Xponential Fitness Reports Mixed Q4 Results Amid Operational Changes

Xponential Fitness updates investors on its Q4 2024 performance. Despite revenue and systemwide sales growth, management acknowledges operational shortcomings and plans for further restructuring. Investors should monitor these developments closely.

Date: 14-03-2025

AI Rating: 5

Earnings Highlights: Xponential Fitness reported North America systemwide sales reached $465 million, reflecting a year-over-year increase of 21%. Additionally, total members increased by 15% year over year, showcasing positive growth in user engagement.

Revenue Growth: Total revenue for Q4 was $83.2 million, but it marked a decline of 7% year-over-year, driven primarily by a decrease in revenue from equipment and merchandise sales. Conversely, franchise revenue grew by 17%, indicating a strong performance in the franchise segment despite challenges in equipment margins.

Adjusted EBITDA Performance: Adjusted EBITDA for Q4 was registered at $30.8 million, up 13% compared to the prior-year period. However, it is notable that EBITDA fell short of expectations, primarily due to operational issues that resulted in a restructuring plan. The company hinted at a year of foundation building as it aims toward future growth.

Net Income Insights: The organization reported a net loss of $62.5 million for Q4, significantly more than the $12.3 million net loss in the previous year. This increase in net loss largely resulted from higher impairment of goodwill, litigation expenses, and ongoing restructuring expenses.

Overall Analysis: The reported operational setbacks and challenges in certain brands may weigh on investor sentiment. Yet, the growth in franchise revenue, systemwide sales, and member engagement indicate some resilience in the business model. Future expansions into international markets could provide growth opportunities, albeit with an expensive and complex restructuring process ahead.

Stocks: XPOF