F45 CEO Says He’s Delighted with Q4 & FY 2021 Results
F45 Training announced its financial results & reported record revenues. “We are the Ferrari of training,” says F45 CEO Adam Gilchrist
F45, a functional fitness franchisor, has released its fourth-quarter and full-year fiscal 2021 financial results. F45, which went public last year and is backed by Mark Wahlberg, has experienced rapid growth.
On a recent earnings call, Gilchrist, CEO of F45, stated that it took Starbucks 27 years to reach the same unit size that F45 has achieved in only eight years. “Being the fastest growing franchise in history is a proud metric for myself and our staff,” he said, adding that F45 is just getting started.
The boutique fitness brand is ranked number one according to Entrepreneur Magazine.
Despite continued COVID-related challenges and supply chain issues, F45 has reported strong results. The company says its three pillars – innovation, motivation, and results – continue to drive the business forward. F45 says it plans to introduce thousands of additional workouts over the next several years.
“I am delighted with our terrific Q4 and full-year results – we completed the year with record revenues and Adjusted EBITDA, we set a record sales pace of over 1,000 franchise sales for the full year, and we opened over 300 franchises globally during the year. We demonstrated our ability to execute on our growth strategies and have shown that both we and our franchisees can achieve great successes despite lingering impacts of the COVID-19 pandemic,” says Gilchrist.
Here are some key highlights:
F45’s Fourth Quarter Fiscal 2021 Highlights Compared to Fourth Quarter 2020
- Total revenue increased from the prior year period by 242% to $61.8 million.
- Same store sales increased 6% globally and 53% in the United States.
- System-wide sales increased 27% globally to $113.9 million, and 95% in the United States to $49.9 million.
- System-wide visits increased 7% globally to 6.7 million, and 50% in the United States to 2.6 million.
- Net Franchises Sold totaled 290 compared to 30 in the prior year period.
- Net Initial Studio Openings totaled 131 compared to 61 in the prior year period.
- Reported net income of $14.8 million.
- Adjusted EBITDA increased from the prior year period by 376% to $25.9 million.(1)
F45’s Fiscal Year 2021 Highlights Compared to Fiscal Year 2020
- Total revenue increased from the prior year period by 63% to $134.0 million.
- Same store sales increased 12% globally and 42% in the United States.
- System-wide sales increased 36% globally to $410.3 million, and 96% in the United States to $167.0 million.
- System-wide visits increased 31% globally to 26.8 million, and 103% in the United States to 10.8 million.
- Net Franchises Sold totaled 1,057, resulting in system-wide Total Franchises Sold of 3,301.
- Net Initial Studio Openings totaled 312, resulting in system-wide Total Studios of 1,749.
- Reported net loss of $182.7 million.
“Our goal is to be the world’s fastest growing franchisor, and I believe our ability to achieve this goal has never been stronger,” says F45’s CEO.
F45 sold 290 new franchises in the 2021 fourth quarter, with 3301 total franchises sold, a 47% increase from last year. The functional fitness company says it’s encouraged by the rapid uplift in its Australian studio performances, as government mandated restrictions have recently eased.
Customer engagement metrics have continued to strengthen with average visits per week, increasing to above pre-pandemic levels, reports F45.
F45 on its Pricing Model
“We want to change people’s lives and to do that, they do need to turn up more than two and a half, three times per week,” says F45 CEO
Gilchrist commented that F45 has witnessed some “catastrophic mistakes” with some of its peers when they have lowered pricing to attract its membership base. Gilchrist explained that fitness consumers end up all booking into a class at a certain time, leading to a “membership backlash.” In addition to logistic issues, Gilchrist says F45 is only targeting 200 to 300 people out of a population demographic of 35,000.
“We are the Ferrari of training and we want people to respect that. But more importantly, when you’re paying $66 per week, what you find is that these members want to get value out of that particular service, and turn up more frequently. If you’re paying $2.50 a week, and using that as an example where Planet has a great business, you’re not as motivated as in a comparison where you’re paying sort of 3000 a year,” he explained.
“We believe the people would cherish the service and more importantly, we want people to get results as per our slogan, team training, life changing, we want to change people’s lives and to do that, they do need to turn up more than two and a half, three times per week,” Gilchrist continued.
F45 Looks ahead
F45 says real estate opportunities have emerged due to the pandemic
Gunnar Peterson was named Chief of Athletics by F45 last month. Gilchrist believes Peterson, who has worked with athletes such as Tom Brady, will be a valuable asset to F45.
Looking ahead, Gilchrist believes that F45 has a significant long-term opportunity to expand its franchise studio footprint, estimating that there is potential for over 7,000 F45 studios in the United States.
“What gives us additional confidence to achieve our long-term goals, is the real estate opportunities that have emerged over the course of the pandemic. Since the onset of the pandemic, IHRSA estimates that 25% of all fitness facilities have closed in the U.S., allowing us opportunities to secure highly attractive real estate locations for all of our new franchisees. Importantly, the 7,000 studio TAM figure does not include the meaningful long-term whitespace potential related to our other F45 channels, including military and colleges,” Gilchrist explained on the earnings call.
As far as marketing, F45’s CEO mentioned the “Wahlberg Effect” and says that F45 continues to accelerate awareness by partnering with notable faces.
“When we brought Mark on board, we had this huge impact across and especially speaking in California, we had this huge wave of inquiry for not just members, but also people wanting to inquire about buying a franchise. And what we’re doing at the moment is, we have more of a micro marketing campaign, with lots of smaller influences.”
Gilchrist shared that Beckham is opening up his first F45 location in London in two weeks.
