The King of Boutique Fitness is Poised for Growth…

May 25, 2022

Consumers are flocking to Xponential Fitness (XPOF) classes as gyms re-open and social activities prompt a focus on health (and appearance).

Xponential Fitness boasts several group fitness brands under its umbrella, including CycleBar, Pure Barre, and even StretchLab.

When Xponential Fitness released its 22Q1 earnings two weeks ago, it topped revenue expectations, posting $50.36 million vs. $45.24 expected.Q1 revenue grew 73%, which wasn’t a surprise to us.

However, it posted a wider than expected loss.

The company said this was in part due to a “$9.5 million non-cash contingent consideration related primarily to the Rumble acquisition.” 

XPOF shares have continued to shed value since that earnings report, building on negative momentum since March. The stock is down 33% in the last month and 23% in 2022…But this could provide an attractive entry point.

Here are 3 reasons XPOF stock could turn around.

1. A Macro Headwind

Consumers are dipping their toes in group fitness classes again.

Mentions of attending a class are trending +3% QoQ and +17% YoY. While they are still nowhere near pre-pandemic levels, this is a noted improvement.

The attending a group fitness class trend surged to an all-time high right before the pandemic.

And while gym-goers may still be wary, they are heading back. Gym membership sign-ups are +16% higher YoY, while working out at home mentions push lower.

2. Consumers Love the Classes

Consumer Happiness Mentions for XPOF are extremely positive, trending +8 points higher YoY, with Positive Sentiment at 85% (this is high).

That happiness is primarily driven by the popularity of XPOF’s CycleBar brand, which is trending +9% YoY.

Even more impressive: happiness is rising alongside increased buzz. CycleBar Overall Mentions have risen by +14% YoY.

3. User Growth is Strong

While mentions of attending a group fitness class are not yet near pre-pandemic levels, Purchase Intent Mentions for XPOF is on course to close well above Q2 2019.

Overall Mentions for Xponential Fitness are currently trending at +19% QoQ and +85% YoY, while Purchase Intent Mentions are rising at an even steeper clip:+25% QoQ and +182% YoY in the current quarter.

Bottom Line: Xponential Fitness’ various group fitness classes are a favorite amongst consumers and popularity is growing.

Demand for XPOF brands is rising on both a near-term and long-term basis, and a growing number of consumers are heading back to group fitness classes.

The company is also outpacing other fitness competitors such as Planet Fitness, Peloton, and Nautilus.

We’ll continue to monitor XPOF as its expands its digital presence in collaboration with Lululemon’s MIRROR offering.

But for now, data is looking increasingly positive.

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