Xponential Fitness CEO talks fitness demand, franchise growth, and adding brands
Xponential Fitness CEO Anthony Geisler joins Yahoo Finance Live to discuss the company’s stock, increased memberships, revenue growth, the state of the fitness industry, expansion, and the expectations for the fitness space in 2023.
Video Transcript
- Outside of big tech, we're seeing actually big gains for one particular stock-- Xponential Fitness. Those shares have risen over 80% since the IPO. They've actually risen in the last year as well, despite the broader market sell off. Xponential Fitness CEO, Anthony Geissler, joins us now to discuss what to expect in 2023. Anthony, good to see you. Thank you for being here. I guess actually going to the gym and pumping some iron is working a little bit better than some of the big tech companies right now, which is an interesting place to be. As we get into this year, what is sort of going to be your main strategic goal for 2023?
ANTHONY GEISLER: I mean, we're going to continue to do what we've been doing. Q3 was amazing for us. Our revenues grew 56%. Our system wide sales were up 37%. We did deals in Japan and Kuwait and Portugal and did broader B2B deals with Princess and Active and Lululemon and increased membership 33%. And now that allows us to raise guidance. But we sold 258 new franchises. We opened 128 new stores. We did 36 of those in the last week of the quarter. So the AUVs are at an all time high. Our openings at an all time high. Our total store count at all time highs.
So we're living off of some really great tailwinds in the fitness industry coming out of COVID, and a lot of our competitors closing during COVID. So we're comping almost twice as high coming out of COVID as we were in a pre-COVID world.
- Anthony, I went to my gym over the weekend, and I saw three people in a Zumba class. And my first thought was, wow, what a fall from grace. As an owner of all these brands, how do you keep them hot?
ANTHONY GEISLER: I mean, look, what's so great is that we're a portfolio. And so we're not worried about all 10 flavors of ice cream that were scooping being the hottest brand. And so for us, we look at it as a portfolio play. And so at certain points in time, cycling has been hotter. 20 plus years ago when I got started, cycling was hot, and then it was less hot, and then it got hotter again. And so what's so great about us is that we have that shared risk. But of course, we're the largest franchisor doing what we do in boutique fitness. So we've got a lot of instructors across the country. And so we're continuing to make sure that everything is fresh and continuing to make sure that our portfolio has brands and modalities in these new fresh verticals.
- Have you seen any weakness among the franchisees who were looking to expand the brands that you own even further into new categories or regions, rather?
ANTHONY GEISLER: Yeah, over 55% of our franchisees actually own multiple units. And then a lot of them multiple brands. We have some franchisees that own three or four locations that just sit side by side by side in the same shopping centers. And so they're able to actually share some instructors, share some front desk staff. About 85% of the backbone of each of the brands are exactly the same. And about 15%, we celebrate the individuality of each of those brands. And so it allows our franchisees to expand. For instance, our first Rumble Boxing, which is one of our hot new brands, opened in Anchorage, Alaska with one of our Pure Barre franchisees who's expanding. And so she's getting to enjoy the expansion of the brands right alongside us.
- Anthony, and I'm a Rumble fan as well. But just to dig down into that a little bit more. So it sounds like you are still seeing expansion among the franchisees to opening other franchises. Have you seen a slowdown though at all in that expansion as we are seeing the economy slow down?
ANTHONY GEISLER: Now as I said earlier, we sold 258 franchises in Q3. And so we're continuing to sell internally and externally, welcoming new franchisees to the business. And so we'll sell more franchises this year and open more stores than we ever have as a company. And so we're not seeing any slowdown in system-wide sales kind of at the bottom consumer side. And we're not seeing it at the top of the funnel where franchisees come in to buy a franchise and continue to operate their units. And our franchisees buy an average of three units, and then they develop those three units over time. And so we're still seeing those openings happening.
Like I said, our most openings we've ever done in company history was 36 in a week. And that happened in the last week of the quarter. So it couldn't be any more recent demand than that.
- Are you looking at any new brands to add to the portfolio right now?
ANTHONY GEISLER: We always are. Like anything, I get a lot of really great phone calls and a lot of really not so great phone calls as people are out there building their businesses and kind of living their passion inside the fitness industry. And so we're always looking. We're looking to be opportunistic, and we'll continue to do that as we go forward.
- All right, we're going to be waiting with bated breath to see exactly which of those phone calls catches your interest too. Xponential Fitness CEO, Anthony Geisler, always a pleasure to get some time with you.
