Tonal is laying off 35% of its workforce.
How we got here: Spurred by 800% sales growth during the pandemic, the company banked $250M in funding, notching a $1.6B valuation. Scaling rapidly, Tonal upped its headcount from 110 pre-COVID to 750 this July.
The latest: Amid a connected fitness correction and economic downturn, the smart strength company is cutting costs — and about 260 jobs. According to CEO Aly Orady, it’s time to batten down the hatches:
“As we head into a recession… it’s really important that we become a business that’s here for the long term. What we’re doing is effectively going from a hypergrowth business … to more of a sustained-growth business.”
To date, the company hasn’t been profitable — a red flag for both its IPO ambitions and financial viability. With the job cuts—and reduced advertising budget—Orady insists the company will start making money “in a matter of months.”
Full circle. Drinking their own Kool-Aid, many at-home fitness brands let pandemic demand dictate their decision-making. Now, it’s time to restructure after overreaching.
- Starting last year, iFIT enacted layoffs, replaced its CEO, and saw its valuation trimmed by 60%.
- In February, Peloton cut 2,800 jobs and restructured under new CEO Barry McCarthy.
- In March, both Beachbody and Tempo laid off 10% of their respective workforces.
- In May, Zwift slashed 150 jobs and scrapped its long-awaited at-home bike.
TBD. Despite membership gains for gyms, consumers aren’t giving up on home workouts. But, as growth fades, connected fitness is still reeling from the end of the workout-from-home gold rush.