8-K: Xponential Fitness Reports Q4, Full Year 2025 Results

Xponential Fitness announced its Q4 and full year 2025 financial results, revealing mixed performance with revenue declines and significant legal settlements.

Summary

• Q4 2025 reported revenue was $83.0 million, a decrease of $0.3 million from the prior year period.
• Full year 2025 reported revenue was $314.9 million, a decrease of 2% from the prior year period.
• North America system-wide sales increased by 5% to $446.7 million in Q4 2025 and by 13% to $1.75 billion for the full year 2025.
• North America same store sales decreased by 4% in Q4 2025, compared to 7% growth in the prior year period.
• North America same store sales growth for the full year 2025 was 0.5%, compared to 7% growth in the prior year period.
• Q4 2025 net loss was $45.6 million, or a loss of $1.17 per basic share, compared to a net loss of $62.5 million in Q4 2024.
• Full year 2025 net loss was $53.7 million, or a loss of $1.47 per basic share, compared to a net loss of $98.7 million in FY 2024.
• Q4 2025 Adjusted EBITDA was $22.9 million, a 26% decrease from $30.8 million in the prior year period.
• Full year 2025 Adjusted EBITDA was $111.8 million, a 4% decrease from $116.2 million in the prior year.
• The company sold 179 franchise licenses and opened 341 gross new studios in 2025.
• Xponential Fitness agreed to pay $17.0 million over a 12-month period to resolve a previously disclosed FTC investigation.
• The company finalized a $22.75 million settlement with over 500 current and former franchisees, to be paid out over a thirty-five month period.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging report, marked by significant declines in key profitability and growth metrics, coupled with a cautious 2026 outlook despite resolving legal uncertainties.

Positives

• North America system-wide sales increased by 5% in Q4 2025 to $446.7 million and by 13% for FY 2025 to $1.75 billion.
• Net loss decreased to $45.6 million in Q4 2025 from $62.5 million in Q4 2024, and to $53.7 million in FY 2025 from $98.7 million in FY 2024.
• Resolution of the FTC investigation with a $17.0 million settlement over 12 months, expected to substantially reduce regulatory uncertainty.
• Finalization of a $22.75 million settlement with over 500 franchisees over 35 months, also expected to substantially reduce legal uncertainty.
• Net cash provided by operating activities was $28.3 million for the full year ended December 31, 2025.

Negatives

• Total revenue decreased by $0.3 million in Q4 2025 to $83.0 million and by 2% to $314.9 million for FY 2025, primarily due to lower equipment revenue from declining installations.
• North America same store sales decreased by 4% in Q4 2025, a significant decline compared to 7% growth in the prior year.
• North America same store sales growth for FY 2025 was only 0.5%, a substantial slowdown from 7% growth in the prior year.
• North America quarterly run-rate average unit volume (AUV) decreased to $683,000 in Q4 2025 from $695,000 in Q4 2024.
• Adjusted EBITDA decreased by 26% in Q4 2025 to $22.9 million and by 4% for FY 2025 to $111.8 million.
• Adjusted net loss significantly widened to $44.6 million in Q4 2025 from $7.1 million in Q4 2024, and for FY 2025 was $18.4 million compared to an adjusted net income of $1.8 million in FY 2024.
• Total long-term debt increased to $525 million as of December 31, 2025.
• The 2026 outlook projects decreases in net new studio openings (20% at midpoint), revenue (16% at midpoint), and Adjusted EBITDA (6% at midpoint).

Risks

• Franchisees' ability to generate sufficient revenues.
• The company's ability to anticipate and satisfy consumer preferences.
• Risks related to loss of reputation and brand awareness.
• The company's ability to manage changes in executive leadership.
• The company's ability to attract and retain key senior management and key employees.
• Risks relating to expansion into international markets.
• Macroeconomic conditions or economic downturns.
• Geopolitical uncertainty, including the impact of the presidential administration in the U.S. trade policies and tariffs.
• General economic conditions and industry trends.
• Other risks as described in SEC filings, including the Annual Report on Form 10-K for the full year ended December 31, 2025.

Future Outlook

For full year 2026, the company projects net new studio openings in the range of 150 to 170, representing a decrease of 20% at the midpoint. North America system-wide sales are expected to be in the range of $1.72 billion to $1.80 billion, an increase of 1% at the midpoint. Revenue is projected between $260.0 million and $270.0 million, a decrease of 16% at the midpoint. Adjusted EBITDA is anticipated to be in the range of $100.0 million to $110.0 million, representing a decrease of 6% at the midpoint. The company also expects a tax rate in the mid-to-high single digits and a share count of 37.3 million shares for EPS calculations.

Management Comments

• "The fourth quarter capped a year of progress as we refined the strategic priorities that will drive Xponential's long term growth."
• "With strong franchise partner engagement and disciplined execution across our brands, we are continuing to reinforce our industry-leading position and capitalize on the opportunities ahead."
• "As we enter 2026, we are focused on driving organic growth and elevating the member experience. We are making intentional investments to drive member acquisition and retention, even if this results in more modest near-term Adjusted EBITDA."

Industry Context

StockSavvy.ai notes that Xponential Fitness operates in the competitive boutique health and wellness sector, which has seen varying recovery rates post-pandemic. The company's focus on organic growth and member experience, even at the expense of near-term Adjusted EBITDA, suggests a strategic pivot towards long-term sustainability and market share, a common theme among established players facing increased competition and evolving consumer preferences. The legal settlements, while costly, could remove significant overhangs, potentially allowing for a clearer focus on operational execution.

Comparison to Industry Standards

• The decline in North America same store sales by 4% in Q4 2025 and only 0.5% growth for FY 2025 contrasts with some industry peers who have reported stronger post-pandemic recovery in same-store sales, such as Planet Fitness (PLNT) which often reports mid-to-high single-digit comparable store sales growth.
• The projected 16% decrease in revenue for 2026 at the midpoint is a significant contraction, which could be concerning compared to growth expectations for many established franchise models in the fitness space.
• The decrease in Adjusted EBITDA for both Q4 and FY 2025, and the projected further decrease for 2026, indicates a challenging profitability trend that may lag behind more robustly growing fitness chains.

Legal Proceedings

• The staff of the United States Federal Trade Commission (FTC) will recommend a stipulated consent agreement to fully resolve the previously disclosed FTC investigation. The company has agreed to pay $17.0 million over a 12-month period, subject to approval by FTC Commissioners and the court, without admitting liability.
• The company finalized a $22.75 million settlement with over 500 current and former franchisees, to be paid out over a thirty-five month period.

Stakeholder Impact

• Shareholders face significant financial losses, declining profitability, and a cautious outlook for 2026, potentially impacting share value. However, the resolution of legal uncertainties could remove a significant overhang.
• Franchisees benefit from the $22.75 million settlement, which addresses past disputes and may improve relations. However, declining same-store sales and AUV indicate potential challenges in studio performance.
• Employees are not directly impacted by mentioned changes, but strategic shifts and financial performance could indirectly affect morale or future hiring.
• Customers/Members may see potential improvements in service and offerings due to the company's stated focus on driving organic growth and elevating the member experience.
• Creditors should monitor the company's $525 million in total long-term debt, especially given declining revenue and EBITDA, although operating cash flow remains positive.

Next Steps

• Host a conference call on February 26, 2026, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss financial results.
• File the Annual Report on Form 10-K for the full year ended December 31, 2025, with the SEC.
• Focus on driving organic growth and elevating the member experience in 2026.
• Make intentional investments to drive member acquisition and retention in 2026.

Key Dates

Recommendation

The filing reveals significant underperformance in key metrics such as revenue, same-store sales, and Adjusted EBITDA for both Q4 and the full year 2025. The 2026 outlook projects further declines in revenue and Adjusted EBITDA, indicating a challenging operational environment and potential erosion of profitability. While the resolution of legal issues is a positive, the underlying business trends are concerning, suggesting continued pressure on the stock price. A seasoned investor would likely view these results and outlook as a strong signal to reduce exposure.

Keywords

Xponential Fitness, XPOF, financial results, Q4 2025, full year 2025, earnings, revenue, net loss, Adjusted EBITDA, system-wide sales, same store sales, AUV, franchise, boutique fitness, health and wellness, SEC filing, 8-K, FTC investigation, franchisee settlement, 2026 outlook