Hydrow, the maker of a $2,500 connected rowing machine, on Thursday said it has received an additional $55 million in funding to fuel its growth while the home fitness industry is experiencing through a shake-up as consumers returned to the gyms after two years of Covid-related lockdowns and restrictions.
The Series D round brings its total funding to date to more than $255 million, the company said.
New financing for Hydrow comes as Pelotonperhaps the most recognized connected fitness manufacturer in the world, is cut thousands of jobs and cut costs across the enterprise after growing so fast in the height of Pandemic caused by covid-19. Under new CEO Barry McCarthy, Peloton is looking to reset to align its operations with the slower growth it will see as consumers leave their homes and return to the gyms .
Shares of Peloton have dropped nearly 80% in the past 12 months, trading below the $29 IPO price, which has cast a cloud for the rest of the industry, especially the likes of Hydrow in the market. The private sector wants to list shares.
However, according to Hydrow founder and CEO Bruce Smith, there is still plenty of room for growth, despite the difficulties Peloton and the industry are facing. He said the overall penetration rate in the connected fitness sector compared to the total addressable market remains below 10% today.
“The work we’ve been doing around market penetration – obviously the pandemic has sped up penetration a bit, but we haven’t seen any change in trends,” said Smith. long-term direction”. interview. “In fact, the pandemic will continue to accelerate demand because no one is back in the office five days a week. The same goes for fitness.”
“People are totally going back to the gym,” says Smith. “We’re for that and we’re going to your gym in your apartment building. And your home. And that hybrid experience is the new normal in the future.”
June of last year, Bloomberg reports that Hydrow is exploring pursuing an initial public offering, or merge with a special-purpose acquisition company, at a valuation of more than $1 billion. By comparison, Peloton’s market capitalization has dropped to more than $7.9 billion from a peak of around $50 billion in early 2021.
Hydrow declined to comment on its current valuation or plans to take the business public. Still, Smith says hitting the public market is still in the cards.
“A big part of being ready to go public is predictability… that’s really what rewards your valuation and we’re focused on that,” he said. . “Every time someone learns about sailing, they choose Hydrow.”
Peloton is said to be working on its own rowing machine as it develops new products to boost sales, which could pull some future demand away from the Hydrow. Other rowing machine manufacturers include iFit Health and Fitness’ NordicTrack division, CityRow and Ergatta.
Hydrow doesn’t disclose its finances because it’s not a publicly traded business, but it says its revenue will triple 2020 levels by 2021. It also says it now employs more than 200,000 people use.
Those who already own a Hydrow rowing machine can pay an extra $38 per month to take the company’s in-person and on-demand classes. Hydrow also offers a digital-only membership for $19.99 per month.
The data shows how much more consumers are buying cardio equipment during the pandemic than they were pre-Covid, as many seek to recreate the home gym experience.
Cardiovascular equipment sales — including treadmills, stationary bikes, rowing machines, steppers, and ellipticals — total $1.5 billion in the U.S. in 2021, up 95 % from 2019 levels but down 4% from 2020 levels, that’s according to data tracked by the NPD Group. Still, treadmill sales are up 5% in 2021 compared to 2020, NPD said.
Hydrow said it will use the new financing to support greater marketing and branding costs, as well as product innovation.
Series D round took the lead of a private equity firm based in Massachusetts, USA, along with investments from L Catterton, RX3 Ventures, Liberty Street, Activant Capital and Sandbridge Capital.
Michael Farello, managing partner at L Catterton, said: “The fact that Hydrow’s growth continues to accelerate as consumers are able to return to the gym and gyms underscores the challenges favorable thing to promote connected fitness in general and Hydrow in particular.”
