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XP Factory delivers maiden operating profit after a bumper Christmas

10:37, 19th March 2024
John Hughman
Vox Newswire

A strong Christmas party season helped experiential leisure group XP Factory (XPF)Follow | XPF celebrate record numbers, with revenues doubling for the second year in succession and a maiden operating profit. Sales in the year to 31 December 2023 climbed 96% to £44.8m driven by strong performances across its two brands. 

Its Escape Hunt escape room business saw owner-operated site revenue climb 38% to £13.5m, driven by strong like-for-like sales group and new site openings – that additional scale meant Ebitda margins held steady at 42% despite meaningfully higher wage costs and deliberately flat pricing. A new site opened in Woking brought the number of owner-operated sites to 23, including three international sites in Dubai, Paris, and Brussels. 

Boom Battles Bars – where punters can enjoy Bavarian axe throwing and ‘crazier’ golf alongside food and drink – delivered an even more impressive result, with overall sales trebling to £28.6m thanks to strong underlying growth from existing sites, three new openings, and the acquisition of five former franchises taking the owner-operated site total to 19. 

The division’s Christmas performance was especially strong, with corporate sales almost trebling, which alongside record consumer demand saw a steady improvement in profitability over the year; gross margins climbed from 52% in 2022 to 58%, while the site level Ebitda margin climbed from 18% in H1 to 23% in the second half. 

The company pointed to continual operational improvements and a focus on estate optimisation as key to its success over the year, including delivering extra capacity in its escape rooms and bars and harnessing data insights to optimise site layouts. 

Alongside a modular and a therefore highly scalable approach to site rollout, that should help it take advantage of the growing demand for experiential leisure in the UK over more traditional forms of leisure. The market is growing at 13% a year, which XP Factory suggests leaves room for more than 50 Escape Hunts sites and more than 100 Boom Battle Bars. 


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The benefits of scale shone through in these figures, and with critical mass reached and clear demand for XP Factory’s brand of ‘competitive socialising’ this maiden operating profit promises to be the first of many. The cash is already flowing thick and fast, with the company ending the period with net cash of £4.4m as operating cash flow of £9.5m far outstripped capital expenditure of £6.9m. 

Perhaps more importantly is the disciplined approach XP Factory is taking to expansion, with site improvements and rollouts underpinned by data insights – which again become even more useful as the company adds scale. Alongside the significant UK opportunity, international expansion offers the icing on the cake. 

With the company pointing to strong trading in the first 10 weeks of 2024, analysts’ expectations look comfortably achievable -  sales are expected to climb 7.9% to £58.1m, delivering a first pre-tax profit.  


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