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XF

Xponential Fitness, Inc. (XPOF)·Q2 2025 Earnings Summary

Executive Summary

  • Mixed quarter: revenue declined 1% YoY to $76.2M on lower equipment installs/merchandise while Adjusted EBITDA rose 14% YoY to $28.1M and margin expanded 480 bps to 36.9% .
  • Against S&P Global consensus, revenue modestly MISSED by ~$1.0M and adjusted EPS MISSED by $0.03 as same‑store sales slowed to +1% (vs +7% LY) and equipment installs fell 39% YoY; EBITDA benefited from higher royalty mix and lower SG&A . Consensus values marked with “*” are from S&P Global.
  • Guidance CUT: FY25 revenue to $300–310M (from $315–325M) and Adj. EBITDA to $106–111M (from $120–125M), while net new studio openings RAISED to 170–190; cuts reflect divestitures (CycleBar/Rumble), FDD timing, heavier H2 marketing, and new-CEO-driven prudence .
  • Strategic actions: divested CycleBar and Rumble; appointed new CEO (Mike Nuzzo); outsourced retail to FitCommerce with $50M minimum commissions over 5 years, positioning for 2026 margin uplift and working-capital relief .

What Went Well and What Went Wrong

What Went Well

  • EBITDA quality improved: Adjusted EBITDA up 14% YoY to $28.1M; margin expanded to 36.9% (from 32.1%), driven by higher royalty mix and lower SG&A .
  • Portfolio focus and cost structure: Completed divestiture of CycleBar and Rumble; SEC investigation concluded without action; retail outsourcing expected to reduce SG&A and deliver $50M minimum commissions over 5 years starting December 1 (benefits 2026) .
  • Category leaders performing: Club Pilates showing high utilization with pricing/monetization opportunity; Pure Barre SSS strength and 25th anniversary campaigns; YogaSix momentum and new class formats .

Management quotes:

  • “We’ve expanded our field operations team, executed a new retail partnership, and completed the divestiture of CycleBar and Rumble.” – Mark King, Former CEO .
  • “FitCommerce…introducing annual minimum guaranteed commissions totaling over $50 million in the initial five-year contract period resulting in higher operating margins than our prior retail strategy.” – John Kawaja, President NA .

What Went Wrong

  • Top-line pressure: Revenue -1% YoY on a 39% decline in global equipment installations and lower merchandise, partly offset by franchise and marketing fund revenue .
  • Demand moderation in comps: Same-store sales decelerated to +1% (from +4% in Q1; +7% LY), with StretchLab negative comps and Club Pilates moderating; drove guidance reset for H2 .
  • Higher closures and portfolio cleanup: 57 closures in Q2 (annualized 6.9% closure rate); ~40% of global license backlog over 12 months behind schedule (though much in divested banners) .

Financial Results

Headline Metrics vs Prior Periods and Estimates

MetricQ4 2024Q1 2025Q2 2025
Revenue ($M)$83.2 $76.9 $76.2
Revenue Consensus Mean ($M)*—$75.4*$77.2*
GAAP EPS (Basic)$(1.36) $(0.10) $(0.01)
Adjusted EPS$(0.19) $(0.20) $0.26
Adjusted EPS Consensus Mean*—$0.153*$0.293*
Adjusted EBITDA ($M)$30.8 $27.3 $28.1
Adjusted EBITDA Margin %37.0% 35.5% 36.9%
N.A. System-wide Sales ($M)$464.7 $467.0 $473.5
Same-store Sales (YoY)+5% +4% +1%
Quarterly AUV (run rate)$668k $659k $659k

Notes: *Values retrieved from S&P Global.

Beats/Misses vs Consensus (Q2 2025): Revenue $76.2M vs $77.2M* → MISS; Adjusted EPS $0.26 vs $0.293* → MISS. EBITDA margin up YoY to 36.9% → POSITIVE .

Revenue Mix (YoY and QoQ)

Revenue Component ($M)Q2 2024Q1 2025Q2 2025
Franchise revenue$43.0 $43.9 $45.4
Equipment revenue$12.9 $11.1 $9.5
Merchandise revenue$6.1 $6.3 $5.6
Franchise marketing fund revenue$8.4 $9.3 $9.5
Other service revenue$6.4 $6.4 $6.3
Total Revenue$76.9 $76.9 $76.2

Drivers: Equipment revenue down on 39% fewer global installs; franchise revenue up on higher royalties and active members; merchandise softer YoY .

Operating KPIs

KPIQ4 2024Q1 2025Q2 2025
Global open studios (end of period)—3,298 3,327
Gross new studio openings—116 86
Global closures—51 57
Annualized closure rate—6.0% 6.9%
Licenses sold—21 58
Total members (N.A.)813k 865k 863k

Balance Sheet and Cash

  • Cash, cash equivalents & restricted cash: $38.7M; Total long-term debt: $377.8M (drew +$10M in 2025) .
  • Net cash from operations (6M25): $8.3M (includes lease settlements); expected 2025 interest expense ~$49M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net new studio openings (global, net)FY25160–180 170–190 Raised
N.A. System-wide SalesFY25$1.935–$1.955B $1.780–$1.800B Lowered (excludes divested brands)
RevenueFY25$315–$325M $300–$310M Lowered
Adjusted EBITDAFY25$120–$125M $106–$111M Lowered
SG&A ex one-time/regulatoryFY25$115–$120M $110–$115M Lowered
CapexFY25$10–$12M $10–$12M Maintained
Tax rateFY25Mid-to-high single digits Mid-to-high single digits Maintained
Share count (EPS calc)FY2534.8M 34.8M Maintained
Preferred dividendsFY25~$1.9M/quarter ~$1.9M/quarter Maintained

Guidance bridge: ~$120M of the system-wide sales guide reduction is removal of CycleBar/Rumble; remainder reflects softer core sales outlook and conservative posture amid FDD amendments, increased H2 marketing spend, and CEO transition .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Portfolio rationalizationQ4: restatement; broader transformation focus . Q1: StretchLab fix underway; consider portfolio discipline .Divested CycleBar/Rumble; backlog cleanup continues; closures ~5% expected for FY25 ex divested brands .Positive focus; near-term friction
Retail/merch strategyQ1: exploring alternatives to improve profitability and inventory turns .Outsourced to FitCommerce; $50M minimum commissions over 5 years; benefits start 12/1 (cash flow 2026) .Margin-accretive from 2026
Field ops & franchisee supportQ1: building 40-person field ops team; first wave in 2025 .First wave hired/training; deployment starting; second wave in Q4 .Execution progressing
FDD/License sales cadenceQ1: FDD renewals paused US sales; targeting ~100 licenses/qtr thereafter .Brief pause for CEO amendment; expect resumes quickly; 58 licenses sold in Q2 .Reaccelerating
Brand performanceQ1: CP, Y6, PB strong; StretchLab challenged .CP high utilization with pricing lever; PB strong; Y6 innovation; StretchLab model changes testing in Q3 .Mixed: CP/PB/Y6 strong; StretchLab fix
Marketing investmentQ1: accelerated fund spend; optimize media .+25% H2 spend; CP brand campaign $20M+ in Q3–Q4; performance marketing focus .Stepping up
Macro/tariffsQ1: Tariff exposure limited via cost-plus model .Seasonality pressure Q2–Q3; comps reset to low-single-digits for H2 .More conservative
Governance/RegulatoryQ1: class action accrual; restatement .SEC investigation concluded without action; $15M insurance reimbursement expected H2 .Risk de-escalation
Capital structureQ4/Q1: higher debt for lease settlements; interest ~$49M FY25 .Focus on refinancing post-SEC resolution .Potential 2H catalyst

Management Commentary

  • “These actions enable us to focus our company resources on the brands that generate the highest ROI… With a leaner and more focused portfolio, we expect… reduction in closure rates and an increase in average unit volumes.” – Mark King .
  • “This partnership [FitCommerce] will reduce our SG&A while introducing annual minimum guaranteed commissions… totaling over $50 million in the initial five-year contract period.” – John Kawaja .
  • “Adjusted EBITDA was $28.1 million… primarily driven by an increase in high margin royalties in our franchise revenues. Adjusted EBITDA margin was 36.9%.” – CFO John Meloun .
  • “We are spending about 25% more marketing dollars in the second half… with a conservative guide for system-wide sales.” – CFO .
  • “The SEC informed the company that it had concluded its investigation without action… expect to receive $15 million reimbursement from insurance in the second half.” – CFO .

Q&A Highlights

  • Comp slowdown diagnosis: Club Pilates decelerated from Q1, StretchLab negative comps; H2 comp assumption reset to low-single-digits from mid-single-digits .
  • Closures/outlook: FY25 closure rate ~5%; improvement expected into 2026 as healthier brands/units scale; Q2 closures concentrated in divested brands and international BFT .
  • Pricing/monetization: CP to deploy dynamic pricing, cancellation/late fees, tiers to lift revenue per class; dynamic pricing seen as cross-brand opportunity over time .
  • Guidance bridge: ~$120M guide drop in SWS tied to divestitures; remainder reflects softer core trend and conservative posture .
  • FitCommerce economics: starts 12/1; ~$7M year-1 minimum commissions; monthly payments; inventory purchase by partner to free working capital .
  • Debt refinancing: SEC resolution clears path; actively pursuing refinancing .

Estimates Context

  • Q2 2025 actuals vs S&P Global consensus: Revenue $76.2M vs $77.2M* (MISS); Adjusted EPS $0.26 vs $0.293* (MISS) .
  • Q1 2025: Revenue $76.9M vs $75.4M* (BEAT); Adjusted EPS $(0.20) vs $0.153* (MISS) .
PeriodRevenue Actual ($M)Revenue Consensus ($M)*EPS (Adj.) ActualEPS Consensus*
Q2 2024$76.9 $83.6*$(0.04) $0.226*
Q1 2025$76.9 $75.4*$(0.20) $0.153*
Q2 2025$76.2 $77.2*$0.26 $0.293*

Notes: *Values retrieved from S&P Global.

Where estimates may adjust: Lowered FY25 revenue/EBITDA guidance, comps reset to low-single-digits, and increased H2 marketing spend likely drive downward revisions to out-quarter EBITDA/EPS; 2026 could see upward bias from retail outsourcing and StretchLab model changes if execution succeeds .

Key Takeaways for Investors

  • Near-term earnings power reset: Guidance cuts and Q2 revenue/EPS misses signal softer H2 trajectory despite stronger EBITDA mix; expect consensus to drift lower for FY25 .
  • Margin story improving: EBITDA margin expansion and retail outsourcing support a more asset-light, royalty-heavy mix with 2026 tailwinds; monitor execution milestones and FitCommerce ramp .
  • Growth quality over breadth: Portfolio narrowed (CycleBar, Rumble divested); focus on CP/PB/Y6; watch dynamic pricing and brand campaign to lift CP revenue per class .
  • StretchLab is the swing factor: Model changes (cross-studio memberships, recovery equipment, at-home programs) in test through Q3 with 2026 rollout; stabilization here could de-risk closures and comps .
  • License sales and openings reacceleration: Expect improved cadence post FDD amendments; field ops rollout should support openings and reduce early-life failures .
  • Balance sheet/watch refinancing: $377.8M debt and ~$49M FY25 interest expense underline importance of refinancing; SEC overhang cleared; insurance reimbursement ($15M) aids liquidity .
  • Catalysts: CP brand campaign and pricing tests, StretchLab pilot outcomes, FDD-driven license momentum, retail outsourcing go-live, debt refi progress, and closure rate trajectory.

Appendix: Additional Data Points

  • Q2 2025 revenue drivers: lower equipment installs (-39% YoY) and merchandise, partially offset by higher franchise and marketing fund revenue .
  • Studio activity: Q2 openings 86 (66 N.A., 20 international); 57 closures (about half in divested brands) .
  • Liquidity: Cash $38.7M; total long-term debt $377.8M; operating cash flow 6M25 $8.3M .

All non-estimate data cited from company filings and transcripts as referenced. Estimates marked with an asterisk were retrieved from S&P Global.