XPOF Xponential Fitness Inc

• System-wide sales1 of $431.2 million in Q3 2024 increased 21% year-over-year
• Quarterly AUV (run rate)2 of $631,000 in Q3 2024 grew 8% year-over-year, while total members of 827,000 were up 16%
• Sold 84 franchise licenses and opened 125 gross new studios in Q3 2024

Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the “Company”), one of the leading global franchisors of boutique health and wellness brands, today reported financial results for the third quarter ended September 30, 2024. All financial data included in this release refer to global numbers, unless otherwise noted. All KPI information is presented on an adjusted basis to include full historical data for all brands in the current brand portfolio, regardless of when they were acquired, and to exclude all information for all brands not currently owned. Definitions for the non-GAAP measures and a reconciliation to the corresponding GAAP measures are included in the tables that accompany this release.

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% to $431.2 million.
• Reported North America same store sales3 growth of 5%, compared to growth of 15%.
• Reported North America quarterly run-rate average unit volume (AUV) of $631,000, compared to $585,000.
• Posted net loss of $18.0 million, or a loss of $0.29 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 our strategic shift away from company-owned transition studios.

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 our 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. Please see the table at the end of this press release for a calculation of the loss per share for the quarter ended September 30, 2024.

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% 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% 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% 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% 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% at the midpoint compared to full year 2023; unchanged from previous guidance.

Additional key assumptions for full year 2024 include:

• Tax rate in the mid-to-high single digits;
• Share count of 31.8 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 at the end of this press release; and
• $1.9 million in quarterly dividends paid related to the Company’s Convertible Preferred Stock, or $2.2 million if paid-in-kind.

We are not able to provide a quantitative reconciliation of the estimated full year Adjusted EBITDA for fiscal year ending December 31, 2024 without unreasonable efforts to the most directly comparable GAAP financial measure due to the high variability, complexity and low visibility with respect to certain items such as taxes, TRA remeasurements, and income and expense from changes in fair value of contingent consideration from acquisitions. We expect the variability of these items to have a potentially unpredictable and potentially significant impact on future GAAP financial results, and, as such, we also believe that any reconciliations provided would imply a degree of precision that would be confusing or misleading to investors.

Third Quarter 2024 Conference Call

The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its third quarter 2024 financial results. Participants may join the conference call by dialing 1-877-407-9716 (United States) or 1-201-493-6779 (International).

A live webcast of the conference call will also be available on the Company’s Investor Relations site at https://investor.xponential.com/. For those unable to participate in the conference call, a telephonic replay of the call will be available shortly after the completion of the call, until 11:59 p.m. ET on Thursday, November 21, 2024, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13748575.

About Xponential Fitness, Inc.

Xponential Fitness, Inc. (NYSE: XPOF) is one of the leading global franchisors of boutique health and wellness brands. Through its mission to make health and wellness accessible to everyone, the Company operates a diversified platform of nine brands spanning across verticals including Pilates, indoor cycling, barre, stretching, dancing, boxing, strength training, metabolic health, and yoga. In partnership with its franchisees, Xponential offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout the U.S. and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states and 27 additional countries. Xponential’s portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; CycleBar, the largest indoor cycling brand in the United States; StretchLab, the largest assisted stretching brand in the United States offering one-on-one and group stretching services; AKT, a dance-based cardio workout combining toning, interval and circuit training; YogaSix, the largest yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest Barre brand in the United States; Rumble, a boxing-inspired full body workout; BFT, a functional training and strength-based program; and Lindora, a leading provider of medically guided wellness and metabolic health solutions. For more information, please visit the Company’s website at xponential.com.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe non-GAAP financial measures are useful in evaluating our operating performance. We use certain non-GAAP financial information, such as EBITDA, Adjusted EBITDA, adjusted net income (loss), and adjusted net earnings (loss) per share, which exclude certain non-operating or non-recurring items, including but not limited to, equity-based compensation expenses and related employer payroll taxes, acquisition and transaction expenses (income), litigation expenses, financial transaction fees and related expenses, tax receivable agreement remeasurement, impairment of goodwill and other assets, loss on brand divestitures and wind down (excluding impairments), executive transition costs, non-recurring rebranding expenses, and charges incurred in connection with our restructuring plan that we believe are not representative of our core business or future operating performance, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively with comparable GAAP financial measures, is helpful to investors because it provides consistency and comparability with past financial performance and provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We seek to compensate such limitations by providing a detailed reconciliation for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. For a reconciliation of non-GAAP to GAAP measures discussed in this release, please see the tables at the end of this press release.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management’s judgment, beliefs, current trends, and anticipated financial performance. These forward-looking statements include, without limitation, statements relating to expected growth of our business; projected number of new studio openings; profitability; the expected impact of our movement away from company-owned transition studios; anticipated industry trends; projected financial and performance information such as system-wide sales; and other statements under the section “2024 Outlook”; our competitive position in the boutique fitness and broader health and wellness industry; and ability to execute our business strategies and our strategic growth drivers. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, our relationships with master franchisees, franchisees and international partners; difficulties and challenges in opening studios by franchisees; the ability of franchisees to generate sufficient revenues; risks relating to expansion into international markets; loss of reputation and brand awareness; general economic conditions and industry trends; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the full year ended December 31, 2023, filed by Xponential with the SEC, and other periodic reports filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and Xponential undertakes no duty to update such information, except as required under applicable law.

Xponential Fitness, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)

  September 30, December 31,

2024

2023

Assets Current assets: Cash, cash equivalents and restricted cash

$

37,774

 

$

37,094

 

Accounts receivable, net

 

29,552

 

 

32,751

 

Inventories

 

10,608

 

 

14,724

 

Prepaid expenses and other current assets

 

8,341

 

 

5,856

 

Deferred costs, current portion

 

9,022

 

 

6,620

 

Notes receivable from franchisees, net

 

279

 

 

203

 

Total current assets

 

95,576

 

 

97,248

 

Property and equipment, net

 

18,840

 

 

19,502

 

Right-of-use assets

 

34,160

 

 

71,413

 

Goodwill

 

163,036

 

 

171,601

 

Intangible assets, net

 

117,753

 

 

120,149

 

Deferred costs, net of current portion

 

41,616

 

 

46,541

 

Notes receivable from franchisees, net of current portion

 

103

 

 

802

 

Other assets

 

1,093

 

 

1,442

 

Total assets

$

472,177

 

$

528,698

 

Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) Current liabilities: Accounts payable

$

21,297

 

$

19,119

 

Accrued expenses

 

21,467

 

 

14,088

 

Deferred revenue, current portion

 

28,560

 

 

34,674

 

Current portion of long-term debt

 

5,397

 

 

4,760

 

Other current liabilities

 

17,423

 

 

19,666

 

Total current liabilities

 

94,144

 

 

92,307

 

  Deferred revenue, net of current portion

 

108,799

 

 

117,305

 

Contingent consideration from acquisitions

 

15,494

 

 

8,666

 

Long-term debt, net of current portion, discount and issuance costs

 

342,038

 

 

319,261

 

Lease liability

 

33,501

 

 

70,141

 

Other liabilities

 

1,537

 

 

9,152

 

Total liabilities

 

595,513

 

 

616,832

 

Commitments and contingencies Redeemable convertible preferred stock, $0.0001 par value, 400 shares authorized, 115 shares issued and outstanding as of September 30, 2024 and December 31, 2023

 

116,810

 

 

114,660

 

Stockholders' equity (deficit): Undesignated preferred stock, $0.0001 par value, 4,600 shares authorized, none issued and outstanding as of September 30, 2024 and December 31, 2023

 

—

 

 

—

 

Class A common stock, $0.0001 par value, 500,000 shares authorized, 32,191 and 30,897 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

3

 

 

3

 

Class B common stock, $0.0001 par value, 500,000 shares authorized, 16,091 and 16,566 shares issued, and 16,016 and 16,491 shares outstanding as of September 30, 2024 and December 31, 2023, respectively

 

2

 

 

2

 

Additional paid-in capital

 

516,582

 

 

521,998

 

Receivable from shareholder

 

(16,508

)

 

(15,426

)

Accumulated deficit

 

(654,095

)

 

(630,127

)

Treasury stock, at cost, 75 shares outstanding as of September 30, 2024 and December 31, 2023

 

(1,697

)

 

(1,697

)

Total stockholders' deficit attributable to Xponential Fitness, Inc.

 

(155,713

)

 

(125,247

)

Noncontrolling interests

 

(84,433

)

 

(77,547

)

Total stockholders' deficit

 

(240,146

)

 

(202,794

)

Total liabilities, redeemable convertible preferred stock and stockholders' deficit

$

472,177

 

$

528,698

 

Xponential Fitness, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

  Three Months Ended September 30, Nine Months Ended September 30,

2024

2023

2024

2023

Revenue, net: Franchise revenue

$

44,458

 

$

36,425

 

$

129,232

 

$

104,524

 

Equipment revenue

 

14,681

 

 

12,564

 

 

41,506

 

 

40,086

 

Merchandise revenue

 

6,538

 

 

8,456

 

 

20,593

 

 

24,021

 

Franchise marketing fund revenue

 

8,565

 

 

6,948

 

 

24,777

 

 

19,776

 

Other service revenue

 

6,249

 

 

16,042

 

 

20,421

 

 

40,058

 

Total revenue, net

 

80,491

 

 

80,435

 

 

236,529

 

 

228,465

 

Operating costs and expenses: Costs of product revenue

 

17,071

 

 

12,709

 

 

44,328

 

 

40,967

 

Costs of franchise and service revenue

 

4,867

 

 

3,559

 

 

15,822

 

 

11,305

 

Selling, general and administrative expenses

 

46,164

 

 

43,908

 

 

120,308

 

 

116,003

 

Impairment of goodwill and other assets

 

4,502

 

 

4,671

 

 

16,591

 

 

11,909

 

Depreciation and amortization

 

4,226

 

 

4,216

 

 

13,179

 

 

12,701

 

Marketing fund expense

 

6,423

 

 

5,817

 

 

20,785

 

 

16,289

 

Acquisition and transaction expenses (income)

 

3,664

 

 

(1,923

)

 

6,962

 

 

(17,433

)

Total operating costs and expenses

 

86,917

 

 

72,957

 

 

237,975

 

 

191,741

 

Operating income (loss)

 

(6,426

)

 

7,478

 

 

(1,446

)

 

36,724

 

Other expense (income): Interest income

 

(481

)

 

(24

)

 

(1,231

)

 

(1,189

)

Interest expense

 

11,843

 

 

10,638

 

 

34,644

 

 

27,242

 

Other expense

 

51

 

 

1,845

 

 

913

 

 

3,097

 

Total other expense

 

11,413

 

 

12,459

 

 

34,326

 

 

29,150

 

Income (loss) before income taxes

 

(17,839

)

 

(4,981

)

 

(35,772

)

 

7,574

 

Income taxes

 

131

 

 

202

 

 

216

 

 

212

 

Net income (loss)

 

(17,970

)

 

(5,183

)

 

(35,988

)

 

7,362

 

Less: net income (loss) attributable to noncontrolling interests

 

(5,971

)

 

(1,801

)

 

(12,020

)

 

2,348

 

Net income (loss) attributable to Xponential Fitness, Inc.

$

(11,999

)

$

(3,382

)

$

(23,968

)

$

5,014

 

  Net income (loss) per share of Class A common stock: Basic

$

(0.29

)

$

0.91

 

$

(0.88

)

$

1.08

 

Diluted

$

(0.29

)

$

(0.50

)

$

(0.88

)

$

(0.17

)

Weighted average shares of Class A common stock outstanding: Basic

 

32,177

 

 

32,260

 

 

31,704

 

 

32,025

 

Diluted

 

32,177

 

 

40,223

 

 

31,704

 

 

39,988

 

Xponential Fitness, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

  Nine Months Ended September 30,

2024

2023

Cash flows from operating activities: Net income (loss)

$

(35,988

)

$

7,362

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization

 

13,179

 

 

12,701

 

Amortization and write off of debt issuance costs

 

179

 

 

416

 

Amortization and write off of discount on long-term debt

 

3,129

 

 

2,032

 

Change in contingent consideration from acquisitions

 

6,435

 

 

(17,528

)

Non-cash lease expense

 

5,415

 

 

9,637

 

Bad debt expense

 

2,270

 

 

850

 

Equity-based compensation

 

13,121

 

 

15,647

 

Non-cash interest

 

(986

)

 

(857

)

Loss (gain) on disposal of assets

 

(8,307

)

 

(770

)

Impairment of goodwill and other assets

 

16,591

 

 

11,909

 

Changes in assets and liabilities, net of effect of acquisition: Accounts receivable

 

1,152

 

 

(2,535

)

Inventories

 

4,116

 

 

(5,376

)

Prepaid expenses and other current assets

 

(2,485

)

 

(7,237

)

Operating lease liabilities

 

(2,002

)

 

(4,027

)

Deferred costs

 

2,522

 

 

(4,743

)

Notes receivable, net

 

3

 

 

1

 

Accounts payable

 

1,952

 

 

7,302

 

Accrued expenses

 

6,688

 

 

1,656

 

Other current liabilities

 

5,816

 

 

4,953

 

Deferred revenue

 

(14,620

)

 

7,536

 

Other assets

 

348

 

 

(458

)

Other liabilities

 

(7,613

)

 

(277

)

Net cash provided by operating activities

 

10,915

 

 

38,194

 

Cash flows from investing activities: Purchases of property and equipment

 

(4,815

)

 

(6,156

)

Proceeds from sale of assets

 

346

 

 

60

 

Purchase of studios

 

—

 

 

(164

)

Purchase of intangible assets

 

(1,435

)

 

(2,420

)

Notes receivable issued

 

—

 

 

(581

)

Notes receivable payments received

 

470

 

 

666

 

Acquisition of business

 

(8,500

)

 

—

 

Net cash used in investing activities

 

(13,934

)

 

(8,595

)

Cash flows from financing activities: Borrowings from long-term debt

 

62,951

 

 

189,150

 

Payments on long-term debt

 

(42,527

)

 

(3,014

)

Debt issuance costs

 

(318

)

 

(411

)

Payment of preferred stock dividend

 

(3,768

)

 

(5,677

)

Payment of promissory note liability

 

(3,467

)

 

—

 

Payment of contingent consideration

 

—

 

 

(1,412

)

Payments for taxes related to net share settlement of restricted share units

 

—

 

 

(8,111

)

Proceeds from issuance of common stock in connection with stock-based compensation plans

 

74

 

 

—

 

Payment for tax receivable agreement

 

(2,267

)

 

(1,163

)

Payments for redemption of preferred stock

 

—

 

 

(130,766

)

Payments for distributions to Pre-IPO LLC Members

 

(6,979

)

 

(7,485

)

Repurchase of Class A common stock

 

—

 

 

(50,378

)

Payment received from shareholder

 

—

 

 

8,062

 

Loan to shareholder

 

—

 

 

(4,400

)

Proceeds from disgorgement of stockholders short-swing profits

 

—

 

 

516

 

Net cash provided by (used in) financing activities

 

3,699

 

 

(15,089

)

Increase in cash, cash equivalents and restricted cash

 

680

 

 

14,510

 

Cash, cash equivalents and restricted cash, beginning of period

 

37,094

 

 

37,370

 

Cash, cash equivalents and restricted cash, end of period

$

37,774

 

$

51,880

 

Xponential Fitness, Inc.

Net Income (Loss) to GAAP EPS

(in thousands, except per share amounts)

  Three months ended September 30, Nine months ended September 30,

2024

2023

2024

2023

Numerator: Net income (loss)

$

(17,970

)

$

(5,183

)

$

(35,988

)

$

7,362

 

Less: net (income) loss attributable to noncontrolling interests

 

4,577

 

 

(14,976

)

 

14,123

 

 

(14,127

)

Less: dividends on preferred shares

 

(1,898

)

 

(1,863

)

 

(5,911

)

 

(5,789

)

Less: deemed contribution

 

6,094

 

 

51,435

 

 

—

 

 

34,326

 

Add: deemed contribution from redemption of convertible preferred stock

 

—

 

 

—

 

 

—

 

 

12,679

 

Net income (loss) attributable to XPO Inc. - basic

 

(9,197

)

 

29,413

 

 

(27,776

)

 

34,451

 

Add: dividends on preferred shares

 

—

 

 

1,863

 

 

—

 

 

5,789

 

Less: deemed contribution

 

—

 

 

(51,435

)

 

—

 

 

(34,326

)

Less: Deemed contribution from redemption of convertible preferred stock

 

—

 

 

—

 

 

—

 

 

(12,679

)

Net loss attributable to XPO Inc. - diluted

$

(9,197

)

$

(20,159

)

$

(27,776

)

$

(6,765

)

Denominator: Weighted average shares of Class A common stock outstanding - basic

 

32,177

 

 

32,260

 

 

31,704

 

 

32,025

 

Effect of dilutive securities: Convertible preferred stock

 

—

 

 

7,963

 

 

—

 

 

7,963

 

Weighted average shares of Class A common stock outstanding - diluted

 

32,177

 

 

40,223

 

 

31,704

 

 

39,988

 

  Net earnings (loss) per share attributable to Class A common stock - basic

$

(0.29

)

$

0.91

 

$

(0.88

)

$

1.08

 

Net loss per share attributable to Class A common stock - diluted

$

(0.29

)

$

(0.50

)

$

(0.88

)

$

(0.17

)

  Anti-dilutive shares excluded from diluted loss per share of Class A common stock: Restricted stock units

 

2,077

 

 

1,267

 

 

2,077

 

 

1,267

 

Conversion of Class B common stock to Class A common stock

 

16,016

 

 

16,492

 

 

16,016

 

 

16,492

 

Convertible preferred stock

 

8,112

 

 

—

 

 

8,112

 

 

—

 

Accelerated Purchase Program - final settlement

 

—

 

 

589

 

 

—

 

 

589

 

Treasury share options

 

75

 

 

75

 

 

75

 

 

75

 

Rumble contingent shares

 

2,024

 

 

2,024

 

 

2,024

 

 

2,024

 

Profits interests, time vesting

 

—

 

 

1

 

 

—

 

 

1

 

Xponential Fitness, Inc.

Reconciliations of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

  Three Months Ended September 30, Nine Months Ended September 30,

2024

2023

2024

2023

(in thousands) Net income (loss)

$

(17,970

)

$

(5,183

)

$

(35,988

)

$

7,362

 

Interest expense, net

 

11,362

 

 

10,614

 

 

33,413

 

 

26,053

 

Income taxes

 

131

 

 

202

 

 

216

 

 

212

 

Depreciation and amortization

 

4,226

 

 

4,216

 

 

13,179

 

 

12,701

 

EBITDA

 

(2,251

)

 

9,849

 

 

10,820

 

 

46,328

 

Equity-based compensation

 

4,983

 

 

3,536

 

 

13,121

 

 

15,647

 

Employer payroll taxes related to equity-based compensation

 

(7

)

 

94

 

 

415

 

 

659

 

Acquisition and transaction expenses (income)

 

3,664

 

 

(1,923

)

 

6,962

 

 

(17,433

)

Litigation expenses

 

10,435

 

 

1,511

 

 

14,521

 

 

5,855

 

Financial transaction fees and related expenses

 

—

 

 

327

 

 

620

 

 

1,971

 

TRA remeasurement

 

51

 

 

1,845

 

 

913

 

 

3,097

 

Impairment of goodwill and other assets

 

4,502

 

 

4,671

 

 

16,591

 

 

11,909

 

Loss on brand divestitures and wind down (excluding impairments)

 

408

 

 

—

 

 

1,609

 

 

—

 

Executive transition costs

 

—

 

 

—

 

 

690

 

 

—

 

Non-recurring rebranding expenses

 

—

 

 

—

 

 

331

 

 

—

 

Restructuring and related charges (excluding impairments)

 

9,194

 

 

6,611

 

 

19,583

 

 

6,611

 

Adjusted EBITDA

$

30,979

 

$

26,521

 

$

86,176

 

$

74,644

 

Three Months Ended September 30, Nine Months Ended September 30,

2024

2023

2024

2023

Net income (loss)

$

(17,970

)

$

(5,183

)

$

(35,988

)

$

7,362

 

Acquisition and transaction expenses (income)

 

3,664

 

 

(1,923

)

 

6,962

 

 

(17,433

)

TRA remeasurement

 

51

 

 

1,845

 

 

913

 

 

3,097

 

Impairment of goodwill and other assets

 

4,502

 

 

4,671

 

 

16,591

 

 

11,909

 

Loss on brand divestitures and wind down (excluding impairments)

 

408

 

 

—

 

 

1,609

 

 

—

 

Restructuring and related charges (excluding impairments)

 

9,194

 

 

6,611

 

 

19,583

 

 

6,611

 

Adjusted net income

$

(151

)

$

6,021

 

$

9,670

 

$

11,546

 

Adjusted net income attributable to noncontrolling interest

 

(50

)

 

2,038

 

 

3,343

 

 

3,940

 

Adjusted net income attributable to Xponential Fitness, Inc.

 

(101

)

 

3,983

 

 

6,327

 

 

7,606

 

Dividends on preferred shares

 

(1,267

)

 

(1,233

)

 

(3,908

)

 

(3,759

)

Adjusted Earnings (loss) per share - basic numerator

$

(1,368

)

$

2,750

 

$

2,419

 

$

3,847

 

Add: Adjusted net income (loss) attributable to noncontrolling interest

 

—

 

 

2,038

 

 

3,343

 

 

3,940

 

Add: Dividends on preferred shares

 

—

 

 

1,233

 

 

3,908

 

 

3,759

 

Adjusted Earnings (loss) per share - diluted numerator

$

(1,368

)

$

6,021

 

$

9,670

 

$

11,546

 

  Adjusted net earnings (loss) per share - basic

$

(0.04

)

$

0.09

 

$

0.08

 

$

0.12

 

Weighted average shares of Class A common stock outstanding - basic

 

32,177

 

 

32,260

 

 

31,704

 

 

32,025

 

  Adjusted net earnings (loss) per share - diluted

$

(0.04

)

$

0.11

 

$

0.17

 

$

0.20

 

Effect of dilutive securities: Restricted stock units

 

—

 

 

85

 

 

—

 

 

421

 

Convertible preferred stock

 

—

 

 

7,963

 

 

8,112

 

 

7,963

 

Conversion of Class B common stock to Class A common stock

 

—

 

 

16,503

 

 

16,242

 

 

17,206

 

Weighted average shares of Class A common stock outstanding - diluted

 

32,177

 

 

56,811

 

 

56,058

 

 

57,615

 

  Shares excluded from dilutive earnings per share of Class A common stock Restricted stock units

 

2,077

 

 

—

 

 

2,077

 

 

—

 

Convertible preferred stock

 

8,112

 

 

—

 

 

—

 

 

—

 

Conversion of Class B common stock to Class A common stock

 

16,016

 

 

—

 

 

—

 

 

—

 

Treasury share options

 

75

 

 

—

 

 

75

 

 

—

 

Rumble contingent shares

 

2,024

 

 

2,024

 

 

2,024

 

 

2,024

 

Profits interests, time vesting

 

—

 

 

1

 

 

—

 

 

1

 

Note: The above adjusted net income (loss) per share is computed by dividing the adjusted net income (loss) attributable to holders of Class A common stock by the weighted average shares of Class A common stock outstanding during the period. Total share count does not include potential future shares vested upon achieving certain earn-out thresholds. Net income, however, continues to take into account the non-cash contingent liability primarily attributable to Rumble.

Footnotes

1 System-wide sales represent gross sales by all North America studios. System-wide sales include sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance. System-wide sales growth is driven by new studio openings and increases in same store sales. Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.

2 AUV is calculated by dividing sales during the applicable period for all studios contributing to AUV by the number of studios contributing to AUV. All traditional studio locations in North America are included in the AUV calculation, so long as they meet certain time since opening and sales criteria (as defined immediately below). In particular, AUV (LTM as of period end) and Quarterly AUV (run rate) are calculated as follows:

• AUV (LTM as of period end) consists of the average sales for the trailing 12 calendar months for all traditional studio locations in North America that opened at least 13 calendar months ago as of the measurement date and that have generated positive sales for each of the last 13 calendar months as of the measurement date.
• Quarterly AUV (run rate) consists of average quarterly sales for all traditional studio locations in North America that had opened at least six calendar months ago as of the beginning of the respective quarter, and that have non-zero sales in the respective quarter (including nominal or negative sales figures; the only figures excluded are exact $0 amounts in the quarter), multiplied by four.

We measure sales for AUV based solely upon monthly sales as derived through the designated point-of-sale system. AUV is impacted by changes in same store sales, studio openings, and studio closures. Management reviews AUV to assess studio economics.

3 Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include monthly sales for any traditional studio location in North America. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendars months ago as of any month within the measurement period, the respective comparable months will be included. We measure same store sales based solely upon monthly sales as derived through the designated point-of-sale system. This measure highlights the performance of existing studios, while excluding the impact of new studio openings. Management reviews same store sales to assess the health of the franchised studios.

4 We define Adjusted EBITDA as EBITDA (net income/loss before interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity-based compensation and related employer payroll taxes, acquisition and transaction expenses (income) (including change in contingent consideration and transaction bonuses), litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions) and other contemplated corporate transactions, expense related to the remeasurement of our TRA obligation, expense related to loss on impairment or write down of goodwill and other assets, loss on brand divestitures and wind down (excluding impairments), executive transition costs (consisting of costs associated with the transition of our former CEO, such as professional services, legal fees, executive recruiting costs and other related costs), non-recurring rebranding expenses, and restructuring and related charges (excluding impairments) incurred in connection with our restructuring plan that we do not believe reflect our underlying business performance and affect comparability. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that Adjusted EBITDA, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107487653/en/

Addo Investor Relations investor@xponential.com (310) 829-5400