Xponential Fitness Q2 Earnings Call Highlights

Weak second-quarter performance led Xponential Fitness to lower its 2026 outlook. North American same-store sales fell 6.8%, revenue declined 13% to $66 million, and adjusted EBITDA dropped 22% to $21.9 million.

The company continues to expand its studio network, ending the quarter with 3,165 locations and pursuing a Club Pilates deal expected to add 117 studios over six years. However, management is shifting priorities toward organic membership growth, franchisee economics, digital marketing and operational consistency.

Xponential is maintaining elevated paid-media spending while addressing merchandise and lead-generation challenges, and its board continues to review strategic alternatives, including a potential sale or merger. Management expects approximately $11.4 million in additional settlement payments during the rest of 2026 and cash flow to turn positive in 2027.

Xponential Fitness NYSE: XPOF reported second-quarter results that fell below its internal expectations, prompting the boutique fitness franchisor to lower its full-year outlook as same-store sales declined, merchandise operations remained pressured and the company continued to invest in paid marketing and digital initiatives. Chief Executive Officer Mike Nuzzo said the company is shifting its emphasis from the unit expansion and brand development that characterized its prior growth toward improving organic growth, franchisee economics, operating execution and consistency in the member experience.

Xponential ended the second quarter with 3,165 open studios globally. The company opened 67 gross new studios during the quarter, including 47 in North America and 20 internationally, while 39 studios closed. Net unit growth was 16 domestically and 12 internationally during the quarter. Year to date, the company added 39 net domestic studios and 29 net international studios.

The company sold 53 licenses globally in the quarter, including 43 internationally and 10 in North America. As of June 30, Xponential had more than 690 North American licenses contractually obligated to open, along with 730 international master franchise obligations. Club Pilates remained a focal point of the growth strategy. Xponential announced a partnership with Spartan Fitness Holdings, its largest Club Pilates franchisee, that is expected to result in 117 studio openings across 10 states over the next six years. Nuzzo said the arrangement is centered on detailed geographic planning and does not materially differ from the company’s core franchise arrangement. Internationally, Xponential now has more than 500 studios open, with Club Pilates opening its 200th international studio in June.

However, North America system-wide sales were flat year over year at $437 million, as sales from net new studios were offset by a 6.8% decline in same-store sales. Club Pilates same-store sales declined 5% during the quarter. Nuzzo said the results were modestly weaker than first-quarter trends and were primarily affected by pressure at the top of the customer funnel. Management pointed to a more challenging consumer environment, including selective consumer spending, higher promotional activity and pressure on new-customer acquisition entering the summer months. Total company member retention nevertheless improved 2...