Xponential Fitness(US:XPOF)2023-03-03 04:52Financial 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]