Xponential Fitness, Inc.

Greetings and welcome to the Exponential Fitness' first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Patricia Neer, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and thank you all for joining our conference call to discuss Exponential Fitness' first quarter 2026 financial results. I am joined by Mike Nuzzo, Chief Executive Officer, and Robert Julian, Interim Chief Financial Officer. A recording of this call will be posted on the investor section of our website, at investor.exponential.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 most recent ENO report on Form 10-K for the year ended December 31, 2025, filed with the SEC and subsequent filings with the SEC. We assume no obligations to update the information provided on today's call except as required by applicable law. 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 and in the investor presentation available on our website. We are not able to provide a quantitative reconciliation of forward-looking non-gap measures without unreasonable efforts to the most directly comparable gap measure due to the high variability, complexity, and low visibility with respect to certain items. Please also note that all numbers reported in today's prepared remarks refer to global figures unless otherwise noted. As a reminder, in order to ensure period-over-period comparability, and consistent with our reporting methods since IPO, we present all KPIs on a pro forma basis, meaning for the full KPI history presented, we only include brands that are under our ownership as of the current reporting period. For the period ended March 31st, 2026, this includes BFT, Club Pilates, Pure Bar, Stretch Lab, and Yoga 6. I will now turn the call over to Mike Nuzzo, CEO of Exponential Fitness.

Thanks, Patricia. Good afternoon, and thank you all for joining us today. Before I discuss the quarter, I'd like to highlight three important leadership additions. During the first quarter, we welcomed Robert Julian as interim CFO and Eric Quaid as chief information officer. Robert brings over 30 years of proven financial leadership with experience guiding high-growth consumer brands, including The RealReal, Sportsman's Warehouse, and Callaway Golf. Eric brings extensive hands-on experience across the full spectrum of multi-site technology disciplines, scaling enterprise capabilities for consumer brands such as Tilly's, Hot Topic, and Billabong. Finally, in mid-May, we will be welcoming Steph So as our new Chief Marketing Officer. Steph was most recently Chief Growth Officer at Shake Shack and has led brand building and performance marketing efforts in senior roles at Ralph Lauren, Estee Lauder, Shopbop, and Cover FX. Collectively, these highly accomplished leaders will strengthen execution across the organization, and we are very happy to welcome them to the exponential team. Now I'll turn to a more detailed discussion of the quarter. In Q1, we continued focusing on operating in a more integrated way, aligning marketing, operations, technology, and brand building to drive stronger performance and set the foundation for continued operational improvement. These organic growth priorities, coupled with our sustained unit expansion, established brands, and industry tailwinds, highlight the potential beyond our existing platform today and position Exponential strongly for future success. With that backdrop, an overview of Q1 is as follows. Domestically, we opened 23 net new units, and internationally we opened 17 net new units, consistent with our midpoint expectation of 160 net new openings globally for 2026. We finalized Club Pilates unit expansion deals with two major domestic franchisee partners, securing commitments for approximately 160 future studio openings. Internationally, Club Pilates opened its first studios in three new countries, Mexico, Belgium, and Thailand. We also recently finalized the development agreement in the Philippines. Overall, our Club Pilates growth pipeline remains robust, and we have an expectation to expand to over 2,100 studios domestically. Internationally, we currently have 189 open studios across 14 countries with committed licenses for more than 499 additional studios in major markets in Europe and Asia, capitalizing on the growing Pilates wave across the world. We also see studio growth potential across our other brands, and we will provide more updates as we move through 2026. Our Q1 same-store studio sales were down 6% overall and down 4% for Club Pilates. which was a modest change from the fourth quarter decrease of 3% in Club Pilates. These sales results, while below our standard, were expected given several factors I'll discuss shortly, in addition to the challenging year-over-year comparison with Q1 2025, which included 6% total company and 9% Club Pilates same studio sales. Importantly, we have seen signs of stabilization as we reaffirm our 2026 guidance. Specifically, with front-loaded marketing spend in Q1, we saw paid lead growth with a combination of enhanced national and local paid marketing match efforts. While still early, we expect ongoing improved performance and continued momentum as we further enhance organic top of funnel member acquisition capabilities, and meaningfully improve our digital experience. Operationally, we also made progress in Q1, including the following initiatives. Completed a transition to a new national marketing and digital agency with extensive expertise in the rapidly changing performance, social, and AI marketing landscape. We are seeing quick improved performance and our paid performance marketing efforts. Launched an automated email CRM program, which is now being used across all our brands and major new member cohorts, with a second phase that includes the development of member retention outreach. Accelerated critical work on all our brand digital properties that I am convinced is a key element to organic growth. Our websites, in particular, are long overdue for upgrades to design, navigation, user experience, and AI SEO. Initial improvements recently completed for a pilot group of StretchLab Studio microsites are yielding a high single-digit initial booking lift. Once we expand this new navigation experience to our national site and full studio chain, we anticipate it will have a real impact on Stretch Lab trends. I also recently saw the new proposed Club Pilates site redesign, and it is a significant change that will position us with best-in-class fitness digital experiences. I can't wait to leverage this work for all of our brand's web, mobile, and app properties. We expect it to transform our top-of-funnel experience. Nationally, we saw the recently launched Club Pilates circuit class gain quick adoption across our chain and popularity with members. While we will also be launching a new Y6 core class for our Yoga 6 brand, which incorporates elements of Hot Mat Pilates. We kicked off our remodel program in Club Pilates with Pure Bar planned as a fast follow. All new Club Pilates studio openings will feature our new design experience. We've meaningfully enhanced our Yoga 6, Pure Bar, and BFT brand assets and introductory offers across all marketing channels. Leverage the pricing work we completed in Q4 to plan actions in upcoming quarters, including targeting an inflationary price adjustment in early Q3 and We continue to expand our engagement with studio operators with our field support teams with a focus on improving lead to new member conversion. These teams are providing more hands-on support through targeted sales coaching, enhanced marketing tools, and newly developed KPI dashboards. Most importantly, this represents our scaled effort to deliver consistent in-market support, particularly for new studio openings, staff transitions, and underperforming locations, which we believe will be a key driver of improved studio-level performance over time. This is all positive progress, but let me talk more about our same studio sales, where we have spent considerable time focusing on the drivers of our trends. First, importantly, our existing members are showing even more affinity and loyalty to our modalities and brand proposition. In fact, in Q1, year-over-year company-wide member retention improved 36 basis points, and March marked our best member retention month since Q1 2024. In particular, this strong member retention in Club Pilates continues to produce one of the strongest three-year member LTB at over $2,300. And recent surveys continue to indicate that approximately 80% of members expect to continue taking classes over the next six to 12 months. Clearly our strong member retention provides a foundation for driving organic growth. So with stronger existing member retention, we are laser focused on accelerating top of funnel and new member conversion as the major opportunity. Here we see the following factors at play. First, across all our brands, we have seen lower digital traffic driven by industry-wide platform changes at Meta and Google. Meta represents a major share of our local marketing, specifically direct franchisee spend with company-approved local agency partners. Starting in mid-2025, Meta began transitioning to Andromeda. This AI-driven ad approach replaced focused audience targeting, which shifted the platform toward a more broad-based consolidated spend model. This challenged the efficacy of our structure of many distinct agency arrangements supporting individual studio markets. Essentially, we were not realizing the scale advantage with our meta spend, and we believe this started to affect lead flow in late 2025 into 2026. Also in the second half of 2025, organic search, for us, primarily Google, underwent significant AI-driven changes that have been widely reported to reduce traditional organic click-through rates across every sector by nearly 30%. Increasingly, search results now yield AI-generated content instead of clickable links or ads, a shift many of you have experienced firsthand. Because virtually all prospective members begin their journey on our web and mobile platforms, these changes had a major impact on our organic website traffic, and in turn, our new member lead generation. Second, our ability to convert new leads to members was impacted as changes to member privacy systems created confusion at the studio level, and complicated lead outreach. In addition, we had the anticipated transition period from our brand-based sales structure to our new field-based support team. The good news is that all these factors are within our control, and we are actively taking steps to address and capitalize on them. 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, which you will see in our financial results, while our major planned website improvement projects across all brands will include a focus on all the ways to drive better AI SEO results. As the industry leader in the space, we expect to be at the forefront of making meaningful progress quickly. On lead to member conversion, we've already addressed our studio system related deficiencies created by privacy related changes. And we are continuing to integrate our field ops team who are rolling out tools in support of driving our franchisee success. In addition, we expect that our recently launched automated email program will support these efforts, and we will also evaluate other technology tools to improve introductory class booking and membership close rates. My goal in all of this is to become best in class in partnering with our franchisees to generate new member lead flow, create the most seamless digital engagement, and offer the best supported membership purchase process. With strong member retention as a foundation, by bringing more advanced resources to lead generation with paid performance marketing, new member digital experience improvement, and incremental in-studio membership conversion support, we plan to help our franchisee partners provide a best-in-class member experience. As we look ahead, our focus is on restoring sustainable organic growth through a more disciplined and repeatable execution framework. We also remain focused on retention through ongoing class innovation, our studio remodel programs, and enhanced brand positioning. I want to thank our franchisees and studio teams for their partnership and continued focus on delivering a great member experience every day. Finally, I would like to thank Chelsea, Jair, and Bruce for their service to our board and welcome our newest board member, Nicole. With that, I'll turn the call over to Robert for a review of the financials.