Financial Data and Key Metrics Changes - For Q3 2023, net revenue totaled $80.4 million, an increase of 26% year-over-year [16] - Adjusted EBITDA was $26.5 million, representing a 33% increase from $20 million in the prior year, with an adjusted EBITDA margin of 33% compared to 31% in the previous year [58] - The company recorded a net loss of $5.2 million, improved from a net loss of $13.1 million in the prior year [56] Business Line Data and Key Metrics Changes - North American system-wide sales reached $357 million, up 35% year-over-year, driven by a 15% same-store sales growth [12][44] - Franchise revenue was $36.4 million, up 21% year-over-year, primarily due to increased royalty revenue [46] - Equipment revenue increased by 7% to $12.6 million, while merchandise revenue rose by 35% to $8.5 million [47][48] Market Data and Key Metrics Changes - Total members in North America grew 26% year-over-year to 726,000, with 92% being actively paying members [10] - North American studio visits increased by 30% year-over-year, totaling 13.1 million visits [12] - The boutique fitness industry is projected to grow by 17% by 2025, with Xponential positioned to capture a significant share of this growth [10] Company Strategy and Development Direction - The company is prioritizing international growth, with franchise agreements in 23 countries and new master franchise agreements in Qatar [9][23] - A new position of President of International has been created to enhance international expansion efforts [21] - The company aims to refranchise its portfolio of company-owned transition studios to improve operating leverage and EBITDA margins [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of consumer demand and the resilience of the membership base despite economic challenges [7][30] - The company raised its full-year 2023 guidance for revenue and adjusted EBITDA, anticipating continued strong performance in Q4 [62] - Management noted that the adoption of weight loss drugs like Ozempic has positively influenced consumer activity levels [11] Other Important Information - The company has a stock repurchase program approved for $50 million, with shares repurchased at an average price of $19.24 [60] - The company anticipates elevated SG&A expenses in Q4 due to the annual franchise convention, expected to add approximately $5 million in expenses [64] Q&A Session Summary Question: Opening mix by banner and geography - The company opened 127 new studios in Q3, with a breakdown of 41 in Club Pilates, 36 in BFT, and others [69] Question: Performance of Q3 cohort relative to past cohorts - The 2023 cohort is performing well, with average AUVs increasing as studios mature [72] Question: Trends in member frequency and pricing power - Q3 visitation was the highest in company history, with pricing contributing only 5% to system-wide sales growth [78] Question: SG&A impact from transition studios - SG&A is expected to be around 30% of revenue in 2024, with significant reductions anticipated as transition studios are refranchised [91] Question: Impact of GLP-1 drugs on business - Management acknowledged potential tailwinds from GLP-1 drugs, noting increased engagement from users [92] Question: Other service revenue dynamics - Other service revenue was significantly impacted by transition studios, with $8 million attributed to them in Q3 [109]

Studio Operations and Growth - As of September 30, 2023, there were 2,596 studios open in North America, with franchisees committed to opening an additional 2,031 studios[164]. - The total number of operating studios in North America increased from 2,175 at the end of September 2022 to 2,596 at the end of September 2023, representing a growth of approximately 19.5%[171]. - Internationally, the number of studios operated increased from 266 at the end of September 2022 to 384 at the end of September 2023, marking a growth of approximately 44.3%[172]. - The number of operating studios globally increased to 2,980 by the end of Q3 2023, up from 2,481 at the end of Q3 2022, representing a growth of 20.2%[173]. - The number of studios obligated to open internationally under master franchise agreements (MFAs) totaled 1,042 as of Q3 2023, compared to 920 in Q3 2022, showing a growth of 13.3%[174]. - The company reported a net increase of 344 new studio openings for the nine months ended September 30, 2023, compared to 355 in the same period of 2022[175]. - The company opened 127 new studios in Q3 2023, slightly down from 128 in Q3 2022[173]. - Cumulative franchise licenses sold globally reached 6,088 by the end of Q3 2023, an increase from 5,193 in Q3 2022, marking a growth of 17.2%[173]. Financial Performance - Total revenue for the three months ended September 30, 2023, was $80.4 million, an increase of $16.7 million or 26% compared to $63.8 million in the same period of 2022[189]. - Total revenue for the nine months ended September 30, 2023, was $228.5 million, an increase of $54.8 million or 31.5% compared to $173.7 million in the same period of 2022[205]. - Franchise revenue increased to $36.4 million, up $6.4 million or 21% from $30.0 million in the prior year, driven by a 15% increase in same store sales and 499 net new studio openings globally[190]. - Franchise revenue increased to $104.5 million, up $21.4 million or 25.7% from $83.1 million in the prior year, driven by a 17% increase in same store sales and 499 new studio openings[206]. - Equipment revenue rose to $12.6 million, an increase of $0.8 million or 7%, with global equipment installations totaling 116 compared to 136 in the prior year[191]. - Equipment revenue rose to $40.1 million, an increase of $8.2 million or 25.5% compared to $31.9 million in the previous year, attributed to 395 global equipment installations[207]. - Other service revenue grew to $16.0 million, an increase of $5.5 million or 52%, mainly from a $6.1 million rise in package and memberships revenue[194]. - Other service revenue surged to $40.1 million, up $15.1 million or 60.3% from $25.0 million, primarily due to increased package and memberships revenue[210]. - Adjusted EBITDA for Q3 2023 was $26.5 million, compared to $20.0 million in Q3 2022, reflecting a 32.5% increase[174]. - Adjusted EBITDA for Q3 2023 was $26.5 million, up 32.5% from $20.0 million in Q3 2022[227]. - Net income for the nine months ended September 30, 2023, was $7.4 million, compared to $3.2 million in the same period of 2022[186]. - Net income for Q3 2023 was a loss of $5.2 million, an improvement from a loss of $13.1 million in Q3 2022[227]. Costs and Expenses - The company recognized restructuring charges of $6.3 million during the three and nine months ended September 30, 2023, primarily for write-offs and losses related to abandoned assets[166]. - Total operating costs and expenses decreased slightly by $1.2 million or 1.7% to $73.0 million compared to $74.2 million in the prior year[195]. - Selling, general and administrative expenses increased by $15.7 million or 48% to $48.6 million, largely due to restructuring charges and increased salaries[197]. - Selling, general and administrative expenses increased to $127.9 million, up $31.8 million or 33% from $96.1 million, primarily due to restructuring charges and increased salaries[214]. - Marketing fund expense was $16.3 million, an increase of $3.6 million or 28% compared to $12.7 million in the prior year, consistent with the increase in franchise marketing fund revenue[216]. - Costs of product revenue increased to $12.7 million, up $0.9 million or 7%, with costs as a percentage of related revenue decreasing to 60% from 66%[195]. - Acquisition and transaction expenses (income) showed a significant decrease to ($1.9) million from $16.3 million, a change of $18.2 million or 112%[199]. Cash Flow and Financing - Cash and cash equivalents as of September 30, 2023, totaled $43.7 million, excluding $8.2 million of restricted cash[228]. - Net cash provided by operating activities for the nine months ended September 30, 2023, was $38.2 million, compared to $37.5 million in the same period of 2022[245]. - Cash provided by operating activities increased to $38.2 million in the nine months ended September 30, 2023, from $37.5 million in the same period of 2022, reflecting a $0.7 million increase[246]. - Cash used in investing activities decreased to $8.6 million in the nine months ended September 30, 2023, compared to $11.6 million in the same period of 2022, primarily due to reduced cash used for purchasing intangible assets[247]. - Cash used in financing activities decreased to $15.1 million in the nine months ended September 30, 2023, from $16.3 million in the same period of 2022, driven by an increase in cash received from long-term debt borrowings of $183.7 million[248]. - The company incurred $15.1 million in net cash used in financing activities for the nine months ended September 30, 2023[245]. - The total principal amount outstanding on the Term Loans was $329.7 million as of September 30, 2023[241]. - An accelerated share repurchase program was executed for $50.0 million, resulting in the repurchase of 2,598,877 shares at an average price of $19.24 per share[244]. - Cash used for the ASR Program amounted to $50.4 million in the nine months ended September 30, 2023[248]. - The company received $8.1 million from a shareholder during the financing activities in the nine months ended September 30, 2023[248]. Restructuring and Future Plans - The restructuring plan is expected to yield annualized gross savings of approximately $9.0 million to $12.0 million once completed[168]. - The company plans to continue investing in its brands and integrated services to support franchisees and enhance consumer experiences[170]. - The company is negotiating lease terminations that may result in net gains from lease liability decreases, with cash outflows expected through 2024[167]. - The company aims to increase same store sales and average unit volumes (AUVs) by helping franchisees acquire new members and expand ancillary revenue streams[170]. Debt and Compliance - Interest expense for the nine months ended September 30, 2023, was $27.2 million, an increase of $18.2 million or 201% compared to $9.1 million in the prior year, due to higher average debt balances and interest rates[219]. - Interest expense for the nine months ended September 30, 2023, was $26.1 million, compared to $7.9 million in the same period of 2022[227]. - The company expects available cash and cash generated from operations to meet anticipated debt service requirements for at least the next twelve months[229]. - The company was in compliance with all covenants under the Credit Agreement as of September 30, 2023[234]. Off-Balance Sheet Arrangements - The company has off-balance sheet arrangements consisting of guarantees of lease agreements for franchisees, with a maximum total commitment of approximately $3.1 million[249]. - As of September 30, 2023, an accrual of $0.2 million has been recorded for the potential obligation under a standby letter of credit issued to a third-party financing company[250]. - The estimated fair value of guarantees related to off-balance sheet arrangements was not material as of September 30, 2023[249]. - The company experienced unfavorable changes in working capital totaling $3.7 million, primarily related to prepaid expenses and deferred revenue[246]. - There have been no significant changes to the company's critical accounting policies and estimates since the last annual report[251].

FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from to WASHINGTON, DC 20549 Delaware 84-4395129 (State or other jurisdiction of incorporation or organization) 17877 Von Karman Ave., Suite 100 Irvine, CA 92614 (Address of principal exe ...

Xponential Fitness, Inc. (NYSE:XPOF) Q2 2023 Earnings Conference Call August 3, 2023 4:30 PM ET Company Participants Anthony Geisler - Founder, Director and Chief Executive Officer Sarah Luna - President John Meloun - Chief Financial Officer Conference Call Participants Randal Konik - Jefferies Joseph Altobello - Raymond James Alexander Perry - Bank of America Brian Harbour - Morgan Stanley Jonathan Komp - Baird Ryan Meyers - Lake Street Capital Julio Marquez - Guggenheim Partners Warren Cheng - Evercore IS ...

Xponential Fitness, Inc. (NYSE:XPOF) Q1 2023 Earnings Conference Call May 4, 2023 4:30 PM ET Participants Kimberly Esterkin - Investor Relations Anthony Geisler - Chief Executive Officer Sarah Luna - President John Meloun - Chief Financial Officer Analysts Jeff Van Sinderen - B. Riley Alex Perry - Bank of America John Heinbockel - Guggenheim Securities Randy Konik - Jefferies Joe Altobello - Raymond James Sean Rooney - Citigroup Warren Cheng - Evercore Ryan Meyers - Lake Street Capital Markets Jonathan Komp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40638 Xponential Fitness, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 84-4395129 (State or other jurisdi ...

[PART I](index=4&type=section&id=PART%20I) This section details Xponential Fitness's business model, competitive strengths, growth strategies, brand portfolio, franchise operations, studio footprint, and regulatory environment, along with associated risk factors, property details, and legal proceedings [Business](index=4&type=section&id=Item%201.%20Business) Xponential Fitness, Inc. is the largest global franchisor of boutique fitness brands, operating a diversified platform of ten brands, driven by its "Xponential Playbook" to optimize studio performance [Overview](index=4&type=section&id=Overview) Xponential Fitness operates as the largest global franchisor of boutique fitness brands, leveraging its "Xponential Playbook" to support franchisees and drive studio performance, with a significant global growth pipeline - Xponential Fitness is the largest global franchisor of boutique fitness, operating a diversified platform of ten brands including Club Pilates, CycleBar, StretchLab, and Pure Barre[13](index=13&type=chunk) - The company utilizes a proven operational model, the "Xponential Playbook," to support franchisees in areas such as site selection, pre-opening support, training, and technology systems to drive studio performance[15](index=15&type=chunk)[17](index=17&type=chunk) - The business model is designed to generate a weighted average Average Unit Volume (AUV) of approximately **$500,000** in the second year of operations with studio-level operating margins of **25-30%**[18](index=18&type=chunk) - As of December 31, 2022, the company had a strong growth pipeline with franchisees contractually committed to open an additional **1,939** studios in North America and master franchisees obligated to sell licenses for **1,094** international studios[20](index=20&type=chunk) [Our Competitive Strengths](index=5&type=section&id=Our%20Competitive%20Strengths) The company's competitive advantages include a diversified portfolio of ten leading boutique fitness brands, significant scale as the largest U.S. franchisor, an asset-light model with recurring revenue, attractive studio-level economics, and a strong pipeline for future organic growth - The company possesses a diversified portfolio of ten leading boutique fitness brands across various verticals, which is a significant competitive advantage in a fragmented market[25](index=25&type=chunk) - Xponential is the largest boutique fitness franchisor in the U.S. with over **2,301** studios, leveraging its scale for brand recognition, real estate access, and favorable vendor relationships[27](index=27&type=chunk)[28](index=28&type=chunk) - The company benefits from an asset-light franchise model with multiple predictable and recurring revenue streams, with approximately **71%** of revenue considered recurring in 2022[33](index=33&type=chunk) - The franchise model offers attractive studio-level economics, with a relatively low initial investment of about **$350,000** and a target unlevered cash-on-cash return of approximately **40%**[34](index=34&type=chunk) - As of December 31, 2022, the company had sold **5,450** franchise licenses globally, indicating a strong and visible pipeline for future organic growth[36](index=36&type=chunk) [Our Growth Strategies](index=8&type=section&id=Our%20Growth%20Strategies) The company's primary growth strategies focus on expanding its franchised studio base in North America, increasing system-wide same-store sales and average unit volume, improving operating margins, and accelerating international expansion through digital platforms and cross-selling initiatives - Primary growth strategies include expanding the franchised studio base in North America, driving system-wide same-store sales and AUV, expanding operating margins, and growing internationally[40](index=40&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The company aims to increase same-store sales by acquiring new customers, increasing membership penetration, and driving consumer spending through dynamic pricing, cross-selling, and digital platform engagement[43](index=43&type=chunk) - International expansion is a key focus, with **312** studios open internationally as of year-end 2022 and master franchise agreements in place for an additional **1,094** studios to be sold[46](index=46&type=chunk) - The company is leveraging its digital platform, Xponential+, and membership option, XPASS, to enhance consumer engagement, cross-sell brands, and generate incremental revenue[47](index=47&type=chunk) [Our Brands](index=10&type=section&id=Our%20Brands) Xponential Fitness manages a diverse portfolio of ten leading boutique fitness brands, each specializing in different workout modalities, contributing to its extensive global studio network and franchise licenses sold Brand Portfolio and Studio Count (as of Dec 31, 2022) | Brand | Description | Global Studios Open | Global Licenses Sold | | :--- | :--- | :--- | :--- | | Club Pilates | Largest Pilates brand in the U.S. | 826 | 1,280 | | Pure Barre | Largest Barre brand in the U.S. | 638 | 760 | | CycleBar | Largest indoor cycling brand in the U.S. | 282 | 553 | | StretchLab | Assisted stretching services | 305 | 817 | | Row House | Largest franchised indoor rowing brand | 96 | 331 | | YogaSix | Largest franchised yoga brand | 170 | 575 | | Rumble | Boxing-inspired full-body workout | 42 | 351 | | AKT | Dance-based cardio and strength training | 34 | 119 | | Stride | Treadmill-based cardio and strength | 18 | 93 | | BFT | Functional and strength-based training | 230 | 571 | [Our Franchise Model](index=13&type=section&id=Our%20Franchise%20Model) The company's capital-efficient franchise model leverages local expertise and a comprehensive operational playbook to rapidly expand its global footprint, characterized by multi-unit ownership and predictable recurring revenue streams from long-term agreements - The franchise model leverages local market expertise and the Xponential Playbook to grow the global footprint in a capital-efficient manner, scaling from 2018 to 2022 at a **25% CAGR**[75](index=75&type=chunk) - As of Dec 31, 2022, **81%** of licenses in North America were owned by multi-unit franchisees, and **54%** of all franchisees owned more than one license[76](index=76&type=chunk) - Franchise agreements have an initial ten-year term, with options to renew, and franchisees pay an initial franchise fee and ongoing monthly royalty fees based on gross sales[81](index=81&type=chunk)[83](index=83&type=chunk) [Studios](index=15&type=section&id=Studios) Xponential Fitness maintains a substantial global studio footprint, primarily through franchised locations, while strategically managing a small number of company-owned transition studios intended for refranchising Studio Count by Location (as of Dec 31, 2022) | Location | Number of Studios | | :--- | :--- | | U.S. & D.C. | 2,301 | | Canada | 28 | | International | 312 | | **Total** | **2,641** | - The company operates a small number of company-owned transition studios (**55** as of Dec 31, 2022) for a limited time while facilitating transfers to new or existing franchisees[92](index=92&type=chunk) [Government Regulation](index=20&type=section&id=Government%20Regulation) The company operates under a complex framework of government regulations, including federal and state franchise sales laws, labor laws, consumer protection regulations for health clubs, and data privacy laws, requiring strict compliance - The company is subject to the FTC Franchise Rule and various state franchise sales laws, which regulate the offer and sale of franchises and require specific disclosures in a Franchise Disclosure Document (FDD)[130](index=130&type=chunk) - Operations are also governed by labor laws (e.g., Fair Labor Standards Act), consumer protection regulations for health clubs, and data privacy laws like GDPR and CCPA[132](index=132&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, primarily related to its reliance on the financial success of its franchisees, potential growth strategy failures, and disruptions in financing, alongside challenges in brand reputation, international expansion, competition, macroeconomic downturns, key personnel reliance, and various legal and regulatory compliance issues, including data privacy and franchise laws, further complicated by its organizational structure and substantial indebtedness - **Business & Industry Risks:** The company's financial results are directly affected by the operational and financial success of its franchisees, where negative economic conditions or failure of franchisees to perform could harm revenue[146](index=146&type=chunk)[147](index=147&type=chunk) - **Growth & Expansion Risks:** The growth strategy depends on opening new studios, which faces challenges like financing availability, site selection, and competition, while expansion into new and international markets carries increased risks due to unfamiliarity and different economic conditions[148](index=148&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - **Operational & Legal Risks:** The company relies heavily on a single information systems provider (ClubReady) and faces risks related to data security and privacy laws (e.g., CCPA, GDPR), in addition to being subject to extensive franchise regulations and potential litigation[212](index=212&type=chunk)[217](index=217&type=chunk)[223](index=223&type=chunk) - **Financial & Structural Risks:** The company has substantial indebtedness with restrictive covenants, and its holding company structure makes it dependent on distributions from its subsidiary (XPO Holdings) to meet obligations, including payments under the Tax Receivable Agreement (TRA)[256](index=256&type=chunk)[260](index=260&type=chunk)[275](index=275&type=chunk) [Properties](index=60&type=section&id=Item%202.%20Properties) The company's corporate headquarters are located in a leased 35,000 square foot office in Irvine, California, with additional leased spaces for a digital production studio, training locations, and a warehouse, while also operating 55 company-owned transition studios in leased properties intended for refranchising - Corporate headquarters are in Irvine, CA, under a lease expiring in 2032[320](index=320&type=chunk) - The company leases approximately **55,000** square feet of warehouse space in Tustin, CA, and a **6,800** square foot digital production studio[320](index=320&type=chunk) - As of December 31, 2022, the company held leases for **55** company-owned transition studios, which it is actively seeking to refranchise[321](index=321&type=chunk) [Legal Proceedings](index=60&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 17, "Contingencies and Litigation," in the Notes to Consolidated Financial Statements - Details on legal proceedings are provided in Note 17 of the financial statements[323](index=323&type=chunk) [PART II](index=61&type=section&id=PART%20II) This section covers the market for the company's common equity, management's discussion and analysis of financial condition and results of operations, the consolidated financial statements, and internal controls and procedures [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=61&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock is traded on the New York Stock Exchange (NYSE) under the ticker symbol "XPOF," with no current cash dividends paid on its Class A common stock, and any future dividends are at the discretion of the board of directors - Class A common stock trades on the NYSE under the symbol "XPOF"[327](index=327&type=chunk) - The company does not currently pay cash dividends on its Class A common stock, and future dividend declarations are at the board's discretion[328](index=328&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2022, Xponential Fitness saw significant growth, with total revenue increasing **58.0%** to **$245.0 million**, driven by a **25%** increase in same-store sales and the opening of **511** net new studios globally, achieving operating income of **$15.1 million** and net income of **$2.9 million**, with Adjusted EBITDA growing substantially to **$74.3 million** [Key Performance Indicators](index=65&type=section&id=Key%20Performance%20Indicators) This section presents a summary of key operational and financial metrics, including system-wide sales, global studio count, average unit volume, same-store sales, and Adjusted EBITDA, illustrating the company's performance trends Key Performance Indicators (2020-2022) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | System-wide sales | $1,033.2M | $709.7M | $442.7M | | Global studios operating (eop) | 2,641 | 2,130 | 1,796 | | Global licenses sold (cumulative) | 5,450 | 4,424 | 3,469 | | AUV (run-rate) | $522k | $446k | $287k | | Same store sales | 25% | 41% | (34%) | | Adjusted EBITDA | $74.3M | $27.3M | $9.8M | [Results of Operations](index=69&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, highlighting significant increases in total revenue, a turnaround from operating loss to income, and a substantial improvement in net income for the fiscal year 2022 Consolidated Results of Operations (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Total revenue, net** | **$244,954** | **$155,079** | **$106,592** | | Total operating costs and expenses | $229,818 | $185,898 | $98,798 | | **Operating income (loss)** | **$15,136** | **($30,819)** | **$7,794** | | **Net income (loss)** | **$2,875** | **($51,440)** | **($13,640)** | - Total revenue increased by **58.0%** in 2022 compared to 2021, primarily due to a **25%** increase in same-store sales and **511** net new global studio openings[361](index=361&type=chunk)[362](index=362&type=chunk) - Operating income was **$15.1 million** in 2022, a significant improvement from an operating loss of **$30.8 million** in 2021, driven by higher revenues and a large decrease in acquisition and transaction expenses[358](index=358&type=chunk)[372](index=372&type=chunk) - Net income for 2022 was **$2.9 million**, compared to a net loss of **$51.4 million** in 2021, with the improvement driven by strong revenue growth and lower interest expense[358](index=358&type=chunk)[374](index=374&type=chunk) [Non-GAAP Financial Measures](index=76&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, specifically Adjusted EBITDA, to the most directly comparable GAAP financial measure, providing additional insights into the company's operational profitability - Adjusted EBITDA is defined as EBITDA adjusted for non-cash and other items such as equity-based compensation, acquisition expenses, management fees, and litigation expenses[397](index=397&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income (loss) | $2,875 | ($51,440) | ($13,640) | | Interest expense, net | $11,212 | $23,545 | $21,065 | | Income taxes | $526 | $783 | $369 | | Depreciation and amortization | $15,315 | $10,172 | $7,651 | | **EBITDA** | **$29,928** | **($16,940)** | **$15,445** | | Adjustments | $44,324 | $44,263 | ($5,638) | | **Adjusted EBITDA** | **$74,252** | **$27,323** | **$9,807** | [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's financial position, including its cash and cash equivalents, debt obligations, and cash flow activities, to determine its ability to meet short-term and long-term financial commitments - As of December 31, 2022, the company had **$32.0 million** of cash and cash equivalents and believes this, along with cash from operations, is adequate to meet needs for the next twelve months[401](index=401&type=chunk)[402](index=402&type=chunk) - The company's primary debt is a senior secured term loan facility with a total principal amount of **$137.7 million** outstanding as of December 31, 2022[413](index=413&type=chunk) Summary Cash Flow (in thousands) | Cash Flow | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $51,670 | $14,451 | | Net cash used in investing activities | ($14,613) | ($50,635) | | Net cash (used in) from financing activities | ($21,007) | $46,205 | [Critical Accounting Estimates](index=81&type=section&id=Critical%20Accounting%20Estimates) This section outlines the significant accounting policies and estimates that require management's subjective judgment, such as revenue recognition, business combinations, asset impairment, and equity-based compensation, which materially impact the financial statements - Key critical accounting estimates include revenue recognition, business combinations, impairment of long-lived assets (including goodwill), acquisition-related contingent consideration, and equity-based compensation[431](index=431&type=chunk) - For franchise revenue, initial fees are deferred and recognized on a straight-line basis over the franchise term (typically 10 years), while royalties are recognized as franchisee sales occur[434](index=434&type=chunk)[435](index=435&type=chunk)[438](index=438&type=chunk) - Goodwill is tested for impairment annually or when indicators exist, and in Q3 2022, a goodwill impairment of **$3.4 million** was recorded for the AKT reporting unit due to a decline in forecasted cash flows[460](index=460&type=chunk)[461](index=461&type=chunk) [Financial Statements and Supplementary Data](index=88&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the audited consolidated financial statements for Xponential Fitness, Inc. for the fiscal year ended December 31, 2022, including the Consolidated Balance Sheets, Statements of Operations, Statements of Changes to Stockholders' Equity, and Statements of Cash Flows, along with the accompanying notes, with an unqualified opinion from Deloitte & Touche LLP [Consolidated Balance Sheets](index=90&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position at specific points in time, detailing its assets, liabilities, and stockholders' equity, providing a snapshot of its financial health Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$482,691** | **$415,544** | | Cash, cash equivalents and restricted cash | $37,370 | $21,320 | | Goodwill | $165,697 | $169,073 | | **Total Liabilities** | **$382,678** | **$349,123** | | Long-term debt, net | $133,039 | $127,983 | | Deferred revenue, net | $109,465 | $95,691 | | **Total Stockholders' Deficit** | **($208,062)** | **($210,469)** | [Consolidated Statements of Operations](index=91&type=section&id=Consolidated%20Statements%20of%20Operations) This section reports the company's financial performance over a period, summarizing its revenues, expenses, and net income or loss, reflecting its profitability Consolidated Statement of Operations Highlights (in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Total revenue, net | $244,954 | $155,079 | | Operating income (loss) | $15,136 | ($30,819) | | Net income (loss) | $2,875 | ($51,440) | | Net loss per share of Class A common stock - Basic & Diluted | ($0.87) | ($2.85) | [Consolidated Statements of Cash Flows](index=93&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash generated and used by the company over a period, categorized into operating, investing, and financing activities, illustrating its liquidity and solvency Consolidated Cash Flow Highlights (in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,670 | $14,451 | | Net cash used in investing activities | ($14,613) | ($50,635) | | Net cash (used in) provided by financing activities | ($21,007) | $46,205 | | **Net increase in cash, cash equivalents and restricted cash** | **$16,050** | **$10,021** | [Controls and Procedures](index=130&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2022, and also assessed the effectiveness of internal control over financial reporting using the COSO 2013 framework, concluding it was effective, with no attestation report from the independent registered public accounting firm as an emerging growth company - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were effective[725](index=725&type=chunk) - Based on the COSO 2013 framework, management concluded that internal control over financial reporting was effective as of December 31, 2022[728](index=728&type=chunk) [PART III](index=132&type=section&id=PART%20III) This section incorporates by reference detailed information regarding the company's directors, executive officers, corporate governance practices, executive compensation, security ownership, and related party transactions from its proxy statement [Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership](index=132&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) The information required for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, security ownership of certain beneficial owners and management, certain relationships and related transactions, director independence, and principal accounting fees and services, is incorporated by reference from the company's Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders, to be filed within 120 days of the fiscal year-end - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's upcoming Definitive Proxy Statement[735](index=735&type=chunk)[736](index=736&type=chunk)[737](index=737&type=chunk)[738](index=738&type=chunk)[739](index=739&type=chunk) [PART IV](index=133&type=section&id=PART%20IV) This section includes a list of all exhibits filed as part of the Annual Report on Form 10-K and notes the omission of financial statement schedules and a Form 10-K summary [Exhibits, Financial Statement Schedules](index=133&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, which are included in Item 8, and notes that financial statement schedules are omitted as they are not applicable, also providing an index of all exhibits filed as part of the Annual Report on Form 10-K - This section contains the list of exhibits filed with the Form 10-K[742](index=742&type=chunk) [Form 10-K Summary](index=135&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary is provided for the Form 10-K - Item 16 is not applicable[748](index=748&type=chunk)

Financial Data and Key Metrics Changes - For the full year 2022, the company achieved net revenue of approximately $245 million, representing a 58% year-over-year increase [14] - Adjusted EBITDA for 2022 totaled $74.3 million, or 30.3% of revenue, an increase of 172% from $27.3 million, or 17.6% of revenue in the prior year [14] - Fourth quarter net revenue was $71.3 million, up 44% year-over-year, with adjusted EBITDA of $22.2 million, compared to $8.6 million in the prior year period [31][41] Business Line Data and Key Metrics Changes - Franchise revenue for the fourth quarter was $32.2 million, up 40% year-over-year, driven by increased member visits and system-wide sales [32] - Equipment revenue was $11.5 million, up 64% year-over-year, primarily due to higher volumes of global equipment installations [33] - Merchandise revenue increased by 22% year-over-year to $8 million, driven by a higher number of operating studios and increased foot traffic [33] Market Data and Key Metrics Changes - North American studio visits for the 12 months ending December 2022 increased by 32% year-over-year, reaching a total of 39.2 million [12] - North American system-wide sales increased 46% in 2022, surpassing $1 billion for the first time in the company's history [12] - Total members across North America increased by approximately 32% year-over-year in 2022 to a total of 590,000, with membership surpassing 600,000 in January 2023 [11] Company Strategy and Development Direction - The company aims to increase its franchise studio base, having opened 511 net new studios globally in 2022, with a goal of 540 to 560 new studio openings in 2023 [15][45] - The company is expanding internationally, with over 1,000 studios obligated to be opened, including recent master franchise agreements in Portugal and Japan [17] - The company plans to expand adjusted EBITDA margins to the 35% to 39% range in 2023, targeting 40% in 2024 [19][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business, noting strong same-store sales growth and a loyal customer base [7][11] - The company anticipates continued growth in system-wide sales and membership, despite potential macroeconomic headwinds [45][88] - Management highlighted the importance of community and customer engagement in driving retention and reducing churn [20][29] Other Important Information - The company reported a net loss of $0.4 million in the fourth quarter, compared to a net loss of $29.8 million in the prior year period [39] - Cash, cash equivalents, and restricted cash were $37.4 million as of December 31, 2022, up from $21.3 million a year earlier [42] - The company completed a secondary offering of 5 million shares, which closed on February 10, 2023 [44] Q&A Session Summary Question: Can you provide insights on international prospects and growth? - Management noted that prior to COVID, international growth was limited, but recent acquisitions and pre-COVID efforts have led to significant expansion [50][52] Question: What levers does the company have for pricing power? - Management indicated that as the business scales, there is potential to increase royalty rates and optimize operational costs to enhance margins [56][58] Question: What could drive upside to EBITDA margins in 2023? - Strong AUV growth and continued studio openings are expected to contribute significantly to margin expansion [62][64] Question: Can you elaborate on the XPASS membership and its impact? - Management stated that while XPASS is not a major revenue driver yet, it is effective in generating awareness and acquiring new customers [65] Question: How are macroeconomic factors affecting studio openings? - Management acknowledged some macro headwinds but emphasized that financing and location acquisition have not been significant issues [88][90]

ЖРОПЕЙТІАЦ INVESTOR PRESENTATION Updated on January 9, 2023 ING ll D (我 G AI、T W 9 BFT a LEGAL DISCLAIMER The information contained in this presentation is provided solely for the purpose of acquainting the readers with Xponential Fitness, Inc. (the "Company," "Xponential" or "we") and its business operations, strategies and financial performance. This presentation and any accompanying oral statements is not an offer to sell nor is it a solicitation of any offer to buy any securities and conveys no right, t ...

Xponential Fitness, Inc. (NYSE:XPOF) Q3 2022 Earnings Conference Call November 10, 2022 4:30 PM ET Company Participants Kimberly Esterkin – Investor Relations Anthony Geisler – Chief Executive Officer Sarah Luna – President John Meloun – Chief Financial Officer Conference Call Participants Jeff Van Sinderen – B. Riley Randy Konik – Jefferies Brian Harbour – Morgan Stanley Alex Perry – Bank of America John Heinbockel – Guggenheim Partners Jonathan Komp – Baird Warren Cheng – Evercore ISI Joe Altobello – Raym ...