With an investment of 900 million U.S. dollars, the "App Factory" has acquired the world's top-grossing pet collar brand?

More and more domestic manufacturers are entering the pet collar track, and the exit of Tractive may illuminate the way ahead.

In multiple previous topics, we have repeatedly observed the strategy of Bending Spoons, the so-called "App Factory": "Acquire established software products with sluggish growth, integrate them into the automated middle platform, reduce costs, adjust growth and monetization strategies, and revitalize the underperforming products held by other parties." Relying on this logic, Bending Spoons successfully listed on the Nasdaq on July 1, 2026.

But the label of "software acquisition" is not entirely accurate, back in May before the listing bell rang, Bending Spoons spent 900 million US dollars to acquire Tractive, an Austrian pet hardware startup that develops pet GPS tracking collars.

The core product of Tractive is pet GPS tracking collars | Image source: Tractive official website

A company that started with software and built its valuation story around software chose to acquire a hardware target at the critical moment of listing when it most needed to "clarify its own positioning". What exactly is it pursuing?

I. An Acquisition Target That Does Not "Meet the Standard"

The origin of Tractive traces back to a dog-finding experience.

In 2012, Michael Hurnaus, who was working as a technical manager at Amazon at the time, spent two full hours helping a friend find their lost dog. Later he found that there was not a single product on the market that allowed users to directly check the location of their pets on their mobile phones. So he decided to develop a "tracking collar" by himself, which is exactly Tractive. In October of the same year, Tractive was founded in Austria, and its first product made its official debut at CES 2013.

The reason why Tractive could enter the market lies in the widespread "semi-free-range" pet raising mode in Europe and the United States. In non-core urban areas of Europe and the United States, pets are not confined within the hard boundaries formed by windows and security doors. Most dogs are kept in fenced yards during the day. Even when walking dogs, people may let go of the traction rope in sparsely populated areas if the rules allow it; most cats can freely go in and out during the day, and return home to eat and sleep.

An inevitable result of this raising method is that pets are out of their owners' sight for a long time, and the probability of getting lost is much higher. Data from the American Veterinary Medical Association (AVMA) shows that nearly 10 million cats and dogs are lost or stolen in the United States every year, with an average of more than 27,000 per day. Over a 5-year period, 16% of dogs and 18% of cats get lost at least once. Due to the large number of natural hidden spots in non-core urban areas, only 93% of lost dogs and 75% of lost cats can be retrieved. For users in Europe and the United States who generally regard pets as family members, "anti-lost" is a rigid demand.

Precisely because its entry point is a "rigid demand", Tractive has been restrained in function iteration, which is of course also related to its earlier entry into the market.

From its launch in 2013 to 2020, Tractive only provided GPS positioning and derived functions such as passive electronic fences; after 2020, it gradually added basic monitoring functions such as exercise volume and sleep tracking, and did not add monitoring for resting heart rate, breathing, scratching and barking (for dogs) until 2025. Compared with many collars on the market that have begun to pile up functions like emotion recognition and even the somewhat mysterious "pet language translation", Tractive's function list looks very simple.

The direct benefit of extremely simplified functions is that hardware costs can be controlled. In terms of pricing, the original price of the hardware on the official website is about 45-90 US dollars, but there are discounts all year round. According to shares on Reddit, the actual price most users pay is in the range of 30-50 US dollars, and one of its cat trackers only costs 22.5 US dollars with free shipping.

The hardware prices of mainstream pet collars on the market, all the prices above are the original prices on official websites, excluding any form of discount, unit: US dollar | Data source: Public information on the Internet

The founder did not shy away from the fact that the hardware business is losing money, and the real profit comes from subscriptions.

At the software subscription level, Tractive adopts the idea of "subscription is required for use, and the longer the subscription period, the lower the price". The price of a 1-year subscription is 10 US dollars per month, while a one-time payment for 5 years only costs 300 US dollars, which is equivalent to 5 US dollars per month. The longer the commitment period, the cheaper the monthly fee. With the existing hardware as a sunk cost, users are more inclined to subscribe for a long time and use the product for a long time.

The results also confirm this design. Although there are complaints about Tractive's positioning accuracy and battery life on Reddit, due to its rigid demand attribute and the subscription model of "the longer the period, the lower the price", the CEO once revealed on some occasion that Tractive's user churn rate is less than 2%, and the average user renewal period exceeds 4 years, which is basically equivalent to the hardware life (the average battery life is 3-5 years). By the end of 2024, Tractive's subscription ARR (Annual Recurring Revenue) reached 100 million euros, equivalent to about 144 million US dollars.

In the entire pet collar track, Tractive is the undisputed No.1 in revenue. Over the past ten years, it has accumulated authoritative endorsements from Consumer Reports, Wirecutter of The New York Times, and the achievement of No.1 in sales in its category on Amazon.

But the doubt also lies here. If we use Bending Spoons' acquisition standards to measure Tractive, it meets the standards of rigid demand scenarios, brand awareness and user loyalty, but the financial aspect does not match. According to institutional estimates, Tractive's revenue will still maintain a growth rate of 35% to 40% in 2025. This is not an asset waiting to be bought at a discounted price.

II. The Tried-and-Tested Transformation Strategy in the App Track Also Does Not Work

In Bending Spoons' strategy, the next step after acquisition is transformation. Matteo Danieli, co-founder and CPO, explained their transformation methodology as: "Relying on pricing, product updates and personnel arrangement, we turn the originally luck-based decisions into processes that can be verified by data and replicated by the system." This strategy has worked well on software products such as WeTransfer and Splice. But when applied to Tractive, several variables are not suitable. Tractive is already the leader in the track, with no obvious operational shortcomings, and it also involves the hardware variable that the team is not familiar with.

The software subscription prices of mainstream pet collars on the market, unit: US dollar per month | Data source: Public information on the Internet

Bending Spoons' most immediate transformation method is to raise the original price to an acceptable level based on the formed product stickiness of segmented user groups, but this time it hit a hard wall.

Tractive's subscription fee is 5-10 US dollars per month, which does not seem high at first glance, but its advantage is not obvious in horizontal comparison. As shown in the picture above, consumer products focusing on health monitoring such as FitBark and SATELLAI are basically in the range of 5-12 US dollars; while collar products for professional scenarios such as dog training, medical monitoring and outdoor hunting mostly have the highest pricing around 15 US dollars, and only Halo Collar has the highest subscription price reaching 19.99 US dollars per month.

In terms of functions, consumer products such as Tractive, FitBark and SATELLAI have already made health/behavior analysis a standard feature beyond GPS. Even if Tractive has recently added functions such as heart rate and breathing monitoring, it is only at the passing level, and it is difficult to drive price increases by functions. If it follows the route of professional products such as PetPace to deepen health monitoring or a certain function, it will encounter restrictions such as hardware and professional clinical qualifications. (PetPace's annual subscription is 200 to 300 US dollars, which mainly serves elderly pets with chronic diseases that require continuous monitoring, and is endorsed by professional veterinarians)

The more fundamental obstacle is that this "hardware + subscription" business model originally locks users through long-term contracts, and there are many existing "contracts". Even if prices are forcibly raised, the revenue-increasing effect will not be as immediate as that of software products such as WeTransfer.

A more realistic plan is to launch the next-generation hardware first, complete and deepen the functions, and then raise the price appropriately. But launching new hardware requires multiple links such as design, verification and production, which cannot be implemented in less than a year or two, and it is difficult to see financial contributions in a short period of time.

The only option left for the company is to reduce costs. As in the past, after the acquisition was completed, Bending Spoons laid off 160 people, accounting for more than half of Tractive's team, and the two founders also left one after another.

III. What Is Bought Is Not a Pet Collar, But an IPO Story

The consideration of 900 million US dollars, corresponding to the 144 million US dollars subscription ARR at the end of 2024, is statically more than 6 times; considering that it is still growing at a rate of 35% to 40%, the forward multiple will drop to around 4.5 times when diluted by the 2025 volume.

In the public market, this transaction consideration is not expensive. For a subscription business that ranks first in its category, has a growth rate of nearly 40%, a churn rate of less than 2%, and an average renewal period of 4 years, giving a forward ARR multiple of 4 to 5 times is a very fair pricing. But if we change the measurement standard, it is quite abnormal when placed in Bending Spoons' own strategy.

The entire advantage of Bending Spoons' model lies in taking over dying or sluggish-growth assets at a low price, and then squeezing out profits little by little through the middle platform. But this time, it paid a market fair price for a healthy, growing asset with almost no operational shortcomings.

So what exactly is Bending Spoons pursuing? The answer may lie in the timing of the acquisition.

Six months before the listing, Bending Spoons intensively finalized three acquisitions of AOL, Eventbrite and Tractive. For a company that is about to enter the secondary market, this is more like a centralized demonstration of strength. Among the three acquisitions, Tractive plays a particularly special role — it is a top player in the track that is still growing at a rate of more than 35%, and it is also a hardware asset. Buying it is equivalent to handing investors a combined narrative of "software + hardware". This company can not only revitalize old software, but also control a hardware business with entities, repurchase and brand. On the eve of the listing bell, such a story is a real plus for the confidence of the secondary market.

On the other hand, beyond the IPO story, the longer-term possibility is data. As the top player in the track, Tractive holds a large amount of continuous positioning, activity and health data of pets for many years, which can lay a foundation for Bending Spoons to enter the tracks of pet insurance, veterinary services, predictive health analysis and other fields in the future.

Final Thoughts

Overall, whether from the perspective of finance, scenario rigid demand, brand influence or user loyalty, Tractive is a high-quality asset. But after the acquisition, it is not easy for Bending Spoons to increase revenue through simple price adjustment and function innovation, and the iteration rhythm of hardware itself is much slower than that of software. Short-term revenue improvement may not be the focus at all.

But a more interesting perspective is that for similar "App Factories", this may be a signal. When the pure software acquisition arbitrage space reaches its peak, extending tentacles to hardware categories with entities and data precipitation may become the starting point of the next growth narrative. This phenomenon has actually emerged in many categories, such as calorie tracking, home fitness hardware and so on.

Whether this path can be taken through remains to be verified, but the story has already begun.

This article is from the WeChat official account "Baijing Chuhai", author: Zhang Kairan, editor: Yin Guanxiao, published with authorization from 36Kr.