What happened

Xponential Fitness (XPOF -7.90%) investors beat the market on Friday as shares jumped 20% by 1:30 p.m. ET, compared to a 1.1% boost in the S&P 500. The increase pushed the stock near positive results for the full year even as the broader market is down 11%.

It was sparked by good news about demand for its boutique fitness brands.

So what

In a press release before the market opened, Xponential detailed its latest operating results for the selling period that ran though late June. While investors were worried that demand might have slowed as consumers pulled back spending on fitness memberships, that's not what happened. Instead, Xponential posted a 66% sales increase.

Looking deeper into the results reveals mostly good news for shareholders. The company's fitness studios generated over $480,000 in average sales volumes compared to $384,000 a year earlier.

Those gains helped adjusted earnings rise to $28 million over the past six months compared to just $8 million in the previous period. "We experienced a strong year-over-year increase in members and grew our system-wide sales across North America for the eighth consecutive time in the second quarter," CEO Anthony Geisler said in a statement.

Now what

Xponential earns higher revenue as its base of studios grows and as these locations serve larger membership bases. Management is expecting both trends to remain positive through the rest of 2022.

Specifically, sales should land between $211 million and $221 million, or roughly 39% compared to a prior forecast calling for 33% growth. Adjusted earnings will expand more quickly, too, executives forecast. Xponential continues to target adding more than 500 new studio locations.

Consumer demand trends can still slow, especially if economic growth rates stall. But Xponential's current expansion pace implies a better fiscal year than investors had been predicting before this operating update. As a result, it was no surprise to see the growth stock jump in response to the brightening earnings prospects.