Specialist
VP at Flywheel Sports Inc
Agenda
- Pricing strategy regarding volume considerations
- Subscription model and membership churn as Peloton Interactive matures
- Product expansion potential examining cross-selling and cannibalisation
- Music licensing considerations and content relevancy
Questions
1.
What headwinds and tailwinds should the investment community be paying attention to for Peloton’s operating environment in the at-home virtual fitness market?
2.
How would you assess the potential exposure and response of a premium player to a possible recessionary environment? What impact might there be on selling new bikes or new treadmills vs subscription cancellations?
3.
How do you foresee the at-home virtual fitness market developing? As well as Equinox’s resilience in a recession, do you have any comments on its outlook and that of new entrants and competitors such as Mirror?
4.
How do you expect the litigation to play out? It recently doubled from USD 150m to USD 300m. What is the best-case and worst-case scenario and what are Peloton’s strategies to overcome it? It spent about USD 56m in music licences in the last three years. What would be a more realistic number?
5.
Peloton claims to be a tech, media, software, product, experience, fitness, design, retail, apparel, logistics company. How much of that do you think is exaggeration to potentially generate a more interesting multiple following the S-1 filing, and what is a realistic description?
6.
How would you assess Lululemon as a possible competitor? If it continues with the apparel business, is it the same customer overlap with those buying the bikes? How would you break down the competitive environment for Peloton more broadly?
7.
What do you think the medium household income would be for Peloton’s customer base? Are they overspending what they have? Do they have enough discretionary income to use it on a big purchase?
8.
What do you think the size of the TAM is for potential participants in boutique cycling fitness as well as home cycling? How might these markets grow and behave in future?
9.
You mentioned the TAM approaching saturation for the stationary bikes. How does that play out into the potential treadmill or rowing verticals that Peloton might expand into? How does that impact its overall health and the market?
10.
Could you explain the nuances of maintaining and competing for talent and human capital in this market? What does that mean for sustainability of users in future?
11.
Could you explain user habits? After a customer purchases a Peloton bike, do they cut off all their boutique cycling classes they used to go to? How does that fit into their fitness budget and overall maintenance of general memberships? Do they trade down to a cheaper membership if they get a Peloton bike? Do they maintain their Equinox membership and also have a Peloton bike?
12.
Could you elaborate on the churn dynamics? Peloton has mentioned 0.65% monthly churn, which seems artificially low. How sustainable or realistic might that be, how does that compare to other players, and how might that behave in future?
13.
Would you expect a cyclicality of churn with drop-offs at the end of the year and user sign-ups at the beginning of the year with the New Year’s resolutions? What does that type of cyclicality perhaps mean for other memberships?
14.
Do you think Peloton is doing too much, trying to be a retailer, product manufacturer, content provider? Would it make sense to it to pick one lane and optimise it? Is there value in playing as all of these, and how might this develop as the company continues to scale?
15.
Could you comment on the TAM, market size, challenges and opportunities for Europe and potentially an expansion to Asia? What is there to gain and what is your outlook on international opportunity?
16.
How does pricing work for the bikes, treadmills and the subscription in the US? How would you describe typical customer price-sensitivity, Peloton’s ability to maintain premiums in this market and how much of the market is ostracised due to the price barrier?
17.
To what extent would you say Peloton could be taking share away from these cycling boutiques because the economics make more sense to buy the bike than to go to the boutique a lot? What competitive levers might the boutiques have?
18.
Peloton claims it has effective word-of-mouth referrals but it has quite an excessive marketing budget. How might these two elements reconcile, what does it take to reach critical mass for awareness and what are the advantages?
19.
What would you suggest the implications of the customer acquisition cost might be, and at what point can Peloton bring it down? Can it continue to get new customers at the current levels? Is the price going to go up for acquiring customers?
20.
How would you assess the first-mover advantage erosion rate and its sustainability? Do you think Technogym or another home solution or business take away share in the medium and long run?
