What changed in this filing

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Item 1. Financial Statements

2025-11-10 compared with 2025-08-08 · 363 added, 283 removed, 880 unchanged (42% of the section changed)

3 unchanged sentences

(amounts in thousands, except per share amounts)

September 30,

Current assets:

Cash, cash equivalents and restricted cash

Accounts receivable, net (Note 10)

Accounts receivable, net

Prepaid expenses and other current assets

Deferred costs, current portion

Notes receivable from franchisees, net

Notes receivable, net

Total current assets

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Long-term debt, net of current portion, discount and issuance costs

Lease liability

Lease liabilities, net of current portion

Other liabilities

2 unchanged sentences

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

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

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

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

Class A common stock, $ 0.0001 par value, 500,000 shares authorized, 35,126 and 33,660 shares

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

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

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

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

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

Treasury stock, at cost, 75 shares outstanding as of September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Revenue, net:

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Total other expense

Income (loss) before income taxes

Net income (loss)

net income (loss) attributable to noncontrolling interests

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

Loss before income taxes

net loss attributable to noncontrolling interests

Net loss attributable to Xponential Fitness, Inc.

Net loss per share of Class A common stock:

26 unchanged sentences

Balance at June 30, 2025

Equity-based compensation

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 September 30, 2025

See accompanying notes to condensed consolidated financial statements.

27 unchanged sentences

Balance at June 30, 2024

Equity-based compensation

Vesting of Class B 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 September 30, 2024

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

9 unchanged sentences

Non-cash interest

Gain on disposal of assets

Gain on disposal of assets and lease terminations

Gain on divestitures

Impairment of goodwill and other noncurrent assets

17 unchanged sentences

Notes receivable payments received

Acquisition of businesses

Proceeds from disposition of brands

Acquisition of business

Net cash used in investing activities

3 unchanged sentences

Debt issuance costs

Payment of preferred stock dividend and deemed cash dividend

Payment of preferred stock dividend

Payment of promissory note liability

Payments of contingent consideration

4 unchanged sentences

Payment received from shareholder (Note 10)

Reimbursement from shareholder (Note 10)

Net cash provided by (used in) financing activities

Increase (decrease) in cash, cash equivalents and restricted cash

Increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

4 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental cash flow information:

3 unchanged sentences

Capital expenditures accrued at period end

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

Contingent consideration receivable

Notes receivable

Non-cash proceeds from sale of asset

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

“Club Pilates,” a Pilates facility franchisor;

“CycleBar,” a premier indoor cycling franchise;

“StretchLab,” a fitness concept offering one-on-one assisted stretching services;

“YogaSix,” a yoga concept that concentrates on connecting to one’s body in a way that is energizing;

“Pure Barre,” a total body workout concept that uses the ballet barre to perform small isometric movements;

“Rumble,” a boxing concept that offers boxing-inspired group fitness classes;

“BFT,” a high-intensity interval training concept that combines functional, high-energy strength, cardio and conditioning-based classes, designed to achieve the unique health goals of its members;

and “Lindora,” a provider of medically guided wellness and metabolic health solutions, which was acquired on January 2, 2024.

The Company, through its boutique fitness brands, licenses its proprietary systems to franchisees who in turn operate studios to promote training and instruction programs to their club members within each vertical.

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 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.

On May 20, 2024, the Company divested the Row House brand, including the intellectual property, franchise rights and franchise agreements for open studios.

Additionally, during the three months ended September 30, 2024, the Company announced the wind down of AKT franchise operations.

See Note 4 for additional information.

In connection with the IPO, XPO Inc.

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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.

As of September 30, 2025 , the Company’s portfolio of five brands consisted of:

“Club Pilates,” a Pilates facility franchisor;

“StretchLab,” a fitness concept offering one-on-one assisted stretching services;

“YogaSix,” a yoga concept that concentrates on connecting to one’s body in a way that is energizing;

“Pure Barre,” a total body workout concept that uses the ballet barre to perform small isometric movements;

and “BFT,” a high-intensity interval training concept that combines functional, high-energy strength, cardio and conditioning-based classes, designed to achieve the unique health goals of its members.

Additionally, prior to the divestiture of the Lindora brand in September 2025, the Company, through its ownership of the Lindora brand, franchised clinics that provided 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 September 30, 2025 and 2024.

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”).

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 in-house teams to a dedicated e-commerce provider, allowing the Company to focus on its core business priorities.

Pursuant to the Agreement, FC will pay 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 the Company's 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 approximately $ 50,000 over the five-year period subject to certain adjustments provided in the Agreement.

Additionally, pursuant to the Agreement, FC is required to satisfy certain financing conditions (the “Financing Conditions”).

The Company is in the process of confirming whether all of such Financing Conditions have been met.

Xponential Fitness, Inc.

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(amounts in thousands, except per share amounts)

On September 19, 2025, the Company divested the Lindora brand, including the intellectual property, franchise rights and franchise agreements for open studios.

On July 24, 2025, the Company divested the CycleBar and Rumble brands, including the intellectual property, franchise rights and franchise agreements for open studios.

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

On May 20, 2024, the Company divested the Row House brand, including the intellectual property, franchise rights and franchise agreements for open studios.

Additionally, during the three months ended September 30, 2024, the Company announced the wind down of AKT franchise operations.

See Note 4 for additional information.

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”).

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

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.

See Note 4 for additional information.

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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 June 30, 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 and six months ended June 30, 2024.

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.

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 September 30, 2024, the Company identified misstatements impacting previously issued financial statements.

The accompanying condensed consolidated financial statements as of and for the three and nine months ended September 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 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.

The identified misstatements impacting the condensed consolidated financial statements for the three and nine months ended September 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 an understatement of costs of product revenue of $ 223 for the nine months ended September 30, 2024.

Additionally, there was an understatement of merchandise revenue of $ 39 and an overstatement of merchandise revenue of $ 74 for the three and nine months ended September 30, 2024, respectively.

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

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.

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 six months ended June 30, 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 six months ended June 30, 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 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.

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 six months ended June 30, 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 other service revenue of $ 134 for the nine months ended September 30, 2024.

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

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 $ 217 and $ 374 for the three and nine months ended September 30, 2024, respectively.

Impairment of assets – The 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 costs of product revenue for inventory write downs of $ 64 for the nine months ended September 30, 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 nine months ended September 30, 2024.

Equipment inventory – Equipment inventory which had been received by the Company was not properly recorded resulting in an understatement of costs of product revenue of $ 95 for the nine months ended September 30, 2024.

Costs 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 nine months ended September 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:

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

Condensed Consolidated Statement of Operations

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

As Previously Reported

1 unchanged sentence

Merchandise revenue

Other service revenue

Total revenue, net

1 unchanged sentence

Costs of product revenue

Selling, general and administrative expenses

Impairment of goodwill and other assets

Total operating costs and expenses

Operating income

Operating loss

Loss before income taxes

1 unchanged sentence

Net loss attributable to Xponential Fitness, Inc.

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

Xponential Fitness, Inc.

2 unchanged sentences

Condensed Consolidated Statement of Operations

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

As Previously Reported

5 unchanged sentences

Costs of product revenue

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

A, B2, C1, C2, C4, C5

Costs of franchise and service revenue

1 unchanged sentence

C2, C3, C6, D

Impairment of goodwill and other assets

Total operating costs and expenses

Operating income

Operating loss

Loss before income taxes

7 unchanged sentences

Additional Paid-In Capital

from Shareholder

Noncontrolling Interests

6 unchanged sentences

Balance at June 30, 2024

Balance at September 30, 2024

Additional Paid-In Capital

from Shareholder

Noncontrolling Interests

6 unchanged sentences

Balance at June 30, 2024

Balance at September 30, 2024

Additional Paid-In Capital

from Shareholder

Noncontrolling Interests

6 unchanged sentences

Balance at June 30, 2024

Balance at September 30, 2024

Xponential Fitness, Inc.

2 unchanged sentences

Condensed Consolidated Statement of Cash Flows

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

As Previously Reported

4 unchanged sentences

Change in tax receivable agreement liability

Gain from disposal of assets

Changes in assets and liabilities, net of effect of acquisitions:

Gain on disposal of assets

Impairment of goodwill and other assets

Changes in assets and liabilities, net of effect of acquisition:

Accounts receivable

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Payment received from shareholder

Net cash used in financing activities

Net cash provided by financing activities

Note 3 – Summary of Significant Accounting Policies

Cash, cash equivalents and restricted cash – The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

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.

Marketing fund restricte d cash was $ 15,857 and $ 15,312 at September 30, 2025 and December 31, 2024 , respectively.

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

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

Total restricted cash was $ 16,645 and $ 16,063 at September 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.

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however, the franchise agreements provide the Company the right to withdraw funds from the franchisee’s bank account or to terminate the franchise for nonpayment.

The Company’s accounts and notes receivable are recorded at net realizable value, which includes an appropriate allowance for expected credit losses.

The Company’s accounts and notes receivable are recorded at net realizable value, which includes an allowance for expected credit losses.

On a periodic basis, the Company evaluates its accounts and notes receivable balances and establishes an allowance for expected credit losses.

9 unchanged sentences

Balance at December 31, 2024

Bad debt expense recognized during the year

Bad debt expense recognized during the period

Write-off of uncollectible amounts

Balance at June 30, 2025

Balance at September 30, 2025

Inventories – Inventories are comprised of finished goods including equipment and branded merchandise primarily held for sale to franchisees.

Cost is determined using the first-in-first-out method.

Management analyzes obsolete, slow-moving and excess merchandise to determine adjustments that may be required to reduce the carrying value of such inventory to the lower of cost or net realizable value.

Write-down of obsolete or slow-moving and excess inventory charges are included in costs of product revenue in the condensed consolidated statements of operations.

During the three months ended September 30, 2025, the Company evaluated the recoverability of certain inventory due to brand divestitures and the agreement related to outsourcing of the Company's retail merchandising, resulting in a $ 2,461 excess and obsolete inventory write-down r ecorded in costs of product revenue.

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

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

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

Starting in 2025, new franchise agreements 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 non-refundable, in the case of single unit franchise agreements, 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.

Prior to the second quarter of 2025, the Company would enter into an area development agreement 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.

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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.

The initial franchise fee ranges from $ 55 to $ 65 for each studio.

T he 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 franchise licenses are recorded as deferred revenue.

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.

1 unchanged sentence

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 Company may enter into master franchise agreements with master franchisees, under which the master franchisee sells licenses to franchisees in one or more countries, excluding the United States and Canada.

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

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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 royalty rate in the franchise agreement is typically 7 % to 8 % 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.

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

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

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

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

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2 – Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates and yield curves), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

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The carrying amounts of these financial instruments approximate fair value due to their short maturities, proximity of issuance to the balance sheet date or variable interest rate.

Recently adopted accounting pronouncements

Segment Reporting – In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

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 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 .

Recently issued accounting pronouncements

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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.

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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.

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

Financial Instruments-Credit Losses – In July 2025, the FASB issued ASU 2025-05, “Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This standard allows entities to apply a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC Topic 606, “Revenue from Contracts with Customers.” The standard is effective for fiscal years beginning after December 15, 2025, including interim periods within those annual periods.

Early adoption is permitted.

Upon adoption, the guidance will be applied prospectively.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Intangibles-Goodwill and Other Internal-Use Softwar e – In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use-Software.” This standard modernizes the guidance to reflect the software development approaches currently being used by removing all references to "development stages" from ASC 350-40 Intangibles-Goodwill and Other Internal-Use Software.

Under ASU 2025-06, only the following criteria in ASC 350-40-25-12(b) and (c) must be met to begin capitalizing software costs:

(i) management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold” ).

This standard is effective for fiscal years beginning after December 15, 2027, including interim periods within those annual periods.

Early adoption is permitted.

Upon adoption, the guidance will be applied prospectively, retrospectively, or via a modified prospective transition method.

The Company is evaluating the impact this amended guidance may have but does not expect it to have a significant impact on its condensed consolidated financial statements.

Supplemental balance sheet information

September 30,

Prepaid expenses and other current assets

Prepaid expenses and other

Contingent consideration receivable

Insurance receivable

Tax receivables

5 unchanged sentences

Sales tax accruals

Legal accruals

Legal accruals, current portion

Other accruals

1 unchanged sentence

Other current liabilities

Lease liabilities, short-term

Lease liabilities, current portion

Promissory note

3 unchanged sentences

Total other current liabilities

Other liabilities

Legal accruals, net of current portion

Tax receivable agreement liability, net of current portion

Other liabilities

Total other liabilities

Note 4 – Acquisitions and Dispositions

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 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.

Xponential Fitness, Inc.

1 unchanged sentence

(amounts in thousands, except per share amounts)

During the nine months ended September 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 nine months ended September 30, 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.

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

When the Company believes that a studio will be refranchised for a price less than its carrying value but does not believe the studio has met the criteria to be classified as held for sale, the Company reviews the studio for impairment.

1 unchanged sentence

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

During the three and nine months ended September 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.

9 unchanged sentences

The acquisition of the Lindora Franchisor was completed on January 2, 2024.

The acquisition of Lindora complements the Company's existing brands and will help the Company deliver on consumers’ increasing demand for a holistic approach to health.

The transaction was accounted for as a business combination using the acquisition method of accounting, which requires the assets acquired to be recorded at their respective fair value as of the date of the transaction.

5 unchanged sentences

Total assets acquired

The goodwill recognized in this acquisition was attributable to the synergies that the Company expects to achieve.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

The goodwill recognized in this acquisition was attributable to the synergies that the Company expected to achieve.

The fair values, which are Level 3 measurements, of the recognizable intangible assets are comprised of trademarks and franchise agreements.

4 unchanged sentences

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.

The Co mpany did no t incur any transaction costs r elated to acquisitions during the three and nine months ended September 30, 2025.

During the three and nine months ended September 30, 2024, the Company incurred $ 0 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.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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.

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The wind down of the AKT brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Divestiture of CycleBar and Rumble brands – 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 l iabilities, 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 , consisting of $ 2,000 received in the three months ended September 30, 2025 , and a promissory note for $ 5,000 , which was included in notes receivable, net in the condensed consolidated balance sheet at September 30, 2025 .

The promissory note bears interest at the annual rate of 14 %, increasing to 18 % if the note is not paid by the due date of September 22, 2025.

The Company will receive royalty payments from franchisees associated with the divested brands from the divestiture date until the promissory note is paid in full.

Such royalty payments are included in other income in the condensed consolidated statements of operations.

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.

The Company recognized a net gain on divestiture of $ 2,214 , including related fees, which was included within selling, general and administrative expenses in the condensed consolidated statements of operations.

The divested brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations.

Divestiture of Lindora brand – On September 19, 2025, the Company entered into an agreement with a buyer, pursuant to which the Company divested the Lindora brand, 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 consideration of up to $ 6,000 from the divestiture of the Lindora brand, which will be received monthly based on 7 % of the monthly cash-basis gross revenue of the legacy studio locations.

Payments will continue until the earlier of receipt of $ 6,000 or seven years .

At the disposition date the Company determined that the fair value of the estimated contingent consideration receivable was $ 3,764 , of which $ 456 and $ 3,308 is included with prepaid expenses and other current assets and other assets, respectively, in the condensed consolidated balance sheets at September 30, 2025 .

The divestiture allows the Company to better focus and utilize its resources on its other brands.

The Company recognized a net loss on divestiture of $ 1,015 , which was included within selling, general and administrative expenses in the condensed consolidated statements of operations.

The divested brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations.

Note 5 – Contract Liabilities and Costs from Contracts with Customers

Contract liabilities – Contract liabilities consist of deferred revenue resulting from franchise and area development fees (franchise fees, development fees and master franchise fees paid by franchisees), which are recognized over time on a straight-line basis over the franchise agreement term.

Contract liabilities – Contract liabilities consist of deferred revenue resulting from franchise fees (franchise fees, development fees and master franchise fees paid by franchisees), which are recognized over time on a straight-line basis over the franchise agreement term.

The Company also receives upfront payments from vendors under agreements that give the vendors access to franchisees’ members to provide certain services to the members (“brand fees”).

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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 franc hise and area development and brand fee contract liabilities for the six months ended June 30, 2025 .

The following table reflects the change in franc hise, including area development and multi-unit agreements, and brand fee contract liabilities for the nine months ended September 30, 2025 .

Other deferred revenue amounts of $ 13,242 are excluded from the table as the original expected duration of the contracts is one year or less.

Franchise and area development fees

Franchise development fees

Balance at December 31, 2024

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

Decrease in deferred revenue due to divestiture

Increase, excluding amounts recognized as revenue during the period

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 .

Balance at September 30, 2025

(1) Includes revenue recognized as a result of ter minations of $ 10,702 for the nine months ended September 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 June 30, 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 September 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.

1 unchanged sentence

Contract liabilities to be recognized in revenue

Franchise and area development fees

Franchise development fees

Remainder of 2025

The following table reflects the components of deferred revenue:

Franchise and area development fees

September 30,

Franchise development fees

Equipment and other

8 unchanged sentences

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

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.

At September 30, 2025 and December 31, 2024 , there were approximately $ 3,411 and $ 3,940 of current deferred commission costs and approximately $ 28,970 and $ 39,684 in non-current deferred commission costs, respectively.

The Company recognized franchise sales commission expense of approximately $ 4,643 and $ 7,324 for the three and nine months ended September 30, 2025, respectively, and $ 2,690 and $ 8,827 for the three and nine months ended September 30, 2024 , respectively.

Note 6 – Property and Equipment

Property and equipment consisted of the following:

September 30,

Furniture and equipment

7 unchanged sentences

(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.

Depreciation expense for the three and nine months ended September 30, 2025 was $ 1,335 and $ 3,318 , respectively, and $ 1,509 and $ 4,587 for the three and nine months ended September 30, 2024, respectively.

During the three and nine months ended September 30, 2025, the Company determined that the carrying amount of certain property and equipment assets exceeded their fair values and recorded an impairment of $ 764 and $ 2,234 , respectively.

The impairment charges were primarily related to software assets of BFT, for which the Company no longer had established cash flows to support continued recognition of such assets.

The fair values of software assets were determined by assumptions that are considered Level 3 inputs.

No impairment of property and equipment was recorded for the three and nine months ended September 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.

2 unchanged sentences

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

Cumulative goodwill impairment was $ 55,371 and $ 47,920 at September 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.

2 unchanged sentences

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.

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

The fair value was determined using Level 3 inputs.

The Company determined that the carrying value of the BFT trademark, franchise agreement and deferred video production intangible assets were in excess of their fair value and recognized an aggregate impairment loss of $ 12,700 during the quarter ended September 30, 2025.

The fair value of the trademark intangible asset was determined by the relief from royalty method using Level 3 inputs.

The discount rate and royalty rate used in the relief from royalty valuation was 17.0 % and 0.5 %, respectively.

The fair value of the franchise agreement intangible asset was determined by the excess earnings method, which represents the multi-period excessive earnings generated by the asset that remains after a deduction for a return on other contributory assets using Level 3 inputs.

The discount rate used in the excess earning valuation was 14.0 %.

At September 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.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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.

2 unchanged sentences

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.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

In connection with the wind down of the AKT brand, as discussed in Note 4, the Company determined that the deferred video production costs and web design and domain intangible assets related to AKT were impaired and recognized an impairment loss of $ 179 during the quarter ended September 30, 2024.

Intangible assets consisted of the following:

June 30, 2025

September 30, 2025

December 31, 2024

6 unchanged sentences

Total intangible assets

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.

Amortization expense wa s $ 2,344 and $ 6,290 , for the three and nine months ended September 30, 2025, respectively, and $ 2,717 and $ 8,592 for the three and nine months ended September 30, 2024, respectively.

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

3 unchanged sentences

The Company’s obligations under the Credit Agreement are guaranteed by XPO Holdings and certain of the Company’s material subsidiaries and are secured by substantially all of the assets of XPO Holdings and certain of the Company’s material subsidiaries.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

Under the Credit Agreement, the Company is required to make:

(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 % ( 10.86 % at June 30, 2025).

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 Agre ement 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 % ( 10.8 % at September 30, 2025).

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

4 unchanged sentences

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:

10 unchanged sentences

(viii) restricting certain payments, including certain payments to affiliates or equity holders and distributions to equity holders;

and (ix) restricting the issuance of equity.

and (ix) restricting the issuance of certain equity.

Additionally, on March 10, 2025, the Company obtained a waiver related to EBITDA levels as the Credit Agreement did not contain active exceptions for non-recurring legal expenses.

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

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

As of September 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.

8 unchanged sentences

The Seventh Amendment provides for, among other things, (i) additional term loans in an aggregate principal amount of $ 25,000 , with an original issue discount of $ 750 , (the “Seventh Amendment Incremental Term Loans”), (ii) an increased amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the Seventh Amendment Incremental Term Loans) commencing on September 30, 2024 to $ 1,349 and (iii) a prepayment premium on the Seventh Amendment Incremental Term Loans.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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.

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

The Eighth Amendment extends the final maturity date under the Credit Agreement to August 1, 2027 (the “Final Maturity Date”) and provides for, among other things, additional term loans in an aggregate principal amount of $ 10,000 (the “Eighth Amendment Incremental Term Loans”), an upfront fee, paid-in-kind, equal to 3 % of the (a) aggregate principal amount of term loans outstanding as of the amendment date and (b) the Eighth Amendment Incremental Term Loans funded on the funding date, which will be capitalized and added to the outstanding loan principal, and an exit fee of approximately $ 7,248 payable upon the earlier of the Final Maturity Date or the date all loans under the Credit Agreement have been repaid or prepaid.

The Eighth Amendment extends the final maturity date under the Credit Agreement to August 1, 2027 (the “Final Maturity Date”) and provides for, among other things, additional term loans in an aggregate principal amount of $ 10,000 (the “Eighth Amendment Incremental Term Loans”), an upfront fee, paid-in-kind, equal to 3 % of the (a) aggregate principal amount of term loans outstanding as of the amendment date and (b) the Eighth Amendment Incremental Term Loans funded on the funding date, which were capitalized and added to the outstanding loan principal, and an exit fee of approximately $ 7,248 payable upon the earlier of the Final Maturity Date or the date all loans under the Credit Agreement have been repaid or prepaid.

The exit fee is treated as additional interest expense and is accreted over the life of the loan using the effective interest method and is presented as a reduction to long-term debt in the condensed consolidated balance sheets.

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 .

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:

On July 24, 2025, the Company entered into a ninth amendment (the “Ninth Amendment”) to the Credit Agreement in connection with the divestiture of the Rumble and CycleBar brands.

The Ninth Amendment did not modify the terms of the Credit Agreement.

Instead, the Ninth Amendment requires the Company to apply the net proceeds received from the divestiture of the Rumble and CycleBar brands to repayment of the outstanding loan principal.

The Company incurred debt issuance costs of $ 90 and $ 318 for the nine months ended September 30, 2025 and 2024 , respectively.

Debt issuance cost amortization and write off amounted to $ 36 and $ 123 for the three and nine months ended September 30, 2025 , respectively, and $ 55 and $ 179 for the three and nine months ended September 30, 2024, respectively.

Unamortized debt issuance costs as of September 30, 2025 and December 31, 2024, we re $ 265 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 September 30, 2025 and December 31, 2024 , was $ 11,516 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 September 30, 2025 and December 31, 2024, were $ 5,576 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 September 30, 2025 were as follows:

Remainder of 2025

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.

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

Note 9 – Leases

1 unchanged sentence

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

The Company has guaranteed lease agreements for certain franchisees.

The Company has in the past guaranteed lease agreements for certain franchisees.

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

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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.

2 unchanged sentences

If the undiscounted cash flows used in the recoverability test are less than the carrying amount, the Company estimates the fair value of the ROU asset and recognizes an impairment loss when the carrying amount exceeds the estimated fair value (Step 3).

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 $ 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.

When determining the fair value of the ROU asset, the Company estimates 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 $ 3,906 and $ 6,379 during the three and nine months ended September 30, 2025 , respectively.

The Company recognized ROU asset impairment charges of $ 4,323 during the three and nine months ended September 30, 2024, related to studio exits in conjunction with restructuring plans discussed in Note 17.

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

1 unchanged sentence

Balance Sheet Location

June 30, 2025

September 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,

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

Three months ended September 30,

Nine Months Ended September 30,

Operating lease costs

Variable lease costs

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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,

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

Three months ended September 30,

Nine Months Ended September 30,

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

1 unchanged sentence

The following table presents other information related to leases:

June 30, 2025

September 30, 2025

December 31, 2024

1 unchanged sentence

Weighted average discount rate

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

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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

Remainder of 2025

5 unchanged sentences

In connection with the Reorganization Transactions, XPO Inc.

recorded $ 10,600 receivable from shareholder, as the Rumble Seller is a shareholder of XPO Inc., for the debt financing provided to the Rumble Seller.

recorded $ 10,600 receivable from shareholder, as the original founder sellers of the Rumble brand, which was acquired by the Company in 2021 (the “Rumble Seller” ) is a shareholder of XPO Inc., for the debt financing provided to the Rumble Seller.

In July 2022, the Company entered into a settlement agreement with the Rumble Sellers to resolve disputes related to the acquisition and related agreements.

Under the terms of the settlement, the Company prospectively reduced the interest rate on the debt financing provided to the Rumble Sellers from 11 % per annum to 7.5 % per annum if payment is in cash or 10 % per annum if payment is in payment-in-kind and extended the maturity date of the debt financing.

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.

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.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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 e quity.

In 2025, the Rumble Sellers agreed to reimburse the Company for additional expenses of $ 162 , which was recorded as receivable from shareholder within equity.

The Company recorded $ 678 and $ 1,460 of interest-in-kind during the three and nine months ended September 30, 2025 , respectively, and $ 373 and $ 1,082 during the three and nine months ended September 30, 2024, respectively, which was recorded as interest income and an increase to receivable from shareholder within equity.

In December 2022, the Company entered into an agreement with the former owner of Row House, pursuant to which contingent consideration relating to the 2017 acquisition of Row House was settled in exchange for the issuance of 105 restricted stock units (“RSUs”), which vest in full on the fourth anniversary of the grant date.

2 unchanged sentences

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 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.

As of September 30, 2025 , the former owner of Row House borrowed $ 560 , which was recorded as a reduction to liability.

In March 2023, Spartan Fitness Holdings, LLC (“Spartan Fitness”), which currently owns and operates 143 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 75 Club Pilates licenses to open additional new units.

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 recorded franchise, equipment and marketing fund revenue aggregating $ 3,984 and $ 10,483 , during the three and nine months ended September 30, 2025 , respectively, and $ 3,261 and $ 7,710 , during the three and nine months ended September 30, 2024, respectively, from studios owned by Spartan Fitness.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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 $ 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.

Revenues from this affiliate, consisting of franchise revenue, marketing fund revenue and merchandise revenue, were $ 94 and $ 209 for the three and nine months ended September 30, 2024 , respectively, and no accounts receivable were recorded as of December 31, 2024, for such sales.

The Company provided $ 217 and $ 1,172 of studio support to this franchisee during the three and nine months ended September 30, 2024, respectively.

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

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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.

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

The Company recognized an $ 18 gain on sale of asset during the nine months ended September 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 June 30, 2025.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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

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.

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The Convertible Preferred is recorded as mezzanine equity (temporary equity) on the condensed consolidated balance sheets because it is not mandatorily redeemable but does contain a redemption feature at the option of the Preferred holders that is considered not solely within the Company’s control.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share amounts)

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 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.

At September 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 September 30, 2025 and December 31, 2024).

The recording of the preferred maximum redemption value for the three and nine months ended September 30, 2025 , did not impact the calculation of earnings (loss) per share and did not result in any change to additional paid-in-capital.

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

Note 12 – Stockholders' Equity (Deficit)

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.

Common stock – During the three and nine months ended September 30, 2025, 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 0 and 1,001 , shares of Class A common stock on a one-for-one basis, respectively.

During the three and nine months ended September 30, 2024 , pursuant to the Amended LLC Agreement, certain Continuing Pre-IPO LLC Members exchanged their LLC units for 0 and 476 s hares of Class A common stock on a one-for-one basis, respectively.

Noncontrolling interests – Following the IPO, XPO Inc.

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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 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.

During the nine months ended September 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 September 30, 2025:

Ownership percentage

Noncontrolling interests

Xponential Fitness, Inc.

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(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 six months ended June 30, 2025:

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

Weighted Average

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Forfeited, expired, or canceled

Outstanding at June 30, 2025

Outstanding at September 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.

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

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.

During the nine months ended September 30, 2025, 29 performance-based RSUs were earned and issued and 262 performance based RSUs were forfeited.

In addition, during the three months ended September 30, 2025, the Company granted 216 performance-based RSUs that contained market conditions, with weighted average grant-date fair value of $ 6.85 .

To estimate the fair value of performance-based awards containing a market condition, the Company uses the Monte Carlo valuation model.

For other performance-based awards, the fair value is generally based on the closing price of the Company’s Class A Common Stock as reported on the New York Stock Exchange on the date of grant.

As of September 30, 2025, the achievement of remaining performance metrics is considered probable.

The Monte Carlo simulation assumptions used for the period presented were as follows:

Nine Months Ended September 30,

Risk free interest rate

Expected volatility

Dividend yield

Expected term (in years)

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,

Three months ended September 30,

Nine Months Ended September 30,

Selling, general and administrative

Total stock-based compensation expense, before tax

Income tax benefit (expense)

Income tax expense

Total stock-based compensation expense, after tax

Income tax benefit relates to vested RSUs.

Income tax expense relates to vested RSUs.

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

At September 30, 2025, the Company had $ 17,552 of total unamortized compensation expense related to non-vested RSUs.

That cost is expected to be recognized over a weighted-average period of 2.05 years.

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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.

The effective tax rate for the three and nine months ended September 30, 2025 , was ( 4.1 %) and ( 15.2 %) , respectively, and ( 0.7 %) and ( 0.6 %) for the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2025 , the Company recognized income tax expense of $ 266 and $ 1,063 , respectively, on its share of pre-tax book income (loss), exclusive of the noncontrolling interest of 28.1 % .

During the three and nine months ended September 30, 2024 , the Company recognized income tax expense of $ 131 and $ 216 , respectively, on its share of pre-tax book income (loss), exclusive of the noncontrolling interest of 33.3 % , respectively.

As of September 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 September 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.

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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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which enacted 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.

The Company has incorporated the OBBBA changes in its income tax provision for the nine months ended September 30, 2025.

There is no material impact to the Company's effective income tax rate and net deferred income tax assets, as the Company maintains a full valuation allowance on the deferred tax assets of XPO Inc.

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.

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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.

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.

As of September 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 $ 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 .

Except for $ 11 and $ 1,331 of the current and non-current portions of the TRA, respectively, $ 85,827 of the TRA liability was not recorded as of September 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 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.

Weighted average shares of Class B common stock were 13,664 and 13,928 for the three and nine months ended September 30, 2025, respectively, and 16,016 and 16,242 for the three and nine months ended September 30, 2024, respectively.

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

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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.

Three months ended September 30,

Nine months ended September 30,

Net loss attributable to XPO Inc.

net loss attributable to noncontrolling interests

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Rumble contingent shares

Profits interests, time vesting

Note 16 – Contingencies and Litigation

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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 $ 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.

The Company accrued for estimated legal liabilities, where appropriate, or settlement agreements to resolve legal disputes and recorded an aggregate accrual of $ 29,545 , and $ 14,717 , which was included in accounts payable, accrued expenses and other liabilities in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively.

Xponential Fitness, Inc.

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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 $ 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.

The Company recorded an insurance receivable of $ 10,000 , which was included in prepaid expenses and other current assets in the condensed consolidated balance sheet as of September 30, 2025.

Additionally, during the nine months ended September 30, 2025 , the Company received proceeds of $ 24,750 in connection with its claims for insurance reimbursement for previous legal expenses.

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

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

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.

By order dated June 18, 2025 (the “Order”), the court enumerated requisite changes to the settlement structure.

On September 25, 2025, the parties filed the Second Amended Complaint with exhibits containing the settlement structure and agreement and the parties are currently awaiting approval.

The Company recorded an accrual in anticipation of this settlement, which was included in accrued expenses in the condensed consolidated balance sheets as of September 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.

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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 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 Company filed a motion to dismiss the amended consolidated complaint on July 1, 2025 that is scheduled for hearing on December 3, 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.

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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.

Geisler and Meloun for contribution or indemnification under Sections 10(b) and 21D of the Exchange Act.

Plaintiff alleges claims for breach of fiduciary duty, unjust enrichment, gross mismanagement, abuse of control, waste of corporate assets, violations of Section 14(a) of the Exchange Act, violations of Sections 20(a) and 10(b) and Rule 10b-5 of the Exchange Act, and against Anthony Geisler, the Company's former Chief Executive Officer, and John Meloun, the Company's Chief Financial Officer, for contribution or indemnification under Sections 10(b) and 21D of the Exchange Act.

Plaintiffs seek, inter alia, damages with pre- and post-judgment interest, and an order directing the Company and the individual defendants to improve the Company’s corporate governance, and restitution by the individual defendants.

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On April 22, 2025, as a result of mediation, the parties agreed in principle to settle this matter, on behalf of a class of all non-opt-out franchisees for $ 25,000 .

The settlement is subject to entry into a definitive settlement agreement and court approval and will be paid in installments, with 50 % payable upon court approval and the remaining 50 % payable in three equal installments, with the first payment due one year after settlement approval.

The parties remain in negotiations regarding the proposed settlement structure and other material terms, including the final settlement amount.

The Company recorded an accrual in anticipation of this settlement, which is included in the Company’s aggregate accrual discussed above.

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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.

Other regulatory matters – On April 10, 2023, the Company received notice of an investigation from the Commissioner of California’s Department of Financial Protection and Innovation (“DFPI”) related to the Company's compliance with California’s Franchise Investment Law.

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 , 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.

Other regulatory matters – As previously disclosed, the Company received notice of an investigation from the State of Washington's Department of Financial Institutions (“DFI”) related to the Company's compliance with Washington state franchise laws.

On August 12, 2025, without admission of wrongdoing, the Company entered into a Consent Order with DFI to resolve the matter.

As part of the Consent Order, the Company paid $ 5 to reimburse DFI for investigation costs (which was the only monetary component of the settlement) and agreed to desist and refrain from violating applicable franchise laws.

In addition, the Office of the Attorney General of the State of Maryland (“MAG”) and the Virginia Division of Securities and Retail Franchising (“VDSRF”) have previously contacted the Company regarding compliance with applicable franchise laws.

Discussions with MAG and VDSRF are ongoing.

Xponential Fitness, Inc.

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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 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.

During the three and nine months ended September 30, 2025 , the Company recorded an increase (decrease) of $ 3,072 and $ ( 7,503 ) to contingent consideration, respectively, which was recorded as acquisition and transaction expense (income).

During the three and nine months ended September 30, 2024 the Company recorded an increase of $ 3,797 and $ 7,042 to contingent consideration, respectively, which was recorded as acquisition and transaction expense (income).

At September 30, 2025 and December 31, 2024 , contingent consideration of $ 9,802 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.

and Canada, as well as a percentage of royalties collected by the Company, provided that aggregate minimum payments of $ 5,000 AUD (approximately $ 3,694 USD based on the currency exchange rate as of the purchase date) are required to be paid to the Seller for the two-year period ended December 31, 2023.

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 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.

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 $ 0 and $ 2 during the three and nine months ended September 30, 2025, respectively, and $ 31 and $ 108 during the three and nine months ended September 30, 2024, respectively, which was recorded as interest expense.

The Company recorded additional contingent consideration of $ ( 1 ) and $ 5 during the three and nine months ended September 30, 2025 , respectively, and $ ( 302 ) and $ ( 950 ) during the three and nine months ended September 30, 2024 , respectively, which was recorded as acquisition and transaction expense (income).

The Company paid no contingent consideration during the three and nine months ended September 30, 2025 and 2024.

At September 30, 2025 and December 31, 2024, contingent consideration was $ 131 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.

1 unchanged sentence

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 $ 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.

The contingent consideration remains payable notwithstanding the divestiture of the brand.

The Company recorded additional contingent consideration of $ 16 and $ 62 during the three and nine months ended September 30, 2025, respectively, and $ 27 and $ 61 during the three and nine months ended September 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 nine months ended September 30, 2025 , respectively, and $ 169 and $ 342 during the three and nine months ended September 30, 2024, respectively, which was recorded as acquisition and transaction expense.

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

At September 30, 2025 and December 31, 2024, contingent consideration was $ 460 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 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 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.

The Company has determined the fair value of these guarantees at inception was not material, and as of September 30, 2025 and December 31, 2024 , a $ 815 and $ 150 accrual has been recorded for the Company’s probable obligation under its guaranty arrangement, respectively, which is included in accrued expenses in the condensed consolidated balance sheets.

Xponential Fitness, Inc.

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(amounts in thousands, except per share amounts)

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

The Company’s potential obligation, as a result of its guarantees of leases, is approximately $ 3,501 and $ 3,617 as of September 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 September 30, 2025 and December 31, 2024 , a $ 1,179 and $ 2,034 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively.

Note 17 – Restructuring

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The components of the restructuring charges were as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Impairment and accelerated amortization of right-of-use assets

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(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 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.

Amount for the three and nine months ended September 30, 2025 is net of, among other things, a $ 4,448 and $ 5,142 gain, respectively, 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 nine months ended September 30, 2024 is net of, among other things, a $ 0 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Costs of product revenue

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The following table provides the components of and changes in the Company’s restructuring charges, included in accounts payable and accrued expenses on the condensed consolidated balance sheets:

Balance at December 31, 2024

Charges incurred

Balance at June 30, 2025

Xponential Fitness, Inc.

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(amounts in thousands, except per share amounts)

Balance at December 31, 2024

Charges incurred

Balance at September 30, 2025

Note 18 – Segment Information

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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.

The Company generated $ 2,384 and $ 7,732 of revenue outside of the United States during the three and nine months ended September 30, 2025, respectively, and $ 3,808 and $ 10,898 during the three and nine months ended September 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.

As of September 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 June 30,

Six months ended June 30,

Three Months Ended September 30,

Nine months ended September 30,

Total revenue, net

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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.

(1) Other segment items include restructuring e xpenses of $ 1,318 and $ 2,376 for the three and nine months ended September 30, 2025, respectively, and $ 5,542 and $ 10,472 for the three and nine months ended September 30, 2024 , respectively.

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

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Note 19 – Subsequent events

Retail supply agreement

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

In October 2025, the Rumble Sellers made a partial paym ent of $ 2,435 toward receivable from share holder.

In October 2025, the Company initiated a headcount related Reduction in Force ( “RIF”) that is designed to reduce operating costs, drive efficiencies and enable investment for potential long-term growth.

The Company expects to incur approximately $ 850 of costs in the fourth quarter of 2025, primarily related to termination charges arising from severance obligations.

In November 2025, the $ 5,000 note receivable related to the divestiture of CycleBar and Rumble brands was collected in full.

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