- Company raises full year 2023 guidance for revenue and tightens
top end ranges for new studio openings, system-wide sales and
Adjusted EBITDA4
- Grew Q3 2023 revenue 26% and North America system-wide sales1
35%, compared to Q3 2022
- Sold 216 franchise licenses and opened 127 new studios in Q3
2023
- Sold 6,088 total franchise licenses and had 2,980 total studios
operating as of Q3 2023
Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the
“Company”), the largest global franchisor of boutique fitness
brands, today reported financial results for the third quarter
ended September 30, 2023. All financial figures included in this
release refer to global numbers, unless otherwise noted.
Definitions for the non-GAAP measures and a reconciliation to the
corresponding GAAP measures are included in the tables that
accompany this release.
Financial Highlights: Q3 2023 Compared to Q3 2022
- Grew revenue 26% to $80.4 million.
- Increased North America system-wide sales1 by 35% to $356.7
million.
- Reported North America same store sales2 growth of 15%,
compared to growth of 17% in Q3 of 2022.
- Reported North America quarterly run-rate average unit volume
(AUV)3 of $564,000, compared to $489,000.
- Posted net loss of $5.2 million, or earnings of $0.91 per basic
share, on a share count of 32.3 million shares of Class A Common
Stock, compared to a net loss of $13.1 million, or a loss of $1.53
per basic share, on a share count of 26.2 million shares of Class A
Common Stock.
- Posted adjusted net income of $6.0 million, or adjusted
earnings of $0.09 per basic share, compared to adjusted net income
of $8.0 million, or adjusted earnings of $0.10 per basic
share.
- Reported Adjusted EBITDA4 of $26.5 million, an increase of 33%,
compared to $20.0 million.
“Our KPIs continue to trend well in Q4 and we are confident we
will close the year out on a high note,” said Anthony Geisler, CEO
of Xponential Fitness, Inc. “We have begun implementing the
movement away from company-owned transition studios that we
discussed during our Analyst and Investor Day in September; the
impact of this right-sizing on our profitability in 2024 will be
material.”
Results for the Third Quarter Ended September 30,
2023
For the third quarter of 2023, total revenue increased $16.7
million, or 26%, to $80.4 million, up from $63.8 million in the
prior year period. This increase included a corresponding North
America same store sales increase of 15%.
Net loss totaled $5.2 million, or earnings of $0.91 per basic
share, compared to a net loss of $13.1 million, or a loss of $1.53
per basic share, in the prior year period. The lower net loss was
the result of an $18.2 million decrease in non-cash contingent
consideration primarily related to the Rumble acquisition, and a
$0.7 million decrease in non-cash equity-based compensation
expense; offset by $3.4 million of lower overall profitability, a
$6.7 million increase in restructuring costs from our company-owned
transition studios, and $0.9 million increase in write-down of
goodwill and brand assets. Please see the table at the end of this
press release for a calculation of the basic earnings per share and
diluted loss per share for the quarter ended September 30,
2023.
Adjusted net income for the third quarter 2023, which excludes
the $1.9 million non-cash contingent consideration gain related
primarily to the Rumble acquisition, $1.8 million related to the
re-measurement of the Company’s tax receivable agreement, $4.6
million related to the write down of goodwill and brand assets, and
$6.7 million related to restructuring charges, was $6.0 million, or
adjusted earnings of $0.09 per basic share, on a share count of
32.3 million shares of Class A Common Stock.
Adjusted EBITDA, which is defined as net income (loss) before
interest, taxes, depreciation and amortization, adjusted for
equity-based compensation and related employer payroll taxes,
acquisition and transaction expenses, litigation expenses (outside
of the ordinary course of business), financial transaction fees and
related expenses, tax receivable agreement remeasurement, write
down of goodwill and brand assets, and restructuring charges
increased 33% to $26.5 million, up from $20.0 million in the prior
year period.
Liquidity and Capital Resources
As of September 30, 2023, the Company had approximately $51.9
million of cash, cash equivalents and restricted cash and $329.7
million in total long-term debt. Net cash provided by operating
activities was $38.2 million for the nine months ended September
30, 2023.
2023 Outlook
Based on the Company’s performance year to date, Xponential is
increasing its full year 2023 guidance for revenue and tightening
the top end ranges for new studio openings, system-wide sales and
Adjusted EBITDA as follows:
- New studio openings in the range of 550 to 560, or an increase
of 9% at the midpoint as compared to full year 2022; this compares
to previous guidance of 540 to 560;
- North America system-wide sales in the range of $1.390 billion
to $1.395 billion, or an increase of 35% at the midpoint as
compared to full year 2022; this compares to previous guidance of
$1.385 billion to $1.395 billion;
- Revenue in the range of $305.0 million to $310.0 million, or an
increase of 26% at the midpoint as compared to full year 2022; this
compares to previous guidance of $295.0 million to $305.0 million;
and
- Adjusted EBITDA in the range of $104.5 million to $106.5
million, or an increase of 42% at the midpoint as compared to full
year 2022; this compares to previous guidance of $102.5 million to
$106.5 million.
Additional key assumptions for full year 2023 include:
- Tax rate in the mid-to-high single digits;
- Share count of 31.7 million shares of Class A Common Stock for
the GAAP EPS and Adjusted EPS calculations. A full explanation of
the Company’s share count calculation and associated EPS and
Adjusted EPS calculations can be found in the tables at the end of
this press release; and
- $1.9 million in quarterly dividends paid related to the
Company’s Convertible Preferred Stock.
Third Quarter 2023 Conference Call
The Company will host a conference call today at 1:30 p.m.
Pacific Time / 4:30 p.m. Eastern Time to discuss its third quarter
2023 financial results. Participants may join the conference call
by dialing 1-844-825-9789 (United States) or 1-412-317-5180
(International).
A live webcast of the conference call will also be available on
the Company’s Investor Relations site at
https://investor.xponential.com/. For those unable to participate
in the conference call, a telephonic replay of the call will be
available shortly after the completion of the call, until 11:59
p.m. ET on Tuesday November 21, 2023, by dialing 1-844-512-2921
(United States) or 1-412-317-6671 (International) and entering the
replay pin number: 10183073.
About Xponential Fitness, Inc.
Xponential Fitness, Inc. (NYSE: XPOF) is the largest global
franchisor of boutique fitness brands. Through its mission to make
boutique fitness accessible to everyone, the Company operates a
diversified platform of ten brands spanning across verticals
including Pilates, indoor cycling, barre, stretching, rowing,
dancing, boxing, running, functional training and yoga. In
partnership with its franchisees and master franchisees, Xponential
offers energetic, accessible, and personalized workout experiences
led by highly qualified instructors in studio locations throughout
the U.S. and internationally, with franchise, master franchise and
international expansion agreements in 49 U.S. states and 22
additional countries. Xponential Fitness' portfolio of brands
includes Club Pilates, the largest Pilates brand in the United
States; CycleBar, the largest indoor cycling brand in the United
States; StretchLab, a concept offering one-on-one and group
stretching services; Row House, the largest franchised indoor
rowing brand in the United States; AKT, a dance-based cardio
workout combining toning, interval and circuit training; YogaSix,
the largest franchised yoga brand in the United States; Pure Barre,
a total body workout that uses the ballet barre to perform small
isometric movements, and the largest Barre brand in the United
States; STRIDE, a treadmill-based cardio and strength training
concept; Rumble, a boxing-inspired full-body workout; and BFT, a
functional training and strength-based program. For more
information, please visit the Company’s website at
xponential.com.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP,
we believe non-GAAP financial measures are useful in evaluating our
operating performance. We use certain non-GAAP financial
information, such as EBITDA, Adjusted EBITDA, adjusted net income
(loss), and adjusted net earnings (loss) per share, which exclude
certain non-operating or non-recurring items, including but not
limited to, equity-based compensation expenses, acquisition and
transaction expenses, litigation expenses, employee retention
credit, financial transaction fees and related expenses, tax
receivable agreement remeasurement, write down of goodwill and
brand assets that we believe are not representative of our core
business or future operating performance, and charges incurred in
connection with our restructuring plan, to evaluate our ongoing
operations and for internal planning and forecasting purposes. We
believe that non-GAAP financial information, when taken
collectively with comparable GAAP financial measures, is helpful to
investors because it provides consistency and comparability with
past financial performance and provides meaningful supplemental
information regarding our performance by excluding certain items
that may not be indicative of our business, results of operations
or outlook. However, non-GAAP financial information is presented
for supplemental informational purposes only, has limitations as an
analytical tool, and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. In addition, other companies, including companies in our
industry, may calculate similarly titled non-GAAP measures
differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measures as tools for comparison. We seek to
compensate such limitations by providing a detailed reconciliation
for the non-GAAP financial measures to the most directly comparable
financial measures stated in accordance with GAAP. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of the non-GAAP financial measures to their most
directly comparable GAAP financial measures and not rely on any
single financial measure to evaluate our business. For a
reconciliation of non-GAAP to GAAP measures discussed in this
release, please see the tables at the end of this press release. In
addition, we are not able to provide a quantitative reconciliation
of the estimated full-year Adjusted EBITDA for fiscal year ending
December 31, 2023 without unreasonable efforts to the most directly
comparable GAAP financial measure due to the high variability,
complexity and low visibility with respect to certain items such as
taxes, TRA remeasurements, and income and expense from changes in
fair value of contingent consideration from acquisitions. We expect
the variability of these items to have a potentially unpredictable
and potentially significant impact on future GAAP financial
results, and, as such, we also believe that any reconciliations
provided would imply a degree of precision that would be confusing
or misleading to investors.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections
of future performance based on management’s judgment, beliefs,
current trends, and anticipated financial performance. These
forward-looking statements include, without limitation, statements
relating to expected growth of our business; projected number of
new studio openings; profitability; the expected impact of our
movement away from company-owned transition studios; anticipated
industry trends; projected financial and performance information
such as system-wide sales; projected annual revenue, Adjusted
EBITDA and other statements under the section “2023 Outlook”; our
competitive position in the boutique fitness industry; and ability
to execute our business strategies and our strategic growth
drivers. Forward-looking statements involve risks and uncertainties
that may cause actual results to differ materially from those
contained in the forward-looking statements. These factors include,
but are not limited to, our relationships with master franchisees,
franchisees and international partners; difficulties and challenges
in opening studios by franchisees; the ability of franchisees to
generate sufficient revenues; risks relating to expansion into
international markets; loss of reputation and brand awareness;
general economic conditions and industry trends; and other risks as
described in our SEC filings, including our Annual Report on Form
10-K for the full year ended December 31, 2022 filed by Xponential
with the SEC and other periodic reports filed with the SEC. Other
unknown or unpredictable factors or underlying assumptions
subsequently proving to be incorrect could cause actual results to
differ materially from those in the forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance, or achievements.
You should not place undue reliance on these forward-looking
statements. All information provided in this press release is as of
today’s date, unless otherwise stated, and Xponential undertakes no
duty to update such information, except as required under
applicable law.
Xponential Fitness,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except share
and per share amounts)
September 30, December 31,
2023
2022
Assets Current Assets: Cash, cash equivalents and restricted
cash
$
51,880
$
37,370
Accounts receivable, net
27,714
25,555
Inventories
16,339
10,864
Prepaid expenses and other current assets
13,531
6,294
Deferred costs, current portion
6,507
4,131
Notes receivable from franchisees, net
1,113
1,520
Total current assets
117,084
85,734
Property and equipment, net
20,293
18,524
Right-of-use assets
77,353
30,079
Goodwill
165,661
165,697
Intangible assets, net
122,450
137,175
Deferred costs, net of current portion
45,958
43,620
Notes receivable from franchisees, net of current portion
1,181
1,067
Other assets
1,252
795
Total assets
$
551,232
$
482,691
Liabilities, redeemable convertible preferred stock and equity
(deficit) Current Liabilities: Accounts payable
$
24,097
$
16,185
Accrued expenses
13,389
12,295
Deferred revenue, current portion
37,000
31,996
Current portion of long-term debt
5,195
3,035
Other current liabilities
21,840
9,265
Total current liabilities
101,521
72,776
Deferred revenue, net of current portion
115,229
109,465
Contingent consideration from acquisitions
10,303
28,182
Long-term debt, net of current portion, discount and issuance costs
319,053
133,039
Lease liability
74,678
30,583
Other liabilities
7,440
8,633
Total liabilities
628,224
382,678
Commitments and contingencies Redeemable convertible preferred
stock, $0.0001 par value, 400,000 shares authorized, 114,660 and
200,000 shares issued and outstanding as of September 30, 2023 and
December 31, 2022, respectively
130,304
308,075
Stockholders' equity (deficit): Undesignated preferred stock,
$0.0001 par value, 4,600,000 shares authorized, none issued and
outstanding as of September 30, 2023 and December 31, 2022
—
—
Class A common stock, $0.0001 par value, 500,000,000 shares
authorized, 31,477,165 and 27,571,312 shares issued and outstanding
as of September 30, 2023 and December 31, 2022, respectively
3
3
Class B common stock, $0.0001 par value, 500,000,000 shares
authorized, 16,566,027 and 21,647,447 shares issued, and 16,491,502
and 21,572,922 shares outstanding as of September 30, 2023 and
December 31, 2022, respectively
2
2
Additional paid-in capital
502,606
505,186
Receivable from shareholder
(15,026
)
(16,369
)
Accumulated deficit
(624,210
)
(641,903
)
Treasury stock, at cost, 74,525 shares outstanding as of September
30, 2023 and December 31, 2022
(1,697
)
(1,697
)
Total stockholders' deficit attributable to Xponential Fitness,
Inc.
(138,322
)
(154,778
)
Noncontrolling interests
(68,974
)
(53,284
)
Total stockholders' deficit
(207,296
)
(208,062
)
Total liabilities, redeemable convertible preferred stock and
stockholders' deficit
$
551,232
$
482,691
Xponential Fitness,
Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
(in thousands, except per
share amounts)
Three Months Ended September 30, Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue, net: Franchise revenue
$
36,425
$
30,006
$
104,524
$
83,128
Equipment revenue
12,564
11,770
40,086
31,930
Merchandise revenue
8,456
6,264
24,021
19,100
Franchise marketing fund revenue
6,948
5,172
19,776
14,544
Other service revenue
16,042
10,551
40,058
24,983
Total revenue, net
80,435
63,763
228,465
173,685
Operating costs and expenses: Costs of product revenue
12,709
11,840
40,967
34,951
Costs of franchise and service revenue
3,559
4,811
11,305
13,589
Selling, general and administrative expenses
48,579
32,841
127,912
96,082
Depreciation and amortization
4,216
4,154
12,701
11,225
Marketing fund expense
5,817
4,260
16,289
12,696
Acquisition and transaction expenses (income)
(1,923
)
16,290
(17,433
)
(5,793
)
Total operating costs and expenses
72,957
74,196
191,741
162,750
Operating income (loss)
7,478
(10,433
)
36,724
10,935
Other (income) expense: Interest income
(24
)
(402
)
(1,189
)
(1,209
)
Interest expense
10,638
3,333
27,242
9,060
Other expense
1,845
—
3,097
—
Total other expense
12,459
2,931
29,150
7,851
Income (loss) before income taxes
(4,981
)
(13,364
)
7,574
3,084
Income taxes (benefit)
202
(308
)
212
(158
)
Net income (loss)
(5,183
)
(13,056
)
7,362
3,242
Less: net income (loss) attributable to noncontrolling interests
(1,801
)
(5,918
)
2,348
1,065
Net income (loss) attributable to Xponential Fitness, Inc.
$
(3,382
)
$
(7,138
)
$
5,014
$
2,177
Net income (loss) per share of Class A common stock: Basic
$
0.91
$
(1.53
)
$
1.08
$
0.28
Diluted
$
(0.50
)
$
(1.53
)
$
(0.17
)
$
0.05
Weighted average shares of Class A common stock outstanding: Basic
32,260
26,156
32,025
24,782
Diluted
40,223
26,156
39,988
62,823
Xponential Fitness,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)(in
thousands)
Nine Months Ended September 30,
2023
2022
Cash flows from operating activities: Net income
$
7,362
$
3,242
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
12,701
11,225
Amortization and write off of debt issuance cost
416
94
Amortization of discount on long-term debt
2,032
454
Change in contingent consideration from acquisitions
(17,528
)
(5,791
)
Amortization of right-of-use assets
9,729
1,450
Bad debt expense (recovery)
850
(526
)
Equity-based compensation
15,647
23,920
Non-cash interest
(857
)
(679
)
Write down of goodwill and brand assets
11,817
3,656
Gain on disposal of assets
(770
)
(90
)
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable
(2,535
)
(6,592
)
Inventories
(5,376
)
(6,810
)
Prepaid expenses and other current assets
(7,237
)
(5,529
)
Operating lease liabilities
(4,027
)
(1,398
)
Deferred costs
(4,743
)
(1,248
)
Notes receivable, net
1
25
Accounts payable
7,302
7,497
Accrued expenses
1,656
(1,555
)
Other current liabilities
4,953
599
Deferred revenue
7,536
13,993
Other assets
(458
)
(129
)
Other liabilities
(277
)
1,663
Net cash provided by operating activities
38,194
37,471
Cash flows from investing activities: Purchases of property and
equipment
(6,156
)
(5,660
)
Proceeds from sale of assets
60
65
Purchase of studios
(164
)
—
Purchase of intangible assets
(2,420
)
(6,840
)
Notes receivable issued
(581
)
(1,782
)
Notes receivable payments received
666
2,643
Net cash used in investing activities
(8,595
)
(11,574
)
Cash flows from financing activities: Borrowings from long-term
debt
189,150
5,480
Payments on long-term debt
(3,014
)
(2,220
)
Debt issuance costs
(411
)
(49
)
Payment of preferred stock dividend and deemed cash dividend
(5,677
)
(13,000
)
Payment of contingent consideration
(1,412
)
(1,336
)
Payments for taxes related to net share settlement of restricted
share units
(8,111
)
(1,897
)
Payment for tax receivable agreement
(1,163
)
—
Payments for redemption of preferred stock
(130,766
)
—
Payments for distributions to Pre-IPO LLC Members
(7,485
)
—
Repurchase of Class A common stock
(50,378
)
—
Payment received from shareholder
8,062
—
Loan to shareholder
(4,400
)
(3,300
)
Proceeds from disgorgement of stockholders short-swing profits
516
—
Net cash used in financing activities
(15,089
)
(16,322
)
Increase in cash, cash equivalents and restricted cash
14,510
9,575
Cash, cash equivalents and restricted cash, beginning of period
37,370
21,320
Cash, cash equivalents and restricted cash, end of period
$
51,880
$
30,895
Xponential Fitness,
Inc.
Net Loss to GAAP EPS Per
Share
(in thousands, except per
share amounts)
Three Months Ended September 30, Nine Months Ended
September 30,
2023
2022
2023
2022
Numerator: Net income (loss)
$
(5,183
)
$
(13,056
)
$
7,362
$
3,242
Less: net (income) loss attributable to noncontrolling interests
(14,976
)
33,271
(14,127
)
(6,295
)
Less: dividends on preferred shares
(1,863
)
(3,250
)
(5,789
)
(9,750
)
Add: deemed contribution (dividend)
51,435
(57,096
)
34,326
19,794
Add: deemed contribution from redemption of convertible preferred
stock
—
—
12,679
—
Net income (loss) attributable to XPO Inc. - basic
29,413
(40,131
)
34,451
6,991
Add: net income (loss) attributable to non-controlling interests
—
—
—
6,295
Add: dividends on preferred shares
1,863
—
5,789
9,750
Less: deemed (contribution) dividend
(51,435
)
—
(34,326
)
(19,794
)
Less: Deemed contribution from redemption of convertible preferred
stock
—
—
(12,679
)
-
Net income (loss) attributable to XPO Inc. - diluted
$
(20,159
)
$
(40,131
)
$
(6,765
)
$
3,242
Denominator: Weighted average shares of Class A common stock
outstanding - basic
32,260
26,156
32,025
24,782
Effect of dilutive securities: Rumble Class A common stock
—
—
—
1,300
Restricted stock units
—
—
—
539
Convertible preferred stock
7,963
—
7,963
13,889
Conversion of Class B common stock to Class A common stock
—
—
—
22,313
Weighted average shares of Class A common stock outstanding -
diluted
40,223
26,156
39,988
62,823
Net earnings (loss) per share attributable to Class A common
stock - basic
$
0.91
$
(1.53
)
$
1.08
$
0.28
Net earnings (loss) per share attributable to Class A common stock
- diluted
$
(0.50
)
$
(1.53
)
$
(0.17
)
$
0.05
Anti-dilutive shares excluded from diluted earnings (loss)
per share of Class A common stock: Rumble Class A common stock
—
1,300
—
—
Restricted stock units
1,342
2,121
1,342
—
Conversion of Class B common stock to Class A common stock
16,492
21,651
16,492
—
Convertible preferred stock
—
13,889
—
—
Accelerated Purchase Program - final settlement
589
—
589
—
Rumble contingent shares
2,024
2,024
2,024
2,024
Profits interests, time vesting
1
15
1
15
Xponential Fitness,
Inc.
Reconciliations of GAAP to
Non-GAAP Measures
(in thousands, except per
share amounts)
Three Months Ended September 30, Nine Months Ended
September 30,
2023
2022
2023
2022
(in thousands) Net income (loss)
$
(5,183
)
$
(13,056
)
$
7,362
$
3,242
Interest expense, net
10,614
2,931
26,053
7,851
Income taxes
202
(308
)
212
(158
)
Depreciation and amortization
4,216
4,154
12,701
11,225
EBITDA
9,849
(6,279
)
46,328
22,160
Equity-based compensation
3,536
4,243
15,647
23,920
Employer payroll taxes related to equity-based compensation
94
—
659
—
Acquisition and transaction expenses (income)
(1,923
)
16,290
(17,433
)
(5,793
)
Litigation expenses
1,511
1,015
5,855
8,374
Employee retention credit
—
—
—
(2,597
)
Financial transaction fees and related expenses
327
—
1,971
737
TRA remeasurement
1,845
1,078
3,097
1,635
Write down of goodwill and brand assets
4,579
3,656
11,817
3,656
Restructuring and related charges
6,703
—
6,703
—
Adjusted EBITDA
$
26,521
$
20,003
$
74,644
$
52,092
Three Months Ended September 30, Nine Months Ended
September 30,
2023
2022
2023
2022
Net income (loss)
$
(5,183
)
$
(13,056
)
$
7,362
$
3,242
Change in fair value of contingent consideration
(1,923
)
16,290
(17,433
)
(5,791
)
TRA remeasurement
1,845
1,078
3,097
1,635
Write down of goodwill and brand assets
4,579
3,656
11,817
3,656
Restructuring and related charges
6,703
—
6,703
—
Adjusted net income
$
6,021
$
7,968
$
11,546
$
2,742
Adjusted net income (loss) attributable to noncontrolling
interest
2,038
3,612
3,940
1,299
Adjusted net income attributable to Xponential Fitness, Inc.
3,983
4,356
7,606
1,443
Dividends on preferred shares
(1,233
)
(1,777
)
(3,759
)
(5,131
)
Earnings (loss) per share - basic numerator
2,750
2,579
3,847
(3,688
)
Add: adjusted net income attributable to noncontrolling interest
2,038
3,612
3,940
—
Add: dividends on preferred shares
1,233
1,777
3,759
—
Earnings (loss) per share - diluted numerator
$
6,021
$
7,968
$
11,546
$
(3,688
)
Adjusted net earnings (loss) per share - basic
$
0.09
$
0.10
$
0.12
$
(0.15
)
Adjusted net earnings (loss) per share - diluted
$
0.11
$
0.13
$
0.20
$
(0.15
)
Weighted average shares of Class A common stock outstanding
- basic
32,260
26,156
32,025
24,782
Effect of dilutive securities: Rumble Class A common stock
—
1,300
—
—
Restricted stock units
85
43
421
—
Convertible preferred stock
7,963
13,889
7,963
—
Conversion of Class B common stock to Class A common stock
16,503
21,685
17,206
—
Weighted average shares of Class A common stock outstanding -
diluted
56,811
63,073
57,615
24,782
Anti-dilutive shares excluded from diluted earnings per
share of Class A common stock: Rumble Class A common stock
—
—
—
1,300
Restricted stock units
—
—
—
2,121
Convertible preferred stock
—
—
—
13,889
Conversion of Class B common stock to Class A common stock
—
—
—
21,651
Rumble contingent shares
2,024
2,024
2,024
2,024
Profits interests, time vesting
1
15
1
15
Note: The above adjusted net income (loss) per share is
computed by dividing the adjusted net income (loss) attributable to
holders of Class A common stock by the weighted average shares of
Class A common stock outstanding during the period. Total share
count does not include potential future shares vested upon
achieving certain earn-out thresholds. Net income, however,
continues to take into account the non-cash contingent liability
primarily due to Rumble.
Footnotes
1System-wide sales represent gross sales by all North America
studios. System-wide sales include sales by franchisees that are
not revenue realized by us in accordance with GAAP. While we do not
record sales by franchisees as revenue, and such sales are not
included in our consolidated financial statements, this operating
metric relates to our revenue because we receive approximately 7%
and 2% of the sales by franchisees as royalty revenue and marketing
fund revenue, respectively. We believe that this operating measure
aids in understanding how we derive our royalty revenue and
marketing fund revenue and is important in evaluating our
performance. System-wide sales growth is driven by new studio
openings and increases in same store sales. Management reviews
system-wide sales weekly, which enables us to assess changes in our
franchise revenue, overall studio performance, the health of our
brands and the strength of our market position relative to
competitors.
2 Same store sales refer to period-over-period sales comparisons
for the base of studios. In accordance with industry standard, we
define the same store sales base to include studios in North
America that are in traditional locations and that have generated
positive sales for at least 13 consecutive calendar months as of
the measurement date. Any transfer of ownership of an existing
studio does not affect this metric. We measure same store sales
based solely upon monthly sales as reported by franchisees. This
measure highlights the performance of existing studios, while
excluding the impact of new studio openings. Management reviews
same store sales to assess the health of the franchised
studios.
3AUV is calculated by dividing sales during the applicable
period for all studios being measured by the number of studios
being measured. Quarterly run-rate AUV consists of average
quarterly sales activity for all North America traditional studio
locations that are at least 6 months old at the beginning of the
respective quarter, and that have non-zero sales in the period,
multiplied by four. Monthly run-rate AUV is calculated as the
monthly AUV multiplied by twelve, for studios that are at least 6
months old at the beginning of the respective month, operate in
traditional locations and have nonzero sales. AUV growth is
primarily driven by changes in same store sales and is also
influenced by new studio openings. Management reviews AUV to assess
studio economics.
4We define Adjusted EBITDA as EBITDA (net income/loss before
interest, taxes, depreciation and amortization), adjusted for the
impact of certain non-cash and other items that we do not consider
in our evaluation of ongoing operating performance. These items
include equity-based compensation and related employer payroll
taxes, acquisition and transaction expenses (including change in
contingent consideration), litigation expenses (consisting of legal
and related fees for specific proceedings that arise outside of the
ordinary course of our business), employee retention credit (a tax
credit for retaining employees throughout the COVID-19 pandemic),
fees for financial transactions, such as secondary public offering
expenses for which we do not receive proceeds (including bonuses
paid to executives related to completion of such transactions),
expense related to the remeasurement of our TRA obligation, write
down of goodwill and brand assets, and restructuring and related
charges that we do not believe reflect our underlying business
performance and affect comparability. EBITDA and Adjusted EBITDA
are also frequently used by analysts, investors and other
interested parties to evaluate companies in our industry. We
believe that Adjusted EBITDA, viewed in addition to, and not in
lieu of, our reported GAAP results, provides useful information to
investors regarding our performance and overall results of
operations because it eliminates the impact of other items that we
believe reduce the comparability of our underlying core business
performance from period to period and is therefore useful to our
investors in comparing the core performance of our business from
period to period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107661801/en/
Addo Investor Relations investor@xponential.com (310)
829-5400
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