XP Factory’s (LON:XPF) latest research note from Edison points to a business that is becoming more focused, more disciplined and better placed to navigate a difficult UK consumer backdrop. The group, best known for its Escape Hunt escape rooms and Boom Battle Bar competitive socialising venues, has updated the market with a trading statement that suggests progress is being made where it matters most, profitability, cost control and a clearer path towards cash generation.
The note, written by Research Analysts Russell Pointon and Yana Mihaylova, highlights that XP Factory’s FY26 adjusted EBITDA is expected to be marginally ahead of consensus analyst estimates. That is a constructive outcome given the broader pressure facing experiential leisure operators, particularly from weaker consumer spending and labour cost inflation.
A key message from Edison is that Escape Hunt is now the stronger engine of the group. The brand delivered 11% revenue growth in FY26, including like-for-like growth of 3.8%. This contrasts with Boom, where revenue rose 2% overall but like-for-like sales declined 8%. While Boom remains part of the wider business, the numbers suggest that Escape Hunt is providing the more resilient and higher-margin platform for future growth.
As Edison’s analysts write, “Escape Hunt resilience anchors the strategy.” This short but important observation captures the direction of travel for XP Factory. Escape Hunt’s site-level margins of around 40% are materially ahead of Boom’s approximate 16%, making it understandable that management is prioritising the escape room format for future expansion.
Key Highlights From The Latest Edison Research Note
- FY26 revenue is expected to be more than £59m.
- Adjusted EBITDA is expected to be marginally ahead of consensus analyst estimates.
- Escape Hunt revenue grew 11%, with like-for-like growth of 3.8%.
- Boom revenue increased 2%, although like-for-like sales declined 8%.
- Escape Hunt site-level margins are around 40%, compared with around 16% for Boom.
- Net debt excluding lease liabilities was £5.7m at the end of FY26.
- Management has secured £2m of annualised savings during FY26.
- A further circa £1m of head office savings is expected to benefit FY27.
The strategy now appears to be centred on building from a firmer base. Edison notes that management is targeting 100 UK Escape Hunt sites over the medium term, compared with 24 currently in the UK. The company is also looking at larger sites with eight escape rooms rather than six, a move intended to improve site economics and build on the format’s reported cash-on-cash site returns of around 40%.
Cost discipline is another important part of the story. XP Factory has secured £2m of annualised savings during FY26 and expects around £1m of head office savings to support FY27. With Boom openings paused, expansionary capital expenditure should reduce in the near term. This creates a clearer opportunity for the business to move towards sustained free cash flow and deleveraging from FY27.
Valuation remains measured rather than overly optimistic. Edison notes that, at an 18p share price, XP Factory was trading below the consensus analyst target price of around 20p. The note describes risk and reward as balanced, with consumer weakness and net debt on one side, and the potential for escape room consolidation on the other.
For general investors and observers, the main point is that XP Factory appears to be narrowing its focus towards the part of the business with better margins, stronger like-for-like growth and a longer rollout runway. Escape Hunt is not just a brand within the group, it is increasingly the strategic centre of gravity.
Final Thoughts
XP Factory still faces challenges, including pressure on Boom, consumer caution and a debt position that needs careful management. However, Edison’s latest research note presents a business with a clearer plan, a stronger focus on Escape Hunt and improving cost discipline. If trading remains steady and cash flow improves as expected, XP Factory may have a firmer base from which to rebuild confidence.
