The ClassPass Fitness subscription platform has made a rare acquisition to strengthen its presence in international markets.
Earlier this week, ClassPass announced the signing of an agreement to acquire $ 4.2 million from Singapore-based competitor GuavaPass, ClassPass CEO Fritz Lanman said in an interview with Yahoo Finance . The transaction should be finalized later this month.
The acquisition of GuavaPass, which has established partnerships with studios in major cities in Asia and the Middle East, reinforces the growing presence of ClassPass on international sites. ClassPass services are available in approximately 20 cities outside the United States, in addition to its 60 national sites.
Although it is not the first acquisition of ClassPass – which acquired the FitMob competitor about four years ago – the GuavaPass operation nevertheless constitutes a rare strategic shift for the company. fitness company. Lanman stated that the acquisition was not an essential part of ClassPass' expansion strategy and that GuavaPass had initially approached ClassPass for the acquisition.
GuavaPass, which was launched in early 2015, will be closed in markets where ClassPass is currently active, including Singapore, Bangkok, Hong Kong, Kuala Lumpur and Dubai. It will continue to operate as part of the ClassPass in Abu Dhabi, Beijing, Shanghai, Jakarta, Manila and Mumbai until its launch on these markets in early 2019.
When asked whether ClassPass, a New York-based company, relied more on international markets than on domestic markets, Lanman replied, "We do not do this business."
"We have more than 70 people in America focused on US expansion and we think we currently only cover about 15% of the postcodes that are useful in this country – postal codes that have enough studios and gyms for us to exist, "said Lanman. I said.
But the international opportunity for ClassPass has been undeniable, acknowledged Lanman.
"If you look at a market like Bangkok or Singapore, or Hong Kong or Manila, the fitness studio is as developed as in America," Lanman said during a phone interview with Thailand. "People were wondering if a US company could enter Asia and succeed, and we did it."
ClassPass acquires GuavaPass for $ 4.2 million
ClassPass has been more interested in international markets since at least last year, thanks in part to its recent funding. During the summer, the company announced that it had raised an additional $ 85 million in a series D led by Temasek Holdings, a company owned by the Government of Singapore. The round raised the total funding for ClassPass to $ 255 million, an undisclosed estimate.
In the last 18 months or so, ClassPass has changed its business model so that users buy credits instead of a number of fitness classes per month. The credit-based system was officially launched in March 2018. This change gave customers "much more flexibility" in selecting studios and classrooms, Lanman added, and allowed the studios to generate more revenue in increasing the number of credits required for premium classes.
Lanman said the business model change was key to bringing another participant to the company's D series of financing, L Catterton, a leading investor in the fitness industry, whose brand portfolio includes Equinox, Peloton and Core Power Yoga.
"Before moving on to the current system, they had somehow been ClassPass detractors – they had told their brands" be very careful "with the delivery platform," said Lanman. "But after we switched to the credit system, they thought," It's great. "
According to Statista data, the multinational fitness industry and sports clubs would generate more than $ 80 billion a year. ClassPass is currently in "hyper-Uber-type expansion mode," said Lanman. And this growth could easily lead to a public registration.
The story continues
"Certainly, we plan to be floated at any given time," Lanman said, without elaborating on a specific timetable. "[We] want to build a huge generational public company. That's our plan. "
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