Xponential Fitness delivered third quarter results that exceeded Wall Street’s revenue and profit expectations, leading to a significant positive market reaction. Management attributed the quarter’s performance to the company’s streamlined brand portfolio, growth in franchise revenue, and operational improvements, particularly within Club Pilates, which continues to benefit from robust new studio ramp-up economics. CEO Michael Nuzzo highlighted that Club Pilates’ recent cohorts have achieved higher first-year revenue ramps than prior vintages, underscoring the brand’s appeal and operational execution. Meanwhile, the company’s efforts to address member acquisition and retention challenges in brands like StretchLab also played a role in the quarter’s outcome.
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Xponential Fitness (XPOF) Q3 CY2025 Highlights:
- Revenue: $78.82 million vs analyst estimates of $75.83 million (2.1% year-on-year decline, 3.9% beat)
- Adjusted EPS: $0.34 vs analyst estimates of $0.12 (significant beat)
- Adjusted EBITDA: $33.48 million vs analyst estimates of $25.81 million (42.5% margin, 29.7% beat)
- The company reconfirmed its revenue guidance for the full year of $305 million at the midpoint
- EBITDA guidance for the full year is $108.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 4.5%, up from -8.2% in the same quarter last year
- Market Capitalization: $224 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Xponential Fitness’s Q3 Earnings Call
- Christopher O'Cull (Stifel) asked about Club Pilates’ same-store sales trends and current member utilization rates. CFO John Meloun explained that new studios are ramping to maturity faster, leading to stable but lower comp growth due to high capacity.
- Christopher O'Cull (Stifel) followed up on pricing strategies, questioning how the company balances price increases with potential member churn. Meloun detailed a data-driven pricing approach, emphasizing franchisee feedback and careful analysis to avoid alienating members.
- Randal Konik (Jefferies) inquired about the role of private equity in the franchisee base and the company’s approach to increasing studio density. CEO Michael Nuzzo responded that Xponential is partnering with larger operators and using advanced real estate tools to optimize locations while minimizing cannibalization.
- Richard Magnusen (B. Riley Securities) pressed for details on StretchLab’s strategy to offset lost Medicare Advantage revenue and reduce labor costs. Nuzzo outlined efforts to broaden the membership base and test operational adjustments, while noting early-stage progress.
- Owen Rickert (Northland Capital Markets) asked about franchisee concerns regarding labor and occupancy costs. Nuzzo indicated that instructor availability is being managed through strong training programs and that field consultants are helping franchisees optimize profitability.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the impact of the new Club Pilates national marketing campaign on member growth and engagement, (2) progress in reducing the license backlog and accelerating new studio openings, and (3) the effectiveness of pricing strategy changes and operational improvements in driving franchisee profitability—especially for underperforming brands like StretchLab. Continued execution in these areas will help gauge the sustainability of Xponential Fitness’s growth initiatives.
Xponential Fitness currently trades at $6.38, up from $6.30 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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