Sweat takes hit to US subscribers as lockdowns, restrictions ease

The reopening of gyms is proving a challenge for digital workout platform Sweat, particularly in its flagship US market.

Kayla Itsines remained the face of Sweat following the brand’s sale to iFIT.

The reopening of gyms and fitness studios is proving a challenge for digital workout platform Sweat, with subscription revenue in its largest market, the US, taking a hefty hit.

Financial statements lodged with ASIC reveal the company fell just short of $100 million in revenue in the 12 months to June, which ended with its $400 million takeover by US fitness giant iFIT on June 30.

Subscription revenue in the US slumped by 16.1 per cent to $45 million, but gains in Australia, Europe and other overseas markets meant total revenue was only 1 per cent lower at $98.6 million.

A pre-tax loss of $11.7 million included transaction costs of $11.6 million, as Adelaide co-founders Tobi Pearce and Kayla Itsines tied up the sale to iFIT. It compares to a pre-tax loss of $7.5 million in the previous year.

Pearce and Itsines took away $1.75 million in dividends during the year.

Kayla Itsines is the face of the Sweat platform.

Pearce, who remained Sweat’s chief executive following the sale, said Covid-19 had fuelled fierce competition in the US digital fitness market, and coupled with the reopening of gyms, it was having an impact on US subscriptions.

“The performance did drop in the US,” he said.

“I think as well as a result of Covid, the increased competition and the rate of increase in competition was very significant.

“In the American market it is quite competitive at the moment but I think for us it’s always going to have a primary place in our business strategy moving forward.”

iFIT’s acquisition in June came with the promise of significant investment in the Sweat brand, development of new and improved training content, and a commitment to building the brand’s presence in key international markets.

Other brands in the iFIT portfolio, including NordicTrack, ProForm and Freemotion, offer treadmills, exercise bikes and other equipment that integrate with the fitness app, and

Sweat co-founder Tobi Pearce.

Pearce said similar opportunities were being explored for Sweat.

“We’re spending a lot of our time at the moment doing a lot of strategic planning and thinking about how we want to make our most significant investments over the next couple of years,” he said.

“For us, historically, it’s been centred around content, but now with this big new partnership, they obviously have a great range of hardware that we’re continuing to learn more about, and that presents a really amazing opportunity for both businesses.

“The consideration for us, and for iFIT broadly speaking, has really been around how do we leverage our amazing capability with content, and how do we leverage our amazing trainer portfolio to effectively maximise the member experience.”

Pearce and Itsines, both personal trainers, shot to fame after forming the Bikini Body Guide fitness program in 2015.

It evolved into Sweat, the top ranking app which has become one of the world’s largest digital fitness training platforms for women, having been downloaded more than 30 million times.

The duo split early last year but have continued as business partners, with Pearce as chief executive and Itsines as head trainer.

Pearce said the pair remained committed to Sweat, and were working with iFIT to further grow the brand internationally.

“The same principle for Kayla and I applies, and in short that is that for the entirety of our careers we’ve had a passion for, and as a result of that passion, a focus on empowering women with fitness,” he said.

“And I think frankly the transaction result, albeit very exciting and successful, doesn’t necessarily change that passion - it just amplifies it.

“We’re very committed to what we do and very much looking forward to the long-term impact we can have.”

Pearce declined to comment on recent legal proceedings brought against Victoria’s Secret in the US, alleging the lingerie brand copied the Sweat trademark.