What Oura's IPO can teach accountants about the gap between profit and earnings per share
2 Min Read
Oura filed its amended prospectus on 21 September and wants $40 to $44 a share to list on Nasdaq under the ticker OURA.
It sells a titanium ring that tracks your heart rate while you sleep and then tells you, politely, that you should have gone to bed earlier. As at 30 June it had 5.0 million paying members across 56 markets.
For the nine months to 30 June 2026 the company turned over $1,214.5 million, up 74% on the same period last year, and reported net income of $60.8 million.
Two lines further down the same statement, it reports a loss per share of $44.77.
Both figures are correct, and the reason they're both correct is the most useful thing in the filing.
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🧠 Fun fact: Nokia started in 1865 as a pulp mill on a river in southwestern Finland and spent its first century in paper, rubber boots and cables before it went anywhere near a telephone. Finland's next flagship export is a ring that tells you that you slept badly.
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The Main Story
The cleanup before the listing
A share register has to be simplified before it meets a public market. But years of venture funding leave a stack of preference share classes sitting above the ordinary shares, each with its own liquidation preference and conversion terms, very little of that structure survives a listing. In order to fix this the company buys some of it back.
Oura repurchased 27,933,119 redeemable convertible preference shares in the nine months to June, running from Series Seed through Series C-1, for $1,091.9 million. Those shares were carried on the balance sheet at $108.3 million.
The difference is $985.0 million… yeah A LOT.
The preference shares were sitting at close to what investors originally paid for them, and the company bought them out at something nearer what the business is worth after 74% revenue growth and five million members. Of the excess, $5.5 million was taken against additional paid-in capital and $979.5 million went straight to an accumulated deficit.
None of it touched the income statement, and as such Oura still earned its $60.8 million as per its income statement.
Earnings per share measures what's left over for the ordinary shareholders, and handing $985 million above book value to a different class of shareholder leaves considerably less.
So the $985.0 million comes off the numerator as a deemed dividend, $60.8 million of profit becomes $924.3 million of loss attributable to ordinary shareholders, and dividing by a weighted average of 20,646,388 shares gives you the $44.77.
The prior year did the same thing on a smaller scale.
Oura's net income for the year to September 2025 was twelve thousand dollars, the deemed dividend was $186.1 million, and the reported loss per share was $8.53.
IFRS reaches the same destination by a shorter route → IAS 33.16 deals with preference shares repurchased under a tender offer to holders, and says the excess of the fair value of the consideration paid over the carrying amount of those shares is a return to the preference shareholders and a charge to retained earnings, deducted in calculating profit attributable to ordinary equity holders.
IAS 33.18 runs it in reverse where the carrying amount exceeds what was paid.
The harder question under IFRS comes at classification.
Oura's preference shares sit in a category US GAAP calls temporary equity, parked between liabilities and equity because they're redeemable in circumstances the company doesn't control.
IFRS has no such limbo. Under IAS 32 an instrument is a financial liability or it's equity, and IAS 32.18(a) settles it on whether there's a contractual obligation to deliver cash that the issuer cannot avoid. A preference share redeemable on a set date, or at the holder's option, carries that obligation and is a liability.
If those shares were liabilities, buying them back extinguishes a financial liability, and IFRS 9.3.3.3 puts the difference between carrying amount and consideration paid into profit or loss. The $985 million would stop being an earnings per share adjustment and become a charge against profit itself. If they were equity, IAS 32.33 keeps the whole thing out of profit or loss and the IAS 33.16 adjustment does the work on its own.
One classification call, two very different income statements.
Where the software shows up
Shocker… another multi-billion dollar company based on an intangible asset, who would have thought?
(You should be seeing a pattern here)
The ring is a sensor and the value sits in the models reading it, and the prospectus spends its early pages on data and intelligence layers that get better as more people wear one.
A large portion of that isn’t on the balance sheet as an asset, for the reasons we went through with Anthropic a fortnight ago → see that post here.
Hardware was $974.0 million of the nine month revenue and membership was $240.5 million, so roughly 80/20.
A member buys a ring for a few hundred dollars and then pays $5.99 a month for the thing that makes the ring worth wearing. The prospectus is blunt about the dependency, noting that members generally have to buy a ring in order to subscribe, and that the membership is designed to extend the value of the ring.
Under IFRS 15 that's a single contract with a customer carrying more than one performance obligation.
The ring transfers at a point in time under IFRS 15.38.
The membership is satisfied over time under IFRS 15.35, with fees collected up front sitting in deferred revenue until the service is delivered.
The judgement lives in IFRS 15.74 and 15.76, which require the transaction price to be allocated across performance obligations on a relative standalone selling price basis. Where no observable standalone price exists, IFRS 15.79 permits an estimate, including a residual approach where the price is highly variable or uncertain.
Insights From The Pocket CA
We've partnered with Pocket CA, an AI tool built for accountants, like your friend if they actually listened in lecture.
Here’s the technical detail in this scenario from the number-crunching machine:
IAS 33 Earnings per Share
Basic EPS divides profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding (IAS 33.10).
The amounts attributable to ordinary equity holders are adjusted for after-tax preference dividends, differences arising on the settlement of preference shares, and other similar effects of preference shares classified as equity (IAS 33.12).
Where preference shares are repurchased under a tender offer, the excess of the fair value of consideration paid over the carrying amount is a return to the preference holders and a charge to retained earnings, deducted in calculating profit attributable to ordinary equity holders (IAS 33.16).
Any excess of the carrying amount over the fair value of consideration paid is added back in that calculation (IAS 33.18).
Inducing early conversion of convertible preference shares by improving the terms produces the same kind of deduction (IAS 33.17).
IAS 32 Financial Instruments: Presentation
The critical feature separating a financial liability from equity is a contractual obligation to deliver cash or another financial asset that the issuer cannot avoid (IAS 32.17, IAS 32.18(a)).
A preference share redeemable on a specified date or at the option of the holder contains a financial liability, and an inability to pay when required does not negate the obligation (IAS 32.AG25).
Where the shares are non-redeemable and distributions are at the issuer's discretion, they're equity, and a history or intention of making distributions doesn't change that (IAS 32.AG26).
Reacquired own equity instruments are deducted from equity, and no gain or loss on their purchase or cancellation goes to profit or loss (IAS 32.33, IAS 32.AG36).
IFRS 9 Financial Instruments
The difference between the carrying amount of a financial liability extinguished and the consideration paid is recognised in profit or loss (IFRS 9.3.3.3).
Where only part of a liability is repurchased, the previous carrying amount is split on relative fair values before that difference is worked out (IFRS 9.3.3.4).
IFRS 15 Revenue from Contracts with Customers
Each promise to transfer a distinct good or service is a separate performance obligation (IFRS 15.22).
Revenue is recognised over time where the customer simultaneously receives and consumes the benefits as the entity performs (IFRS 15.35(a)), and otherwise at the point control transfers (IFRS 15.38).
The transaction price is allocated to each performance obligation in an amount depicting the consideration expected in exchange for it (IFRS 15.73), on a relative standalone selling price basis determined at contract inception (IFRS 15.74, IFRS 15.76).
Where a standalone selling price isn't directly observable it must be estimated, with a residual approach available for highly variable or uncertain prices (IFRS 15.79).
The transaction price is not reallocated for later changes in standalone selling prices (IFRS 15.88).
Check out the → 🔗Pocket CA
The Bottom Line
If you're in articles on anything with preference shares in the structure, whether that's a venture backed client, a BEE funding arrangement or a plain redeemable preference share issue, the useful hour this week is spent on the instrument terms rather than the ledger. Find out who can force redemption and when. That single answer decides whether the instrument is debt or equity, whether the dividends are finance costs or distributions, and whether a buyback lands in profit or in equity.
It’ll also give you some insight into startup funding.
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Until next week,
The Journal Entry Team
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