Xponential Fitness Stock is an Elastic Fitness Play

Boutique fitness franchisor Xponential Fitness (NYSE: XPOF) stock has been basing for a potential breakout since its recent IPO. The asset-light franchisor has over 1,060 franchisees operating 1,824 open studios. The Company offers customers fitness and wellness workouts which include boxing, dance, yoga, running, cycling, barre, Pilates, rowing, and stretching under the brands Club Pilates, CycleBar, StretchLab, Row House, AKT, YogaSix, Pure Barre, STRIDE and Rumble Brands. The Company is riding the boutique fitness wave and is a core reopening play as live events and engagements recover in the post-pandemic era. Connected fitness, wellness and the boutique elastic gym are parts of the new normal as consumers return to work and the gym but have the ability to engaged remotely as well. Prudent investors looking for exposure in the return to normal trend can watch for opportunistic pullbacks in shares of Xponential.

Q2 2021 Earnings Release

On Aug. 24, 2021, Xponential released its fiscal second-quarter 2021 results for the quarter ending June 2021. Revenues rose 67% year-over-year (YoY) to $35.8 million. System-wide sales rose 179% to $171.6 million. System-wide same-store sales grew 129% YoY. Net loss was (-$8 million) compared to (-$4.8 million) in prior-year period. Adjusted EBITDA was $8.3 million compared to (-$3.1 million) in year ago period. The Company opened 59 new studios with nearly 100% of the 1,824 North American studios opened and operating. The Company sold 197 North American franchise licenses in the quarter. The Company ended the quarter with $20.2 million in cash and cash equivalents with $206.8 million in total debt.

CEO Comments

Xponential CEO Anthony Geisler commented, As is evident from our solid year-over-year revenue growth and the sale of 197 North American franchisee licenses in Q2, our business has rapidly rebounded to pre-pandemic levels and importantly, as of today’s date, is showing no signs of slowing down in the third quarter. When comparing the end of the second quarter of 2021 to January 31, 2020, even without taking into account our newest brand, Rumble, our business had recovered to 103% of actively paying members, 98% of total visits and nearly 90% run-rate AUV. Thus far in Q3, this positive trajectory has continued. In July, we recorded our highest-ever monthly system-wide sales, and our August results to-date remain solid. So far in August, compared to the end of Q2, we’ve seen an increase in our total memberships and our actively paying members, both overall and at a per studio level.” Mr. Geisler continued, “Since Xponential Fitness’ founding in 2017, our mission has been to make boutique fitness accessible to everyone. Today, we are the largest boutique fitness franchisor in the United States and have over 1,850 studios operating globally across nine leading boutique fitness brands. In July, we reached an important milestone in our history by completing our IPO, which positions us well to continue to successfully execute our mission and differentiated business strategy for years to come. Looking ahead, we are confident in our ability to continue expanding our market share in the large and growing boutique fitness industry as we unlock the incredible power of the Xponential platform.”

2021 Outlook

The Company provided tentative outlook for 2021. Xponential expects to open 215 to 235 studios with North American system-wide sales in the $690 million to $700 million range, up 57% at the midpoint compared to full-year 2020. Revenues for full-year 2021 are expected between $135.5 million to $137 million, up 28% YoY. Adjusted EBITDA is expected to rise 129% at the midpoint compared to full-year 2020, in the range of $22 million to $23 million. These assumptions are expected under the conditions of a 5% tax rate and 22.5 million share count and $3.25 million in quarterly dividends paid out to the $200 million preferred convertible note.

XPOF Opportunistic Pullback Levels

Using the rifle charts on the daily and 60-minute time frames provides a precision view of the landscape for XPOF stock. The smaller time frames are needed since the wider time frames need more data and time to process the indicators. The daily rifle chart shows a tight trading range between $10.50 to $12.50. The top peaked at the $13.11 Fibonacci (fib) level. The daily rifle chart has a make or break with an inactive downtrend indicated by the flat 5-period moving average (MA) at $11.52 and 15-period MA at $11.62. The daily Bollinger Bands (BBs) are also flat with upper BBs at $12.55 and lower BBs at $10.84. The daily stochastic crossed up and stalled for either a mini pup on the 5-period MA crossing up through the 15-period MA, or an inverse pup on the shares falling under the 5-period MA as stochastic crosses down. The 60-minute rifle chart has an uptrend with a rising 5-period MA at 11.80 heading towards the daily market structure low (MSL) buy triggers above $12.15. Prudent investors can watch for opportunistic pullback levels at the $11.35 fib, $10.79 fib, $10.50 fib, $10.09 fib, $9.73 fib, and the $9.53 fib level. The upside trajectories range from the $13.11 fib up to the $17.52 level.