Xponential Fitness (XPOF) Q4 2024 Earnings Call March 13, 2025 04:30 PM ET Company Participants Avery Wannemacher - Vice PresidentMark King - CEO & DirectorJohn Meloun - Chief Financial OfficerChris O’Cull - Managing Director - Restaurants, Franchised BusinessesRandal Konik - Managing DirectorJoseph Altobello - Managing DirectorRichard Magnusen - Senior Research Associate Conference Call Participants John Heinbockel - SMD & Equity Research AnalystJonathan Komp - Senior Research AnalystOwen Rickert - Senior ...

Financial Performance - System-wide sales reached $464.7 million in Q4 2024, a 21% increase year-over-year[6] - Reported revenue for Q4 2024 was $83.2 million, a decrease of 7% from $89.3 million in Q4 2023[8] - For the full year 2024, total revenue increased by $2.4 million, or 1%, to $320.3 million[12] - Total revenue for the year ended December 31, 2024, was $320.346 million, a slight increase from $317.937 million in 2023[29] - Franchise revenue increased to $174.524 million in 2024 from $143.247 million in 2023, representing a growth of 21.8%[29] Net Loss and Earnings - Net loss for Q4 2024 totaled $62.5 million, or a loss of $1.36 per basic share, compared to a net loss of $12.3 million in the prior year[9] - Full year net loss was $98.7 million, or a loss of $2.27 per basic share, compared to a net loss of $6.4 million in 2023[13] - The net loss attributable to Xponential Fitness, Inc. for the year ended December 31, 2024, was $67.658 million, compared to a net loss of $4.001 million in 2023[29] - The net loss for Q4 2024 was $62.454 million, compared to a net loss of $12.290 million in Q4 2023, representing a significant increase in losses[33] - The adjusted net loss attributable to Xponential Fitness, Inc. for Q4 2024 was $4.804 million, compared to an adjusted net income of $0.460 million in Q4 2023[36] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $30.8 million, up 13% from $27.2 million in the prior year[11] - Adjusted EBITDA for the full year 2024 increased to $116.2 million, up 16% from $100.3 million in the prior year[15] - Adjusted EBITDA for the year ended December 31, 2024, was $116.217 million, up from $100.321 million in 2023, indicating a growth of approximately 15.5%[33] Impairment and Expenses - The company reported an impairment of goodwill and other assets amounting to $62.551 million for the year ended December 31, 2024[29] - The company incurred $45.957 million in impairment of goodwill and other assets during Q4 2024, compared to $4.841 million in Q4 2023, reflecting a substantial increase in impairment charges[36] - Acquisition and transaction expenses for the year ended December 31, 2024, totaled $8.886 million, a significant recovery from an income of $18.464 million in 2023[36] - The company reported a significant increase in litigation expenses, totaling $18.054 million in Q4 2024, compared to $0.984 million in Q4 2023[33] Studio Openings and Future Projections - The company plans to open 200 to 220 new studios in 2025, a decrease of 12% at the midpoint[22] - 2025 revenue is projected to be in the range of $315.0 million to $325.0 million, representing no change at the midpoint[22] Assets and Liabilities - Cash, cash equivalents, and restricted cash decreased to $32.739 million as of December 31, 2024, down from $37.094 million in 2023[30] - Total assets decreased to $403.397 million in 2024 from $529.534 million in 2023, reflecting a decline of 23.7%[27] - Total liabilities decreased slightly to $597.402 million in 2024 from $624.406 million in 2023[27] - The company’s total current liabilities increased to $107.887 million in 2024 from $102.234 million in 2023[27] Share Information - The weighted average shares of Class A common stock outstanding for the year ended December 31, 2024, was 31,999, compared to 31,742 in 2023[29] - The weighted average shares of Class A common stock outstanding for Q4 2024 were 32.879 million, an increase from 30.900 million in Q4 2023[36] Operating Income - Operating income (loss) for the year ended December 31, 2024, was a loss of $53.614 million, compared to an operating income of $34.906 million in 2023[29] Unit Volume and Membership - Quarterly average unit volume (AUV) was $668,000 in Q4 2024, growing 9% year-over-year, with total members increasing by 15% to 813,000[6] Earnings Per Share - The adjusted earnings per share (basic) for Q4 2024 was $(0.19), compared to $(0.02) in Q4 2023, indicating a decline in earnings performance[36] Restructuring Charges - The company’s restructuring and related charges (excluding impairments) amounted to $6.884 million in Q4 2024, compared to $9.089 million in Q4 2023, showing a decrease in restructuring costs[36]

Xponential Fitness, Inc. (XPOF) is scheduled to report fourth-quarter 2024 results on March 13.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the last reported quarter, XPOF registered a negative earnings surprise of 122.2%.Trend in Estimate Revision of XPOFThe Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) is pegged at 39 cents, indicating an improvement of 387.5% from 8 cents reported in the year-ago quarter.For revenues, the consensus mark is pegged at $ ...

Xponential Fitness, Inc. (NYSE: XPOF ) had a turbulent 2023 with an SEC information request , short seller accusations , divestitures, and refranchising or closing existing company-owned transition studios that have presented a headwind for sales. Yet, in the last fiveI'm in the last year of my law PhD on the topic of corporate wrongdoing. My main focus in equity research is following up on companies that have been targeted by activist short sellers. I have found these interesting because:i) they are typica ...

Financial Data and Key Metrics Changes - North America run rate average unit volumes (AUV) increased 8% to $631,000 in Q3 2024 from $585,000 in the prior year period, driven by sales growth at scaled brands [26] - System-wide sales in North America reached $431.2 million, up 21% year-over-year, with a 5% same-store sales increase [29] - Consolidated revenue for the quarter was $80.5 million, slightly up from $80.4 million in the prior year [29] - Adjusted EBITDA was $31 million, up 17% compared to $26.5 million in the prior year, with an adjusted EBITDA margin expanding to 38% [46] Business Line Data and Key Metrics Changes - Franchise revenue increased 22% year-over-year to $44.5 million, driven by a larger base of operating studios and higher royalties [31] - Equipment revenue rose 17% year-over-year to $14.7 million due to a higher volume of equipment installations [32] - Merchandise revenue decreased 23% year-over-year to $6.5 million as the company focused on reducing inventory levels [33] - Franchise marketing fund revenue increased 23% year-over-year to $8.6 million, reflecting growth in system-wide sales [34] Market Data and Key Metrics Changes - The company ended Q3 with 3,178 global open studios, having opened 125 new studios during the quarter [27] - 84 licenses were sold globally in Q3, with over 1,700 licenses sold and contractually obligated to open in North America [28] Company Strategy and Development Direction - The company aims to become the franchiseur of choice in health and wellness, focusing on improving the franchisee experience and operational efficiency [13][14] - Plans include enhancing member experience through technology improvements and data-driven decision-making [15][16] - The company is prioritizing international expansion, particularly in markets like Japan and Mexico, where there is significant growth potential [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges related to infrastructure and processes due to rapid growth, emphasizing the need for sustainable, profitable growth [10] - The company expects to see a decrease in studio closures as management effectiveness improves and the strategy shift from 2023 takes effect [79] - Guidance for 2024 includes a projected 22% increase in North America system-wide sales, with total revenue expected to be between $310 million to $320 million [50] Other Important Information - The company recorded a net loss of $18 million in Q3, compared to a net loss of $5.2 million in the prior year [43] - Total long-term debt increased to $353.8 million as of September 30, 2024, primarily due to additional debt drawn for lease termination payments [48] Q&A Session Summary Question: Factors for potential divestitures of certain concepts - Management indicated that all brands are strategically liked, and evaluations will focus on franchisee profitability and momentum before considering divestitures [56] Question: Focus on Japan for international expansion - Japan was highlighted due to positive momentum and strong franchise partnerships, with other markets like Singapore and New Zealand also performing well [58][60] Question: Consistency of execution across brands - Management is working on standardizing execution across brands and creating operational playbooks to improve consistency [62][64] Question: Infrastructure and processes for growth - Management believes that improving infrastructure does not require significant spending but rather a focus on discipline and efficiency [69] Question: Expectations for studio closures - Management expects Q4 closures to be in line or lower than Q3, with a goal of reducing closure rates to 1% to 2% in 2025 [79][80] Question: Revenue guidance for Q4 - Management reiterated that Q4 is expected to show sequential revenue growth, supported by new studio openings and franchisee conference revenues [83]

Xponential Fitness (XPOF) reported $80.49 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 0.1%. EPS of -$0.04 for the same period compares to $0.53 a year ago.The reported revenue represents a surprise of +4.74% over the Zacks Consensus Estimate of $76.85 million. With the consensus EPS estimate being $0.18, the EPS surprise was -122.22%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations ...

Xponential Fitness (XPOF) came out with a quarterly loss of $0.04 per share versus the Zacks Consensus Estimate of $0.18. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -122.22%. A quarter ago, it was expected that this franchisor of boutique fitness brands would post earnings of $0.19 per share when it actually produced a loss of $0.03, delivering a surprise of -115.79%.Over the last four q ...

Financial Performance - System-wide sales reached $431.2 million in Q3 2024, an increase of 21% year-over-year[1] - The company reported a net loss of $18.0 million, or a loss of $0.29 per basic share, compared to a net loss of $5.2 million in the prior year[3] - Adjusted net loss for Q3 2024 was $0.2 million, or a loss of $0.04 per basic share, compared to adjusted net income of $6.0 million in the prior year[6] - Adjusted EBITDA for Q3 2024 was $31.0 million, up 17% from $26.5 million in the prior year[7] - Total revenue for the three months ended September 30, 2024, was $80,491,000, slightly up from $80,435,000 in the same period last year, representing a 0.07% increase[19] - Franchise revenue increased to $44,458,000 for the three months ended September 30, 2024, compared to $36,425,000 in the prior year, marking a 22.8% growth[19] - Net income for the three months ended September 30, 2024, was $(17,970) million, compared to $(5,183) million for the same period in 2023, indicating a significant decline[23] - Adjusted net income for the nine months ended September 30, 2024, was $9,670 million, down from $11,546 million in the same period of 2023, reflecting a decrease of approximately 16.2%[23] Guidance and Future Plans - The company is reiterating 2024 guidance for North America system-wide sales in the range of $1.705 billion to $1.715 billion, reflecting a 22% increase at the midpoint compared to 2023[9] - Revenue guidance for 2024 is set between $310.0 million and $320.0 million, indicating a decrease of 1% at the midpoint compared to 2023[9] - The company plans to open between 490 to 510 new studios in 2024, a decrease of 10% at the midpoint compared to 2023[9] Cash and Debt Management - As of September 30, 2024, the company had approximately $37.8 million in cash and $353.8 million in total long-term debt[8] - Total current assets decreased to $95,576,000 as of September 30, 2024, down from $97,248,000 at the end of 2023, reflecting a 1.73% decline[18] - Total liabilities decreased to $595,513,000 as of September 30, 2024, compared to $616,832,000 at the end of 2023, indicating a 3.45% reduction[18] - Cash and cash equivalents increased to $37,774,000 as of September 30, 2024, from $37,094,000 at the end of 2023, showing a 1.83% increase[18] - Long-term debt, net of current portion, increased to $342,038,000 as of September 30, 2024, from $319,261,000 at the end of 2023, reflecting a 7.13% increase[18] - The company’s accumulated deficit increased to $(654,095,000) as of September 30, 2024, compared to $(630,127,000) at the end of 2023, indicating a worsening of 3.8%[18] Operating Costs and Expenses - Operating costs and expenses for the three months ended September 30, 2024, totaled $86,917,000, up from $72,957,000 in the prior year, representing a 19.1% increase[19] - The company reported an impairment of goodwill and other assets of $4,502,000 for the three months ended September 30, 2024, compared to $4,671,000 in the same period last year[19] - The company incurred litigation expenses of $10,435 thousand for the three months ended September 30, 2024, compared to $1,511 thousand in the same period of 2023, representing a significant increase[22] Shareholder Information - The weighted average shares of Class A common stock outstanding for the three months ended September 30, 2024, was 32,177 thousand, compared to 32,260 thousand in the same period of 2023[21] - The weighted average shares of Class A common stock outstanding (diluted) for the three months ended September 30, 2024, was 32,177, compared to 56,811 in the prior year, indicating a significant reduction in share count[23] Sales and Performance Metrics - Quarterly average unit volume (AUV) was $631,000, growing 8% year-over-year, with total members increasing by 16% to 827,000[1] - System-wide sales growth is driven by new studio openings and increases in same store sales, with management reviewing these metrics weekly to assess performance[24] - Same store sales are measured for studios that have generated at least 13 months of consecutive positive sales, highlighting the performance of existing studios[26] - The company receives approximately 7% and 2% of franchisee sales as royalty and marketing fund revenue, respectively, which are critical for evaluating overall performance[24] Other Financial Activities - Total cash used in investing activities for the nine months ended September 30, 2024, was $13,934 thousand, compared to $8,595 thousand in the same period of 2023, indicating an increase of 62.5%[20] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $10,915 thousand, down from $38,194 thousand in the prior year, representing a decrease of approximately 71.4%[20] - Depreciation and amortization expenses for the nine months ended September 30, 2024, totaled $13,179 thousand, up from $12,701 thousand in the prior year, an increase of approximately 3.8%[20] - The company reported a bad debt expense of $2,270 thousand for the nine months ended September 30, 2024, compared to $850 thousand in the same period of 2023, indicating a rise of 167.1%[20] - Acquisition and transaction expenses for the three months ended September 30, 2024, were $3,664 million, compared to $(1,923) million in the prior year, showing a substantial increase in costs[23]

Group 1 - Moore Law, PLLC is investigating potential claims against Xponential Fitness, Inc. due to allegations of misleading investors and financial mismanagement [1] - A report by short-seller Fuzzy Panda indicated that over 50% of Xponential's studios do not achieve positive financial returns and that more than 100 franchises were listed for sale at prices at least 75% lower than their initial costs [1] - Following the publication of the Fuzzy Panda report, Xponential's stock price dropped over 37%, from $25.11 to $15.72, a decline of $9.39 per share [2] Group 2 - An article by Businessweek reported that Xponential misled franchisees, leading to significant financial difficulties, which resulted in a further stock price decline of over 26% over two trading days [2] - The investigation by Moore Law is aimed at holding Xponential's officers and directors accountable for potential breaches of fiduciary duty and corporate misconduct [3]

For the quarter ended June 2024, Xponential Fitness (XPOF) reported revenue of $76.52 million, down 1.1% over the same period last year. EPS came in at -$0.03, compared to $0.07 in the year-ago quarter. The reported revenue represents a surprise of -8.84% over the Zacks Consensus Estimate of $83.93 million. With the consensus EPS estimate being $0.19, the EPS surprise was -115.79%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wal ...