Dive Brief:
- Eight years after founding the company, Aly Orady has stepped down from the CEO role at Tonal to become its chief technology officer, according to a company press release Monday.
- Krystal Zell, who joined the fitness equipment brand in July as president, is succeeding Orady as the new chief executive, per the release. Zell previously worked at The Home Depot and Starwood Hotels & Resorts Worldwide.
- Tonal also announced it raised $130 million in funding through existing investors including L Catterton, Cobalt, Dragoneer, Kindred Ventures and THVC.
Dive Insight:
Founded in 2015 by Orady, Tonal’s executive leadership change comes as the brand focuses on its future.
“As we embark upon this next stage of our journey, I am filled with confidence as I hand the reins over to Krystal,” Orady said in a statement. “A proven executive at scale, Krystal is an exceptional collaborator and fierce advocate for our members, who is always putting customers at the center of our business. I look forward to continuing our partnership as I focus on the next phase of technology and product development.”
The direct-to-consumer brand’s latest funding is significantly lower than its previous fundraise in March 2021, which brought in $250 million and valued the company at $1.6 billion, according to Tonal. The company's valuation has fallen to between $550 million and $600 million since then, according to reporting from The Wall Street Journal that cited anonymous sources.
In July 2022, Orady told CNBC in an interview that the company would be cutting 35% of its staff as the company aims to become profitable ahead of a potential IPO. Tonal was reportedly exploring a potential sale of the business in February after burning through cash the year prior, according to The Information.
Tonal previously bet on tying celebrities to its brand image, including naming investor Serena Williams as a brand ambassador for a new company campaign in February 2022. Prior to that, Tonal announced LeBron James as an investor and brand partner during a marketing campaign in October 2021.
The brand operates within an industry known for its expensive, at-home fitness equipment. Tonal’s strength training device is mounted to a wall and costs $3,995 excluding some accessories. The brand announced this new pricing in January, which was a $500 increase.
Meanwhile, Peloton’s basic at-home stationary bike costs $1,445 and its treadmill is $3,495. The Studio system from fitness company Tempo costs at least $1,695. Athletics apparel brand Lululemon also sells a home gym device called the Mirror, which is $995 without any accompanying accessories. Each company has a subscription for content to use with the devices, with Tonal in January announcing it was increasing its monthly membership price from $49 to $59.95.
After a year of executive changes and company layoffs, Peloton touted its “best quarterly performance” in a year this February. Second-quarter revenue reached $792.7 million and its net loss narrowed to $335.4 million from $439.4 the year before. However, subscription revenue fell from $412.3 million in the previous quarter to $411.3 million despite an increase in connected fitness subscribers.
