8-K: Xponential Fitness Reports Q1 2025 Results: System-Wide Sales Up, Guidance Adjusted

Xponential Fitness, Inc. announced its Q1 2025 financial results, showing an increase in system-wide sales but a decrease in revenue and adjusted EBITDA, while also adjusting its guidance for new studio openings.

Summary

• Xponential Fitness reported Q1 2025 system-wide sales of $466.8 million, an 18% increase year-over-year.
• Quarterly AUV (run rate) grew 8% year-over-year to $659,000, with total members reaching 865,000, up 12%.
• The company opened 116 gross new studios in Q1 2025.
• Reported revenue decreased by 4% to $76.9 million compared to the prior year period.
• North America same store sales growth was 4%, compared to 9% in the previous year.
• The company posted a net loss of $2.7 million, or $0.10 per basic share, compared to a net loss of $3.8 million, or $0.29 per basic share, in the prior year period.
• Adjusted net loss was $7.7 million, or $0.20 per basic share, compared to an adjusted net income of $9.2 million, or $0.15 per basic share, in the prior year.
• Adjusted EBITDA was $27.3 million, down 9% from $29.9 million in the prior year period.
• The company had $42.6 million in cash, cash equivalents, and restricted cash as of March 31, 2025, with $379.1 million in total long-term debt.
• Net cash provided by operating activities was $5.8 million for the three months ended March 31, 2025.
• The company is lowering guidance on global net new studio openings to a range of 160 to 180, a decrease of 29% at the midpoint.
• Guidance is reiterated for system-wide sales ($1.935 billion to $1.955 billion), revenue ($315.0 million to $325.0 million), and adjusted EBITDA ($120.0 million to $125.0 million) for full year 2025.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While system-wide sales increased, revenue and adjusted EBITDA decreased, and the company lowered its guidance for new studio openings. There are both positive and negative aspects to the report.

Positives

• System-wide sales increased by 18% year-over-year.
• Quarterly AUV (run rate) grew 8% year-over-year.
• Total members increased by 12% to 865,000.
• The net loss per share improved from $0.29 to $0.10.

Negatives

• Reported revenue decreased by 4% compared to the prior year period.
• Adjusted EBITDA decreased by 9% compared to the prior year period.
• The company posted an adjusted net loss of $7.7 million, compared to an adjusted net income of $9.2 million in the prior year.
• North America same store sales growth slowed to 4% from 9%.

Risks

• The company is subject to ongoing and any future government investigations and litigation.
• The company's performance depends on its relationships with master franchisees, franchisees, and international partners.
• Difficulties and challenges in opening studios by franchisees could impact growth.
• The ability of franchisees to generate sufficient revenues is crucial for the company's success.
• Expansion into international markets carries inherent risks.
• Loss of reputation and brand awareness could negatively impact the business.
• Geopolitical uncertainty, including the impact of the presidential administration in the U.S., could affect the company.
• General economic conditions and industry trends could impact the company's performance.

Future Outlook

The company is lowering guidance on global net new studio openings but reiterating guidance on system-wide sales, total revenue, and adjusted EBITDA for full year 2025.

Management Comments

• Xponential delivered results in line with our expectations this quarter, supported by solid KPIs, while successfully completing our updated financing agreement and making significant progress on the renewals of our Franchise Disclosure Documents, said Mark King, CEO of Xponential Fitness, Inc.
• Our team continues to enhance operations and focus upon Xponentials franchisee-first strategy.
• We look forward to sharing further detail at our upcoming Analyst & Investor Day.

Industry Context

Xponential Fitness operates in the boutique health and wellness industry, competing with other franchisors and fitness studios. The company's performance is influenced by consumer trends in fitness, economic conditions, and its ability to attract and retain franchisees and members.

Comparison to Industry Standards

• Comparable companies in the fitness franchising space include Planet Fitness, Anytime Fitness, and F45 Training.
• Xponential's AUV of $659,000 is a key metric to compare against these competitors to assess studio-level performance.
• Franchise agreements and royalty structures are also important benchmarks for comparison.
• Studio opening rates and international expansion strategies can be compared to assess growth potential.

Stakeholder Impact

• Shareholders will be impacted by the decrease in revenue and adjusted EBITDA, as well as the lowered guidance for new studio openings.
• Franchisees will be impacted by the company's performance and its ability to support their studio operations.
• Employees will be impacted by the company's overall financial health and its ability to invest in its workforce.
• Customers will be impacted by the company's ability to maintain and improve the quality of its fitness offerings.

Next Steps

• The company will host a conference call to discuss its first quarter 2025 financial results.
• The company will share further detail at its upcoming Analyst & Investor Day.

Key Dates

Keywords

Xponential Fitness, Financial Results, Q1 2025, System-wide Sales, AUV, Studio Openings, Adjusted EBITDA, Guidance