- Company raises full year 2022 guidance for
revenue and Adjusted EBITDA
- Grew Q3 2022 revenue 56% and North America
system-wide sales 37% compared to Q3 2021
- Sold 258 franchise licenses and opened 128
new studios in Q3 2022
- Sold 5,193 total franchise licenses and had
2,485 total studios operating as of Q3 2022
Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the
“Company”), the largest global franchisor of boutique fitness
brands, today reported financial results for the third quarter
ended September 30, 2022. All financial figures included in this
release refer to global numbers, unless otherwise noted.
Definitions for the non-GAAP measures and a reconciliation to the
corresponding GAAP measures are included in the tables that
accompany this release.
Financial Highlights: Q3 2022 Compared to Q3 2021
- Grew revenue 56% to $63.8 million.
- Increased North America system-wide sales1 by 37% to $264.8
million.
- Reported North America same store sales2 growth of 17%.
- Reported North America quarterly run-rate average unit volume
(AUV)3 of $489,000, compared to $417,000.
- Posted net loss of $13.1 million, or a loss of $1.53 per basic
share, on a share count of 26.2 million shares of Class A Common
Stock, compared to a net loss of $8.9 million, or a loss of $0.38
per basic share, on a share count of 22.1 million shares of Class A
Common Stock.
- Posted adjusted net income of $8.0 million, or $0.10 per basic
share, compared to an adjusted net loss of $5.8 million, or a loss
of $0.31 per basic share.
- Reported Adjusted EBITDA4 of $20.0 million, compared to $6.8
million.
“Nine quarters of consistent growth in our run-rate AUVs is a
strong reminder that the workouts our franchisees provide across a
diverse portfolio of brands remain an integral part of our members’
lives, irrespective of macroeconomic challenges,” said Anthony
Geisler, CEO of Xponential Fitness, Inc. “Not only did we expand
our core franchise business in Q3 2022, but we also welcomed key
new partners, including Princess Cruises and lululemon Studio.
Connecting with our membership base where and when they want to
work out through our omni-channel approach will continue to be a
core part of our growth strategy.”
For the third quarter of 2022, total revenue increased $22.9
million, or 56%, to $63.8 million, up from $40.9 million in the
prior-year period. Total revenue increased largely due to
increasing equipment installations and royalties generated from
strong North American system-wide sales.
Net loss totaled $13.1 million, or a loss of $1.53 per basic
share, compared to a net loss of $8.9 million, or a loss of $0.38
per basic share, in the prior-year period. While overall
profitability was higher by $13.6 million, this was offset by $13.4
million of higher non-cash contingent consideration expense
primarily related to the Rumble acquisition, a $3.7 million
increase in impairment of brand assets, and a $0.7 million increase
in non-cash equity-based compensation expense. Please see the table
contained in this press release for a calculation of the basic and
diluted earnings (loss) per share for the quarter ended September
30, 2022.
Consistent with previous periods, the Rumble acquisition
non-cash contingent consideration liability is marked-to-market
based on Xponential’s share price, contributing to a $16.3 million
increase to contingent consideration liability in the third quarter
of 2022.
Adjusted net income for the third quarter of 2022, which
excludes the $16.3 million change in fair value of non-cash
contingent consideration, $1.1 million expense related to the third
quarter remeasurement of the Company’s tax receivable agreement
liability, and $3.7 million related to the impairment of brand
assets, was $8.0 million, or $0.10 per basic share.
Adjusted EBITDA, which is defined as net income before interest,
taxes, depreciation and amortization, adjusted for equity-based
compensation, acquisition and transaction expenses, management
fees, litigation expenses, employee retention credit, secondary
public offering expenses, tax receivable agreement remeasurement
and impairment of brand assets, increased to $20.0 million, up from
$6.8 million in the prior-year period.
Liquidity and Capital Resources
As of September 30, 2022, the Company had approximately $30.9
million of cash, cash equivalents and restricted cash and $136.5
million in total long-term debt. Net cash provided by operating
activities was $37.5 million for the nine months ended September
30, 2022.
2022 Outlook
Based on the Company’s performance in the first nine months of
2022 and the current state of the business as of the date of this
press release, Xponential is increasing its full-year 2022 guidance
for revenue and Adjusted EBITDA and re-affirming guidance for
studio openings and system-wide sales in North America as
follows:
- New studio openings to remain in the range of 500 to 520, or an
increase of 53% at the midpoint as compared to full year 2021;
- North America system-wide sales to remain in the range of
$995.0 million to $1.005 billion, or an increase of 41% at the
midpoint as compared to full year 2021;
- Revenue is now anticipated to be $235.0 million to $240.0
million, or an increase of 53% at the midpoint as compared to full
year 2021; this compares to previous guidance of $211.0 million to
$221.0 million, or an increase of 39% at the midpoint as compared
to full year 2021; and
- Adjusted EBITDA is now anticipated to be $70.0 million to $74.0
million, or an increase of 164% at the midpoint compared to full
year 2021; this compares to previous guidance of $68.0 million to
$72.0 million, or an increase of 156% at the midpoint as compared
to full year 2021.
Additional key assumptions for full year 2022 include:
- Tax rate in mid-to-high single digits;
- Share count of approximately 25.3 million shares of Class A
Common Stock for the GAAP EPS and Adjusted EPS calculations. A full
explanation of the Company’s share count calculation and associated
EPS and Adjusted EPS calculations can be found in the tables
contained in this press release; and
- $3.25 million in quarterly cash dividends paid related to the
$200 million Convertible Preferred Stock.
Third Quarter 2022 Conference Call
The Company will host a conference call today at 1:30 p.m.
Pacific Time / 4:30 p.m. Eastern Time to discuss its third quarter
2022 financial results. Participants may join the conference call
by dialing 1-877-407-9716 (United States) or 1-201-493-6779
(International).
A live webcast of the conference call will also be available on
the Company’s Investor Relations site at
https://investor.xponential.com/. For those unable to participate
in the conference call, a telephonic replay of the call will be
available shortly after the completion of the call, until 11:59
p.m. ET on Thursday, November 24, 2022, by dialing 1-844-512-2921
(United States) or 1-412-317-6671 (International) and entering the
replay pin number: 13732449.
About Xponential Fitness, Inc.
Xponential Fitness, Inc. (NYSE: XPOF) is the largest global
franchisor of boutique fitness brands. Through its mission to make
boutique fitness accessible to everyone, the Company operates a
diversified platform of ten brands spanning across verticals
including Pilates, indoor cycling, barre, stretching, rowing,
dancing, boxing, running, functional training and yoga. In
partnership with its franchisees, Xponential Fitness offers
energetic, accessible, and personalized workout experiences led by
highly qualified instructors in studio locations across 48 U.S.
states and Canada, and through master franchise or international
expansion agreements in 14 additional countries. Xponential
Fitness' portfolio of brands includes Club Pilates, the largest
Pilates brand in the United States; CycleBar, the largest indoor
cycling brand in the United States; StretchLab, a concept offering
one-on-one and group stretching services; Row House, the largest
franchised indoor rowing brand in the United States; AKT, a
dance-based cardio workout combining toning, interval and circuit
training; YogaSix, the largest franchised yoga brand in the United
States; Pure Barre, a total body workout that uses the ballet barre
to perform small isometric movements, and the largest Barre brand
in the United States; STRIDE, a treadmill-based cardio and strength
training concept; Rumble, a boxing-inspired full-body workout; and
BFT, a functional training and strength-based program. For more
information, please visit the Company’s website at
xponential.com.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP,
we believe non-GAAP measures are useful in evaluating our operating
performance. We use certain non-GAAP financial information, such as
EBITDA, Adjusted EBITDA, adjusted net income (loss), and adjusted
net earnings (loss) per share, which exclude certain non-operating
or non-recurring items, including but not limited to, equity-based
compensation expenses, acquisition and transaction related
expenses, litigation expenses, secondary public offering expenses,
impairment of brand assets and employee retention credit, that we
believe are not representative of our core business or future
operating performance, to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively with
comparable GAAP financial measures, is helpful to investors because
it provides consistency and comparability with past financial
performance and provides meaningful supplemental information
regarding our performance by excluding certain items that may not
be indicative of our business, results of operations or outlook.
However, non-GAAP financial information is presented for
supplemental informational purposes only, has limitations as an
analytical tool, and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. In addition, other companies, including companies in our
industry, may calculate similarly titled non-GAAP measures
differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measures as tools for comparison. We seek to
compensate such limitations by providing a detailed reconciliation
for the non-GAAP financial measures to the most directly comparable
financial measures stated in accordance with GAAP. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of the non-GAAP financial measures to their most
directly comparable GAAP financial measures and not rely on any
single financial measure to evaluate our business. For a
reconciliation of non-GAAP to GAAP measures discussed in this
release, please see the tables at the end of this press
release.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections
of future performance based on management’s judgment, beliefs,
current trends, and anticipated financial performance. These
forward-looking statements include, without limitation, statements
relating to expected growth of our business; projected number of
new studio openings; anticipated industry trends; projected
financial and performance information such as system-wide sales;
projected annual revenue, Adjusted EBITDA and other statements
under the section “2022 Outlook”; our competitive position in the
boutique fitness industry; and ability to execute our business
strategies. Forward-looking statements involve risks and
uncertainties that may cause actual results to differ materially
from those contained in the forward-looking statements. These
factors include, but are not limited to, the impact of the COVID-19
pandemic on our business and franchisees; our relationships with
master franchisees, franchisees and international partners;
difficulties and challenges in opening studios by franchisees; the
ability of franchisees to generate sufficient revenues; risks
relating to expansion into international markets; loss of
reputation and brand awareness; material weakness in our internal
control over financial reporting; and other risks as described in
our SEC filings, including our Annual Report on Form 10-K for the
full year ended December 31, 2021 filed by Xponential with the SEC
and other periodic reports filed with the SEC. Other unknown or
unpredictable factors or underlying assumptions subsequently
proving to be incorrect could cause actual results to differ
materially from those in the forward-looking statements. Although
we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
level of activity, performance, or achievements. You should not
place undue reliance on these forward-looking statements. All
information provided in this press release is as of today’s date,
unless otherwise stated, and Xponential undertakes no duty to
update such information, except as required under applicable
law.
Xponential Fitness,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except share
and per share amounts)
September 30,
December 31,
2022
2021
Assets
Current Assets: Cash, cash equivalents and restricted cash
$
30,895
$
21,320
Accounts receivable, net
19,377
11,702
Inventories
13,738
6,928
Prepaid expenses and other current assets
10,801
5,271
Deferred costs, current portion
3,573
3,712
Notes receivable from franchisees, net
1,926
2,293
Total current assets
80,310
51,226
Property and equipment, net
16,613
12,773
Right-of-use assets
22,738
—
Goodwill
165,697
169,073
Intangible assets, net
139,718
136,863
Deferred costs, net of current portion
43,402
42,015
Notes receivable from franchisees, net of current portion
3,107
3,041
Other assets
682
553
Total assets
$
472,267
$
415,544
Liabilities, redeemable
convertible preferred stock and deficit
Current Liabilities: Accounts payable
$
23,342
$
14,905
Accrued expenses
18,818
21,045
Deferred revenue, current portion
29,039
22,747
Notes payable
—
983
Current portion of long-term debt
3,035
2,960
Other current liabilities
6,620
3,253
Total current liabilities
80,854
65,893
Deferred revenue, net of current portion
108,191
95,691
Contingent consideration from acquisitions
46,655
54,881
Long-term debt, net of current portion, discount and issuance costs
131,668
127,983
Lease liability
24,472
—
Other liabilities
3,974
4,675
Total liabilities
395,814
349,123
Commitments and contingencies Redeemable convertible preferred
stock, $0.0001 par value, 400,000 shares authorized, 200,000 shares
issued and outstanding as of September 30, 2022 and December 31,
2021
257,096
276,890
Stockholders' equity (deficit): Undesignated preferred stock,
$0.0001 par value, 4,600,000 shares authorized, none issued and
outstanding as of September 30, 2022 and December 31, 2021
—
—
Class A common stock, $0.0001 par value, 500,000,000 shares
authorized, 27,560,549 and 23,898,042 shares issued and outstanding
as of September 30, 2022 and December 31, 2021, respectively
3
2
Class B common stock, $0.0001 par value, 500,000,000 shares
authorized, 21,650,669 and 22,968,674 shares issued and outstanding
as of September 30, 2022 and December 31, 2021, respectively
2
2
Additional paid-in capital
528,807
—
Receivable from shareholder
(14,219
)
(10,600
)
Accumulated deficit
(641,656
)
(643,833
)
Total stockholders' deficit attributable to Xponential Fitness,
Inc.
(127,063
)
(654,429
)
Noncontrolling interests
(53,580
)
443,960
Total stockholders' deficit
(180,643
)
(210,469
)
Total liabilities, redeemable convertible preferred stock and
deficit
$
472,267
$
415,544
Xponential Fitness,
Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
(in thousands, except share
and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Revenue, net: Franchise revenue
$
30,006
$
19,985
$
83,128
$
51,504
Equipment revenue
11,770
6,750
31,930
15,571
Merchandise revenue
6,264
4,879
19,100
13,620
Franchise marketing fund revenue
5,172
3,706
14,544
9,503
Other service revenue
10,551
5,547
24,983
15,509
Total revenue, net
63,763
40,867
173,685
105,707
Operating costs and expenses: Costs of product revenue
11,840
7,641
34,951
19,259
Costs of franchise and service revenue
4,811
3,169
13,589
8,615
Selling, general and administrative expenses
32,841
24,262
96,082
62,066
Depreciation and amortization
4,154
2,376
11,225
6,838
Marketing fund expense
4,260
3,828
12,696
9,304
Acquisition and transaction expenses (income)
16,290
2,880
(5,793
)
3,527
Total operating costs and expenses
74,196
44,156
162,750
109,609
Operating income (loss)
(10,433
)
(3,289
)
10,935
(3,902
)
Other (income) expense: Interest income
(402
)
(343
)
(1,209
)
(796
)
Interest expense
3,333
5,855
9,060
21,869
Gain on debt extinguishment
—
—
—
(3,707
)
Total other expense
2,931
5,512
7,851
17,366
Income (loss) before income taxes
(13,364
)
(8,801
)
3,084
(21,268
)
Income taxes (benefit)
(308
)
103
(158
)
387
Net income (loss)
(13,056
)
(8,904
)
3,242
(21,655
)
Less: net income (loss) attributable to noncontrolling interests
(5,918
)
(4,848
)
1,065
(17,599
)
Net income (loss) attributable to Xponential Fitness, Inc.
$
(7,138
)
$
(4,056
)
$
2,177
$
(4,056
)
Net earnings (loss) per share of Class A common stock: Basic
$
(1.53
)
(0.38
)
$
0.28
(0.38
)
Diluted
$
(1.53
)
(0.38
)
$
0.05
(0.38
)
Weighted average shares of Class A common stock outstanding: Basic
26,156,418
22,146,011
24,781,778
22,146,011
Diluted
26,156,418
22,146,011
62,822,737
22,146,011
Xponential Fitness,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)(in
thousands)
Nine Months Ended September
30,
2022
2021
Cash flows from operating activities: Net income (loss)
$
3,242
$
(21,655
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization
11,225
6,838
Amortization and write off of debt issuance cost
94
5,722
Amortization and write off of discount on long-term debt
454
2,553
Change in contingent consideration from acquisitions
(5,791
)
3,220
Bad debt expense (recovery)
(526
)
165
Adjustment for recognition of TRA and deferred tax liability
—
(24
)
Equity-based compensation
23,920
4,201
Non-cash interest
(679
)
765
Gain on debt extinguishment
—
(3,707
)
(Gain) loss on disposal of assets
(90
)
362
Impairment of studio assets
—
781
Impairment of brand assets
3,656
—
Changes in assets and liabilities: Accounts receivable
(6,592
)
(1,913
)
Inventories
(6,810
)
1,074
Prepaid expenses and other current assets
(5,529
)
(9,429
)
Operating lease right-of-use assets and operating lease liabilities
52
—
Deferred costs
(1,248
)
(4,811
)
Notes receivable, net
25
148
Accounts payable
7,497
(2,702
)
Accrued expenses
(1,555
)
(559
)
Related party payable
—
(1
)
Other current liabilities
599
455
Deferred revenue
13,993
22,372
Other assets
(129
)
18
Other liabilities
1,663
52
Net cash provided by operating activities
37,471
3,925
Cash flows from investing activities: Purchases of property and
equipment
(5,660
)
(2,604
)
Proceeds from sale of assets
65
318
Purchase of studios
—
(390
)
Purchase of intangible assets
(6,840
)
(868
)
Notes receivable issued
(1,782
)
(1,000
)
Notes receivable payments received
2,643
563
Net cash used in investing activities
(11,574
)
(3,981
)
Cash flows from financing activities: Borrowings from long-term
debt
5,480
218,360
Payments on long-term debt
(2,220
)
(309,860
)
Debt issuance costs
(49
)
(904
)
Proceeds from the issuance of Class A common stock, net of
underwriting costs
—
122,016
Payments of costs related to IPO
—
(3,221
)
Payments to purchase 750,000 LLC units/Class B Shares
—
(9,000
)
Proceeds from issuance of redeemable convertible preferred stock,
net of offering costs
—
198,396
Payment to purchase all of the shares of LCAT from LCAT
shareholders
—
(144,485
)
Payment of H&W Cash Merger Consideration
—
(11,720
)
Payments to acquire the Preferred Units and LLC Units
—
(20,493
)
Exchange of LLC units for Class B shares
—
2
Payment of preferred stock dividend and deemed dividend
(13,000
)
(4,117
)
Payment of contingent consideration
(1,336
)
(12,006
)
Payments on loans from related party
—
(85
)
Member contributions
—
562
Payments for taxes related to net share settlement of restricted
share units
(1,897
)
—
Distributions to Member
—
(10,600
)
Loan to shareholder
(3,300
)
Receipts from Member, net
—
1,456
Net cash provided by (used in) financing activities
(16,322
)
14,301
Increase in cash, cash equivalents and restricted cash
9,575
14,245
Cash, cash equivalents and restricted cash, beginning of period
21,320
11,299
Cash, cash equivalents and restricted cash, end of period
$
30,895
$
25,544
Xponential Fitness,
Inc.
Net Loss to GAAP EPS Per
Share
(in thousands, except share
and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Numerator: Net income (loss)
$
(13,056
)
$
(8,904
)
$
3,242
$
(21,655
)
Less: net income (loss) attributable to noncontrolling interests
33,271
9,452
(6,295
)
22,203
Less: dividends on preferred shares
(3,250
)
(2,492
)
(9,750
)
(2,492
)
Less: deemed contribution (dividend)
(57,096
)
(6,500
)
19,794
(6,500
)
Net income (loss) attributable to XPO Inc. Numerator - basic
$
(40,131
)
$
(8,444
)
$
6,991
$
(8,444
)
Add: net income (loss) attributable to non-controlling
interests
-
-
6,295
-
Add: dividends on preferred shares
-
-
9,750
-
Less: deemed contributions (dividend)
-
-
(19,794
)
-
Net income (loss) attributable to XPO Inc. Numerator - diluted
$
(40,131
)
$
(8,444
)
$
3,242
$
(8,444
)
Net earnings (loss) per share attributable to Class A common
stock - basic
$
(1.53
)
$
(0.38
)
$
0.28
$
(0.38
)
Weighted average shares of Class A common stock outstanding - basic
26,156,418
22,146,011
24,781,778
22,146,011
Net earnings (loss) per share attributable to Class A common
stock - diluted
$
(1.53
)
$
(0.38
)
$
0.05
$
(0.38
)
Weighted average shares of Class A common stock outstanding -
diluted
26,156,418
22,146,011
62,822,737
22,146,011
Xponential Fitness,
Inc.
Reconciliations of GAAP to
Non-GAAP Measures
(in thousands, except share
and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net income (loss)
$
(13,056
)
$
(8,904
)
$
3,242
$
(21,655
)
Interest expense, net
2,931
5,512
7,851
21,073
Income taxes
(308
)
103
(158
)
387
Depreciation and amortization
4,154
2,376
11,225
6,838
EBITDA
(6,279
)
(913
)
22,160
6,643
Equity-based compensation
4,243
3,530
23,920
4,201
Acquisition and transaction expenses (income)
16,290
2,880
(5,793
)
3,527
Management fees and expenses
—
63
—
462
Litigation expenses
1,015
1,089
8,374
3,707
Employee retention credit
—
—
(2,597
)
—
Secondary public offering expenses
—
—
737
—
TRA remeasurement
1,078
180
1,635
180
Impairment of brand assets
3,656
—
3,656
—
Adjusted EBITDA
$
20,003
$
6,829
$
52,092
$
18,720
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net income (loss)
$
(13,056
)
$
(8,904
)
$
3,242
$
(21,655
)
Change in fair value of contingent consideration
16,290
2,880
(5,791
)
3,220
TRA remeasurement
1,078
180
1,635
180
Impairment of brand assets
3,656
—
3,656
—
Adjusted net income (loss)
$
7,968
$
(5,844
)
$
2,742
$
(18,255
)
Adjusted net loss (income) attributable to noncontrolling interest
(3,612
)
(3,281
)
(1,299
)
(15,692
)
Adjusted net income (loss) attributable to Xponential
Fitness, Inc.
4,356
(2,563
)
1,443
(2,563
)
Dividends on preferred shares
(1,777
)
(1,216
)
(5,131
)
(1,216
)
Deemed dividend
—
(3,172
)
—
(3,172
)
EPS numerator - Basic
$
2,579
$
(6,951
)
$
(3,688
)
$
(6,951
)
Add: Adjusted net income (loss) attributable to
noncontrolling interest
3,612
—
—
—
Add: Dividends on preferred shares
1,777
—
—
—
EPS numerator - Dilutive
$
7,968
$
(6,951
)
$
(3,688
)
$
(6,951
)
Adjusted net earnings (loss) per share - Basic
$
0.10
$
(0.31
)
$
(0.15
)
$
(0.31
)
Weighted average shares of Class A common stock outstanding - Basic
26,156,418
22,146,011
24,781,778
22,146,011
Adjusted net earnings (loss) per share - Dilutive
$
0.13
$
(0.31
)
$
(0.15
)
$
(0.31
)
Effect of dilutive securities: Rumble Class A common stock
1,300,032
—
—
—
Restricted stock units
43,063
—
—
—
Convertible preferred shares
13,888,889
—
—
—
Conversion of Class B to Common Stock
21,684,849
—
—
—
Weighted average shares of Class A common stock outstanding -
Dilutive
63,073,251
22,146,011
24,781,778
22,146,011
Note: The above adjusted net income (loss) per share is
computed by dividing the adjusted net income (loss) attributable to
holders of Class A common stock by the weighted average shares of
Class A common stock outstanding during the period. Total share
count does not include potential future shares vested upon
achieving certain earn-out thresholds. Net income, however,
continues to take into account the non-cash contingent liability
primarily due to Rumble.
Footnotes
1 System-wide sales represent gross sales by all North American
studios. System-wide sales include sales by franchisees that are
not revenue realized by us in accordance with GAAP. While we do not
record sales by franchisees as revenue, and such sales are not
included in our consolidated financial statements, this operating
metric relates to our revenue because we receive approximately 7%
and 2% of the sales by franchisees as royalty revenue and marketing
fund revenue, respectively. We believe that this operating measure
aids in understanding how we derive our royalty revenue and
marketing fund revenue and is important in evaluating our
performance. System-wide sales growth is driven by new studio
openings and increases in same store sales. Management reviews
system-wide sales daily, which enables us to assess changes in our
franchise revenue, overall studio performance, the health of our
brands and the strength of our market position relative to
competitors.
2 Same store sales refer to period-over-period sales comparisons
for the base of studios. We define the same store sales base to
include studios in North America that have been open for at least
13 calendar months as of the measurement date. Any transfer of
ownership of a studio does not affect this metric. We measure same
store sales based solely upon monthly sales as reported by
franchisees. This measure highlights the performance of existing
studios, while excluding the impact of new studio openings.
Management reviews same store sales to assess the health of the
franchised studios.
3 AUV is calculated by dividing sales during the applicable
period for all studios being measured by the number of studios
being measured. Quarterly run-rate AUV consists of average
quarterly sales for all studios that are at least 6 months old at
the beginning of the respective quarter, multiplied by four.
Monthly run-rate AUV is calculated as the monthly AUV multiplied by
twelve, for studios that are at least 6 months old at the beginning
of the respective month. AUV growth is primarily driven by changes
in same store sales and is also influenced by new studio openings.
Management reviews AUV to assess studio economics.
4 We define Adjusted EBITDA as EBITDA (net income/loss before
interest, taxes, depreciation and amortization), adjusted for the
impact of certain non-cash and other items that we do not consider
in our evaluation of ongoing operating performance. These items
include equity-based compensation, acquisition and transaction
expenses (including change in contingent consideration), management
fees and expenses (that were discontinued after July 2021),
litigation expenses (consisting of legal and related fees for
specific proceedings that arise outside of the ordinary course of
our business), employee retention credit (a credit for retaining
employees throughout the COVID-19 pandemic), secondary public
offering expenses for which we do not receive proceeds, expense
related to the remeasurement of our TRA obligation and expense
related to loss on impairment of our brand intangible assets and
goodwill that we do not believe reflect our underlying business
performance and affect comparability. EBITDA and Adjusted EBITDA
are also frequently used by analysts, investors and other
interested parties to evaluate companies in our industry. We
believe that Adjusted EBITDA, viewed in addition to, and not in
lieu of, our reported GAAP results, provides useful information to
investors regarding our performance and overall results of
operations because it eliminates the impact of other items that we
believe reduce the comparability of our underlying core business
performance from period to period and is therefore useful to our
investors in comparing the core performance of our business from
period to period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221110005401/en/
Kimberly Esterkin Addo Investor Relations
investor@xponential.com (310) 829-5400
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