Tonal, a manufacturer of connected fitness equipment backed by Amazon, is reportedly laying off 35% of its workforce, affecting all areas of its operations.
According to CNBC, the company now employs about 750 people, up from just over 110 prior to the Covid-19 pandemic, according to chief executive officer Aly Orady.
Orady also emphasized the necessity of profitability, particularly as the business considers an IPO.
The CEO claims that Tonal has never been profitable. However, the company will be on track to break even in a matter of months thanks to the job cuts.
In 2020 and 2021, Tonal, a company that sells $3,495 wall-mounted exercise equipment, saw explosive growth as a result of consumers looking for ways to get moving while they were stuck at home.
However, Tonal is applying the brakes right now. It joins a group of companies, including rival Peloton, that are laying off employees in order to cut costs and readjust to higher levels of customer demand for their goods.
Businesses are simultaneously dealing with hot inflation on everything from fuel to worker salaries to raw materials, and many are gearing up for a slowdown in the economy even though a recession isn’t a given.
“It is really important that we become a business that’s here for the long term as we head into a recession — and many of us believe we are headed into a recession,” Orady said.
In essence, Orady continued, “we are transitioning from a hypergrowth business to more of a sustained-growth business.”
The precise amount of money Tonal expects to save through the layoffs was not made public. Furthermore, it did not mention whether its valuation had been changed in the private markets.
After raising $250 million in a Series E funding round led by Dragoneer in March 2021, the company’s last estimated value was $1.6 billion.
