Xponential Fitness, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $62.3 million, a 21% decrease from $78.8 million in the prior year period.
• Net income was $4.9 million ($0.10 per basic share) compared to a net loss of $6.7 million ($0.18 per basic share) in the prior year.
• Adjusted net income was $2.2 million ($0.04 per basic share), down from $19.3 million ($0.36 per basic share) in the prior year.
• Adjusted EBITDA was $24.3 million, a 27% decrease from $33.5 million in the prior year.
• Franchise revenue was $43.4 million, down 16% year-over-year.
• Equipment revenue was $4.3 million, down 42% year-over-year.
• Merchandise revenue was $0.4 million, down 92% year-over-year.
• Franchise marketing fund revenue was $8.5 million, down 4% year-over-year.
• Other service revenue was $5.7 million, down 2% year-over-year.
• Selling, general and administrative expenses were $28.2 million, up 14% year-over-year.
• Net cash used in operating activities was $21.1 million for the nine months ended September 30, 2026.
• As of September 30, 2026, the Company held $27.2 million in cash, cash equivalents, and restricted cash.
• Total long-term debt was $521.1 million as of September 30, 2026.
• Deferred revenue was $81.4 million ($20.1 million current, $61.3 million non-current) as of September 30, 2026.

Guidance and Future Outlook:

• The Company is reiterating its full year 2026 outlook for North America system-wide sales and revenue.
• Net new studio openings for 2026 are updated to a range of 124 to 130, a 37% decrease at the midpoint compared to previous guidance of approximately 150.
• North America system-wide sales for 2026 are projected in the range of $1.70 billion to $1.75 billion, a 1% decrease at the midpoint.
• Revenue for 2026 is projected in the range of $250.0 million to $260.0 million, a 19% decrease at the midpoint.
• Adjusted EBITDA for 2026 is updated to a narrowed range of $91.0 million to $94.0 million, a 17% decrease at the midpoint compared to previous guidance of $91.0 million to $97.0 million.
• The tax rate is expected to be in the mid-to-high single digits for the full year 2026.
• The share count for GAAP and Adjusted EPS calculations is expected to be 41.0 million shares of Class A Common Stock.

Business Segments and Product Lines:

• The decline in franchise revenue was driven by lower revenue recognized from franchise agreement terminations, decreased royalty fees due to lower same store sales and brand divestitures in 2025, and declines in technology and training fees.
• The decrease in equipment revenue resulted from fewer global equipment installations driven by fewer studio openings.
• The decrease in merchandise revenue was driven by the transition from an in-house wholesale model to an outsourced retail model.
• The decrease in franchise marketing fund revenue was due to lower same store sales and the impact of divested brands.

Market and Competitive Landscape:

• North America system-wide sales were $424.3 million, down from $432.2 million in the prior year.
• North America same store sales decreased 7.5% in the third quarter, compared to a 0.8% decrease in the prior year.
• North America quarterly run-rate average unit volume (AUV) was $634,000, down from $668,000 in the prior year.
• The Company operates a diversified platform of five brands spanning Pilates, barre, stretching, strength training, and yoga.
• The portfolio includes Club Pilates (largest Pilates brand in the U.S.), StretchLab, YogaSix (largest franchised yoga brand in the U.S.), Pure Barre (largest barre brand in the U.S.), and BFT.
• Franchise, master franchise, and international expansion agreements exist in 49 U.S. states, Puerto Rico, and 29 additional countries.

Risks and Challenges:

• The review of strategic alternatives may not result in a transaction and could adversely affect the business, operations, and stock price.
• Franchisees' ability to generate sufficient revenues and the Company's ability to anticipate consumer preferences are key risks.
• Risks include loss of reputation and brand awareness, difficulties in attracting and retaining key senior management, and challenges in opening studios by franchisees.
• Macroeconomic conditions, geopolitical uncertainty, trade policies, tariffs, and conflicts in Europe and the Middle East pose risks.
• High variability and complexity regarding taxes, tax receivable agreement remeasurements, and income/expense from changes in fair value of contingent consideration from acquisitions may significantly impact future GAAP financial results.

Management Commentary and Tone:

• CEO Mike Nuzzo stated the Company is making progress in strengthening the business through initiatives in marketing, technology, and brand management.
• Management priorities include improving franchisee and studio-level economics, supporting healthy and disciplined unit expansion, strengthening financial performance, and elevating the member experience.
• The Board of Directors initiated a review of strategic alternatives in April to maximize shareholder value, supported by Jefferies as financial advisor.

Other Key Points:

• The Company announced a transition from an in-house wholesale model to an outsourced retail model for merchandise.
• The Board is exploring strategic, financial, and operational alternatives, which may include a sale of the company, a merger, or another strategic transaction.
• The Company does not intend to comment further on the strategic alternatives review until the process has concluded.
• A conference call to discuss the results was scheduled for November 5, 2026, at 1:30 p.m. Pacific Time.
• The Company reported a net loss attributable to XPO Inc. of $653,000 for the nine months ended September 30, 2026, compared to a loss of $5.8 million in the prior year period.
• Adjusted EBITDA for the nine months ended September 30, 2026, was $66.7 million, compared to $88.9 million in the prior year period.