Xponential Fitness posted a net loss of U$13.7 million for Q2 2024, following the US$4.4 million loss it posted in Q1.

The company's full year guidance has also been adjusted in the first set of results since Mark King took over as CEO, following the departure of Anthony Geisler.

The boutique franchisor reported that it sold 87 franchise licenses in the second quarter and that 108 new studios opened. The number of openings in 2024 has been downgraded to between 500 and 520, versus the previously predicted 540 to 560 and rather than looking for further acquisitions, the company says it will now focus on its existing portfolio.

King reported that Xponential is still growing rapidly and is confident about its growth trajectory, commenting: “During my first six weeks, I’ve enjoyed the opportunity to meet with many of our dedicated franchisees and employees. Every company I’ve led has had strong, growing brands, passionate stakeholders and scalable teams with models that are poised to generate significant cash with some fine tuning. I see the exact same things at Xponential,” he said.

Due to the leadership change and impending legal action the company is facing, the full-year revenue guidance is between US$300 million and US$310 million, compared to a previous guidance of US$340 million to US$350 million.

“We saw some of the same retail softness that other consumer companies experienced during the second quarter,” said chief financial officer, John Meloun. “When taken together with the effects of our leadership transition and previously announced regulatory investigations, it makes sense to temper elements of our prior outlook.”

Revenue decreased for the second quarter – this time by 1 per cent to $76.5 million – resulting in the net loss. This was the result of lower overall profitability; less acquisition and transaction income; restructuring charges from company-owned transition studios; an increase in impairment of goodwill and other assets associated with a decrease in CycleBar’s actual and forecasted cashflows and a loss on brand divestiture.

On the upside, membership was up by 17 per cent and visit growth by 20 per cent and there was a 22 per cent increase in franchise revenue.

However, retail softness had an impact on merchandise sales, with revenues from these falling by 30 per cent. Revenue from equipment commissions paid to Xponential decreased by 10 per cent, as a result of a shift towards less equipment-intensive brands and a fall in the number of openings.

As of June 30, the company had approximately US$26 million of cash and cash equivalent and US$330 million in debt. Refinancing options are being explored to reduce interest expenses and support long-term growth.