Xponential Fitness Q2 2026 Earnings: Revenue Falls 13% as Outlook Is Cut

Xponential Fitness (NYSE: XPOF) reported Q2 2026 revenue of $66.0 million, down 13% from $76.2 million a year earlier, while basic and diluted EPS each came to a loss of $0.10 versus a loss of $0.01. Adjusted EBITDA declined 22% to $21.9 million as North America same-store sales fell, equipment installations slowed, and legal and marketing costs increased. The company also lowered each of its major full-year 2026 outlook measures.

Core Financial Results

The revenue decline was primarily attributed to fewer equipment installations and lower merchandise revenue following Xponential’s transition from an in-house wholesale operation to an outsourced retail model. Franchise revenue also decreased because of weaker same-store sales and brand divestitures completed in 2025.

Profitability deteriorated more sharply than revenue. Higher legal expenses lifted selling, general and administrative costs, while the company moved more marketing spending into the second quarter.

The company’s non-GAAP figures exclude items such as litigation expenses, equity compensation, transaction-related costs, restructuring charges, and certain divestiture and transformation expenses.

Business and Revenue Performance

All five reported revenue categories declined. Merchandise and equipment posted the largest percentage decreases, while franchise revenue remained the company’s largest revenue source.

Equipment revenue was hurt by fewer global installations, reflecting fewer studio openings and lower franchise license sales. The merchandise decline mainly reflected the outsourced retail model, although the company also cited challenges during the transition. Lower vendor commissions and brand access fees weighed on other service revenue.

North America system-wide sales were flat at $437.3 million. Same-store sales declined 6.8%, reversing growth of 2.4% in the prior-year quarter, while quarterly run-rate average unit volume fell to $659,000 from $686,000. Xponential opened 67 gross new studios and sold 53 franchise licenses during the quarter.

The operating KPIs are presented on an adjusted portfolio basis that excludes brands no longer owned as of June 30, 2026. Reported financial revenue, by contrast, was affected by the brand divestitures completed in 2025.

Profitability, Cash Flow, and the Balance Sheet

Selling, general and administrative expenses increased 33% to $32.0 million, primarily because of higher legal costs. Marketing fund expenses rose 29% to $11.4 million as Xponential front-loaded more marketing investment into Q2 2026 than it did a year earlier.

The company remained profitable at the operating level, but $14.9 million of interest expense exceeded its $9.5 million of operating income. That gap contributed to a $4.8 million pretax loss and the quarter’s GAAP net loss.

Cash flow also weakened. For the six months ended June 30—not the quarter alone—operating activities used $25.7 million of cash, compared with $8.3 million generated in the corresponding 2025 period. Working-capital outflows included decreases of $20.6 million in accrued expenses and $11.2 million in accounts payable.

Cash, cash equivalents, and restricted cash stood at approximately $25.0 million, down from $45.9 million at the end of 2025. Xponential reported $522.4 million of total long-term debt and drew $10.0 million from its line of credit during the first half of 2026.

Studio Growth Is Not Yet Offsetting Weaker Productivity

Xponential continued to add locations, but the existing studio base generated weaker comparable sales and lower average unit volume. The combination of 67 gross openings and a 6.8% same-store sales decline left North America system-wide sales flat rather than producing aggregate growth.

That productivity pressure affected multiple financial lines. Lower same-store sales weighed on franchise revenue, while slower openings and license sales reduced equipment installations. At the same time, higher legal and marketing costs caused adjusted EBITDA to fall faster than total revenue.

2026 Guidance

Xponential reduced or narrowed every major component of its full-year outlook. The revised ranges incorporate lower expected system-wide sales, revenue, profitability, and studio development than previously planned.

The company continues to assume a mid-to-high single-digit tax rate and 41.0 million Class A shares for its full-year GAAP and adjusted EPS calculations. The percentage comparisons in the latest guidance are the company’s stated comparisons with 2025 results.

Management’s View

CEO Mike Nuzzo acknowledged that second-quarter results were below expectations. Management remains focused on domestic and international studio growth, improved digital capabilities, and additional support for franchisees, which it views as priorities for building more sustainable long-term growth.

Recent Insider Transactions

The supplied insider dataset contains a discrepancy: its six-month summary shows zero purchase transactions, but its detailed transaction list reports the following indirect purchase. The more recent entries were zero-price stock awards to directors and the company president, but the supplied data did not include their share counts.

The reported transaction alone does not establish the purchaser’s view of Xponential’s future prospects.

Risks Investors Should Monitor

• Studio productivity: The 6.8% same-store sales decline and lower average unit volume could continue to pressure franchise revenue and system-wide sales.
• Slower development activity: Fewer openings and license sales have already reduced equipment revenue, while full-year net opening guidance has been narrowed to approximately 150.
• Merchandise transition: Revenue from merchandise fell 90% as Xponential changed its business model, and management also identified execution challenges related to the transition.
• Legal, marketing, and interest costs: Higher legal expenses and front-loaded marketing spending reduced operating leverage, while quarterly interest expense exceeded operating income.
• Liquidity and leverage: Six-month operating cash flow was negative, cash declined from year-end, and total long-term debt remained substantially above available cash.

Summary

Xponential Fitness’s Q2 2026 results show a widening gap between continued studio expansion and weaker performance at existing locations. Falling same-store sales, fewer equipment installations, the merchandise outsourcing transition, and higher expenses reduced both GAAP and adjusted profitability. The lowered full-year outlook makes studio productivity, development activity, cost control, and cash generation the main areas to monitor during the rest of 2026.