Xponential Fitness Inc. reported a profit against a loss in the third quarter that ended September 30 as sales grew 56 percent.

Financial Highlights: Q3 2022 Compared to Q3 2021

  • Grew revenue 56 percent to $63.8 million;
  • Increased North America system-wide sales1 by 37 percent to $264.8 million;
  • Reported North America same-store sales2 growth of 17 percent;
  • Reported North America quarterly run-rate average unit volume (AUV)3 of $489,000, compared to $417,000;
  • Posted net loss of $13.1 million, or a loss of $1.53 per basic share, on a share count of 26.2 million shares of Class A Common Stock, compared to a net loss of $8.9 million, or a loss of $0.38 per basic share, on a share count of 22.1 million shares of Class A Common Stock;
  • Posted adjusted net income of $8.0 million, or $0.10 per basic share, compared to an adjusted net loss of $5.8 million, or a loss of $0.31 per basic share; and
  • Reported Adjusted EBITDA4 of $20.0 million, compared to $6.8 million.

“Nine quarters of consistent growth in our run-rate AUVs is a strong reminder that the workouts our franchisees provide across a diverse portfolio of brands remain an integral part of our members’ lives, irrespective of macroeconomic challenges,” said Anthony Geisler, CEO, Xponential Fitness, Inc. “Not only did we expand our core franchise business in Q3 2022, but we also welcomed key new partners, including Princess Cruises and lululemon Studio. Connecting with our membership base where and when they want to work out through our omnichannel approach will continue to be a core part of our growth strategy.”

For the third quarter of 2022, total revenue increased $22.9 million, or 56 percent, to $63.8 million, up from $40.9 million in the prior-year period. Total revenue increased largely due to increasing equipment installations and royalties generated from strong North American system-wide sales.

Net loss totaled $13.1 million, or a loss of $1.53 per basic share, compared to a net loss of $8.9 million, or a loss of $0.38 per basic share, in the prior-year period. While overall profitability was higher by $13.6 million, this was offset by $13.4 million of higher non-cash contingent consideration expense primarily related to the Rumble acquisition, a $3.7 million increase in impairment of brand assets, and a $0.7 million increase in non-cash equity-based compensation expense. Please see the table contained in this press release for a calculation of the basic and diluted earnings (loss) per share for the quarter ended September 30, 2022.

Consistent with previous periods, the Rumble acquisition non-cash contingent consideration liability is marked-to-market based on Xponential’s share price, contributing to a $16.3 million increase in contingent consideration liability in the third quarter of 2022.

Adjusted net income for the third quarter of 2022, which excludes the $16.3 million change in fair value of non-cash contingent consideration, $1.1 million expense related to the third quarter remeasurement of the company’s tax receivable agreement liability, and $3.7 million related to the impairment of brand assets, was $8.0 million, or $0.10 per basic share.

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for equity-based compensation, acquisition and transaction expenses, management fees, litigation expenses, employee retention credit, secondary public offering expenses, tax receivable agreement remeasurement and impairment of brand assets, increased to $20.0 million, up from $6.8 million in the prior-year period.

Liquidity and Capital Resources
As of September 30, 2022, the company had approximately $30.9 million of cash, cash equivalents and restricted cash and $136.5 million in total long-term debt. Net cash provided by operating activities was $37.5 million for the nine months ended September 30, 2022.

2022 Outlook
Based on the company’s performance in the first nine months of 2022 and the current state of the business as of the date of this press release, Xponential is increasing its full-year 2022 guidance for revenue and Adjusted EBITDA and re-affirming guidance for studio openings and system-wide sales in North America as follows:

  • New studio openings to remain in the range of 500 to 520, or an increase of 53 percent at the midpoint as compared to full year 2021;
  • North American system-wide sales to remain in the range of $995.0 million to $1.005 billion, or an increase of 41 percent at the midpoint as compared to full year 2021;
  • Revenue is now anticipated to be $235.0 million to $240.0 million, or an increase of 53 percent at the midpoint as compared to full year 2021; this compares to previous guidance of $211.0 million to $221.0 million, or an increase of 39 percent at the midpoint as compared to full year 2021; and
  • Adjusted EBITDA is now anticipated to be $70.0 million to $74.0 million, or an increase of 164 percent at the midpoint compared to full year 2021; this compares to previous guidance of $68.0 million to $72.0 million, or an increase of 156 percent at the midpoint as compared to full year 2021.

Additional key assumptions for the full year 2022 include:

  • Tax rate in the mid-to-high single digits;
  • Share count of approximately 25.3 million shares of Class A Common Stock for the GAAP EPS and Adjusted EPS calculations. A full explanation of the company’s share count calculation and associated EPS and Adjusted EPS calculations can be found in the tables contained in this press release; and
  • $3.25 million in quarterly cash dividends paid related to the $200 million Convertible Preferred Stock.

Photo courtesy Xponential Fitness