All right. Good morning, everybody. My name is Korinne Wolfmeyer. I am the beauty and wellness analyst here at Piper Sandler, and we're happy to have with us today Xponential Fitness. We have CEO Anthony Geisler and CFO John Meloun. And for those not familiar, Xponential is a boutique fitness franchise, fitness studio franchisor, 10 brand concepts with brands like Club Pilates, CycleBar, that you've likely heard of. The company went public several years ago, 2021. And so great, thanks so much for being here today with us. And first, you know, I'd like to start with the outlook for the year, and you just held the analyst day last week, talked about some of your forward expectations. This past quarter, you did raise guidance. You're pointing towards the high end, implies over 20% top line growth, almost five points of margin expansion. First, can you just talk about what gives you confidence in this raised outlook? And then, now that we're almost through the third quarter, can you provide any color on what you're seeing in terms of customer traffic flows, membership demand, and how that's tracking with your internal expectations? Yeah, I mean, from a guidance perspective, the one thing that's really easy to do is predict our business. About 74% of our revenue is recurring. So pretty much what we did last quarter, we know exactly what we're going to do again in third quarter and fourth quarter. We have a pretty good visibility into our pipeline as well. So the number of leases we signed, you know, we can pretty much see six to nine months out by address, what studios are going to be open by brand. So for us, it's really easy to predict not only the 74% of our revenue, but even the one-time revenue related to equipment. SG&A has been pretty stable. We had some creep up in SG&A, you know, in the last couple of quarters related to transition studios, but we made the, you know, the decision that we're going to go ahead and ramp those down. So we have a pretty good idea of our core SG&A and what that looks like. So from our perspective, you know, only four months left of the year, you know, we have a good idea. I mean, even into 2024 already, it's starting to solidify itself pretty well as far as, like, where we see the next year at. You want to talk about demand, consumer demand? Yeah. On the, on the consumer demand side of the business, we, you know, we track about 30 different KPIs on a monthly basis. So we, we track obviously things for sale, member units, you know, per studio, things of that nature. So, you know, all that trend is continuing to grow stronger. So, you know, people—there's always talk at each conference or, you know, each quarter, people talk about the consumer and the macro. We've been answering that question for two years. You know, there definitely is some macro headwind. We don't know what that headwind is because, you know, we were comping at 8%, 9% pre-COVID. We're comping at almost twice that now. Could we be comping higher without the macro? Sure, you know, but we're still... You know, we sold 1,000 units, 1,000 franchises last year, opened 500 clubs. We're opening a store every 15 hours this year. So it's, you know, it's sustainable, but it's also a, it's also a big number. But could it be bigger? Could we be selling more, opening more, driving higher AUVs if there wasn't a macro? Most likely, but there's no way for us to measure that because, you know, the cohorts keep opening better and better quarter-over-quarter. So there's no way for us to say, "Well, we were opening 500 units, now we're opening 400, so the macro is hurting us for 100 units." As all of our KPIs are up and to the right, continuing to grow, you know, we don't know. There's no way for anyone to know what it would have been if, you know, interest rates were this or inflation was that. But I can tell you that our, our average consumer spends 1% of their income on our product. So, and in that product, that's where they drive their health and wellness, right? It's where they drive their community in boutique, and, it's where they drive entertainment dollars. So that's, that's a lot to give up when you're, you know, you're making $160,000 a year, and you're paying $130 a month. You know, I said this in 2008, because I'm, I'm the only guy around that was in boutique fitness when there was a, you know, an economic disaster, not a, not a bad macro. And even at that, you know, I said there'd be bread lines before people got rid of their memberships, and that turned out to be true, right? The industry actually grew slower, but still grew through 2008. Great. That's a great segue into maybe next year and the long-term plan that you laid out last week. Calling for a top line that seems reasonable, some may think a little bit conservative, really steep EBITDA ramp. First, let's maybe touch on the top line and what drivers you see getting the top line to where you're projecting, and what, where could we see some potential upside from that long-term target you laid out? Yeah, I mean, the 2026 targets we put out for clarification is doing what we do today. It's with the 10 brands we have today. It's based off of opening, you know, 500-600 units for the next three years. You know, so the revenue isn't linear growth. Obviously, if you open 500 studios next year and 500 studios the year after, that revenue is 0% growth, if you looked at it from that perspective. But the thing I want to point out to people is when you look at, as we open 500 units, the variable revenue is what you really should be focusing on, because their variable revenue or your royalties and the rebates we get, you know, associated with royalties, that's 100% margin. So that's growing at a 20% CAGR over the next three years at a 100% margin. So that just flows to the bottom line. So the upside really in revenue is we buy another brand, we see acceleration in same-store sales, we see higher levels of performance internationally. You know, we will be stabilizing our SG&A. So from that perspective, you'll see SG&A as a percent of revenue go sub 30%, excluding stock-based comp over the next couple of years. So you'll see tremendous margin expansion. The amount of cash the business is gonna generate over the next three years, you know. Just fast-forward to 2026, north of $100 million of cash after we've paid our interest taxe s and done our CapEx. So the business is gonna throw off a tremendous amount of cash, which gives us a lot of opportunity to decide, you know, whether or not we want to reinvest that back into the business, M&A, or even doing stock buybacks, you know, with the capital, if, you know, the stock is depressed like it is today, so. Can you talk a little bit about what's gonna, beyond scale in the variable versus fixed component, what is really gonna drive that, that margin over the next couple of years? Maybe discuss the corporate-owned studios that you currently own and you're planning to sell off and the strategy there. Yeah, so the this corporate-owned portfolio of studios we have today, we've always done this. You know, if we take back a studio, the intent is always to rehabilitate it and get it refranchised out as soon as possible. So we're not really changing the strategy there, 'cause that's what we've always done. The strategy is we're just not taking any more back. So in essence, getting to a portfolio of zero and taking a much more proactive approach from that front. By doing that, you remove any and typically, when you get a studio back, it's because of some reason why that studio is impacted. So the studios are usually operating at a loss, and those, usually, when we take them back, obviously, that flows through our P&L. So now those losses go to zero. Your SG&A will go down to, you know, just north of $100 million, you know, on an annualized basis. So once we, you know, execute on that, the SG&A becomes very pretty much fixed or, or flat from that perspective. As we open 500 more studios per year, the SG&A leverages. Any incremental revenue that we generate or margin that we generate, falls right to the bottom line, and that's really where the margin expansion is coming from. Incremental domestic units, the favorable economics around international units, the brand access business we've been doing, the other service revenue, where you've seen deals with, like, Princess, Lululemon, those deals are virtually 100% margin for us. So my long-term forecast assumes steady state on those, so any additional deal that we do in that category is future upside for us. So you'll see, like I said, those kind of four levers that we have will drive a significant amount of the margin expansion. Very helpful. Another thing discussed last week beyond the outlook was the unit economics, and it's been a big investor question as of late. Everyone's trying to understand how are all the different brands performing versus each other. You did provide some pretty good color on your top five scaled brands that make up, I believe, 94% of system-wide sales. So for those other five brands that make up the smaller portion, you know, how long do you think it could take for those to become a bigger piece of the mix? And then along those lines, because those are such a small piece of the business, what's the reasoning behind having those brands, and what's the long-term goal of those brands? I'll talk to the unit economics piece of that, and then I'll let Anthony talk to the longer-term strategy around why we acquire brands. But the unit economics, you know, we laid out that people typically look at the unit economics and think all 10 brands, they have different four-wall operating expenses. That's not true. They're very uniform. 70% of your operating expenses are tied up in two lines: wages and rent. DMA obviously impacts rents, because if you're operating in New York City versus, you know, Lincoln, Nebraska, very different cost per square foot. So the AUV really depends on, you know, DMA. Studios in New York City, it's not uncommon to see much higher AUVs than in St. Louis, because it's just a different population, different. But the margins are largely the same because your OpEx is higher in New York City than it is in Nebraska. So when you look across the brands, OpEx break-even point, very back-of-the-napkin, $30,000 is kind of like national average a month. You got to do $30,000 a month. But again, in, in Lincoln, Nebraska, you could probably be doing low $20,000 and be breaking even. When you look at, like, brands like Rumble and BFT, we've sold 1,000 licenses between those two brands. So they don't contribute much today from an economic standpoint, 'cause it's just a handful of units open domestically. But over the next three years, we typically sell in three-packs, so you see pretty much a third of those studios will get open over the next three years. By the time you get to 2026, you know, we'll have 500, roughly about 4,500 units open. Those brands will make up about 1,000 of those 4,500. So they'll have much more meaningful contribution in three years as we get them open. But today, you know, they're just a handful, so they don't drive a lot of economic benefit. The reason why we buy the brands, though, is so you have kind of like an evergreen kind of growth profile. We didn't buy all 10 brands and start them at the same time. Yeah, and the reason to keep them is that, you know, you have brands also operate outside of their four wall. So for instance, all of our B2B partnerships, right? So if you take a brand like AKT, that has 25 open units today, and you say, it has four employees, right? Because 80% plus of our org chart is all on shared services. So if you buy a brand like AKT, you're hiring four people. The incremental SG&A is dollars for those four people. So if the brand makes $500,000, the brand makes, breaks even, right? And so these aren't huge gambles. When we go to buy businesses, we're buying them for $1 million, $2 million, $3 million. You know, our biggest acquisition was BFT, with—has 300 plus open units at $44 million, right? And so, when you buy these, you're not taking this massive gamble if it doesn't work out, right? And that's the whole idea in the portfolio approach. So if you have something like AKT, where you say, "Okay, there's 25 stores, four walls needs to make $500,000," but, you know, people look at that and say, "Oh, well, why, why wouldn't you just get rid of that brand?" Well, because lululemon paid me $6 million, and AKT is the number one brand on the Lululemon Mirror. What about that? What about AKT in Mexico? What about the fact that UnitedHealthcare paid me on 3,000 stores, and that's one of the 10 brands? What about LG televisions? What about Princess Cruises, where we operate AKT, and we're in 23,000 staterooms? And what about AKT at Hyatt, Hilton, and Four Seasons Hotels? And, you know, like, so the difference is, we are not just a four-wall, brick-and-mortar business, and we're not just a domestic business. So to then just take the four wall of one of the brands times the units and be like, "Oh, well, why would you bother with that?" Right? And so I've told people where, where we will move off a brand like an AKT and say, "Hey, let's just sell that brand off," or, "Let's not do it anymore," or whatever you want to call it, right, would be because I would want to take the labor from that, right? Hey, I've got four great people that I could be repurposing that labor somewhere where I get higher four wall, and I get digital, I get international, I get all my B2B, I get all of that stuff. And, and labor is kind of the driver there, not is it accretive to the business? Because it's accretive, right? If you shut AKT down, you would lose EBITDA, right? At the end of the day, when you look across the different ways that we sell. And so that's why it makes a difference from a portfolio kind of approach perspective. Thanks for all that color. And, to kind of piggyback off of that, a big question you also get is: When is the next acquisition coming? And it has been a couple of years now since your last transaction. Yes. Can you provide any color on how you're thinking about maybe the next concept you want to move into, potential tim ing of that? Sure. And some of the different aspects you're looking for in a business when you acquire them? Yeah. Well, I've only been on Wall Street for two years. So I can't say I've been doing it for 10 or 20, but, you know, investors have been doing it a very long time. What I am learning is that there are themes that will happen, right? You know, we did our Investor Day last week, and then, you know, we'll do three conventions like this over the next three days. One yesterday, one today, one tomorrow, right? And so we spend a lot of time with our investors, and at this conference last year, everybody said, "Don't buy a brand." Right? "Don't buy a brand. The consumer, the macro, you guys have a couple thousand already sold to go open. Keep your head down, keep cash high, leverage down, go open the studios, focus on the business. There's a tough macro coming," right? The last six weeks, it's been: "I don't know what macro you're talking about last year. Why haven't you guys bought an 11th brand?" "Where's the growth? Why is there no brand acquisitions in the next three years? You haven't bought anything in two years. You've been asleep at the wheel. What are you doing?" Right? Same conference. We got the same conference yesterday, same question. So over the last four weeks, the investor questions have shifted from that, right? But it's also interesting because the number one question we've gotten over the last couple of weeks is: Is the consumer weakening? Mm-hmm. Right? So we've got a weakening consumer still, potentially, but why aren't you going buying more brands, right? And so, from a company perspective, what we've done is I've always mentored, coached, and dealt with about six brands across our health and wellness space at any given time. If these were all the investors, and these were only my investors, and everybody in this room raised their hand and said, "Go buy a brand," I could have it done in 21 to 30 days, right? Because I've been having 18-month-long conversations with these people. So I've been dating for 18 months. It's been great. I could get engaged tomorrow and married in four weeks, right? So we have that ability because we've kept all those conversations going. And the way I've looked at it, given kind of where the investor questions were a year ago versus today, is, let me continue to interact with those people, continue to give them the Xpo playbook. So in essence, I am controlling the business to some degree, but I'm not. I don't own it, right? But at the point at which I want to own it, I can go own it, and I've already been kind of stewarding it. It's not like I talked to somebody 18 months ago, and now I go, I was like, "Hey, remember me?" It's like, we, we talk multiple times a month via text message, email, and I'm hooking them up with, you know, banks that provide funding. I'm hooking them up with leasing equipment people. I'm hooking them up with CRMs or point of sale. I'm doing all of that. The same stuff I would do to transition a brand into our family, I'm doing that work today, and then it allows me to see how is the interaction, and how does what I change affect the business? What is it like pre- and post-COVID, right? So when I do acquire it, I'm technically acquiring with less risk... Mm-hmm. Because I've got more knowledge. Wonderful, and very, very interesting. We're excited to see what happens. And yes, Wall Street is hard to please sometimes. Yes! We appreciate your... I'm learning. I'm I'm learning. I'd like to touch on the TAM and really your target market. I think last week you did talk about how your TAM is actually growing. Right. You look at it from more of a, I think, a bottom-up approach versus top-down. Can you talk about how you're kind of building your TAM, and how you're thinking about it, and why is that TAM growing? Just in the past couple of years... Yeah It's grown for several of your brands. Discuss some of how you're getting to that level, and what kind of opportunity you see for your more mature brands. Yeah, we're very conservative and very scientific in our TAM. You know, others in the industry, you know, look at the, you know, population of Australia and say: You know, I've got this many stores and this many pop, and then I come to the US, and I just solve for X by population, and all of a sudden I have, you know, 7,000 stores per brand. I have 10 brands, I can do 70,000, right? Like, we actually take our entire membership database. We use a company called Buxton, B-U-X-T-O-N. We Experian Buxton, Experian credit checks all of our members, as scary as that sounds. And we drive real information about our consumer and our core customer. We then use that core customer to go out and say, "Given we wanna have this certain AUV," which at the time it was $500,000 AUV for Club Pilates, and I'm giving a 2-mile protective radius. Where are all these densities with these exact core customers that are already coming to my stores, and generating territory that way? And at that point, it was about 900 plus on TAM, on Club Pilates. This is back eight years ago, you know, six years ago, right? And so we looked at that and said, "Okay, those are the 900 units we're gonna go sell." So we're not... You know, when a franchisee calls us and says: "Hey, I wanna open in Miami." They don't get to open wherever they want. Cool, you wanna open in Miami? Here are the polygons in Miami. This is the box you get to choose from. Then they go open inside that box, right? So we had about 900. We opened 900, right? So we know where they are. Population shape shifts a bit, consumer shape shifts a bit. Pilates has gotten bigger. In 2015, people used to come in, they thought they were rowers, because they didn't know what Pilates reformers were. That doesn't happen now. So Pilates has grown. We've grown 900 stores that never existed before, so it shape-shifts some of the TAM. So we rerun it again, and we just reran it just now, and came back with another 300 units, right? And this is mathematically where these 300 units are gonna go. Because, by the way, when I bought Club Pilates, it was doing a $250K AUV. We designed the business to be at $500, because I said: I want to increase AUV by 100%, so I want to go in markets that'll drive $500. Today, we're driving almost $900K AUV. So we went back in the market and said, "Okay, we obviously didn't need as much density as we took in these circles, right?" And so we're able to free up, you know, a couple hundred extra units, 200-300 extra units, and we are now, literally today, I met in Nashville yesterday with one of our big Club Pilates franchisees, where, hey, you have, you know, a particular individual has 70 open units, 30 more opening over the next 15 months. But we've now freed up additional territory for him to be able to expand in his current geography. So he is very excited about that, right? Because the hardest thing is that we basically sold the TAM out, right? Yeah. We're very conservative about that because we wanna see comps, right? Positive comps. Like I said, they were low single or mid, high single digits, 8% to 9%, now mid kind of teens to higher teens that we've seen. So we're comping well, AUV is growing. It's okay to go and get some additional TAM. You know, we don't wanna put out... We could sell. I could go sell 5,000 Club Pilates units, but then as they get open, AUV would go from 900 to 500, right? Mm-hmm. We do it very scientifically on the way in, and then we make sure we take a pragmatic approach at opening the stores properly. Great. And earlier, we discussed a little bit about the B2B partnerships, and you talk a lot about, like, negative CAC... Mm-hmm A nd the good margin that you get from that. Can you talk a little bit about what kind of membership leads these partnerships have generated for the brand, and where you see that going over the next several years? And you have announced... You know, you've built up your level of partnerships, and you continue to expand those. So where do you see that going? Yeah. So there's no shortage of brand partnerships. I started that we call it a department, but I started that during COVID because, you know, we needed to find ways to generate cash to keep, we left 100% of our employees out making 100% of their money. So John was like: "Well, if you want to make payroll, you're gonna need to generate money." And so I went back to these B2B partnerships and basically said: Hey, you're our credit card processor, and you're a credit card processor because when I started 20 years ago, you were nobody, and I was nobody, and so we were nobody together, and now we've both grown up. But at this point, if you think about it, this year, we'll process almost $1.4 billion of system-wide sales through the credit card processor, because we were the only two people in the room when it got created, kind of thing. And so went back and said: We want you to stay as a partner, but you're gonna need to give us millions of dollars and 1% of the credit card swipe, right? So there'll be about $14 million of credit card rebates that we get from the credit card processor, that are 100% margin, goes straight to the bottom line. And so that was where it started. I thought it was a novel idea until I went to a Chargers football game, and I saw that Gatorade, the official drink of the Bolts, and this and that, whatever. I'm like: Cute idea for you, but obviously everybody else has been doing this on planet Earth. You're just kind of doing it in your business. So with that, I actually hired the guy who was in charge of B2B partnerships for the Chargers, and he'd been there for over 10 years, Steve, and I brought him in. So I said, "This is, this is what they do for a living. This is what we want." So he's got a whiteboard, you know, the size of a wall, with all the B2B partnerships. So we're being very selective about which ones that we wanna do. We just did Gympass last week, which is our biggest one. You know, we did a deal with ClassPass during COVID. I can't give out the number, but the, you know, the Gympass one is 150% more than we charged ClassPass, and we did it on a non-exclusive basis, right? So we didn't pin ourselves into exclusivity with the aggregator, and we got 150% more money. It's the biggest deal we've ever done, right? Mm-hmm. And so these B2B deals are continuing, and they're getting bigger. But something like you talked about, a lead flow, like a Princess Cruises, somebody goes and, you know, our products in the 23,000 staterooms on the TV. We actually have brick-and-mortar stores on the cruise, and when they leave, we have their name, address, and phone number. We deliver that to the franchisee and say, "Hey, John just did five yoga classes while he was in the Caribbean, and Yoga Six is 0.5 miles from his house. You should probably invite John to come in and continue his yoga journey inside your studio," right? And so we have marketing that goes out to, you know, the cruiser and then goes out to the franchisee. So I call it negative CAC because that Lululemon Mirror, things like that, we're delivering a lot of brand awareness, while all these brands pay us a lot of money to take their lead flow and bring it in internally. Awesome. That puts us right at time. Thank you, Anthony and John, for being here today and sharing more about Expo, and we're looking forward to see where it goes from here.