Sweat co-founders buy back iFIT

Co-founders - Kayla Itsines and Tobi Pearce - of Sweat, a leading platform for women's health and fitness, have taken back control of the company less than three years after their reported $200 million sale to US firm iFIT in 2021.

Sweat was sold at the height of the COVID pandemic in a $US150 million deal when many physical gyms around Australia and the world were shut due to COVID restrictions.

Founded in 2015 by trainer Itsines and Chief Executive Pearce, Sweat has reportedly engaged with millions of women around the world in their journeys to become healthier, stronger and more confident. The Sweat app is translated into eight different languages and is available in 155 countries.

The Sweat platform is powered by a team of industry-leading personal trainers and offers over 5,000 workouts across 26 exercise programs ranging from high-intensity interval training and strength to yoga, barre and Pilates.

Following the sale to iFIT, Sweat Co-Founders Itsines and Pearce continued to lead the Sweat business in their existing roles, with the company remaining headquartered in Adelaide.

Itsines, who has been the face of the brand since she and Pearce founded the company in 2015, advised this week the decision to take back control is about “ensuring the best future for Sweat”.

According to AFR, Itsines said iFIT wished to return to its core business of selling exercise equipment, while she wanted to concentrate on Sweat’s community of subscribers.

Itsines was reported as stating “I am thrilled to be back as an owner of Sweat, a platform that has meant so much to me and to the millions of women it serves. We have always been a platform built for women, by women, providing a secure and encouraging space for them to share their transformation journeys. Our commitment to this community remains unwavering.”

AFR reports that a source with knowledge of the deal said the pair had paid “nowhere near” the total value of the original deal with iFit to get Sweat back.

While the sale price at the time was reported to be around US$300 million (around $403 million), financial documents filed by iFIT at the end of 2022 showed the sale was a maximum of US$150 million ($228 million).

Sweat, which offers virtual workouts and fitness programs from a team of trainers led by Itsines, pitched annual revenue of $100 million from 450,000 paid subscribers in the 2021 sale process that saw iFIT take it over.

However, revenue in the 11 months to 31st May, 2022, was just $71 million. In financial statements lodged with the corporate regulator, iFIT’s new Australian subsidiary reported “headwinds of reduced customer demand and increased competition from bricks-and-mortar gyms, along with many new entrants into the digital fitness market, as pandemic restrictions eased”.

AFR also reports Sweat booked a loss of $85 million for the period, including a complete write-off of the $81 million in goodwill that iFit had booked upon making the acquisition just 11 months earlier.

Documents lodged by iFIT for an aborted US public listing in 2021 indicate that Itsines and Pearce may only have received $US40 million in cash for Sweat, with the rest of the $US150 million consideration to have come in the form of stock, three-year performance bonuses and royalties on the sale of exercise equipment.

The sale comes as Itsines is preparing to release her new book, Reboot with Kayla, at the end of January 2024, through Penguin Random House.