Xponential Fitness, Inc. saw total revenue for the second quarter increase 30 percent to $77.3 million, up from $59.6 million in the prior-year period. The increase included a corresponding North America same-store sales increase of 15 percent compared to growth of 25 percent in Q2 of 2022.

“The company continues to execute our strategic growth drivers. We were pleased to announce the renewal and expansion of our partnership with Lululemon in June, as well as the signing of a master franchise agreement in France, which marks Xponential’s 19th country outside of North America,” said Anthony Geisler, CEO of Xponential Fitness, Inc.

Net income totaled $27.5 million for the quarter, or EPS of $1.44 a share, compared to net income of $31.5 million, or EPS of $3.28, in the prior-year period.

The slightly lower net income was said to be the result of $5.3 million of higher overall profitability, offset by a $0.4 million increase in non-cash contingent consideration primarily related to the Rumble acquisition, a $1.6 million increase in non-cash equity-based compensation expense, and a $7.2 million increase in a write-down of brand assets associated with the purchase of Rumble founder studios in the period.

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 $31.3 million gain in the second quarter of 2023.

Adjusted net income was $4.2 million for Q2, or adjusted EPS of 5 cents per share, which excludes the $31.3 million non-cash contingent consideration gain related primarily to the Rumble acquisition, $0.7 million related to the re-measurement of the company’s tax receivable agreement, and $7.2 million related to the write-down of brand assets, compared to adjusted net income of $0.1 million, or adjusted loss of 7 cents per basic share, in Q2 last year.

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, financial transaction fees and related expenses, tax receivable agreement remeasurement and write down of brand assets, increased 43 percent to $25.3 million, up from $17.6 million in the prior-year period.

Xponential Fitness had approximately $40.2 million of cash, cash equivalents and restricted cash and $265.9 million in total long-term debt at quarter-end.

Net cash provided by operating activities was $30.6 million for the three months ended June 30, 2023.

2023 Outlook
Xponential Fitness is increasing full-year 2023 guidance for system-wide sales, revenue, and Adjusted EBITDA and re-affirming guidance for new studio openings as follows:

  • New studio openings in the range of 540 to 560, or an increase of 8 percent at the midpoint as compared to the full year 2022;
  • North America system-wide sales in the range of $1.39 billion to $1.40 billion, or an increase of 35 percent at the midpoint as compared to the full year 2022; this compares to previous guidance of $1.37 billion to $1.38 billion;
  • Revenue in the range of $295.0 million to $305.0 million, or an increase of 22 percent at the midpoint as compared to the full year 2022; this compares to previous guidance of $290.0 million to $300.0 million; and
  • Adjusted EBITDA in the range of $102.5 million to $106.5 million, or an increase of 41 percent at the midpoint as compared to the full year 2022; this compares to previous guidance of $102.0 million to $106.0 million.

Additional key assumptions for full year 2023 include:

  • Tax rate in the mid-to-high single digits;
  • Share count of 32.7 million Class A Common Stock shares for the GAAP EPS and Adjusted EPS calculations; and
  • $1.9 million in quarterly dividends paid related to the company’s Convertible Preferred Stock.

Geisler said the Board had approved a $50 million stock repurchase program, and the company’s lender, MSD Partners, has amended the term loan Financing Agreement and is funding the capital to complete the repurchase.

Photo courtesy Xponential Fitness