Good day, and welcome to the Xponential Fitness, Inc. third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Avery Wannemacher, senior associate, Edelman Investor Relations. Please go ahead. Thank you, operator. Good afternoon, and thank you all for joining our conference call to discuss Xponential Fitness third quarter 2023 financial results. I am joined by Anthony Geisler, Chief Executive Officer, Sarah Luna, President, and John Meloun, Chief Financial Officer. A recording of this call will be posted on the Investors section of our website at investor.xponential.com. We remind you that during this conference call, we will make certain forward-looking statements, including discussions of our business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update the information provided on today's call. In addition, we will be discussing certain non-GAAP financial measures in this conference call. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release that was issued earlier today prior to this call. Please note that all numbers reported in today's prepared remarks refer to global figures unless otherwise noted. I will now turn the call over to Anthony Geisler, Chief Executive Officer of Xponential Fitness. Thank you, Avery, and thanks to everyone for joining our third quarter earnings conference call. As the leading global boutique fitness franchisor, Xponential again produced strong results this quarter as we continue to operate our business efficiently while providing our end customers with the workouts they find vital to their routine. We are encouraged by the strength of our consumer, and our KPIs are continuing to show consistent and healthy growth. At the end of the third quarter, Xponential franchisees operated nearly 3,000 studios globally, with over 6,000 licenses sold across our 10 brands. Momentum has continued into the fourth quarter. Xponential has made international growth a priority, and our efforts have continued to bear fruit in the form of new master franchise agreements. Our existing Kuwait master franchise partner has recently signed a new master franchise agreement to develop Club Pilates, Rumble, StretchLab, and AKT in Qatar. We now have franchise, master franchise, and international expansion agreements in 23 countries around the globe. We will discuss our international strategy in more detail shortly. Our membership and visitation trends continue to demonstrate the strength and resiliency of our membership base. During the third quarter, total members across North America grew 26% year-over-year to a total of 726,000, with 92% of these customers continuing to be actively paying members. Consumers also continue to flock to the overall boutique fitness industry. According to IHRSA's 2023 report, boutique fitness now accounts for 42% of all gym memberships today, with estimated growth of 17% by 2025. As the largest player in the boutique fitness market, we are confident our brands are well-positioned to capture a large share of this growth. Additionally, current adoption of weight loss drugs, such as Ozempic, have shown early tailwinds for our business model, with Morgan Stanley analysts recently citing a survey that showed people's greater propensity to get active after beginning injections. Our visitation rates remain strong, with North American studio visits for the third quarter up 30% year over year to a total of $13.1 million. This drove North American system-wide sales to $357 million during the period, an increase of 35% over the third quarter of 2022. Q3 North American run rate average unit volumes of 564,000 increased 15% from 489,000 in Q3 of 2022. While the third quarter typically sees a slight sequential slowing of growth impact due to seasonality related to summer vacations and travel, we still delivered our thirteenth straight quarter of AUV growth. In addition, September and October AUVs of 570,000 and 576,000, respectively, provided momentum heading into Q4, which tends to be our best performing quarter from an AUV perspective. We are seeing encouraging early trends thus far in the fourth quarter, with same-store sales up again 15% in October and visitation rates up 29% year-over-year and approximately 5% compared to September. Third quarter North American same-store sales growth of 15% were consistently strong with the previous quarter and remained well above our long-term targeted levels. Studios over three years old also saw remarkable growth, with same-store sales increasing by 15% during the quarter, further demonstrating the resilience of boutique fitness consumers and the healthy growth profile of our more mature studios. Turning to revenue. For the quarter, net revenue totaled $80.4 million, an increase of 26% year over year. As John will discuss in a moment, these better-than-expected results and our visibility to Q4 drove us to increase our revenue guidance for 2023. Adjusted EBITDA totaled $26.5 million in Q3, or 33% of revenue, up 33% from $20 million, or 31% of revenue in the prior year period. I will now turn to our strategic growth drivers. I'll discuss the first three and then turn the call over to Sarah to discuss the fourth. Beginning with the increase of our franchise studio base, we ended Q3 with 2,980 global open studios, opening 127 new studios in the third quarter, comprised of 100 in North America and 27 international. As presented in our Analyst and Investor Day in September, our pipeline of future openings is predictable based on visibility into lease signings. As of September, we have 442 leases and LOIs signed for studios not yet open. In Q3 alone, franchisees signed 123 leases in North America, which adds to our evergreen backlog of studio openings. As a reminder, in the fourth quarter, we consistently produce a high volume of new studio openings as franchisees want to take advantage of growing their membership bases as consumers set New Year's health resolutions, and this year will be no different. We sold 216 licenses globally during the quarter. Our increasing pipeline includes over 2,000 licenses sold and contractually obligated to open on a global basis, plus an additional over 1,000 master franchise agreement obligations, giving us clear visibility on openings over the next several years. Turning to our second growth driver, international expansion. Considering the continued importance of international as a key growth driver, we created the new position of President of International. We're excited to announce the addition of Bob Kaufman, who will be our first President of International. Bob has over 25 years of experience leading global franchising for franchisors across 50 countries. He has held various roles, including Senior Vice President of Business Development and International Franchising at Tower Records, Vice President of Global Franchise Development and Operations for the Coffee Bean & Tea Leaf, and most recently, Senior Vice President of Franchise Operations at Mathnasium, a brick-and-mortar education franchise system with over 1,100 locations across 10 countries, which was acquired by Roark Capital Group in 2021. Bob is a true industry veteran with a long-standing history of international franchising success, and we're thrilled to have him lead our already impressive international team of individuals who have joined us from Oranget heory, Anytime Fitness, and the International Health, Racquet and Sports Club Association, or IHRSA, among other companies. As of quarter end, we have over 1,000 studios obligated to open under master franchise agreements, and we continue expanding into new markets. In addition to the new master franchise agreement recently signed in Qatar for our AKT, Club Pilates, Rumble, and StretchLab brands, we have also expanded further into Asia and Europe with new multi-unit franchise agreements for BFT in Hong Kong, Malaysia, Scotland, and Spain. We look forward to signing more deals around the globe and expanding our presence. Growth in our international business comes with nearly 100% EBITDA margins as we deploy an asset-light model and receive a percentage of revenue share with minimal corresponding SG&A. Importantly, there remains ample white space to continue growing our presence around the globe. Our third key growth driver is to expand margins and drive free cash flow conversion. Adjusted EBITDA margins increased to 33% during the third quarter and will improve further as we continue to grow our higher-margin revenue stream and ultimately decrease our selling, general, and administrative expenses. As discussed during our Analyst and Investor Day presentation, in the third quarter, the company has continued the process of refranchising our portfolio of company-owned transition studios with the goal of getting to zero studios operating in a net loss position by year-end. We have made solid progress, and as of the end of the third quarter, we have reduced the number of company-owned transition studios to 22 transitional studios, as well as nine LA Fitness locations that we intend to operate as we prove out that business model. Executing this strategy of either refranchising or closing our existing company-owned transition studios, and if not taking on any new company-owned transition studios, will lead to higher operating leverage in EBITDA margins. During Q3, we've had 39 overall studio closures, including 24 units in North America, of which 11 were franchised, and 15 units internationally. Taking this into account, the closure rate over the last six years to date would represent a nominal annual percentage per year. I'd now like to briefly provide an update around our M&A strategy. As discussed at Analyst Day, we're continuously evaluating targets. We've been pleased with what we have been seeing. Any transactions we pursue would be funded from cash available on our balance sheet. We continue to be focused on smaller targets with significant growth, potential, and white space. In summary, we are pleased with another strong quarter and the continued momentum we are seeing in Q4. With that, I'll pass the call on to Sarah. Thank you, Anthony. Despite an increase in interest rates, restart in student loan repayments, and various geopolitical events, visitation rates in the third quarter grew 30% year-over-year, and our North America actively paying membership base grew to over 667,000 members. Our studios continue to play an integral role in our members' lifestyles, and we have not seen an increase in frozen memberships or monthly churn. The Xponential team generated strong in-studio performance in the third quarter on the back of an expanded ecosystem of B2B partnerships... as well as further refinements to our X PASS and X PLS services. We continue to enhance our omni-channel fitness offerings to allow our members to access our classes and content in the format and location that works best for them. Xponential's omni-channel boutique offerings help drive customer engagement and lead flow, which ultimately result in higher Same-Store Sales, System-Wide Sales, and AUVs. We are also increasingly focused on maximizing organic forms of customer acquisition and interactions that serve as a complement to our paid marketing strategy. Enhanced organic growth initiatives will drive greater brand awareness and lead generation, and by way of example, we have over 20 retail partners, including Lululemon, Nomadic, Pura Vida, and Alo Yoga, that service our franchise studios by offering wholesale merchandise. Through these retail partnerships, we receive some exclusive perks, build brand awareness, generate revenue, and maximize the franchise studio's footprint by driving ancillary revenue. This operation is a stable part of our business and allows our customers to engage with us in a different way than they do when attending class. With that, let's now discuss a few of our most recent initiatives. Our newly announced loyalty program, Class Points, which is embedded in our mobile app, will help to gamify our members' experience and, most importantly, drive wellness and retention. Members can earn points by attending classes and engaging in various positive behaviors in the studio. The points earned correlate to their loyalty status, giving the member various benefits across the Xponential ecosystem. We engaged IBM to help us design this loyalty program, and they've recently concluded phase one of their analysis and recommendation. To date, we are on track to deploy early next year. Xponential Plus is an important part of our omni-channel strategy. Through X PLUS, members can access digital classes at all 10 of our brands from the comfort of their own home and as a supplement to in-person classes at our studios. After working closely with Meta for nearly a year to develop a leading-edge mixed reality fitness experience, Xponential+ launched on Meta Quest. Through augmented reality, users will be able to take digital versions of Xponential classes with a level of realism that was not previously possible, and this app will help to introduce new audiences to Xponential's brands and drive new members to our studios. Initially, the Xponential+ app will have virtual content from Club Pilates, StretchLab, and Pure Barre. In the coming months, we will launch additional brands. Our recently announced Gympass partnership is an exciting new relationship through which Gympass subscribers will have access to Xponential brands. Xponential will gain access to Gympass' more than 2 million subscribers and over 15,000 corporate customers. Through this partnership, Gympass members will be able to book into classes with excess inventory. Xponential benefits by offering spots in pre-existing classes to a new base of potential members, while driving incremental studio revenue and filling classes to maximize capacity. Our studios have been onboarded to the Gympass platform, and the launch to consumers will take place in the fourth quarter. Our partnership with Princess Cruises also continues to progress, with Pure Barre, YogaSix, StretchLab, Club Pilates, and CycleBar now launched across the entire Princess fleet, and the remaining brands plan to launch in 2024. We successfully concluded our first branded cruise in September, a seven day Alaskan retreat featuring Club Pilates-themed workouts throughout the cruise, as well as destination Pilates experiences. Our franchise partners enjoy high margins from B2B revenue sources. In the fourth quarter of 2023, we will further build out our network of B2B partnerships and enhance X PASS and X PLUS to drive organic growth via referrals and increase customer retention. As a portfolio of brands, we will continue to leverage our scale, omni-channel offerings, and partnerships to drive new customer acquisition. Xponential's new relationship with VaynerMedia will also help to further accelerate our marketing efforts and better utilize our marketing spend. Our key performance indicators continue to validate that our approach to organic growth is working. Lastly, as we close out 2023, we are excited to host our franchisees and business partners at our annual XPO Convention being held in early December in Las Vegas. Over 1,300 participants have already RSVP'd. The convention is a great way for Xponential franchisees to get together, discuss our growth strategies, share best practices, and learn more about our brands. We look forward to seeing our franchisees and vendor partners there and are appreciative of those who sponsor the event. Thank you again for your time. I'll now turn the call over to John to discuss our third quarter results and 2023 outlook. Thanks, Sarah, and thank you to everyone for joining the call. Beginning with our third quarter results, North America system-wide sales of $356.7 million were up 35% year over year, even considering headwinds related to our strategic decisions to refranchise and/or close transition studios during the quarter. The growth in North American system-wide sales was driven primarily by the 15% same-store sales within our existing base of open studios that continue to acquire new members, coupled with 127 gross new studio openings. Further, 95% of the growth came from volume or new members, which has remained consistent with historical performance, and 5% coming from price. On a consolidated basis, revenue for the quarter was $80.4 million, up 26% year over year. 78% of the revenue for the quarter was recurring, which we have consistently defined to include all revenue streams except for franchise license sales and equipment revenues, given these materially occur upfront before a studio opens. All five of the components that make up our revenue grew during the quarter. Franchise revenue was $36.4 million, up 21% year-over-year. This growth was primarily driven by an increase in royalty revenue, as member visits and system-wide sales reached all-time highs. In addition, we saw higher monthly tech fees and increased instructor training revenues that will continue to increase as we open more studios domestically. Equipment revenue was $12.6 million, up 7% year-over-year. This increase in equipment revenue is the result of higher volumes of global installations, in addition to a higher mix of equipment-intensive brands like BFT and Rumble. Merchandise revenue was $8.5 million, up 35% year-over-year. The increase during the quarter was primarily driven by a higher number of operating studios and inventory purchases by existing studios to address the demand for retail, as consumer foot traffic has grown compared to the prior year. Franchise marketing fund revenue of $6.9 million was up 34% year-over-year, primarily due to continued growth in system-wide sales from a higher number of open studios in North America. Lastly, other service revenue, which includes rebates from processing studio system-wide sales, B2B partnerships, X PASS, and X PLUS, amongst other items, was $16 million, up 52% from the prior year period. The increase in the period was primarily due to increased revenues from sales generated in our company-owned transition studios, increased rebates from the processing of studio-level system-wide sales, and higher revenues from our B2B partnerships. As a reminder, as we decrease the number of company-owned transition studios, the revenue generated from them will decrease in this revenue line. Turning to our operating expenses, cost of product revenue were $12.7 million, up 7% year over year. The increase was primarily driven by a higher volume of equipment installations for new studio openings and a higher mix of equipment-intensive brands in the period. Cost of franchise and service revenue were $3.6 billion, down 26% year over year. The decrease was driven by lower costs to advertise franchise license commissions in the period. Selling, general, and administrative expenses of $48.6 million were up 48% year-over-year. The increase in SG&A was primarily the result of higher operating costs in the period associated with company-owned transition studios and restructuring costs for studios where we have ceased operations. As previously discussed, we are shifting our transition studio strategy, which we anticipate over time will decrease SG&A expenses and improve EBITDA margins. The largest liability we are working through is our commercial leases. We anticipate the restructuring will continue in the fourth quarter and in 2024, and will be finalized once we have settled any outstanding leases with landlords. The investments we are making to streamline operations to a franchise-only model will optimize forward-looking SG&A expenses, resulting in increased margin levels. In 2023, net operating losses associated with transition studios were expected to be approximately $10 million, which we expect to go away in 2024. Depreciation and amortization expenses was $4.2 million, an increase of 1% from the prior year period. Marketing fund expenses were $5.8 million, up 37% year-over-year, driven by increased spend because of higher franchise marketing fund revenue. As a reminder, each of our franchise locations contributes 2% of sales to our marketing fund. Therefore, as the number of studios and system-wide sales grow, our marketing fund increases. Since we are obligated to spend marketing fund, an increase in marketing fund revenue will always translate into an increase in marketing fund expenses over time. Acquisition and transaction expenses were a credit of $1.9 million versus an expense of $16.3 million in the third quarter of 2022. As I have noted on prior earnings calls, the contingent consideration is related to the Rumble acquisition earn-out and is driven by the share price at quarter end. We mark to market the earn-out each quarter and accrue for the earn-out. We recorded a net loss of $5.2 million in the third quarter, compared to a net loss of $13.1 million in the prior year period. The lower net loss was the result of an $18.2 million decrease in non-cash contingent consideration, primarily related to the Rumble acquisition, and $0.7 million decrease in non-cash equity-based compensation expense, offset by $3.4 million of lower overall profitability, a $6.7 million increase in restructuring costs from our company-owned transition studios, and $0.9 million increase in write-down of brand assets. We continue to believe that adjusted net income is a more useful way to measure the performance of our business. A reconciliation of net income to adjusted net income is provided in our earnings press release. Adjusted net income for the third quarter was $6 billion, which excludes the $1.9 million gain in fair value of non-cash contingent consideration, a $1.8 million liability increase related to the third quarter remeasurement of the company's tax receivable agreement-... the $4.6 million write-down of goodwill and brand assets, and the $6.7 million restructuring charge. This results in adjusted net earnings of $0.09 per basic share on a share count of 32.3 million shares of Class A common stock, after accounting for income attributable to non-controlling interests and dividends on preferred shares. Adjusted EBITDA was $26.5 million in the third quarter, up 33% compared to $20 million in the prior year period. Adjusted EBITDA margin grew to 33% in the third quarter, compared to 31% in the prior year period. As a reminder, our 2023 outlook anticipates adjusted EBITDA margins reaching the 35%-39% range by year-end, and we expect margins to grow to over 40% in 2024. Turning to the balance sheet. As of September 30th, 2023, cash, cash equivalents, and restricted cash were $51.9 million, up from $30.9 million as of September 30th, 2022. Total long-term debt was $329.7 million as of September 30th, 2023, compared to $136.5 million as of September 30th, 2022. The increase in total long-term debt is primarily due to the repurchase of 85,340 shares of convertible preferred stock at a price of $22.07 per share, announced in January. These shares, prior to the repurchase, would have been convertible into $5.9 million shares of Class A common stock. Also, during the quarter, our board of directors approved a $50 million stock repurchase program to repurchase shares of the company's Class A common stock. This was completed at an average price of $19.24, and $2.6 billion common A shares were repurchased. As mentioned on previous earnings calls, the company remains focused on optimizing our capital structure by lowering our cost of borrowing. While we are continuing to work through a possible fixed-rate whole business securitization, we are in parallel pursuing other financing alternatives, given the current high-rate environment. Now turning to our outlook. Based on current business conditions, we are raising our full year 2023 guidance for revenue and tightening the top-end ranges for new studio openings, system-wide sales, and Adjusted EBITDA as follows: We expect 2023 global new studio openings in the range of 550-560, up from the previous 540-560, and representing a 9% increase at the midpoint over 2022. We expect North America System-Wide Sales to range from $1.39 billion-$1.395 billion, up from the previous $1.385 billion-$1.395 billion, and representing a 35% increase at the midpoint from the prior year. Total 2023 revenue is expected to be between $305 million-$310 million, up from the previous $295 million-$305 million, and representing a 26% year-over-year increase at the midpoint from the prior year. Adjusted EBITDA is expected to range from $104.5 million-$106.5 million, up from the previous $102.5 million-$106.5 million, and representing a 42% year-over-year increase at the midpoint from the prior year. This range translates into roughly 34.3% adjusted EBITDA margin at the midpoint. I would also like to call out, consistent with prior year fourth quarters, we do anticipate elevated SG&A expenses in Q4 2023, because of our annual franchise convention. Our annual franchise convention is anticipated to add roughly $5 million in SG&A expenses, noting that we do have approximately $3.5 million in sponsorship revenue expected in our other revenue line, which will partially offset this expense down to approximately $1.5 million. In terms of capital expenditures, we anticipate approximately $10 million-$12 million for the year, or approximately 4% of revenue at the midpoint. Going forward, capital expenditures will be primarily focused on new digital platform features across our portfolio, XPASS and XPlus new features, and maintenance on other technology investments to support our digital offerings. For the full year, our tax rate is expected to be mid- to high-single digits. Share count for purposes of earnings per share calculation to be 31.7 million and $1.9 million in quarterly dividends to be paid related to our convertible preferred stock. A full explanation of our share count, calculation and associated pro forma EPS and adjusted EPS calculations can be found in the table at the back of our earnings press release, as well as our corporate structure and capitalization FAQ on our investor website. Thank you for your time and for your support of Xponential. We will now open the call for any questions. Operator? We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Randy Konik with Jefferies. Please go ahead. Hey, guys. Good afternoon, and thanks for taking my question, questions. I guess my first one, I just want to get some perspective of how we should be thinking about opening mix by banner and geography as we go into the balance of the year and then beyond. Just give us some perspective how things will be changing from the mix perspective. Thanks. Yeah. Thanks, Randy. I'll take that one. So in the third quarter, we opened up 127 new studios. Kind of the breakdown of banner in the quarter was 41 in Club Pilates, StretchLab had 36, BFT had 17, Rumble was 11, YogaSix had 10, and all the other brands made up the balance of the 12. As you kind of look into Q4 and into 2024, Q4 will look much like Q3 as far as the mix of studios. But as you get into 2024, you know, as we guided the street in our Investor Day presentation, you know, we still are holding that 500-600 studios a year. you know, probably 2024 will be mid-500s to high 600s or to, to high, closer to 600, with BFT and Rumble making up about 25% of those openings. Club Pilates will still be holding at about a third of the total openings next year. StretchLab, 25%, and then the balance of the brands will make up the other 17%. That's really helpful. Go ahead. From a domestic and international perspective, you could probably assume the 80-20 rule will still apply, with 80% on the domestic side, about 20% international. Gotcha. Super helpful. And then I guess my last question would be, you know, how are we thinking about just how the Q3 cohorts, cohort kind of performed relative to, you know, how you've seen other cohorts perform in the past? Yeah, we've continued to monitor that. We've seen strength in the 2023 cohort. When you look at Q1, Q2, Q3 on a simple average, the brands are performing at about—actually over $550,000 AUV for their respective months. So the studios that opened up in, you know, in the third quarter, they're doing about $360,000, given that they're only three months old. But then as you get to the studios that opened up in Q2 that have gotten to six months, and the studios that opened up in Q1 that are now at nine months, you know, they're at 500 or five high—excuse me, 550. So you're seeing, on average, a simple average, as they mature, they're getting well into that $550K, which is the designed AUV level. Pointing out Pure Barre as a brand that's done exceptionally well. We're seeing those brands, Pure Barre, doing really well as far as coming out of the gate, where it's opening up, you know, at a $500K AUV, on a simple average across the board. So Pure Barre is doing really well. Obviously, Club Pilates has been really strong as we've entered 2023. You know, across the board, most of the studios that are opening, BFT, Rumble, you're seeing, you know, that $500,000 rough kind of starting point, you know, as designed. So, you know, we expect as these studios continue to mature, that we'll see AUVs continue to climb, especially in these younger, growth brands, and then obviously in the scaled brands as we continue to open up more. Super helpful. Thanks, guys. The next question comes from John Heinbockel with Guggenheim. Please go ahead. Hey, guys. This is William Marquez on for John Heinbockel. Yeah, if you could give us some color on maybe trends in member frequency throughout the quarter, on visitation and, maybe potential pricing power by cohort, you know, just based on the strong engagement that you guys are, you know, reporting here for some of the more recent openings. And then I have a quick follow-up after that. Thank you. Yeah, I mean, when you look at the visitation in Q3, it's the highest it's been ever in the company's history, with over 13 million visits, you know, in the quarter. You know, as far as pricing is concerned and by cohorts, you know, you could see in the Same-Store Sales, we did 15% for all studios over 13 months, and then 15% for all studios over 36 months. It's been very consistent, with price being only about 5% of the growth in System-Wide Sales, with 95% more on volume, so new members being added. You know, you got to remember, as we sign up members, they establish their price, their membership price, and it's locked in. The only way it would go up is if they went ahead and canceled and rejoined, because we are always taking price as utilization in the studio increases. So 5% was price across all the cohorts, is a simple way to look at it. Awesome. Thank you. That's very helpful. And just a little bit more, and I think you guys mentioned discussing alternative financing alternatives, the Whole Business Securitization. You know, what's that process looking like? And if you give us a ballpark on, you know, the kind of rates, the rates that you're seeing there. Thank you. Yeah. So we've been working with a bank on a Whole Business Securitization. We've also been looking at alternatives. Right now, we're seeing about mid- to high-single-digit percentage rates on a Whole Business Securitization. As far as the process, you know, the goal is obviously to get that taken care of or refinanced, get our term loan refinanced as soon as possible, given the rising interest rates on our term loan. Today, we're sitting right around 12%. I think we're in a good position to, you know, get something done by the end of the year. Awesome. Thank you very much. The next question comes from Ryan Meyers with Lake Street Capital Markets, excuse me. Please go ahead. Hey, guys. Thanks for taking my question. First one for me, if you think about that 40% Adjusted EBITDA margin in 2024, you know, how much of that is just gaining overall leverage versus how much of that, coming from the right sizing of the company-owned stores? Yeah, the key to kind of getting an instant bump in our leverage or our Adjusted EBITDA margin is the transition studios, you know, ramping those down to zero or ultimately none with any operating losses. So we will carry a handful of studios into 2024, particularly like the LA Fitness studios. We do have a handful of Rumble signature studios that we're operating. You know, we do eventually plan on selling those, so we do have a couple interested buyers that we're looking at. But the majority of the Adjusted EBITDA pop that you'll see in 2024 will instantly be kind of realized by getting those studios, you know, down to zero. You know, from that perspective, when you look at SG&A, you know, next year, you know, we should be around 30% SG&A as a percent of revenue, excluding stock-based comp. So, you know, a considerable, you know, kind of decrease in SG&A spend, in 2024. Okay, got it. That's helpful. Yeah. And then you guys called out membership churn, basically being unchanged. Can you just remind us what that is? And then if there's any difference between the scaled and growth brands as far as membership churn goes? Yeah. Across all the brands, it's in the low single digits, so it's in the, you know, kind of 1%-3%, given the, the month. You know, typically in the scaled brands, there's pretty low churn, when you look at it. We do look at it as of members that stick around after 12 months. You do get some volatility under 12 months as people, whether it's New Year's resolution or people getting ready for vacation or weddings or whatever it may be, where they're trying to, I guess, get fitter for, you know, kind of a quick, fix kind of mentality. But at the end of the day, the churn is pretty low, at the scaled brands, and, you know, you do see some volatility, in less than 12 months. You know, across the brands, we've never really disclosed volatility or, you know, churn, brand by brand, but it has been remained pretty consistent, you know, since these brands have been operating. All right. Great. Thanks for taking my questions. The next question comes from Warren Cheng with Evercore ISI. Please go ahead. Hey, good evening, guys. The first question is for John. It's actually just a follow-up on the last question. Would you be able to quantify for us the amount of SG&A those transition studios are gonna carry for this year? And, given that that's gonna be a tailwind next year on the SG&A line, would flat SG&A dollar growth be in the realm of possibility for next year? Yeah. The way you should think about—I'll talk, I'll answer the question on SG&A for next year. You know, SG&A next year is, like I said, it's probably gonna be around the 30% of revenue, excluding stock-based comp. There is opportunity as we continue to kind of optimize our SG&A as we scale into 2024, 2025, 2026, where I do feel it'll remain relatively flat. You know, maybe it's a 3%-5% increase a year in the outer years as we grow and add headcount, and just like we did this year with international, adding presidents, to really make sure we have the right resources focused on the business. You know, this year, when you look at SG&A, you know, you're probably talking probably around $40 million of SG&A would come out, related to the company-owned studios. You know, you got to remember, we did, in this quarter, take a restructuring charge of the lease liability, so that would be included in that number. But next year, you could probably think of the SG&A, you know, in 2024, you know, a sub-$100 million number, excluding stock-based comp. Thanks, John. And Anthony, I'm curious if you've given any thought on the topic of GLP-1s, given it's pretty transformative on weight and it's increasingly having an effect on fitness activity too. So have you seen any impact on your business, and is there any sort of strategy to engage the GLP-1 population as it continues to grow pretty quickly here? Yeah, absolutely. You know, I'm not sure if you saw the Morgan Stanley study that was done. But you know, pretty great tailwinds that we have, you know, kind of coming out of that. Obviously, hard to quantify. We're not, you know, we're not doing survey work as people sign up and asking them, you know, what they're on or, or what they're doing. But you know, we're, we're definitely leaning into that, and we understand that, you know, that we're getting unique users from that, so. Great. Thanks, guys. Good luck. The next question comes from Megan Alexander of Morgan Stanley. Please go ahead. Good timing there, I suppose. Maybe I could just ask a little bit, you know, more near term, but, you know, the EBITDA flow-through on the full-year guide, was it a touch muted relative to the revenue? And is there anything in particular to call out there? You mentioned transition studios, franchise convention. You know, is there anything related to timing going on with that, with either of those relative to your expectations? Yeah. In Q3, you know, we had planned, you know, in the kind of the Q3 forecast cycle, to have ramped down some of the transition studios a little bit faster than we have. You know, our end goal is to get as many of those studios into the hands of qualified operators, and it did take a little bit longer to do in Q3 than, I guess, the kind of the ramp down schedule that we had mapped in. So it did have a slightly, you know, muting impact, I guess, as you called it, in Q3 and into Q4. But, you know, overall, you know, our goal is to get those studios refranchised. We do, as I mentioned earlier on the call, you know, as we do get those done and the faster we do it, the more we'll see the margin expansion, you know, continue to play out. So in the fourth quarter, you know, we're trying to be as aggressive as possible in getting those refranchised back out. You know, we do see line of sight to a 35%-39% adjusted EBITDA margin fourth quarter. However, you know, at the end of the day, my goal is obviously to drive as much adjusted EBITDA dollars to the bottom line as possible. So from our perspective, you know, if we, you know, come in slightly under 35%, but deliver more dollars, then great. But, you know, as it stands right now, we think the full year at 106.5% and looking at the fourth quarter being right around that, you know, mid- to high 35% range Adjusted EBITDA margin is very doable, as we continue to execute and get those studios refranchised. Okay, that's helpful. And, you know, I understand you don't want to provide detail for each brand, but maybe you could just help us in the context of the 15% comp. You know, were there any outliers to the up or downside? And maybe, you know, give an update on how some of the brands that maybe have been lagging, like CycleBar, are performing. Yeah, absolutely. So when you look CycleBar in particular, when you look at, you know, same-store sales, and these are all domestic numbers, you know, CycleBar had a 7% same-store sales in the third quarter, so it was not a, you know, again, it was a good quarter, a positive quarter for CycleBar. Some standout brands that may not, you know, be so surprising as you know, Club Pilates did 20%, which was really strong. Pure Barre, again, continues to be really, you know, really strong performer, but being the number of studios, they had 15%. You know, YogaSix was 11%, you know, you know, Rumble and some of our startup brands, 15%. So across the board, you're seeing really good performance in the brands that have, you know, a lot of studios open or a good quality number of studios open. You know, and again, as I talked about cohorts, you know, when you look at the studios we opened in Q3, they're already at $360,000 AUV at month three. You know, the Q2 is at, you know, 559 by... Excuse me, 581 by month six, and then you're getting to the Q1s, you know, they're at 553 by month nine. So you're really seeing really good, strong openings, and sales curves on all these brands, you know, as we've opened them in 2023. I think it really is attributed to just, you know, the overall consumer, where they're directing their spend. I think when it comes to some of the macro issues that people are reading in the headlines, it just hasn't shown up in our numbers or our KPIs as a place where, you know, people are looking to cut. You know, we're actually seeing more members show up, and the studios that were open are performing very well and again, showing really strong comps, so. Awesome. Thank you very much. The next question comes from Jeff Van Sinderen with B. Riley. Please go ahead. Hi, everyone. Just wanted to see if maybe we can circle back to seasonality for a minute. Just wondering if the monthly visits, the member adds, anything unusual you're experiencing, kind of the monthly progression there, or has it been as usual through November to date? Yeah, I mean, visitation has been very consistent. Yeah, we have you do see in Q2 a slight falloff because people kind of focus on, you know, travel and probably when kids are out of school, there's more of that going on. But as you ramp into kind of Q4, you know, you get to September, October, you see the visitation and utilization start going back up. So there is seasonality in Q3 from a visitation perspective because people are distracted with vacationing. But Q4 is and actually, Q4 and Q1 are particularly strong quarters for us as far as not only sales, but new members and utilization. As we look at October, visits are already up 5% off of, you know, the previous period, so that's, you know, a really good sign. And October is not even our strongest month, it's November. We're really excited about where the quarter's heading as we close out the year. Okay, great. I think you said 216 or so licenses sold. Just wondering if you could share the composition of licenses sold. I know you don't usually break that out, but. Yeah, yeah, yeah, I have that for you. Club Pilates, so of the 216, Club Pilates was 123. Still remains a really strong brand as far as sales. StretchLab, we had 23. BFT was 48. We had seven Rumbles and eight YogaSixes, and the balance of the brands make up the other seven. And of that, 170 were international, domestic, but 46 international. So about an eighty- Okay, great. 46 international. Okay. Thanks very much for taking my questions. Yep. The next question comes from Joe Altobello from Raymond James. Please go ahead. Thanks. Hey, guys. Good afternoon. First question may be for you, Anthony, on M&A. You talked, you know, recently about adding, you know, at least maybe one additional brand this year. Is that still the expectation? And what sort of acquisitions are you looking at at this point? Hey, Joe, thanks for the question. Yeah, no, we are, we are still working on that. You know, I had talked about, you know, a few weeks ago, I talked about saying we'd get something done this year, and I'm still confident in, making that happen. So we've, you know, kind of taken targets down from a wide range down to a narrow range, and then we're, you know, completing off on that narrow range. So we're, still, still the same answer as before, but, we're, we're working through the same stuff. So still the, you know, cash out of, the company. We're not issuing stock, we're not taking on new debt, and we'll be buying something with a lot of growth opportunity, something that we're not currently in the space of, and something in that, you know, 1,500-2,000 sq ft retail box type situation. So can't give you much more color than that without telling you exactly what I'm doing. But those are all the parameters. Understood. Appreciate it. And maybe just a second question. In terms of other service revenue, obviously up pretty significantly, and I think it sounds like a lot of that was attributable to transition studios, but the number of transition studios seemed to come down from Q2 to Q3. So help us understand the dynamics of that. Yeah. Going back to the answer I gave, the—I guess you could say—the slope of the ramp down of those is kind of what drove that. We had expected, you know, it's not a linear slope to the bottom. It is, you know, as fast as we could move. So we did have studios on a little bit longer in the third quarter than we had anticipated. So when you think about other service revenue, there was about, you know, $8 million of revenue in the other service revenue line attributed to the studios. And again, they came down later, so the KPI came off, but the revenue was there longer. As you kind of roll into, you know, Q4, you know, they'll probably be somewhere between what was, you know, we did about $4.4 million in Q1 to $6.2 million in Q2. So I think Q4 will be in that range, as far as, you know, the revenue the studios will generate as we ramp them down. So you will see a decline on that specific portion of the other service revenue. But keep in mind, in the fourth quarter, we have the benefit of the franchisee convention, where we generate sponsorship rebates from our vendors. So that will offset and keep the other service revenue line relatively flat to where we were in Q3. So we are ramping down. You know, we do anticipate getting to, you know, a really low number by the end of the year from an annualized standpoint, but the fourth quarter still will be, you know, probably sitting between where Q1 and Q2 was. Okay. Got it. Thank you. The next question comes from Korinne Wolfmeyer with Piper Sandler. Please go ahead. Hey, good afternoon. Thanks for taking the questions. My first one is, I think, John, maybe you touched on October same-store sales trends of being about 15%. As you laid out your guide for the remainder of the year, can you touch on what kind of same-store sales growth you're anticipating for the next couple quarters? I mean, what kind of deceleration, if any, are you expecting for the next couple of months, what kind of deceleration are you expecting into November and December, if any? Thanks. Yeah. So always, this is a always a good battle between me and Anthony. He keeps continuing to beat me on expectations here. But the fourth quarter, I think you're gonna still see mid-teens kind of level for same-store sales. You know, I'm still a believer that over time, as we continue to ramp, you know, the same-store sales will normalize to the mid- to high single digits. Again, I've been very conservative on that statement and been wrong in the right direction, I guess, every time. But I do think as you roll into early 2024 and fast forward to Q4, you'll see it ramp down to, you know, mid- to low teens, down to the mid- to high single digits by the end of next year. That's the way I'm kind of viewing the business. But again, I'm trying to predict how members will react in a post-COVID world versus a pre-COVID world. That was the mid- to high-single digits was the pre-COVID world, so I'm assuming it gets back to that. But I've been proven wrong, you know, every quarter since the pandemic's been over. So, but my forecast and outlook assumes a conservative mid- to high-single digits by the end of 2024. Got it. Super helpful. Then, just on the closed studios this quarter, I mean, it did seem a little bit heavier than we've seen in the past, and I know as you talk about having more studios, obviously it's gonna, the closures are gonna increase a little bit. But can you just add a little bit of color on what drove, you know, the bulk of those closures this quarter, and how we should be thinking about, you know, closures heading into the early parts of 2024? Thanks. Yeah. I mean, the majority of those are the backlog of transition studios that we had, that we talked about, that we were gonna refranchise and/or close. So, it's not. It's heavier now than it normally will be in normalizing, going forward as we work through those studios. So it's a shift in strategy. It's not, you know, indicative of like a normal go forward, once we're done getting through this kind of transition phase. Got it. Thank you. The next question comes from Jonathan Komp with Baird. Please go ahead. Yeah. Hi, good afternoon. Thank you. John, can I just follow up on the restructuring costs in the quarter? Could you just maybe share a little more detail? Are those all cash or non-cash? How much are you expecting in total, and just how, how should that flow going forward? ... Yeah, so the restructuring charges in the quarter are reflective of the studios, the that Anthony just talked about, the ones that we've already closed and the ones that we are ceasing operations at. We take a, you know, a charge or a liability for exiting the leases. Kind of a back of the napkin. We kind of assume about 18 months to exit the leases is the way we're approaching it. So any of the costs associated with shutting down studios, exiting leases in the quarter, it was roughly around, you know, $7 million. I think it was $6.6 million was the actual number. So but that, that's the majority of the costs. We look at it as one time just to get off the leases and get the studios completely closed down. You know, as we continue to do that, it might take-- you know, we do expect to see it in Q3, some additional activity, as well as potentially into the first half of 2024, as we work with landlords to figure out exactly what we settle the leases for. But given our experience or my experience, having done this in the past, typically it's about 18 months worth of leases. I think total, you know, benefit to the company by doing this, as I mentioned in the earnings script, is it's about a $10 million Adjusted EBITDA benefit on an annualized basis, roughly. So it does have very meaningful margin impacts in 2024 by us going through this restructuring. Okay. Thank you for that. And then just, separate question, but Anthony, I don't know if you could discuss the, the Lululemon relationship any further. I know that's, that's changed recently, but, you know, at the time, you know, a month or so ago, you highlighted opportunity to deepen and expand the relationship that's remaining. So just any thoughts there? And then, John, are you willing to talk about just longer term inter-international, how much, you know, broad strokes, you know, revenue or EBITDA you might be able to generate from, from the international activity? Thanks again. Yeah. So we continue to do great business with Lululemon. I mean, the biggest part of our business with them was the actual collaboration on the retail that we sell across the studios globally. So that, you know, that still remains intact, and we're still doing great business with that. You know, the digital studio business part was nice to have, and, you know, of course, we would love to keep that. But obviously, you know, Mirror was not something that was a successful venture ultimately for Lulu. And so, you know, it made sense for them to shut that down, and, you know, give it over to Peloton, and that was exactly what they did. And so, you know, Lulu still paid us 100% of our money. And so, you know, they did everything right, everything they were supposed to do by us, and so we still have a really great relationship with them, and, you know, we work with them daily, ultimately, so everything's great there. You know, to answer your question in regards to international, you know, as we talked about, I mean, we will see about, you know, 75-25 or, you know, between that and 80-20% growth over the next couple of years between domestic and international. You got to remember, on the international side, though, it's a rev share model, right? So we don't get the same full 100% benefit of the revenue and adjusted EBITDA we get on the U.S. side. And the fact that the U.S. is growing, you know, multiples faster than the international. Today, international, about 5% of the EBITDA contribution. You know, given the growth of studios opening internationally, you will see the EBITDA double over the coming years, but as a percent of the total, you know, it moves from five to seven, right? Because you're just seeing so much accelerated growth on the U.S. side. So you will see dollar growth internationally, but percentage-wise, as a total, you know, is only gonna move, you know, 1%-2%, in the next two to three years. All right. Thanks again. The next question comes from J.P. Wollam with Roth Capital Partners. Please go ahead. Hi, everyone. Thanks for taking my question tonight. Maybe if I could first just follow up on the international side. If we talk about the new hire, the President of International, could you maybe just expand on sort of what is really the goal for his role there? Is there anything that, you know, was kind of just becoming too big or too cumbersome that it was necessary to put someone in that role? Or could you just expand on that a little bit? Yeah, I think it was both upside opportunity and downside risk aversion, right? Ultimately, we had about a team of five or six, so we're doing an amazing job over there with a lot of international experience. So a lot of really great players, but not necessarily a great coach to kind of band everything together. And so we really wanted to professionalize that department and make sure that, you know, it had a lot of infrastructure so it could really operate like our domestic business, so that, you know, we can increase franchise sales, increase franchise openings, you know, make sure that franchisee health internationally is doing very well. You know, a lot of franchisors in the U.S. start off with, you know, great brand, great concept, and then over time, they get some international interest, and it's just kind of a nice to have. And we were much like that prior to the BFT acquisition. And then we acquired BFT, you know, really set our eyes over on international twofold. One, the massive opportunity, it is over there, you know, done properly. And then two, if not done properly, the risk that would be there if, you know, if we didn't, you know, build a great business, exactly like it would be if you started franchising domestically, right? When you have a lot of interest. And so we wanted to make sure we were able to harness all the international interests we were getting properly, build the right infrastructure to make sure that we executed and rolled out, you know, franchise sales, franchise openings, equipment packages... AUVs, franchisee health, the exact same business we do here. So we are really looking for someone that would be me outside of the United States. And, you know, we got a lot of really great candidates. We did a lot of interviewing over the last month, group interviews, individual interviews, in-person stuff with the candidates that, you know, that did really well. And so we spent a lot of time on it. And then, you know, had the team interview the coach to make sure that, you know, we really built a good player-coach situation there. So something that's really sustainable, predictable, and that can grow. So those were the goals that we were hiring for. So it just made a lot of sense. Got it. Yeah, that's very helpful. And then just one quick follow-up. As we start to think about next year and really how to continue pressing on AUVs and same-store sales growth, I'm wondering if you can maybe either kind of stack, rank, or give us some insight on how we should think about what will be the most impactful, as we think across some of the different initiatives. So, you know, thinking about X PASS, thinking about Gympass, some of the loyalty that Sarah touched on. Can you maybe just give us a sense of what you think are kind of the most meaningful of those different items? Thank you. Yeah. So I'll dive into one of the examples. So Pure Barre is an example. We had the opportunity to roll out a new class, which was Pure Barre Define. And as we did that, we started to see that demand increased across the studios that had rolled out and followed the program. So just overall demand was high at Pure Barre. So went back and did a pricing exercise and increased pricing at a good portion of the studios, 20% or more, went up in a new pricing tier across the country. So we're able to take advantage of, you know, pricing and drive brick-and-mortar memberships. And then the aggregator partnerships that we have are supplemental to those direct exercises that we do at the studio level. You know, each day, we're working with franchise partners to help manage their supply and demand and increase their pricing where it makes sense. The aggregators just help us fill capacity or maximize capacity just a little bit more so that we're ensuring that every single class is as profitable as it can be. As you know, our classes, we've already paid for the instructor, the doors are already open, lights are on, music is going, so every incremental booking is going to be a profitable booking for the franchise partner. Got it. Best of luck moving forward. Thank you. Thank you. The next question comes from Alex Perry with Bank of America. Please go ahead. Hi, thanks for taking my questions here. Just first, can you talk to us a little bit about royalty rates? Should we expect sort of average royalty rates to continue to increase as you make shift towards Club Pilates and StretchLab, which are coming in at higher royalties? Thanks. Yeah, I mean, obviously, like any business on supply and demand, the more demand we see for, you know, from our Pilates consumer, the more demand we see for store openings and franchise sales. You know, we were able to, you know, really obtain an 8% there, and so we're able to do that at StretchLab. You know, we'll most likely be doing that at our acquisition target as that comes in at 8%. And so, yes, the company is working to shift its way toward 8%. Perfect. That's really helpful. And then just my follow-up question, maybe, John, how should we think about sort of equipment revenue in the outer years, sort of the mix between, you know, what's similar number of openings, but potentially a mix shift towards higher equipment brands? Does that mean, you know, we'll continue to get sort of equipment revenue growth, or how should we think about that? Thanks. Yeah, I mean, as we start to open more BFTs and Rumbles, as I mentioned, about 25% of the openings next year, next year will be in those brands, more equipment intensive. You will see an average equipment package revenue increase, so you will see that, you know, in the coming years. But you got to look at, you know, when the majority of the lion's share of openings this year and next year are still falling in StretchLab and Club Pilates. So, you know, directionally, yes, it'll go up over time, but it's a function of, you know, Club Pilates and StretchLab slowing down, which is not the case. It continues to accelerate. So, in theory, yes, as we open more BFTs and Rumbles, you will see that, but, you know, it's—they've got to overcome the majority that we're currently seeing in some of the other brands. One thing to point out on the equipment package, you know, you'll notice that the margins in Q2 and Q3 have remained really strong. We've done a lot of work on the supply chain side to kind of optimize, use our purchasing power to drive pricing. So, you know, as we continue to, you know, open 500-600 studios a year, you know, you will see very consistent margins going forward, elevated above where they were previously. So, yes, overall, you should see a slightly higher ticket price given the higher equipment-intensive brands, and you should also see a higher margin driven by that, higher equipment-intensive brands, but also some of the work that we're doing on the supply chain front to optimize and use our purchasing power to drive pricing, so. Perfect. That's incredibly helpful. Best of luck going forward. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Anthony Geisler for any closing remarks. Thank you, everyone, for joining today's earnings call and for your support. I'd also like to acknowledge our franchisees and our team for their continued strong execution. We look forward to seeing many of you at upcoming marketing events, and we'll speak to you again on our Q4 and year-end earnings call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.