©Reuters. Xponential Fitness, Inc. (XPOF) sees strong sales growth in the fourth quarter
Xponential Fitness, Inc. (XPOF) stock rose 43.15% after the company announced a significant improvement in Q4 2023 revenue and an optimistic outlook for 2024. The fitness franchise reported a 27% increase in fourth-quarter revenue to $90.2. million, beating the analyst consensus of $81.71 million.
The company's growth trajectory continued, with systemwide sales in North America increasing 31% to $384.6 million. Despite reporting a net loss of $9.1 million ($0.10 per basic share), adjusted net income was $4.2 million ($0.05 per basic share), compared with $6.8 million ($0.05 per basic share) a year earlier. ($0.07 per share). The decrease in adjusted net income was primarily due to an $8.8 million increase in restructuring charges and a $4.9 million increase in goodwill and other asset impairment charges.
For the full year 2023, Xponential Fitness' revenue increased 30% to $318.7 million, and same-store sales in North America increased 16% year-over-year. The company's adjusted EBITDA for the year reflected a significant increase of $105.3 million, an increase of 42%.
The company has set a positive outlook for 2024, with 550 new studio openings and a 22% increase in systemwide revenue expected. Revenue is expected to increase 8% to $340 million to $350 million, the midpoint of the guidance range, in line with analyst consensus of $346.2 million. Adjusted EBITDA is expected to increase by 31% at the midpoint of the guidance range.
Commenting on the results, CEO Anthony Geisler said, “In 2023, we experienced significant growth in both sales and revenue as our members continued to demonstrate that they were prioritizing their health and wellness habits. We have further streamlined our business and are operating from a position of strength.” While leveraging our business. ” He expressed confidence that this momentum will continue into 2024, with expectations for significant profit expansion and operating cash flow.
Investors reacted positively to this news, with the significant increase in the stock price reflecting confidence in the company's performance and future prospects. Market movements suggest strong support for Xponential Fitness' strategic direction and growth initiatives.
Following this report, Morgan Stanley analysts maintained an overweight rating on XPOF and lowered their price target from $26 to $25 per share.
Analysts at the bank said: “Topline KPIs for the fourth quarter are already known, with sales exceeding previous expectations, but EBITDA reaching the midpoint, likely due to the timing of the transition studio. We believe there is,” he said. “The contrast between our 2024 revenue/EBITDA outlook and forecast implies lower net unit opens given expected closings, but we view this as part of our ongoing stock revaluation.” We are taking a conservative view considering the execution key.
