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Xponential Fitness, Inc. Announces Third Quarter 2022 Financial Results

- Company raises full year 2022 guidance for revenue and Adjusted EBITDA

- Grew Q3 2022 revenue 56% and North America system-wide sales 37% compared to Q3 2021

- Sold 258 franchise licenses and opened 128 new studios in Q3 2022

- Sold 5,193 total franchise licenses and had 2,485 total studios operating as of Q3 2022

Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the “Company”), the largest global franchisor of boutique fitness brands, today reported financial results for the third quarter ended September 30, 2022. All financial figures included in this release refer to global numbers, unless otherwise noted. Definitions for the non-GAAP measures and a reconciliation to the corresponding GAAP measures are included in the tables that accompany this release.

Financial Highlights: Q3 2022 Compared to Q3 2021

  • Grew revenue 56% to $63.8 million.
  • Increased North America system-wide sales1 by 37% to $264.8 million.
  • Reported North America same store sales2 growth of 17%.
  • Reported North America quarterly run-rate average unit volume (AUV)3 of $489,000, compared to $417,000.
  • Posted net loss of $13.1 million, or a loss of $1.53 per basic share, on a share count of 26.2 million shares of Class A Common Stock, compared to a net loss of $8.9 million, or a loss of $0.38 per basic share, on a share count of 22.1 million shares of Class A Common Stock.
  • Posted adjusted net income of $8.0 million, or $0.10 per basic share, compared to an adjusted net loss of $5.8 million, or a loss of $0.31 per basic share.
  • Reported Adjusted EBITDA4 of $20.0 million, compared to $6.8 million.

“Nine quarters of consistent growth in our run-rate AUVs is a strong reminder that the workouts our franchisees provide across a diverse portfolio of brands remain an integral part of our members’ lives, irrespective of macroeconomic challenges,” said Anthony Geisler, CEO of Xponential Fitness, Inc. “Not only did we expand our core franchise business in Q3 2022, but we also welcomed key new partners, including Princess Cruises and lululemon Studio. Connecting with our membership base where and when they want to work out through our omni-channel approach will continue to be a core part of our growth strategy.”

For the third quarter of 2022, total revenue increased $22.9 million, or 56%, to $63.8 million, up from $40.9 million in the prior-year period. Total revenue increased largely due to increasing equipment installations and royalties generated from strong North American system-wide sales.

Net loss totaled $13.1 million, or a loss of $1.53 per basic share, compared to a net loss of $8.9 million, or a loss of $0.38 per basic share, in the prior-year period. While overall profitability was higher by $13.6 million, this was offset by $13.4 million of higher non-cash contingent consideration expense primarily related to the Rumble acquisition, a $3.7 million increase in impairment of brand assets, and a $0.7 million increase in non-cash equity-based compensation expense. Please see the table contained in this press release for a calculation of the basic and diluted earnings (loss) per share for the quarter ended September 30, 2022.

Consistent with previous periods, the Rumble acquisition non-cash contingent consideration liability is marked-to-market based on Xponential’s share price, contributing to a $16.3 million increase to contingent consideration liability in the third quarter of 2022.

Adjusted net income for the third quarter of 2022, which excludes the $16.3 million change in fair value of non-cash contingent consideration, $1.1 million expense related to the third quarter remeasurement of the Company’s tax receivable agreement liability, and $3.7 million related to the impairment of brand assets, was $8.0 million, or $0.10 per basic share.

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for equity-based compensation, acquisition and transaction expenses, management fees, litigation expenses, employee retention credit, secondary public offering expenses, tax receivable agreement remeasurement and impairment of brand assets, increased to $20.0 million, up from $6.8 million in the prior-year period.

Liquidity and Capital Resources

As of September 30, 2022, the Company had approximately $30.9 million of cash, cash equivalents and restricted cash and $136.5 million in total long-term debt. Net cash provided by operating activities was $37.5 million for the nine months ended September 30, 2022.

2022 Outlook

Based on the Company’s performance in the first nine months of 2022 and the current state of the business as of the date of this press release, Xponential is increasing its full-year 2022 guidance for revenue and Adjusted EBITDA and re-affirming guidance for studio openings and system-wide sales in North America as follows:

  • New studio openings to remain in the range of 500 to 520, or an increase of 53% at the midpoint as compared to full year 2021;
  • North America system-wide sales to remain in the range of $995.0 million to $1.005 billion, or an increase of 41% at the midpoint as compared to full year 2021;
  • Revenue is now anticipated to be $235.0 million to $240.0 million, or an increase of 53% at the midpoint as compared to full year 2021; this compares to previous guidance of $211.0 million to $221.0 million, or an increase of 39% at the midpoint as compared to full year 2021; and
  • Adjusted EBITDA is now anticipated to be $70.0 million to $74.0 million, or an increase of 164% at the midpoint compared to full year 2021; this compares to previous guidance of $68.0 million to $72.0 million, or an increase of 156% at the midpoint as compared to full year 2021.

Additional key assumptions for full year 2022 include:

  • Tax rate in mid-to-high single digits;
  • Share count of approximately 25.3 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 contained in this press release; and
  • $3.25 million in quarterly cash dividends paid related to the $200 million Convertible Preferred Stock.

Third Quarter 2022 Conference Call

The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its third quarter 2022 financial results. Participants may join the conference call by dialing 1-877-407-9716 (United States) or 1-201-493-6779 (International).

A live webcast of the conference call will also be available on the Company’s Investor Relations site at https://investor.xponential.com/. For those unable to participate in the conference call, a telephonic replay of the call will be available shortly after the completion of the call, until 11:59 p.m. ET on Thursday, November 24, 2022, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13732449.

About Xponential Fitness, Inc.

Xponential Fitness, Inc. (NYSE: XPOF) is the largest global franchisor of boutique fitness brands. Through its mission to make boutique fitness accessible to everyone, the Company operates a diversified platform of ten brands spanning across verticals including Pilates, indoor cycling, barre, stretching, rowing, dancing, boxing, running, functional training and yoga. In partnership with its franchisees, Xponential Fitness offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations across 48 U.S. states and Canada, and through master franchise or international expansion agreements in 14 additional countries. Xponential Fitness' portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; CycleBar, the largest indoor cycling brand in the United States; StretchLab, a concept offering one-on-one and group stretching services; Row House, the largest franchised indoor rowing brand in the United States; AKT, a dance-based cardio workout combining toning, interval and circuit training; YogaSix, the largest franchised yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest Barre brand in the United States; STRIDE, a treadmill-based cardio and strength training concept; Rumble, a boxing-inspired full-body workout; and BFT, a functional training and strength-based program. For more information, please visit the Company’s website at xponential.com.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe non-GAAP measures are useful in evaluating our operating performance. We use certain non-GAAP financial information, such as EBITDA, Adjusted EBITDA, adjusted net income (loss), and adjusted net earnings (loss) per share, which exclude certain non-operating or non-recurring items, including but not limited to, equity-based compensation expenses, acquisition and transaction related expenses, litigation expenses, secondary public offering expenses, impairment of brand assets and employee retention credit, that we believe are not representative of our core business or future operating performance, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively with comparable GAAP financial measures, is helpful to investors because it provides consistency and comparability with past financial performance and provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We seek to compensate such limitations by providing a detailed reconciliation for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. For a reconciliation of non-GAAP to GAAP measures discussed in this release, please see the tables at the end of this press release.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management’s judgment, beliefs, current trends, and anticipated financial performance. These forward-looking statements include, without limitation, statements relating to expected growth of our business; projected number of new studio openings; anticipated industry trends; projected financial and performance information such as system-wide sales; projected annual revenue, Adjusted EBITDA and other statements under the section “2022 Outlook”; our competitive position in the boutique fitness industry; and ability to execute our business strategies. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of the COVID-19 pandemic on our business and franchisees; our relationships with master franchisees, franchisees and international partners; difficulties and challenges in opening studios by franchisees; the ability of franchisees to generate sufficient revenues; risks relating to expansion into international markets; loss of reputation and brand awareness; material weakness in our internal control over financial reporting; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the full year ended December 31, 2021 filed by Xponential with the SEC and other periodic reports filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and Xponential undertakes no duty to update such information, except as required under applicable law.

Xponential Fitness, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2022

 

2021

Assets

Current Assets:
Cash, cash equivalents and restricted cash

$

30,895

 

$

21,320

 

Accounts receivable, net

 

19,377

 

 

11,702

 

Inventories

 

13,738

 

 

6,928

 

Prepaid expenses and other current assets

 

10,801

 

 

5,271

 

Deferred costs, current portion

 

3,573

 

 

3,712

 

Notes receivable from franchisees, net

 

1,926

 

 

2,293

 

Total current assets

 

80,310

 

 

51,226

 

Property and equipment, net

 

16,613

 

 

12,773

 

Right-of-use assets

 

22,738

 

 

 

Goodwill

 

165,697

 

 

169,073

 

Intangible assets, net

 

139,718

 

 

136,863

 

Deferred costs, net of current portion

 

43,402

 

 

42,015

 

Notes receivable from franchisees, net of current portion

 

3,107

 

 

3,041

 

Other assets

 

682

 

 

553

 

Total assets

$

472,267

 

$

415,544

 

Liabilities, redeemable convertible preferred stock and deficit

Current Liabilities:
Accounts payable

$

23,342

 

$

14,905

 

Accrued expenses

 

18,818

 

 

21,045

 

Deferred revenue, current portion

 

29,039

 

 

22,747

 

Notes payable

 

 

 

983

 

Current portion of long-term debt

 

3,035

 

 

2,960

 

Other current liabilities

 

6,620

 

 

3,253

 

Total current liabilities

 

80,854

 

 

65,893

 

Deferred revenue, net of current portion

 

108,191

 

 

95,691

 

Contingent consideration from acquisitions

 

46,655

 

 

54,881

 

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

 

131,668

 

 

127,983

 

Lease liability

 

24,472

 

 

 

Other liabilities

 

3,974

 

 

4,675

 

Total liabilities

 

395,814

 

 

349,123

 

Commitments and contingencies
Redeemable convertible preferred stock, $0.0001 par value, 400,000 shares authorized, 200,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021

 

257,096

 

 

276,890

 

Stockholders' equity (deficit):
Undesignated preferred stock, $0.0001 par value, 4,600,000 shares authorized, none issued and outstanding as of September 30, 2022 and December 31, 2021

 

 

 

 

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 27,560,549 and 23,898,042 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

3

 

 

2

 

Class B common stock, $0.0001 par value, 500,000,000 shares authorized, 21,650,669 and 22,968,674 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

2

 

 

2

 

Additional paid-in capital

 

528,807

 

 

 

Receivable from shareholder

 

(14,219

)

 

(10,600

)

Accumulated deficit

 

(641,656

)

 

(643,833

)

Total stockholders' deficit attributable to Xponential Fitness, Inc.

 

(127,063

)

 

(654,429

)

Noncontrolling interests

 

(53,580

)

 

443,960

 

Total stockholders' deficit

 

(180,643

)

 

(210,469

)

Total liabilities, redeemable convertible preferred stock and deficit

$

472,267

 

$

415,544

 

 

Xponential Fitness, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue, net:
Franchise revenue

$

30,006

 

$

19,985

 

$

83,128

 

$

51,504

 

Equipment revenue

 

11,770

 

 

6,750

 

 

31,930

 

 

15,571

 

Merchandise revenue

 

6,264

 

 

4,879

 

 

19,100

 

 

13,620

 

Franchise marketing fund revenue

 

5,172

 

 

3,706

 

 

14,544

 

 

9,503

 

Other service revenue

 

10,551

 

 

5,547

 

 

24,983

 

 

15,509

 

Total revenue, net

 

63,763

 

 

40,867

 

 

173,685

 

 

105,707

 

Operating costs and expenses:
Costs of product revenue

 

11,840

 

 

7,641

 

 

34,951

 

 

19,259

 

Costs of franchise and service revenue

 

4,811

 

 

3,169

 

 

13,589

 

 

8,615

 

Selling, general and administrative expenses

 

32,841

 

 

24,262

 

 

96,082

 

 

62,066

 

Depreciation and amortization

 

4,154

 

 

2,376

 

 

11,225

 

 

6,838

 

Marketing fund expense

 

4,260

 

 

3,828

 

 

12,696

 

 

9,304

 

Acquisition and transaction expenses (income)

 

16,290

 

 

2,880

 

 

(5,793

)

 

3,527

 

Total operating costs and expenses

 

74,196

 

 

44,156

 

 

162,750

 

 

109,609

 

Operating income (loss)

 

(10,433

)

 

(3,289

)

 

10,935

 

 

(3,902

)

Other (income) expense:
Interest income

 

(402

)

 

(343

)

 

(1,209

)

 

(796

)

Interest expense

 

3,333

 

 

5,855

 

 

9,060

 

 

21,869

 

Gain on debt extinguishment

 

 

 

 

 

 

 

(3,707

)

Total other expense

 

2,931

 

 

5,512

 

 

7,851

 

 

17,366

 

Income (loss) before income taxes

 

(13,364

)

 

(8,801

)

 

3,084

 

 

(21,268

)

Income taxes (benefit)

 

(308

)

 

103

 

 

(158

)

 

387

 

Net income (loss)

 

(13,056

)

 

(8,904

)

 

3,242

 

 

(21,655

)

Less: net income (loss) attributable to noncontrolling interests

 

(5,918

)

 

(4,848

)

 

1,065

 

 

(17,599

)

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

$

(7,138

)

$

(4,056

)

$

2,177

 

$

(4,056

)

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

$

(1.53

)

 

(0.38

)

$

0.28

 

 

(0.38

)

Diluted

$

(1.53

)

 

(0.38

)

$

0.05

 

 

(0.38

)

Weighted average shares of Class A common stock outstanding:
Basic

 

26,156,418

 

 

22,146,011

 

 

24,781,778

 

 

22,146,011

 

Diluted

 

26,156,418

 

 

22,146,011

 

 

62,822,737

 

 

22,146,011

 

 

Xponential Fitness, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)(in thousands)

 

 

 

 

 

Nine Months Ended September 30,

 

 

2022

 

2021

Cash flows from operating activities:
Net income (loss)

$

3,242

 

$

(21,655

)

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

 

11,225

 

 

6,838

 

Amortization and write off of debt issuance cost

 

94

 

 

5,722

 

Amortization and write off of discount on long-term debt

 

454

 

 

2,553

 

Change in contingent consideration from acquisitions

 

(5,791

)

 

3,220

 

Bad debt expense (recovery)

 

(526

)

 

165

 

Adjustment for recognition of TRA and deferred tax liability

 

 

 

(24

)

Equity-based compensation

 

23,920

 

 

4,201

 

Non-cash interest

 

(679

)

 

765

 

Gain on debt extinguishment

 

 

 

(3,707

)

(Gain) loss on disposal of assets

 

(90

)

 

362

 

Impairment of studio assets

 

 

 

781

 

Impairment of brand assets

 

3,656

 

 

 

Changes in assets and liabilities:
Accounts receivable

 

(6,592

)

 

(1,913

)

Inventories

 

(6,810

)

 

1,074

 

Prepaid expenses and other current assets

 

(5,529

)

 

(9,429

)

Operating lease right-of-use assets and operating lease liabilities

 

52

 

 

 

Deferred costs

 

(1,248

)

 

(4,811

)

Notes receivable, net

 

25

 

 

148

 

Accounts payable

 

7,497

 

 

(2,702

)

Accrued expenses

 

(1,555

)

 

(559

)

Related party payable

 

 

 

(1

)

Other current liabilities

 

599

 

 

455

 

Deferred revenue

 

13,993

 

 

22,372

 

Other assets

 

(129

)

 

18

 

Other liabilities

 

1,663

 

 

52

 

Net cash provided by operating activities

 

37,471

 

 

3,925

 

Cash flows from investing activities:
Purchases of property and equipment

 

(5,660

)

 

(2,604

)

Proceeds from sale of assets

 

65

 

 

318

 

Purchase of studios

 

 

 

(390

)

Purchase of intangible assets

 

(6,840

)

 

(868

)

Notes receivable issued

 

(1,782

)

 

(1,000

)

Notes receivable payments received

 

2,643

 

 

563

 

Net cash used in investing activities

 

(11,574

)

 

(3,981

)

Cash flows from financing activities:
Borrowings from long-term debt

 

5,480

 

 

218,360

 

Payments on long-term debt

 

(2,220

)

 

(309,860

)

Debt issuance costs

 

(49

)

 

(904

)

Proceeds from the issuance of Class A common stock, net of underwriting costs

 

 

 

122,016

 

Payments of costs related to IPO

 

 

 

(3,221

)

Payments to purchase 750,000 LLC units/Class B Shares

 

 

 

(9,000

)

Proceeds from issuance of redeemable convertible preferred stock, net of offering costs

 

 

 

198,396

 

Payment to purchase all of the shares of LCAT from LCAT shareholders

 

 

 

(144,485

)

Payment of H&W Cash Merger Consideration

 

 

 

(11,720

)

Payments to acquire the Preferred Units and LLC Units

 

 

 

(20,493

)

Exchange of LLC units for Class B shares

 

 

 

2

 

Payment of preferred stock dividend and deemed dividend

 

(13,000

)

 

(4,117

)

Payment of contingent consideration

 

(1,336

)

 

(12,006

)

Payments on loans from related party

 

 

 

(85

)

Member contributions

 

 

 

562

 

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

 

(1,897

)

 

 

Distributions to Member

 

 

 

(10,600

)

Loan to shareholder

 

(3,300

)

Receipts from Member, net

 

 

 

1,456

 

Net cash provided by (used in) financing activities

 

(16,322

)

 

14,301

 

Increase in cash, cash equivalents and restricted cash

 

9,575

 

 

14,245

 

Cash, cash equivalents and restricted cash, beginning of period

 

21,320

 

 

11,299

 

Cash, cash equivalents and restricted cash, end of period

$

30,895

 

$

25,544

 

 

Xponential Fitness, Inc.

Net Loss to GAAP EPS Per Share

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

Three Months

Ended

September 30,

 

Nine Months

Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Numerator:
Net income (loss)

$

(13,056

)

$

(8,904

)

$

3,242

 

$

(21,655

)

Less: net income (loss) attributable to noncontrolling interests

 

33,271

 

 

9,452

 

 

(6,295

)

 

22,203

 

Less: dividends on preferred shares

 

(3,250

)

 

(2,492

)

 

(9,750

)

 

(2,492

)

Less: deemed contribution (dividend)

 

(57,096

)

 

(6,500

)

 

19,794

 

 

(6,500

)

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

$

(40,131

)

$

(8,444

)

$

6,991

 

$

(8,444

)

 
Add: net income (loss) attributable to non-controlling interests

 

-

 

 

-

 

 

6,295

 

 

-

 

Add: dividends on preferred shares

 

-

 

 

-

 

 

9,750

 

 

-

 

Less: deemed contributions (dividend)

 

-

 

 

-

 

 

(19,794

)

 

-

 

Net income (loss) attributable to XPO Inc. Numerator - diluted

$

(40,131

)

$

(8,444

)

$

3,242

 

$

(8,444

)

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

$

(1.53

)

$

(0.38

)

$

0.28

 

$

(0.38

)

Weighted average shares of Class A common stock outstanding - basic

 

26,156,418

 

 

22,146,011

 

 

24,781,778

 

 

22,146,011

 

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

$

(1.53

)

$

(0.38

)

$

0.05

 

$

(0.38

)

Weighted average shares of Class A common stock outstanding - diluted

 

26,156,418

 

 

22,146,011

 

 

62,822,737

 

 

22,146,011

 

 

Xponential Fitness, Inc.

Reconciliations of GAAP to Non-GAAP Measures

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Net income (loss)

$

(13,056

)

$

(8,904

)

$

3,242

 

$

(21,655

)

Interest expense, net

 

2,931

 

 

5,512

 

 

7,851

 

 

21,073

 

Income taxes

 

(308

)

 

103

 

 

(158

)

 

387

 

Depreciation and amortization

 

4,154

 

 

2,376

 

 

11,225

 

 

6,838

 

EBITDA

 

(6,279

)

 

(913

)

 

22,160

 

 

6,643

 

Equity-based compensation

 

4,243

 

 

3,530

 

 

23,920

 

 

4,201

 

Acquisition and transaction expenses (income)

 

16,290

 

 

2,880

 

 

(5,793

)

 

3,527

 

Management fees and expenses

 

 

 

63

 

 

 

 

462

 

Litigation expenses

 

1,015

 

 

1,089

 

 

8,374

 

 

3,707

 

Employee retention credit

 

 

 

 

 

(2,597

)

 

 

Secondary public offering expenses

 

 

 

 

 

737

 

 

 

TRA remeasurement

 

1,078

 

 

180

 

 

1,635

 

 

180

 

Impairment of brand assets

 

3,656

 

 

 

 

3,656

 

 

 

Adjusted EBITDA

$

20,003

 

$

6,829

 

$

52,092

 

$

18,720

 

Three Months

Ended

September 30,

 

Nine Months

Ended

September 30,

2022

 

2021

 

2022

 

2021

Net income (loss)

$

(13,056

)

$

(8,904

)

$

3,242

 

$

(21,655

)

Change in fair value of contingent consideration

 

16,290

 

 

2,880

 

 

(5,791

)

 

3,220

 

TRA remeasurement

 

1,078

 

 

180

 

 

1,635

 

 

180

 

Impairment of brand assets

 

3,656

 

 

 

 

3,656

 

 

 

Adjusted net income (loss)

$

7,968

 

$

(5,844

)

$

2,742

 

$

(18,255

)

Adjusted net loss (income) attributable to noncontrolling interest

 

(3,612

)

 

(3,281

)

 

(1,299

)

 

(15,692

)

 
Adjusted net income (loss) attributable to Xponential Fitness, Inc.

 

4,356

 

 

(2,563

)

 

1,443

 

 

(2,563

)

Dividends on preferred shares

 

(1,777

)

 

(1,216

)

 

(5,131

)

 

(1,216

)

Deemed dividend

 

 

 

(3,172

)

 

 

 

(3,172

)

EPS numerator - Basic

$

2,579

 

$

(6,951

)

$

(3,688

)

$

(6,951

)

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

 

3,612

 

 

 

 

 

 

 

Add: Dividends on preferred shares

 

1,777

 

 

 

 

 

 

 

EPS numerator - Dilutive

$

7,968

 

$

(6,951

)

$

(3,688

)

$

(6,951

)

 
Adjusted net earnings (loss) per share - Basic

$

0.10

 

$

(0.31

)

$

(0.15

)

$

(0.31

)

Weighted average shares of Class A common stock outstanding - Basic

 

26,156,418

 

 

22,146,011

 

 

24,781,778

 

 

22,146,011

 

 
Adjusted net earnings (loss) per share - Dilutive

$

0.13

 

$

(0.31

)

$

(0.15

)

$

(0.31

)

Effect of dilutive securities:
Rumble Class A common stock

 

1,300,032

 

 

 

 

 

 

 

Restricted stock units

 

43,063

 

 

 

 

 

 

 

Convertible preferred shares

 

13,888,889

 

 

 

 

 

 

 

Conversion of Class B to Common Stock

 

21,684,849

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding - Dilutive

 

63,073,251

 

 

22,146,011

 

 

24,781,778

 

 

22,146,011

 

Note: The above adjusted net income (loss) per share is computed by dividing the adjusted net income (loss) attributable to holders of Class A common stock by the weighted average shares of Class A common stock outstanding during the period. Total share count does not include potential future shares vested upon achieving certain earn-out thresholds. Net income, however, continues to take into account the non-cash contingent liability primarily due to Rumble.

Footnotes

1 System-wide sales represent gross sales by all North American 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 daily, 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.

2 Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include studios in North America that have been open for at least 13 calendar months as of the measurement date. Any transfer of ownership of a studio does not affect this metric. We measure same store sales based solely upon monthly sales as reported by franchisees. 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.

3 AUV is calculated by dividing sales during the applicable period for all studios being measured by the number of studios being measured. Quarterly run-rate AUV consists of average quarterly sales for all studios that are at least 6 months old at the beginning of the respective quarter, multiplied by four. Monthly run-rate AUV is calculated as the monthly AUV multiplied by twelve, for studios that are at least 6 months old at the beginning of the respective month. AUV growth is primarily driven by changes in same store sales and is also influenced by new studio openings. Management reviews AUV to assess studio economics.

4 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, acquisition and transaction expenses (including change in contingent consideration), management fees and expenses (that were discontinued after July 2021), litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business), employee retention credit (a credit for retaining employees throughout the COVID-19 pandemic), secondary public offering expenses for which we do not receive proceeds, expense related to the remeasurement of our TRA obligation and expense related to loss on impairment of our brand intangible assets and goodwill 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.

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