Peloton Interactive Inc. is raising a $550 million round of financing as the maker of video-streaming stationary bikes contemplates an initial public offering as soon as next year.
The funding round, led by venture-capital firm TCV, values Peloton at $4.15 billion, according to people familiar with the terms of the financing.
Peloton’s co-founder and Chief Executive John Foley and President William Lynch said in an interview that they expect this financing will be the last before an IPO. The timing of a public debut remains fluid, but 2019 “makes a lot of sense,” Mr. Foley said.
The latest financing adds to Peloton’s already ample fundraising and comes at a sizable premium to its last round. In 2017, Peloton raised $325 million from investors including Wellington Management Co., Fidelity Investments and Kleiner Perkins at a $1.25 billion valuation.
Peloton, founded in 2012, makes a $1,995 stationary bicycle. Most customers use the bikes at home, paying about $39 a month to stream live classes that the company produces using its own instructors. The New York-based firm, which has showrooms around the U.S., plans to launch a treadmill this fall.
The company is on pace to generate more than $700 million in revenue in the fiscal year ending next February, continuing its more than 100% year-to-year revenue growth rate, Mr. Foley said. It has recently generated earnings before interest, taxes, depreciation and amortization, but Mr. Foley said he expects it to lose money in the second half as the company invests in growth opportunities.
TCV, a new investor, is contributing $150 million to the latest round. Nearly all of the company’s existing investors, including its earliest institutional investor Tiger Global Management LLC, will take part, Peloton said.
TCV’s founding general partner Jay Hoag, an early Netflix Inc. investor, said that while many companies claim to be the Netflix of their category, Peloton is a rare example of one that is. “We’re totally convinced it’s the Netflix of fitness,” he said.
While roughly $150 million of the proceeds will be used to give existing investors and employees the option to sell shares, the rest will be earmarked for initiatives including international and retail expansion.
The IPO market has been booming, hastening the debuts of a number of companies that had been content to draw on private funding and delay going public. So far this year, 146 companies have raised $41.2 billion on U.S. exchanges, according to Dealogic. That is up more than 30% from last year’s dollar volume at this point in the year, when 107 companies had raised $30.9 billion through IPOs.
Write to Maureen Farrell at email@example.com
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