Xponential Fitness Reports Second-Quarter 2026 Results, Focuses on Long-Term Growth Strategy Despite Revenue Decline
Xponential Fitness, Inc. (NYSE: XPOF), one of the world’s largest franchisors of boutique fitness brands, reported its financial results for the second quarter of 2026, highlighting continued investments in franchise expansion, digital innovation, and operational support while acknowledging that quarterly performance fell short of expectations.
Chief Executive Officer Mike Nuzzo said the company remains committed to executing initiatives designed to strengthen the business over the long term, despite facing near-term financial pressures. According to Nuzzo, management continues to prioritize studio growth in both domestic and international markets, enhance digital capabilities across its brands, and provide stronger operational support to franchisees.
He noted that these initiatives are being driven by a collaborative leadership team working across all business units with the objective of building sustainable growth while improving long-term success for franchise owners.
During the second quarter ended June 30, 2026, Xponential generated $66.0 million in total revenue, representing a 13% decline compared with the same period last year. Management explained that the decrease was anticipated and primarily reflected fewer equipment installations associated with studio openings as well as significantly lower merchandise sales following the company’s transition to an outsourced logistics and retail fulfillment model.
Although overall revenue declined, the company emphasized that much of the decrease resulted from strategic operational changes rather than weakening demand across its franchise system.
Franchise revenue, which remains the company’s largest source of income, totaled $44.0 million during the quarter, down 3% year over year. The decline was primarily attributed to lower same-store sales across certain brands and the impact of brand divestitures completed during 2025. Despite these challenges, franchise royalties continue to represent the foundation of Xponential’s recurring revenue model.
Revenue generated from equipment sales reached $7.1 million, reflecting a 26% decrease compared with the prior-year quarter. Management stated that fewer equipment installations were directly tied to a slower pace of new studio openings and reduced franchise license sales during the period.
The company’s merchandise business experienced the most significant decline. Merchandise revenue totaled just $0.5 million, down 90% from the previous year. Executives explained that the sharp reduction resulted primarily from the transition away from an internally managed wholesale distribution model toward an outsourced retail fulfillment strategy. While the transition temporarily disrupted revenue, management believes the new operating model will ultimately improve efficiency and reduce complexity.
Revenue generated through the franchise marketing fund reached $8.7 million, representing an 8% decline from the same period last year. This decrease largely reflected lower overall system-wide sales resulting from brands that were divested during 2025.
Meanwhile, other service revenue totaled $5.6 million, a decline of 10% year over year. The reduction was mainly driven by lower vendor commission income and decreased brand access fee revenue.
Operating expenses increased during the quarter as the company continued investing in key initiatives while also managing elevated legal costs.
Selling, general, and administrative expenses rose to $32.0 million, an increase of 33% compared with the second quarter of 2025. According to management, higher legal expenses accounted for a significant portion of the increase.
Marketing fund expenses also increased substantially, reaching $11.4 million, up 29% from the prior-year period. Executives explained that marketing investments were intentionally concentrated during the second quarter as part of an accelerated advertising strategy designed to support franchisees and increase consumer engagement earlier in the year.
As a result of lower revenue and higher operating expenses, Xponential reported a net loss of $4.8 million, or $0.10 per basic share, compared with net income of $1.3 million during the same period last year.
On an adjusted basis, which excludes several non-recurring and non-operating items, the company reported adjusted net income of $0.8 million, or $0.02 per basic share. This compares with adjusted net income of $14.5 million, or $0.26 per share, during the second quarter of 2025.
Adjusted EBITDA, one of management’s primary performance measures, totaled $21.9 million, representing a 22% decline from $28.1 million recorded one year earlier.
Turning to liquidity, Xponential ended the quarter with approximately $25.0 million in cash, cash equivalents, and restricted cash. Total long-term debt stood at $522.4 million as of June 30, 2026.
The company reported net cash used in operating activities of $25.7 million during the quarter. Despite ongoing cash utilization, management stated that it continues to closely monitor liquidity while balancing investments in growth initiatives with disciplined financial management.
The financial information presented reflects global operations across Xponential’s remaining portfolio of fitness brands. Company performance metrics have been adjusted to include historical results from brands currently owned while excluding brands that have been divested.
Given current business conditions, Xponential revised its financial outlook for the full 2026 fiscal year.
Management now expects approximately 150 net new studio openings during 2026. While this represents continued expansion of the global franchise network, it is at the lower end of the company’s previous guidance range of 150 to 170 new studios.
North American system-wide sales are now projected to range between $1.70 billion and $1.75 billion, slightly below the previous forecast of $1.72 billion to $1.80 billion.
Revenue guidance for the full year has also been reduced. Xponential now expects annual revenue between $250 million and $260 million, compared with prior guidance of $260 million to $270 million.
Similarly, projected Adjusted EBITDA has been lowered to a range of $91 million to $97 million, compared with previous expectations of $100 million to $110 million.
Management also indicated that the company expects its effective tax rate to remain in the mid-to-high single-digit percentage range during 2026.
For earnings calculations, the company anticipates approximately 41 million Class A common shares outstanding throughout the fiscal year.
Executives noted that the company cannot reasonably provide a reconciliation between forward-looking Adjusted EBITDA guidance and the most directly comparable GAAP measure because several items—including contingent consideration adjustments, tax-related accounting, and other non-cash valuation changes—remain difficult to estimate and could materially affect reported GAAP results.
To review quarterly performance and discuss future priorities, Xponential Fitness scheduled a conference call for investors and analysts on August 6, 2026. Senior executives are expected to provide additional commentary on financial performance, franchise development, operational initiatives, and updated guidance for the remainder of the year.
Xponential Fitness operates one of the world’s largest portfolios of boutique fitness franchise brands, serving consumers across multiple workout categories. Its current portfolio includes Club Pilates, StretchLab, YogaSix, Pure Barre, and BFT, offering specialized fitness experiences ranging from Pilates and yoga to assisted stretching, barre workouts, and functional strength training.
Through its franchise model, the company maintains studio locations throughout the United States and internationally, supported by master franchise agreements covering numerous global markets. Management continues to view international expansion, digital engagement, and franchise support as key drivers of future growth.
In addition to GAAP financial measures, Xponential regularly reports non-GAAP metrics such as Adjusted EBITDA, adjusted net income, and adjusted earnings per share. These measures exclude items such as stock-based compensation, acquisition-related costs, litigation expenses, restructuring charges, executive transition costs, transformation initiatives, impairment charges, and certain tax-related adjustments. Management believes these metrics provide investors with a clearer understanding of the company’s core operating performance and improve comparability across reporting periods.
The company also cautioned investors that forward-looking statements regarding future financial performance, studio expansion, profitability, and growth strategies remain subject to numerous risks and uncertainties. These include changing consumer demand, franchisee performance, macroeconomic conditions, international expansion challenges, geopolitical developments, evolving trade policies, regulatory changes, competitive pressures, and broader industry trends. While management believes its long-term strategy remains sound, actual results may differ materially from current expectations depending on future market conditions and operational developments.
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