The Zhitong Finance App learned that after the market on April 25, sports technology company Keep (03650) released its 2023 annual report. The report comprehensively presents Keep's 2023 development status and results through multiple dimensions such as the company's financial summary, management business discussions, and corporate governance reports.
On the financial side, Keep's total revenue in 2023 was RMB 2,138 million (same below), and adjusted net loss (measured in non-IFRS, same below) was $295 million, a 55.7% drop compared to $667 million in 2022, and the adjusted net loss ratio narrowed from 30.2% to 13.8%. Keep's gross profit increased for 4 consecutive years, from 273 million yuan in 2019 to 962 million yuan in 2023. Keep's operating costs were reduced by 10.3% from 1,311 billion yuan in 2022 to 1,176 billion yuan, and operational efficiency improved significantly.
Keep's revenue sources are mainly divided into: private label sports products (consumer goods), online membership and paid content (online business) and advertising, etc. Among them, online membership and paid content revenue was 996 million yuan, up 11.4% year on year, accounting for 46.58% from 40.4% in 2022, private label sports products revenue of 946 million yuan, accounting for 44.24%, and advertising and other revenue of 196 million yuan, accounting for 9.18%, up 8.6% year on year.
Key operating data shows that in 2023, the average monthly active users of Keep was 29.76 million, the average monthly subscription membership was 3.19 million, and the member penetration rate increased from 10% in 2022 to 10.7%.
As at December 31, 2023, Keep had total current assets of $2.29 billion, total assets of $2.45 billion, net asset value of $1.87 billion, and reserves available for distribution to shareholders of $5.3 billion.
Fitness content is diversified, and membership services are fully exploited
In 2023, Keep will continue to provide users with rich and professional online courses, covering various sports categories such as aerobic exercise, skipping rope, yoga, and strength training.
In terms of membership courses, Keep provides members with a large number of exclusive recorded online courses. As of December 31, 2023, the number of recorded and broadcast courses exclusive to Keep members was 4,225, an increase of 126% over 1873 sessions in the same period of the previous year. At the same time, Keep has launched a number of self-developed courses and existing popular professional content series, and collaborated with well-known fitness experts such as Pamela and Ouyang Chunxiao to launch exclusive high-quality recorded and broadcast courses to enhance members' rights and meet the diverse needs of members.
In addition to exclusive recorded and broadcast courses, Keep will also launch an exclusive members-only outdoor course in 2023, breaking through the previous indoor sports scene centered around the home or gym, and adding outdoor courses to serve users of different exercise levels, such as providing easy running courses for beginners and advanced training courses for marathoners. High-quality content and new outdoor courses will continue to drive member activity and open up new opportunities for future development.
Along with the continuous improvement of membership services, Keep's 2023 member penetration rate, average monthly membership retention rate, and activity all increased compared to 2022 — in 2023, Keep member penetration rate reached 10.7%, and the number of member course exercises increased by more than 200% compared to 2022.
According to the report, Keep will continue to deepen its strategic investment in content development and drive future growth with deep insight into users, the ability to respond flexibly to evolving needs, and continuously refined content development capabilities.
The fun upgrade of virtual sports events reaches a wide range of users
In 2023, the participation and popularity of Keep's online virtual sports events increased dramatically, and the average revenue per virtual sports event paying user reached a new high in 2023, an increase of more than 30% compared to 2022.
Virtual sports events are fun activities launched by Keep to motivate users to participate in sports. Users can obtain various fitness achievements and physical sports rewards through registration fees ranging from 20-179 yuan to obtain various fitness achievements and physical sports rewards, which greatly enhances users' desire to exercise and meets the growing demand of different user groups for high-quality fitness content.
Over the past year, Keep has expanded its service coverage and reached a wider range of users through continuous expansion of partnerships with popular IPs. For example, the game Keep launched in 2023 is co-branded online running “Let's Run, Trailblazer! Virtual sports events such as “Starry Sky Railway Online Charity Run” and “Light and Night Love Online Challenge” have further expanded Keep's popularity among fans of two-dimensional games.
New private brand sports products are frequently released, and the sports experience is constantly being upgraded
In addition to diverse content services and a huge active community, Keep also provides a wide range of self-branded sports products (consumer goods), including smart fitness devices (such as smart bikes, bracelets, and treadmills) and supporting sports products (including smart equipment, clothing, and food). These products collaborate with online fitness content to create a one-stop comprehensive sports solution for users.
In 2023, under the premise of focusing on optimizing the design, functions, and cost structure of smart devices, Keep launched a variety of smart hardware, including the new self-powered smart bike C1 Mini+, the B4 Lite bracelet, the first A1 rowing machine, and K4 treadmill. These products met the needs of different users with their excellent design and functionality, and were well received. Among them, the A1 rowing machine won the 2023 Red Dot Product Design Award, and the K4 treadmill won the 2024 IF Design Award. At the same time, various smart fitness devices have rich supporting content. For example, by the end of 2023, Keep's themed realistic cycling routes had been expanded to 74.
Keep's product strength in the core equipment and apparel category was also enhanced in 2023, and its items such as yoga wear, fitness equipment, protective equipment, sports underwear, and fitness pants continued to be popular. At the same time, Keep is expanding its product line from indoor to outdoor-related categories based on user needs to provide users with sports equipment and apparel choices in various sports scenarios. Over the past year, the development of Keep's outdoor series products showed a steady growth trend.
Looking forward to the future: expand the outdoors, deploy AI, explore overseas
The report shows that based on the company's tough performance in 2023, management remains optimistic about the company's long-term development prospects and will work to improve service and commercialization efficiency and enhance profitability. The future layout will be carried out in the following areas:
Invest in online content. Keep will continue to invest in immersive, exclusive, and professional online fitness content to build a strong business foundation, acquire and retain high-quality users, and consolidate its leading position in the online fitness market.
Improve outdoor services. Keep will further expand and improve outdoor functions and products to better serve outdoor users. For example, Keep's recently fully upgraded app version 8.0 can provide users with a better outdoor sports experience and provide deeper community interaction features.
Explore opportunities for AI technology in overseas markets. Keep will develop and apply new technologies and intelligent functions, actively explore application opportunities for AI technology in overseas markets, use AI to drive innovation, provide users with an excellent sports experience in a more efficient manner, attract new user groups, and explore new commercialization opportunities.