Dance Fitness Market - Competitor Financial Profile

Part
01
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Part
01

Zumba - Financial Profile

Information concerning Zumba's financial status and details are kept tightly under wraps by the company's founder. Because Zumba is a private company, they are not obligated to make their financial information public. Despite this, we were able to pull together existing finding to come up with a range of estimates that address various areas of the company's finances. The final conclusions resulting from this complete research project have been summarized in the list below:
  • Although the company's founder notoriously keeps Zumba's revenue under wraps, we were able to use existing data to estimate that the U.S. share of the company's revenue may fall in the range of $31.65 million and $316.18 million.
  • Zumba's U.S. market penetration is estimated to be around 1.45%.
  • Investing in Zumba could logically be assumed to be a medium risk investment, as there are various factors working for and against Zumba. In its favor, Zumba has made solid moves in terms of evolving with current fitness trends and there appears to be a lot of untapped market potential for the company, which could bode well for its future growth. The company's valuation as of 2012 was $500 million.
  • In terms of ad spend, it is estimated that Zumba's spends between $15.825 million and $19.939 million on advertising in the United States. Although these figures seem low, research findings suggest that much of Zumba's advertising comes from word-of-mouth.
  • Gyms that offer Zumba classes do not have to pay any licensing fees, according to the company's website.
  • Zumba's share of the total U.S. fitness market likely falls between an estimated 0.1% and 1.05%.
  • Gyms that offer Zumba classes do not have to pay any licensing fees, according to the company's website. Instructors, however, need to earn their license by completing an instructor training course, and the license must be renewed every six months.
A deep dive of these findings and the methodologies used to arrive that the stated estimates has been provided below.

ZUMBA'S REVENUE

  • Zumba is a privately held company and therefore, the company does not appear to make its financial information publicly available. For example, the company does not have any publicly available annual reports nor SEC filings.
  • A 2018 article from the Miami Herald notes that the company's founder "won't reveal revenues."
  • Despite the lack of publicly available financial reports, there are some available estimates regarding the company's revenue. According to D&B Hoover's, the total revenue of Zumba Fitness, LLC is estimated to be around $21.46 million.
  • Owler estimates that the company's revenue is much lower at around $10 million, however, it should be noted that the credibility of Owler is fuzzy compared to Wonder's resource standards.
  • Overall, it could logically be assumed that Zumba's actual revenue would be in excess of $21.46 million given the global reach of the company's brand. This conclusion is supported by the fact that in 2012 Zumba's founder stated in an Inc. magazine article that the company's revenue was "nine figures", which would place it somewhere between $100 million and $999 million.

MARKET PENETRATION

  • According to insights from Crunchbase, more than 12 million people take weekly Zumba classes, globally. According to a 2018 article from the Miami Herald, more than 15 million people in the world take weekly Zumba classes.
  • The United States is Zumba's biggest market (along with Germany and Japan).
  • As of 2012, 95% of major gym chains in the United States were offering Zumba programs.

HOW RISKY IS IT TO INVEST IN ZUMBA IN THE U.S. DANCE FITNESS MARKET?

  • Zumba's previous investors include Insight Partners and the Raine Group (both in 2012). The Raine Group is a global merchant bank and Insight Partners is a software company.
  • Zumba had a valuation of $500 million in 2012, according to the New York Times.
  • Since these investments have been made, some rumors have surfaced on whether the company will go IPO, however, the founder has stated: "I don't need to exit."
  • Zumba's founder is very 'hush-hush' when it comes to talking about the company's growth and finances. It appears that the last time he spoke very openly about these topics was in a 2012 Inc. magazine article.
  • The Miami Herald published an article in 2018 that notes: "Zumba's signature dance fitness fell out of the top 20 worldwide fitness trends in 2014, when it was 28th on the list that year, according to the annual American College of Sports Medicine ranking." In 2018, Zumba was 39th on the list. The authors of the report suggested that Zumba may have been a passing fad.
  • Despite this, high-intensity training has become a leading fitness trend worldwide, and Zumba operates a brand within this segment called 'Strong by Zumba', which now has over 400,000 participants and is growing at a faster rate than the original Zumba classes did during its early years. Strong by Zumba was founded sometime around 2015-2016.
  • Overall, the research findings presented here could collectively suggest that an investment in Zumba could be considered as a 'medium risk' as there are factors pushing in either direction. However, it could be logically assumed that as long as Zumba stays on top of evolving fitness trends into the future, as it has seemingly done with Strong by Zumba, the brand is likely to remain profitable.
  • Additionally, overall low market penetration (as reflected in other areas of this report), suggests there is a lot of untapped potential for the company. Based on this, it could be logically assumed that the company has a lot of growth potential.

ANNUAL MARKETING/ADVERTISING SPEND OF THE ZUMBA FITNESS MARKET

  • Zumba has between 250-500 employees according to Crunchbase. A 2018 article by the Miami Herald pinpoints the employee count at 220.
  • As of 2012, the Zumba planned to spend $50 million on advertising and $63 million on advertising in 2013. This appears to be the most recently published data that provides direct insight into Zumba's advertising spend.
  • Much of Zumba's advertising comes from word-of-mouth.

MARKET SHARE OF ZUMBA IN THE TOTAL U.S. FITNESS MARKET

  • According to Crunchbase, Zumba is the "world's largest and most successful dance-fitness program."
  • The U.S. fitness market size in 2019 is estimated to be around $30 billion.

LICENSING AND CERTIFICATION

  • According to Zumba's official website, individuals who want to become instructors need to attend an instructor training.
  • There are no pre-requisites to become a Zumba instructor, however, fitness and/or dance backgrounds are helpful and instructors must be over the age of 18.
  • After completing the training, Zumba instructors are given a certificate of completion (license) which remains valid for 6 months, at which time it needs to be renewed.
  • Gyms that offer Zumba classes do not have to pay any licensing fees, according to the company's website.

OTHER RELEVANT FINANCIAL INFORMATION ABOUT ZUMBA IN THE U.S. DANCE FITNESS MARKET

  • Zumba participants spend millions of dollars on 'Zumba apparel. Zumba Wear is the company's online apparel shop and is a multimillion-dollar business.
  • One of Zumba's revenue streams is ZIN (Zumba Instructor Network) which nearly all Zumba instructors join at a cost of $40 per month. ZIN provides instructors with materials, resources and social networking. As of 2012, there are 100,000 instructors globally, however, the founder will not say how many there currently here.
  • The cost of attending a Zumba class varies based on locale. For one example, classes in South Florida (where Zumba is headquartered) costs between $5 and $15 per class. Some classes are included in fitness center memberships as well.
  • Since 2006 (when the Zumba only had $14,000 in the bank), their revenue has increased by 400,000%, according to the company's founder.
  • Zumba has sold 14 million copies of its video games (for Wii and Xbox) and is soon to release a game for Nintendo Switch.
  • Zumba also generates revenue from its themed cruises and a 'Club Med' type vacation experience.

RESEARCH STRATEGY

The sections below explain how an answer was arrived at for each part of this request. Although extensive research was carried out to locate details specific to Zumba's U.S. market, analysis of the company's website, trusted media articles, interviews with company executives, and company databases revealed that there is very little available data about Zumba's financials in general, and financial details about their U.S. operations specifically are even less scarce. This is due to the fact that the company is privately owned, and the founder is highly secretive about the company's financial status. However, existing data and information was pulled together to arrive at a handful of estimates, which have been explained in detail below.

It should be noted here that some estimates produced below were derived from financial data from 2012. This is because, while the company's financial data overall is severely limited within the public domain, some hints and bits of information have been published via interviews with the company's executives. One of the most prominent of these interviews was a 2012 Inc. article which was published after Zumba Fitness was awarded as the Inc. Company of the Year. Therefore, it is possible that the estimates presented below are a bit low-balled. On the flip side, it could also be argued that Zumba's current financials would likely still fall within these estimated ranges based on the fact that 1) Zumba had previously hit a slump in numbers for a few years after 2012 before launching Strong by Zumba a few years ago which then helped to revitalize the brand (as noted in the body of this report), and 2) some provided estimates are quite broad ranges, therefore, its very possible Zumba still remains under these umbrellas despite the fact that several years have passed. In any case, the body of this report has made it clear which individual pieces of data were sourced from 2012.

U.S. REVENUE:

In order to determine the company's U.S. revenue, we first conducted research in attempts to locate direct data stating that company's U.S. revenue specifically, or data showing the company's global revenue which could be used to attempt to triangulate the U.S. revenue if direct data could not be found. However, our research findings revealed that Zumba is a private company that does not make their financial data public and the company's founder is known for being secretive about the company's financial status.

Although we first attempted to triangulate a U.S. revenue by locating the number or percent of Americans who participate in Zumba and multiply this by the average cost per class, data showing the number of Americans who participate in Zumba was not found to be readily available (even after researching extensively through industry reports, surveys, trusted media articles, interviews with company execs). All participant data available reflected only the global figures of participants. Additionally, our research findings revealed that Zumba is making millions of additional revenue via non-class revenue streams such as through the sale of apparel and experience packages such as vacations, as well as through the sale of digital media. Financial data about these specific streams was also not found to be publicly available due to the same reasons noted above. Therefore, this triangulation attempted failed.

Despite this, we were able to pull together some hard data and 'hints' about the company's revenue made by the founder to come up with an estimated range of the U.S. share of Zumba's revenue:

According to SimilarWeb, 31.65% of visitors to Zumba's website come from the United States. Using this percentage as a proxy for the U.S. share of the company's revenue, we were able to arrive at an estimated range for the company's U.S. revenue by calculating this percentage with the company's estimated global revenues. Using this proxy was necessary as no direct data showing the percentage of the U.S. share of Zumba was found to be publicly available, even after analysis of market and industry reports, available financial data about Zumba and statements from company execs. This data appears to be missing due to the fact that Zumba does not make its financial information publicly available. As indicated by the data presented earlier in this report, the most recent and credible revenue estimate places the company's revenue somewhere between $100 million and $999 million; assuming the revenue currently still falls within this broad range, 31.65% of these figures would mean the U.S. revenue would fall in the range of $31.65 million and $316.18 million.

MARKET PENETRATION:

For similar reasons noted above, data on Zumba's U.S. market penetration was not found to be publicly available even after researching extensively through industry reports, surveys, trusted media articles, interviews with company execs. However, we were able to come up with an estimate for the U.S. market penetration by using the same web traffic data proxy used in the triangulation above and applying it in the same manner. In this case, we first calculated 31.65% of the global Zumba participant base (around 15 million weekly participants) which provided an estimated U.S. participant base of about 4.75 million people. As there are currently around 327.16 million people in the United States as of 2018, the U.S. market penetration of Zumba would be around 1.45% (or, [4.75 million x 100]/327.16 million=about 1.45).

MARKETING SPEND:

Using the same triangulation method above, we were able to also come up with an estimate for the U.S. share of the company's advertising spend. The most recent data that reflects the company's total advertising spend places the figure between $50 million and $63 million dollars; 31.65% of these figures would place the U.S. share of marketing spend between $15.825 million and $19.939 million.

MARKET SHARE OF ZUMBA IN THE TOTAL U.S. FITNESS MARKET:

As this data was also not found to be directly available after research into market reports, industry reports, and trusted media articles, we were instead able to triangulate this information by first locating the total market size of the U.S. fitness industry ($30 billion) and then using the U.S. revenue range we estimated above ($31.65 million and $316.18 million) to arrive at an estimated range of the company's market share. Based on this, Zumba's share of the total U.S. fitness market likely falls between 0.1% and 1.05%. CALCULATION: ($31.65 million x 100)/$30 billion=about 0.1% ; ($316.18 million x 100)/$30 billion=about 1.05%.

HOW RISKY IS IT TO INVEST IN ZUMBA IN THE U.S. DANCE FITNESS MARKET?:

To answer this part of the request, we collected various insights that we logically assumed could impact the investment risk into the company (for example, insights on how the company has been performing and evolving overtime) and made some logical assumptions as to what level of investment risk would result after consideration of these factors. Overall, the research findings presented here could collectively suggest that an investment in Zumba could be considered as a 'medium risk' as there are factors pushing in either direction. However, it could be logically assumed that as long as Zumba stays on top of evolving fitness trends into the future, as it has seemingly done with Strong by Zumba, the brand is likely to remain profitable. Additionally, overall low market penetration (as reflected in other areas of this report) suggests there is a lot of untapped potential for the company. Based on this, it could be logically assumed that the company has a lot of growth potential.
Part
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Part
02

Jazzercise - Financial Profile

To be a franchisee and certified Jazzercise instructor, one needs to complete Jazzercises's New Franchisee Training and pass an audition. Franchisees pay a re-certification fee of $625. Information on the revenue, market penetration, annual marketing and ad spend, and market share of Jazzercise were not available in the public domain. Below is an overview of the findings.

Risk of Investment in Jazzercise

  • According to an anonymous owner/instructor, it is "Difficult to make any profit. Very high franchise fee and too many owner costs."
  • Another source mentions that "It's almost impossible to support yourself on what you make. If you're a class owner corporate keeps 20% of your gross. Add rent and other fees and you're lucky to have anything left over. Promotional items (giveaways that customers play games/challenges to earn) are very pricey as well."

Licensing and Certification Details

  • The re-certification fee of a Jazzercise franchise is $625.
  • The length of the franchise agreement is five years. If the franchisees meet certain conditions, it can renew its franchise agreement for an additional term of five years.
  • To become a franchisee and certified Jazzercise instructor, one needs to complete the "New Franchisee Training" and pass an audition.

ADDITIONAL HELPFUL FINDINGS

COMPANY OVERVIEW AND REVENUE

INVESTMENT/FRANCHISE ASSOCIATED COSTS
  • As of 2018, Jazzercise had 6,953 franchises in the U.S.
  • The total amount of initial investment to open a Jazzercise ranges from $2,405 — $17,155, the ongoing initial franchise fee is $1,250 and the ongoing royalty fee is 20%.
  • The continuing fee is 20% of gross customer enrollment and 10% for certain programs. The class owner franchise minimum is currently $250 per month and the business franchise minimum is $500 per month.
  • Jazzercise offers marketing support to their franchisees such as co-op advertising, ad templates, national media, regional advertising, social media, SEO, website development, and email marketing.

RESEARCH STRATEGY

First, we performed an exhaustive search of the Jazzercise company website, press releases, annual reports, and financial statements hoping to find the Jazzercise revenue, market share, success results/risk factor for investing in Jazzercise, and annual marketing and ad spending in the fitness market, specific to the U.S. market. However, Jazzercise has not published annual reports or financial statements. We determined that the company is privately held which means that they are not obligated to post annual/financial reports. The press releases did not offer any relevant information except for the earnings per year globally, which we added as a helpful finding. We were able to find some data regarding licensing and certifications.

To determine specifically if it is risky to invest in Jazzercise (U.S. market), we consulted franchising publications and franchising review websites (such as Franchising Today, Athletic Business, Entrepreneur, Franchise 500) to find any relevant statistics. However, we only found franchising associated costs, the number of franchises in the U.S., and investments costs. No data showed the associated risk for investing in Jazzercise that would enable us to determine if such an investment was risky or not. We then switched gears and searched through business forums and business reviews databases (such as Glassdoor, Yelp, and others) to find franchisee sentiments or feedback about the risk associated with investing in Jazzercise. Here, we found some cons from an anonymous owner/franchisee of Jazzercise.

Concerning the U.S. revenue, market share, and market penetration percentage, we consulted third-party sites that provide company revenues (such as Hoovers, Zoominfo, Crunchbase, Glassdoor, and Inc.) but only found the overall company revenue. We searched through market reports/analysis (such as IBISWorld, MarketWatch, Wellness Creatives, and others) but only found market reports related to the dance fitness industry in the U.S. such as "US Gym, Health & Fitness Clubs Market report" and "US Fitness Market Size". The market share of Jazzercise was not mentioned in these reports. Due to the unavailability of Jazzercise's revenue in the U.S., we were not able to triangulate the market share and market penetration percentage.

With regard to the marketing and ad spend of the Jazzercise fitness market, we consulted several marketing and advertising publications (such as Neil Patel, Ad Age, Nep Tali, eMarketer, and others) but only found some top brands ranked by highest ad spending, a list of the most creative/effective marketing campaigns, and ad campaign analysis for several companies. There was no information available on the marketing and ad spending for Jazzercise. We switched gears and searched for available case studies and white papers but the only relevant case studies available regarded Jazzercise's apparel e-commerce campaigns and no information on their spending from Magento and Atmosol.

The unavailability of the requested data points was mainly because Jazzercise is a privately held company and not obligated to make its financial statement and annual report available to the public.
Sources
Sources