Xponential Fitness said system sales in North America for the first quarter grew for the seventh consecutive quarter, up 70 percent year-over-year. The fitness store owner is on track to open more than 500 new studios this year.
Xponential fitness stores include Club Pilates, CycleBar, StretchLab, Row House, AKT, YogaSix, Pure Barre, Stride, Rumble, and BFT.
“Following a very strong last quarter, Xponential Fitness entered 2022 with great momentum,” said Anthony Geisler, CEO on a call with analysts.
Visit rates for active members in the first quarter and visit rates in North America increased about 60 percent and 45 percent, respectively, year over year. Sequentially, both numbers improved by 17 percent compared to the fourth quarter of 2021.
“Importantly, performance during the first quarter continued to strengthen on a monthly basis,” Geisler said. “We reached an important milestone in March with our North American AUV Monthly Operating Rate (Average Unit Size) of $477,000, bouncing back to the pre-COVID peak of our Quarterly AUV Operating Rate. We expect AUVs to continue to increase with continued implementation of our strategies. our growth.”
A quarter to date, positive momentum has continued across boutique franchises.
“As we go through a period of unprecedented inflation and macroeconomic stress, our member numbers are increasing both overall and at the individual studio level as our clients continue to prioritize their health,” Geisler said. “Furthermore, we believe that our model is more insulated from macroeconomic pressures because our customers, in general, on recurring membership packages do not consider fitness a discretionary spending. Our membership fees tend to be a relatively small portion of their total budgets.”
In the first quarter, total revenue, including royalties from franchisees, jumped 73 percent to $50.4 million, including a 47 percent increase in same-store sales in North America.
The total net loss was $15.2 million, or $1.51, compared to a loss of $4.8 million in the same period last year. The increase was the result of $14.0 million of higher overall profitability, offset by a $9.4 million increase in non-cash contingent consideration primarily associated with the acquisition of Rumble and an increase of $15.0 million in non-cash compensation expense based on equity.
Xponential Fitness was launched to the public in July 2021.
The adjusted net loss, which excludes potential consideration primarily related to the Rumble acquisition, was $5.3 million, or 19 cents.
Adjusted EBITDA increased four times to $14.5 million, compared to $3.6 million in the same period last year. Compared to the fourth quarter, first-quarter adjusted EBITDA improved $5.9 million, an increase of 68 percent, with EBITDA margins nearly doubling on a quarterly basis.
To drive growth, Geisler said the primary focus will be increasing the franchise studio base across all brands in North America and expanding internationally.
Geisler said, “We finished the quarter with 2,229 global studios, the largest number of studios in our company’s history. Having opened 99 new studios in the first quarter as expected, we remain on track to open more than 500 new studios this year.”
The main driver of the studio’s growth in North America is its nationwide partnership with LA Fitness, giving the exclusive right to open Xponential Fitness studios to brands within LA Fitness locations with a commitment to develop a minimum of 350 locations over five years.
Internationally, the company now has nearly 1,000 studios bound to open, including recently entered agreements with Mexico and the United Kingdom.
On the M&A front, BFT (Body Fit Training) integration remains on track, with more than 170 franchise studios currently open and an additional 180 sold and contractually obligated to open globally. Geisler said, “With regard to future mergers and acquisitions, we will continue to opportunistically evaluate potential brands and new modalities, while taking a disciplined approach to capital allocation.”
Same-store sales and average unit volume (AUV) drivers are expected to include the XPass subscription program that gives access to the 10 fitness studios and XPlus online offerings on demand.
After the quarter ended, Xponential Fitness announced an expansion of its digital offering in collaboration with Lululemon and home gym technology, Mirror. Starting this fall, four Xponential Fitness brands, Pure Barre, Rumble, YogaSix and AKT, will be creating original fitness content for the Mirror.
“We are thrilled to bring tremendous offerings to the Mirror community, and believe this partnership will help us increase brand awareness and reduce overall customer acquisition costs as Lululemon, Mirror and Xponential all target a similar customer demographic,” said Sarah Luna, President. on the call.
Xponential Fitness has reiterated its 2022 guidance which calls for:
- New studio openings in the range of 500 to 520, or an 81 percent increase halfway over the full year 2021;
- System-wide sales in North America range from $995.0 million to $1.005 billion, or a 41 percent increase halfway over the full year 2021;
- Revenue in the range of $201.0 million to $211.0 million, or a 33 percent increase midway over the full year 2021; And
- Adjusted EBITDA is in the $67.0 million to $71.0 million range, or a 153 percent increase midway over the full year 2021.
In sum, we are very pleased with our strong start to 2022. Xponential is well positioned for continued growth as we open new studios, drive same-store sales, and expand our operating margins. These factors, along with the ongoing implementation of our four growth initiatives, concluded Geisler. Strategically, we continue to cement our position as the largest and most distinguished global franchisor in the fitness industry.
Photo courtesy Xponential Fitness
