Xponential Fitness, Inc. (XPOF) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights several concerning factors: a decrease in global studio openings and revenue, declining EBITDA, and significant delinquent licenses. While there are efforts to improve pricing and marketing strategies, the lack of clear guidance and challenges like labor issues and franchisee pressures overshadow positive aspects like brand strength and efficient new unit ramp-up. Additionally, the Q&A revealed management's avoidance of addressing key issues directly. These factors suggest a likely negative stock price reaction over the next two weeks.
Key Financial Performance
North America system-wide sales $432.2 million, up 10% year-over-year. This was driven primarily by growth from net new studio openings. About 90% of system-wide sales growth came from a higher mix of actively paying members, with the remainder driven by higher pricing and mix shifts.
Same-store sales Down 0.8% for the quarter and up 5.4% on a 2-year stack basis. Factors include lead flow and member conversion issues, and StretchLab's challenges due to Medicare Advantage coverage reductions.
North America run rate average unit volumes (AUVs) $668,000 in the third quarter, up 2% from $654,000 in the prior year period. The increase was largely driven by a higher number of actively paying members and higher pricing for new members.
Consolidated revenue $78.8 million, down 2% or $1.7 million from $80.5 million in the prior year period. 73% of revenue for the quarter was recurring. Decline attributed to lower equipment and merchandise revenue.
Franchise revenue $51.9 million, up 17% year-over-year or $7.4 million. Growth driven by franchise territory license terminations and higher effective royalty rate from new studio openings.
Equipment revenue $7.5 million, down 49% year-over-year or $7.2 million. Decline reflects a 41% drop in global installation volume compared to the prior year period.
Merchandise revenue $4.8 million, down 27% year-over-year or $1.8 million. Decline attributed to lower sales volumes.
Adjusted EBITDA $33.5 million in the third quarter, up 9% or $2.7 million compared to $30.8 million in the prior year period. Growth driven by increased margin from license terminations and increased royalties in franchise revenues.
Adjusted EBITDA margin 42% in the quarter, up from 38% in the prior year period.
Net loss $6.7 million in the third quarter, compared to a net loss of $18.1 million in the prior year period. Improvement attributed to lower SG&A expenses and insurance reimbursements.
Cash, cash equivalents, and restricted cash $41.5 million as of September 30, 2025, up from $32.7 million as of December 31, 2024. Increase due to net cash provided by operating activities and proceeds from brand disposition.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Class Launch: Club Pilates launched a new class called Circuit, incorporating intense athletic movements accessible to beginners. Yoga6 is refining its class offerings for 2026.
Studio Design: A new Club Pilates studio design was introduced, addressing franchisee requests.
Market Expansion: Opened 78 new studios globally in Q3 2025, including 57 in North America and 21 internationally. Sold 49 licenses, with 16 in North America and 33 internationally. Focused on expanding Club Pilates and BFT in Europe and Asia.
Marketing Enhancements: Improved digital media, CRM, search, and social capabilities. Launched a pricing study for Club Pilates and refreshed corporate brand websites. Initiated a national brand campaign for Club Pilates using new channels like podcasts and YouTube TV.
Operational Support: Introduced field support teams to enhance local studio performance. Transitioned to an outsourced retail model, expected to complete by year-end.
Cost Savings: Executed a reduction in corporate workforce, saving $6 million annually. Streamlined operations post-divestitures.
Brand Portfolio Optimization: Divested CycleBar, Rumble, and Lindora to streamline the brand portfolio and focus on core brands.
Franchisee Support: Enhanced real estate and license sales support using AI-powered tools. Attracted established operators and private equity to the franchisee base.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
StretchLab Revenue Trends: StretchLab's revenue trends have been pressured due to Medicare Advantage plans scaling back on stretch as a covered benefit, impacting member flow and revenue.
Same-Store Sales Decline: Same-store sales were down 0.8% for the quarter, driven by lead flow and member conversion issues across the portfolio, as well as brand-specific challenges like StretchLab's positioning and Medicare Advantage reductions.
Studio Closures: There were 32 global studio closures in the third quarter, representing an annualized closure rate of 4%, which could impact overall growth and profitability.
Delayed License Openings: Approximately 40% of global licenses are over 12 months behind their applicable development schedules, delaying revenue generation and expansion plans.
Cost Pressures and SG&A Reduction: The company executed a reduction in force across corporate departments to save $6 million annually, which, while necessary, could impact operational capacity and morale.
Equipment and Merchandise Revenue Decline: Equipment revenue decreased by 49% year-over-year, and merchandise revenue fell by 27%, reflecting lower sales volumes and impacting overall revenue.
Debt Refinancing Risk: The company is actively exploring refinancing options for its term loan, which comes due in May 2026, posing a financial risk if not successfully managed.
Marketing and Lead Management Deficiencies: Lead management system and process deficiencies have been identified, impacting top-of-funnel KPIs and member acquisition.
StretchLab Brand Positioning Challenges: StretchLab faces brand positioning challenges, which, combined with Medicare Advantage reductions, have negatively impacted its performance.
High Studio Closure Rate: The company expects approximately 5% of the global system to close this year, which could hinder growth and profitability.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
North America system-wide sales: Projected to range from $1.73 billion to $1.75 billion in 2025, representing a 12% increase at the midpoint.
Global net new studio openings: Expected to range from 170 to 190 in 2025, representing a 37% decrease at the midpoint from the prior year.
Total 2025 revenue: Expected to be between $300 million and $310 million, unchanged from previous guidance, representing a 5% year-over-year decrease at the midpoint.
Adjusted EBITDA: Expected to range from $106 million to $111 million in 2025, unchanged from previous guidance, representing a 7% year-over-year decrease at the midpoint.
SG&A expenses: Expected to range from $130 million to $140 million in 2025, with further breakdowns excluding one-time charges and stock-based costs.
Marketing fund spend: Expected to exceed marketing fund revenue by approximately $5 million in Q4 2025, driven by a nationwide branding campaign for Club Pilates.
Capital expenditure: Anticipated to be approximately $6 million to $8 million for 2025, reduced from previous guidance of $10 million to $12 million.
Tax rate: Expected to be mid- to high single digits for the full year 2025.
Unlevered free cash flow conversion: Anticipated to be approximately 90% of adjusted EBITDA for 2025.
Levered adjusted EBITDA cash flow conversion: Expected to be approximately 35% for 2025.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you provide an update on Club Pilates comps for Q3 and current trends?
A:In Q3, Club Pilates comps came into the low single digit or about 1%. The installed base of studios is reaching full maturity with an average unit volume (AUV) of around $1 million. New units are ramping up efficiently to $900,000-$1 million AUV within the first 12 months, but they are not comping beyond $1 million due to full capacity.
Q:How do you balance higher pricing strategies with the risk of alienating members and address off-peak capacity hours?
A:The company has engaged an expert group to analyze pricing strategies deeply, considering member usage, packages, and pricing structures. They are also gathering feedback from franchisees to create a thoughtful approach to pricing and promotions. The focus is on maximizing studio utilization and addressing off-peak hours.
Q:Can you expand on private equity entering the franchisee base and the density strategy for Club Pilates?
A:The company is exploring opportunities with private equity and larger-scale operators to grow in new geographies. For density, they are using sophisticated location selection technologies to place studios in proximity without significant cannibalization, aiming to maximize the network of studios.
Q:What is your philosophy on portfolio construction and potential changes?
A:The company is focused on a smaller portfolio, which allows for better focus and leveraging best practices across brands. They are satisfied with the current portfolio and see complementary aspects among the brands, but no specific future changes were disclosed.
Q:How has the Club Pilates economic model changed with the faster ramp to $1 million AUV?
A:The faster ramp is attributed to strong brand strength, franchisee presale activity, and improved execution. The real estate team is adjusting models to make more intelligent site location decisions, and there is ongoing refinement in launch marketing and operational strategies.
Q:What is the status of retail ops field consultants and their focus?
A:The field team consists of about 20 consultants, with plans to add more. They are working with franchisees on improving studio-level economics using the ProfitKeeper system and focusing on opportunity studios to enhance performance.
Q:What is the purpose of the national ad campaign for Club Pilates?
A:The campaign aims to test new marketing channels like CTV, YouTube, and podcasts to understand their efficacy. While focused on Club Pilates, the learnings could benefit other brands in the future.
Q:How does the accounting for terminated licenses impact Q4 EBITDA guidance?
A:Terminated licenses accelerate deferred revenue and commissions to the P&L. Q4 EBITDA guidance reflects a $4 million headwind from fewer terminations, $4 million in franchise conference expenses, and $5 million in marketing fund spend, totaling an $8 million sequential impact.
Q:What is the outlook for the 40% of licenses that are 12 months behind schedule?
A:The backlog is a result of delays during COVID. The company has reduced the number of delinquent licenses but still has 40% delinquent. They are confident in Club Pilates and StretchLab licenses moving forward, with ongoing terminations and franchisee progress expected to reduce the percentage.
Q:What are the key metrics being tracked to measure progress?
A:Key metrics include leads, new members, classes, retail sales, cancellations, and average studio sales, tracked weekly and compared to prior periods to assess momentum.
Q:What innovation efforts are being made across concepts?
A:Class content innovation is rolled out nationwide after testing. The company is also focusing on marketing and awareness around new class content to drive interest and growth.
Q:What is the current churn rate for Club Pilates, and how does it impact pricing strategies?
A:Churn has remained stable, and there has been no significant shift in cancellations or frozen memberships. The focus is on top-of-the-funnel growth rather than churn.
Q:What efforts are being made to address the loss of Medicare visitors at StretchLab?
A:The company is expanding membership mix, targeting younger members, offering individual stretches, and improving pricing, marketing, and local activation. Operational adjustments are also being tested to reduce labor demand.
Q:What pressures are franchisees facing, and how is the company addressing them?
A:Franchisees face challenges like labor and instructor availability. The company supports them with instructor training programs and field consultants focusing on profitability and cost management.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific reasons for the 40% delinquent licenses not decreasing significantly, despite terminations and progress. They also did not provide detailed results or timelines for operational adjustments at StretchLab to reduce labor demand.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI market
AUVs year
Advantage plan
America location
Americans exercise
Asia front
Australia offering
BFT Australia
BFT StretchLab
BFT attribute
BFT way
CRM search
CTV marketing
Circuit class
Circuit movement
Inc reminder
KPIs portfolio
Lindora brand
Medicare Advantage
Yoga
age group
area focus
benefit
content
efficiency cost
effort
element
engagement
estate
fitness
franchisees member
improvement
marketing engine
practice
record
stretch
team
unit licensing
vintage
XPOF Transcript
Xponential Fitness, Inc. (XPOF) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call summary highlights strong financial performance, with significant year-over-year increases in revenue, net income, and adjusted EBITDA. Operating margin and cash flow improvements further support a positive outlook. Despite the lack of strategic initiatives and operational updates, the financial metrics indicate robust growth and efficient management. The absence of negative sentiment in the Q&A section reinforces the positive sentiment, suggesting a likely positive stock price movement in the short term.
Xponential Fitness, Inc. (XPOF) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights strong financial performance, with a 22% increase in revenue and a shift from a net loss to a net income, indicating improved operational efficiencies. Adjusted EBITDA and free cash flow also saw significant growth. Despite risks associated with forward-looking statements, the financial results suggest positive sentiment. The lack of discussion on operational updates and shareholder returns does not detract from the overall positive financial outlook. Without market cap data, the positive sentiment is based on financial growth and improved profitability, suggesting a likely stock price increase of 2% to 8%.
Xponential Fitness, Inc. (XPOF) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call highlights several concerning factors: a decrease in global studio openings and revenue, declining EBITDA, and significant delinquent licenses. While there are efforts to improve pricing and marketing strategies, the lack of clear guidance and challenges like labor issues and franchisee pressures overshadow positive aspects like brand strength and efficient new unit ramp-up. Additionally, the Q&A revealed management's avoidance of addressing key issues directly. These factors suggest a likely negative stock price reaction over the next two weeks.
Xponential Fitness, Inc. (XPOF) Q2 2025 Earnings Call Transcript
Positive8-9
The earnings call highlights strong financial performance, with a significant improvement in net income and cash reserves. The company is actively addressing backlog issues and is focused on strategic expansions and partnerships, like the Fit Commerce deal, which promises future revenue. Despite some concerns about same-store sales and backlog, the overall guidance and strategic plans are optimistic, including aggressive marketing and expansion of Club Pilates. The positive sentiment from analysts in the Q&A further supports a positive outlook, likely leading to a stock price increase of 2% to 8%.
XPOF Slides
XPOF Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
