Oura filed its S-1 on September 3, heading for the Nasdaq under the ticker OURA, and the numbers on the front page are genuinely good. Revenue for the nine months ended June 30 reached $1.21 billion, up 74% from $697.5 million a year earlier. Five million people pay for a membership. The company made money, roughly $61 million of net income over those nine months, which is not a sentence most consumer hardware companies get to write before an IPO.
The coverage stopped there. What it skipped sits further into the filing: in fiscal 2025 Oura booked an additional $84.4 million of warranty expense because batteries in certain production cohorts of the Oura Ring 4 were not performing as expected. That single line accounts for most of a gross margin collapse from 65% in fiscal 2024 to 52% in fiscal 2025, and it is the most important disclosure in the document.
The Margin Story Nobody Led With
Track the gross margin across the filing and the shape is hard to miss.
- Fiscal 2024: 65%
- Fiscal 2025: 52%
- Nine months ended June 30, 2025: 51%
- Nine months ended June 30, 2026: 55%
Revenue roughly doubled from $406.8 million in fiscal 2024 to $907.9 million in fiscal 2025, and the margin fell thirteen points while it happened. That is the opposite of what scale is supposed to do to a hardware business, and the filing says why. Rings in affected cohorts were replaced at no charge, and Oura extended some of those replacements beyond the normal warranty period. The company attributes the problem to earlier design, manufacturing and supplier decisions, and says it has since widened testing and quality control, a sequence teardown coverage of the filing traced back through the Ring 4 production run.
The recovery to 55% over the most recent nine months suggests the worst of the charge is behind it. It has not returned to 65%, and the filing does not promise it will.
A Hardware Company Wearing a Subscription
The second thing the filing settles is what kind of company this is. For the nine months ended June 30, hardware revenue was $974.0 million against $240.5 million of membership revenue. That is roughly 80% hardware, 20% subscription.
The membership line is growing faster, up 121% from $108.8 million in the comparable period, and that is the number the bulls will point at. It is still one dollar in five. Oura is a device manufacturer with a recurring revenue attachment, not a software business that happens to ship a ring, and the blended gross margin says so plainly. Subscription software companies run at 75% to 85%. Oura runs in the mid-fifties because most of its revenue carries a bill of materials, a point the early analyst breakdowns of the filing made before the mainstream write-ups settled on the growth rate.
This matters for how the offering gets priced. An investor paying a subscription multiple is paying it on 20% of the revenue and inheriting the other 80%, which is a consumer electronics business with a component supply chain, a replacement cycle, and, as fiscal 2025 demonstrated, warranty exposure that can move the whole margin line by itself.
Why the Battery Charge Is Not a One-Off
The tempting read is that $84.4 million was an unusual event, now fixed, and the margin trend since supports that. BTN does not think it can be filed away that neatly, for a structural reason rather than an engineering one.
Oura’s membership revenue is an annuity that depends entirely on people continuing to wear the ring. There is no desktop client, no browser tab, no workplace mandate keeping the subscription alive. If the hardware on a customer’s finger stops holding charge, the subscription attached to it stops too, and the company loses the high-margin dollar as well as the low-margin one. Battery performance is not a cost-of-goods problem at Oura. It is the retention mechanism.
That makes the warranty charge a better disclosure than it looks. Oura chose to replace affected rings free, including outside the warranty window, which was the right call commercially and not a cheap one. The filing shows a company spending $84.4 million to protect a subscription base, and then reporting that subscription base as evidence of a durable business. Both things are true. Prospective shareholders should be clear that the second was partly bought with the first.
The open question the S-1 does not answer is what proportion of the installed base the affected cohorts represent, and what a similar defect would cost at five million members rather than at the size Oura was when Ring 4 shipped. Those are the numbers to look for in the amended filings.
What to Watch Before the Roadshow
Oura arrives in a market that has been rewarding this kind of filing. It follows a run of large registrations, from SpaceX’s trillion-dollar-plus valuation filing in April to Anthropic’s move toward what could be the largest AI offering on record, and 2026 is pacing toward the strongest IPO year since 2021. A profitable consumer company growing 74% will not struggle for attention.
The three things worth watching are narrow. First, whether gross margin keeps climbing back toward the fiscal 2024 level or settles in the mid-fifties, which would tell you the 65% was the anomaly rather than the 52%. Second, whether membership revenue holds above 20% of the mix as hardware volumes grow, because a subscription share that stays flat while the company scales is a subscription that is attaching, not compounding. Third, the disclosure on the Ring 4 cohorts.
Oura has built something rare, a hardware company that is growing fast and making money at the same time. The filing is honest about what that cost. The coverage has not been, and anyone reading only the revenue line is reading the wrong page.