Xponential Fitness sees sustained momentum in 2023 with strong Q1 results and increased guidance for the year

Xponential Fitness, the parent company of several popular fitness brands, is experiencing sustained momentum in 2023, as it continues to see strong growth in revenue, adjusted EBITDA, and North America system-wide sales across its 10 studio brands, which include Row House, Club Pilates, CycleBar, StretchLab, AKT, YogaSix, Pure Barre, Stride, Rumble, and BFT.

According to a recent announcement by the company on May 4, Xponential Fitness generated $70.7 million in revenue in the first quarter of 2023, which represents a 40% increase compared to the first quarter of 2022. During the same period, North America system-wide sales rose by 42% to $317.8 million, while same-store sales in North America grew by 20%, compared to a growth of 47% in the first quarter of 2022.

Xponential CEO Anthony Geisler noted during a call with analysts on May 4 that mature studios also exhibited strong same-store sales growth with profiles similar to younger studios, as North American studios over three years old comped at 21% same-store sales. The company opened 115 studios during the quarter, contributing to overall revenue growth primarily from a higher number of operating studios, new members, and increased foot traffic.

John Meloun, CFO of Xponential Fitness, stated during the analyst call that revenue growth primarily came from a higher number of operating studios, new members, and increased foot traffic. Memberships increased by 31% year-over-year, ending the quarter at 665,000, with over 90% of customers being actively paying members. Studio visits in North America for the quarter increased by 38% year-over-year, reaching 12.6 million.

In addition, equipment revenue increased by 68% year-over-year to $13.1 million, which was a result of continued higher volumes of global equipment installations. Merchandise revenue was $7.2 million, up 18% from the first quarter of 2022.

Looking ahead, Xponential Fitness is seeking international expansion for future growth, as it sold 188 licenses globally during the quarter, bringing its total sold licenses to 5,638. The company has more than 1,000 studios obligated to be opened under master franchise agreements internationally. Recently, the company announced a master franchise agreement in Japan to open 40 StretchLab studios during the next 10 years, and a master franchise agreement in Ireland and Switzerland for Club Pilates. Also during the quarter, the company opened its first Club Pilates in Frankfurt, Germany.

As of March 31, 2023, Xponential Fitness had approximately $28.1 million of cash, cash equivalents, and restricted cash, and $266.7 million in total long-term debt. Net cash provided by operating activities was $11.4 million for the quarter.

The company posted adjusted net income of $1.3 million, or a loss of $0.02 per basic share, compared to an adjusted net loss of $5.3 million, or a loss of $0.19 per basic share in the first quarter of 2022. Adjusted EBITDA for the quarter was $22.9 million, compared to $14.5 million in the first quarter of 2022.

During the quarter, Xponential Fitness opened 115 new studios, bringing its studio count as of March 31 to 2,750 studios across 18 countries. North America quarterly run-rate average unit volume (AUV) grew 21% to $542,000, compared to $450,000 in the same period last year, marking the 11th