XPOF - Earnings call transcript Q1 2024 | Xponential Fitness, Inc.

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Operator

Greetings, and welcome to the Xponential Fitness First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Avery Wannemacher from Investor Relations. Thank you.

You may begin.

Avery Wannemacher

Thank you, Operator. you Fitness joining results. first thank to conference and Xponential discuss quarter afternoon, all our for call Good XXXX financial am Chief Geisler, President; Anthony joined Officer; I Luna, Sarah Chief and Officer. Financial Executive Meloun, John by A the section recording of on investor.xponential.com. Investors' at of will website posted call this be our conference you of and outlook our this will certain call, remind We during forward-looking make business financial we that statements, discussions projections. including our on based uncertainties are current results and involve materially statements and such cause These risks that could from expectations management's actual differ to forward-looking expectations.

in of unless today's turn Geisler, that, the reported earnings numbers note global will conjunction For call. Officer measures about considered the use of remarks Executive the detailed this conference Chief with noted.I risks these more no be will refer in information should GAAP in also included performance a please GAAP We to today's to we reconciliation call. because issued SEC. useful information believe measures this non-GAAP refer they today recent measures Please figures, description is prior obligations to our filings these of provide provide. operating subsequent investors in non-GAAP earlier call to measures be A on that all comparable over that and Anthony with otherwise was the now update prepared to release that addition, discussing provided certain by Xponential and uncertainties, to assume we measures financial we our We call.In the non-GAAP Fitness.

Anthony Geisler

of had adjusted of growth are plan acquisition margins fueled XXXX our After have us integration joining had sold to expanding with Lindora to end and studio XXXX for continued activities. first with with we and all afternoon. EBITDA you thank start and studios solid In with by globally licenses our on portfolio. of the we completed QX, we've momentum, strong X,XXX Avery, the across X,XXX footprint operating closing a expenses.As the of in revenue, XX% leaner operating Thanks, quarter, this the

we the Lindora As shortly, to franchises. Sarah will very demand speak initial encouraged for are with

drove We since we same-store QX. to to strong the Lindora year XX% from at primarily quarter while new first totaled total from prior sales X% Same-store period, visits XX first the due increased a are XX% in of studios increased in North the rate system-wide $XXX,XXX, of growth for $XX.X increased continued X% for net revenues the our came quarter, or highly asset-light, million of scaled EBITDA profitability million, an leverageable franchising first studios up existing of quarter totaled XX% XX% million from drives of $XX.X model. or in in $XX.X optimizing increase XX% discussed growth XX% of Adjusted older in XX%, in brands.During to than our revenue year-over-year. previously, sales $XXX,XXX quarter revenue, in licenses visits demand we months XXXX.As our the XX first selling America both quarter, $XX.X to to $XXX volumes year-over-year the sales sold over have North in North This we the and franchisee March, for XXXX. American encouraged unit of million increase while see an existing in total total $XXX,XXX coming particularly the already studio million grew run over groups.During members QX. American in quarter, almost in XX% and of started average

Lindora an brands, the United addressable with TAM its be Row each signed we States open, studios XXXth XXXX. sold alone we additional American North the quarter, of with X,XXX our to quarter.Turning our yet studios. efforts. X,XXX now agreement first a obligated of our divest room by in on X,XXX pipeline opened franchise expand XXX strategy has line over for the growth access time, quarter, Lindora franchise our the international remain gross in our both obligations.We United potential growing to this X,XXX and wellness any our master last in In over in At House margins the over remains the markets.As to following complete, to now America, shift new obligated with expect studio licenses which studios continue resulted long-term locations plus for on are Buxton more driver, the also is the remain on our open transition in to or not and this for the illustrates of approximately in also the our portfolio global and an seasonality studio. back-end business. discuss quarters. open in increased EBITDA North expansion from has to continues continue during of of market to firmly of locations including in XX% studios to divestiture XX% track our master targeted health North acquisition first Pilates States, overall At gradual sold Along and and robust and openings for XXXX.Let's quarter the further have the we X,XXX In year AKT optimization increase ended and weighted in TAM. We we open align to in studio XX international and desired leases to under analysis been TAM estimate, removed contractually our of mentioned increase market.Buxton's acquire LOIs franchise broader first call we location over additional key the brands estimates We at XXX We cadence, Xponential another studios focus in our new addition, base. our X,XXX America globally in with currently XXX along coming STRIDE and with almost QX quarter Club end the over studios with that and XX and with not with to brands reach we current trajectories locations.As grow, licenses opening adjusted have XXX our typical open growing growth latest included an international X,XXX to TAM is opportunities agreements. April,

We will to awareness markets, help drive a select significant scale. are starting presence economies which consumer in international of and build

XXX across CycleBar, international For XX XXX we to example, those we Rumble, have Club over studios Pilates XXX be has in first Australia. now same studios XX focused The on development developed been an has brands In our team have in markets overseen franchisee in our XX hired locations Singapore.Our Japan, developed be while locations and open. who Japan, of have Pilates to our well additional Japan, Club existing locations franchisees President master our as in and seek development AKT as alone, franchise master new brand's to relationships, the licenses. quarter supporting sold new master sub-franchise for expansion.In out rights recently continuing

Our consumer at and Jeffrey like of leadership license brands. have how to made first international first mention of decades openings most recently quarter.I'd well-known Lawrence. are business completed of up our pleased new experience XX% our to also some Jeff the XX% of we Board sales newest director, brings with in the meeting

record global the Officer brand and at track Chief he and transformation in the on Shack. expansions In acumen Vice executing to previously its supported Pizza, and a he global President currently served board addition Domino's where franchise scale.Jeff deep Financial of value through Executive brings of on financial his serves technological creation, expansion, as expertise and Shake he

as on the I'll We him look expect he strategic to franchises, drivers; our on will forward that, call with forward.In Xponential execute we pass we Xponential X moving be selling asset and globally, SG&A.And our increasing as to AUVs, optimizing to had summary, key working opening strong studios, I a against quarter and great continue another expanding with growth initiatives Sarah.

Sarah Luna

Anthony. you, Thank

are in studio one witnessed demonstrated it keep level.Total per total have the way interest in January, our of meaningful the states, CycleBar's consumer's and per Our we members our both total at members' critical of front increases. which and adopted exhibited looking year-over-year. visits is paying a and brand, very growth overall better now been relevant for. format per studio formats aligns the introduced across Studios at this saw positive are paying Barre produce to We class also excited Pure declining Similarly, a a both format in networks. major a Lindora.Xponential ensure training imperative that remain members actively grew QX. what AUV. by during their while actively quarter consumer-facing with also we routines, AUVs members in to visits class Changing newest XX strong define, that CycleBar members new and launched by a a of North is studios total growth a that adopted low, strength class in Lindora We is freezes our sell positively.On member average, increased, metrics, new class format and the brand offerings part interest brands have America. to format, We're change in we in members' strong and continued received broker membership approved about average year-over-year.Running have visits our our can interest of class portfolio active and prospects is and XX% strength-focused mind has brands, one increase strong remained that both studio first Average

QX, this the already growth. place beginning a in put lead to in sold for since charge Lindora team ready that year, we of XX mentioned, Anthony As brand to almost licenses.In the sell March we've specific is

product the customer month addition month-over-month AUVs locations initiatives our overall underway level and service profitability.Our Lindora seen we as existing to unit number have offerings, acquisition. to revenue to ultimately have every January several growing increases gross improve as well drive locations, higher In the since also and experience of Lindora

which financial hormones concerns. supplement testosterone or currently the in TRT enhance memberships, base.HRT offers by producing the adequately, John address services recurring are to Replacement through John? of turn a lead improve TRT, a health over or body to in symptoms the marketing, to process low in experience, licensed that website more mobile or involve We longer hormones generation.I'll studio treatment now TRT prescription app Lindora is adding men. our body, is subject Replacement used Hormone the and used levels accelerate of professional.Finally, quarterly a to medical levels expanding call balance and no Lindora's hormone members' Therapy, Lindora can is constructing detail. discuss in to primarily and specific provided to our results Therapy, are across to the HRT Testosterone address and replacing we and medical upgrading a HRT,

John Meloun

for and to call. the Sarah, you everyone joining thank Thanks,

sales the First our system-wide within consistent sales continue America existing quarter volume, growth of new American XX% million growth were performance, acquire well which that members, The system-wide up of XX% was came X% new new as and driven base has sales North in price. from North with studios same-store studio the from $XXX.X sales coming year-over-year. system-wide of remained to members, as historical by Further, openings. or X% open

sales We of fee in XX% year-over-year. This recognition quarter revenue as XXXX.On a addition, revenues was anticipating for we grown which sales still royalty those up for higher a as consumer STRIDE mid primarily revenues year-over-year, normalize make XX% Equipment higher and an inventory higher are number reached is a was equipment-intensive by address was revenue from demand including up XX% million equipment X traffic revenue occur to quarter. on in million, the including by given territory revenue price has of revenue and driven driven grew accelerated a high for the increase Franchise from primarily of year-over-year. up the the $XX.X highs.In quarter up was of that recurring, $XX.X define system-wide up same-store in $XX.X streams, was have system-wide single-digit primarily compared marketing upfront was licenses, revenue of period existing year.Franchise consolidated foot year-over-year. same these all-time to in higher result fund basis, the revenue quarter million, studios opens.All prior million, due compared in the due to an mix number was percentages sales will of America. retail by during fee to North was continued our except growth operating point all the during year.Merchandise which components revenue prior revenue the to for of was studio brands, terminated before to increase This a the franchise revenue million, $X.X increase purchases studios year-over-year. territory to studios increase growth up the materially brand. as revenue $X.X equipment X% operating in XX% a The XX% revenue franchise

rebates sales, generated in includes million, period. last a from BXB service away prior revenues. Lastly, transition the XPASS processing XX% other studios move XPLUS, and The down system-wide our studios, other other sales strategic primarily year partnerships, to period transition from items $X.X year, amongst studio lower which from was was from company-owned due revenue, decline in the company-owned resulting service

expenses resulting The was Importantly, increase ceased associated were Cost operating franchise a a for as brands administrative those installations from sold related higher X% expenses goods terminated leases equipment-intensive general primarily from up year-over-year. expenses. SG&A equipment operating increased driven in merchandise were million to and of to revenues. the brand.Selling, on up studio margins.Turning service operations. cost revenue were increase year-over-year. higher where revenue, decline STRIDE commissions Costs was EBITDA including of sales was accelerated period the in of and in $XX.X in savings our settling that restructuring XX% studios the the $X.X from exceeded studio with and driven were million, of costs increase of as higher on up by we volume of mix company-owned openings new well higher have X% by The year-over-year. licenses, The the transition franchise revenue improved primarily $XX.X million, product

sales of a franchise increases. margin driven our system-wide increase because of each we $X.X marketing in transaction XX% was in increase by declined to expenses resulting shifted contributes marketing As were of first margins.The of the grow, XX% higher which the XX were quarter million, optimize remaining With run end XXXX. having increased franchise translate period. levels.Depreciation have from back end studios revenue X% fund. previously are quarter The SG&A to as fund one-time SG&A and EBITDA of fund operating to of revenue.As will to pure model Therefore, X% of enhanced strategy will XXXX Marketing liabilities amortization of always streamline expenses, discussed, over forward-looking of we as increase the improved into non-operating eliminated.For are net first planning company-owned operations funds, spending have are fund enter the time.Acquisition studios the marketing we the these of been materially in with spend at company-owned and transition from franchise expenses company-owned studio only year-over-year, of making expenses end number prior studios, some $X.X of restructuring, transition fund landlords our first $X.X having expenses treated some obligated of X Since locations the agreements quarter an been rate permanently, with reminder, studios up year million, of marketing have sales closed number decrease and our our as the on refranchised that from associated the expenses the year. transition fund the the to losses and to down new and been marketing an to owners settlement being studios million, we lease marketing will by are investments XXXX. a

on accrue non-cash net basic result loss quarter, our an the XX% ability business model year continue improved million of was in and increased $X.XX the the prior shares.Adjusted million compared this up the An and preferred of net prior of leverage believe million and a in basic share forward, cash loss element increase going higher in for year. Adjusted in agreement, was As I $X.XX the year in of excludes consideration, period. $XX.X in measure $X.X $X.X for year that the on quarter from first price million contingent in of free end. income performance and margins non-cash loss $XX.X net of to of earnings consideration and million, income XX% for acquisition, first operating $X.XX restructuring million offset receivable prior includes a EBITDA in substantial have consideration loss we is to after generate compared results XX% which share quarter and million by to transaction primarily $X.X million, the quarter related have period. on million first loss is a and million earnout, share equity-based A to expenses, recorded a The this net million We loss loss $X.X the related to each Adjusted share, net Rumble shares our a quarter, the the $XX.X the in divestiture in of for the interest million to XX% is calls, useful driven expect A million $X.X and count on we overall acquisition, a the to is Anthony of activity, quarter of was share margins attributable to to remeasurement to net related XX.X approximately earnout higher related $X.X acquisition the attractive of dividends earnings per prior the compared $X.X or earnout.We stock, positioned the company is company's continue in to restructuring $X.X the adjusted our $XX noted first first mark-to-market way contingent of the of a to the Rumble a contingent at million increase period.As related to EBITDA and which basic adjusted or the compensation reach $X.X mentioned, an Class to more press and net transition studio, net the the a business. decrease by margin charges.This for acquisition company-owned STRIDE, non-controlling the in release. Rumble income million $X.X quarter, costs non-cash income provided expense, to brand income franchise profitability, adjusted earnings tax reconciliation primarily in on divestiture.We per our flow. related to of grew common decrease per adjusting

anticipated unlevered QX, that has require It EBITDA, adjusted worth federal exceeded million in cash net company to free we $XXX the assuming burden minimal years.Our capital and tax grow that $XX minimal loss negligible on of will expenditures paydown, flow be During additional is debt no interest coming approximately million, mentioning we conversion the the carry-forwards capital tax assume business. a approximately as cash will XXXX result expense XX% flow. in in cash impacts for state and our working

For expect levered will XX%, over would and continue usage cash to will prioritize of over leases conversion the convert flow preferred excluding full year, in for and EBITDA transition coming any the effects to dividends adjusted restructuring, studios. on our from years.We we cash one-time settling XX%

leases, these As will make time the on to settling balance repurchase we we executing our on when sheet. begin assess appropriate progress will stock the to be program.Turning

and the XXXX.Let's for expectations our equivalents of under to business cash and now share $X.X this program date Material total Lindora guidance XX, cash discussed QX approximately repurchase lease As restructuring million, compared discuss reiterating $XX.X down current our Based in of outlook call, were included settlements.Total XX, of and of acquisition was of the The as debt of million and previously to increase debt of million cash, XXXX. long-term X.X million the million $XXX.X XXXX, the million from year March of due XXXX. our primarily XX, usage period as conditions XXXX, for as $XXX.X retirement are March we of follows. on $XX.X the March in as as restricted March accelerated XXXX. long-term immediate shares is and cash QX XX, $X.X in current the million repurchase

expect expect $XXX global to XXX project to at year billion openings studio is a revenue with increase at our million, This range. EBITDA sales gradually at the range XX% midpoint. the from year, adjusted XXX. a revenue, at adjusted expected and the system-wide the range will We $XXX million in our our an We prior to is the studio $XXX in SG&A translates X% to openings.We system-wide history.Total single-digit $XXX to openings to continue North fourth $X.XXX range roughly to the line further the range XX% XXXX highest million the charges, guided normalize increase one-time range when in to XXXX $XXX EBITDA by studio the range. from a and stock-based be new high year year-over-year from This year-over-year and midpoint will increase costs. midpoint and $X.XXX to million of $XXX XX% same-store the the expected Adjusted to in to to or guided North million midpoint margin between we anticipate restructuring total from $XXX quarter.We new lease be or excluding $XXX is America anticipate million, sales EBITDA sales ramps billion, million to $XXX of America range to prior range, of when throughout similar XXXX, into range excluding increase under

to capital offerings. of and be forward, of the X% $XX technology to support anticipate expenditure, for at approximately focused midpoint.Going revenue terms $X on will or million investments maintenance the year, integration our In on million other of Lindora digital the expenditure primarily capital approximately we

our website.This related year, for our of preferred and associated for share back all remarks. Investor mid you Thank adjusted per earnings high today's be time your EPS at million, our to can prepared of our FAQ to share to well our press full structure found concludes and count today. quarterly as million convertible corporate rate release, the to earnings capitalization as calculation dividends the share to count tables tax and our be For in be EPS the stock.A on be pro calculation forma single explanation expected calculation $X.X of full paid and is $XX.X in purposes digits,

open now will any We call the for Operator? questions.

Operator

from Heinbockel Guggenheim Partners. Your from first comes John question

John Heinbockel

think but So the XX amount, idea that wanted Is the I or of what's commentary million dollar might conversion a you or rate, possibly talk Hey, right with, know right, about the your flow cash And what's be no the 'XX. on maybe been the John, I million not of do thought $XX debt number? free -- then I this dollars sort right? -- think year talked the on that cash minimal flow of to have about in free start about timing financing? that that's your And very this Is at with buyback. or year, suggested buyback focused -- that all? likely will reduction you then latest late

John Meloun

A couple questions there.

of the we repurchase, So stock last year some the the production, so call, cash is intent about in year, to cash, earnings and is first in this liabilities getting refinancing, lease to range. studios.As we be on and of earlier opportunity the of this get a lease first. be to as XXXX. the first the part an million talked but half address the this liabilities, for cash foremost, the to about going to going is there the the regards transition of the that did yes, The as we that do is how far want rid around done us deploy we right, of the cash the extension to throughout repurchasing $XX generation second again, In the year, pre-restructuring, use prioritize

rate of of place opportunities they're interest more some like lower start where it rates interest financing a the cost. set fixed refinancing we flat, as we in and seems a more and that get they recent us of interest rates much to with draw take monitor to at advantage and of would holding kind get for opportunities are done at long-term potentially at and a cheaper the continuing in.Obviously allow us look look could are but at to to on down announcements, looking We out

John Heinbockel

got the curious, And the open expands Lindora, right, that of then do interest guess, for TAM, them out, X think franchisees' they'll right, next locations you you and does is? them, that there's or -- -- for be has then I years? other about mean do cannibalization all cannibalize in no, I think that Buxton the sell other how But front-loaded do just, and XX plays because maybe you later. X,XXX that you've opening over stage think licenses? how you no Anthony, do I'm sold right, you know it how think, you I would secondly you selling it And at to you'll if on brands? selling Or sort X

Anthony Geisler

on the other are No, exponential and sales flow generating no franchised looking could the independents about brokers of cannibalization definitely at, And new selling well, across the in there's that XXX people sales kind people lead plus of anything licenses, across franchise have come they're country. majority our country. franchise from we the system, not that be of

a they no high there's definitely of in So there.Buxton has they integrity in level cannibalization work. what do, and do TAM their

to very with conservative be see them. tend the so, we numbers And

was total. got XX% just more in short of And already today X,XXX a Pilates even pre-sold, that right, we've than open. original instance, X,XXX about Club bit For with

them where more out those how beginning we what and we're TAMs. so open, in as be AUVs constrictive willing then on very increase, them. we And and And stable we more get we release get and see is many the sell, we're find stores that we sell to

Pilates So if TAM. look the XXX-ish of several you so about TAM new increase Pilates at on kind a now, years continues year to every units Club Club or by later,

with membership, we Pilates the and Lindora synonymous current Lindora on were to they Club to for TAM us expect based the get comment Club Buxton's Pilates. So, the cohorts when ran they StretchLab that X,XXX. will

XX, in this the open, start see that today likely to you'll that close stores out, we are in X,XXX to over open to expect get TAM the the seeing the will those most we of QX but of those open, So, sold, range time, X,XXX head some XX those provided we Lindora be get that somewhere see numbers, will which to we you're year. of

that's what see. you So probably would that

Operator

The from Megan next comes Morgan Stanley. question Alexander from

Megan Christine Alexander

I wanted bit. to ask about the comp a little

and of a the talked then, low running you were did February, in you the it guided your comp and expectation I And color the type quarter? give the expecting just about You of more when downside to double-digit balance you double-digit during decelerate bit expectations? that what you comp little drove low so the a maybe versus were guess, over can accelerate the quarter? cadence us the didn't. Or over comp

Sarah Luna

that jump can one. on I Sure. in

the studios for the at at call lower XXXX. single from we months low see to StretchLab quarter majority little mentioned really packages we QX in of did did -- in successful KPI bit to in growth X% trends were But high XX We So, was visitations a double-digit we Black as as Pure were really The freezes double a or what Friday this sold was rates normalize in growth had low, in a great maturity, same-store but sorry, were forward number see QX pull system in high, we to it and XXXX a comp. aiming that sales than were our X%, rates QX, well who Barre, or had the standpoint.So double-digit we expected promotions. what saw for. membership and that from mid-teens over primarily we

next will of So, or quarter forward over we start so. pull did see a that to the little bit normalize

Megan Christine Alexander

on type normalizing single-digit high high depending I single-digit. level you end X% the mean, And Okay. to still John, year. the about be definition, I then, talked of by think that your could

bit how And think talk So XQ at changed about on maybe XQ? about has comp? exit little think the we can a to for the should your we how all And about XQ should you expectation rate?

John Meloun

Yes.

about in high a the will off believe QX the the will something single-digit year those when I look is or It using. QX, think down that and the were really I'm kind assumption single to and from same-store then think of to now that going if looking do between But QX re-up by information at for sales think using of -- size believe of you'll comes you based to high is as sold to probably year, they when packages people the see the right because members, -- StretchLab still that the in a what it, the I to influencer comp. either be -- will Barre I'm full in the you're stay the assumption I that join digits QX. Again, still mid it overall scale, similar QX.I be it's to QX flat in and be in QX. that Pure how an

Operator

from Your Markets. Lake Ryan Meyers next from Capital Street comes question

Ryan Meyers

First I'm brands? CycleBar me, just Anthony, drove adding that guys about you within do AUV have that kind one talked Barre strength wondering quarter. into for the during and sort of optionality you other Pure of to the what

Anthony Geisler

BFT already Well, have I some mean, brands like it. obviously

don't that Club to we Pilates today. so And really drive need into

nature. it where brands wasn't, those kind have that House into it that today.We sense, where putting have brands be which really things drives makes of already Row like we'd training it all of we So, and in strength

be, of that of anything course, So things doing in it nature. we Lindora or won't like StretchLab or

we where are on So, that's that.

Ryan Meyers

year, about especially you as And you've that into then this we just have Lindora if can throughout And next now maybe brand by acquisition. progress how to wondering seen changes if mix talk the as think the we any you about that opening then year.

John Meloun

Yes, for QX, domestically quarters. of take the X It openers of one number that. last Club highest Club actually I could openings the Pilates. was Pilates in In was the largest

it So, was little in over-indexed CP QX. in a bit

XXXX, forward, still strong an you openings overall lately, about perspective you Club we mix through year.And quarters, you'll from similar then YogaSix a in will I XX% up at which move And very performance also X/X look is the perspective. when of from about make the StretchLab go to the shown last has an mix. then AUV the think of being really see as openings but as Pilates,

that for X% XX% think I be in in X% then this to year. of the the then up will XX% is the BFT, openings. to the other think be the And and brands. will And both range range total balance Rumble made I of

when And about Rumble, between Pilates, StretchLab. YogaSix, maybe X% So, it, the about Club look and XX% to you of mix. then at total X/X XX% BFT,

you're So, among those a kind the brands. of seeing concentration openings of

Operator

The from next from question comes Baird. Komp Jonathan

Jonathan Komp

profit year that outlook. full about the know full adjusted year on just I XX% the for follow-up is could EBITDA I margin. if John,

insights for call from as think QX to color or to XX% any So, mid about any could out the the XX% share just year? you maybe more we other in progression

John Meloun

to lot earnings if And mid crossing get flat. which in last QX you call, of stay relatively the that more.If in dilutive margin in It the you'll installs months call The see QX guess, look year. a range performance summer lights much margin bit XX%, high the that to XX% first lot or a of -- I then changed hasn't to and will being to they how a in equipment We to little relatively earnings have of Yes. XX% happen at said the to not is in or each one little range. bit crossing last flat It QX. QX cadence we close QX. QX, be that performed, a of should other. QX, from QX XX% QX XX% in XXXX are XX%

range because of achieving the there XXXX, to quarter. equipment installed into to then low and little it XX% it our see as to impact the be over bit just a has XX% of quarters of the back track and then bit, climb the are low conferences pulled see in quarter.So, mid still you'll fourth QX. to in XX% north you -- in you'll in top be So, a QX. X and Expect roll QX, in little XXXX. bit by convention fourth the will XX% from on a QX dilutive of the And XX% on when it next national a little we in the And see dilution

grind here So, X% it quarter getting each or better kind of from cadence from a a will be X% perspective. a a

Jonathan Komp

concept Anthony FDDs I or Sarah. included question year separate one monthly this new. the believe just churn, We for then And noticed which was level maybe Okay.

I but you're color a you on maybe what churn trends from negative we across to differences maybe if churn could churn know about or about overall you positive share a concept, perspective. wanted it's as or think think system, follow-up the by that. any follow-up, seeing in any don't what comments any maybe as Just drives Or with

John Meloun

at the take churn brands, mean, seeing I'll Yes, between lead across look on the this you're I on somewhere to one. When the average, X% X% brands. you

you customer the but because see churn where to digits. then, resolution your the to your is months at that months, XX attached X% or kind type low I We in months, and from after typically New that. get of the always In at are people their come to attrition really weddings, location. -- type we you is And percentage those mean, the in, people in it Some trying or for brands kind that's brand at Year's XX that core ready that get look things. really months when single within see XX look core look vacation X%.When get those you the of -- case, you rates between are summer you of

see So, more when X% you of post X% to on brands. scaled digits look single it's in kind XX you of monthly low consumer, it call basis. on But in that, churn let's the do the percentage our some core months a

Jonathan Komp

And in has into any quarters the that that held changes few and last XXXX, noticed? you've stable

John Meloun

it's behaviors the perspective, spending. of trade seen, at freeze the seen we really post-COVID, kind are very kind consistent.So, very from haven't been the look Even a Yes. you attrition have even trends, in since haven't downs an consumer perspective, overall what consumers we of When stable. been

you price consumers progressed XXXX. purchasing versus seeing QX quarter. up look But there, wallet or is on are through has getting this as on the at of more we're up, we've QX X-pack, XXXX spend a the their a we unlimited, if So, of been X-pack pack what they're what -- in

utilization new did we're In a very stable are studios, to little consumers price So, is visit the year old kind more members the and in getting patterns wallet consumer. able ago. on, share on But take very members utilization the a as of from we're capacity come bit we more essence, traded less. stable out, and because new than

Operator

comes O'Cull from Your Chris from next Stifel. question

Christopher O'Cull

a just first John, need earlier comment. to level? to the quarter trending that as currently level? comp to the follow-up to it get improve to Is Or an similar does

John Meloun

asking in Comp you're for? QX is what

Christopher O'Cull

Yes.

John Meloun

down expect X%, to it similar perspective. to that to year the but haven't the QX COVID. Yes. comments, will And pre-COVID any, in as we around the full we're forward-looking They normal look is looking from I do the see provided quarters for then but roll averaged pre-COVID, a singles.When you what will environment. assumption QX were X the quarters that much high mid X a at into comps QX, still I is more high taper prior single-digit, that to like, be I comp QX

X%, is forward model So, modeling assumption they my in QX. that's kind of using will, X% that the they even you though going at know, were they're I'm that for

back that, to in way X% do the being somewhat to getting conservative think using. my the modeling, it, call I is assumption X% again, let's by QX, I I'm

Christopher O'Cull

thinking high first it this trend was I you the Is like level around more Yes, current level? get to you Okay. the the of current single-digit from to that trend. expecting are saw currently quarter? the Or accelerate to in

John Meloun

lot of the opening of at, STRIDE's mix. impacts got obviously, a year. the and Possible. Lindora We're the We're mix. -- in longer no we've in looking Pilates StretchLabs Club last

go this quarter. enter comp year, So they're the through to we as starting the

make in again, I you'd assumption. what think, in order yes, QX, probably to probably I to safe full QX it's in model model, probably I'm conservatism, it plus you're to have to a was or for as year to the get at work, slight But in understand QX in looking QX, to X%.So, X%. So, see asking, that going it a be in minus the QX range my it's same uptick

yes. So,

Christopher O'Cull

Okay. sequential dynamic? on that what Can to drove about the noticed rate average run volume We you unit essentially a basis talk the held relative fourth quarter. flat

John Meloun

Black in strong that Sarah Friday mentioning and of fourth AUVs offered what StretchLab is were had the really when at quarter. Barre in was was deals you kind look QX, Pure That the Yes.

that have expected So, they would pulling lot normally in QX. get fourth you quarter the were, essence, in sales into in a of to

promos. those to attached consumers So,

a because led of sooner. believe promotions, us that, too let's at kind consumers well, what you say for thing just sales did high. these a good you've to and Barre they visitation were QX, because in was there there StretchLab in QX.So, that's larger Pure So, in really QX brought And when being the but they for we weren't look already expect that's brand

these function trying studios, visit now to a of converted the consumers into So, them it's membership. a get as

it's It the Friday impacted QX based QX off or brands, where -- a didn't they a in probably they it because package pulled was in from a normal bit other which into of get pretty spike. a rate you promotion.So, Black those of but bit little promotions Club do QX. saw So, the drove the of you're revenue QX, more seeing reoccurring more But brands. type run little promo, promotions a of flatness volume, from QX those activity. lot had Pilates

Christopher O'Cull

then curious to in capturing And I'm or psychographics terms Buxton now? added enablers of expansion And TAM. that the locations Club you mentioned was of either what Pilates demographics just main think the I Okay. XXX you're that

Anthony Geisler

ourselves Yes. when When another we other from look said at cannibalization call -- as we on keep for TAM, percentages low. and I question, competitors very earlier original we the

X As brand, you've we've years, that million. with seen from has the over AUV last as X to climbed expanded XXX the

release point sell doing more it. we'll we cannibalization by that kind or sure that X core point what potentially we'll what do so, to ultimately, and see meaning means the stores density X and high of in area.And make that X, it a kept percentage additional little TAM surrounding and very conservative does, So, low open with, was let to that TAM, a properly too X, or we're our customer start very begin of is kept

designed there of a well And, it's XXX designators million. above certain originally brand at that That was the AUV. designed about AUV. is for One in at of $X obviously

do play go know, see backward, makes you AUV an and to that on, sense. cannibalization and, the flat area can we But that we potential be don't So, early store, want oversell either or AUVs with if of AUV, density.

Operator

Perry Alex next from question Bank from comes America. Your of

Alexander Perry

quarter Should the last this net then studio same. of on year? versus your all? the studio expectation how And net gross follow-up same on I sort wanted the changed the at many each we think to opening the So, studio expect for stayed year. cadence guess I I openings year? percent Has in openings openings of number

John Meloun

from midpoint. cadence in XXX for the in kind which of the full first the at year, line half, perspective. So, half right we cadence XXXX to second is in XX% with guided The is, XX% XXX a at the still

last quarter, QX open like New resolution QX, conceptually see was So, of build a we year build QX. standpoint. in just large a get then -- volume to QX being XXXX. saw you'll slightly of people from year, the in Year's lowest again, It'll openings the similar QX, as for new which And the

that have closures expect same X.X%. a typically closures. in look net XXXX.And from in You at phenomenon see QX, trends just it's When don't the number a a franchising. in perspective, you of And of we we have to that lot on historical over

is when the that to guidance. we modeled X% cumulatively basis the you you rata look it.QX We've how But X% of year, on lower assumption. that, than through into at the franchising, closures of still is the thinking pro way normal schedule, the ahead X% build end a a of our kind as X% So, about range. kind we're we're X% meaning mindset on high favorably is to did

continue open to, helping they we'll AUVs studios drive the that studios, and are so don't and, business, close. improve franchisees So, struggling support getting

second half, half, full XX% year. XX% and for So, of think at around the $X.XX midpoint, first closures is X% the

Anthony Geisler

And are from obviously, cohort AUV perspective, a cohorts dollar's totally the the opening. of, that different of the AUVs than closing cohort is of that are

or basis unit on model really KPI in a off. can't net be you So, you'll model, them one-for-one the

Alexander Perry

expectation implications makes the what savings X on months ago? you're with that in And expecting financial just transition sense. that for can lot net line is sort coming of remind wind-down the how is year? That of you you're a sort of the thinking the the of us studios? then, And it of about Like,

John Meloun

Yes.

million you be no would transition far as -- that lighter. XXXX year, in As if your and last assume there $XX revenue pro-forma studios was about

Your other service million $XX about lighter. revenue line be would

about lower. Your SG&A normal on $XX X-wall be million would operating the expenses

So, net-net around was $XX million. EBITDA last impact the year

your EBITDA, starting $XXX year, million million Street building we that million $XXX you assume to if as the range this too. adjusted and then, you're $XXX in kind to So, of point the starting at, guided

Alexander Perry

Best going forward. of helpful. incredibly That's luck

Operator

Riley question next Securities. from comes Sinderen B. from Your Van Jeff

Jeff Van Sinderen

for in the just when year? year? guidance QX progression of at AUV look So, an bake and the maybe, to does enterprise, increase the the expect should remainder for you of comprehensively Or it on clarify we AUV your for the what remainder AUV, in

John Meloun

assume a increase AUVs Yes. will The model continue does XXXX to basis. quarterly in on that

don't believe of you off from point you'll high believe the XXXX, assets, get -- half at look us today the kind that I into start to push this we ranges of, cross -- at do think you'll the QX we the trying later As do the based I I or the perspective, into way to XXXs, the have of but and been that and mix, of finished, to, $XXX,XXX move driving the over as think higher $XXX,XXX brands you'll we and AUV in of that quarter -- this into towards how $XXX,XXX.I we XXXX, $XXX,XXX kind see progress Club growth an high the got kind range. towards you'll threaten through in to $X million $XXX,XXX as to lot A to our at has you the, cross year. don't remember the of is, start mid Pilates

part high BFTs, entering Those have to from more and very a of of will have like later coming Lindora's AUV we last grow StretchLab this a well studios really to quarters. will to very that overall get $XXX,XXX last lot openings They've AUV a the response Those great set, AUV.Brands show We at studios got perspective. now year. little there. to over bit timeframe, albeit accelerated we StretchLab, just Barre. The the kind is YogaSix continue as of start sample Rumbles, very Your done kind small the in up of quickly Pure AUVs. QX pull it up actually opened but we an continues to, a up open

midway fairly scale to lot so brands relatively the today, were but those AUVs support QX, in with of getting you're that all So sit doing well.So, they AUVs, as a right through very pulling are start the of at the they gate. X now the flat up they right well months and the studios performing age that'll the they'll probably enter because the out AUV year, start calculation they're of entering

Jeff Van Sinderen

around sort I'm terms Okay, of helpful. new in as color QX? XX selling and in of give other sold the speak. of that's licenses, more us you're And sure more we course, then, of trends Lindora's the you the brands in any Can composition you sold licenses

John Meloun

sold were of QX, XX% Pilates. Yes, Club of licenses in XXX them the about

we sold was Pilates, in indexed the as mentioned, there you license StretchLab about XXX quarter. BFT, Again, performance So, about that And XX Pure to we led new we Barre, saw XX about Club first that Lindora license new Pure over Club Barre mentioned of sales had Pilates. in then has Pure Barre. sold was were the and BFTs sales.So, as in in there XX.

brands with that are licenses So, are QX, from the of very brands, given the with license coming sales of well Club was in XXX performing a the where balance -- Pilates. about because with the in surprise coming but them not rest from they're high XX% It's EVs.

So, very existing, portfolio. to franchisees licenses whether expand franchisee an existing buy a motivated you're to new or are trying more and your

Operator

next Your Warren question Cheng Evercore comes ISI. from from

Warren Cheng

StretchLab pull to on wanted the packages saw Barre forward comment in Pure and some of of XQ. you follow-up just that some I your

were mismatch the So, they so packages when between about good. it used bought them. sounds them like you're those sales talking numbers they earlier a when because and their And bought

-- look So, at if yes. oh, we instead

So, StretchLab instead months line with you ago? if at to Pure we at what -- clarify. looking instead just looked Barre, was we for I in wanted just at look If and revenues, visits of that expected X

John Meloun

first was the about the talking in were about up heard were And people interested kept calls, when earnings Visits that quarter. thing because we weather. Yes. other on we've one

So, really end high. of at the wasn't we because day, weather visitation the was knew it

come them. to if to they your wouldn't people So, couldn't studios get

So, off. per up saw class We at when XXXX, didn't look high. was of across studio. see saw of versus we visitations on visits fall QX X% you We average on look QX scale, we high.When a actually national XXXX offerings visitation

actually had engagement QX. you in from more So, consumers

and Pure the at down get you you into had did because to purchased. the brands, earlier. kind the of onto now membership are opportunity you in when really And effect And QX they that The the members it the a get where led essence, versus pulled with franchisees this and the revenue look good faster see we sales, them to more perspective. now have consumers growth individual a Barre QX.So, from whatever got is just StretchLab using them the path. expectation convert thing reoccurring it's So,

Warren Cheng

licenses you AUV my follow-up help I great here. the high Lindora. those to understand look on you to year gate normalized out XX then know like? It's us open pretty X? at AUV Can signed see And Because of a expect in what is

Anthony Geisler

close I and $X AUVs They're about million mean, to are look, million. $XXX change.

So, we our really as engine. the marketing gotten hands all on we flow, percentages, attrition, really or well haven't tech, to sales a and around lead things that closing do

to that all just get So, starting stuff implemented. is

work are together, starting teams all Our together, of stuff. type that kind to

us really, really So, a I don't stores. lift, seen yet on think we've from

John Meloun

$XXX,XXX kind Club curve.We've map the above tended conservative in to of the lot how different kind side, But Yes. lean designed that model point, built there's which Anthony's we've but is start into like lot and is We modeled our put model. to Right franchisees now, on much into and perspective. perform economics our very their always It's nationally similar the to growth of And StretchLab is curves better similar into you -- learning when very of built AUV. they deploying of kind markets. the of that we kind the franchisees this, we assumption unit and a from members. a to of we've it the on Pilates consumers there's as $XXX,XXX it StretchLab, a

mentioned, they they're right just But we're get just now, we'll portfolio perform. acquired, So, The million. $XXX,XXX. $X as joined existing right we assuming they see how under Anthony that when to

do business. So, for upside if north of $XXX,XXX, the they anything it's

Operator

from question Piper Sandler. comes Korinne Your from next Wolfmeyer

Korinne Wolfmeyer

of a with What's the conversion realization? end new there you people this My too I promotions promotions to then a this you and conversion pull did gives what's ago, forward the you're historic, much, recognize about but not am kind these you've like historic already couple seen harp this that first out that members. will you what a on when of confidence converting? was expectations types of is of pull laid And these full-time up is talking months one curious forward or

John Meloun

like couple the From QX, perspective, well. to I did don't really promotions say, And years, to approached used very guidance anymore no, them is at look of would the because anticipate. that Pilates. we we've differently a do over in every -- I high. a we guess, promotions more when do Club It's you do year-to-year, the from so We last not because tell demand hard

to. You really don't need

weather. X trying fill start to things, to us capacity AUVs different things a get there performance little lighter. look people weren't with to brands stood falling back February, you're reactions.So, franchisees you're and as but As then again did using of these your look an the March, that the you to it at product. then issue, did in in And and People we We them. also key a in talking different your and January seeing love it the we're really brands with offer at-bat studios, okay, from studios about is in saw, appear and and into getting The weather kept just the out climb so the gives like, data kind perspective. convert you promotions

strongest have QX in and on typically seen we quarters our be QX. early QX -- then So, and

far into done really normal same jury's a the well. brands we'll again, of as year more So, not that as, come this as see or those kind have environment of we whether out COVID.But, impact since back

they how package percentage these that's of expect, a the good to business member. we either re-up will a or their convert if consumers So, approach

Korinne Wolfmeyer

just on are it And of end and, Is where to where little you're still or up can licenses the you color on bit built interest get up? Lindora, see give you states? other units building to a these then California will starting us like, new expecting in more

Sarah Luna

X or across, was it sold groups X ownership think or X different I we've X across states. Yes,

spread the to to and the starting it's So, Coast. East Midwest

Operator

question MKM. Wollam ROTH from J.P. from Your comes next

John-Paul Wollam

first could I kind I'm just the me But platform wrong, you underway. and you're I a start, correct bit believe that's and if an believe, changing franchisees just and what then challenge of IT that switching? of on for sort and If booking of are you elaborate online the big I how advantages that of prepare that, what is, already maybe you're could doing prepare to for

Sarah Luna

can I definitely that. speak Yes, to

agreement we vendor, with So, ClubReady. our had an point sale exclusive of

new new applications the our customers and system the infrastructure.So, We'll be of point sale entire years ClubReady out We is customer learn the sale opportunity of we've for application. and the plug we've exclusive it the are in last we websites to ClubReady go our have agreement won't couple top point ecosystem lift of a to consumer-facing a behind and to our of out a is or Really, market system booking of over management now all booking actually needing system What transition, of system. it. on new an underneath built RFP. that done of terms and or

been of of to ensure that any that could minimizing already it's sort lot So, occur. work disruption we're a

minimum to a tests see able This you'll maybe at curves learning in a and the XX-month we've be would to domestic desk partner, ultimately got at for about place, level.But then some operations. or a go-forward good what think put select the be of pathway. I some front operationally runway is studio decide

this of domestic on but our global We operations. course, are open focused primarily is to, a solution,

John-Paul Wollam

Anthony. were those just on last maybe Great. in there week, fitness this industry boutique and in Then this about industry of just That's sale. high-level just and rumors regarding months geared considering items? back think stepping kind there terms few I of ago, more you, towards news Orangetheory the considerations any some Barry's very a a terms Is any a read-through The and thought helpful. merger of maybe potential

Anthony Geisler

both publicly for but Orangetheory great time. they're that operators, merged kind while, those long No, together. mutually long of Self you and see Chuck been running a they've running business Roark-owned think and owned have Esteem for and those a they I think They're exclusive. can Dave I for been a time. of

securitization it million think business there. whole $XXX a of took out I

because they're great they and roof.I a Orangetheory for him together, together left kind bring under run They looking of those more merged well. but right really of Obviously, it's So, as pocket, of just could together like Roark, compelling. somebody think Dave's together and to brand, put -- both for I kind think Chuck pocket an one it's operator. under amazing those is

think I a North pre-COVID then and Castle's COVID. now. while Barry's for through owned came owned kind totally it separate. that's of They

think nothing I things X see those happening, think out to close but like together. I some they're upside looking that, of really kind I private into any are other to their from that read than their equity But firm, separate acquisition. and see fund those

Operator

this further remarks. There would floor questions like turn to the for time. are I Anthony no at over to closing Geisler now back

Anthony Geisler

everyone, our Thank again you forward today's call your and and We we'll to earnings look to August. seeing June, joining many of for on and you, call May earnings support. in QX you Investor upcoming for at Conferences in speak

Operator

teleconference. today's concludes This you. Thank

your participation. may disconnect Thank your you for You lines at this time.

Xponential Fitness (XPOF) 2 May 242024 Q1 Earnings call transcript