Xponential Fitness Revenue Falls 21% as Studio Openings Slow

Xponential Fitness (NYSE:XPOF) posted a 21% revenue decline in the third quarter, to $62.3 million from $78.8 million a year earlier, as same-studio sales fell 7.5% and equipment and merchandise revenue weakened. The boutique fitness franchisor also narrowed its full-year adjusted EBITDA outlook and cut its expectation for net studio openings. Every headline number moved in the wrong direction; the question on the call was whether any of them can turn.

What drove the decline?

Adjusted EBITDA fell 27% to $24.3 million. North America systemwide sales dropped 2% to $424 million on a pro forma basis. Same-studio sales at Club Pilates, the company's largest growth focus, declined 5.6%. CEO Mike Nuzzo said lower merchandise sales, pressured by the transition to an outsourced logistics partner, also weighed on comparable sales.

Interim Chief Financial Officer Robert Julian broke the revenue gap into three pieces:

• Franchise revenue fell $8.5 million, primarily because less revenue was recognized from franchise agreement terminations; royalty fees also declined on lower same-store sales and 2025 brand divestitures.
• Equipment revenue fell $3.2 million as installations and studio openings declined.
• Merchandise revenue decreased $4.4 million, reflecting a change in reporting under a new business model and challenges tied to the transition.

Nuzzo said attracting new members is the company's biggest focus for improving comparable sales, while retention has held strong. He also cited credit card data showing a slowdown across boutique fitness in the third quarter compared with the first half of 2026 — an industry-wide signal, though one the company cannot control.

Can the studio base keep growing?

Xponential ended the quarter with 3,185 open studios globally. It opened 54 and closed 34, with closures concentrated at StretchLab, BFT and Pure Barre. Domestic net unit growth was one; international net growth was 19. The company sold 58 licenses, including 43 internationally. At September 30, 618 licenses were contractually obligated to open in North America, alongside 741 international master franchise obligations.

Nuzzo said Club Pilates had reached more than $1 million in average unit volume and that some moderation from that level was expected — candor worth noting, since the brand anchors the growth thesis. The long-term objective is more than 2,000 Club Pilates locations over the next five years.

Asked whether the franchisor could operate economically with lower unit volumes and same-studio sales, Nuzzo said it could, provided the studio base keeps expanding. "As long as we're continuing to grow total studios, total system-wide sales will increase, and total royalty revenue will increase," he said. That arithmetic holds only if openings continue; domestic net growth of one studio suggests it is not yet holding.

What changed in guidance and leadership?

For 2026, Xponential now expects adjusted EBITDA of $91 million to $94 million and global net new studio openings of 124 to 130. It maintained its revenue forecast of $250 million to $260 million and North America systemwide sales outlook of $1.70 billion to $1.75 billion. Nuzzo characterized the EBITDA change as a narrowing of the range. On openings, he cited a more difficult real estate environment for the roughly 2,000-square-foot spaces the company seeks, plus more selective site assessments. He said neither factor reflects reduced franchisee intent to open.

Nuzzo declined to discuss fourth-quarter comparable sales. He did point to a double-digit percentage increase in lead-form submissions and first-class appointment conversion since a new Club Pilates website launched at the end of September, with a similar redesign planned for Pure Barre and other brands. Leads, not revenue, are what the claim rests on.

The board remains engaged in the strategic alternatives review announced in April, which could include a company sale, merger or another strategic or financial transaction. The company plans no further comment until the review concludes.

The call was Julian's last as interim CFO. Jennifer Ryu has joined as CFO, and Nuzzo said one of her initial priorities will be reviewing the cost structure, including technology use and vendor relationships. She inherits a balance sheet with $27.2 million in cash, equivalents and restricted cash at September 30, $521.1 million in long-term debt, and $10 million drawn on a $25 million revolving credit facility. Julian said the debt increase from a year earlier primarily reflected borrowing connected with the retirement of convertible preferred stock in late 2025.

Xponential, founded in 2017 and headquartered in Irvine, California, franchises brands including Club Pilates, CycleBar, StretchLab, YogaSix, Pure Barre, AKT, Rumble, STRIDE Fitness and BFT.

Guidance held, but the openings target did not — and openings are the number Nuzzo's own argument depends on.