Nautilus, Inc. Investor Day Outlines Long-Term Strategic Plan
Company Provides Financial Aspirations for Fiscal Year 2026 Including
“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
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
During the Investor Day, management outlined the five strategic pillars of the Company’s
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
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
As part of the Company’s
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.
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
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
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.
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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
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