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Xponential Fitness reported third-quarter revenue of $62.3 million, down 21% from a year earlier, and lowered its forecast for net new studio openings. The company maintained its full-year revenue outlook while its board continues a review that could result in a sale or merger; a major shareholder recently floated taking the franchisor private.
Xponential Fitness reported third-quarter revenue of $62.3 million, a 21% decline from a year earlier, and cut its forecast for new studio openings as the boutique fitness franchisor continues a strategic review that could lead to a sale or merger. The results came about a week after shareholder Fund 1 Investments floated a plan to take the company private, though no transaction has been announced.
North American same-store sales fell 7.5% in the quarter, worsening from a 6.8% decline in the second quarter. Xponential kept its full-year revenue forecast at $250 million to $260 million, but lowered its outlook for net new studio openings to 124 to 130, from about 150.
Franchise revenue declined 16% to $43.4 million, which the company attributed to lower franchise territory revenue, including less revenue recognized from franchise agreement terminations. Equipment revenue fell 42%, which Xponential tied to fewer studio openings. Merchandise revenue dropped 92%; the company said the decrease reflected its shift from an in-house wholesale model to an outsourced retail model.
Xponential ended the quarter with 3,185 open studios worldwide across its brands, including Club Pilates, Pure Barre, StretchLab, YogaSix and BFT. CEO Mike Nuzzo said the company expects more openings and equipment installations in the fourth quarter after streamlining its development process. The call also included new CFO Jennifer Ryu, as interim CFO Robert Julian prepares to leave.
Sales Pressure Meets Take-Private Interest
The results show that weak operating trends remain a concern even as a potential buyout draws attention to Xponential’s ownership. The lower studio-opening forecast could constrain a key source of franchise growth, while declines in same-store sales point to pressure at existing North American locations. The company’s unchanged revenue forecast, however, signals that management has not reduced its full-year sales expectations.
For investors and franchisees, the two developments are connected but unresolved: Xponential is reporting weaker sales while its board weighs strategic options. A sale or merger could change the company’s ownership and direction, but the source material does not report an agreed deal, a buyer, or proposed terms. The financial results therefore remain central to judging the business while the review proceeds.
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Club Pilates Anchors Growth Plans
Club Pilates is Xponential’s largest brand, with more than 1,500 locations worldwide, according to the report. Nuzzo identified it as the company’s biggest growth opportunity in the United States and internationally. He said Xponential aims to grow the brand to more than 2,000 locations within five years and is building a pipeline of international master-franchise and sub-franchise partners.
The expansion ambitions come as the company has lowered its near-term opening forecast. Nuzzo said Xponential has an established group of franchisees interested in expanding, but the company’s plans depend on disciplined development and studio-level economics. He described the Club Pilates business model as healthy, while the latest reported sales and opening figures show that near-term performance remains under pressure.
Xponential has been weighing a sale since April, with Jefferies serving as adviser, according to Athletech News. The board also adopted a limited-duration stockholder rights plan last month. Under the plan, a trigger can occur if an investor or group acquires 19.9% or more of the company’s Class A shares.
“Our priorities are clear across the organization: improve franchisee and studio-level economics, support healthy and disciplined unit expansion both domestically and internationally, strengthen Xponential’s financial performance, and elevate our member experience across our portfolio.”
— Mike Nuzzo, Xponential Fitness CEO
Buyout Terms and Outcome Remain Unknown
No sale, merger, or take-private agreement has been announced in the source material. Fund 1 Investments floated a plan, but the report does not give proposed terms, identify a confirmed transaction partner, or say whether the board has selected a preferred option. Nuzzo said the board remains engaged in its review and that the company would not comment further until the process concludes.
It is also unclear whether the review will produce a transaction or how any deal would affect shareholders, franchisees, employees, or the company’s brands. The full-year revenue forecast remains in place, but actual results and the expected fourth-quarter pickup in openings have yet to be reported.
Board Review and Fourth-Quarter Openings
The next major developments are the outcome of the board’s strategic review and Xponential’s fourth-quarter operating results. The company has said the review could lead to a sale or merger, but has not provided a timetable beyond saying it will not comment further until the process concludes.
Investors will also be watching whether new studio openings and equipment installations increase in the fourth quarter as Nuzzo predicted, and whether the company meets its revised target of 124 to 130 net new studios. Xponential’s full-year revenue forecast remains $250 million to $260 million, leaving forthcoming results to show whether the business is tracking toward that range.
Key Questions
How much did Xponential’s revenue fall?
Xponential reported $62.3 million in third-quarter revenue, down 21% from $78.8 million in the same quarter a year earlier.
Did Xponential lower its full-year revenue forecast?
No. The company reiterated its full-year revenue outlook of $250 million to $260 million, while lowering its forecast for net new studio openings.
Is Xponential being taken private?
No transaction has been announced. Fund 1 Investments floated a take-private plan, and Xponential’s board is reviewing strategic options that could include a sale or merger.
How many new studios does Xponential now expect?
The company reduced its full-year forecast to 124 to 130 net new studio openings, from about 150.
What does Xponential say about Club Pilates’ growth?
CEO Mike Nuzzo described Club Pilates as the company’s largest growth opportunity and said Xponential’s long-term goal is to expand the brand to more than 2,000 locations within five years.
Source: athletechnews.com
