Exhibit 99.1

 

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Xponential Fitness, Inc. Announces Third Quarter 2023 Financial Results

 

   

Company raises full year 2023 guidance for revenue and tightens top end ranges for new studio openings, system-wide sales and Adjusted EBITDA(4)

 

   

Grew Q3 2023 revenue 26% and North America system-wide sales1 35%, compared to Q3 2022

 

   

Sold 216 franchise licenses and opened 127 new studios in Q3 2023

 

   

Sold 6,088 total franchise licenses and had 2,980 total studios operating as of Q3 2023

IRVINE, Calif., November 7, 2023 – 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, 2023. 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 2023 Compared to Q3 2022

 

   

Grew revenue 26% to $80.4 million.

 

   

Increased North America system-wide sales1 by 35% to $356.7 million.

 

   

Reported North America same store sales2 growth of 15%, compared to growth of 17% in Q3 of 2022.

 

   

Reported North America quarterly run-rate average unit volume (AUV)3 of $564,000, compared to $489,000.

 

   

Posted net loss of $5.2 million, or earnings of $0.91 per basic share, on a share count of 32.3 million shares of Class A Common Stock, compared to a 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.

 

   

Posted adjusted net income of $6.0 million, or adjusted earnings of $0.09 per basic share, compared to adjusted net income of $8.0 million, or adjusted earnings of $0.10 per basic share.

 

   

Reported Adjusted EBITDA4 of $26.5 million, an increase of 33%, compared to $20.0 million.

“Our KPIs continue to trend well in Q4 and we are confident we will close the year out on a high note,” said Anthony Geisler, CEO of Xponential Fitness, Inc. “We have begun implementing the movement away from company-owned transition studios that we discussed during our Analyst and Investor Day in September; the impact of this right-sizing on our profitability in 2024 will be material.”

 

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Results for the Third Quarter Ended September 30, 2023

For the third quarter of 2023, total revenue increased $16.7 million, or 26%, to $80.4 million, up from $63.8 million in the prior year period. This increase included a corresponding North America same store sales increase of 15%.

Net loss totaled $5.2 million, or earnings of $0.91 per basic share, compared to a net loss of $13.1 million, or a loss of $1.53 per basic share, in the prior year period. The lower net loss was the result of an $18.2 million decrease in non-cash contingent consideration primarily related to the Rumble acquisition, and a $0.7 million decrease in non-cash equity-based compensation expense; offset by $3.4 million of lower overall profitability, a $6.7 million increase in restructuring costs from our company-owned transition studios, and $0.9 million increase in write-down of goodwill and brand assets. Please see the table at the end of this press release for a calculation of the basic earnings per share and diluted loss per share for the quarter ended September 30, 2023.

Adjusted net income for the third quarter 2023, which excludes the $1.9 million non-cash contingent consideration gain related primarily to the Rumble acquisition, $1.8 million related to the re-measurement of the Company’s tax receivable agreement, $4.6 million related to the write down of goodwill and brand assets, and $6.7 million related to restructuring charges, was $6.0 million, or adjusted earnings of $0.09 per basic share, on a share count of 32.3 million shares of Class A Common Stock.    

Adjusted EBITDA, which is defined as net income (loss) before interest, taxes, depreciation and amortization, adjusted for equity-based compensation and related employer payroll taxes, acquisition and transaction expenses, litigation expenses (outside of the ordinary course of business), financial transaction fees and related expenses, tax receivable agreement remeasurement, write down of goodwill and brand assets, and restructuring charges increased 33% to $26.5 million, up from $20.0 million in the prior year period.

Liquidity and Capital Resources

As of September 30, 2023, the Company had approximately $51.9 million of cash, cash equivalents and restricted cash and $329.7 million in total long-term debt. Net cash provided by operating activities was $38.2 million for the nine months ended September 30, 2023.

2023 Outlook

Based on the Company’s performance year to date, Xponential is increasing its full year 2023 guidance for revenue and tightening the top end ranges for new studio openings, system-wide sales and Adjusted EBITDA as follows:

 

   

New studio openings in the range of 550 to 560, or an increase of 9% at the midpoint as compared to full year 2022; this compares to previous guidance of 540 to 560;

 

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North America system-wide sales in the range of $1.390 billion to $1.395 billion, or an increase of 35% at the midpoint as compared to full year 2022; this compares to previous guidance of $1.385 billion to $1.395 billion;

 

   

Revenue in the range of $305.0 million to $310.0 million, or an increase of 26% at the midpoint as compared to full year 2022; this compares to previous guidance of $295.0 million to $305.0 million; and

 

   

Adjusted EBITDA in the range of $104.5 million to $106.5 million, or an increase of 42% at the midpoint as compared to full year 2022; this compares to previous guidance of $102.5 million to $106.5 million.

Additional key assumptions for full year 2023 include:

 

   

Tax rate in the mid-to-high single digits;

 

   

Share count of 31.7 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 at the end of this press release; and

 

   

$1.9 million in quarterly dividends paid related to the Company’s Convertible Preferred Stock.

Third Quarter 2023 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 2023 financial results. Participants may join the conference call by dialing 1-844-825-9789 (United States) or 1-412-317-5180 (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 Tuesday November 21, 2023, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 10183073.

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 and master franchisees, Xponential Fitness offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout the U.S. and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states and 22 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

 

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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 financial 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 expenses, litigation expenses, employee retention credit, financial transaction fees and related expenses, tax receivable agreement remeasurement, write down of goodwill and brand assets that we believe are not representative of our core business or future operating performance, and charges incurred in connection with our restructuring plan, 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. In addition, we are not able to provide a quantitative reconciliation of the estimated full-year Adjusted EBITDA for fiscal year ending December 31, 2023 without unreasonable efforts to the most directly comparable GAAP financial measure due to the high variability, complexity and low visibility with respect to certain items such as taxes, TRA remeasurements, and income and expense from changes in fair value of contingent consideration from acquisitions. We expect the variability of these items to have a potentially unpredictable and potentially significant impact on future GAAP financial results, and, as such, we also believe that any reconciliations provided would imply a degree of precision that would be confusing or misleading to investors.

 

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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; profitability; the expected impact of our movement away from company-owned transition studios; anticipated industry trends; projected financial and performance information such as system-wide sales; projected annual revenue, Adjusted EBITDA and other statements under the section “2023 Outlook”; our competitive position in the boutique fitness industry; and ability to execute our business strategies and our strategic growth drivers. 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, 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; general economic conditions and industry trends; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the full year ended December 31, 2022 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.

Contact:

Addo Investor Relations

investor@xponential.com

(310) 829-5400

 

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Xponential Fitness, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

 

    September 30,
2023
    December 31,
2022
 

Assets

 

Current Assets:

   

Cash, cash equivalents and restricted cash

  $ 51,880     $ 37,370  

Accounts receivable, net

    27,714       25,555  

Inventories

    16,339       10,864  

Prepaid expenses and other current assets

    13,531       6,294  

Deferred costs, current portion

    6,507       4,131  

Notes receivable from franchisees, net

    1,113       1,520  
 

 

 

   

 

 

 

Total current assets

    117,084       85,734  

Property and equipment, net

    20,293       18,524  

Right-of-use assets

    77,353       30,079  

Goodwill

    165,661       165,697  

Intangible assets, net

    122,450       137,175  

Deferred costs, net of current portion

    45,958       43,620  

Notes receivable from franchisees, net of current portion

    1,181       1,067  

Other assets

    1,252       795  
 

 

 

   

 

 

 

Total assets

  $ 551,232     $ 482,691  
 

 

 

   

 

 

 

Liabilities, redeemable convertible preferred stock and equity (deficit)

 

Current Liabilities:

   

Accounts payable

  $ 24,097     $ 16,185  

Accrued expenses

    13,389       12,295  

Deferred revenue, current portion

    37,000       31,996  

Current portion of long-term debt

    5,195       3,035  

Other current liabilities

    21,840       9,265  
 

 

 

   

 

 

 

Total current liabilities

    101,521       72,776  

Deferred revenue, net of current portion

    115,229       109,465  

Contingent consideration from acquisitions

    10,303       28,182  

Long-term debt, net of current portion, discount and issuance costs

    319,053       133,039  

Lease liability

    74,678       30,583  

Other liabilities

    7,440       8,633  
 

 

 

   

 

 

 

Total liabilities

    628,224       382,678  

Commitments and contingencies

   

Redeemable convertible preferred stock, $0.0001 par value, 400,000 shares authorized, 114,660 and 200,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

    130,304       308,075  

Stockholders’ equity (deficit):

   

Undesignated preferred stock, $0.0001 par value, 4,600,000 shares authorized, none issued and outstanding as of September 30, 2023 and December 31, 2022

    —         —    

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 31,477,165 and 27,571,312 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

    3       3  

Class B common stock, $0.0001 par value, 500,000,000 shares authorized, 16,566,027 and 21,647,447 shares issued, and 16,491,502 and 21,572,922 shares outstanding as of September 30, 2023 and December 31, 2022, respectively

    2       2  

Additional paid-in capital

    502,606       505,186  

Receivable from shareholder

    (15,026     (16,369

Accumulated deficit

    (624,210     (641,903

Treasury stock, at cost, 74,525 shares outstanding as of September 30, 2023 and December 31, 2022

    (1,697     (1,697
 

 

 

   

 

 

 

Total stockholders’ deficit attributable to Xponential Fitness, Inc.

    (138,322     (154,778

Noncontrolling interests

    (68,974     (53,284
 

 

 

   

 

 

 

Total stockholders’ deficit

    (207,296     (208,062
 

 

 

   

 

 

 

Total liabilities, redeemable convertible preferred stock and stockholders’ deficit

  $ 551,232     $ 482,691  
 

 

 

   

 

 

 

 

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Xponential Fitness, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2023     2022     2023     2022  

Revenue, net:

        

Franchise revenue

   $ 36,425     $ 30,006     $ 104,524     $ 83,128  

Equipment revenue

     12,564       11,770       40,086       31,930  

Merchandise revenue

     8,456       6,264       24,021       19,100  

Franchise marketing fund revenue

     6,948       5,172       19,776       14,544  

Other service revenue

     16,042       10,551       40,058       24,983  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue, net

     80,435       63,763       228,465       173,685  

Operating costs and expenses:

        

Costs of product revenue

     12,709       11,840       40,967       34,951  

Costs of franchise and service revenue

     3,559       4,811       11,305       13,589  

Selling, general and administrative expenses

     48,579       32,841       127,912       96,082  

Depreciation and amortization

     4,216       4,154       12,701       11,225  

Marketing fund expense

     5,817       4,260       16,289       12,696  

Acquisition and transaction expenses (income)

     (1,923     16,290       (17,433     (5,793
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     72,957       74,196       191,741       162,750  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     7,478       (10,433     36,724       10,935  

Other (income) expense:

        

Interest income

     (24     (402     (1,189     (1,209

Interest expense

     10,638       3,333       27,242       9,060  

Other expense

     1,845       —         3,097       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     12,459       2,931       29,150       7,851  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (4,981     (13,364     7,574       3,084  

Income taxes (benefit)

     202       (308     212       (158
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (5,183     (13,056     7,362       3,242  

Less: net income (loss) attributable to noncontrolling interests

     (1,801     (5,918     2,348       1,065  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Xponential Fitness, Inc.

   $ (3,382   $ (7,138   $ 5,014     $ 2,177  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share of Class A common stock:

        

Basic

   $ 0.91     $ (1.53   $ 1.08     $ 0.28  

Diluted

   $ (0.50   $ (1.53   $ (0.17   $ 0.05  

Weighted average shares of Class A common stock outstanding:

        

Basic

     32,260       26,156       32,025       24,782  

Diluted

     40,223       26,156       39,988       62,823  

 

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Xponential Fitness, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)(in thousands)

 

     Nine Months Ended
September 30,
 
     2023     2022  

Cash flows from operating activities:

    

Net income

   $ 7,362     $ 3,242  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     12,701       11,225  

Amortization and write off of debt issuance cost

     416       94  

Amortization of discount on long-term debt

     2,032       454  

Change in contingent consideration from acquisitions

     (17,528     (5,791

Amortization of right-of-use assets

     9,729       1,450  

Bad debt expense (recovery)

     850       (526

Equity-based compensation

     15,647       23,920  

Non-cash interest

     (857     (679

Write down of goodwill and brand assets

     11,817       3,656  

Gain on disposal of assets

     (770     (90

Changes in assets and liabilities, net of effect of acquisitions:

    

Accounts receivable

     (2,535     (6,592

Inventories

     (5,376     (6,810

Prepaid expenses and other current assets

     (7,237     (5,529

Operating lease liabilities

     (4,027     (1,398

Deferred costs

     (4,743     (1,248

Notes receivable, net

     1       25  

Accounts payable

     7,302       7,497  

Accrued expenses

     1,656       (1,555

Other current liabilities

     4,953       599  

Deferred revenue

     7,536       13,993  

Other assets

     (458     (129

Other liabilities

     (277     1,663  
  

 

 

   

 

 

 

Net cash provided by operating activities

     38,194       37,471  

Cash flows from investing activities:

    

Purchases of property and equipment

     (6,156     (5,660

Proceeds from sale of assets

     60       65  

Purchase of studios

     (164     —    

Purchase of intangible assets

     (2,420     (6,840

Notes receivable issued

     (581     (1,782

Notes receivable payments received

     666       2,643  
  

 

 

   

 

 

 

Net cash used in investing activities

     (8,595     (11,574

Cash flows from financing activities:

    

Borrowings from long-term debt

     189,150       5,480  

Payments on long-term debt

     (3,014     (2,220

Debt issuance costs

     (411     (49

Payment of preferred stock dividend and deemed cash dividend

     (5,677     (13,000

Payment of contingent consideration

     (1,412     (1,336

Payments for taxes related to net share settlement of restricted share units

     (8,111     (1,897

Payment for tax receivable agreement

     (1,163     —    

Payments for redemption of preferred stock

     (130,766     —    

Payments for distributions to Pre-IPO LLC Members

     (7,485     —    

Repurchase of Class A common stock

     (50,378     —    

Payment received from shareholder

     8,062       —    

Loan to shareholder

     (4,400     (3,300

Proceeds from disgorgement of stockholders short-swing profits

     516       —    
  

 

 

   

 

 

 

Net cash used in financing activities

     (15,089     (16,322
  

 

 

   

 

 

 

Increase in cash, cash equivalents and restricted cash

     14,510       9,575  

Cash, cash equivalents and restricted cash, beginning of period

     37,370       21,320  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 51,880     $ 30,895  
  

 

 

   

 

 

 

 

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Xponential Fitness, Inc.

Net Loss to GAAP EPS Per Share

(in thousands, except per share amounts)

 

     September 30,     September 30,  
     2023     2022     2023     2022  

Numerator:

        

Net income (loss)

   $ (5,183   $ (13,056   $ 7,362     $ 3,242  

Less: net (income) loss attributable to noncontrolling interests

     (14,976     33,271       (14,127     (6,295

Less: dividends on preferred shares

     (1,863     (3,250     (5,789     (9,750

Add: deemed contribution (dividend)

     51,435       (57,096     34,326       19,794  

Add: deemed contribution from redemption of convertible preferred stock

     —         —         12,679       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to XPO Inc. - basic

     29,413       (40,131     34,451       6,991  

Add: net income (loss) attributable to non-controlling interests

     —         —         —         6,295  

Add: dividends on preferred shares

     1,863       —         5,789       9,750  

Less: deemed (contribution) dividend

     (51,435     —         (34,326     (19,794

Less: Deemed contribution from redemption of convertible preferred stock

     —         —         (12,679     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to XPO Inc. - diluted

   $ (20,159   $ (40,131   $ (6,765   $ 3,242  
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Weighted average shares of Class A common stock outstanding - basic

     32,260       26,156       32,025       24,782  

Effect of dilutive securities:

        

Rumble Class A common stock

     —         —         —         1,300  

Restricted stock units

     —         —         —         539  

Convertible preferred stock

     7,963       —         7,963       13,889  

Conversion of Class B common stock to Class A common stock

     —         —         —         22,313  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares of Class A common stock outstanding - diluted

     40,223       26,156       39,988       62,823  
  

 

 

   

 

 

   

 

 

   

 

 

 
        

Net earnings (loss) per share attributable to Class A common stock - basic

   $ 0.91     $ (1.53   $ 1.08     $ 0.28  

Net earnings (loss) per share attributable to Class A common stock - diluted

   $ (0.50   $ (1.53   $ (0.17   $ 0.05  
        

Anti-dilutive shares excluded from diluted earnings (loss) per share of Class A common stock:

        

Rumble Class A common stock

     —         1,300       —         —    

Restricted stock units

     1,342       2,121       1,342       —    

Conversion of Class B common stock to Class A common stock

     16,492       21,651       16,492       —    

Convertible preferred stock

     —         13,889       —         —    

Accelerated Purchase Program—final settlement

     589       —         589       —    

Rumble contingent shares

     2,024       2,024       2,024       2,024  

Profits interests, time vesting

     1       15       1       15  

Xponential Fitness, Inc.

Reconciliations of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2023     2022     2023     2022  
           (in thousands)              

Net income (loss)

   $ (5,183   $ (13,056   $ 7,362     $ 3,242  

Interest expense, net

     10,614       2,931       26,053       7,851  

Income taxes

     202       (308     212       (158

Depreciation and amortization

     4,216       4,154       12,701       11,225  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     9,849       (6,279     46,328       22,160  

Equity-based compensation

     3,536       4,243       15,647       23,920  

Employer payroll taxes related to equity-based compensation

     94       —         659       —    

Acquisition and transaction expenses (income)

     (1,923     16,290       (17,433     (5,793

Litigation expenses

     1,511       1,015       5,855       8,374  

Employee retention credit

     —         —         —         (2,597

Financial transaction fees and related expenses

     327       —         1,971       737  

TRA remeasurement

     1,845       1,078       3,097       1,635  

Write down of goodwill and brand assets

     4,579       3,656       11,817       3,656  

Restructuring and related charges

     6,703       —         6,703       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 26,521     $ 20,003     $ 74,644     $ 52,092  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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     Three Months Ended September 30,      Nine Months Ended September 30,  
     2023      2022      2023      2022  

Net income (loss)

   $ (5,183    $ (13,056    $ 7,362      $ 3,242  

Change in fair value of contingent consideration

     (1,923      16,290        (17,433      (5,791

TRA remeasurement

     1,845        1,078        3,097        1,635  

Write down of goodwill and brand assets

     4,579        3,656        11,817        3,656  

Restructuring and related charges

     6,703        —          6,703        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

   $ 6,021      $ 7,968      $ 11,546      $ 2,742  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income (loss) attributable to noncontrolling interest

     2,038        3,612        3,940        1,299  

Adjusted net income attributable to Xponential Fitness, Inc.

     3,983        4,356        7,606        1,443  

Dividends on preferred shares

     (1,233      (1,777      (3,759      (5,131
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings (loss) per share - basic numerator

     2,750        2,579        3,847        (3,688

Add: adjusted net income attributable to noncontrolling interest

     2,038        3,612        3,940        —    

Add: dividends on preferred shares

     1,233        1,777        3,759        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings (loss) per share - diluted numerator

   $ 6,021      $ 7,968      $ 11,546      $ (3,688
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net earnings (loss) per share - basic

   $ 0.09      $ 0.10      $ 0.12      $ (0.15

Adjusted net earnings (loss) per share - diluted

   $ 0.11      $ 0.13      $ 0.20      $ (0.15

Weighted average shares of Class A common stock outstanding - basic

     32,260        26,156        32,025        24,782  

Effect of dilutive securities:

           

Rumble Class A common stock

     —          1,300        —          —    

Restricted stock units

     85        43        421        —    

Convertible preferred stock

     7,963        13,889        7,963        —    

Conversion of Class B common stock to Class A common stock

     16,503        21,685        17,206        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares of Class A common stock outstanding - diluted

     56,811        63,073        57,615        24,782  

Anti-dilutive shares excluded from diluted earnings per share of Class A common stock:

           

Rumble Class A common stock

     —          —          —          1,300  

Restricted stock units

     —          —          —          2,121  

Convertible preferred stock

     —          —          —          13,889  

Conversion of Class B common stock to Class A common stock

     —          —          —          21,651  

Rumble contingent shares

     2,024        2,024        2,024        2,024  

Profits interests, time vesting

     1        15        1        15  

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 America 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 weekly, 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. In accordance with industry standard, we define the same store sales base to include studios in North America that are in traditional locations and that have generated positive sales for at least 13 consecutive calendar months as of the measurement date. Any transfer of ownership of an existing 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.

 

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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 activity for all North America traditional studio locations that are at least 6 months old at the beginning of the respective quarter, and that have non-zero sales in the period, 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, operate in traditional locations and have nonzero sales. 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 and related employer payroll taxes, acquisition and transaction expenses (including change in contingent consideration), 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 tax credit for retaining employees throughout the COVID-19 pandemic), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions), expense related to the remeasurement of our TRA obligation, write down of goodwill and brand assets, and restructuring and related charges 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.

 

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