Global boutique franchisor, Xponential Fitness has posted a net loss of US$98.7 million for the full year and is re-stating its 2023 financial position. This was against a profit of US$37.5 million in 2023.

This was attributed to a number of factors including a US$8.4 million decrease in financial transaction fees; a US$27.4 million increase in acquisition and transaction expenses – which includes non-cash contingent consideration primarily related to the Rumble acquisition – and a US$25.7 million increase in litigation expenses.

As of December 31, 2024, the Company had approximately US$32.7 million of cash, cash equivalents and restricted cash and $352.4 million in total long-term debt.

The 2023 re-statement corrects accounting errors primarily related to accrued inventory, compliance, purchase accounting, and vendor rebates. The net impact of the 2023 corrections increased net loss from $1.7 million to $6.4 million, and decreased Adjusted EBITDA from $105.3 million to $100.3 million. The re-statement is not a result of any substantive change to the company’s operations or business performance and had no impact on the overall cash position or net cashflow.

It's been a volatile year for the world’s largest boutique franchise company. After announcing all time membership highs in April 2024, founder and CEO, Anthony Geisler, was forced to resign because of a legal challenge by the United States Attorney’s Office for the Central District of California. This matter is still not resolved.

The company also lost a number of other key executives, including John Kersh and Sarah Luna.

Former Taco Bell CEO, Mark King was brought in last June to steady the ship and refresh the management team. “We've made significant progress over the course of my first two full quarters as CEO," he said, "I've also gained a deeper understanding of both the opportunities and challenges at Xponential.

“It's clear from some of the issues we've found and are addressing that there's a lot to do," he said. "That said, I have full confidence in the new team we’ve assembled; they all have experience executing on exactly what Xponential must do to sustainably grow.”

For the fourth quarter of 2024, total revenue decreased US$6.1 million (7 per cent) to US$83.2 million, as increases in franchise and marketing fund revenues were offset by decreases in other service, merchandise and equipment revenues.

Net losses for Q4 were US$62.5 million, compared to a net loss of US$12.3 million in the prior year period and US$18 million in Q3.

Xponential Fitness has 3,200 franchised boutique studios open globally across its eight brands: Club Pilates, Cyclebar, StretchLab, BFT, Pure Barre, YogaSix, Rumble and Lindora.

Last year 400 franchise licenses were sold and 464 new studios were opened. Club Pilates established two London locations in 2024, with additional studios across Spain, Germany, Portugal, and France.

BFT (Body Fit Training) launched in Glasgow Central and East Croydon UK and has just signed a master franchisor for Scandinavia..

The outlook for 2025 is a decrease in new studio openings, in the range of 200 to 220.

Look out for a Top Team interview with King and his senior leadership team in an upcoming issue of HCM. Sign up here to get your free digital subscription to HCM.