Hydrow acquires Speede Fitness, expands as Peloton shrinks

The company, best known for its expensive connected rowing machines that cost between $1,700 and $4,000, is backed by private equity bigwigs such as Constitution Capital and L Catterton. Its investors include several professional athletes and celebrities, including Kansas City Chiefs tight end Travis Kelce and singer Justin Timberlake.

Hydrow has raised over $300 million in funding. It said it acquired Speede Fitness so it could expand into strength training, one of the fastest growing segments of fitness today.

The acquisition comes as gym-goers are abandoning cardio exercises such as running and cycling in favor of strength training.

Planet Fitness announced in November that it would replace its cardio equipment more slowly, in part to free up capital.

“Our members are constantly looking for more strength and less cardio,” Thomas Fitzgerald, Planet Fitness’ chief financial officer, said during the company’s third-quarter earnings call, adding that weight-training equipment costs less than cardio equipment.

Life Time Fitness highlighted a similar trend in its annual fitness survey. More than a third of respondents said “building muscle” was their No. 1 goal for 2024, an increase of more than 3% from the previous year.

Speede Fitness makes a connected fitness machine that looks somewhat like a BowFlex, but incorporates advanced technologies such as AI-powered cameras, sensors, and a large touchscreen.

“Strength training represents one of the largest addressable markets in fitness, and with Speede’s advanced technology outperforming current offerings, this acquisition is a significant milestone for both companies,” Hydrow said. “This investment supports Hydrow’s mission to grow as a whole-body health company…with a consumer product expected to be released next year.”

Hydrow’s acquisition and sales growth come as Peloton, which is credited with creating the connected fitness market, struggles to turn around a slowing business. At its height, during the height of the Covid-19 pandemic, Peloton tried to acquire Hydrow rather than build its own rowing machine, but the company refused, she told CNBC. Peloton did not respond to CNBC’s request for comment.

Now, Peloton itself has become an acquisition target as many private equity firms consider taking it private after posting another quarter of declining sales and losses, CNBC reported Tuesday.

Peloton said demand for its fitness equipment was slow as consumers backed away from big-ticket items. Yet Hydrow has managed to grow while Peloton has declined.

Unit sales delivered by Hydrow for its connected rowing machine jumped 23% this year compared to last year. On Amazon, sales increased 273% in the 12 months ended March 31 compared to the year-ago period.

Hydrow’s growth raises the question of whether Peloton’s problems have more to do with weakness in the broader home fitness market or its internal stumbles and product errors. Additionally, the company primarily sells cardio equipment, which is losing favor with consumers, and its own members are flocking to strength training. The company said its strength training content, not its cycling or running classes, is the most popular type of class for digital members and No. 2 among those with Peloton equipment.

Peloton launched its rower, the Peloton Row, in September 2022, but has done little to announce or highlight the $3,000 machine.

It has already launched the Peloton Guide, an AI-powered device for guided strength training at home, but the device has received even less attention than the company’s rowing machine.

In Peloton’s letter to shareholders for the fiscal third quarter, the Guide received a mention. This is an approximately $9.1 million write-down the company took on its product inventory.