Xponential Fitness faced a difficult second quarter, with the market reacting negatively to both its flat revenue performance and updated financial outlook. Management attributed the muted results to challenges in certain core brands, such as a slowdown in same-store sales for Club Pilates and StretchLab, and the impact of brand divestitures. Newly appointed CEO Michael Nuzzo acknowledged the need to drive operational improvements, while CFO John Meloun highlighted that divestitures and transition costs weighed on results. The company also pointed to ongoing franchisee development delays, noting that 40% of its license backlog remains behind schedule.
Is now the time to buy XPOF? Find out in our full research report (it’s free).
Xponential Fitness (XPOF) Q2 CY2025 Highlights:
- Revenue: $76.21 million vs analyst estimates of $77.35 million (flat year on year, 1.5% miss)
- Adjusted EPS: $0.26 vs analyst expectations of $0.29 (11.1% miss)
- Adjusted EBITDA: $28.1 million vs analyst estimates of $29.27 million (36.9% margin, 4% miss)
- The company dropped its revenue guidance for the full year to $305 million at the midpoint from $320 million, a 4.7% decrease
- EBITDA guidance for the full year is $108.5 million at the midpoint, below analyst estimates of $121.3 million
- Operating Margin: 19.5%, up from -4% in the same quarter last year
- Market Capitalization: $299 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Xponential Fitness’s Q2 Earnings Call
- Randal J. Konik (Jefferies) asked about the drivers of the decline in same-store sales and backlog delays. CFO John Meloun cited softness in Club Pilates and StretchLab, with backlog issues concentrated in CycleBar, Rumble, and some legacy licenses.
- John Edward Heinbockel (Guggenheim Partners) inquired about the four main factors impacting 2025 profitability and their duration. Meloun explained most effects, such as divestiture transition costs and elevated SG&A, are expected to be contained within this year.
- Joseph Nicholas Altobello (Raymond James) questioned the pace of FDD renewals and license sales momentum. Meloun said he expects sales momentum to return as FDD amendments are processed, especially in non-registration states.
- Christopher Thomas O'Cull (Stifel) probed the rationale for not accelerating Club Pilates infill and asked about details of the upcoming marketing campaign. John Kawaja responded that there is significant white space and a major campaign, with over $20 million in spend, will begin in Q3.
- JP Wollam (ROTH Capital Partners) asked about the scope for dynamic pricing across brands. Kawaja highlighted that Club Pilates is the main focus for dynamic pricing but sees potential across other brands as well.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) execution of the Club Pilates marketing campaign and its effect on member acquisition and retention, (2) progress on addressing the franchise license backlog and improving new studio opening rates, and (3) the financial and operational benefits of the Fit Commerce retail partnership as it ramps up. The impact of ongoing portfolio streamlining and the new CEO’s strategic direction will also be critical factors to watch.
Xponential Fitness currently trades at $8.69, down from $9.62 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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