Oura’s IPO and the Business of Wearables

In May, we wrote about Google’s acquisition of Fitbit, the launch of Fitbit Air, why we thought it could be a WHOOP killer, and why the wearables industry really isn’t about the hardware. Four months later, somewhat serendipitously, Oura has filed for an IPO, and one of our favourite newsletters, Mostly Metrics by CJ Gustafson, went through the S-1 in enough detail that it got us thinking about that thesis again.

While, yes, we mainly write about AI infra, compute, open source, enterprise software, startups, and the economics of emerging technology, consumer technology is not really our world. Fitness is however, and by association so are wearables, health optimization, and the increasingly obsessive measurement of metrics, including our own.

The first thing that jumps out from Oura’s filing is that this is of course no longer some niche biohacking product. Oura now has 5 million paid members, $1.425 billion in trailing revenue growing 74% year over year, a 65% DAU-to-MAU ratio, and 85% weighted average 12-month paid retention (really freaking good). Fiscal 2025 revenue was $908 million, up 123% from $407 million the year before, and the company sold 3.6 million rings over the last twelve months. It is also actually profitable generating $61 million of net income and $328 million of operating cash flow through the first nine months of fiscal 2026.

That is impressive, but the more interesting part is how the business works underneath the growth. Oura still gets roughly 80% of revenue from hardware, which, for readers who remember our Fitbit piece from May, looks a little awkward at first glance given our thesis that the wearables battle really isn’t about the hardware. But 20% now comes from subscriptions, and membership revenue is growing 121% year over year compared with 65% for hardware. Membership carries an 89% gross margin, while hardware backs into roughly 46%, which is actually very good for a physical product. Overall gross margin sits around 55%. On roughly $311 of revenue per ring, Oura generates about $143 of hardware gross profit, enough to pay back customer acquisition on day one.

From there, the subscription economics take over.

That last point is what makes Oura a much more interesting business than a company that simply sells expensive rings. Historically, 94% of ring activations convert into paid memberships after the initial 30-day trial. Roughly 63% of new members start on the $69.99 annual plan, while the rest start monthly at $5.99, and twelve-month retention has improved from about 81% for fiscal 2023 cohorts to 85% overall and as high as 87% for the fiscal 2025 cohorts. Repeat purchases are also moving in the right direction, rising from 5% of rings sold in fiscal 2024 to 9% in fiscal 2025 and 11% in the first nine months of fiscal 2026. The hardware gets you in, pays for acquiring you, and the recurring relationship gets more valuable from there.

This is where our May thesis starts to look pretty good. We argued that the hardware was simply the entry point and that the real value was in what happened after the data landed. Oura members wear the ring for a median of 23 hours per day, collecting heart rate, HRV, temperature, sleep, movement, stress, and other physiological signals. Oura says the finger can produce a signal up to 100 times stronger than the wrist for certain measurements. With five million paying users that is a lot of longitudinal data.

Longitudinal is the important word because knowing my resting heart rate this morning is mildly useful, while knowing my resting heart rate every morning for four years, what happened when I got sick, how alcohol affects it, how sleep changes it, and what “normal” actually means for me is much more useful. The longer you wear the ring, the more context Oura has, and that is why the company increasingly talks about its dataset as an asset rather than simply the output of a sensor.

The sensor collects the data, but the value comes from turning years of that data into something useful enough to change behaviour. That is also where Oura Advisor and AI start to matter much more than whether the next ring is a few millimetres thinner.

The engagement suggests people are already finding value in that interpretation layer. Oura reports a 65% DAU-to-MAU ratio, while 85% of paid members are still around after twelve months. For a consumer subscription product, that is an absurdly good retention number, much closer to the durability we associate with software businesses than the average fitness app.

Repeat purchases are increasing too, suggesting that customers are not simply sticking with the subscription but increasingly refreshing the hardware itself (which was a shock to me). This does not look like a New Years Resolution fitness gadget that gets used for six weeks and then abandoned beside the Nutribullet. At least for the majority of Oura’s customers, the relationship survives well beyond the initial hardware purchase.

The other half of our May thesis was about scale. We argued that Google and Apple have a structural advantage because they do not necessarily need to make money on the wearable itself. Oura cannot win by racing them to the bottom, so it has spent years building its own distribution. Retail now represents roughly half of hardware revenue, with Oura available across about 8,400 doors through partners like Amazon, Best Buy, Costco, and Target.

That broader distribution comes with a cost. Revenue per ring has fallen from $332 in fiscal 2024 to $311 this year as retailers take their cut, even as sticker prices have increased. But the trade is logical: Costco may compress the margin on the ring, but it does not get a piece of the $69.99 annual membership afterward. Oura is also expanding through HSA and FSA eligibility, Amex credits, employers, insurers, and healthcare partners like Cigna, making the business look actually closer to a health distribution platform rather than just a gadget company.

There is still reason to be cautious. Oura sold 3.6 million rings over the last twelve months, only about 2% of the roughly 212 million wearables shipped globally, and Apple, Google, and Samsung have mega distribution advantages it will never match on device volume. That helps explain why Oura would rather frame itself against a roughly $90 billion market spanning wearables, coaching, digital health, biosensors, and preventative healthcare. “We sell rings, but our TAM is healthcare” is classic S-1 language, but there is at least a credible path connecting the two.

That brings us back to May. We still think wearables are not fundamentally about the hardware. Oura’s fastest-growing and highest-margin revenue stream is the subscription, while its differentiation increasingly lives in longitudinal data, personalization, and AI. Where we may have been too pessimistic was assuming standalone wearable companies inevitably lose to platforms like Google and Apple. With 5 million paid members, 94% activation into subscription, 85% twelve-month retention, 121% subscription growth, and hardware economics that pay back acquisition on day one, Oura has built a compelling counterexample.

So really, the IPO is a bet on whether it can turn that head start in data and engagement into a durable health intelligence layer.