The growing interactive fitness market has gotten crowded lately. Peloton Interactive (NASDAQ:PTON) is battling several major brands, including Apple's Fitness+, Nike's Training Club app, and Lululemon Athletica's Mirror. While there are many other brands that are not publicly traded, investors should keep their eyes on iFit Health & Fitness, whose NordicTrack and ProForm brands are direct competitors to Peloton's connected fitness products.

iFit recently filed to go public and intends to offer shares on the Nasdaq under the symbol IFIT. When a company files for an initial public offering (IPO), it files a prospectus on Form S-1 with the Securities and Exchange Commission that provides a wealth of information for potential investors to consider.

Here are a few takeaways from iFit's filing and how the company compares with Peloton.

A NordicTrack user running on a treadmill in an apartment.

Image source: iFit Health & Fitness.

Peloton has a clear marketing advantage

Both Peloton and iFit have expanded quite rapidly over the past few years. iFit's total revenue more than doubled from $700 million to $1.745 billion from fiscal 2019 through fiscal 2021 (which ends in May). Much of that increase came during the pandemic. Prior to the pandemic during fiscal 2020, iFit's revenue advanced only 22%.

Peloton's performance is in a different league. From fiscal 2019 through fiscal 2021 (which ends in July for Peloton), revenue more than quadrupled from $915 million to $4 billion. In fiscal 2020, Peloton's revenue roughly doubled.

Interestingly, while both companies spend a relatively high amount on marketing, iFit has spent more relative to its revenue. Peloton spent 26% on sales and marketing in fiscal 2020 and 18% in fiscal 2021. By comparison, iFit spent more than 30% on sales and marketing in each of the last two years, yet it grew slower than Peloton. 

Peloton clearly knows exactly which buttons to push in TV ad campaigns to build a brand. It's earning a much higher return on marketing than iFit, which is impressive considering that iFit has a differentiated offering to sell to customers.

iFit is a formidable competitor

The interactive fitness market is playing out similarly to video streaming. Peloton and iFit are not as interested in maximizing profit from hardware equipment as much as growing subscribers to workout classes. Hardware is a low-margin business, but iFit and Peloton only need to get the customer to buy an exercise bike once and then both companies can earn a high-margin recurring revenue stream from subscriptions for years.

However, the companies are tackling this opportunity in different ways. Peloton's Bike and Bike+ are basically high-tech spin class bikes. Peloton is mostly going for the indoor studio experience. Much of the content is recorded with instructors conducting a training session from one of its studios in New York or London. Peloton says it offers thousands of classes with 40 instructors leading sessions across 11 different types of activities, such as cycling, indoor/outdoor running and walking, bike bootcamps, yoga, and strength training. 

iFit says it offers more than 17,000 interactive workouts across more than 60 workout disciplines. A key difference is that iFit is focusing more on simulating outdoor training sessions. For example, the NordicTrack S22i has an incline feature that simulates uphill climbing that differentiates it from Peloton's equipment. iFit users can follow professional cyclists on scenic highways from around the world, as the NordicTrack maker offers content filmed in over 50 countries. 

iFit also prices its NordicTrack bikes very competitively with Peloton, which might explain why the latter has lowered the price of its Bike recently. iFit's NordicTrack S15i and S22i bikes are priced at $1,599 and $1,999, respectively, compared with $1,495 for Peloton's basic Bike and $2,495 for the Bike+ that adds additional bells and whistles. 

The race to win the most subscribers is on

Peloton has managed to take the pole position in this race with a blitz of TV ad campaigns in recent years. It is largely seen as the default option for people looking for gym alternatives, but iFit could use its IPO proceeds to invest further in marketing or product innovation to catch up to Peloton. Keep in mind, iFit manufactures a wider range of products across different brands, such as rowers, ellipticals, climbers, strength equipment, fitness mirrors, and yoga equipment. It has more to pitch to prospective customers than Peloton does.

iFit also appears to be ahead of Peloton internationally, with a global distribution presence in 120 countries. Peloton is currently investing to expand its distribution system in the U.S., Canada, U.K., Germany, and Australia. 

Moreover, iFit estimates that the global market for people interested in purchasing one of its products or subscribing to a workout class is $2.4 trillion. For the U.S. specifically, the market is estimated to be worth $192 billion. 

Currently, the market is large enough for both companies to grow, but this is ultimately about which company can gain the most subscribers, as that will likely translate to the best return for investors. Peloton is winning so far, with 5.9 million subscribers, including its stand-alone digital app, which is far ahead of iFit's 1.56 million. That might be a gap that is already too high for iFit to overcome with its relatively limited resources, but things could change after iFit has access to fresh capital after its IPO.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.