What changed in this filing

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Item 1. Financial Statements

2025-08-08 compared with 2025-05-09 · 386 added, 192 removed, 777 unchanged (43% of the section changed)

31 unchanged sentences

Redeemable convertible preferred stock, $ 0.0001 par value, 400 shares authorized,

115 shares issued and outstanding as of March 31, 2025 and December 31, 2024

115 shares issued and outstanding as of June 30, 2025 and December 31, 2024

Stockholders' equity (deficit):

Undesignated preferred stock, $ 0.0001 par value, 4,600 shares authorized, none issued and

outstanding as of March 31, 2025 and December 31, 2024

outstanding as of June 30, 2025 and December 31, 2024

Class A common stock, $ 0.0001 par value, 500,000 shares authorized, 35,082 and 33,660 shares

issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Class B common stock, $ 0.0001 par value, 500,000 shares authorized, 13,738 and 14,739 shares issued,

and 13,664 and 14,664 shares outstanding as of March 31, 2025 and December 31, 2024,

and 13,663 and 14,664 shares outstanding as of June 30, 2025 and December 31, 2024,

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

Treasury stock, at cost, 75 shares outstanding as of March 31, 2025 and December 31, 2024

Treasury stock, at cost, 75 shares outstanding as of June 30, 2025 and December 31, 2024

Total stockholders' deficit attributable to Xponential Fitness, Inc.

6 unchanged sentences

(amounts in thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Revenue, net:

14 unchanged sentences

Total operating costs and expenses

Operating income

Operating income (loss)

Other expense (income):

3 unchanged sentences

Total other expense

Loss before income taxes

Income taxes (benefit)

net loss attributable to noncontrolling interests

Net loss attributable to Xponential Fitness, Inc.

Income (loss) before income taxes

Net income (loss)

net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to Xponential Fitness, Inc.

Net loss per share of Class A common stock:

19 unchanged sentences

Balance at March 31, 2025

Equity-based compensation

Conversion of Class B shares to Class A shares

Issuance of Class A common stock under stock-based compensation plans, net of shares withheld for taxes

Loan to shareholder and accumulated interest

Distributions paid to Pre-IPO LLC Members

Preferred stock dividend

Balance at June 30, 2025

See accompanying notes to condensed consolidated financial statements.

19 unchanged sentences

Balance at March 31, 2024

Equity-based compensation

Conversion of Class B shares to Class A shares

Preferred stock dividend

Adjustment of preferred stock to redemption value

Issuance of Class A common stock under stock-based compensation plans, net of shares withheld for taxes

Loan to shareholder and accumulated interest

Distributions paid to Pre-IPO LLC Members

Balance at June 30, 2024

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

6 unchanged sentences

Change in tax receivable agreement liability

Bad debt expense (recovery)

Bad debt expense

Equity-based compensation

29 unchanged sentences

Payments for taxes related to net share settlement of restricted share units

Proceeds from issuance of common stock in connection with stock-based compensation plans

Payments for tax receivable agreement

Payments for distributions to Pre-IPO LLC Members

8 unchanged sentences

(amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental cash flow information:

4 unchanged sentences

Adjustment of convertible preferred stock to redemption value

Accrued tax withholding related to convertible preferred stock dividend

Contingent consideration upon acquisition

1 unchanged sentence

Debt issuance costs exit fees - long-term debt

Non-cash proceeds from sale of asset

Preferred stock dividend paid-in-kind

See accompanying notes to condensed consolidated financial statements.

4 unchanged sentences

Xponential Fitness, Inc.

(the “Company” or “XPO Inc.”), was formed as a Delaware corporation on January 14, 2020 for the purpose of facilitating an initial public offering (“IPO”) and entered into a series of transactions to implement an internal reorganization.

( “XPO Inc.”), and together with its subsidiaries, ( the “Company” or “we,” “us,” and “our”), was formed as a Delaware corporation on January 14, 2020 for the purpose of facilitating an initial public offering (“IPO”) and entered into a series of transactions to implement an internal reorganization.

Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being an ownership interest in Xponential Fitness LLC (“XPO LLC”) through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”).

XPO LLC was formed on August 11, 2017 as a Delaware limited liability company for the sole purpose of franchising fitness brands in several verticals within the boutique fitness industry.

XPO LLC was formed on August 11, 2017 as a Delaware limited liability company for the sole purpose of franchising fitness brands, through its subsidiaries, in several verticals within the boutique fitness industry.

XPO LLC is a wholly owned subsidiary of XPO Holdings, which was formed on February 24, 2020, and prior to the IPO, ultimately, H&W Franchise Holdings, LLC (the “Parent”).

Prior to the formation of XPO Holdings, the Company was a wholly owned subsidiary of H&W Franchise Intermediate Holdings, LLC (the “Member”).

As of March 31, 2025 , the Company’s portfolio of eight brands consisted of:

As of June 30, 2025 , the Company’s portfolio of eight brands consisted of:

“Club Pilates,” a Pilates facility franchisor;

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Additionally, the Company, through its ownership of the Lindora brand, franchises clinics that provide medically guided wellness and metabolic health solutions to its members.

In addition to franchised studios, the Company operated one company-owned transition studio as of March 31, 2025 and 2024.

In addition to franchised studios, the Company operated one company-owned transition studio as of June 30, 2025 and 2024.

On February 13, 2024, the Company divested the Stride brand, including the intellectual property, franchise rights and franchise agreements for open studios.

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The Company consolidates XPO LLC on its condensed consolidated financial statements and records a noncontrolling interest related to the Class B units held by the Class B stockholders on its condensed consolidated balance sheet and statement of operations.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Basis of presentation – The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

3 unchanged sentences

Interim results of operations are not necessarily indicative of results of operations to be expected for a full year.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

On January 2, 2024, the Company acquired Lindora Franchise, LLC, a Delaware limited liability company, the franchisor of the Lindora wellness brand (the “Lindora Franchisor” or “Lindora”), and has included the results of operations of Lindora in its condensed consolidated statements of operations from the acquisition date forward.

9 unchanged sentences

Note 2 – Correction of Previously Issued Financial Statements

As previously disclosed in Note 2 of Notes to Consolidated Financial Statements within Part II, Item 8 “Financial Statements and Supplementary Data” in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, subsequent to the issuance of the Company's condensed consolidated financial statements for the period ended March 31, 2024, the Company identified misstatements impacting previously issued financial statements.

The Company concluded that the aggregate impact of all the errors did not result in a material misstatement of previously issued condensed consolidated financial statements as of and for the three months ended March 31, 2024.

The accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2024, have been corrected from amounts previously reported.

As previously disclosed in Note 2 of Notes to Consolidated Financial Statements within Part II, Item 8 “Financial Statements and Supplementary Data” in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, subsequent to the issuance of the Company's condensed consolidated financial statements for the period ended June 30, 2024, the Company identified misstatements impacting previously issued financial statements.

The accompanying condensed consolidated financial statements as of and for the three and six months ended June 30, 2024, have been corrected from amounts previously reported.

The Company has also corrected related amounts within the accompanying footnotes.

The identified misstatements impacting the condensed consolidated financial statements for the three months ended March 31, 2024 include the following, for which the amounts described below are the net impact:

Rebates – Certain agreement terms had not been properly or timely communicated to be considered for their accounting impact resulting in misstatements including understatement of costs of product revenue of $ 250 and overstatement of merchandise revenue of $ 366 for the three months ended March 31, 2024.

Revenues – The Company’s evaluation of certain revenue contracts did not appropriately evaluate the accounting for all key terms and conditions, resulting in an understatement of merchandise revenue of $ 537 and costs of product revenue of $ 429 for the three months ended March 31, 2024.

Cost of product revenue – Certain costs and fees related to inventory were not properly expensed in the appropriate period, resulting in an overstatement of cost of product revenue of $ 937 for the three months ended March 31, 2024.

Impairment of assets – Company did not properly assess the disposition of the Stride brand subsequent to the balance sheet date as an impairment indicator as of the balance sheet date, resulting in an overstatement of selling, general and administrative expenses of $ 338 and an understatement of cost of product revenue for inventory write downs of $ 64 for the three months ended March 31, 2024.

Legal Accruals – Certain legal liabilities had not been communicated to be considered for their accounting impact resulting in an overstatement of selling, general and administrative expenses of $ 328 for the three months ended March 31, 2024.

Equipment inventory – Equipment inventory which had been received by the Company was not properly recorded resulting in an understatement of cost of product revenue of $ 95 for the three months ended March 31, 2024.

The identified misstatements impacting the condensed consolidated financial statements for the three and six months ended June 30, 2024 include the following, for which the amounts described below are the net impact:

Rebates – Certain agreement terms had not been properly or timely communicated to be considered for their accounting impact resulting in misstatements including overstatement of costs of product revenue of $ 27 and understatement of costs of product revenue of $ 223 for the three and six months ended June 30, 2024, respectively.

Additionally, there was an understatement of merchandise revenue of $ 252 and an overstatement of merchandise revenue of $ 113 for the three and six months ended June 30, 2024, respectively.

Revenues – The Company’s evaluation of certain revenue contracts did not appropriately evaluate the accounting for all key terms and conditions, resulting in:

An understatement of other service revenue of $ 134 for the three and six months ended June 30, 2024.

An understatement of merchandise revenue of $ 537 and costs of product revenue of $ 429 for the six months ended June 30, 2024.

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

Cost of product revenue – The Company improperly recognized deferred costs related to equipment resulting in an understatement of $ 273 of costs of product revenue for the three months ended March 31, 2024.

Invoices – The Company did not properly account for certain vendor invoices, including not recognizing expenses in the period incurred, resulting in an overstatement of costs of franchise and service revenue of $ 74 and an understatement of selling, general and administrative expenses of $ 128 for the three months ended March 31, 2024.

The impact of the correction of errors to the Company's condensed consolidated statement of operations, condensed consolidated statement of changes to stockholders' equity (deficit) and condensed consolidated statement of cash flows for the three months ended March 31, 2024 are presented below:

Cost of product revenue – Certain costs and fees related to inventory were not properly expensed in the appropriate period, resulting in an understatement of cost of product revenue of $ 1,094 and $ 157 for the three and six months ended June 30, 2024, respectively.

Legal accruals – Certain legal liabilities had not been communicated to be considered for their accounting impact resulting in an overstatement of selling, general and administrative expenses of $ 328 for the six months ended June 30, 2024.

Cost of product revenue – The Company improperly recognized deferred costs related to equipment resulting in an understatement of $ 273 of costs of product revenue for the six months ended June 30, 2024.

The Company has also corrected certain other rounding and immaterial reclassifications that were identified.

The impact of the correction of errors to the Company's condensed consolidated statement of operations for the three and six months ended June 30, 2024 and the condensed consolidated statement of changes to stockholders' equity (deficit) and the condensed consolidated statement of cash flows for the six months ended June 30, 2024 are presented below:

Condensed Consolidated Statement of Operations

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

As Previously Reported

1 unchanged sentence

Merchandise revenue

Other service revenue

Total revenue, net

1 unchanged sentence

Costs of product revenue

A, B, C1, C2, C4, C5

Total operating costs and expenses

Operating income

Loss before income taxes

Net loss attributable to noncontrolling interests

Net loss attributable to Xponential Fitness, Inc.

Net income (loss) per share of Class A common stock:

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Condensed Consolidated Statement of Operations

Six Months Ended June 30, 2024

As Previously Reported

Revenue, net:

Merchandise revenue

Other service revenue

Total revenue, net

Operating costs and expenses:

Costs of product revenue

A, B2, C1, C2, C4, C5, D

Costs of franchise and service revenue

Selling, general and administrative expenses

C2, C3, C6, D

Total operating costs and expenses

3 unchanged sentences

Net loss attributable to Xponential Fitness, Inc.

Net income (loss) per share of Class A common stock:

Xponential Fitness, Inc.

10 unchanged sentences

Balance at March 30, 2024

Conversion of Class B shares to Class A shares

Balance at June 30, 2024

Additional Paid-In Capital

5 unchanged sentences

Balance at March 30, 2024

Conversion of Class B shares to Class A shares

Balance at June 30, 2024

Additional Paid-In Capital

5 unchanged sentences

Balance at March 30, 2024

Conversion of Class B shares to Class A shares

Balance at June 30, 2024

Xponential Fitness, Inc.

2 unchanged sentences

Condensed Consolidated Statement of Cash Flows

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

As Previously Reported

13 unchanged sentences

Other current liabilities

Deferred revenue

Other liabilities

6 unchanged sentences

The Company's restricted cash consists of marketing fund restricted cash, which can only be used for activities that promote the Company’s brands and guarantee of standby letter o f credit (See Note 16).

Marketing fund restricted cash was $ 16,146 and $ 15,312 at June 30, 2025 and December 31, 2024, respectively.

The interest earned on marketing fund restricted cash accounts is also restricted for use.

Restricted cash was $ 15,987 and $ 16,063 at March 31, 2025 and December 31, 2024 , respectively.

Total restricted ca sh was $ 16,934 and $ 16,063 at June 30, 2025 and December 31, 2024 , respectively.

Accounts receivable and allowance for expected credit losses – Accounts receivable primarily consist of amounts due from franchisees and vendors.

15 unchanged sentences

Balance at December 31, 2024

Bad debt expense (recovery) recognized during the year

Bad debt expense recognized during the year

Write-off of uncollectible amounts

Balance at March 31, 2025

Balance at June 30, 2025

Revenue recognition – The Company’s contracts with customers consist of franchise agreements with franchisees.

The Company also enters into agreements to sell merchandise and equipment, training, on-demand video services and membership to company-owned transition studios.

The Company’s revenues primarily consist of franchise license revenues, other franchise related revenues including equipment and merchandise sales and training revenue.

In addition, the Company earns on-demand revenue, service revenue and other revenue.

Each of the Company’s primary sources of revenue and their respective revenue policies are discussed further below.

Franchise revenue – The Company enters into franchise agreements for each franchised studio.

The Company’s performance obligation under the franchise license is granting certain rights to access the Company’s intellectual property;

all other services the Company provides under the franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for as a single performance obligation, which is satisfied over the term of each franchise agreement.

Those services include initial development, operational training, preopening support and access to the Company’s technology throughout the franchise term.

Fees generated related to the franchise license include development fees, royalty fees, marketing fees, technology fees and transfer fees.

Variable fees are not estimated at contract inception, and are recognized as revenue when invoiced, which occurs monthly.

The Company has concluded that its agreements do not contain any financing components.

Franchise development fee revenue – The Company’s franchise agreements typically operate under ten-year terms with the option for up to two additional five-year successor terms .

Starting in 2025 new franchise agreements typically operate under ten-year terms with the option for one additional ten-year successor term .

The Company determined the successor options are neither qualitatively nor quantitatively material and do not represent a material right.

Initial franchise fees are non-refundable and are typically collected upon signing of the franchise agreement.

Initial franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over the franchise life, which the Company has determined to be ten years , as the Company fulfills its promise to grant the franchisee the rights to access and benefit from the Company’s intellectual property and to support and maintain the intellectual property.

Prior to the second quarter of 2025, the Company would enter into an area development agreements with certain franchisees.

Area development agreements are for a territory in which a developer has agreed to develop and operate a certain number of franchise locations over a stipulated period of time.

The related territory is unavailable to any other party and is no longer marketed to future franchisees by the Company.

Depending on the number of studios purchased under franchise agreements or area development agreements, the initial franchise fee ranges from $ 60 (single studio) to $ 350 (ten studios) and is paid to the Company when a franchisee signs the franchise agreement or the area development agreement.

Area development fees are initially recorded as deferred revenue.

The development fees are allocated to the number of studios purchased under the development agreement.

The revenue is recognized on a straight-line basis over the franchise life for each studio under the development agreement.

Development fees and franchise fees are generally recognized as revenue upon the termination of the development agreement with the franchisee.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Starting in the second quarter of 2025, the Company may enter into multi-unit agreements with certain franchisees.

Under these agreements, a developer has agreed to develop and operate a certain number of franchise locations over a stipulated period of time.

The multi-unit agreement fees are allocated to the number of studios to be developed and as part of the agreement, franchisees are required to remit the full fee associated with the first franchise license and make nonrefundable development fee payments of $ 10 each to reserve the right to open the subsequent studios as specified.

Fees received for the initial franchise license are recorded as deferred revenue.

Development fee payments received in advance for studios expected to open within one year are classified as short-term liabilities and development fee payments received in advance for studios expected to open beyond one year are classified as long-term liabilities.

Nonrefundable development fee payments are applied towards the multi-unit agreement fees and the remaining balance for each subsequent studio is due upon site selection for the studio and signing of a franchise agreement by the franchisee.

Revenue is recognized on a straight-line basis over the franchise life for each studio under the multi-unit agreement.

Multi-unit agreement fees and nonrefundable development fee payments are generally recognized as revenue upon the termination of the multi-unit agreement with the franchisee.

The Company may enter into master franchise agreements with master franchisees, under which the master franchisee sells licenses to franchisees in one or more countries outside of North America.

The master franchise agreements generally provide a ten-year period under which the master franchisee may sell licenses.

The master franchise agreement term ends on the earlier of the expiration or termination of the last franchise agreement sold by the master franchisee.

Initial master franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over 20 years .

Franchise royalty fee revenue – Royalty revenue represents royalties earned from each of the franchised studios in accordance with the franchise disclosure document and the franchise agreement for use of the brands’ names, processes and procedures.

The royalty rate in the franchise agreement is typically 7 % of the gross sales of each location operated by each franchisee.

The royalties are entirely related to the Company’s performance obligation under the franchise agreement and are billed and recognized as franchisee sales occur.

Technology fees – The Company may provide access to third-party or other proprietary technology solutions to the franchisees for a fee.

The technology solution may include various software licenses for statistical tracking, scheduling, allowing club members to record their personal workout statistics, music and technology support.

The Company bills and recognizes the technology fee as earned each month as the service is performed and access is provided.

Transfer fees – Transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee.

Transfer fees are recognized as revenue on a straight-line basis over the term of the new or assumed franchise agreement, unless the original franchise agreement for an existing studio is terminated, in which case the transfer fee is recognized immediately.

Training revenue – The Company provides coach training services either through direct training of the coaches who are hired by franchisees or by providing the materials and curriculum directly to the franchisees who utilize the materials to train their hired coaches.

Direct training fees are recognized over time as training is provided.

Training fees for materials and curriculum are recognized at the point in time of delivery of the materials.

The Company also offers coach training and final coach certification through online classes.

Fees received by the Company for online class training are recognized as revenue over time for the 12-month period that the Company is obligated to provide access to online training content.

Comprehensive income – The Company does not have any components of other comprehensive income recorded within the consolidated financial statements and therefore does not separately present a consolidated statement of comprehensive income in the condensed consolidated financial statements.

1 unchanged sentence

ASC Topic 820 establishes a valuation hierarchy for disclosures of the inputs to valuations used to measure fair value.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

This hierarchy prioritizes the inputs into three broad levels as follows:

10 unchanged sentences

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The adoption of this accounting standard did not have an impact on the Company's condensed consolidated financial statements.

The Company adopted ASU 2023-07 during the fourth quarter of 2024, using a retrospective method.

The adoption expanded the Company’s disclosures but did not have a material impact on the Company's condensed consolidated financial statements.

See Note 18 for additional information .

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The Company has elected to use this extended transition period.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Income Taxes Disclosures – In December 2023, the FASB issued ASU No.

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ASU 2024-03 is effective for public entities with annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Business Combinations and Consolidation – In May 2025, the FASB issued ASU No.

2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.” ASU No.

2025-03 provides clarifying guidance on determining the accounting acquirer in certain transactions involving VIEs.

The update aims to improve consistency and comparability in financial reporting.

The guidance will be effective for annual periods beginning after December 15, 2026, including interim periods within those annual periods.

Early adoption is permitted.

Upon adoption, the guidance will be applied prospectively.

The Company is currently evaluating the impact this amended guidance may have but do not expect the adoption of the guidance to have a material impact on its condensed consolidated financial statements.

Supplemental balance sheet information

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The Company completed the following acquisitions and dispositions which contain Level 3 fair value measurements related to the recognition of goodwill and intangibles.

During the three months ended March 31, 2025 and 2024, the Company refranchised operations at 0 and 10 company-owned transition studios, respectively, received no proceeds in either period, and recorded a net loss of $ 0 and $ 122 on disposal of the studio assets, respectively.

During the three months ended March 31, 2025 and 2024, the Company also ceased operations at 0 and 11 company-owned transition studios, respectively.

The Company refranchised or closed company-owned transition studios under its restructuring plan that started in the third quarter of 2023.

During the six months ended June 30, 2025 and 2024, the Company refranchised operations at 0 and 10 company-owned transition studios, respectively, received no proceeds in either period, and recorded a net loss of $ 0 and $ 122 on disposal of the studio assets, respectively.

During the six months ended June 30, 2025 and 2024, the Company also ceased operations at 0 and 11 company-owned transition studios, respectively.

The Company enfranchised or closed company-owned transition studios under its restructuring plan that started in the third quarter of 2023.

See Note 17 for further discussion of the Company's restructuring plan.

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For studio assets that are not deemed to be recoverable, the Company recognizes impairment for any excess of carrying value over the fair value of the studios, which is based on the expected net sales proceeds.

During the three months ended March 31, 2025 and 2024 , the Company did no t record any impairment charges related to studio assets.

S ee Note 8 for discussion of impairment charges related to right-of-use assets.

During the three and six months ended June 30, 2025 and 2024 , the Company did no t record any impairment charges related to studio assets.

See Note 9 for discussion of impairment charges related to right-of-use assets.

Lindora Acquisition

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Goodwill and intangible assets recognized from this acquisition are expected to be tax deductible.

During the three months ended March 31, 2025 and 2024 , the Company incurred $ 0 and $ 428 , respectively, of transaction costs related to acquisitions, which is included in acquisition and transaction expenses in the condensed consolidated statements of operations.

See Note 7 for discussion of impairment charges related to goodwill and intangible assets.

The Company did no t incur any transaction costs related to acquisitions during the three and six months ended June 30, 2025.

During the three and six months ended June 30, 2024, the Company incurred $ 100 and $ 528 , respectively, of transaction costs related to acquisitions, which is included in acquisition and transaction expenses in the condensed consolidated statements of operations.

Pro forma financial information and revenue from the date of acquisition have not been provided for these acquisitions as they are not material either individually or in the aggregate.

Divestiture of Stride brand – On February 13, 2024, the Company entered into an agreement with a buyer, pursuant to which the Company divested the Stride brand, including the intellectual property, franchise rights and franchise agreements for open studios.

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

The buyer of the Stride brand is a former member of management and shareholder of the Company.

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The Company classifies these contract liabilities as either current deferred revenue or non-current deferred revenue in the condensed consolidated balance sheets based on the anticipated timing of delivery.

The following table reflects the change in franchise and area development and brand fee contract liabilities for the three months ended March 31, 2025 .

The following table reflects the change in franc hise and area development and brand fee contract liabilities for the six months ended June 30, 2025 .

Other deferred revenue amounts of $ 13,111 are excluded from the table as the original expected duration of the contracts is one year or less.

1 unchanged sentence

Balance at December 31, 2024

Revenue recognized that was included in deferred revenue at the beginning

of the year (1)

Revenue recognized that was included in deferred revenue at the beginning of the year (1)

Increase, excluding amounts recognized as revenue during the period

Balance at March 31, 2025

(1) Includes revenue recognized as a result of terminations of $ 815 for the three months ended March 31, 2025 .

Balance at June 30, 2025

(1) Includes revenue recognized as a result of ter minations of $ 1,447 for the six months ended June 30, 2025 .

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

The following table illustrates estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of March 31, 2025.

The following table illustrates estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of June 30, 2025.

The expected future recognition period for deferred franchise and area development fees related to unopened studios is based on management’s best estimate of the beginning of the franchise license term for those studios.

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The associated expense is classified within costs of franchise and service revenue in the condensed consolidated statements of operations.

At March 31, 2025 and December 31, 2024 , there were approximately $ 3,970 and $ 3,940 of current deferred costs and approximately $ 38,453 and $ 39,684 in non-current deferred costs, respectively.

The Company recognized franchise sales commission expense of approximately $ 1,368 and $ 2,845 for the three months ended March 31, 2025 and 2024 , respectively.

At June 30, 2025 and December 31, 2024 , there were approximately $ 3,899 and $ 3,940 of current deferred commission costs and approximately $ 37,444 and $ 39,684 in non-current deferred commission costs, respectively.

The Company recognized franchise sales commission expense of approximately $ 1,313 and $ 2,681 for the three and six months ended June 30, 2025, respectively, and $ 3,292 and $ 6,137 for the three and six months ended June 30, 2024 , respectively.

Note 6 – Property and Equipment

Property and equipment consisted of the following:

Furniture and equipment

Computers and software

Leasehold improvements

Construction in progress

accumulated depreciation

Total property and equipment

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Depreciation expense for the three and six months ended June 30, 2025 was $ 997 and $ 1,983 , respectively, and $ 1,590 and $ 3,078 for the three and six months ended June 30, 2024, respectively.

During the three and six months ended June 30, 2025 , the Company recorded an impairment of $ 1,470 , p rimarily related to software assets for which the Company no longer had established cash flows to support continued recognition of such assets.

No impairment of property and equipment was recorded for the six months ended June 30, 2024.

Property and equipment impairment expenses are included within impairment of goodwill and other noncurrent assets in the Company's condensed consolidated statements of operations.

Note 7 – Goodwill and Intangible Assets

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Goodwill is not amortized but is tested annually for impairment or more frequently if indicators of potential impairment exist.

The carrying value of goodwill at March 31, 2025 and December 31, 2024, totaled $ 135,240 .

Cumulative goodwill impairment was $ 47,920 at March 31, 2025 and December 31, 2024.

At March 31, 2025 , the trademark intangible asset related to the CycleBar reporting unit of $ 9,649 , and the franchise agreements intangible assets related to BFT reporting unit of $ 1,047 , are considered to be at a heightened risk of future impairment in the event of significant unfavorable changes in assumptions, including forecasted future cash flows, as well as discount rates and other macroeconomic factors.

The carrying value of goodwill at June 30, 2025 and December 31, 2024, totaled $ 127,789 and $ 135,240 , respectively.

Cumulative goodwill impairment was $ 55,371 and $ 47,920 at June 30, 2025 and December 31, 2024, respectively.

The impairment charges are included within impairment of goodwill and other noncurrent assets in the Company's condensed consolidated statements of operations.

During the quarter ended June 30, 2025, the Company determined it was necessary to re-evaluate goodwill of the BFT and Lindora reporting units for impairment due to indicators of potential impairment resulting from a decline in forecasted and actual cash flows.

Therefore, the Company performed a quantitative assessment of the fair value of the reporting units using an income approach with assumptions that are considered Level 3 inputs and concluded that the carrying value of the BFT and Lindora reporting units exceeded their fair values, resulting in a goodwill impairment of $ 5,105 and $ 2,346 , respectively, and no goodwill remaining for the BFT and Lindora reporting units.

The fair value of the reporting units were determined by discounting estimated future cash flows, which were calculated based on revenue and expense long-term growth assumptions ranging from 9.0 % to 22.0 %, at a weighted average cost of capital (discount rate) of 19.0 % for the BFT reporting unit and revenue and expense long-term growth assumptions ranging from 6.0 % to 16.0 %, at a weighted average cost of capital (discount rate) of 26.0 % for the Lindora reporting unit.

The Company also determined that the carrying value of the trademark intangible asset related to the CycleBar reporting unit was in excess of its fair value and recognized an impairment loss of $ 3,449 during the quarter ended June 30, 2025.

As this was a partial impairment, the trademark intangible asset, which was $ 6,200 as of June 30, 2025, is considered to be at a heightened risk of future impairment in the event of significant unfavorable changes in assumptions, including forecasted future cash flows, as well as discount rates and other macroeconomic factors.

At June 30, 2025 , the goodwill related to the Pure Barre reporting unit of $ 42,548 is at a heightened risk of future impairment if the fair value of the Pure Barre reporting unit, and its associated assets, decreases in value due to the amount and timing of expected future cash flows, an inability to execute management’s business strategies or general market conditions, such as economic downturns, and changes in interest rates, including discount rates.

Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates.

If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods.

During the quarter ended June 30, 2024, the Company determined it was necessary to re-evaluate goodwill of the CycleBar reporting unit for impairment due to indicators of potential impairment resulting from a decline in forecasted and actual cash flows.

Therefore, the Company performed a quantitative assessment of the fair value of the reporting unit using an income approach with assumptions that are considered Level 3 inputs and concluded that the carrying value of the CycleBar reporting unit exceeded its fair value, resulting in a goodwill impairment of $ 10,911 and no goodwill remaining for the CycleBar reporting unit.

The fair value of the reporting unit was determined by discounting estimated future cash flows, which were calculated based on revenue and expense long-term growth assumptions ranging from ( 1.0 %) to 3.0 %, at a weighted average cost of capital (discount rate) of 16.0 %.

In addition, the Company determined that the franchise agreements intangible assets related to the CycleBar reporting unit were also impaired and recognized an impairment loss of $ 1,178 in the second quarter of 2024.

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

At March 31, 2025 , the goodwill related to the Pure Barre and BFT reporting units of $ 42,548 and $ 5,105 , respectively, are at a heightened risk of future impairment if the fair value of the Pure Barre and BFT reporting units, and their associated assets, decreases in value due to the amount and timing of expected future cash flows, an inability to execute management’s business strategies or general market conditions, such as economic downturns, and changes in interest rates, including discount rates.

Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates.

Intangible assets consisted of the following:

March 31, 2025

June 30, 2025

December 31, 2024

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Total intangible assets

Amortization expense was $ 1,970 and $ 2,948 , for the three months ended March 31, 2025 and 2024, respectively.

Amortization expense was $ 1,976 and $ 3,946 , for the three and six months ended June 30, 2025, respectively, and $ 2,927 and $ 5,875 for the three and six months ended June 30, 2024, respectively.

The anticipated future amortization expense of intangible assets is as follows:

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(i) monthly payments of interest on the Term Loans and (ii) quarterly principal payments equal to 0.25 % of the original principal amount of the Term Loans.

Borrowings under the Term Loan Facility bear interest at a per annum rate of, at the Company’s option, either (a) the term secured overnight financing rate (“Term SOFR”) plus a Term SOFR Adjustment (as defined in the Credit Agreement per the fifth amendment), plus a margin of 6.50 % or (b) the Reference Rate (as defined in the Credit Agreement) plus a margin of 5.50 % ( 10.85 % at March 31, 2025).

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The Credit Agreement also contains mandatory prepayments of the Term Loa ns with:

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and (v) up to $ 60,000 of net proceeds in connection with an initial public offering of at least $ 200,000 , subject to certain exceptions.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Unless agreed in advance, a ll voluntary prepayments and certain mandatory prepayments of the Term Loan made:

13 unchanged sentences

The waiver permits the exclusion of certain non-recurring legal expenses from the calculation of EBITDA through March 31, 2026.

As of March 31, 2025, the Company was in compliance with these covenants.

As of June 30, 2025, the Company was in compliance with these covenants.

The Credit Agreement also contains customary events of default, which could result in acceleration of amounts due under the Credit Agreement.

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The proceeds of the Seventh Amendment will be used for general corporate purposes, including working capital, lease liabilities, and legal expenses arising from regulatory matters.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

On March 14, 2025, the Company entered into an eighth amendment (the “Eighth Amendment”) to the Credit Agreement.

2 unchanged sentences

The Eighth Amendment also increased the amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the Eighth Amendment Incremental Term Loans) commencing on March 31, 2025 to $ 1,374 .

The Company incurred debt issuance costs of $ 90 and $ 269 for the three months ended March 31, 2025 and 2024 , respectively.

Debt issuance cost amortization and write off amounted to $ 50 and $ 72 for the three months ended March 31, 2025 and 2024, respectively.

Unamortized debt issuance costs as of March 31, 2025 and December 31, 2024 , were $ 337 and $ 297 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Unamortized original issue discount as of March 31, 2025 and December 31, 2024 , was $ 14,657 and $ 4,967 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Unamortized exit fees as of March 31, 2025 and December 31, 2024, were $ 7,096 and $ 0 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Principal payments on outstanding balances, including exit fee, of long-term debt as of March 31, 2025 were as follows:

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The Company incurred debt issuance costs of $ 90 and $ 269 for the six months ended June 30, 2025 and 2024 , respectively.

Debt issuance cost amortization and write off amounted to $ 37 and $ 87 for the three and six months ended June 30, 2025 , respectively, and $ 52 and $ 124 for the three and six months ended June 30, 2024, respectively.

Unamortized debt issuance costs as of June 30, 2025 and December 31, 2024, we re $ 301 and $ 297 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Unamortized original issue discount as of June 30, 2025 and December 31, 2024 , was $ 13,086 and $ 4,967 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Unamortized exit fees as of June 30, 2025 and December 31, 2024, were $ 6,336 and $ 0 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Principal payments on outstanding balances, including exit fee, of long-term debt as of June 30, 2025 were as follows:

Remainder of 2025

The carrying value of the Company’s long-term debt approximated fair value as of March 31, 2025 and December 31, 2024 , due to the variable interest rate, which is a Level 2 input.

The carrying value of the Company’s long-term debt approximated fair value as of June 30, 2025 and December 31, 2024 , due to the variable interest rate, which is a Level 2 input.

Note 9 – Leases

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Certain real estate leases include one or more options to renew.

The Company has guaranteed lease agreements for certain franchisees.

See Note 16 of Notes to Condensed Consolidated Financial Statements for additional information.

Right-of-use (“ROU”) assets from operating leases are subject to the impairment guidance in ASC Topic 360, Property, Plant, and Equipment , and are reviewed for impairment when indicators of impairment are present.

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When determining the fair value of the ROU asset, the Company estimated what market participants would pay to lease the assets assuming the highest and best use in the assets' current forms.

The Company recognized ROU asset impairment charges of $ 1,915 and $ 0 during the three months ended March 31, 2025 and 2024, respectively.

The Company recognized ROU asset impairment charges of $ 558 and $ 2,473 during the three and six months ended June 30, 2025 , respectively.

There were no ROU asset impairment charges during the three and six months ended June 30, 2024.

Supplemental balance sheet information related to leases is summarized as follows:

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Balance Sheet Location

March 31, 2025

June 30, 2025

December 31, 2024

5 unchanged sentences

Lease liability

The following table presents the components of lease expense during the three and six months ended June 30, 2025 and 2024:

Three months ended June 30,

Six Months Ended June 30,

Operating lease costs

Variable lease costs

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

The following table presents the components of lease expense during the three months ended March 31, 2025 and 2024:

Three months ended March 31,

Operating lease costs

Variable lease costs

The following table presents the supplemental cash flow information related to operating leases during the three months ended March 31, 2025 and 2024:

Three months ended March 31,

The following table presents the supplemental cash flow information related to operating leases during the three and six months ended June 30, 2025 and 2024:

Three months ended June 30,

Six Months Ended June 30,

Cash paid for amounts included in the measurement of operating lease liabilities

Lease liabilities arising from new ROU assets

The following table presents other information related to leases:

March 31, 2025

June 30, 2025

December 31, 2024

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Weighted average discount rate

Maturities of lease liabilities as of March 31, 2025 are summarized as follows:

Maturities of lease liabilities as of June 30, 2025 are summarized as follows:

Remainder of 2025

9 unchanged sentences

In 2023 and 2022, the Rumble Sellers borrowed an additional $ 4,400 and $ 5,050 , respectively, under the debt financing agreement which was recorded as receivable from shareholder within equity.

During the three months ended March 31, 2025 and 2024, the Company recorded $ 384 and $ 349 of interest-in-kind, respectively, which was recorded as interest income and an increase to receivable from shareholder within equity.

The Company recorded $ 398 and $ 782 of interest-in-kind during the three and six months ended June 30, 2025 , respectively, and $ 360 and $ 709 during the three and six months ended June 30, 2024, respectively, which was recorded as interest income and an increase to receivable from shareholder within equity.

Xponential Fitness, Inc.

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The outstanding receivable from shareholder and the multi-tranche term loan are collateralized by 75 shares of Class B common stock held by the former owner, which were reclassified to treasury stock, and by the 105 RSUs.

As of March 31, 2025 , the former owner of Row House borrowed $ 480 , which was recorded as a reduction to liability.

In March 2023, Spartan Fitness Holdings, LLC (“Spartan Fitness”), which currently owns and operates 117 Club Pilates studios, entered into a unit purchase agreement with Snapdragon Spartan Investco LP (the “Spartan SPV”), a special purpose vehicle controlled and managed by a member of the Company’s board of directors, pursuant to which Spartan SPV agreed to invest in the equity of Spartan Fitness.

As of June 30, 2025 , the former owner of Row House borrowed $ 480 , which was recorded as a reduction to liability.

In March 2023, Spartan Fitness Holdings, LLC (“Spartan Fitness”), which currently owns a nd operates 126 Club Pilates studios, entered into a unit purchase agreement with Snapdragon Spartan Investco LP (the “Spartan SPV”), a special purpose vehicle controlled and managed by a member of the Company’s board of directors, pursuant to which Spartan SPV agreed to invest in the equity of Spartan Fitness.

In addition, the same member of the Company’s board of directors also invested as a limited partner in the Spartan SPV.

1 unchanged sentence

Spartan Fitness also owns the rights to 78 Club Pilates licenses to open additional new units.

The Company recorded franchise, equipment and marketing fund revenue aggregating $ 3,113 and $ 2,104 , during the three months ended March 31, 2025 and 2024, respectively, from studios owned by Spartan Fitness.

The Company recorded franchise, equipment and marketing fund revenue aggregating $ 3,386 and $ 6,499 , during the three and six months ended June 30, 2025 , respectively, and $ 2,345 and $ 4,449 , during the three and six months ended June 30, 2024, respectively, from studios owned by Spartan Fitness.

The Company previously earned revenues and had accounts receivable from a franchisee comprised of a former member of the Company's senior management together with their spouse, a former employee of the Company.

The former member of the Company's senior management resigned from the Company effective November 4, 2024, ending the related party relationship, and the former member’s spouse resigned from the Company on April 4, 2025 .

Revenues from this affiliate, consisting of franchise revenue, marketing fund revenue and merchandise revenue, were $ 68 for the three months ended March 31, 2024 and no accounts receivable were recorded as of December 31, 2024, for such sales.

The Company provided $ 239 of studio support to this franchisee during the three months ended March 31, 2024.

Revenues from this affiliate, consisting of franchise revenue, marketing fund revenue and merchandise revenue, were $ 47 and $ 115 for the three and six months ended June 30, 2024 , respectively, and no accounts receivable were recorded as of December 31, 2024, for such sales.

The Company provided $ 716 and $ 955 of studio support to this franchisee during the three and six months ended June 30, 2024, respectively.

Studio support to this franchisee included, among other things, cash payments, royalty relief, rent assistance, product and merchandise, and lease guarantees.

The Company provided additional services to this franchisee in the form of assistance from its internal special operations team which focuses on improving studio performance, for which the Company does not allocate any amounts to the franchisees for such employee salaries and bonuses.

In May 2024, the Company’s board of directors approved the sale of one of the Company’s vehicles to the Company’s former Chief Executive Officer and board member, for $ 275 .

The former Chief Executive Officer paid for the vehicle with a $ 275 reduction of TRA payments and partner distributions owed to him by the Company.

The Company recognized an $ 18 gain on sale of asset during the three months ended June 30, 2024, which was included in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations.

Note 11 – Redeemable Convertible Preferred Stock

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Certain embedded features in the Convertible Preferred require bifurcation.

However, the fair value of such embedded features was immaterial upon issuance and as of March 31, 2025.

However, the fair value of such embedded features was immaterial upon issuance and as of June 30, 2025.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The Convertible Preferred ranks senior to the Company’s common stock with respect to the payment of dividends and distribution of assets upon liquidation, dissolution and winding up.

3 unchanged sentences

however, any shares of Series A-1 preferred stock issued to any of the lenders party to the Credit Agreement will convert on a one-to-one basis to shares of Series A preferred stock when permitted under relevant antitrust restrictions.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

At any time after July 23, 2029, upon a sale of the Company, or at any time after the occurrence and continuance of an event of default, holders of the Convertible Preferred have the right to require the Company to redeem all, but not less than all, of the Preferred shares then outstanding at a redemption price in cash equal to the greater of (i) the fair market value per share of Preferred Stock (based on the average volume-weighted average price per share of Class A common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the redemption notice), and (ii) the fixed liquidation preference, plus accrued and unpaid dividends.

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During the three months ended June 30, 2024, the Company elected the paid-in-kind option for the Convertible Preferred quarterly preferential coupon resulting in an increase in the fixed liquidation preference of $ 2,150 , which was recorded as a decrease to additional paid-in-capital and was included in the calculation of earnings (loss) per share.

At March 31, 2025 and December 31, 2024, the Company recognized the preferred maximum redemption value of $ 116,810 , which is the maximum redemption value on the earliest redemption date based on fair market value per share of Convertible Preferred (based on the average volume-weighted average price per share of Class A common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the redemption notice and 115 outstanding shares of Convertible Preferred at March 31, 2025 and December 31, 2024).

The recording of the preferred maximum redemption value was treated as deemed contribution (dividend), which was included in the calculation of earnings (loss) per share and resulted in a net increase (decrease) of $ 0 and $ ( 8,106 ) to additional paid-in-capital for the three months ended March 31, 2025 and 2024 , respectively.

At June 30, 2025 and December 31, 2024, the Company recognized the preferred maximum redemption val ue of $ 116,810 , which is the maximum redemption value on the earliest redemption date based on fair market value per share of Convertible Preferred (based on the average volume-weighted average price per share of Class A common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the redemption notice and 115 outstanding shares of Convertible Preferred at June 30, 2025 and December 31, 2024).

The recording of the preferred maximum redemption value was treated as deemed contribution (dividend), which was included in the calculation of earnings (loss) per share and resulted in a net increase (decrease) of $ 0 and $ ( 6,094 ) to additional paid-in-capital for the six months ended June 30, 2025 and 2024 , respectively.

Note 12 – Stockholders' Equity (Deficit)

Common stock – During the three months ended March 31, 2025 and 2024, pursuant to the Amended Limited Liability Company Agreement of XPO Holdings (“Amended LLC Agreement”), certain Continuing Pre-IPO LLC Members exchanged their LLC units for 1,000 and 78 shares of Class A common stock on a one-for-one basis, respectively.

Common stock – During the six months ended June 30, 2025 and 2024, pursuant to the Amended Limited Liability Company Agreement of XPO Holdings (“Amended LLC Agreement”), certain Continuing Pre-IPO LLC Members exchanged their LLC units for 1,001 and 476 shares of Class A common stock on a one-for-one basis, respectively.

Noncontrolling interests – Following the IPO, XPO Inc.

4 unchanged sentences

Future redemptions or exchanges of LLC Units by the Continuing Pre-IPO LLC Members will result in a change in ownership and reduce the amount recorded as noncontrolling interest and increase additional paid-in capital.

During the three months ended March 31, 2025 and 2024, the Company experienced a change in noncontrolling interests ownership due to the conversion of Class B to Class A shares and as such, has rebalanced the related noncontrolling interests balance.

During the six months ended June 30, 2025 and 2024, the Company experienced a change in noncontrolling interests ownership due to the conversion of Class B to Class A shares and as such, has rebalanced the related noncontrolling interests balance.

The Company calculated the rebalancing based on the net assets of XPO LLC, after considering the preferred shareholders' claim on the net assets of XPO LLC.

The Company used the liquidation value of the preferred shares for such rebalancing.

The following table summarizes the ownership of XPO LLC as of March 31, 2025:

Ownership percentage

Noncontrolling interests

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

The following table summarizes the ownership of XPO LLC as of June 30, 2025:

Ownership percentage

Noncontrolling interests

Note 13 – Equity Compensation

Equity classified restricted stock units – The following table summarizes aggregate activity for RSUs for the three months ended March 31, 2025:

Equity classified restricted stock units – The following table summarizes aggregate activity for RSUs for the six months ended June 30, 2025:

Weighted Average

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Forfeited, expired, or canceled

Outstanding at March 31, 2025

Outstanding at June 30, 2025

RSUs are valued at the Company’s closing stock price on the date of grant and generally vest over a one - to four-year period.

3 unchanged sentences

Management performs a regular assessment to determine the likelihood of meeting the related metrics and adjusts the expense recognized if necessary.

During the three months ended March 31, 2025, 13 performance-based RSUs were earned and issued and 37 performance based RSUs were forfeited.

The Company did not grant any performance-based RSUs during the three months ended March 31, 2025.

Stock-based compensation expense – Aggregate stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows:

Three months ended March 31,

During the six months ended June 30, 2025, 26 performance-based RSUs were earned and issued and 95 performance based RSUs were forfeited.

The Company did not grant any performance-based RSUs during the six months ended June 30, 2025.

Stock-based compensation expense – Aggregate stock-based compensation expense recognized in the conden sed consolidated statements of operations was as follows:

Three months ended June 30,

Six Months Ended June 30,

Selling, general and administrative

Total stock-based compensation expense, before tax

Income tax benefit

Income tax benefit (expense)

Total stock-based compensation expense, after tax

1 unchanged sentence

Due to the Company's full valuation allowance on its net deferred tax assets, there is no income tax benefit on the unvested RSUs.

At March 31, 2025, the Company had $ 21,000 of total unamortized compensation expense related to non-vested RSUs.

At June 30, 2025, the Company had $ 20,075 of total unamortized compensation expense related to non-vested RSUs.

That cost is expected to be recognized over a weighted-average period of 2.13 years.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Note 14 – Income Taxes and Tax Receivable Agreement

6 unchanged sentences

The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from XPO Holdings, based on its 71.9 % economic interest in XPO Holdings.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The provision for income taxes differs from the amount of income tax computed by applying the applicable U.S.

The provision for income tax es differs from the amount of income tax computed by applying the applicable U.S.

statutory federal income tax rate of 21 % to income (loss) before income taxes due to XPO Holdings’ pass-through structure for U.S.

income tax purposes, state taxes, preferred stock dividends, non-deductible expenses, change in fair value of contingent consideration and the valuation allowance against the deferred tax asset.

The effective tax rate for the three months ended March 31, 2025 and 2024 , is ( 22.3 %) and 1.2 %, respectively.

During the three months ended March 31, 2025 and 2024 , the Company recognized income tax expense/(benefit) of $ 485 and $( 47 ), respectively, on its share of pre-tax book income (loss), exclusive of the noncontrolling interest of 28.3 % , and 34.3 %, respectively.

As of March 31, 2025, management determined based on applicable accounting standards and the weight of all available evidence, it was not more likely than not (“MLTN”) that the Company will generate sufficient taxable income to realize its deferred tax assets including the difference in tax basis in excess of the financial reporting value for its investment in XPO Holdings.

Consequently, the Company has established a full valuation allowance against its deferred tax assets as of March 31, 2025.

income tax purposes, state taxes, preferred stock dividends, non-deductible expenses, change in fair value of contingent consideration, impairments which are not currently deductible, and the valuation allowance against the deferred tax asset.

The effective tax rate for the three and six months ended June 30, 2025 , was 18.8 % and ( 154.5 %), respectively, and ( 0.9 %) and ( 0.5 %) for the three and six months ended June 30, 2024.

During the three and six months ended June 30, 2025 , the Company recognized income tax expense of $ 312 and $ 797 , respectively, on its share of pre-tax book income (loss), exclusive of the noncontrolling interest of 28.1 % .

During the three and six months ended June 30, 2024 , the Company recognized income tax expense of $ 132 and $ 85 , respectively, on its share of pre-tax book income (loss), exclusive of the noncontrolling interest of 33.3 %, respectively.

As of June 30, 2025, management determined based on applicable accounting standards and the weight of all available evidence, it was not more likely than not (“MLTN”) that the Company will generate sufficient taxable income to realize its deferred tax assets including the difference in tax basis in excess of the financial reporting value for its investment in XPO Holdings.

Consequently, the Company has established a full valuation allowance against its deferred tax assets as of June 30, 2025.

In the event that management subsequently determines that it is MLTN that the Company will realize its deferred tax assets in the future over the recorded amount, a decrease to the valuation allowance will be made, which will reduce the provision for income taxes.

The Company is subject to taxation and files income tax returns in the United States federal jurisdiction and many state and foreign jurisdictions.

The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions.

XPO Holdings recently received an IRS audit letter for tax year 2023.

As the audit has just commenced, the Company is currently not aware of any adjustments.

The Company is not currently under examination by income tax authorities in state or other jurisdictions.

The Company’s tax returns remain open for examination in the U.S.

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The Company does not expect a significant change in unrecognized tax benefits during the next 12 months.

On July 4, 2025, new U.S.

tax legislation was signed into law, which enacts significant changes to U.S.

tax and related laws, including immediate expensing of certain capital expenditures and favorable impacts to the business interest expense limitation.

The Company is currently evaluating the impact the new tax law will have on its financial condition and results of operations.

Preliminarily, the Company does not anticipate a material change to its effective income tax rate and its net deferred income tax assets, as the Company maintains a full valuation allowance on the deferred tax assets of XPO Inc.

The impact of the tax law changes will be included in the Company’s financial statements beginning in the three months ending September 30, 2025.

Tax receivable agreement – In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA”) pursuant to which the Company is generally required to pay to the other parties thereto in the aggregate 85% of the amount of cash savings, if any, in U.S.

federal, state and local income tax or franchise tax that the Company actually realizes as a result of (i) certain favorable tax attributes acquired from Rumble Holdings LLC and H&W Investco Blocker II, LP (the “Blocker Companies”) in the mergers of the Blocker Companies with and into XPO Inc.

(including net operating losses and the Blocker Companies’ allocable share of existing tax basis);

federal, state and local income tax or franchise tax that the Company actually realizes as a result of (i) certain favorable tax attributes acquired from H&W Investco Blocker II, LP (the “Blocker Company”) in the merger of the Blocker Company with and into XPO Inc.

(including net operating losses and the Blocker Company’s allocable share of existing tax basis);

(ii) increases in the Company's allocable share of existing tax basis and tax basis adjustments that resulted or may result from (x) the IPO Contribution and the Class A-5 Unit Redemption, (y) future taxable redemptions and exchanges of LLC Units by Continuing Pre-IPO LLC Members and (z) certain payments made under the TRA;

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To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Company generates each year and the tax rate then applicable.

6 unchanged sentences

The TRA also provides that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, the TRA will not terminate but the Company’s or the Company’s successor’s obligations with respect to tax benefits would be based on certain assumptions, including that the Company or the Company’s successor would have sufficient taxable income to fully utilize the increased tax deductions and tax basis and other benefits covered by the TRA.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

As of March 31, 2025 , the Company has concluded, based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject to the TRA would not be realized.

As of June 30, 2025 , the Company has concluded, based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject to the TRA would not be realized.

Therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such deferred tax assets.

Except for $ 2,090 and $ 1,095 of the current and non-current portions of the TRA, respectively, $ 87,896 of the TRA liability was not recorded as of March 31, 2025 .

Except for $ 11 and $ 1,975 of the current and non-current portions of the TRA, respectively, $ 86,878 of the TRA liability was not recorded as of June 30, 2025 .

If utilization of the deferred tax asset subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations.

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The potential dilutive impact of redeemable Convertible Preferred shares and Class B common stock is evaluated using the as-if-converted method.

Weighted average shares of Class B common stock were 14,464 shares and 16,468 shares for the three months ended March 31, 2025 and 2024, respectively.

Weighted average shares of Class B common stock were 13,664 and 14,062 for the three and six months ended June 30, 2025, respectively, and 16,244 and 16,356 for the three and six months ended June 30, 2024, respectively.

The potentially dilutive impact of RSUs is calculated using the treasury stock method.

3 unchanged sentences

(amounts in thousands, except per share amounts)

The following table presents the calculation of basic and diluted loss per share of Class A common stock:

Three months ended March 31,

The following table presents the calculation o f basic and diluted loss per share of Class A common stock:

Three months ended June 30,

Six months ended June 30,

Net income (loss) attributable to XPO Inc.

net loss attributable to noncontrolling interests

dividends on preferred shares

deemed dividend

deemed contribution (dividend)

Net loss attributable to XPO Inc.

17 unchanged sentences

As of the end of each applicable reporting period, the Company reviews each of its legal proceedings and, where it is probable that a liability has been incurred, the Company accrues for all probable and reasonably estimable losses.

The Company accrued for estimated legal liabilities, where appropriate, or settlement agreements to resolve legal disputes and recorded an aggregate accrual of $ 28,729 , and $ 14,717 , which is included in accrued expenses in the condensed consolidated balance sheet as of March 31, 2025 and in accounts payable and accrued expenses as of December 31, 2024, respectively.

The Company accrued for estimated legal liabilities, where appropriate, or settlement agreements to resolve legal disputes and recorded an aggregate accrual of $ 29,952 , and $ 14,717 , which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, respectively.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The Company maintains insurance coverage which may cover certain losses and legal costs incurred.

When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount.

The Company recorded an insurance receivable of $ 5,000 , which is included in accounts receivable, net, in the condensed consolidated balance sheet as of March 31, 2025 .

Additionally, during the first quarter of 2025, the Company received proceeds of $ 9,750 in connection with its claims for insurance reimbursement for previous legal expenses, which was recognized within selling, general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 21, 2025.

The Company recorded an insurance receivable of $ 15,000 , which was included in accounts receivable, net, in the condensed consolidated balance sheet as of June 30, 2025 .

Additionally, during the six months ended June 30, 2025, the Company received proceeds of $ 14,750 in connection with its claims for insurance reimbursement for previous legal expenses.

Both the insurance receivable as of June 30, 2025 and the cash proceeds received during the six months ended June 30, 2025 were recognized within selling, general and administrative expenses in the condensed consolidated statements of operations for the six months ended June 30, 2025.

Various factors could affect the timing and amount of recovery and it is reasonably possible that the Company will need to adjust the estimate for insurance receivable or receive additional proceeds, exceeding our current estimated insurance receivable, based on new or additional information.

These changes could be material to the operating results and financial position of the Company for the period in which the adjustments to the receivable are recorded or additional proceeds are received.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

On November 22, 2023, former employees of a former franchisee of the Company filed a putative class action complaint in the United States District Court for the Southern District of Ohio, captioned Shannon McGill et al.

4 unchanged sentences

On April 4, 2025, the parties executed a settlement agreement and filed a motion seeking court approval of the settlement.

The Company recorded an accrual in anticipation of this settlement, which is included in accrued expenses in the condensed consolidated balance sheets as of March 31, 2025.

By order dated June 18, 2025 (the “Order”), the court enumerated requisite changes to the settlement structure, and the parties are working to comply with the Order.

The Company recorded an accrual in anticipation of this settlement, which is included in accrued expenses in the condensed consolidated balance sheets as of June 30, 2025.

On February 9, 2024, a federal securities class action lawsuit was filed against the Company and certain of the Company’s officers in the United States District Court for the Central District of California.

2 unchanged sentences

The Company filed a motion to dismiss the amended complaint on October 8, 2024.

On December 6, 2024, plaintiffs filed their opposition to the motion to dismiss and also filed a motion to supplement complaint the amended complaint, attaching a proposed supplemental complaint.

On December 6, 2024, plaintiffs filed their opposition to the motion to dismiss and also filed a motion to supplement the amended complaint, attaching a proposed supplemental complaint.

On February 18, 2025, the Court granted plaintiffs’ motion to supplement, denying defendants’ pending motion to dismiss as moot.

On February 28, 2025, plaintiffs filed the supplemented complaint.

On April 15, 2025, Defendants filed their motion to dismiss the supplemented complaint.

On February 28, 2025, plaintiffs filed the supplemental complaint.

On April 15, 2025, Defendants filed their motion to dismiss the supplemental complaint.

Instead of opposing Defendants’ motion to dismiss, on May 6, 2025, plaintiffs filed an amended consolidated complaint, which, among other things, adds three new entity defendants to the claim under Section 20(a) of the Exchange Act.

The Company intends to defend itself against this action by filing a motion to dismiss the amended consolidated complaint.

The Company filed a motion to dismiss the amended consolidated complaint on July 1, 2025 that is scheduled for hearing on November 14, 2025, as of the date of this Quarterly Report on Form 10-Q.

The litigation is preliminary in nature and involves substantial uncertainties, and the Company believes that a loss is not probable or estimable at this time.

However, there can be no assurance that such legal proceedings will not have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

On March 10, 2024, a shareholder derivative lawsuit was filed in the United States District Court for the Central District of California by Gideon Akande, allegedly on behalf of Xponential Fitness, Inc., against certain current officers and directors as defendants, and Xponential Fitness, Inc., as nominal defendant, for alleged wrongdoing committed by the individual defendants from July 26, 2021 to December 7, 2023.

7 unchanged sentences

On March 31, 2025, the Court consolidated the Nelson action with the previously consolidated Akande and Ayers action.

On July 21, 2025, the Company received a shareholder demand making allegations similar to those made by Ayers, Akande and Nelson.

The litigation is preliminary in nature and involves substantial uncertainties and the Company believes that a loss is not probable or estimable at this time.

However, there can be no assurance that such legal proceedings will not have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

On November 2, 2023, the Company received a letter from plaintiffs’ counsel purporting to represent unspecified current and former franchisees requesting settlement discussions.

6 unchanged sentences

On February 21, 2025, the Company received a complaint on behalf of a putative nationwide class alleging violations of the Telephone Consumer Protection Act.

The Company is investigating the matter and intends to vigorously defend itself.

Claims that the Company has violated the Telephone Consumer Protection Act could be costly to litigate, whether or not they have merit, and could expose the Company to substantial statutory damages or costly settlements.

The Company is not able to determine the likelihood of an outcome or provide an estimate of any reasonably possible loss or range of possible loss related thereto.

However, such losses, if incurred, could be material.

The matter was settled on June 24, 2025 for $ 18 .

Government investigations – On December 5, 2023, the Company was contacted by the Securities and Exchange Commission (the “SEC”), requesting that the Company provide it with certain information and documents.

3 unchanged sentences

On December 12, 2024, the Company received a subpoena from the Office of the Attorney General of the State of New York (the “NYAG”).

The Company intends to cooperate fully with the SEC, USAO, FTC, and NYAG in these investigations, and the Company has incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with matters relating to or arising from these investigations.

On July 1, 2025, the SEC informed the Company that it had concluded its investigation without action.

The Company intends to cooperate fully with the USAO, FTC, and NYAG in these investigations, and the Company has incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with matters relating to or arising from these investigations.

At this stage, the Company is unable to assess whether any material loss or adverse effect is reasonably possible as a result of these investigations or estimate the range of any potential loss.

1 unchanged sentence

On November 4, 2024, without admission of wrongdoing, the Company entered into a Consent Order with the DFPI to resolve the matter.

As part of the Consent Order, the Company paid an administrative penalty of $ 450 and agreed to various compliance training.

In addition, the Company has received inquiries from other states, including the Office of the Attorney General of the State of New York, the Office of the Attorney General of the State of Maryland, the Washington Department of Financial Institutions, and the Minnesota Department of Commerce regarding the Company’s compliance with applicable franchise laws.

As part of the Consent Order, the Company paid an administrative penalty of $ 450 , agreed to desist and refrain from any violations of the California Franchise Investment Law, agreed to various compliance training, and agreed to include a summary of the Consent Order in Item 3 of the Franchise Disclosure Documents.

In addition, the Office of the Attorney General of the State of New York, the Office of the Attorney General of the State of Maryland, the Washington Department of Financial Institutions, and the Virginia Division of Securities and Retail Franchising are investigating the Company’s compliance with applicable franchise laws.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Contingent consideration from acquisitions – In connection with the Reorganization Transactions, the Parent merged with and into the Member.

2 unchanged sentences

The fair value of the contingent consideration is measured at estimated fair value using a Monte Carlo simulation analysis, which represents a Level 3 measurement.

During the three months ended March 31, 2025 and 2024, the Company recorded an increase (decrease) of $ ( 8,661 ) and $ 4,450 to contingent consideration, respectively, which was recorded as acquisition and transaction expense (income).

At March 31, 2025 and December 31, 2024, contingent consideration of $ 8,644 and $ 17,305 was recorded as contingent consideration from acquisitions in the condensed consolidated balance sheets, respectively.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

During the three and six months ended June 30, 2025 , the Company recorded an increase (decrease) of $ ( 1,914 ) and $ ( 10,575 ) to contingent consideration, respectively, which was recorded as acquisition and transaction expense (income).

During the three and six months ended June 30, 2024 the Company recorded an increase (decrease) of $ ( 1,205 ) and $ 3,245 to contingent consideration, respectively, which was recorded as acquisition and transaction expense (income).

At June 30, 2025 and December 31, 2024 , contingent consideration of $ 6,730 and $ 17,305 was recorded as contingent consideration from acquisitions in the condensed consolidated balance sheets, respectively.

In connection with the October 2021 acquisition of BFT, the Company agreed to pay contingent consideration to the Seller consisting of quarterly cash payments based on the sales of the franchise system and equipment packages in the U.S.

1 unchanged sentence

The aggregate amount of such payments is subject to a maximum of $ 14,000 AUD (approximately $ 10,342 USD based on the currency exchange rate as of the purchase date).

At the acquisition date, the Company determined that the fair value of the estimated contingent consideration liability was $ 9,388 .

The Company recorded a change to contingent consideration of $ 2 and $ 41 during the three months ended March 31, 2025 and 2024, respectively, which was recorded as interest expense.

The Company recorded additional contingent consideration of $ 6 and $ ( 363 ) during the three months ended March 31, 2025 and 2024, respectively, which was recorded as acquisition and transaction expense (income).

In addition, the Company paid contingent consideration of $ 0 during the three months ended March 31, 2025 and 2024.

At March 31, 2025 and December 31, 2024, contingent consideration was $ 132 and $ 124 recorded as accrued expenses, respectively, in the condensed consolidated balance sheets.

At the acquisition date, the Company determined that the fa ir value of the estimated contingent consideration liability was $ 9,388 .

The Company recorded a change to contingent consideration of $ 0 and $ 2 during the three and six months ended June 30, 2025, respectively, and $ 36 and $ 77 during the three and six months ended June 30, 2024, respectively, which was recorded as interest expense.

The Company recorded additional contingent consideration of $ 0 and $ 6 during the three and six months ended June 30, 2025 , respectively, and $ ( 285 ) and $ ( 648 ) during the three and six months ended June 30, 2024, respectively, which was recorded as acquisition and transaction expense (income).

In addition, the Company paid contingent consideration of $ 0 during the three and six months ended June 30, 2025 and 2024.

At June 30, 2025 and December 31, 2024, contingent consideration was $ 132 and $ 124 recorded as accrued expenses, respectively, in the condensed consolidated balance sheets.

In connection with the January 2024 acquisition of Lindora, the Company agreed to pay contingent consideration to the seller subject to the achievement of certain milestones.

Payment of additional consideration is contingent on Lindora reaching two milestones based on a certain gross sales target and the number of operating clinics during the 15-month and 24-month period following the acquisition date, respectively.

Payment of additi onal consideration is contingent on Lindora reaching two milestones based on a certain gross sales target and the number of operating clinics during the 15-month and 24-month period following the acquisition date, respectively.

At the acquisition date, the Company determined that the fair value of the estimated contingent consideration liability was $ 446 .

The Company recorded additional contingent consideration of $ 31 and $ 17 during the three months ended March 31, 2025 and 2024, which was recorded as interest expense, respectively.

The Company recorded a change to contingent consideration of $ 17 and $ 0 during the three months ended March 31, 2025 and 2024, which was recorded as acquisition and transaction expense, respectively.

In addition, the Company paid contingent consideration of $ 500 and $ 0 during the three months ended March 31, 2025 and 2024, respectively.

At March 31, 2025 and December 31, 2024, contingent consideration was $ 429 and $ 457 recorded as accrued expenses, respectively, and $ 0 and $ 424 recorded as contingent consideration from acquisitions, respectively, in the condensed consolidated balance sheets.

The Company recorded additional contingent consideration of $ 15 and $ 46 during the three and six months ended June 30, 2025, respectively, and $ 17 and $ 34 during the three and six months ended June 30, 2024, respectively, which was recorded as interest expense.

The Company recorded a change to contingent consideration of $ ( 1 ) and $ 16 during the three and six months ended June 30, 2025 , respectively, and $ 173 during the three and six months ended June 30, 2024, respectively, which was recorded as acquisition and transaction expense (income).

In addition, the Company paid contingent consideration of $ 500 during the six months ended June 30, 2025, and $ 0 during the six months ended June 30, 2024.

At June 30, 2025 and December 31, 2024, contingent consideration was $ 443 and $ 457 recorded as accrued expenses, respectively, and $ 0 and $ 424 recorded as contingent consideration from acquisitions, respectively, in the condensed consolidated balance sheets.

Letter of credit – In July 2022, the Company entered into an agreement with a third-party financing company, who provides loans to the Company's qualified franchisees, pursuant to which the Company serves as guarantor for such loans.

2 unchanged sentences

The Company deposited cash in a restricted account as collateral for the standby letter of credit.

The Company has determined the fair value of these guarantees at inception was not material, and as of March 31, 2025 and December 31, 2024, a $ 1,000 and $ 150 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively.

The Company has determined the fair value of these guarantees at inception was not material, and as of June 30, 2025 and December 31, 2024 , a $ 651 and $ 150 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively, which is included in accrued expenses in the condensed consolidated balance sheets.

Lease guarantees – The Company has guaranteed lease agreements for certain franchisees.

The Company’s maximum obligation, as a result of its guarantees of leases, is approximately $ 2,757 and $ 3,617 as of March 31, 2025 and December 31, 2024, respectively, and would only require payment upon default by the primary obligor.

The Company has determined the fair value of these guarantees at inception is not material, and as of March 31, 2025 and December 31, 2024, a $ 1,146 and $ 2,034 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively.

The Company’s potential obligation, as a result of its guarantees of leases, is approximately $ 2,173 and $ 3,617 as of June 30, 2025 and December 31, 2024, respectively, and would only require payment upon default by the primary obligor.

The Company has determined the fair value of these guarantees at inception is not material, and as of June 30, 2025 and December 31, 2024 , a $ 1,175 and $ 2,034 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively.

Xponential Fitness, Inc.

10 unchanged sentences

The components of the restructuring charges were as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Impairment and accelerated amortization of right-of-use assets

Contract termination and other associated costs

Loss (gain) on lease terminations and sale or disposal of assets, net (1)

Loss on lease terminations and sale or disposal of assets, net (1)

Other restructuring costs

1 unchanged sentence

(1) Loss on lease termination and sale or disposal of assets represents net losses on studio lease terminations and sales or disposal of studio assets primarily related to studio property and equipment.

Amount for the three months ended March 31, 2024 is net of, among other things, a $ 3,636 gain on lease termination related to a lease for which the Company had recognized accelerated right-of-use asset amortization.

Amount for the three and six months ended June 30, 2025 is net of, among other things, a $ 694 gain on lease termination related to a lease for which the Company had previously recognized an impairment on the related right-of-use asset.

Amount for the three and six months ended June 30, 2024 is net of, among other things, a $ 421 and $ 4,057 gain, respectively, on lease termination related to a lease for which the Company had recognized accelerated right-of-use asset amortization.

The restructuring charges are recorded within the following financial statement captions on the Company’s condensed consolidated statements of operations:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Costs of product revenue

5 unchanged sentences

Charges incurred

Balance at March 31, 2025

Balance at June 30, 2025

Xponential Fitness, Inc.

8 unchanged sentences

The CODM evaluates the operating results through consolidated net income (loss).

The CODM uses consolidated net income (loss) predominantly in the annual budget and forecasting process and to monitor budget-to-actual variances on a monthly basis in order to assess performance and allocate resources.

During the three months ended March 31, 2025 and 2024, the Company generated $ 2,617 and $ 3,588 of revenue outside of the United States, respectively, primarily from franchise development fees and franchise royalty fees earned from master franchisees.

As of March 31, 2025 and 2024, the Company did not have material assets located outside of the United States.

The CODM uses consolidated net income (loss) predominantly in the annual budget and forecasting process and to monitor budget-to-actual variances on a mo nthly basis in order to assess performance and allocate resources.

The Company generated $ 2,731 and $ 5,348 of revenue outside of the United States during the three and six months ended June 30, 2025, respectively, and $ 3,502 and $ 7,090 during the three and six months ended June 30, 2024, respectively.

Revenue generated outside of the United States is primarily from franchise development fees and franchise royalty fees earned from master franchisees.

As of June 30, 2025 and 2024, the Company did not have material assets located outside of the United States.

The following table presents the financial information for the Company’s one reportable and operating segment:

Three Months Ended March 31,

Three Months Ended June 30,

Six months ended June 30,

Total revenue, net

13 unchanged sentences

Interest expense

Income taxes (benefit)

Segment net loss

(1) Other segment items include restructuring expenses of $ 151 and $ 4,443 for the three months ended March 31, 2025 and 2024 , respectively.

Segment net income (loss)

(1) Other segment items include restructuring exp enses of $ 907 and $ 1,058 for the three and six months ended June 30, 2025, respectively, and $ 487 and $ 4,930 for the three and six months ended June 30, 2024 , respectively.

Other segment items also include travel expenses, insurance expense, TRA expense, and other selling, general and administrative expenses.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Note 19 – Subsequent events

Retail supply agreement

On July 3, 2025, the Company and Fit Commerce, a California Corporation (“FC”), entered into a Retail Supply Agreement (the “Agreement”) to be effective as of December 1, 2025 (the “Effective Date”).

All capitalized terms in this “retail supply agreement” section not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

The Agreement relates to the outsourcing of the Company’s retail merchandising, including the manufacturing and distribution, of any retail item sold by a franchisee, subject to terms and conditions outlined in the Agreement.

In addition, FC has agreed to purchase the Company’s existing retail inventory, subject to certain exceptions, no later than the Effective Date of the Agreement.

This strategic initiative shifts management of the franchisee retail experience from our in-house teams to a dedicated e-commerce provider, allowing us to focus on core business priorities.

Pursuant to the Agreement, FC will pay to the Company domestic and foreign commissions as well as direct-to-customer commissions (each, a “Commission” and collectively, “Commissions”) in connection with the sale of Products to the Company or its franchisees.

The domestic Commissions will be paid by FC to the Company based on each Contract Year (prorated for any partial Contract Year) in a minimum aggregate amount of $ 50,000 over the five-year period subject to certain adjustments provided in the Agreement.

Additionally, pursuant to the Agreement, FC is required to have a minimum amount of equity at its inception, including an amount in asset-based lending credit facilities and in inventory financing from FC’s vendors (collectively, the “Capital”).

If such Capital is not fully funded by October 31, 2025, the Agreement will be null and void with no further obligation between the parties except those stated in the prior and underlying agreements.

Rumble and CycleBar divestiture

On July 24, 2025, the Company entered into an agreement with a buyer, pursuant to which the Company divested the CycleBar and Rumble brands, including the intellectual property, franchise rights and franchise agreements for open studios, and retained certain liabilities, including liabilities related to known litigation, pre-litigation, and disputes as of the closing of the divestiture.

The Company will receive total consideration of $ 7,000 , including an initial cash payment of $ 2,000 and a final payment of $ 5,000 due within 60 days from the divestiture of the CycleBar and Rumble brands.

The Company has not yet finalized its accounting for the transaction.

The divestiture allows the Company to better focus and utilize its resources on its core brands and other opportunities which better align with its long-term strategies.

Appointment of new Chief Executive Officer and Director

On August 7, 2025, the Company announced that its board of directors had unanimously appointed Mr.

Mike Nuzzo as Chief Executive Officer effective August 7, 2025.

Nuzzo also joined the Company’s board of directors.

Nuzzo succeeds Mark King, who chose to retire from his position as Chief Executive Officer and as a member of the Company’s board of directors, also effective August 7, 2025.

On July 30, 2025, the Company entered into an employment agreement with Mr.

Nuzzo in connection with his appointment as Chief Executive Officer, to be effective as of August 7, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements