Xponential Fitness, Irvine, California, reported $35.8 million in second quarter 2021 revenue, an increase of 67 percent over the same period last year, the company announced on Aug. 24 in its first earnings report since becoming a public company in July.
Xponential trades on the New York Stock Exchange under the symbol XPOF. It owns nine boutique studio brands: Club Pilates, Pure Barre, CycleBar, StretchLab, Row House, Yoga Six, Rumble, AKT and Stride. Xponential CEO Anthony Geisler noted in a call with analysts on Aug. 24 that the company is talking to multiple brands in the functional training and HIIT space as possible future acquisitions.
To date, the company has seen no negative impacts of the Delta variant of COVID-19 on its membership, Geisler shared in an Aug. 25 interview on Yahoo Finance Live. In fact, in cities such as New Orleans, New York and San Francisco where vaccination proof is required to enter gyms, the company has seen an uptick in memberships, although it is continuing to monitor that on a week-by-week basis, he said.
“We believe that's because people feel more comfortable coming back into the gym,” Geisler said.
The company had its best month ever in the company’s history in July 2021, he said. System-wide sales were stronger in July than in February 2019. The company’s August results to-date remain solid, he said. Compared to the end of the second quarter, Xponential has seen an increase in total memberships and actively paying members, both overall and at a per studio level.
For second quarter 2021, system-wide sales increased 179 percent to $171.6 million while system-wide same store sales increased 129 percent. This is the fourth consecutive quarter of sequential system-wide sales improvement, representing consistent system recovery since the second quarter of 2020, according to the company.
The company has nearly 90 percent run-rate average unit volume (AUV) as compared to Jan. 31, 2020, placing the company on track to reach pre-pandemic run-rate AUVs by early 2022.
Its adjusted EBITDA improved to $8.3 million, compared to negative $3.1 million in second quarter 2020.
However, the company’s net loss increased to $8 million in the quarter compared to a loss of $4.8 million in the same quarter last year. Net loss in second quarter 2021 was positively impacted by a one-time $3.7 million forgiveness of a Payment Protection Program (PPP) loan. In June, the company received forgiveness for a PPP loan received in April 2020 as part of the Coronavirus Aid, Relief and Economic Security Act. Including accrued interest, this PPP loan forgiveness resulted in a gain on debt extinguishment of $3.7 million for the six months ended June 30, 2021.
As of June 30, 2021, the company had approximately $20.2 million of cash and cash equivalents and $206.8 million in total debt. Net cash provided by operating activities was $0.8 million during second quarter 2021.
During the quarter, Xponential opened 59 studios and sold 197 North American franchise licenses, compared to 46 licenses in the same period last year. It increased its total North American studio count to 1,824 as of June 30, 2021, up from 1,765 total studios on March 31, 2021. Nearly 100 percent of the 1,824 North American studios were open and operational during the quarter.
“As is evident from our solid year-over-year revenue growth and the sale of 197 North American franchisee licenses in Q2, our business has rapidly rebounded to pre-pandemic levels, and importantly, as of today’s date, is showing no signs of slowing down in the third quarter,” Geisler said in a media release. “When comparing the end of the second quarter of 2021 to Jan. 31, 2020, even without taking into account our newest brand, Rumble, our business had recovered to 103 percent of actively paying members, 98 percent of total visits and a nearly 90 percent run-rate AUV.”
Based on current business conditions and future expectations as of the date of this release, Xponential anticipates for the full year 2021 that its North America system-wide sales will be in the range of $690 million to $700 million, or an increase of 57 percent at the midpoint as compared to full year 2020. It also anticipates revenue in the range of $135.5 million to $137 million, or an increase of 28 percent at the midpoint as compared to full year 2020. Its adjusted EBITDA is anticipated to be in the range of $22 million to $23 million, or an increase of 129 percent at the midpoint as compared to full year 2020. In addition, the company estimates it will have between 215 and 235 studio openings for the year.