Financial Data and Key Metrics Changes - The company reported a consolidated revenue of $78.8 million for the third quarter, down 2% from $80.5 million in the prior year period [19][21] - Adjusted net income for the third quarter was $19.3 million, or adjusted net income of $0.36 per basic share, compared to a net loss of $18.1 million in the prior year [25] - Adjusted EBITDA was $33.5 million in the third quarter, up 9% from $30.8 million in the prior year period, with an adjusted EBITDA margin of 42% [26] Business Line Data and Key Metrics Changes - North America system-wide sales were $432.2 million, up 10% year-over-year, primarily driven by growth from net new studio openings [17] - Same-store sales were down 0.8% for the quarter but up 5.4% on a two-year stacked basis [17] - North America run-rate average unit volumes climbed to $668,000 in the third quarter, up 2% from $654,000 in the prior year period [19] Market Data and Key Metrics Changes - The global boutique fitness market is expected to reach $60 billion by 2030, driven by increasing demand for specialized fitness experiences [6] - The company ended the quarter with 3,066 global open studios, having opened 78 new studios and closed 32 studios [16] Company Strategy and Development Direction - The company is focusing on enhancing marketing, operations support, unit growth, innovation, and cost efficiencies to drive growth and financial returns [10][11] - Following recent divestitures, the company has streamlined its brand portfolio, which is expected to improve franchisee support and operational efficiency [10][12] - The company plans to implement a national brand campaign for Club Pilates to enhance brand awareness and drive organic growth [12][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in lead flow and member conversion, particularly in the context of enhanced privacy safeguards [18] - The company is taking a conservative approach to North American system-wide sales projections due to current business conditions [29] - The outlook for 2025 includes projected North America system-wide sales ranging from $1.73 billion to $1.75 billion, representing a 12% increase at the midpoint [29] Other Important Information - The company expects to see marketing fund spend exceed marketing fund revenue by approximately $5 million in the fourth quarter due to the nationwide branding campaign [31] - The company recorded a net loss of $6.7 million in the third quarter, compared to a net loss of $18.1 million in the prior year [25] Q&A Session Summary Question: Update on Club Pilates comps - In Q3, Club Pilates comps came into the low single digit or about 1%, reflecting the maturity of the studio base [34] Question: Balancing higher prices with member retention - The company is conducting a pricing analysis to ensure a thoughtful approach to pricing and packages while maximizing studio usage [38] Question: Private equity involvement in franchisee base - The company is exploring opportunities to bring in larger-scale operators and private equity into the franchisee base, particularly for Club Pilates [41] Question: National ad campaign purpose - The national ad campaign aims to test new marketing channels and understand their effectiveness, which could benefit other brands in the future [48]

Core Insights - Xponential Fitness reported Q3 CY2025 results that exceeded Wall Street's revenue expectations, with a revenue of $78.82 million, reflecting a 2.1% year-on-year decline but a 3.9% beat against analyst estimates [1][7] - The company anticipates full-year revenue to be around $305 million, aligning with analysts' expectations, and reported a non-GAAP profit of $0.34 per share, significantly above the consensus estimate of $0.12 [1][7] Company Overview - Xponential Fitness is the owner of several boutique fitness brands, including CycleBar, Rumble, and Club Pilates, offering diverse and specialized exercise experiences [4] Revenue Growth - The company has demonstrated strong long-term sales performance with an annualized revenue growth of 24.1% over the last five years, outperforming the average consumer discretionary company [5] - However, recent performance indicates a slowdown in demand, with an annualized revenue growth of only 2.5% over the last two years, which is below the five-year trend [6] Financial Highlights - Q3 revenue was $78.82 million, surpassing analyst estimates of $75.83 million, despite a year-on-year decline of 2.1% [7] - Adjusted EPS was $0.34, significantly beating the analyst estimate of $0.12 [7] - Adjusted EBITDA reached $33.48 million, with a margin of 42.5%, exceeding analyst expectations of $25.81 million [7] - The company reaffirmed its full-year revenue guidance of $305 million and EBITDA guidance of $108.5 million, both in line with analyst expectations [7] Segment Performance - Revenue breakdown for key segments shows Franchise revenue contributing 65.8%, Equipment 9.5%, and Merchandise 6.1% [8] - Franchise revenue has averaged 17% year-on-year growth over the last two years, while Equipment and Merchandise revenues have seen declines of 8% and 13.9%, respectively [8]

Key Operating Metrics - Global studios increased by 8% year-over-year, reaching 3,066[13] - Global licenses increased by 3% year-over-year, totaling 5,318[13] - System-wide sales in North America increased by 10% year-over-year, reaching $432 million[14] - Run-Rate AUV in North America increased by 2% year-over-year, reaching $668,000[14] - Same-store sales increased by 7% year-over-year for studios open greater than 36 months[21] - Total members decreased by 1% to 796,000[21] Financial Performance - Revenue decreased by 2% year-over-year to $79 million[25] - Adjusted EBITDA increased by 9% year-over-year to $33 million, with a margin of 42% compared to 38% in the previous year[25, 33] - Adjusted net earnings per share - diluted is $034, compared to ($005) in Q3 2024[30] Future Outlook (FY 2025 Guidance) - The company anticipates between 170 and 190 net new studio openings globally, a -37% change vs 2024[35] - System-wide sales in North America are projected to be between $173 billion and $175 billion, a 12% increase compared to 2024[35] - Revenue is expected to be between $300 million and $310 million, a -5% change vs 2024[35] - Adjusted EBITDA is projected to be between $106 million and $111 million, a -7% change vs 2024[35]

Financial Performance - Total revenue for Q3 2025 decreased by $1.7 million, or 2%, to $78.8 million compared to $80.5 million in Q3 2024[5] - The company reported a net loss of $6.7 million, or a loss of $0.18 per basic share, an improvement from a net loss of $18.1 million, or a loss of $0.29 per basic share in the prior year[7] - Adjusted net income was $19.3 million, or adjusted net earnings of $0.36 per basic share, compared to an adjusted net loss of $0.3 million in the prior year[8] - Adjusted EBITDA for Q3 2025 was $33.5 million, a 9% increase from $30.8 million in Q3 2024[9] - Total revenue for the three months ended September 30, 2025, was $78.824 million, a decrease of 2% compared to $80.530 million in the same period of 2024[24] - Franchise revenue increased to $51.882 million for the three months ended September 30, 2025, up 16% from $44.458 million in 2024[24] - Net loss attributable to Xponential Fitness, Inc. for the three months ended September 30, 2025, was $4.859 million, compared to a net loss of $12.120 million in the same period of 2024[24] - Operating income for the nine months ended September 30, 2025, was $28.068 million, a significant improvement from an operating loss of $1.700 million in 2024[24] - Adjusted EBITDA for the three months ended September 30, 2025, was $33,479 thousand, up from $30,802 thousand in the same period of 2024, indicating an increase of 5.5%[30] - Adjusted net income attributable to Xponential Fitness, Inc. for the three months ended September 30, 2025, was $13,924 thousand, compared to a loss of $219 thousand in the same period of 2024[30] Cash and Debt Position - The company had approximately $41.5 million in cash and cash equivalents and $376.4 million in total long-term debt as of September 30, 2025[10] - Cash, cash equivalents, and restricted cash increased to $41.463 million as of September 30, 2025, from $32.739 million at the end of 2024[26] - Total current assets rose to $99.217 million as of September 30, 2025, compared to $84.147 million at the end of 2024, reflecting a 17.9% increase[22] - Total liabilities decreased to $559.000 million as of September 30, 2025, down from $597.402 million at the end of 2024[22] - The company reported a net cash provided by operating activities of $17.640 million for the nine months ended September 30, 2025, compared to $10.901 million in 2024[26] Studio Openings and Sales Growth - System-wide sales reached $432.2 million in Q3 2025, reflecting a 10% year-over-year increase[6] - Quarterly average unit volume (AUV) was $668,000, up 2% year-over-year, with total members increasing by 7% to 796,000[6] - For full year 2025, the company expects net new studio openings in the range of 170 to 190, a decrease of 37% at the midpoint[11] - North America system-wide sales are projected to be between $1.730 billion and $1.750 billion, representing a 12% increase at the midpoint[11] - System-wide sales growth is driven by new studio openings and increases in same store sales, with approximately 7% and 2% of franchisee sales contributing to royalty and marketing fund revenue, respectively[31] Impairments and Charges - The impairment of goodwill and other noncurrent assets was $32.411 million for the nine months ended September 30, 2025, compared to $16.594 million in 2024[26] - The company reported an impairment of goodwill and other noncurrent assets amounting to $17,568 thousand for the three months ended September 30, 2025, compared to $4,505 thousand in 2024[30] - Restructuring and related charges (excluding impairments) amounted to $2,175 thousand for the three months ended September 30, 2025, down from $9,193 thousand in the same period of 2024[30] Shareholder Information - The weighted average shares of Class A common stock outstanding increased to 35,110 thousand for the three months ended September 30, 2025, from 32,177 thousand in 2024[24] - The weighted average shares of Class A common stock outstanding for the three months ended September 30, 2025, increased to 35,110 thousand from 32,177 thousand in 2024, reflecting a growth of 11.4%[30] - Adjusted net earnings per share - diluted for the three months ended September 30, 2025, was $0.34, compared to a loss of $0.05 in the same period of 2024[30] Revenue Guidance - Revenue guidance for 2025 is set between $300.0 million and $310.0 million, indicating a 5% decrease at the midpoint[11]

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Core Viewpoint - Xponential Fitness, Inc. has completed the divestiture of Lindora to Next Health Management Group, allowing the company to concentrate on its core fitness modalities that significantly impact profitability [1] Company Focus - The divestiture of Lindora is aimed at enabling Xponential Fitness to allocate more time and capital towards its primary fitness brands [1] - CEO Mike Nuzzo emphasized that this strategic move will enhance the company's focus on areas with the greatest profitability potential [1]

FORM 10-Q Filing Information [Filing Details](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details the Form 10-Q filing for Xponential Fitness, Inc. for the period ended June 30, 2025, covering registrant status and stock information - Filing Type: Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934[2](index=2&type=chunk) - Period Ended: June 30, 2025[2](index=2&type=chunk) - Registrant Status: Accelerated filer and Emerging growth company[3](index=3&type=chunk) - Outstanding Shares as of July 31, 2025: Class A common stock: **35,097 thousand shares**; Class B common stock: **13,738 thousand shares**[3](index=3&type=chunk) Securities Registered | Securities Registered | | :-------------------- | | Class A common stock, par value $0.0001 per share | | Trading Symbol: XPOF | | Exchange: New York Stock Exchange | PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes to stockholders' equity, and cash flows, with corrections for prior misstatements [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a slight decrease in total assets and liabilities from December 31, 2024, to June 30, 2025, with an increased stockholders' deficit - Cash, cash equivalents and restricted cash increased from **$32,739 thousand** at December 31, 2024, to **$38,679 thousand** at June 30, 2025[8](index=8&type=chunk) - Goodwill decreased from **$135,240 thousand** to **$127,789 thousand**, and intangible assets, net, decreased from **$100,944 thousand** to **$94,350 thousand**[8](index=8&type=chunk) Metric (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets | $399,815 | $403,397 | | Total liabilities | $596,171 | $597,402 | | Total stockholders' deficit | $(313,166) | $(310,815) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported net income of $1,346 thousand, a significant improvement from a net loss in the prior year, driven by increased operating income and reduced costs - Franchise revenue increased by **5.4%** for the three months and **5.3%** for the six months ended June 30, 2025, compared to the prior year periods[10](index=10&type=chunk) - Selling, general and administrative expenses decreased by **34.9%** for the three months and **5.4%** for the six months ended June 30, 2025, primarily due to reduced legal expenses and equity-based compensation[10](index=10&type=chunk) Metric (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Total revenue, net | $76,208 | $76,903 | | Total operating costs and expenses | $61,385 | $79,992 | | Operating income (loss) | $14,823 | $(3,089) | | Net income (loss) | $1,346 | $(14,343) | | Net loss per share of Class A common stock (Basic) | $(0.01) | $(0.30) | Metric (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Total revenue, net | $153,091 | $156,596 | | Total operating costs and expenses | $128,589 | $151,691 | | Operating income (loss) | $24,502 | $4,905 | | Net income (loss) | $(1,313) | $(18,093) | | Net loss per share of Class A common stock (Basic) | $(0.11) | $(0.59) | [Condensed Consolidated Statements of Changes to Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20to%20Stockholders'%20Equity%20(Deficit)) The statements detail changes in stockholders' equity (deficit) for the six months ended June 30, 2025 and 2024, showing an overall increase in total stockholders' deficit - Total stockholders' deficit increased from **$(310,815) thousand** at December 31, 2024, to **$(313,166) thousand** at June 30, 2025[13](index=13&type=chunk) - Equity-based compensation contributed **$3,281 thousand** and **$2,666 thousand** for the periods ended March 31, 2025, and June 30, 2025, respectively[13](index=13&type=chunk) - Net income of **$969 thousand** was recorded for the period ended June 30, 2025, contrasting with a net loss of **$(1,923) thousand** for the period ended March 31, 2025[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased, cash used in investing activities significantly decreased, and cash provided by financing activities improved - The increase in operating cash flow was primarily due to higher net income after adjustments and favorable changes in working capital[19](index=19&type=chunk) - Investing cash flow improved by **$8.9 million**, mainly due to the absence of a business acquisition (Lindora in prior year) and reduced purchases of property and equipment[19](index=19&type=chunk) Metric (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $8,341 | $5,682 | | Net cash used in investing activities | $(2,860) | $(11,761) | | Net cash provided by (used in) financing activities | $459 | $(4,998) | | Increase (decrease) in cash, cash equivalents and restricted cash | $5,940 | $(11,077) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's business, accounting policies, corrections to prior financial statements, acquisitions, debt, leases, related party transactions, equity, income taxes, earnings per share, contingencies, litigation, restructuring, and segment information [Note 1 – Nature of Business and Operations](index=10&type=section&id=Note%201%20%E2%80%93%20Nature%20of%20Business%20and%20Operations) Xponential Fitness, Inc. operates as a holding company, franchising boutique health and wellness brands, with a portfolio of eight brands as of June 30, 2025, following recent divestitures and an acquisition - Portfolio of eight brands as of June 30, 2025: Club Pilates, CycleBar, StretchLab, YogaSix, Pure Barre, Rumble, BFT, and Lindora[26](index=26&type=chunk) - Lindora, a provider of medically guided wellness and metabolic health solutions, was acquired on **January 2, 2024**[26](index=26&type=chunk)[31](index=31&type=chunk) - Divested Stride brand on **February 13, 2024**, and Row House brand on **May 20, 2024**, and announced the wind down of AKT franchise operations during Q3 2024[27](index=27&type=chunk) [Note 2 – Correction of Previously Issued Financial Statements](index=11&type=section&id=Note%202%20%E2%80%93%20Correction%20of%20Previously%20Issued%20Financial%20Statements) The company identified and corrected misstatements in its previously issued condensed consolidated financial statements for the three and six months ended June 30, 2024, impacting various revenue and expense items - Misstatements identified impacting previously issued financial statements for the three and six months ended June 30, 2024[35](index=35&type=chunk) - Corrections included adjustments for rebates, revenue recognition issues, improper expense recognition for inventory-related costs, asset impairment assessment, legal accruals, and unrecorded equipment inventory[36](index=36&type=chunk)[40](index=40&type=chunk) Impact on Net Loss Attributable to Xponential Fitness, Inc. (in thousands) | Period | As Previously Reported | Adjustments | As Corrected | | :----- | :--------------------- | :---------- | :----------- | | 3 Months Ended June 30, 2024 | $(9,102) | $(461) | $(9,563) | | 6 Months Ended June 30,

Core Insights - Xponential Fitness reported revenue of $76.21 million for the quarter ended June 2025, reflecting a year-over-year decline of 0.4% and an EPS of $0.26 compared to -$0.03 a year ago, indicating a significant improvement in profitability [1] - The revenue fell short of the Zacks Consensus Estimate of $77.16 million by 1.23%, while the EPS exceeded the consensus estimate of $0.19 by 36.84% [1] Financial Performance Metrics - Same store sales were reported at 1%, significantly lower than the estimated 3.9% by analysts [4] - Franchise revenue was $45.35 million, slightly below the average estimate of $45.58 million, but showed a year-over-year increase of 5.4% [4] - Franchise marketing fund revenue reached $9.46 million, surpassing the $9.32 million estimate, with a year-over-year growth of 12.9% [4] - Merchandise revenue was $5.61 million, slightly above the estimate of $5.56 million, but represented a year-over-year decline of 4.6% [4] - Other service revenue was $6.27 million, close to the estimated $6.29 million, showing a minor year-over-year decrease of 0.6% [4] - Equipment revenue was reported at $9.51 million, below the $9.77 million estimate, marking a significant year-over-year decline of 26.4% [4] Stock Performance - Xponential Fitness shares have returned +3.6% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Xponential Fitness reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and showing a significant improvement from a loss of $0.03 per share a year ago, indicating a positive earnings surprise of +36.84% [1] Financial Performance - The company posted revenues of $76.21 million for the quarter ended June 2025, which was a slight miss compared to the Zacks Consensus Estimate by 1.23%, and a decrease from year-ago revenues of $76.52 million [2] - Over the last four quarters, Xponential Fitness has surpassed consensus EPS estimates only once, while it has topped consensus revenue estimates three times [2] Stock Performance - Xponential Fitness shares have declined approximately 23.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $80.08 million, and for the current fiscal year, it is $0.50 on revenues of $318.8 million [7] - The trend of estimate revisions for Xponential Fitness was unfavorable prior to the earnings release, which may impact future stock movements [6] Industry Context - The Leisure and Recreation Services industry, to which Xponential Fitness belongs, is currently ranked in the bottom 26% of over 250 Zacks industries, suggesting potential challenges for the stock's performance [8]

Financial Data and Key Metrics Changes - North American system-wide sales reached $474 million, up 12% year over year [11][28] - North American quarterly run rate average unit volumes increased by 3% to 659,000 [11][28] - Total members at quarter end stood at 863,000, reflecting an 8% year-over-year increase [11] - Same store sales increased by 1% [11][28] - Consolidated revenue for the quarter was $76.2 million, down 1% from the prior year [28] - Adjusted net income for the second quarter was $14.5 million, or $0.26 per basic share [37] - Adjusted EBITDA was $28.1 million, up 14% compared to the prior year period [37] Business Line Data and Key Metrics Changes - Franchise revenue for the quarter was $45.4 million, up 5% year over year, driven by an 8% increase in actively paying memberships [29] - Equipment revenue declined by 26% year over year to $9.5 million, primarily due to a 39% decrease in global installations [29] - Merchandise revenue was down 8% year over year to $5.6 million [30] - Franchise marketing fund revenue increased by 13% year over year to $9.5 million [31] Market Data and Key Metrics Changes - Club Pilates reached record high utilization, with plans to enhance monetization strategies [17] - Pure Barre is planning major marketing campaigns for its 25th anniversary, anticipating further growth [18] - Yoga Six continues to perform well with new teacher training programs and innovative class offerings [19] - StretchLab is exploring solutions to support franchisees and improve average unit volumes [20] Company Strategy and Development Direction - The company is focusing on strengthening its core brands, including Club Pilates, Pure Barre, Yoga Six, and StretchLab, while divesting from underperforming brands like Cycle Bar and Rumble [12][10] - A new retail partnership with Fit Commerce aims to enhance service and reduce costs, with expected benefits starting in 2026 [14][30] - The company is committed to increasing marketing spend, particularly for Club Pilates and StretchLab, to drive growth [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the company and the fitness industry, highlighting the momentum in boutique fitness [8][9] - The company anticipates a more conservative revenue outlook due to recent brand divestitures and macroeconomic headwinds [39] - Management expects to see improvements in overall portfolio health and a reduction in closure rates with a more focused brand strategy [12] Other Important Information - The company ended the quarter with 3,327 global open studios, with 86 new openings during Q2 [25] - There were 57 global studio closures in the second quarter, with nearly half attributed to Cycle Bar and Rumble [25] - The company has over 1,400 studios in North America and over 1,000 international master franchise obligations [27] Q&A Session Summary Question: What drove the change in same store sales trend? - Management noted that same store sales decreased from 4% in Q1 to 1% in Q2, primarily due to performance in Club Pilates and StretchLab [47][48] Question: What is the status of the 40% backlog behind schedule? - The backlog includes brands like Rumble and Cycle Bar, with some contributions from Club Pilates, StretchLab, and Yoga Six [49][50] Question: What are the plans for pricing at Club Pilates? - Management confirmed intentions to implement pricing and monetization strategies to drive same store sales growth [51] Question: When should we expect the closure rate to stabilize? - Management anticipates the closure rate to trend down to around 5% by the end of 2025, with improvements expected in 2026 [52][53] Question: Can you elaborate on the four items impacting profitability in 2025? - Management discussed the impact of brand divestitures, system-wide sales adjustments, increased marketing spend, and the new CEO's strategic alignment [56][60] Question: What is the outlook for the FDD renewal process? - Management expects to resume license sales in the second half of the year following necessary amendments due to the CEO transition [64][66] Question: What is the strategy for non-core brands like Lindora and BFT? - Management confirmed ongoing evaluation of Lindora while expressing confidence in BFT's international growth [68][69] Question: What is the expected impact of the FitCommerce partnership? - The partnership is expected to provide significant cost savings and cash flow benefits starting in 2026 [95][96]