Xponential Revenue Falls 21%, Club Pilates Holds the Line as Review Continues

The boutique fitness franchisor said AI-driven shifts at Meta and Google made it harder to attract new members, although its top-performing brand, Club Pilates, kept retention strong and expanded into three new countries

Boutique fitness is booming. Xponential Fitness, the multi-brand franchisor that helped build the category, is having a harder time. Member loyalty, though, is a bright spot.

Xponential Fitness reported first-quarter revenue of $60.7 million, down 21% year-over-year, and North America same-store sales fell 6%. The company reaffirmed its full-year 2026 guidance of revenue between $260 million and $270 million and 150 to 170 net new global studio openings.

The Club Pilates, Pure Barre, YogaSix, BFT and StretchLab franchisor said the revenue decline was expected and driven primarily by strategic divestitures, fewer equipment installations and lower merchandise revenue following its transition to an outsourced logistics arrangement.

Xponential shares fell more than 14% in response.

“We are operating as a more unified organization, aligning marketing, operations, technology and brand-building to drive stronger performance and lay the foundation for continued improvement,” CEO Mike Nuzzo said.

Xponential announced a formal strategic review last month, with Jefferies LLC engaged as financial advisor to evaluate options including a sale, merger or other transaction.

The move comes after mounting pressure from two shareholders. Voss Capital, which holds nearly 20% of outstanding shares, argued in an open letter that Club Pilates is worth more than Xponential’s current enterprise value. Kanen Wealth Management, with roughly 4% ownership, followed with its own letter calling Club Pilates “a premier asset.”

Xponential declined to take questions on the initiative during its earnings call.

Nuzzo, who took over last August following Mark King’s departure, pointed to industry-wide platform changes at Meta and Google as a drag on new member acquisition.

He said Meta’s transition to Andromeda, an AI-driven ad approach that replaced focused audience targeting, began affecting lead flow in late 2025. He also cited AI-driven changes to Google search that have been widely reported to reduce traditional organic click-through rates across sectors by nearly 30%, with AI-generated content increasingly replacing clickable links or ads.

“The good news is that all these factors are within our control, and we are actively taking steps to address and capitalize on them,” Nuzzo told investors on this week’s earnings call. “On Meta, we are working to enhance our local account structure to better realize scale benefits from individual franchisee spend. On Google, short-term, we are addressing organic traffic pressure with a more front-loaded increase in paid media spend.”

That aside, existing members are demonstrating loyalty across Xponential’s brands. Company-wide member retention improved 36 basis points, and March marked Xponential’s best member retention month since the first quarter of 2024, he said.

Club Pilates, in particular, continues to deliver one of Xponential’s strongest three-year member lifetime values, at over $2,300, Nuzzo added. The modality remains one of the hottest in fitness, dominating ClassPass bookings.

Execs shared specific data on Club Pilates members, noting a “very good concentration” in the middle-aged customer segment, who tend to be highly loyal and high-frequency studio users. The company’s Q4 pricing study found Club Pilates members typically attend between 8 and 13 classes, with just under half on the unlimited plan.

The popular Pilates brand opened its first studios in Mexico, Belgium and Thailand during the quarter, finalized a franchise agreement in the Philippines and closed two major multi-unit deals with domestic franchisee partners worth approximately 160 future studios. Club Pilates now has 189 international studios open across 14 countries, with committed licenses for more than 499 additional studios in Europe and Asia.

A Club Pilates studio remodel program began in the quarter, with a similar refresh planned for Pure Barre. In terms of programming, Club Pilates’ new cardio-drive circuit class has reached 75% chain adoption, with new classes in the pipeline for YogaSix and Pure Barre in the coming months, including a YogaSix core class incorporating elements of hot mat Pilates.

Nuzzo also flagged a modest inflationary price adjustment coming in the third quarter, and the company is examining the discounts it provides across its platform, such as those at its offers during new studio openings.

“We were giving some pretty generous discounts, legacy founder forever discounts, and we realized we don’t have to do as much of that,” he said, adding that he believes it will benefit studios.

Xponential welcomed two new C-suite hires during the quarter: Robert Julian as interim chief financial officer and Erik Quade as chief information officer. Former Shake Shack CMO Steph So joins as chief marketing officer in mid-May.