Shares of Xponential Fitness, Inc. (XPOF) jumped 43.15% following the company's announcement of a significant revenue beat for the fourth quarter of 2023 and an optimistic outlook for 2024. The fitness franchise reported a 27% increase in fourth-quarter revenue to $90.2 million, surpassing the analyst consensus of $81.71 million.
The company's growth trajectory continued with North America system-wide sales climbing by 31% to $384.6 million. Despite posting a net loss of $9.1 million, or $0.10 per basic share, the adjusted net income stood at $4.2 million, or $0.05 per basic share, which is a decline from the previous year's $6.8 million, or $0.07 per basic share. The drop in adjusted net income was attributed to an $8.8 million increase in restructuring costs and a $4.9 million increase in impairment of goodwill and other assets, among other factors.
For the full year 2023, Xponential Fitness saw a 30% revenue increase to $318.7 million, with North America same store sales growing by 16% YoY. The company's adjusted EBITDA for the year reflected a robust 42% increase to $105.3 million.
Looking forward to 2024, the company has set an upbeat outlook with expectations of 550 new studio openings and a 22% growth in system-wide sales. Revenue is projected to grow by 8% at the midpoint of the guidance range of $340-350 million, which is in line with the analyst consensus of $346.2 million. Adjusted EBITDA is anticipated to surge by 31% at the midpoint of the guidance range.
CEO Anthony Geisler commented on the results, "In 2023, we experienced substantial growth on both the top and bottom lines as members continued to demonstrate that they prioritize their health and wellness routines. We further streamlined our business and are operating from a position of strength as we leverage our operations." He expressed confidence in the momentum carrying into 2024, with expectations for considerable margin expansion and operational cash flows.
Investors reacted positively to the news, with the stock's significant upswing reflecting confidence in the company's performance and future prospects. The market movement suggests a strong endorsement of Xponential Fitness's strategic direction and growth initiatives.
Following the report, Morgan Stanley analysts maintained their Overweight rating on XPOF, lowering the price target to $25 from $26 per share.
"4Q topline KPIs already known with revenue ahead of prior guide while EBITDA comes in at midpoint perhaps owing to some transition studio timing, in our view," wrote analysts at the bank. "In-line '24 outlook for revenue/EBITDA vs. expectations despite net unit opens implied below given expected closures, though we view this conservatively with ongoing execution key for the stock to re-rate."