8-K: Xponential Fitness Q2 Sales Up, Revenue Dips Amid Guidance Cut

Xponential Fitness reported a 12% increase in system-wide sales for Q2 2025, but revenue decreased by 1%, leading to a downward revision of full-year 2025 guidance for revenue and Adjusted EBITDA.

Summary

• System-wide sales increased 12% year-over-year to $473.5 million in Q2 2025.
• Quarterly Average Unit Volume (AUV) grew 3% year-over-year to $659,000, while total members increased 8% to 863,000.
• Opened 86 gross new studios in Q2 2025.
• Reported revenue decreased 1% to $76.2 million, down from $76.9 million in Q2 2024, primarily due to lower equipment and merchandise sales.
• Net income was $1.3 million, or a loss of $0.01 per basic share, a significant improvement from a net loss of $14.3 million in Q2 2024.
• Adjusted EBITDA increased 14% to $28.1 million, up from $24.7 million in Q2 2024.
• Full-year 2025 revenue guidance was revised down to $300.0 million $310.0 million from previous guidance of $315.0 million $325.0 million.
• Full-year 2025 Adjusted EBITDA guidance was revised down to $106.0 million $111.0 million from previous guidance of $120.0 million $125.0 million.
• Net new studio openings guidance for 2025 is 170 to 190, representing a 37% decrease at the midpoint compared to 2024.
• The financial information for the three and six months ended June 30, 2024, has been corrected from amounts previously reported, with details included in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

Sentiment

Score: 4

Explanation: While system-wide sales and adjusted EBITDA showed growth, the significant downward revision of full-year revenue and Adjusted EBITDA guidance, coupled with a slowdown in same-store sales growth and fewer projected new studio openings, indicates a challenging outlook despite some positive operational metrics. The divestiture and 'proactive investments' are cited, but the immediate financial impact is negative.

Positives

• System-wide sales increased 12% year-over-year to $473.5 million in Q2 2025.
• Quarterly AUV (run rate) grew 3% year-over-year to $659,000.
• Total members increased 8% to 863,000.
• Net income improved significantly to $1.3 million in Q2 2025 from a net loss of $14.3 million in Q2 2024.
• Adjusted EBITDA increased 14% to $28.1 million in Q2 2025.
• Net cash provided by operating activities for the six months ended June 30, 2025, was $8.3 million.

Negatives

• Reported revenue decreased 1% to $76.2 million in Q2 2025, primarily due to lower equipment and merchandise sales.
• North America same store sales growth was 1% in Q2 2025, a significant slowdown compared to 7% in the prior year period.
• Full-year 2025 revenue guidance was revised downwards by 5% at the midpoint, from $315.0 million-$325.0 million to $300.0 million-$310.0 million.
• Full-year 2025 Adjusted EBITDA guidance was revised downwards by 7% at the midpoint, from $120.0 million-$125.0 million to $106.0 million-$111.0 million.
• Guidance for net new studio openings for 2025 is 170 to 190, representing a 37% decrease at the midpoint compared to 2024.
• The company had $377.8 million in total long-term debt as of June 30, 2025.
• Financial information for the three and six months ended June 30, 2024, was corrected from previously reported amounts, indicating past reporting inaccuracies.

Risks

• Outcome of ongoing and any future government investigations and litigation to which the company is subject.
• Ability to retain key senior management and key employees.
• Relationships with master franchisees, franchisees, and international partners.
• Difficulties and challenges in opening studios by franchisees.
• Ability of franchisees to generate sufficient revenues.
• Risks relating to expansion into international markets.
• Loss of reputation and brand awareness.
• Geopolitical uncertainty, including the impact of the presidential administration in the U.S.
• Trade policies and tariffs.
• General economic conditions and industry trends.
• Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from forward-looking statements.

Future Outlook

The company updated its full-year 2025 guidance, revising down revenue to a range of $300.0 million to $310.0 million and Adjusted EBITDA to $106.0 million to $111.0 million, reflecting the recent divestiture of CycleBar and Rumble and proactive investments. Net new studio openings are projected to be between 170 and 190, a 37% decrease at the midpoint from 2024, while North America system-wide sales are expected to increase by 13% at the midpoint to $1.780 billion to $1.800 billion.

Management Comments

• We've made meaningful progress on several key initiatives we discussed during our Investor & Analyst Day.
• We've expanded our field operations team, executed a new retail partnership, and completed the divestiture of CycleBar and Rumble.
• That said, we revised guidance reflecting the recent divestiture and proactive investments in the organization intended to position us for a stronger 2026.
• We'll share more on today's call.

Industry Context

The boutique health and wellness industry continues to see growth in system-wide sales and member numbers, as evidenced by Xponential Fitness's Q2 results. However, the company's revenue dip and revised guidance, partly attributed to divestitures and strategic investments, suggest a period of recalibration within the competitive fitness landscape. The focus on core brands and operational efficiency may be a response to broader market dynamics and the need for sustainable growth in a fragmented sector.

Legal Proceedings

• Outcome of ongoing and any future government investigations and litigation to which the company is subject.

Stakeholder Impact

• Shareholders: Potential negative impact due to revised downward guidance for revenue and Adjusted EBITDA, and slower same-store sales growth, which could affect stock performance.
• Franchisees: Continued growth in system-wide sales and AUV suggests ongoing business activity, but slower new studio openings and same-store sales growth could indicate challenges in expansion and existing studio performance.
• Employees: 'Proactive investments in the organization' could imply strategic shifts, potentially affecting roles or teams, though no direct impact is detailed.
• Creditors: The company's long-term debt of $377.8 million and revised financial outlook could be a point of monitoring.

Next Steps

• Host a conference call on August 7, 2025, to discuss Q2 2025 financial results.
• Continue proactive investments in the organization intended to position the company for a stronger 2026.

Key Dates

Recommendation

While Xponential Fitness demonstrated growth in system-wide sales, AUV, and adjusted profitability in Q2 2025, the significant downward revision of full-year 2025 revenue and Adjusted EBITDA guidance, coupled with a notable slowdown in North America same-store sales growth and a projected decrease in net new studio openings, presents a mixed picture. The divestiture of CycleBar and Rumble, while strategic, impacts the immediate financial outlook. Investors should hold to observe the effectiveness of the 'proactive investments' and the company's ability to achieve a 'stronger 2026' as management suggests, especially given the existing debt load and the need for improved organic growth.

Keywords

Xponential Fitness, XPOF, Financial Results, Q2 2025, Earnings, System-wide Sales, AUV, Studio Openings, Franchise, Boutique Fitness, Health and Wellness, Adjusted EBITDA, Revenue Guidance, SEC Filing