XPOF Xponential Fitness Inc

System-wide sales¹ of $431.2 million in Q3 2024 increased 21% year-over-year

Quarterly AUV (run rate)² of $631,000 in Q3 2024 grew 8% year-over-year, while total members of 827,000 were up 16%

Sold 84 franchise licenses and opened 125 gross new studios in Q3 2024

Reported revenue of $80.5 million, consistent with the prior year period.

Increased North America system-wide sales by 21% to $431.2 million.

Reported North America same store sales³ growth of 5%, compared to growth of 15%.

Reported North America quarterly run-rate average unit volume (AUV) of $631,000, compared to $585,000.

Posted net loss of $18.0 million, or a loss of $0.29 per basic share, on a share count of 32.2 million shares of Class A Common Stock, compared to a net loss of $5.2 million, or earnings per basic share of $0.91, on a share count of 32.3 million shares of Class A Common Stock.

Posted adjusted net loss of $0.2 million, or a loss of $0.04 per basic share, compared to adjusted net income of $6.0 million, or earnings per basic share of $0.09.

Reported Adjusted EBITDA⁴ of $31.0 million, compared to $26.5 million.

Gross new studio openings in the range of 490 to 510, or a decrease of 10% at the midpoint compared to full year 2023 gross new openings; this compares to previous guidance of 500 to 520;

North America system-wide sales in the range of $1.705 billion to $1.715 billion, or an increase of 22% at the midpoint compared to full year 2023; unchanged from previous guidance;

Revenue in the range of $310.0 million to $320.0 million, or a decrease of 1% at the midpoint compared to full year 2023; unchanged from previous guidance;

Adjusted EBITDA in the range of $120.0 million to $124.0 million, or an increase of 16% at the midpoint compared to full year 2023; unchanged from previous guidance.

Tax rate in the mid-to-high single digits;

Share count of 31.8 million shares of Class A Common Stock for the GAAP EPS and Adjusted EPS calculations. A full explanation of the Company’s share count calculation and associated EPS and Adjusted EPS calculations can be found in the tables at the end of this press release; and

$1.9 million in quarterly dividends paid related to the Company’s Convertible Preferred Stock, or $2.2 million if paid-in-kind.

Assets

Current assets:

Cash, cash equivalents and restricted cash

Accounts receivable, net

Inventories

Prepaid expenses and other current assets

Deferred costs, current portion

Notes receivable from franchisees, net

Total current assets

Property and equipment, net

Right-of-use assets

Goodwill

Intangible assets, net

Deferred costs, net of current portion

Notes receivable from franchisees, net of current portion

Other assets

Total assets

Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

Current liabilities:

Accounts payable

Accrued expenses

Deferred revenue, current portion

Current portion of long-term debt

Other current liabilities

Total current liabilities

Deferred revenue, net of current portion

Contingent consideration from acquisitions

Long-term debt, net of current portion, discount and issuance costs

Lease liability

Other liabilities

Total liabilities

Commitments and contingencies

Redeemable convertible preferred stock, $0.0001 par value, 400 shares authorized,
115 shares issued and outstanding as of September 30, 2024 and December 31, 2023

Stockholders’ equity (deficit):

Undesignated preferred stock, $0.0001 par value, 4,600 shares authorized, none issued and
outstanding as of September 30, 2024 and December 31, 2023

Class A common stock, $0.0001 par value, 500,000 shares authorized, 32,191 and 30,897 shares
issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Class B common stock, $0.0001 par value, 500,000 shares authorized, 16,091 and 16,566 shares issued, and 16,016 and 16,491 shares outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

Receivable from shareholder

Accumulated deficit

Treasury stock, at cost, 75 shares outstanding as of September 30, 2024 and December 31, 2023

Total stockholders’ deficit attributable to Xponential Fitness, Inc.

Noncontrolling interests

Total stockholders’ deficit

Total liabilities, redeemable convertible preferred stock and stockholders’ deficit

Revenue, net:

Franchise revenue

Equipment revenue

Merchandise revenue

Franchise marketing fund revenue

Other service revenue

Total revenue, net

Operating costs and expenses:

Costs of product revenue

Costs of franchise and service revenue

Selling, general and administrative expenses

Impairment of goodwill and other assets

Depreciation and amortization

Marketing fund expense

Acquisition and transaction expenses (income)

Total operating costs and expenses

Operating income (loss)

Other expense (income):

Interest income

Interest expense

Other expense

Total other expense

Income (loss) before income taxes

Income taxes

Net income (loss)

Less: net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to Xponential Fitness, Inc.

Net income (loss) per share of Class A common stock:

Basic

Diluted

Weighted average shares of Class A common stock outstanding:

Basic

Diluted

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

Amortization and write off of debt issuance costs

Amortization and write off of discount on long-term debt

Change in contingent consideration from acquisitions

Non-cash lease expense

Bad debt expense

Equity-based compensation

Non-cash interest

Loss (gain) on disposal of assets

Impairment of goodwill and other assets

Changes in assets and liabilities, net of effect of acquisition:

Accounts receivable

Inventories

Prepaid expenses and other current assets

Operating lease liabilities

Deferred costs

Notes receivable, net

Accounts payable

Accrued expenses

Other current liabilities

Deferred revenue

Other assets

Other liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from sale of assets

Purchase of studios

Purchase of intangible assets

Notes receivable issued

Notes receivable payments received

Acquisition of business

Net cash used in investing activities

Cash flows from financing activities:

Borrowings from long-term debt

Payments on long-term debt

Debt issuance costs

Payment of preferred stock dividend

Payment of promissory note liability

Payment of contingent consideration

Payments for taxes related to net share settlement of restricted share units

Proceeds from issuance of common stock in connection with stock-based compensation plans

Payment for tax receivable agreement

Payments for redemption of preferred stock

Payments for distributions to Pre-IPO LLC Members

Repurchase of Class A common stock

Payment received from shareholder

Loan to shareholder

Proceeds from disgorgement of stockholders short-swing profits

Net cash provided by (used in) financing activities

Increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Numerator:

Net income (loss)

Less: net (income) loss attributable to noncontrolling interests

Less: dividends on preferred shares

Less: deemed contribution

Add: deemed contribution from redemption of convertible preferred stock

Net income (loss) attributable to XPO Inc. - basic

Add: dividends on preferred shares

Less: deemed contribution

Less: Deemed contribution from redemption of convertible preferred stock

Net loss attributable to XPO Inc. - diluted

Denominator:

Weighted average shares of Class A common stock outstanding - basic

Effect of dilutive securities:

Convertible preferred stock

Weighted average shares of Class A common stock outstanding - diluted

Net earnings (loss) per share attributable to Class A common stock - basic

Net loss per share attributable to Class A common stock - diluted

Anti-dilutive shares excluded from diluted loss per share of Class A common stock:

Restricted stock units

Conversion of Class B common stock to Class A common stock

Convertible preferred stock

Accelerated Purchase Program - final settlement

Treasury share options

Rumble contingent shares

Profits interests, time vesting

Net income (loss)

Interest expense, net

Income taxes

Depreciation and amortization

EBITDA

Equity-based compensation

Employer payroll taxes related to equity-based compensation

Acquisition and transaction expenses (income)

Litigation expenses

Financial transaction fees and related expenses

TRA remeasurement

Impairment of goodwill and other assets

Loss on brand divestitures and wind down (excluding impairments)

Executive transition costs

Non-recurring rebranding expenses

Restructuring and related charges (excluding impairments)

Adjusted EBITDA

Net income (loss)

Acquisition and transaction expenses (income)

TRA remeasurement

Impairment of goodwill and other assets

Loss on brand divestitures and wind down (excluding impairments)

Restructuring and related charges (excluding impairments)

Adjusted net income

Adjusted net income attributable to noncontrolling interest

Adjusted net income attributable to Xponential Fitness, Inc.

Dividends on preferred shares

Adjusted Earnings (loss) per share - basic numerator

Add: Adjusted net income (loss) attributable to noncontrolling interest

Add: Dividends on preferred shares

Adjusted Earnings (loss) per share - diluted numerator

Adjusted net earnings (loss) per share - basic

Weighted average shares of Class A common stock outstanding - basic

Adjusted net earnings (loss) per share - diluted

Effect of dilutive securities:

Restricted stock units

Convertible preferred stock

Conversion of Class B common stock to Class A common stock

Weighted average shares of Class A common stock outstanding - diluted

Shares excluded from dilutive earnings per share of Class A common stock

Restricted stock units

Convertible preferred stock

Conversion of Class B common stock to Class A common stock

Treasury share options

Rumble contingent shares

Profits interests, time vesting

System-wide sales represent gross sales by all North America studios. System-wide sales include sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance. System-wide sales growth is driven by new studio openings and increases in same store sales. Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.

AUV is calculated by dividing sales during the applicable period for all studios contributing to AUV by the number of studios contributing to AUV. All traditional studio locations in North America are included in the AUV calculation, so long as they meet certain time since opening and sales criteria (as defined immediately below). In particular, AUV (LTM as of period end) and Quarterly AUV (run rate) are calculated as follows:

AUV (LTM as of period end) consists of the average sales for the trailing 12 calendar months for all traditional studio locations in North America that opened at least 13 calendar months ago as of the measurement date and that have generated positive sales for each of the last 13 calendar months as of the measurement date.

Quarterly AUV (run rate) consists of average quarterly sales for all traditional studio locations in North America that had opened at least six calendar months ago as of the beginning of the respective quarter, and that have non-zero sales in the respective quarter (including nominal or negative sales figures; the only figures excluded are exact $0 amounts in the quarter), multiplied by four.

Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include monthly sales for any traditional studio location in North America. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendars months ago as of any month within the measurement period, the respective comparable months will be included. We measure same store sales based solely upon monthly sales as derived through the designated point-of-sale system. This measure highlights the performance of existing studios, while excluding the impact of new studio openings. Management reviews same store sales to assess the health of the franchised studios.

We define Adjusted EBITDA as EBITDA (net income/loss before interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity-based compensation and related employer payroll taxes, acquisition and transaction expenses (income) (including change in contingent consideration and transaction bonuses), litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions) and other contemplated corporate transactions, expense related to the remeasurement of our TRA obligation, expense related to loss on impairment or write down of goodwill and other assets, loss on brand divestitures and wind down (excluding impairments), executive transition costs (consisting of costs associated with the transition of our former CEO, such as professional services, legal fees, executive recruiting costs and other related costs), non-recurring rebranding expenses, and restructuring and related charges (excluding impairments) incurred in connection with our restructuring plan that we do not believe reflect our underlying business performance and affect comparability. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that Adjusted EBITDA, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.