(Bloomberg) -- Oura Health Oy, a Finnish health technology company known for its fitness-tracking rings, will see annual sales double this year to roughly $500 million and expects “healthy” growth in 2025.
Chief Executive Officer Tom Hale, speaking in an interview, said that Oura is building a loyal following after selling more than 2.5 million rings. Still, the company isn’t yet at the stage of planning an initial public offering, he said.
The 11-year-old business, which pioneered the concept of finger-worn activity trackers, makes its money by selling rings for $299 and subscriptions priced at $6 a month. It’s more of a niche market than smartwatches or earbuds, but the field is getting more crowded. Samsung Electronics Co. recently launched a $400 product called the Galaxy Ring.
Hale is upbeat about expanding the business. The company’s profit margins are closer to that of a software company than a hardware maker, he said, and Oura’s subscribers have been sticking with the product.
“Retention is better than any other subscription model I’ve seen,” Hale said. “To double this business, we don’t have to do that much.” He said that the company’s roughly half a billion dollars in revenue for calendar 2024 would be twice what it recorded in 2023.
Though Oura declined to discuss future products, people with knowledge of its plans say the company is introducing a fourth-generation ring in October. The device will have a thinner design and better battery life, as well as more accurate activity tracking, they said. It’s set to be the company’s biggest product overhaul in three years.
In addition to tracking fitness, Oura rings assess the quality of a user’s sleep and provide a “readiness score.” About 80% of Oura’s revenue comes from hardware, with the rest provided by software subscriptions, Hale said in the interview. Oura expects the percentage from software to rise over time, and the company is two years ahead of its profitability goals, Hale said.
But the growth hasn’t yet set the stage for an IPO. “We don’t really have a let’s-go-public plan,” Hale said. He sees an IPO as a “big energy suck” and hasn’t hired banks.
“They do come and talk to us quite a lot,” he said. “They’re very excited about the prospect, but I think we’re less excited right now.”
Before jumping into the smart-ring market, Samsung filed a preemptive lawsuit against Oura claiming that the Galaxy Ring doesn’t infringe five patents. The suit stated that Oura has established a pattern of suing potential competitors for patent infringement on “features common to virtually all smart rings.” Oura has previously sued Ultrahuman, RingConn and Circular.
Hale said that “the facts don’t support the legal claim they’re making,” but also doesn’t see Samsung’s entry into the market as hurting Oura’s momentum. “They were aiming at where we were two years ago,” he said.
Apple Inc., whose smartwatch dominates the market for fitness-tracking technology, has explored the prospect of a ring but isn’t actively working on an Oura competitor.
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