Sports Tech Firm Keep Applies for Hong Kong IPO

Sports technology company Keep submitted its application on February 25 for a public listing in Hong Kong, with Goldman Sachs and CICC serving as co-sponsors.

Keep was launched in February of 2015, and was initially positioned as a tool for providing online sports content for people pursuing fitness goals. In 2018, Keep began to provide one-stop sports solutions regarding users’ need for food, clothing and training, and gradually formed four major business models focusing on athletic products, advertisements, members and “Keepland.”

According to the company’s prospectus, Keep achieved revenue of 663 million yuan ($105 million) and 1.107 billion yuan in 2019 and 2020, respectively. In the first three quarters of 2021, Keep achieved revenue of 1.159 billion yuan, a year-on-year increase of 41.3%. The growth mainly came from the increase in revenue of self-owned fitness products, members and online paid content.

Under non-IFRS measurement, the adjusted net loss of the company decreased from 366 million yuan in 2019 to 106 million yuan in 2020. In the first three quarters of 2021, the adjusted net loss expanded to 696 million yuan. The company explained that due to their increased confidence in the company’s long-term profitability, it had increased investment in advertising and brand promotion during the first three quarters of 2021.

Average monthly users of Keep in 2020 and 2021 were 29.7 million and 34.4 million, respectively. In 2021, average monthly paid subscribers of Keep increased from 1.9 million in 2020 to 3.3 million, while the penetration rate of members increased from 6.4% in 2020 to 9.5% in 2021.

In the seven and a half years since its establishment, Keep has completed eight rounds of financing, totaling $600 million. According to the prospectus, before the IPO, Keep’s founder and CEO Wang Ning held 18.61% of shares, while co-founders Peng Wei, Liu Dong and Wen Chunpeng held 2.26%, 1.18% and 1.16% of shares, respectively. GGV Capital holds 16.14%, followed by SoftBank with 10.39% – a collection of other investors hold the remaining 50.25%.

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According to a report by China Insights Consultancy, the number of fitness product users in China was 300 million in 2021, and it is expected to reach 420 million by 2026. In 2021, the per capita annual expenditure of Chinese fitness users was 2,596 yuan, far lower than 14,268 yuan in the United States, suggesting significant growth potential. As of 2021, Keep ranks first among global online fitness platforms,  in terms of monthly active users and user exercise time.