Xponential Fitness Inc (XPOF)

Xponential Fitness Inc. (XPOF): A Comprehensive Overview

Company Profile

History and Background:

Xponential Fitness Inc. (XPOF) was founded in 2017 through the merger of Club Pilates and CycleBar. Since its inception, the company has grown rapidly through acquisitions, expanding its portfolio of boutique fitness studios. Today, XPOF boasts over 2,000 studios across 10 brands, including:

• Club Pilates: Reformer-based Pilates classes
• CycleBar: Indoor cycling classes
• Row House: Rowing-based cardio and strength training classes
• StretchLab: One-on-one assisted stretching sessions
• YogaSix: Yoga classes
• Pure Barre: Ballet-inspired barre classes
• AKT: Dance-based fitness classes
• STRIDE: Treadmill-based interval training classes
• Rumble: Boxing and kickboxing classes
• BFT: Functional training classes

Business Areas:

• Studio Franchising: XPOF primarily operates through a franchise model, granting licenses to individuals or groups to operate studios under its various brands.
• Equipment Sales: The company also generates revenue from the sale of fitness equipment to its franchisees.
• Technology Platform: XPOF has developed a proprietary technology platform that provides franchisees with support in areas such as marketing, scheduling, and customer management.

Leadership Team:

• Anthony Geisler: CEO and Chairman
• John Kersh: President and COO
• David Carney: CFO
• Margo Dover: General Counsel and Secretary

Top Products and Market Share:

Top Products:

• Club Pilates: With over 700 studios, Club Pilates is the largest brand within XPOF's portfolio.
• CycleBar: CycleBar is the second largest brand with over 500 studios.
• Row House: Row House is the third largest brand with over 150 studios.

Market Share:

• Global Fitness Market: Xponential Fitness is a relatively small player in the global fitness market, which is estimated to be worth over $100 billion.
• US Boutique Fitness Market: Xponential Fitness is a major player in the US boutique fitness market, with a market share of approximately 10%.

Comparison to Competitors:

• Orangetheory Fitness (OTHR): Orangetheory is Xponential's main competitor in the boutique fitness market. However, Orangetheory focuses primarily on high-intensity interval training, while Xponential offers a wider variety of fitness modalities.
• Planet Fitness (PLNT): Planet Fitness is a low-cost gym chain that targets a different customer segment than Xponential.
• Equinox (EXR): Equinox is a luxury fitness chain that also offers a variety of fitness classes. However, Equinox is significantly more expensive than Xponential.

Total Addressable Market (TAM):

The TAM for Xponential Fitness is the global fitness market, which is estimated to be worth over $100 billion. However, Xponential's focus on boutique fitness studios limits its TAM to the smaller, but still substantial, boutique fitness market, which is estimated to be worth around $30 billion.

Financial Performance:

Recent Financial Statements:

• Revenue: Revenue for the 12 months ending September 30, 2023 was $284.2 million, an increase of 30% year-over-year.
• Net Income: Net income for the same period was $14.4 million, an increase of 45% year-over-year.
• Profit Margins: Gross profit margin was 72.3%, and operating profit margin was 19.5%.
• Earnings per Share (EPS): EPS for the same period was $0.21.

Year-over-Year Performance:

Xponential Fitness has experienced strong financial performance in recent years. Revenue has grown by an average of 30% per year over the past three years, and net income has grown by an average of 45% per year over the same period.

Cash Flow and Balance Sheet:

Xponential Fitness has a strong cash flow position and a healthy balance sheet. The company generated $42.8 million in operating cash flow for the 12 months ending September 30, 2023, and had cash and cash equivalents of $129.4 million at the end of the period.

Dividends and Shareholder Returns:

Dividend History:

Xponential Fitness does not currently pay a dividend.

Shareholder Returns:

Shares of XPOF have returned 125% over the past year, 170% over the past three years, and 300% over the past five years.

Growth Trajectory:

Historical Growth:

Xponential Fitness has experienced strong historical growth. The company has grown its studio count by an average of 40% per year over the past three years.

Future Growth:

Xponential Fitness management is optimistic about the company's future growth prospects. The company plans to continue to expand its studio count through both organic growth and acquisitions. Management believes that Xponential can grow its studio count to over 5,000 by 2027.

Recent Initiatives:

Xponential Fitness has recently launched several initiatives to drive growth, including:

• The launch of new studios in new markets.
• The development of new fitness concepts.
• The expansion of its digital fitness offerings.

Market Dynamics:

Industry Overview:

The fitness industry is a large and growing market. The global fitness market is expected to reach $129.2 billion by 2027. The US fitness market is expected to reach $41.2 billion by 2027.

Industry Trends:

Several trends are driving growth in the fitness industry, including:

• The increasing popularity of boutique fitness studios.
• The rise of digital fitness,
• The growing focus on health and wellness.

XPOF's Positioning:

Xponential Fitness is well-positioned to capitalize on these trends. The company's focus on boutique fitness studios and digital fitness offerings positions it to meet the growing demand for personalized and convenient fitness experiences.

Competitors:

Key Competitors:

• Orangetheory Fitness (OTHR)
• Planet Fitness (PLNT)
• Equinox (EXR)

Market Share:

Xponential Fitness has a market share of approximately 10% of the US boutique fitness market.

Competitive Advantages:

• Xponential Fitness has a strong brand portfolio, with a variety of fitness concepts that appeal to a wide range of consumers.
• The company has a proven track record of growth through acquisitions.
• Xponential Fitness has a strong technology platform that supports its franchisees.

Competitive Disadvantages: