Fit! is offering equity at a $25.2 million valuation. In most cases, that would be a large valuation for a company as young as Fit!. However, this business has performed very well relative to most startups. Fit! generated more than $4.3 million in 2020, up from $942,507 in 2019. Plus, Fit! was profitable in both of those years. The company hasn’t released 2021 financials yet, but 2020 revenue implies a revenue-to-valuation multiple of less than 6x. That valuation sits in the middle of what would be fair for a hardware company and a software company, which seems appropriate given Fit!’s dual revenue streams. Overall, this opportunity seems fairly priced for investors. 

The at-home fitness market boomed during the COVID-19 pandemic and has continued to surge as mask mandates and stay-at-home orders continue to dis-incentivize trips to the gym. The global market was expected to expand from $8.4 billion in 2020 to $9.9 billion in 2021 with an annual growth rate of 17.6%. That’s strong growth, but it is expected to reverse: the market is expected to decline to $8.3 billion by 2025. That’s unsurprising, given that companies like Peloton have watched demand decrease since the peak of the pandemic. Overall, the at-home fitness market is not particularly large and the possibility of decreased growth should be concerning for potential investors.

Fit! also captures value from the global fitness app market. While this market is much smaller than the market for equipment, it is expected to witness more stable growth. The fitness app market was valued at $1.1 billion in 2021 and is expected to grow at a strong compound annual growth rate of 17.6% over the next eight years. 

The market for at-home fitness solutions like Fit!’s hardware and app has expanded dramatically in recent years, which is a good sign for the company. However, there are concerns that demand will slow significantly as the pandemic subsides. Slowing demand plus enormous competition in this space means that Fit!’s market prospects are mixed.

Fit! was co-founded by an experienced trio with diverse skills across business operations, growth, and engineering. Michael DeVerna, Fit!’s CEO, was most recently the COO of Wag. Wag is a popular dog-walking startup that was once worth $600 million. However, the company suffered major stumbles and is apparently on the verge of going public at an estimated valuation of just $300 million. DeVerna clearly faced many challenges at Wag, but many investors would argue that failed startup executives make excellent founders, as they have learned a vast number of key startup lessons the hard way. 

Fit! is also led by co-founders Adam Frater, creative director, and Tyler Do, head of hardware. Frater has more than a decade of marketing and sales experience. He previously developed his own fitness app called Body Alchemy, which appears to have been the beginnings of the Fit! app. Do graduated from New York University with a bachelor’s in mechanical engineering, and he has several years of experience as a mechanical engineer for companies including The Aerospace Corporation and Local Roots Farms. 

Fit!’s team is balanced, committed, and deeply experienced. CEO Michael DeVerna’s impressive experience as the COO of Wag is a very positive signal for Fit!, despite Wag’s struggles. Few startup founders can draw on their time as the COO of a near-unicorn when building a new company. Fit!’s founding team seems to have what it takes to scale a large and successful business.

Fit!’s biggest area of weakness is differentiation. Both the at-home fitness equipment and fitness app industries are hopelessly crowded, with incumbent giants and new entrants all vying for a slice of decreasing demand as COVID-19 subsides. Plus, it’s not an encouraging time to be raising money for an at-home fitness equipment company. Peloton – arguably the most prominent company in this sector – is in the midst of newfoundl struggles.

Fit! doesn’t have an obvious competitive moat that differentiates it from companies like Peloton, MIRROR, Tonal, and the growing sector of other at-home fitness devices. All offer well-designed fitness equipment paired with an app for workout content, often created by influencers. Fit! would probably argue that its hardware is more versatile than equipment like a cycling bike or weight-lifting mirror, but users might disagree. Fit!’s simple set of bars could be intimidating or perhaps even useless to a large swath of casual workout enthusiasts. 

All in all, it’s extremely difficult to compete in the at-home fitness industry. Many would say that Peloton’s “secret sauce” was its loyal community of users nurtured over a decade. Yet even that advantage couldn’t save the company from a significant stock price decline and severe layoffs. Without a clear distinction from every other at-home fitness company, Fit! might not grow beyond its COVID-19 boom.

Fit! was founded in 2018 but seems to have begun selling hardware in 2019. After roughly two years in business, the company has accomplished remarkable results. Fit! has brought in roughly $7 million in revenue, and it generated a profit in both 2019 and 2020. Growth between 2019 and 2020 was very strong, with an increase from just over $940,000 in revenue to more than $4.3 million. 

Fit!’s revenue is driven by a blend of subscription fees for its workout app and sales of at-home fitness equipment. On the app side, Fit! has successfully negotiated partnerships with a number of prominent influencers and athletes. These include personalities like Alex Puccio, an American Bouldering Champion, and Tony Jeffries, an Olympic medalist in boxing. With regard to equipment, Fit! offers four products: a home gym rack/bars setup, portable parallel bars, an adjustable plyometric box, and a doorway hangboard for rock climbers. Fit!’s ability to generate interest with new content and new equipment is undoubtedly one of the reasons the company has grown so much in just a few years.

Fit! is a relatively low-risk investment. The company is already generating revenue and has in fact brought in millions in revenue in only a couple of years. The founding team is experienced and dedicated full-time to the business. One of Fit!’s few risks is funding. The company is largely self-funded, which is a good sign for operational efficiency, but it will require a good deal of capital to fund user acquisition and scale in coming years. This small crowd fundraise probably won’t be sufficient. Therefore, Fit!’s ultimate success may rely on a successful institutional raise, which the company has not yet proven an ability to conduct.

Fit! is an impressive company by many measures, and it certainly benefited from the COVID-19 surge in at-home fitness demand. However, the overall at-home fitness industry may experience challenges in coming years. While the pandemic drove unprecedented demand, it may have also saturated the market. Most consumers with the motivation and capital to invest in a home gym have probably done so by now. Even Peloton was recently forced to acknowledge a slump of demand for its hardware. 

Second, Fit! has little differentiation from the crowded landscape of at-home fitness competitors. Buzzy, well-funded companies including Peloton, MIRROR, Tonal, and Hydrow are eating up market share. All of them offer equipment and content, very much like Fit!. Plus, those companies’ products are more appealing to the mass market than Fit!’s equipment. Fit! seems better suited for those interested in niche sports, like rock climbing and boxing, or those with the fitness and confidence to attempt hardcore calisthenics, which severely limits Fit!’s potential slice of the narrowing at-home fitness market. 

Fit! does not seem to be a mass-market at-home fitness company. Its products are too specific for calisthenics. One could argue that this niche appeal hurts Fit!’s prospects in the crowded, competitive at-home fitness market. On the other hand, it could be Fit!’s strength. If competitors, including Peloton and Tonal, are going after a different type of consumer, Fit! can continue focusing on building hardware and creating content for dedicated athletes. This market is significantly smaller than total demand for at-home fitness equipment, but it would still be a sizable market for Fit! to potentially dominate. 

There are also a number of other factors that make Fit! an attractive investment. The company’s founding team is diversified and experienced and, notably, includes a former C-suite executive from a massively funded startup. Fit! has generated a great deal of revenue in its first couple of years in business, and it even generated a profit in both 2019 and 2020 (2021 financials haven’t been released). Plus, investors can obtain a stake in Fit! for a reasonable price that recognizes the company’s dual hardware and software revenue streams. 

Fit! is an at-home fitness company offering both workout equipment and in-app fitness content. Its products are best suited for seasoned athletes comfortable with calisthenics, which is a market arguably not well served by existing solutions. With an experienced executive team, strong revenue and profit from 2019 and 2020, and a decent price, Fit! offers a fair opportunity for investors to gain a stake in the at-home fitness market. 

On the other hand, the at-home fitness market is buzzy for some of the wrong reasons. While the industry experienced a boom in demand during the height of the pandemic, more people are looking to return to the gym in 2022. Peloton’s recent struggles highlight the dangers of being too confident in demand for expensive at-home fitness equipment. Even if there are enough buyers, Fit! will struggle to compete against the crowded landscape of other companies offering both hardware and content. Therefore, Fit! has been rated a Neutral Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written on February 10, 2022.