Peloton may face its fiercest rival from Italy in the battle for fitness dominance

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Milan-listed Technogym is set to make its foray into streaming-online-fitness classes via digital platforms on its machines — putting the company on a collision course with popular Peloton Interactive.

The athletic-equipment outfit, characterized by some as the Netflix NFLX, +1.08% of fitness, is reinventing itself, in an effort to boost earnings, with its Technogym Live service, announced in March but set to launch officially early next week.

Technogym, TGYM, +2.95% is one of the largest fitness equipment makers in the world and boasts a range of machines that include exercise bikes, treadmills, and elliptical climbers for cardio and strength training.

Its streaming service allows gyms and hotels to upload their own live or recorded classes on its platforms, which users around the world can purchase. Technogym is hoping to create a marketplace that encourages price competition and a more diverse range of classes through a revenue-sharing model. It’s a similar model to Apple’s AAPL, +1.67% app store.

Rival Peloton Interactive PTON, +0.04%, which recently listed its shares publicly on Nasdaq Inc. NDAQ, +0.05% , carries a slightly different model, streaming its own classes through its stationary bicycles and equipment.

Peloton’s bikes and treadmills cost $2,000 to $4,000, with an additional $39 a month for a subscription (Technogym hasn’t yet disclosed pricing for its services). Peloton lost $196 million in the year through June, according to its most recent regulatory filing.

Technogym, however, has the advantage of being profitable, and selling Italian-designed machines. While the shares have increased 125% over the past three years, they have slid 13% in the past six months due to market weakness and political turmoil in Italy.

Peloton’s stock, meanwhile, has tumbled 7.8% since late September, amid a broad rejection by investors of nonprofitable, richly valued companies, including WeWork parent The We Company, which ignominiously pulled its initial public offering last month.

Technogym started in 1983 from the garage of fitness enthusiast and industrial designer chief executive Nerio Alessandri, then 22. With the help of his brother, Pierluigi, the pair developed a machine to tone leg muscles. Technogym now employs 2,300 people and owns manufacturing sites in Cesena, Italy, and Slovakia.

It also organizes lease agreements with financial partners. While this isn’t a huge revenue generator, it helps boost its user base. What generates more income is a buyback plan, whereby Technogym purchases and refurbishes used equipment. These are resold to low-cost gyms at a double-digit discount.

It has a market value of €2 billion ($2.2 billion) and delivered half-year earnings before interest, tax, depreciation, and amortization (Ebitda) of €47 million, just below the €48 million expected by some analysts on sales of €295 million for the six months to June. Full-year Ebitda earnings for 2018 were €134 million.

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