Oura Files for an IPO: Here We Go Again
Late last week, Oura filed its S-1 for an IPO. With various financial metrics in hand, the company will now embark on creating the most glamorous narrative imaginable for its business prospects. If that sounds jaded, I follow the Warren Buffett and Charlie Munger schools of thought when it comes to IPOs. They are negotiated sales that often distort reality. The elaborate stories that companies and their bankers push in support of their IPOs have long led me to roll my eyes. For Oura, it’s impossible to not have flashbacks of other hardware start-ups that went public over the past decade or so only to underperform in the long run. It’s tough seeing Oura being any different.
Oura sells smart rings. As detailed in its S-1 filing, approximately five million people wear an Oura ring. Like some other consumer hardware start-ups, Oura utilizes a hardware plus subscription revenue model as the recurring revenue tied to $5.99/month or $69.99/year subscriptions buttresses what is ultimately lumpy hardware revenue associated with $399+ smart rings. The recurring revenue stream is also inevitably elevated as a key part of the company’s IPO story.
Fitbit, Peloton, Sonos, and GoPro all experienced the same inevitable roadblock found with being a start-up generating the bulk of their revenue from hardware sales.
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