Interactive Strength Inc. (TRNR) shares jumped nearly 20% in Thursday's premarket trading after announcing it's buying Ergatta, a Brooklyn-based connected fitness company that's made a name for itself turning workouts into video games. The deal represents a major growth play for Interactive Strength, which has been looking to scale up its revenue after a tough year.
Ergatta isn't your typical rowing machine company. They've built their entire business model around gamified fitness content, creating a subscription service that people actually stick with. The proof is in the numbers: monthly net retention sits above 98%, which means almost nobody cancels, and many upgrade. That's the kind of sticky subscription business that cash-hungry companies dream about.
What Interactive Strength Is Actually Paying
The deal structure is clever, designed to protect Interactive Strength from overpaying if things don't work out. The maximum enterprise value clocks in at $19.5 million, but most of that is contingent on Ergatta hitting performance targets. If Ergatta achieves approximately $4.0 million in 2026 EBITDA, the multiple works out to less than 5.0x before any synergies. That's reasonable for a profitable, subscription-based business.
Here's how the money breaks down: The base transaction sits at $8.8 million, structured as $1.8 million cash at closing, $1.8 million in debt, and $5.3 million in equity that's locked up until May 2027. The sellers can't just flip the stock and walk away.
The earn-out structure gets more interesting. An additional $9.8 million becomes available if Ergatta hits that $4.0 million EBITDA target in 2026, payable as $3.5 million cash and $6.3 million in equity in May 2027. There's even another $1.0 million in equity on the table if 2027 EBITDA reaches approximately $4.8 million.
In total, 50% of the maximum enterprise value hinges on 2026 EBITDA performance, with another 5% tied to 2027 results. Interactive Strength is essentially saying: prove it works, and we'll pay you handsomely.
The Cash Flow Angle
Perhaps the most compelling detail: Interactive Strength expects to receive more cash flow from Ergatta during 2026 than the initial cash consideration it's paying at closing. That means this acquisition could essentially fund itself in year one, which is unusual and attractive.
The deal is expected to close by the first quarter of 2026, and management projects it will push 2026 pro forma revenue past $30 million. Ergatta itself should contribute over $10 million to that total.
