Xponential Fitness(US:XPOF)2022-05-13 17:52Financial Data and Key Metrics Changes - Xponential Fitness reported net revenue of $50.4 million for Q1 2022, a 73% increase year-over-year from $29.1 million [13][35] - Adjusted EBITDA for the quarter was $14.4 million, representing 29% of revenue, compared to $3.6 million or 12% of revenue in the prior-year period [13][46] - North American systemwide sales reached $224.5 million, up 70% from $131.9 million in Q1 2021, marking a record for the company [34] Business Line Data and Key Metrics Changes - Franchise revenue increased to $25.5 million, up 85% from $13.8 million in the prior-year period, driven by higher royalties and franchise license fees [35] - Equipment revenue rose to $7.8 million, a 91% increase from $4.1 million, due to a higher number of equipment installations [36] - Merchandise revenue was $6.1 million, up 44% from $4.2 million, attributed to increased foot traffic and studio openings [37] Market Data and Key Metrics Changes - Active paying members and visitation rates in North America increased by approximately 60% and 45% year-over-year, respectively [10] - The average unit volume (AUV) in North America reached $477,000 in March 2022, rebounding to pre-COVID levels [11] Company Strategy and Development Direction - The company aims to increase its franchise studio base across all brands in North America and expand internationally, with a target of opening over 500 new studios in 2022 [15][50] - A partnership with LA Fitness allows Xponential to open studios within LA Fitness locations, with a commitment of 350 franchise locations over five years [16] - The company is also focusing on enhancing its digital offerings through platforms like XPASS and XPLUS to drive customer engagement and retention [20][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience against macroeconomic pressures, noting that fitness is often viewed as a non-discretionary expense by consumers [12] - The outlook for 2022 includes expectations for total revenue between $201 million to $211 million, a 33% increase from 2021, and adjusted EBITDA projected to range from $67 million to $71 million [51][52] Other Important Information - The company ended Q1 2022 with 2,229 global studios, the highest in its history, and sold 260 franchise licenses globally [15] - The integration of BFT is on track, supporting the company's global growth trajectory [18] Q&A Session Summary Question: Breakdown of new studios opened in Q1 and expected for the year - About 75% of the 99 new studios opened in Q1 were domestic, with 25% international, primarily driven by BFT [55][56] Question: Revenue cadence and AUV expectations - Revenue is expected to scale throughout the year, with AUVs anticipated to continue climbing [58][59] Question: AUV recovery across brands - Brands like Club Pilates and StretchLab are setting new records for AUVs, while some younger brands are still in recovery [67][68] Question: Franchisee economics and cost inflation - Expenses have remained stable, with no significant increases in rent or labor costs observed [71][72] Question: Lululemon partnership details - The partnership includes a one-time payment, and the company is already selling Lululemon apparel [77][78] Question: Trends in member signups and engagement - New member signups are outpacing cancellations, indicating positive trends in studio performance [93] Question: Impact of macro pressures on franchise sales - Franchise sales may slow during a recession, but openings are expected to continue due to pre-contracted territories [100][101] Question: Engagement trends with XPASS - XPASS has attracted 15% new customers and re-engaged 60% previously inactive members [105][106]