Xponential Fitness, Inc.

Reported Q2 2026 revenue was $66.0 million, down $10.2 million or 13% year over year. Adjusted EBITDA was $21.9 million, down $6.2 million or 22% year over year, and adjusted EBITDA margin was 33% versus 37% in Q2 2025. North America system-wide sales were $437 million, flat year over year, and same-store sales were negative 6.8% overall, with Club Pilates down 5%. The quarter ended with 3,165 global open studios, after 67 gross new openings and 39 closures. For 2026, management now expects approximately 150 global net new studio openings, North America system-wide sales of $1.70 billion to $1.75 billion, revenue of $250 million to $260 million, and adjusted EBITDA of $91 million to $97 million.

Mike Nuzzo said the company is shifting from rapid expansion toward optimizing the business, improving franchisee economics, and creating a more consistent member experience. He emphasized a stronger operating team, better franchise support, upgraded digital tools, and initiatives to improve organic leads and conversion, while noting the brand strength remains visible in events like Pure Barre’s 25th anniversary and new partnerships such as the Club Pilates-Starbucks collaboration. His tone was constructive but cautious, repeatedly stressing that the company needs time for these actions to flow through to results.

Robert Julian focused on the drivers of the quarter and the revised outlook. He said revenue fell because of lower equipment revenue tied to studio opening timing, a $5.1 million decline in merchandise revenue, and lower franchise revenue, while adjusted EBITDA missed internal expectations due mainly to lower merchandise contribution and higher marketing investment. He also noted cash equivalents and restricted cash of $25.0 million at June 30, 2026, long-term debt of $522.4 million, $6.8 million of settlement-related payments made in Q2, and about $11.4 million of additional settlement payments expected in the remainder of the year. He said the company expects cash flow to be positive in 2027 and remains disciplined on cost and capital allocation.

Analysts pressed management on how to reverse Club Pilates same-store sales declines, and Nuzzo said the brand does not need double-digit comps anymore; he said a modest positive or even flat comp would be acceptable as the company grows the studio base. On SG&A and cash flow, Julian said recurring SG&A is improving even though non-recurring legal costs remain elevated, and he expects cash flow to turn positive in 2027 as settlement-related pressure fades. Questions also focused on the timeline for merchandise normalization and the impact of larger franchisee partnerships; management said the merchandise issue should improve in the second half and that deals like Spartan are mainly about planned geographic expansion and operational alignment, not special economics.