INSERTING and REPLACING Xponential Fitness, Inc. Announces First Quarter 2022 Financial Results
Xponential Fitness, Inc. (NYSE: XPOF) reported a strong Q1 2022, with revenue increasing 73% to $50.4 million compared to Q1 2021. North America system-wide sales grew 70% to $224.5 million, alongside a 47% rise in same-store sales. Despite a net loss of $15.2 million (or $1.51 per share), the company opened 99 new studios and sold 260 franchise licenses. Xponential reaffirmed its full-year guidance, forecasting 81% growth in new openings and 33% growth in revenue.
- Revenue growth of 73% to $50.4 million.
- North America same-store sales increased by 47%.
- Opened 99 new studios, bringing total to 2,229.
- Reaffirmed full-year 2022 guidance with 81% growth in new studio openings.
- Net loss of $15.2 million, up from a loss of $4.8 million a year ago.
- Adjusted Net Loss increased to $5.3 million.
— Grew Q1 2022 revenue
— Sold 260 franchise licenses and opened 99 new studios in Q1 2022
— Sold 4,684 total franchise licenses and operates 2,229 total studios as of Q1 2022
— Reaffirms full year 2022 outlook of
The updated release reads:
— Grew Q1 2022 revenue
— Sold 260 franchise licenses and opened 99 new studios in Q1 2022
— Sold 4,684 total franchise licenses and operates 2,229 total studios as of Q1 2022
— Reaffirms full year 2022 outlook of
Financial Highlights: Q1 2022 Compared to Q1 2021
-
Grew revenue
73% to$50.4 million -
Increased North America system-wide sales1 by70% to$224.5 million -
Reported North America same store sales2 growth of47% , compared to a decline of24% . -
Reported North America quarterly run-rate average unit volume (AUV)3 of$450,000 $303,000 -
Posted net loss of
$15.2 million $1.51 $4.8 million -
Posted Adjusted Net Loss of
$5.3 million $0.19 $4.6 million -
Reported Adjusted EBITDA5 of
$14.5 million $3.6 million
“On the heels of a very strong fourth quarter,
For the first quarter 2022, total revenue increased
Net loss totaled
Consistent with previous periods, the Rumble acquisition non-cash contingent consideration earn-out liability is being marked-to-market based on Xponential’s share price. With the trading price of our shares increasing nearly
Adjusted Net Loss for the first quarter 2022, which excludes the
Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for equity-based compensation, acquisition & transaction expenses, management fees, litigation expenses, employee retention credit, secondary public offering expenses and tax receivable agreement remeasurement, increased to
Liquidity and Capital Resources
As of
2022 Outlook
The Company is reiterating its full-year 2022 outlook is as follows:
-
New studio openings in the range of 500 to 520, or an increase of
81% at the midpoint as compared to full year 2021; -
North America system-wide sales in the range of$995.0 million $1.00 5 billion41% at the midpoint as compared to full year 2021; -
Revenue in the range of
$201.0 million $211.0 million 33% at the midpoint as compared to full year 2021; and -
Adjusted EBITDA in the range of
$67.0 million $71.0 million 153% 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 25.1 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 back of this release; and
-
$3.25 million $200 million
First Quarter 2022 Conference Call
The Company will host a conference call today at
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
About
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 or Loss, and Adjusted Net Income or 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, and secondary public offering expenses, 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 measure 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 product performance. These forward-looking statements include, without limitation, statements relating to expansion of market share; projected number of new studio openings; anticipated industry trends; projected financial and performance information such as system-wide sales; 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 and franchisees; 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
Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share amounts) |
||||||||
|
|
|
||||||
2022 |
|
2021 |
||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash, cash equivalents and restricted cash | $ |
15,750 |
|
$ |
21,320 |
|
||
| Accounts receivable, net |
|
15,865 |
|
|
11,702 |
|
||
| Inventories |
|
9,217 |
|
|
6,928 |
|
||
| Prepaid expenses and other current assets |
|
7,389 |
|
|
5,271 |
|
||
| Deferred costs, current portion |
|
4,071 |
|
|
3,712 |
|
||
| Notes receivable from franchisees, net |
|
2,531 |
|
|
2,293 |
|
||
| Total current assets |
|
54,823 |
|
|
51,226 |
|
||
| Property and equipment, net |
|
13,910 |
|
|
12,773 |
|
||
| Right-of-use assets |
|
16,179 |
|
|
— |
|
||
|
169,073 |
|
|
169,073 |
|
|||
| Intangible assets, net |
|
134,532 |
|
|
136,863 |
|
||
| Deferred costs, net of current portion |
|
42,474 |
|
|
42,015 |
|
||
| Notes receivable from franchisees, net of current portion |
|
3,095 |
|
|
3,041 |
|
||
| Other assets |
|
558 |
|
|
553 |
|
||
| Total assets | $ |
434,644 |
|
$ |
415,544 |
|
||
| Liabilities, redeemable convertible preferred stock and deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ |
12,359 |
|
$ |
14,905 |
|
||
| Accrued expenses |
|
15,818 |
|
|
21,045 |
|
||
| Deferred revenue, current portion |
|
25,664 |
|
|
22,747 |
|
||
| Notes payable |
|
— |
|
|
983 |
|
||
| Current portion of long-term debt |
|
2,960 |
|
|
2,960 |
|
||
| Other current liabilities |
|
5,175 |
|
|
3,253 |
|
||
| Total current liabilities |
|
61,976 |
|
|
65,893 |
|
||
| Deferred revenue, net of current portion |
|
98,698 |
|
|
95,691 |
|
||
| Contingent consideration from acquisitions |
|
63,968 |
|
|
54,881 |
|
||
| Long-term debt, net of current portion, discount and issuance costs |
|
127,382 |
|
|
127,983 |
|
||
| Lease liability |
|
18,472 |
|
|
— |
|
||
| Other liabilities |
|
1,529 |
|
|
4,675 |
|
||
| Total liabilities |
|
372,025 |
|
|
349,123 |
|
||
| Commitments and contingencies | ||||||||
| Redeemable convertible preferred stock, shares issued and outstanding as of |
|
327,821 |
|
|
276,890 |
|
||
| Stockholders' equity (deficit): | ||||||||
| Undesignated preferred stock, and outstanding as of |
|
— |
|
|
— |
|
||
| Class A common stock, 23,898,042 shares issued and outstanding as of respectively |
|
2 |
|
|
2 |
|
||
| Class B common stock, 22,968,674 shares issued and outstanding as of respectively |
|
2 |
|
|
2 |
|
||
| Additional paid-in capital |
|
465,525 |
|
|
— |
|
||
| Receivable from shareholder |
|
(10,600 |
) |
|
(10,600 |
) |
||
| Accumulated deficit |
|
(651,352 |
) |
|
(643,833 |
) |
||
| Total stockholders' deficit attributable to |
|
(196,423 |
) |
|
(654,429 |
) |
||
| Noncontrolling interests |
|
(68,779 |
) |
|
443,960 |
|
||
| Total stockholders' deficit |
|
(265,202 |
) |
|
(210,469 |
) |
||
| Total liabilities, redeemable convertible preferred stock and deficit | $ |
434,644 |
|
$ |
415,544 |
|
||
Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts) |
||||||||
Three Months Ended |
||||||||
2022 |
|
2021 |
||||||
| Revenue, net: | ||||||||
| Franchise revenue | $ |
25,500 |
|
$ |
13,755 |
|
||
| Equipment revenue |
|
7,779 |
|
|
4,066 |
|
||
| Merchandise revenue |
|
6,083 |
|
|
4,232 |
|
||
| Franchise marketing fund revenue |
|
4,435 |
|
|
2,483 |
|
||
| Other service revenue |
|
6,565 |
|
|
4,529 |
|
||
| Total revenue, net |
|
50,362 |
|
|
29,065 |
|
||
| Operating costs and expenses: | ||||||||
| Costs of product revenue |
|
9,592 |
|
|
5,344 |
|
||
| Costs of franchise and service revenue |
|
4,234 |
|
|
2,319 |
|
||
| Selling, general and administrative expenses |
|
33,919 |
|
|
16,602 |
|
||
| Depreciation and amortization |
|
3,492 |
|
|
2,055 |
|
||
| Marketing fund expense |
|
4,355 |
|
|
2,616 |
|
||
| Acquisition and transaction expenses |
|
9,544 |
|
|
350 |
|
||
| Total operating costs and expenses |
|
65,136 |
|
|
29,286 |
|
||
| Operating loss |
|
(14,774 |
) |
|
(221 |
) |
||
| Other (income) expense: | ||||||||
| Interest income |
|
(389 |
) |
|
(95 |
) |
||
| Interest expense |
|
2,861 |
|
|
4,423 |
|
||
| Total other expense |
|
2,472 |
|
|
4,328 |
|
||
| Loss before income taxes |
|
(17,246 |
) |
|
(4,549 |
) |
||
| Income taxes |
|
(2,067 |
) |
|
201 |
|
||
| Net loss |
|
(15,179 |
) |
|
(4,750 |
) |
||
| Less: Net loss attributable to noncontrolling interests |
|
(7,660 |
) |
|
— |
|
||
| Net loss attributable to |
$ |
(7,519 |
) |
$ |
(4,750 |
) |
||
| Net loss per share of Class A common stock: | ||||||||
| Basic | $ |
(1.51 |
) |
|
N/A |
|
||
| Diluted | $ |
(1.51 |
) |
|
N/A |
|
||
| Weighted average shares of Class A common stock outstanding: | ||||||||
| Basic |
|
22,736,946 |
|
|
N/A |
|
||
| Diluted |
|
22,736,946 |
|
|
N/A |
|
||
Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
||||||||
Three Months Ended |
||||||||
2022 |
|
2021 |
||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(15,179 |
) |
$ |
(4,750 |
) |
||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization |
|
3,492 |
|
|
2,055 |
|
||
| Amortization of debt issuance cost |
|
33 |
|
|
311 |
|
||
| Amortization of discount on long-term debt |
|
151 |
|
|
— |
|
||
| Change in contingent consideration from acquisitions |
|
9,546 |
|
|
120 |
|
||
| Bad debt expense (recovery) |
|
(617 |
) |
|
(105 |
) |
||
| Equity-based compensation |
|
15,248 |
|
|
222 |
|
||
| Non-cash interest |
|
(208 |
) |
|
226 |
|
||
| Gain on disposal of assets |
|
(43 |
) |
|
— |
|
||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable |
|
(3,300 |
) |
|
(1,173 |
) |
||
| Inventories |
|
(2,289 |
) |
|
430 |
|
||
| Prepaid expenses and other current assets |
|
(2,117 |
) |
|
(985 |
) |
||
| Operating lease right-of-use assets and operating lease liabilities |
|
(20 |
) |
|
— |
|
||
| Deferred costs |
|
(818 |
) |
|
(533 |
) |
||
| Notes receivable, net |
|
5 |
|
|
168 |
|
||
| Accounts payable |
|
(2,758 |
) |
|
(1,797 |
) |
||
| Accrued expenses |
|
(3,650 |
) |
|
491 |
|
||
| Notes payable |
|
(983 |
) |
|
— |
|
||
| Other current liabilities |
|
20 |
|
|
65 |
|
||
| Deferred revenue |
|
5,924 |
|
|
5,033 |
|
||
| Other assets |
|
(10 |
) |
|
(1 |
) |
||
| Other liabilities |
|
461 |
|
|
23 |
|
||
| Net cash provided by (used in) operating activities |
|
2,888 |
|
|
(200 |
) |
||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment |
|
(1,798 |
) |
|
(1,125 |
) |
||
| Purchase of studios |
|
— |
|
|
(245 |
) |
||
| Proceeds from sale of assets |
|
65 |
|
|
— |
|
||
| Purchase of intangible assets |
|
(316 |
) |
|
(288 |
) |
||
| Notes receivable issued |
|
(585 |
) |
|
— |
|
||
| Notes receivable payment received |
|
426 |
|
|
9 |
|
||
| Net cash used in investing activities |
|
(2,208 |
) |
|
(1,649 |
) |
||
| Cash flows from financing activities: | ||||||||
| Borrowings from long-term debt |
|
— |
|
|
10,600 |
|
||
| Payments on long-term debt |
|
(740 |
) |
|
(925 |
) |
||
| Debt issuance costs |
|
(46 |
) |
|
(212 |
) |
||
| Payment of preferred stock dividend and deemed dividend |
|
(4,875 |
) |
|
— |
|
||
| Payment of contingent consideration |
|
(589 |
) |
|
(964 |
) |
||
| Distributions to Member |
|
— |
|
|
(10,600 |
) |
||
| Receipts from Member, net |
|
— |
|
|
1 |
|
||
| Net cash used in financing activities |
|
(6,250 |
) |
|
(2,100 |
) |
||
| Decrease in cash, cash equivalents and restricted cash |
|
(5,570 |
) |
|
(3,949 |
) |
||
| Cash, cash equivalents and restricted cash, beginning of period |
|
21,320 |
|
|
11,299 |
|
||
| Cash, cash equivalents and restricted cash, end of period | $ |
15,750 |
|
$ |
7,350 |
|
||
Net Loss to GAAP EPS Per Share (in thousands, except share and per share amounts) |
||||||||
Three Months Ended |
||||||||
2022 |
|
2021 |
||||||
(in thousands, except share and per share amounts) |
||||||||
| Net loss | $ |
(15,179 |
) |
$ |
(4,750 |
) |
||
| Less: net loss attributable to non-controlling interests |
|
35,003 |
|
|
— |
|
||
| Less: dividends on preferred shares |
|
(3,250 |
) |
|
— |
|
||
| Less: deemed dividends |
|
(50,931 |
) |
|
— |
|
||
| Net loss attributable to |
$ |
(34,357 |
) |
$ |
(4,750 |
) |
||
| Denominator: |
|
N/A |
|
|||||
| Weighted-average shares of Class A common stock outstanding |
|
22,736,946 |
|
|
N/A |
|
||
| Net loss per share | $ |
(1.51 |
) |
|
N/A |
|
||
Reconciliations of GAAP to Non-GAAP Measures (in thousands, except share and per share amounts) |
||||||||
Three Months Ended |
||||||||
2022 |
|
2021 |
||||||
| (in thousands) | ||||||||
| Net loss | $ |
(15,179 |
) |
$ |
(4,750 |
) |
||
| Interest expense, net |
|
2,472 |
|
|
4,328 |
|
||
| Income taxes |
|
(2,067 |
) |
|
201 |
|
||
| Depreciation and amortization |
|
3,492 |
|
|
2,055 |
|
||
| EBITDA |
|
(11,282 |
) |
|
1,834 |
|
||
| Equity-based compensation | 15,248 |
222 |
||||||
| Acquisition and transaction expenses |
|
9,544 |
|
350 |
|
|||
| Management fees and expenses |
|
— |
|
|
192 |
|
||
| Litigation expenses |
|
2,740 |
|
959 |
|
|||
| Employee retention credit |
|
(2,597 |
) |
|
— |
|
||
| Secondary public offering expenses |
|
487 |
|
|
— |
|
||
| TRA remeasurement |
|
313 |
|
|
— |
|
||
| Adjusted EBITDA | $ |
14,453 |
|
$ |
3,557 |
|
||
Three Months Ended |
||||||||
2022 |
|
2021 |
||||||
| (in thousands, except share and per share amounts) | ||||||||
| Net loss | $ |
(15,179 |
) |
$ |
(4,750 |
) |
||
| Change in fair value of contingent consideration |
|
9,546 |
|
|
120 |
|
||
| TRA remeasurement |
|
313 |
|
|
— |
|
||
| Adjusted net loss | $ |
(5,320 |
) |
$ |
(4,630 |
) |
||
| Adjusted net loss attributable to noncontrolling interest | $ |
(2,685 |
) |
|
N/A |
|
||
| Adjusted net loss attributable to |
|
(2,635 |
) |
|
N/A |
|
||
| Dividends on preferred shares |
|
(1,610 |
) |
|
N/A |
|
||
| EPS numerator | $ |
(4,245 |
) |
|
N/A |
|
||
| Adjusted net loss per share | $ |
(0.19 |
) |
|
N/A |
|
||
| Weighted average shares of Class A common stock outstanding |
|
22,736,946 |
|
|
N/A |
|
||
Note: The above Adjusted Net Loss per share is computed by dividing the net 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 due to Rumble.
Footnotes
1System-wide sales represent gross sales by all studios. System-wide sales includes 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
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
3AUV 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.
4No comparison of Net Loss per share, and Adjusted Net Loss per share to Q1 2021 is provided as such comparison is not meaningful given the Company’s pre-IPO capital structure.
5We 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20220511006177/en/
Addo Investor Relations
investor@xponential.com
(310) 829-5400
Source:
FAQ
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