iFIT Sells SWEAT Back to Co-Founders

SWEAT eyes a comeback in 2024.

What’s happening: Aussie fitness entrepreneurs Kayla Itsines and Tobi Pearce re-acquired the women’s fitness app from iFIT.

After co-founding the company in 2016, the pair sold SWEAT to the US-based equipment maker in June 2021. But, following iFIT’s failed IPO bid, Itsines is reclaiming the reins, with Adam Koch remaining CEO and Pearce taking an advisory role.

Payday. While initial reports put SWEAT’s sale price north of $300M, insiders say the actual sum iFIT paid was “nowhere near” that number. According to iFIT’s financial filings, the deal included $37.5M in cash, $40M stock and $70M “deferred consideration” based on three years of post-sale revenue.

For Itsines, much of the upside was tied to an IPO that never materialised.

Losing steam. Scooping up SWEAT at the pandemic’s height, iFIT looked to bolster its subscriber base ahead of a planned public offering, adding 450K paying members. However, even though SWEAT continued to operate as a standalone brand, as gyms reopened and its parent changed course, the newly acquired app struggled.

In 2022, the app reported A$85M in losses, as revenue declined from ~A$100M to A$71M YoY, resulting in layoffs at the Adelaide headquarters.

Takeaway: iFIT’s attempt to grow through SWEAT’s acquisition appears to have backfired. After a tumultuous period that brought a change in leadership amid a down-round of funding, the equipment maker is cutting its losses to stabilise its core business. But iFIT’s losses could bring gains for Itsines, SWEAT and the once-loyal member base, who could rally behind the fresh start for its influential founder.