Xponential Fitness, Inc. — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenue was $66.0 million, a 13% decrease year-over-year.
• Net loss was $4.8 million ($0.10 per basic share) compared to net income of $1.3 million ($0.01 per basic share) in the prior year period.
• Adjusted net income was $0.8 million ($0.02 per basic share), down from $14.5 million ($0.26 per basic share) in the prior year.
• Adjusted EBITDA was $21.9 million, a 22% decrease from $28.1 million in the prior year.
• North America system-wide sales were $437.3 million, flat year-over-year.
• North America same-store sales decreased 6.8%, compared to 2.4% growth in the prior year.
• North America quarterly run-rate average unit volume (AUV) was $659,000, down from $686,000.
• Franchise revenue was $44.0 million, down 3% year-over-year.
• Equipment revenue was $7.1 million, down 26% year-over-year.
• Merchandise revenue was $0.5 million, down 90% year-over-year.
• Franchise marketing fund revenue was $8.7 million, down 8% year-over-year.
• Other service revenue was $5.6 million, down 10% year-over-year.
• Selling, general and administrative expenses were $32.0 million, up 33% year-over-year.
• Marketing fund expenses were $11.4 million, up 29% year-over-year.
• Net cash used in operating activities was $25.7 million for the quarter.
• Cash, cash equivalents, and restricted cash were $25.0 million as of June 30, 2026.
• Total long-term debt was $522.4 million as of June 30, 2026.
• Deferred revenue was $82.5 million ($17.3 million current, $65.2 million non-current) as of June 30, 2026.

Guidance and Future Outlook

• Full-year 2026 net new studio openings revised to approximately 150, a 25% decrease from previous guidance of 150 to 170.
• Full-year 2026 North America system-wide sales guidance revised to $1.70 billion to $1.75 billion (midpoint decrease of 1%), compared to previous guidance of $1.72 billion to $1.80 billion.
• Full-year 2026 revenue guidance revised to $250.0 million to $260.0 million (midpoint decrease of 19%), compared to previous guidance of $260.0 million to $270.0 million.
• Full-year 2026 Adjusted EBITDA guidance revised to $91.0 million to $97.0 million (midpoint decrease of 16%), compared to previous guidance of $100.0 million to $110.0 million.
• Full-year 2026 tax rate assumption is in the mid-to-high single digits.
• Full-year 2026 share count for EPS calculations is expected to be 41.0 million shares of Class A Common Stock.

Business Segments and Product Lines

• The company opened 67 gross new studios and sold 53 franchise licenses in Q2 2026.
• The decline in equipment revenue was driven by fewer global equipment installations due to fewer studio openings and lower franchise license sales.
• The decrease in merchandise revenue resulted from the transition from an in-house wholesale model to an outsourced retail model.
• The decrease in franchise marketing fund revenue was primarily due to lower system-wide sales stemming from brand divestitures completed in 2025.
• The decrease in other service revenue was driven by lower vendor commission and brand access fee revenues.

Market and Competitive Landscape

• Xponential Fitness is one of the leading global franchisors of boutique health and wellness brands.
• The company operates a diversified platform of five brands: Club Pilates, StretchLab, YogaSix, Pure Barre, and BFT.
• Franchise agreements exist in 49 U.S. states, Puerto Rico, and 29 additional countries.
• Club Pilates is the largest Pilates brand in the United States.
• YogaSix is the largest franchised yoga brand in the United States.
• Pure Barre is the largest barre brand in the United States.

Risks and Challenges

• Revenue decline was driven by fewer equipment installations and lower merchandise revenue following the transition to an outsourced logistics arrangement.
• Franchise revenue decline was driven by a decrease in same-store sales and brand divestitures.
• Selling, general and administrative expenses increased primarily due to higher legal expenses.
• Marketing fund expenses increased due to front-loaded investment in the second quarter of 2026.
• The company faces risks related to franchisees' ability to generate sufficient revenues, consumer preference changes, brand reputation, executive leadership changes, and international expansion.
• Macroeconomic conditions, geopolitical uncertainty, and trade policies are cited as potential risks.
• The company is reviewing strategic alternatives, which could adversely affect the business, operations, and stock price.
• Variability in tax rates, tax receivable agreement remeasurements, and fair value changes in contingent consideration from acquisitions creates unpredictability in GAAP financial results.

Management Commentary and Tone

• CEO Mike Nuzzo stated that second quarter results were below expectations.
• Management emphasized continued progress on priorities including studio growth (domestic and international), enhanced digital capabilities, and elevated franchisee studio support.
• Management described efforts as "laser focused on driving long term, sustainable growth and success for our franchisees."
• The tone acknowledges the decline in results but highlights strategic investments and long-term focus.

Other Key Points

• The company transitioned from an in-house wholesale model to an outsourced retail model for merchandise.
• Brand divestitures were completed in 2025, impacting current revenue streams.
• The company incurred litigation expenses and executive transition costs included in non-GAAP adjustments.
• The company has a line of credit of $10.0 million outstanding as of June 30, 2026.
• The company reported a net loss attributable to Xponential Fitness, Inc. of $4.1 million for the quarter.
• The company hosts a conference call to discuss results, with a telephonic replay available until August 20, 2026.