Company Provides Financial Aspirations for
Fiscal Year 2026 Including $1 Billion in Revenue and Two Million
Digital Members
Nautilus, Inc. (NYSE: NLS) today hosted its Virtual Investor Day
and unveiled the Company’s long-term strategic plan, North Star:
Journey to 2026, to unlock sustainable growth and digitally
transform the Company. Jim Barr, Nautilus Chief Executive Officer,
was joined by other members of the executive team to introduce the
“new” Nautilus. The team discussed its view of the enhanced home
fitness market opportunity, how Nautilus is well-positioned for
continued growth, pointed to strong momentum which began even
before the pandemic, and how the Company leveraged pandemic demand
to not only grow but also create durable assets for the long-run.
The day featured a detailed presentation of Nautilus’ long-term
vision and strategic direction and its ambitious long-term
objectives.
“My goal since joining Nautilus over 18 months ago, was to
leverage our many strengths to transform into a company that
empowers healthier living through individualized connected fitness
experiences. I am pleased to say, we are well down the path to
transforming into the “new” digital Nautilus and our North Star
strategy has us well positioned to dramatically expand all areas of
our business in the coming years,” said Jim Barr, Nautilus Inc.
Chief Executive Officer. “The five key strategic pillars of North
Star we outlined during our virtual investor day have us well
positioned to achieve many aspirations including revenue of $1
billion and two million digital members by the end of fiscal
2026.”
Mr. Barr continued, “Today, we are not a one product driven
company but a much more diversified revenue platform with a rapidly
growing digital component enabling all consumers to rely on
Nautilus for their entire fitness journey. We operate in a very
dynamic industry with a profoundly expanded opportunity that
includes changing consumer habits, technology preferences, and
connectedness providing us a way to help our consumers on all
aspects of their journey. The North Star strategy will ensure the
“new” Nautilus will properly leverage our leading brands, products,
innovation, distribution and digital assets to build a healthier
world, one person at a time.”
During the Investor Day, management highlighted the Company’s
core strengths to achieve its long-term aspirations:
Strong Brands
Nautilus has great brands with very high consumer
recognition, resulting from many years of building great
products and investing in them. The Company’s brands stand for
high quality and good value. Bowflex started the home
fitness movement over 35 years ago and is one of the three leading
brands in the at-home fitness category, trusted by over one million
people. Bowflex has a strong foundation of quality and broad
assortment, both strength where the brand has its roots, and
cardio, with its award-winning bikes, treadmills, and exclusive MAX
high-intensity trainer. Schwinn has been around for 125-years and
is the most respected name in upright and recumbent bikes, group
indoor cycling, and other cycling-related exercise equipment.
Hardware and Innovation Heritage
The Company’s brands and long-standing track record of
innovation has allowed the Company to be a leader in the home
fitness market for 35 years. Innovation is in the Company’s DNA
with over 300 patents and a history of delivering high
quality, award-winning modalities. Nautilus has had success
with products across all modalities of fitness and going forward
every product launched will be connected to the Company’s JRNY
ecosystem. In today’s environment of bringing the entire gym and
personal trainer into one’s home, Nautilus is uniquely positioned
to offer the full experience.
Broad Distribution
Over many years, the Company has built an incredible network
of retail partners, which, combined with its Direct-to-Consumer
roots, gives Nautilus an omni-channel experience. The Company
leverages an expanding stable of retail partnerships, both in brick
and mortar stores and online, and augments these further with
international distributors. In the US and Canada, the
Company partners with some of the largest players in the industry,
and internationally, partners with over 40 distributors in 80+
countries. Nautilus makes it easy for consumers to shop its
brands, offering choice in when, where and how they
purchase.
During the Investor Day, management outlined the five
strategic pillars of the Company’s North Star strategy:
Adopt a Consumer First Mindset
Nautilus has been successful in developing innovative,
award-winning products and will leverage that strength in order to
become consumer-obsessed in everything it does. Adopting a consumer
first mindset means looking at how Nautilus helps its consumers
across every aspect of their journey. The Company has restructured
its product development approach to gather consumer input at the
very beginning of the process and started testing its marketing
messaging early in the development cycle to ensure its
communications are driving an emotional connection with the
consumer. The Company has moved from traditional product
management to category management, whereby category
managers own a portfolio and a P&L, find white spaces, and
advocate for projects that drive customer success. Nautilus will
focus its product portfolio in the mid and premium tiers of the
category and going forward the brand portfolio will be Bowflex,
Schwinn and JRNY. Bowflex is the Company’s premium connected
brand that offers a broad assortment of strength and cardio
products; Schwinn is the specialty brand, singularly focused on
mid-priced bikes; and JRNY is the ingredient brand that offers
variety and makes both Bowflex and Schwinn better and stronger.
Importantly, this refined brand portfolio allows Nautilus to invest
appropriately to accelerate each brand’s growth.
Scale a Differentiated Digital Offering
A strong JRNY Platform will enable the Company to give its
consumers the best, connected fitness experience. Nautilus has
an amazing combination to offer: high quality, innovative
physical equipment combined with a digital platform that allows
members to get a personalized workout that includes coaching and
entertainment at an incredible value. JRNY creates a highly
personalized fitness experience, allowing end-users to both
personalize the experience themselves by deciding how they want to
work out and, through Artificial Intelligence, making sure that
each workout is unique and pushes their fitness. JRNY is a
platform that crosses modalities and makes life easier for
members by bringing things together as they plan, execute and track
towards their fitness goals. Today, there are two versions of JRNY:
embedded screen equipment that features JRNY and the app which can
be downloaded on iOS or Android phones or tablets, referred to as
Bring Your Own Device (BYOD). The Company plans to scale JRNY
through its large current and future customer base and look
for partnerships to accelerate its growth.
Focus Investments on Core Businesses
Nautilus will be disciplined about investments across brands,
sectors, consumer segments, products and geographies making
fewer, bigger and bolder bets. In 2020, Nautilus made the
decision to focus on Home Fitness and sold its commercially focused
brand Octane Fitness. Nautilus has already discontinued the
Universal brand and is in the process of evaluating next steps for
the Nautilus brand. The Company plans to have a more focused and
deliberate portfolio, where each product within each brand will
have a clear identified reason for being, all centered on what the
consumer wants. Focused international growth will be a large
growth opportunity and the Company has identified which
countries it believes represent the best profit pools.
Nautilus intends to partner with leading retailers in those
countries, in addition to exploring the idea of bringing its
Direct-to-Consumer business to top markets where it already has a
strong presence and brand awareness. International will not be
meaningful in the first 5-year period of North Star, but the
Company believes it will be a strong driver of growth beyond
2026.
Evolve Supply Chain to be Strategic Advantage
Nautilus will transform its supply chain into a strategic
advantage. In 2020, this became mission-critical and the
Company worked to increase capacity of up to five times the level
it entered the year with. In the short term, the Company plans to
continue its progress to bring capacity more in line with the
new levels of elevated demand. In the long term, the Company
will work to create geographic diversity to reduce its risk
and transport times.
Build Organizational Capabilities to Win
The most important platform of Nautilus’ strategic plan is
unleashing the power of its team. The profound change in the
Company’s digital transformation must be carefully sequenced and
managed and requires existing skills be leveraged in new ways
and requires new capabilities. Nautilus has assembled a
talented and diverse group of leaders, who have already delivered
record revenue, cash flow and earnings in 2020 and are determined
to win long-term. Every one of the Company’s leaders is
passionate about people development and the Company’s
people are the foundation for North Star and are all pulling in
this direction.
As part of the Company’s North Star strategy, management also
provided the following financial aspirations for 2026:
2 million digital members
The Company has the opportunity to scale JRNY so that it gets
the platform used by as many people as possible though it’s
embedded screen products, BYOD products, and non-connected
products. Today, the Company attaches and activates JRNY to the
embedded screen products at a high rate and has a strong outlook
for sales with hundreds of thousands forecast this year. In the
past quarter alone, Nautilus has seen a 4x increase in members
since launching the VeloCore bike and connected treadmills. On
top of that, the Company has hundreds of thousands of BYOD products
that have shipped in the last few years and is seeing great demand
moving forward. Layer on top the millions of non-connected products
out in the field. Nautilus sees a lot of opportunity to grow the
JRNY member base internationally as it deploys JRNY products
into existing and new markets. Additionally, the Company will
look to expand JRNY’s presence through strategic
partnerships – wearables, SmartTVs, commercial gym operators,
etc. - to help JRNY reach greater scale.
$1 billion in total revenue by FYE 2026
There has been a structural change in the fitness
industry as some portion of gym-goers have permanently shifted
into home fitness and the Company is well-positioned to capitalize
on the growth in its industry. Nautilus has built a strong
foundation – combining the core strengths of the Company with new
assets that the executive team has built over the last six
quarters. Nautilus is planning on a 5-year CAGR of 10% and
on the equipment side of 6%. The Company does not expect revenue
growth to be linear on a quarterly basis.
At least 20% of total revenue from digital
subscriptions
The planned growth in digital revenue leverages Nautilus
ecosystem and the Company has a short-term goal to cross
250,000 members by the end of fiscal year 2022.
At least 10% annual operating margins
Once North Star is fully executed, the Company will be a
digitally forward company with an improved earnings profile and
more prepared to deliver sustainable, profitable growth. A more
reliable revenue stream combined with higher gross margins will
help create a path to sustainable operating margins of at least
10%.
Nautilus operates in an attractive, dynamic industry with
structural, long-term changes underway based on evolving consumer
needs. The Company’s brands, products, distribution and digital
assets have it well positioned to grow within this industry.
Nautilus has made excellent progress over the past six quarters and
has transitioned from the old Nautilus, focused on inventing the
next “hero’ product, to the new Nautilus, focused on the consumer
and creating a holistic, connected fitness experience. After an
in-depth assessment of the Company’s strengths and weaknesses, the
management team implemented their North Star strategy to leverage
those considerable strengths and make durable changes to usher the
Company forward in its digital transformation. The North Star
strategy has Nautilus moving in the right direction and early
points on the board provides the Company confidence it can achieve
its goals and financial aspirations.
The Investor Day presentation and an archived replay of the
webcast are available on the Investors section of Nautilus’ website
at http://www.nautilusinc.com.
About Nautilus, Inc.
Headquartered in Vancouver, Washington, Nautilus, Inc. (NYSE:
NLS) is a global technology driven fitness solutions company that
believes everyone deserves a fit and healthy life. With a brand
portfolio including Bowflex®, Nautilus®, Schwinn® and JRNY®.
Nautilus, Inc. develops innovative products to support healthy
living through direct and retail channels. Nautilus, Inc. uses the
investor relations page of its website
(www.nautilusinc.com/investors) to make information available to
its investors and the market.
Forward-Looking Statements
This presentation includes forward-looking statements
(statements which are not historical facts) within the meaning of
the Private Securities Litigation Reform Act of 1995, including:
projected, targeted or forecasted financial and operating results,
including FYE26 financial aspirations, anticipated demand for the
Company's new and existing products, statements regarding the
Company's prospects, resources or capabilities; planned
investments, strategic initiatives and the anticipated or targeted
results of such initiatives, including targeted number of JRNY
memberships; the effects of the COVID-19 pandemic on the Company’s
business; and planned operational initiatives and the anticipated
cost-saving results of such initiatives. All of these
forward-looking statements are subject to risks and uncertainties
that may change at any time. Our financial results could also be
impacted by our sale of Octane Fitness and the impact of any
divestiture or separation transaction on our remaining business.
Factors that could cause Nautilus, Inc.’s actual expectations to
differ materially from these forward-looking statements also
include: weaker than expected demand for new or existing products;
our ability to timely acquire inventory that meets our quality
control standards from sole source foreign manufacturers at
acceptable costs; risks associated with current and potential
delays, work stoppages, or supply chain disruptions caused by the
COVID-19 pandemic, including shipping delays due to the severe
shortage of shipping containers; an inability to pass along or
otherwise mitigate the impact of raw material price increases and
other cost pressures, including unfavorable currency exchange rates
and increased shipping costs; experiencing delays and/or greater
than anticipated costs in connection with launch of new products,
entry into new markets, or strategic initiatives; our ability to
hire and retain key management personnel; changes in consumer
fitness trends; changes in the media consumption habits of our
target consumers or the effectiveness of our media advertising; a
decline in consumer spending due to unfavorable economic
conditions; risks related to the impact on our business of the
COVID-19 pandemic or similar public health crises; softness in the
retail marketplace; changes in the financial markets, including
changes in credit markets and interest rates and the impact of any
future impairment. Additional assumptions, risks and uncertainties
are described in detail in our registration statements, reports and
other filings with the Securities and Exchange Commission,
including the “Risk Factors” set forth in our Annual Report on Form
10-K, as supplemented by our quarterly reports on Form 10-Q. Such
filings are available on our website or at www.sec.gov. You are
cautioned that such statements are not guarantees of future
performance and that our actual results may differ materially from
those set forth in the forward-looking statements. We undertake no
obligation to publicly update or revise forward-looking statements
to reflect subsequent developments, events or circumstances.
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version on businesswire.com: https://www.businesswire.com/news/home/20210318005602/en/
Investor Relations: John Mills ICR, LLC 646-277-1254
john.mills@ICRinc.com
Media: John Fread Nautilus, Inc. 360-859-5815
jfread@nautilus.com
Carey Kerns The Hoffman Agency 503-754-7975 ckerns@hoffman.com
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