January 20, 2022

elprincipelila

There's nothing like our health

We haven’t seen ‘any negative activity’ from the Delta variant

5 min read

Xponential Fitness CEO Anthony Geisler joins Yahoo Finance Live to discuss the company’s first financial results since going public and trends in the fitness space amid the pandemic.

Video Transcript

MYLES UDLAND: All right, welcome back to Yahoo Finance Live. Xponential Fitness out of its first quarter since becoming a public company earlier this summer. [INAUDIBLE] beat on the top line here for the company. Joining us now to talk about the direction of the business, the future, of course, of the fitness industry, Anthony Geisler, Founder and CEO of the company.

Anthony, appreciate the time this morning. Let’s start with talking about the Delta variant, which I know you guys discussed a lot on the call last night, just in terms of impacts you’ve seen with respect to your business, and how you’re thinking about, really, the robust recovery we’ve seen for the gym space over the last 12 months or so.

ANTHONY GEISLER: Well, yeah. Thanks, Brian. We actually had our best month ever in the company’s history last month in July. So, Q2 was good, but we also gave reports on July due to the Delta variant just to kind of indicate where the company is today.

So, our system wide sales was stronger in July than it was in February pre-COVID. So, we’re not seeing any meaningful impact from Delta yet. We’re continuing to monitor it on a week-by-week basis.

Even in cities like New Orleans, or New York, or San Francisco where vaccines have been mandated, we see an uptick in membership. We believe that’s because people feel more comfortable coming back into the gym. But so far, we continue to monitor it. But not seeing any meaningful negative activity from Delta yet.

BRIAN SOZZI: Anthony, it’s certainly good to hear. Have you implemented a vaccine mandate for your nine studios, and if not, are you are you looking at something like that?

ANTHONY GEISLER: Yeah, we have not yet. We’re following all the CDC guidelines in any city, county, state mandates, but as a franchise or these are all independently owned businesses, and so, franchisees have to follow the guidelines in their cities and states, but we haven’t mandated anything as a franchise or yet, no.

JULIE HYMAN: Hey, Anthony. It’s Julie. On a related note, what kind of feedback are you getting from franchises? Not just– I mean, you talked about how in some cities you’re seeing an uptick because people feel more comfortable.

It’s been interesting, we talked about masking, when there were mask mandates, about how restaurants, for example, were put in the position of policing it, or stores were put in the position of policing it. What kind of feedback are you getting about your franchisees policing vaccine mandates and checking cards, for example, at the door? Are they finding that challenging?

ANTHONY GEISLER: Yeah, I mean, look, the whole COVID situation is tough, right? Whether we were having to police masking or police vaccinations, you know, we’re doing the best we can, franchisees were doing the best they can to check vaccine cards in the cities where required to. Obviously, there’s labor issues and things like that as well that are across the United States. So, you know, franchisees are doing a great job.

They’re checking vaccine cards and any systems that they have, they’re all a bit different in every city. Some cities have QR code capabilities, some do not. But there’s only three cities that are really doing that today. So, it’s not– given that we’re in 48 states and we have such a mass spread across the United States, it’s not a company wide situation that we’re having to worry about, at this point.

BRIAN SOZZI: And Anthony, as you’ve seen folks come back to your locations, which brand is outperforming others and why do you think that’s the case?

ANTHONY GEISLER: Yeah, it’s not a brand by brand basis. It’s really geography, right? And so, Florida opened up earlier. Texas opened up earlier. California and New York City opened up later. The recovery in those cities or states are longer, right?

So, it’s not on a modality by modality basis or vertical by vertical, it’s really geographical in what we see in the recovery.

BRIAN SOZZI: One key to your story, and I mentioned it before we came on, I’m losing track of how many studios you are opening. How many will you, in fact, open this year? And are you still on track for a longer term vision, or a target, of 6,900 studios in the US?

ANTHONY GEISLER: Yeah, we’re still on track. We’re not losing count here, but it definitely continues to grow. We have over 1,850 locations across the country. Since January of 2020, we’ve actually opened 354 new studios and sold 554 new licenses. So, we sold 200– 197, almost 200 licenses in Q2 just this last quarter alone.

So, people are definitely still getting into the business. They think it’s a great investment. 103% of our active paying members have returned to the gym. So, we’re seeing that number continue to grow and people are confident in what we’re doing. And so, we just continue to run our play and stay on track.

MYLES UDLAND: And Anthony, just a final one here on the fitness industry, right? It’s a business of trends in terms of what people want to be doing to get in shape. And you said something interesting on the call. You said, you’re in the early stages of looking to expand the portfolio into HIIT, functional training, high volume, low cost fitness modality. I have some ideas around what that might mean, and maybe there’s some brands you don’t want to mention, but I’m just curious what you’re seeing in terms of what you think you’re, both franchisees, potential franchisees, and existing customers, might want to be doing in terms of their time in a studio or in a gym?

ANTHONY GEISLER: Yeah, those are the kind of three outstanding modalities that Xponential doesn’t own. Obviously, our latest acquisition of Rumble earlier this year put us back, put me personally back in the boxing space, put the company back in the boxing modality. And so, we’re excited about that.

And those are the three kind of opportunities for the business. And so, we’re talking to multiple brands in functional training and in HIIT, and continue to expand the portfolio.

MYLES UDLAND: All right, we’ll leave it there. Anthony Geisler, CEO of Xponential Fitness. Anthony, appreciate the time this morning. We’ll talk soon.

ANTHONY GEISLER: OK. Thanks for having me back.

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