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Tuesday, Jun 18, 2024

Xponential Fitness Projects $400M in Revenue by 2026

Xponential Fitness Inc., which calls itself the world’s largest franchiser of boutique fitness gyms, held its first-ever investor day on Sept. 6 and rang the closing bell at the New York Stock Exchange.

The Irvine-based fitness studio franchiser (NYSE: XPOF) of brands like Club Pilates and YogaSix provided analysts and investors with three-year company growth targets during the event, and reiterated its 2023 sales outlook to a range of $295 million to $305 million, a 20% to 24% increase over 2022.

The firm is “confident it will achieve the high-end of the ranges,” it said.

Analysts on average expect $300 million in 2023 revenue, followed by 16% growth to $351 million in 2024.

Xponential expects to reach $405 million in revenue in 2026.

On the day of the Sept. 6 report, shares fell around 15% to $19.50, as the forecast implies annual revenue growth will slow to under 10% by 2026.

Revenue in 2022, by comparison, surged 58% to $245 million.

“It is important to keep in mind that our operational model is asset-light and that we’ve already made the investments in our infrastructure that we need to continue to grow our footprint,” Xponential’s Chief Financial Officer John Meloun told the Business Journal.

Xponential, which went public in July 2021 at a price of $12 a share, closed last week trading around $18 per share and a $894 million market cap.

Cautious Ratings

Analysts have taken the mixed investor sentiment following Xponential’s investor day report into consideration.

“2023-2024E visibility appears solid, but 2026E targets imply a slower multiyear revenue algorithm,” research analysts Jonathan Komp and Alexander Conway from Baird wrote.

“Given we were surprised by the stock’s -15% pullback, some near-term patience may still be warranted amid generally cautious investor sentiment,” they added.
Baird retained its “neutral” rating for the fitness franchiser.

New Marketing

Xponential counts 10 brands in its franchise portfolio including a range of fitness activities like indoor cycling, dancing, boxing and stretching.

The company plans to open 500 new studios annually as one of its three-year operating targets; it currently has around 2,892 studios around the world.

This month, Xponential announced a new partnership with New York-based VaynerMedia, which brings all marketing plans for its portfolio under one agency for the first time starting Oct. 1.

The new partner is expected to help “support Xponential’s global expansion,” according to officials.

“This partnership will allow us to better leverage a more scalable and consistent approach to marketing for all of our brands that will make it easier for our franchisees to take advantage of Xponential’s capabilities and insights,” President Sarah Luna told the Business Journal.

It estimates the global boutique fitness market will reach $97 billion by 2027.

Xponential also announced a partnership with fitness platform Gympass, which offers flexible fitness class access to 15,000 corporate customers and 2 million paid users.

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Sonia Chung
Sonia Chung
Sonia Chung joined the Orange County Business Journal in 2021 as their Marketing Creative Director. In her role she creates all visual content as it relates to the marketing needs for the sales and events teams. Her responsibilities include the creation of marketing materials for six annual corporate events, weekly print advertisements, sales flyers in correspondence to the editorial calendar, social media graphics, PowerPoint presentation decks, e-blasts, and maintains the online presence for Orange County Business Journal’s corporate events.

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