Xponential Fitness (XPOF +0.26%), a leading curator of boutique fitness brands operating through an asset-light franchise model, reported results for the second quarter of 2025 on August 7. The main headlines: non-GAAP earnings per share came in at $0.26, beating analyst expectations by $0.04. GAAP revenue totaled $76.2 million, missing the $77.23 million consensus, and representing a slight decline from last year. The period saw mixed results—profitability improved, but revenue growth, new studio openings, and system-level momentum softened. Management significantly dialed back its full-year guidance for net new studios and adjusted EBITDA, attributing much of the change to recent brand divestitures and proactive investments aimed at stabilizing operations for the longer term. While the quarter demonstrated resilient franchise-level economics, it also reflected emerging headwinds for new growth.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.26 | $0.22 | $(0.04) | NM |
| Revenue | $76.2 million | $77.23 million | $76.9 million | 0% |
| Adjusted EBITDA | $28.1 million | $24.7 million | 14% | |
| Net Income | $1.3 million | $(14.3) million | NM | |
| System-wide Sales – North America | $473.5 million | N/A | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Recent Strategic Focus
Xponential Fitness operates a family of boutique fitness studio brands, such as Pilates, barre, yoga, stretching, and group strength training. Its business model centers on franchising, which means it licenses its brands to local operators rather than running the studios directly. This approach lets it expand rapidly while keeping capital spending and risk relatively low.
The company's key to success is maintaining a broad, diversified brand portfolio and supporting its franchise owners. It recently narrowed its focus, trimming its lineup to six core brands after divesting CycleBar and Rumble. Another major area of emphasis is enhancing franchisee support through direct field operations, shifting from broker-driven studio sales to a more selective, in-house approach. Management is looking to strengthen digital engagement and international growth, but also sees regulatory compliance and franchisee profitability as crucial risk factors needing active oversight.
Quarterly Highlights: Results, Segment Trends, and Key Developments
The past quarter offered both advances and some notable slowdowns. Adjusted earnings per share (non-GAAP) reached $0.26, beating estimates by 18%. Net income (GAAP) turned positive to $1.3 million, up sharply from a $14.3 million GAAP loss in the prior-year quarter. Adjusted EBITDA rose 14% to $28.1 million, marking a robust improvement in operating profitability.
Yet, GAAP revenue fell short of expectations, slipping 1% year over year. System-wide sales across North America—meaning all spending at franchised locations—rose 12% to $473.5 million. This top-line momentum was mostly fueled by member growth and higher average unit volumes (AUVs), with all KPI information presented on an adjusted (non-GAAP) basis. AUV, which measures the annualized sales run rate per studio, ticked up to $659,000, a 3% increase on an adjusted (non-GAAP) basis. However, the pace of growth decelerated compared to past quarters, suggesting that studio-level momentum is flattening. Membership count reached 863,000, up 8% on an adjusted basis, but this too reflected a slower growth rate than seen previously.
One key metric, same store sales in North America—which tracks sales from studios open at least a year—grew just 1% year-over-year. For context, that figure was 7% higher in the prior-year quarter.
Gross studio openings slowed to 86 (adjusted basis), compared to 116 in the previous quarter (adjusted basis). This led management to revise its net new studio opening expectation for the year down by 37% at the midpoint, now guiding for 170–190 new units, excluding the impact of the brand divestitures. Brand closures were concentrated in underperforming concepts, particularly at StretchLab and (now-divested) CycleBar. Club Pilates, which offers reformer-based Pilates workouts, remains the biggest source of new studio growth—making up over half of new openings and license sales in the previous quarter. YogaSix (yoga classes) and Pure Barre (barre fitness) also contributed. Rumble and CycleBar, which focused on boxing-inspired and indoor cycling group classes, respectively, were exited during the quarter.
The company’s shift away from franchise brokers to direct, in-house franchise sales represents a major operational pivot. It also began the rollout of a dedicated field operations team, aiming to reach about 40 field staff over three quarters, specifically to support franchisee performance. Marketing strategies were revisited, especially for struggling brands like StretchLab, which is exploring new pricing, labor, and marketing models to address unit-level weakness.
Total operating costs and expenses fell 23% compared to the prior-year quarter. Cash and liquidity (GAAP) were $38.7 million as of quarter end, but total long-term debt remained high at $377.8 million as of quarter end, keeping leverage an important figure to watch.
Looking Forward: Guidance and Near-Term Expectations
Management reduced its forecast for net new studio openings, revenue, and adjusted EBITDA for the year. Net new studio openings are now expected to total 170–190, compared to the prior guidance of 160–180. System-wide sales for North America are targeted at $1.78–$1.80 billion, a 13% increase at the midpoint. Total company revenue (GAAP) is now guided to $300–$310 million, down about 5% from prior guidance, while adjusted EBITDA is expected to reach $106–$111 million, a 7% decrease at the midpoint. Leadership attributes these revisions to the recent brand sales, a slowdown in new studio launches, and stepped-up investments in field operations and franchisee support. No changes were declared for the company’s approach to the existing quarterly dividend, which remains focused on convertible preferred stockholders.
Looking ahead, the critical areas to watch will be the pace of new studio expansion and stabilization of same store sales growth. International performance is unchanged with operations in 30 countries, and there are no major updates on digital initiatives in this quarter’s report. Regulatory compliance and legal costs continue to pose risks, though no new compliance actions were detailed for this period. Management did not provide new guidance for same store sales or margin expansion beyond 2025, citing proactive caution as it works to reposition the business’s operating base.
XPOF currently pays a quarterly dividend on its convertible preferred stock.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
