Xponential Fitness, Inc. posted a net loss of $18 million in the third quarter after litigation expenses, impairment charges and other acquisition-related charges. North America system-wide sales grew by 21 percent but corporate revenue was flat as higher franchise and equipment revenues were largely offset by a decline in other service revenue.

Financial Highlights: Q3 2024 Compared to Q3 2023

  • Reported revenue of $80.5 million, consistent with the prior year period.
  • Increased North America system-wide sales by 21 percent to $431.2 million.
  • Reported North America same-store sales growth of 5 percent, compared to growth of 15 percent.
  • Reported North America quarterly run-rate average unit volume (AUV) of $631,000, compared to $585,000.
  • Sold 84 franchise licenses and opened 125 gross new studios in Q3 2024.
  • Posted net loss of $18.0 million, or a loss of 29 cents per basic share, on a share count of 32.2 million shares of Class A Common Stock, compared to a net loss of $5.2 million, or earnings per basic share of $0.91, on a share count of 32.3 million shares of Class A Common Stock.
  • Posted adjusted net loss of $0.2 million, or a loss of $0.04 per basic share, compared to adjusted net income of $6.0 million, or earnings per basic share of $0.09.
  • Reported Adjusted EBITDA4 of $31.0 million, compared to $26.5 million.

“Following my first 100 days, I’m looking forward to sharing my vision for the company with all of you this afternoon,” said Mark King, CEO of Xponential Fitness, Inc. “My focus is on fostering a culture at Xponential that is conducive to long-term success. We need to transform into a marketing and operations-driven organization that places franchisee success at the center.”

Results for the Third Quarter Ended September 30, 2024
For the third quarter of 2024, total revenue increased $0.1 million to $80.5 million, up slightly from $80.4 million in the prior year period, as increases in franchise and equipment revenues were largely offset by a $9.8 million decline in other service revenue, primarily attributable to its strategic shift away from company-owned transition studios. Xponential previously would buy failing studios, aim to make performance improvements, then resell them to franchisees.

Net loss totaled $18.0 million, or a loss of $0.29 per basic share, compared to a net loss of $5.2 million, or earnings per basic share of $0.91, in the prior year period. The higher net loss was the result of $6.0 million of higher overall profitability and a $0.2 million decrease in impairment of goodwill and other assets, offset by an $8.9 million increase in litigation expenses, a $5.6 million increase in acquisition and transaction expense, which includes non-cash contingent consideration primarily related to the Rumble acquisition, a $2.6 million increase in restructuring and related charges from its company-owned transition studios, a $1.4 million increase in non-cash equity-based compensation expense, and a $0.4 million increase in loss on brand divestitures and wind down.

Adjusted net loss for the third quarter of 2024, which excludes $3.7 million in acquisition and transaction expenses, $0.1 million expense related to the remeasurement of the company’s tax receivable agreement, $4.5 million related to the impairment of goodwill and other assets, $0.4 million loss on brand divestitures and wind down, and $9.2 million of restructuring and related charges, was $0.2 million, or an adjusted net loss of $0.04 per basic share, on a share count of 32.2 million shares of Class A Common Stock.

Adjusted EBITDA, which is defined as net income (loss) before interest, taxes, depreciation and amortization, adjusted for equity-based compensation and related employer payroll taxes, acquisition and transaction expenses, litigation expenses (outside of the ordinary course of business), financial transaction fees and related expenses, tax receivable agreement remeasurement, impairment of goodwill and other assets, loss on brand divestitures and wind down, executive transition costs, non-recurring rebranding expenses, and restructuring and related charges, was $31.0 million for the quarter, up 17 percent from $26.5 million in the prior year period.

Liquidity and Capital Resources
As of September 30, 2024, the company had approximately $37.8 million of cash, cash equivalents and restricted cash and $353.8 million in total long-term debt. Net cash provided by operating activities was $10.9 million for the nine months ended September 30, 2024.

2024 Outlook
Based on current business conditions, and our expectations as of the date of this release, we are reiterating 2024 guidance for system-wide sales, total revenue and adjusted EBITDA, and we are lowering guidance for global new studio openings as follows:

  • Gross new studio openings in the range of 490 to 510, or a decrease of 10 percent at the midpoint compared to full year 2023 gross new openings; this compares to previous guidance of 500 to 520;
  • North America system-wide sales in the range of $1.705 billion to $1.715 billion, or an increase of 22 percent at the midpoint compared to full year 2023; unchanged from previous guidance;
  • Revenue in the range of $310.0 million to $320.0 million, or a decrease of 1 percent at the midpoint compared to full year 2023; unchanged from previous guidance;
  • Adjusted EBITDA in the range of $120.0 million to $124.0 million, or an increase of 16 percent at the midpoint compared to full year 2023; unchanged from previous guidance.

Xponential Fitness owns several fitness boutiques, including Club Pilates, CycleBar, StretchLab, AKT, YogaSix, Pure Barre, Rumble, BFT, and Lindora.

Image courtesy Xponential Fitness