Xponential Fitness faced a challenging second quarter, with management citing a difficult consumer environment and ongoing top-of-funnel pressure as key drivers behind the double-digit revenue decline and margin compression. CEO Michael Nuzzo highlighted weaker-than-expected same-store sales, particularly at Club Pilates, and continued headwinds in new customer acquisition. Merchandise transition challenges and increased marketing investments also weighed on profitability. Interim CFO Robert Julian acknowledged that elevated legal expenses and the transition to an outsourced merchandise model contributed to the quarter’s underperformance, stating, "We are actively implementing initiatives to improve execution and enhance performance, although the pace of the improvement has been slower than originally anticipated."
Is now the time to buy XPOF? Find out in our full research report (it’s free for active Edge members).
Xponential Fitness (XPOF) Q2 CY2026 Highlights:
- Revenue: $65.97 million vs analyst estimates of $64.39 million (13.4% year-on-year decline, 2.5% beat)
- Adjusted EPS: $0.02 vs analyst expectations of $0.13 (84.9% miss)
- Adjusted EBITDA: $21.94 million vs analyst estimates of $26.29 million (33.3% margin, 16.6% miss)
- EBITDA guidance for the full year is $94 million at the midpoint, below analyst estimates of $103.5 million
- Operating Margin: 14.4%, down from 19.5% in the same quarter last year
- Market Capitalization: $207.7 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Xponential Fitness’s Q2 Earnings Call
- John Heinbockel (Guggenheim Partners) questioned how management plans to reverse negative comps at Club Pilates and whether flat or modestly positive comps are sufficient for franchisee health. CEO Michael Nuzzo responded that reliable studio economics and strong AUVs remain central, and double-digit comps are no longer required for attractive franchisee returns.
- John Heinbockel (Guggenheim Partners) also pressed on the normalization of SG&A and the outlook for positive cash flow as legal costs subside. Interim CFO Robert Julian explained that recurring SG&A is improving and projected cash flow should turn positive in 2027 as non-recurring legal expenses decline.
- Arpine Kocharyan (UBS) sought detail on assumptions for same-store sales trends in the second half and what is implied for Club Pilates. Julian stated that guidance assumes trends will remain similar to the first half, with no improvement embedded until results are visible.
- Arpine Kocharyan (UBS) further asked about net unit growth and the impact of closures. Nuzzo replied that closure rates are stable, and the focus is on supporting new studio openings, with most future growth coming from existing franchisees.
- Noah Zatzkin (KeyBanc Capital Markets) inquired about the timeline for merchandise revenue normalization and ROI on increased marketing. Nuzzo stated that marketing spend has boosted paid leads, and management aims to restore merchandise contribution to normal levels in the second half, but improvement is not yet certain.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be closely monitoring (1) progress in stabilizing same-store sales through new digital and marketing initiatives, (2) resolution of outsourced merchandise execution issues and their impact on both franchisee and corporate profitability, and (3) the pace of domestic and international studio expansion, especially in light of the new Spartan Fitness Holdings partnership. Developments in the ongoing strategic alternatives review will also be an important area to watch.
Xponential Fitness currently trades at $4.95, down from $6.36 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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