Executive Summary

F45’s Q2 2022 reset the narrative: revenue was $30.0M (+12% YoY) with Adjusted EBITDA of $(7.3)M, as studio-level KPIs (SSS +6% global, +20% U.S.) held up but corporate profitability was weighed down by elevated SG&A and equipment mix; net loss was $(34.9)M and gross margin fell to 65.5% from 80.6% YoY .
Management terminated the previously announced $150M financing facility (Fortress) and pivoted to liquidity/cash preservation; headcount was reduced ~45% with targeted normalized SG&A of $15–$20M/quarter and a goal of positive free cash flow starting in Q4 2022 .
Guidance was reaffirmed at the revised July 26 levels: 2022 revenue $120–$130M, Adjusted EBITDA $25–$30M, net franchises sold 350–450, and net initial studio openings 350–450; free cash flow guidance withdrawn .
The quarter’s key negative surprise was net franchises sold of (173) due to terminations linked to financing unavailability, partly offset by 92 net initial openings (total studios 1,958) and record system-wide sales of $127.1M; U.S. AUV cited at ~$380k in Q&A .

What Went Well and What Went Wrong

What Went Well
- Underlying network demand and studio performance: system-wide sales hit a record $127.1M (+23% YoY); SSS +6% global (+20% U.S.); system-wide visits +5% global (+15% U.S.) .
- Network expansion sustained, albeit slower: 92 net initial studio openings in Q2; total studios reached 1,958 .
- Clear cost discipline and cash-focus pivot: workforce reduction (~110 roles, ~45% of global employees) and targeted normalized SG&A of $15–$20M/quarter; management expects to “start generating positive free cash flow” by Q4 .
What Went Wrong
- Financing reset drove development pressure: net franchises sold was (173) as multi-unit commitments were terminated due to unavailability of franchise financing facilities; the $150M facility was terminated Aug 14 .
- Profitability deterioration: Adjusted EBITDA fell to $(7.3)M (vs. +$10.7M in Q2’21) as SG&A rose to $52.8M driven by legal, transaction, relocation, stock comp and COVID concessions; gross margin compressed to 65.5% on mix (equipment margins lower) .
- Australia headwinds: reintroduced restrictions weighed on visits and system-wide sales in the quarter (Aus system-wide sales -15%; visits -27%), highlighting macro sensitivity .

Financial Results

Metric	Q4 2021	Q1 2022	Q2 2022
Revenue ($M)	$61.8 (+242% YoY)	$50.0 (+175% YoY)	$30.0 (+12% YoY)
Net Income (Loss) ($M)	$14.8	$2.5	$(34.9)
Basic/Diluted EPS ($)	N/A	$0.03	$(0.36)
Gross Profit Margin %	72%	76%	65.5%
Adjusted EBITDA ($M)	$25.9	$17.7	$(7.3)
Franchise Revenue ($M)	$21.5	$19.9	$19.1
Equipment & Merchandise Revenue ($M)	$40.4	$30.1	$10.9

Segment revenue breakdown (Q2 2022):

Segment	Franchise Revenue ($M)	Equipment & Merchandise Revenue ($M)
United States	$12.145	$6.553
Australia	$3.492	$1.099
Rest of World	$3.472	$3.272
Total	$19.109	$10.924

Key KPIs:

KPI	Q4 2021	Q1 2022	Q2 2022
Same-store sales (global)	+6%	+6%	+6%
Same-store sales (U.S.)	+53%	+40%	+20%
System-wide sales (global, $M)	$113.9	$117.4	$127.1
System-wide sales (U.S., $M)	$49.9	$52.7	$58.1
System-wide visits (global)	6.7M	7.2M	7.3M
System-wide visits (U.S.)	2.6M	3.1M	3.3M
Net Franchises Sold (net)	290	706	(173)
Net Initial Studio Openings	131	117	92
Total Studios (end of period)	1,749	1,866	1,958
Total Franchises Sold (end)	3,301	4,007	3,834

Estimates comparison (S&P Global consensus):

Metric	Actual	Consensus	Surprise
Revenue (Q2 2022)	$30.0M	N/A	N/A
EPS (Q2 2022)	$(0.36)	N/A	N/A
Adjusted EBITDA (Q2 2022)	$(7.3)M	N/A	N/A

Note: S&P Global consensus data for FXLV was unavailable via our feed at the time of analysis (ticker mapping missing). We attempted retrieval but could not obtain estimates; no third-party consensus numbers are cited here.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net New Franchises Sold	FY 2022	~1,500	350–450	Lowered
Net Initial Studio Openings	FY 2022	~1,000	350–450	Lowered
Revenue	FY 2022	$255–$275M	$120–$130M	Lowered
Adjusted EBITDA	FY 2022	$90–$100M	$25–$30M	Lowered
Free Cash Flow	FY 2022	$50–$60M	Withdrawn	Withdrawn

Assumptions explicitly remove the $250M franchise financing availability from outlook .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’21 and Q1’22)	Current Period (Q2’22)	Trend
Franchisee financing	Announced $150M Fortress facility (expandable) and $100M AFTER JV; off-balance sheet structures to compress opening timelines .	Terminated $150M facility; exploring alternatives; many terminations drove net franchises sold (173) .	Negative reset; model pivot to cash discipline
Liquidity and FCF	Q1 comfortable on liquidity and revolver; planned to repay with FCF .	End-Q2 cash ~$8.5M; revolver drawn to ~$61.6M at 6/30 and ~$83M by 8/15; aim for positive FCF in Q4 .	Tight but manageable; FCF focus
Cost structure	Q1 SG&A up on stock comp/investments .	~45% workforce reduction; target normalized SG&A $15–$20M/quarter; 50% cut in non-headcount SG&A targeted .	Aggressive cost-out underway
Australia operations	Q1: Omicron impact but improving into Q2 .	Q2: restrictions reinstated; Aus system-wide sales −15%, visits −27% .	Volatile; macro sensitivity
Member engagement/ AUV	Q1: visits/week ~3; AUVs at/above pre-COVID in U.S. .	U.S. AUV ~ $380k; SSS +20% U.S.; visits +15% U.S. .	Stable/improving in U.S.
Governance/regulatory	—	Interim CEO appointed; board independence shortfall disclosed to NYSE pending new independent director(s) .	Transition; remediation in process

Management Commentary

“We…have implemented a strategic reorganization and cost reduction plan to align the Company more closely with macroeconomic conditions… We are confident they are the appropriate and prudent steps to prioritize profitability and cash flow generation over the near term.” – Interim CEO Ben Coates .
“We expect the benefits of our recent actions to kick in the fourth quarter where we believe we will start generating positive free cash flow.” – Interim CEO Ben Coates .
“We are targeting overall normalized SG&A expense of between $15 million to $20 million per quarter.” – CFO Chris Payne .
“Global system-wide sales increased by 23% to a record $127 million… [U.S.] increased by 44% to a record $58 million.” – CFO Chris Payne .
“Net franchises sold declined by 173…due to cancellations…associated with the inability [of franchisees] to access financing facilities.” – CFO Chris Payne .

Q&A Highlights

Development risk from financing terminations: ~300 remaining multi-unit agreements tied to financing could still cancel, though guidance assumes all 300 cancel; management does not expect full cancellation and is pursuing alternative financing .
U.S. unit economics: Management cited U.S. AUV around $380k, above targets disclosed at IPO; supports SSS and visit trends .
SG&A/FCF path: Normalized SG&A targeted at $15–$20M/quarter; aim to generate ~$10M FCF in Q4, contingent on cost actions and operations normalization .
Balance sheet/credit facility: Revolver draws increased (to ~$83M by 8/15); management does not expect to trip leverage/fixed charge covenants under current run-rate scenarios .
EBITDA outlook: Expect EBITDA margins to return “more in line” with historic ~30% range by Q4, contingent on cost reductions and operations .

Estimates Context

Wall Street consensus via S&P Global was unavailable for FXLV in our feed (mapping error). As a result, we cannot provide a definitive “vs. consensus” comparison for Q2 revenue, EPS, or EBITDA here. We attempted retrieval but could not obtain estimates; therefore actuals are shown without consensus comparisons .
Given the dramatic guidance cuts on July 26 (revenue to $120–$130M; Adjusted EBITDA to $25–$30M; net new franchises and openings each 350–450), Street models likely required significant downward revisions through 2H, anchored to removal of the $250M franchise financing assumption .

Key Takeaways for Investors

The story has pivoted from hyper-growth to balance-sheet discipline: headcount reductions, expense normalization, and a stated objective of positive free cash flow starting Q4 2022 are the new north star .
Franchising momentum stalled near-term: net franchises sold were negative (173) due to financing-related terminations; reacceleration depends on securing alternative franchisee capital or improved credit availability .
Underlying studio trends remain resilient: record system-wide sales ($127.1M), solid SSS (+6% global; +20% U.S.) and U.S. AUV (~$380k) indicate healthy demand and unit-level economics, especially in the U.S. .
Margin/earnings inflection requires cost actions to stick and mix to shift: equipment margins compressed in Q2; SG&A normalization to $15–$20M/quarter is critical to restoring EBITDA margins toward historical levels .
Liquidity watch items: end-Q2 cash ~$8.5M; revolver borrowings increased (to ~$61.6M at 6/30 and ~$83M by 8/15). Management asserts covenant headroom, but execution on FCF in Q4 is a tangible catalyst for de-risking .
Guidance credibility improved by conservative reset and reaffirmation on Aug 15; delivery on revised openings and FCF guide could be the near-term stock driver .

Appendix: Additional Relevant Q2 2022 Press Release

Strategic Update (July 26): CEO transition (Adam Gilchrist stepped down; Ben Coates named interim CEO), ~45% workforce reduction, and a comprehensive guidance reset (revenue $120–$130M; Adj. EBITDA $25–$30M; net new franchises/openings 350–450; FCF withdrawn) reflecting unavailability of $250M franchise financing facilities .

Disclosures on Non-GAAP

Adjusted EBITDA excludes items such as sales tax reserve, transaction fees, certain legal costs/settlements, stock-based compensation, COVID concessions, relocation, recruitment, and development costs; reconciliations are provided in company filings .

F45 Training Holdings Inc. (FXLV)·Q2 2022 Earnings Summary