• Brett Schafer

Deep Dive: Paul Cerro Discusses Xponential Fitness



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Show Notes


This week we brought on Paul Cerro, portfolio manager at Cedar Grove Capital, to discuss Xponential Fitness stock. Xponential Fitness is a roll-up of various boutique fitness brands, which it licenses in a franchise model. These include brands like Pure Barre and Rumble. Here are some questions we asked Paul on the episode:


  1. How’d you come across Xponential?

  2. What does Xponential fitness do? How does its business model differ from a traditional gym operator?

  3. Can you go through the unit economics? What costs does the franchisee pay for?

  4. What sort of operating leverage do you expect over the next few years? What can margins hit at maturity?

  5. What multiples have they paid for all their acquisitions? Thoughts on the aggressive roll-up strategy?

  6. How has fitness changed since the pandemic?

  7. How big do you think Xplus can be? Can the model work well outside the U.S?

  8. Is the business sheltered from the trendiness of the fitness industry? Is that a risk to this business?

  9. Thoughts on management?

  10. Premortem: What could go wrong?


Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this show.

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