That does explain the significant discounts they were giving during their recent big sale....

Very interesting report. Too bad Wahoo aren't a public company so we really know little. What we do know is that they have been on an acquisition spree since 2019. If you gobble up other businesses using debt issued at near-zero interest, then are you ready for the interest rates to go up?

Also, negative EBITDA and negative cash flows may be normal for a start-up - which Wahoo is not. A company that relies on future funding rounds for its existence is especially vulnerable to the sort of conditions we're now seeing in the financial markets.

This is all speculation, obviously, as (again) we don't know how big the debt load is and what the outlook is for better cash flows. Maybe Wahoo are in talks to sell RGT and/or Sufferfest - who knows?

Anyway, if they go belly up, I wouldn't worry too much about the continuity of the business itself. Should debt restructuring fail, the U.S. has a highly functional bankruptcy system that allows businesses to carry on while the shareholders are wiped out and debtholders get a haircut.

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"FTP is a bit 2015, don't you think?" - Gustav Iden

This is terrible. They make fantastic products, but they are probably in the same situation as other trainer makers - warehouses full of product that they cannot sell now.

This is the ultimate fate of companies that grow too aggressively. If you treat your company's future like you were playing in Vegas is going to catch up with you. With companies like Wahoo it's usually over production and too many acquisitions. With other service companies like Facebook it's hiring people with abandon and not caring about the consequences. At the end it all results in lots of people out of jobs. In the case of Wahoo it also would result in wonderful products becoming extinct. Corporate culture got sick in the 80's and we still have not learned anything...

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http://dontletitdefeatyou.blogspot.com

Rhône Announces Investment in Wahoo Fitness | Business Wire

NEP is an Equity Group that has been very successful over the years growing fitness brands, They grew Lifetime Fitness from 10-40 clubs way back when.

It's telling that they bailed on Wahoo after only owning it for a couple of years. I can only assume that they had a strong feeling about what was going to happen.

NEP has been known to hang onto its purchases longer than many PE firms, and they have a solid background in fitness

This is terrible. They make fantastic products, but they are probably in the same situation as other trainer makers - warehouses full of product that they cannot sell now.


Any product company that has touched the world and business of cycling has been on a wild rollercoaster ride the past 2+ years. In the best of times this tends to be a business (the cycling business), that reacts slowly and poorly to market shifts. Keep in mind that by the end of 2019 and into 2020 - the business in terms of bikes in the channel had FINALLY right-sized itself, after close to 10 years of producing too many bikes. Then of course the pandemic hit everyone wanted/needed a new bike, and that rollercoaster ride started.

It was the same for Trainers - with races cancelled for all of 2020 from March onward, and Zwift blowing up, EVERYONE wanted a trainer . . NOW!I recall at one point, in Canada there were zero trainers of any brand available for a 4 - 6 month stretch!

I know Wahoo now has other product offerings - Smart Watches, Power Pedals (Speedplay) etc . . but they compete in all of those other markets with much bigger better established brands. The Trainer market is also reasonably big, and crowded with brands, but greater Trainers is what Wahoo is known for! That should be their bread & butter!

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Steve Fleck @stevefleck | Blog

Interest rates up just as they added debt and sales down 56%. Bad combination

I think it's more this than a "bike industry doesn't 'get it'" kind of thing.

Similar to folks that during the housing craze decided to put down on building houses instead of buying existing and then when the rate hikes hit and their house was done and the it was time to close......they couldn't afford the house any longer.

In general, I don't understand why the bike industry had such horrible problems though. To give credit to that point about 'the bike industry doesn't get it'. I feel like the whole vendor/distributor model in place for bike shit ruins it. Almost like the issues sometimes with "OEM only" direct to dealership auto parts. When the off brand stuff never has issues since it goes direct to consumer.

Road.cc picked up the story


https://road.cc/...cial-concerns-298761

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You will never, in your life, have a chance like this again.
If I were you, I would not pass this up. I would not let this go by...this is rare.
Come on...what harm??

Except not all trainer makers are in this position. Tacx, most notably, is not. I suspect that this because Tacx is owned by Garmin, which has a very long history of properly navigating this type of turbulence. I expect that Garmin knew far better than others - largely because of having been through twice in both 2000 and 2008 - that this was not "the new normal" but rather a temporary windfall to be capitalized upon but not to be baked into future expectations. Tacx was well positioned going into the pandemic and appears to be even better positioned coming out.

As others have said, US bankruptcy court is notably forgiving, so I don't think there's a real risk of Wahoo trainers going away, but I do think that this certainly changes who the dominant players will be in the indoor space. I think Tacx and Zwift are the two biggest beneficiaries of Wahoo's struggles.

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"Non est ad astra mollis e terris via." - Seneca | rappstar.com | FB - Rappstar Racing | IG - @jordanrapp

I'm gonna guess they over-invested in wearable tech...

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Washed up footy player turned Triathlete.

I noticed the other day after putting one of the new Kickr V2's in my cart that they were going to give me one of the watches for free if I bought it.

I wouldn't buy that bike at MSRP, and that was before this all came out, but I was curious what the actual price would be including shipping, taxes etc.

Rappstar wrote:

I think Tacx and Zwift are the two biggest beneficiaries of Wahoo's struggles.

Garmin is definitely a beneficiary here.

Zwift on the other hand was very early to layoffs, May 2022, and explicitly stated they were getting out of the hardware business.

https://www.velonews.com/gear/tech-wearables/report-zwift-cuts-staff-ends-hardware-development-projects/

I don't mean Zwift because of hardware. Quite the opposite. I think hardware was a mistake for Zwift, but I think they avoided getting too caught up in it and were able to kill enough of the projects early on before they ended up with warehouses full of unmovable inventory. The reason this is good for Zwift is solely because of software.

I think Zwift is the beneficiary here because with Wahoo in a strong position, SYSTM is a clear threat. RGT was on the rise, but I can't see any way now that Wahoo continues to invest in integrating SYSTM with RGT and vice-versa. I don't even really see how they continue to invest in a meaningful way in RGT. To me, this basically puts a pretty clear ceiling on RGT's growth.

Prior to this Wahoo and Zwift were both trying to develop full ecosystems. Zwift's in a much better position now - they have a good, solid price point trainer manufactured by a partner and continue to have the dominant platform. They have a reasonably complete ecosystem. That notably weakens Wahoo's position. Wahoo still needs Zwift. Zwift no longer really needs Wahoo.

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"Non est ad astra mollis e terris via." - Seneca | rappstar.com | FB - Rappstar Racing | IG - @jordanrapp

Yeah, if Garmin had not bought Tacx, they could have been in the same situation. Now, it is just a minor blip in a $5B company. But companies whose sole or primary product is a trainer could be in the same boat with Saris and Kinetic.

I think theyre referring to the fact that Wahoo overproduced, but not everyone else did. Its not about what % of their business is impacted.

The same is happening in the bike industry. 2-3 major players went overboard with orders in the last 2 years (you've probably already read about Giant and Specialized). They over-ordered and now sit on huge inventories as well as order commitments.

But not all bike manufacturers made the mistake.

Saris, Kenetic, Wahoo, and Tacx overproduced following the pandemic. Elite not so much.

There is a remarkable lack of any discounts today for a company with warehouses full of stuff.

There is a remarkable lack of any discounts today for a company with warehouses full of stuff.


The Bike business as a whole is notoriously slow to react to things. They are still thinking that it's 2020 - 2021 - when there was a huge shortage of bikes and product and they, were only charging MSRP or higher!

That being said - this is probably a "good thing" - prior to the pandemic and the more recent roller coaster ride, this was a business that was ridiculous for discounting. Pretty much anyone in North America was eligible for some form of 10% - 20% discount off of MSRP at any bike shop via some form of membership in a club, association, entered in a race/event etc . . What it meant was the almost all shops were just giving away their margin!

There is a reason that an MSRP is set - not to rip you the consumer off, but so everyone on down the line can make their little bit of money. Like every business, this is a narrow margin business. No one is getting insanely rich.

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Steve Fleck @stevefleck | Blog

Not much to add to this thread, but the companies that collectively killed computrainer (well we could say computrainer killed itself), are now collectively at another inflection point in the industry ?

Sorta.

- Saris overproduced, but also didn't produce anything people wanted to buy (competitively).
- Kinetic didn't overproduce, they just sold themselves off to Magene.
- Wahoo overproduced, but then the double-whammy for them was the Zwift trainer pricing.
- Tacx didn't overproduce, nor did they overhire (in fact, hiring and expanding more today to keep up)
- Elite didn't overproduce, nor did they overhire (nobody lost any FTE jobs, as they increased temp contract workers instead during the pandemic)

There's a lot of factors to why Tacx didn't overproduce, but one of them is frankly the fact that Garmin had to untangle such a QA mess post-acquisition, combined with moving into and building out a massive new factory. That probably seemed frustrating at the time, but effectively limited production and definitely limited new products. Finally, keep in mind that Saris/Wahoo/Elite distribution points (retailer and distrubtor numbers) remained basically the same throughout this period, Tacx's, via Garmin, exploded in size. Once Tacx products were onboarded into Garmin distribution systems, that meant that almost any Garmin retailer/dealer/distributor anywhere in the world could buy Tacx. Thus again, minimizing the effect of downturn by compensating with increased retail outlets.

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My tiny little slice of the internets: dcrainmaker.com

Very cool. Thank you for the correction and details.

I always enjoy your detailed view. How about Stages, especially with the current $1400 deal for an SB20 and a year of Zwift?

They just had a sale with pretty significant discounts on a lot of their product. I imagine they will evaluate their numbers and have additional sales if needed...