ClassPass is on track to book $150 million this year and is no longer losing money on each sale

Classpass Payal Kadakia 2589Sarah JacobsClassPass founder and CEO Payal Kadakia.

the Google Ventures-backed gym membership startup, has seen its revenue accelerate despite a change to its pricing model that caused a customer backlash and stoked fears that the company could be in trouble.
ClassPass has now reached an annualized $150 million revenue run rate — up from a $100 million
run rate in the summer of 2015, according to people familiar with the matter. Sources also say that ClassPass’s gross profit margin is now close to 17%, up from a negative gross margin last year.

A ClassPass spokesperson said these numbers were off, but declined to offer further guidance.

The company is not profitable on a net basis.

The New York-based startup partners with thousands of fitness facilities so that its members can hop from studio to studio for workouts instead of being tied to a single gym.

The company has experienced some turmoil in the past several months, including operational changes and rumours that the founder CEO was on the way out. In April ClassPass raised its prices, and customers immediately took to the internet to voice their displeasure.

Concurrent with the price increase however, ClassPass added monthly bundles — five and 10-packs of classes — that customers could purchase at a lower price. It’s those packages that are driving the revenue growth for ClassPass, the sources said.

The unlimited monthly price plan meant that customers had to go “all in” on ClassPass. But customers are now responding to the cheaper options, because they allow users to change up their workout schedules: users can still join a gym or work out on their own and afford the $75 per month pack, for example, one of the sources said.

The four-year old company is backed by Google Ventures, General Catalyst, Acequia Capital, and other investors. As funding for startups becomes tougher to come by, ClassPass, which was valued at $400 million in 2015, will be under pressure to show that the business has staying power.

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