Tonal, a fitness tech startup and direct rival to Peloton headquartered in San Francisco, announced Wednesday that it would be laying off a third of its staff.

A company spokesperson confirmed to SFGATE that its “strategic restructuring” would result in a 35% reduction of company staff across all corporate departments, news that was revealed by CEO Aly Orady during a company all-staff meeting Wednesday morning. 

“While sales have continued to grow at an unprecedented rate, so have the costs of our business, particularly in light of the macroeconomic climate and global supply chain challenges,” a company spokesperson said in a statement shared with SFGATE. “This wasn’t an easy decision, but it was the responsible one, as it will allow us to honor our commitment to best serve our members as a healthy business for years to come while growing at a more sustainable rate.”

The company’s main product is a wall-mounted, 24-inch touch screen with digital weights and a suite of workouts. With celebrity endorsements and financial backing from Klay Thompson, Steph Curry and Serena Williams — the company has snagged some serious athletic bona fides. The company was valued at $1.6 billion last year, making it a rare “unicorn” in the fitness tech space.

But with economic headwinds in the tech industry at large — and additional challenges for companies whose business models thrived during the COVID-19 pandemic — Tonal is headed for a period of austerity, hoping to become “a self-sustaining business with an emphasis on profitability,” according to the company statement. 

Employees will receive at least eight weeks of severance pay, company health care benefits through September and payments for COBRA through the end of the year, the spokesperson said. The company is also “offering extended equity vesting” for all employees, granting them the opportunity to become shareholders.