Wen Chunpeng, CO founders, held 2.26%, 1.18% and 1.16% respectively; GGV Jiyuan capital holds 16.14%, Softbank 10.39% and other investors 50.25%.
bleeding behind the listing: who is eager for quick success and instant benefit
The industry has been paying more attention to the commercialization of keep. In fact, since it completed the round D financing of US $127 million in 2018, it has started a comprehensive commercialization exploration. Including e-commerce, member payment, light food, intelligent hardware products, offline gym, etc. However, these commercial exploration is not very smooth, but makes the company organization more and more bloated. At the end of 2019, the platform fell into a capital chain crisis and could only adjust the company's business and lay off staff.
There are also frequent problems with keep products and services. On the black cat complaint platform, as of press time, the number of complaints about keep has exceeded 5500. The problems involved include automatic renewal, false delivery, unfulfilled promises, etc. In addition, keep has also been exposed to illegal collection and use of personal information.
Insiders have told the technology media that keep has taken too big a step. Before the main business "online fitness content" has not run out of a very healthy business model, it blindly crosses the business of fitness equipment, intelligent hardware, clothing and so on. It's easy to rely on the supply chain for start-up companies, but it's easy to be killed by the lack of supply chain integration.
On April 21, 2021, keep launched three upgraded high-quality IP courses and two intelligent hardware products. Its co-founder Peng Wei said that keep's next strategic development direction will be "high-quality content and scientific and technological sports". The platform will seek development with the help of content and hardware products.
Internet analyst Ding Daoshi believes that the loss amount of keep in previous years is still in line with expectations, but the recent loss is surprising. "There should not be such a big loss, which shows that they may be eager for quick success and instant benefits and consume too much capital expenditure for IPO. We should be very vigilant. After all, it is only a start-up company, not that kind of super giant."
Cui Lili, executive director of the E-commerce Research Institute of Shanghai University of Finance and economics, said that although the growth data of the number of users and gross profit margin of keep in 2021 looks good, it seems not convincing compared with the increase of marketing expenses. "The business model it proposes is not necessarily closed-loop. In fact, it has potential competitors in every field. For example, in terms of fitness, there are emerging loco, traditional Wales and shushibao, and there are many large and small gyms; in terms of fitness products, many sports brands and Xiaomi are potential competitors. In terms of fitness catering and nutrition, Enterprises in the catering and general health industries may be more professional. "
\u3000\u3000 "Greater market space still needs education and cultivation. I feel it is difficult to leverage the current content and model of keep by myself. In addition, there are professional competitors in the three business directions, so it is difficult to expand the scale in the medium term at least. I think the better strategy for keep is to do a good job in the deep cultivation and service of existing users. Only in this way can it be profitable." Cui Lili said.
Zhang Yi, CEO and chief analyst of AI media consulting, believes that keep should change the current revenue dilemma. "From the financial data, it belongs to bleeding listing because the capital wants the result. If the financial data can't be improved, I'm more worried about the market value performance after listing." He believes that keep needs the combination of multiple business formats to form a joint force. The current business model is still a money burning model. Whether a smooth business model can be formed is the most important. How to build relevant thresholds is the direction that keep needs to work very hard.
