Tonal, the rival of Peloton which is backed by athlete Serena Williams and Amazon’s Alexa fund, has slashed 35% of its workforce as it prepares for possible recession and an initial public offer.
The fitness equipment maker joins a list of companies, including Peloton Interactive (NASDAQ:PTON), reducing head count to reduce expenses.
Aly Orady, Tonal's chief executive, said the company is trying to become profitable so that it can go public, and that it currently employs 750 people, up from about 110 before the Covid-19 pandemic.
As the company considers an IPO, Orady stressed the need for profitability, adding the company hasn't been profitable in the past but the job cuts would put the company on track to make money within a few months.
All impacted employees will receive a minimum of eight weeks of continued pay, as well as health-care benefits through September, Tonal said.
During the pandemic with consumers stuck at home and searching for ways to exercise, Tonal registered rampant growth in 2020 and 2021.
By partnering with star athletes like LeBron James and Williams, Tonal was also able to increase its brand awareness.
A total of US$450mln has been raised to date, with the company valued at US$1.6bn at one point in 2021.
For now, Tonal is putting the brakes on, with the CEO saying, "As we head into a recession, and many of us believe we’re headed 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."