Decline Continues for Club Pilates Parent Xponential as Shareholder Floats Take-Private Offer

While Xponential Fitness’ performance was “below our expectations” for the third quarter, said CEO Mike Nuzzo, he pointed to member retention and progress on new marketing initiatives as “encouraging signs.”

Revenue fell 21 percent in the third quarter, to $62.3 million from $78.8 million a year earlier, and the decline in same-store sales continued. North American same-stores sales were down 7.5 percent, which follows a 6.8 percent drop in the second quarter.

The company cut its outlook for net new studio openings to 124 to 130, from about 150, but reiterated its full-year revenue forecast of $250 million to $260 million. Xponential’s portfolio of boutique fitness brands includes Club Pilates, its largest with more than 1,500 studios and system sales of $1.1 billion, Pure Barre, StretchLab, YogaSix and BFT.

Xponential Fitness appointed Mike Nuzzo as CEO in August 2025.

There were 3,185 studios across all brands to end the third quarter.

Franchise revenue took a double-digit hit, down 16 percent to $43.4 million from the prior year, which the company said was primarily due to a $7.1 million decline in franchise territory revenue because of franchise agreement terminations. Outgoing interim Chief Financial Officer Robert Julian also said royalty fees were down, reflecting the same-store sales decrease, as was revenue from equipment and merchandise.

Xponential, which has grappled with disruptions to its business since founder and former CEO Anthony Geisler was forced out in May 2024 amid a federal investigation, announced in April it tapped Jefferies as its financial adviser to evaluate strategic alternatives, including a merger or sale. During the earnings call November 5, Nuzzo said that process is ongoing and the company won’t comment further until its conclusion.

Shareholders push for take-private deal

Voss Capital, which controls 16 percent of Xponential’s outstanding shares, urged the multi-brand franchisor in March to sell to private investors. And on October 30, Fund 1 Investments, which owns nearly 10 percent of the outstanding shares of Xponential, sent its own letter to the company’s board of directors likewise pushing a take-private transaction.

With no publicly announced progress on the strategic review, Fund 1 wrote, “shareholders have suffered a further decline in the value of their investment. Despite the long-term value of the company’s franchise system, near-term pressure on same-store sales — combined with the company’s leveraged balance sheet and legacy issues — continues to weigh on the company’s valuation.”

Fund 1 said it was prepared to propose a cash acquisition at $5.61 to $7 per share, at least 50 percent above the closing price of $3.74 on October 29. At press time, Xponential, which trades under the ticker symbol XPOF, had a share price of $4.50.

Fund 1 is based in Rincon, Puerto Rico, and operates as a global long-short equity firm specializing in the consumer, telecom, media and technology sectors. In its letter the company noted it has participated in other take-private transactions, including beauty and skincare group L’Occitane International (October 2024) and specialty retailer Tile Shop Holdings (December 2025).

In October, Xponential’s board adopted a limited-duration stockholder rights plan—also known as a “poison pill”—that can be triggered if any investor or group acquires 19.9 percent or more of its Class A shares. The plan is meant to stop any single investor from building a stake large enough that it could harm trading of Class A stock but, the company said, is not intended to block an acquisition. Instead, it “should encourage anyone seeking to acquire Xponential to negotiate with its board prior to attempting an acquisition.”

Club Pilates remains key growth engine

Same-store sales for Club Pilates were down 5.6 percent for the quarter, which Nuzzo said reflected a broader pullback in consumer spending.

“Across boutique fitness, credit card data also showed a Q3 slowdown compared with the first half of 2026, suggesting a more challenging market backdrop,” Nuzzo said. “Nevertheless, we are concentrating on what we can control: generating higher quality leads, converting more prospects, keeping members engaged longer, and supporting stronger execution at the studio level.”

Despite the dip, Nuzzo called the Club Pilates model “incredibly healthy,” and he noted the average unit volume topped $1 million. He said the goal is to reach more than 2,000 locations within the next five years, inclusive of a big push internationally. Club Pilates has about 300 units in international markets.

“When we model with our franchisees new locations, the expectation around the AUV to start is relatively modest compared to where they are performing today. And the economics that that produces for the franchisee is very, very healthy,” said Nuzzo as he also pointed to a strong member pre-sale process. “We come out of the gates really fast with a big build in membership, and so that sets the foundation for really healthy AUVs go forward.”

Club Pilates launched a new website in September with what Nuzzo said is elevated branded and “significantly improved navigation.” Since the launch, the brand saw a double-digit increase in lead form submission and conversions from initial class appointments. The company will next revamp Pure Barre’s website.

During the earnings call, Nuzzo introduced Jennifer Ryu as Xponential’s new CFO. The former finance chief of global professional services firm Resources Connection is the third new leader to join the executive team since May. The company hired former Go To Foods executive Danielle Porto Parra as president and brought in Steph So, who was the chief growth officer at Shake Shack, as chief marketing officer.

Settlement payments and new litigation

Nuzzo said Xponential during the quarter “made significant progress putting key legal matters behind us, an important step in improving our cash flow profile.”

In February, Xponential announced it would pay nearly $40 million in settlements to the Federal Trade Commission and to more than 500 current and former franchisees. Under the FTC settlement, and without admitting liability, Xponential agreed to pay $17 million over 12 months to resolve alleged Franchise Rule violations and related deceptive practices. The FTC in its complaint claimed Xponential misrepresented key information about the costs, risks, time to open and operate studios, and essential details about the company’s operations, “leaving many franchisees and prospective franchisees in the dark about their investment.”

Xponential also finalized a settlement that will pay $22.75 million over 35 months to 509 existing and former franchisees who “allege they were aggrieved by purported misstatements and omissions by the company or an affiliate thereof.” Those disputes date back to 2023.

In a separate settlement in June related to violations of New York’s Franchise Sales Act, Xponential agreed to pay nearly $4 million for misleading franchisees.

In the third quarter, Xponential paid $4 million related to the FTC case, and for the fourth quarter expects to pay approximately $3.4 million in other franchisee settlements.

The company, however, faces new litigation.

Multi-brand fitness company Extraordinary Brands sued Xponential in May, alleging it overpaid for the acquisition of Cyclebar and Rumble, which it bought from Xponential in July 2025 for $7 million. Among its claims, Extraordinary Brands said Xponential engaged in fraud and made false promises in connection with the deal. Xponential filed a counterclaim in July and the case is ongoing.

Xponential is also facing a lawsuit from former Rumble and Lindora franchisees, who in their complaint filed in July allege violations of the California Franchise Investment Law, breach of the franchise agreements, fraudulent concealment and negligent misrepresentation. The case is ongoing. Xponential sold Lindora, a weight loss clinic company, to franchisor Next Health in September 2025.