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Core Viewpoint - Xponential Fitness, Inc. has completed the divestiture of Lindora to Next Health Management Group, allowing the company to concentrate on its core fitness modalities that significantly impact profitability [1] Company Focus - The divestiture of Lindora is aimed at enabling Xponential Fitness to allocate more time and capital towards its primary fitness brands [1] - CEO Mike Nuzzo emphasized that this strategic move will enhance the company's focus on areas with the greatest profitability potential [1]

FORM 10-Q Filing Information [Filing Details](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details the Form 10-Q filing for Xponential Fitness, Inc. for the period ended June 30, 2025, covering registrant status and stock information - Filing Type: Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934[2](index=2&type=chunk) - Period Ended: June 30, 2025[2](index=2&type=chunk) - Registrant Status: Accelerated filer and Emerging growth company[3](index=3&type=chunk) - Outstanding Shares as of July 31, 2025: Class A common stock: **35,097 thousand shares**; Class B common stock: **13,738 thousand shares**[3](index=3&type=chunk) Securities Registered | Securities Registered | | :-------------------- | | Class A common stock, par value $0.0001 per share | | Trading Symbol: XPOF | | Exchange: New York Stock Exchange | PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes to stockholders' equity, and cash flows, with corrections for prior misstatements [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a slight decrease in total assets and liabilities from December 31, 2024, to June 30, 2025, with an increased stockholders' deficit - Cash, cash equivalents and restricted cash increased from **$32,739 thousand** at December 31, 2024, to **$38,679 thousand** at June 30, 2025[8](index=8&type=chunk) - Goodwill decreased from **$135,240 thousand** to **$127,789 thousand**, and intangible assets, net, decreased from **$100,944 thousand** to **$94,350 thousand**[8](index=8&type=chunk) Metric (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets | $399,815 | $403,397 | | Total liabilities | $596,171 | $597,402 | | Total stockholders' deficit | $(313,166) | $(310,815) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported net income of $1,346 thousand, a significant improvement from a net loss in the prior year, driven by increased operating income and reduced costs - Franchise revenue increased by **5.4%** for the three months and **5.3%** for the six months ended June 30, 2025, compared to the prior year periods[10](index=10&type=chunk) - Selling, general and administrative expenses decreased by **34.9%** for the three months and **5.4%** for the six months ended June 30, 2025, primarily due to reduced legal expenses and equity-based compensation[10](index=10&type=chunk) Metric (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Total revenue, net | $76,208 | $76,903 | | Total operating costs and expenses | $61,385 | $79,992 | | Operating income (loss) | $14,823 | $(3,089) | | Net income (loss) | $1,346 | $(14,343) | | Net loss per share of Class A common stock (Basic) | $(0.01) | $(0.30) | Metric (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Total revenue, net | $153,091 | $156,596 | | Total operating costs and expenses | $128,589 | $151,691 | | Operating income (loss) | $24,502 | $4,905 | | Net income (loss) | $(1,313) | $(18,093) | | Net loss per share of Class A common stock (Basic) | $(0.11) | $(0.59) | [Condensed Consolidated Statements of Changes to Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20to%20Stockholders'%20Equity%20(Deficit)) The statements detail changes in stockholders' equity (deficit) for the six months ended June 30, 2025 and 2024, showing an overall increase in total stockholders' deficit - Total stockholders' deficit increased from **$(310,815) thousand** at December 31, 2024, to **$(313,166) thousand** at June 30, 2025[13](index=13&type=chunk) - Equity-based compensation contributed **$3,281 thousand** and **$2,666 thousand** for the periods ended March 31, 2025, and June 30, 2025, respectively[13](index=13&type=chunk) - Net income of **$969 thousand** was recorded for the period ended June 30, 2025, contrasting with a net loss of **$(1,923) thousand** for the period ended March 31, 2025[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased, cash used in investing activities significantly decreased, and cash provided by financing activities improved - The increase in operating cash flow was primarily due to higher net income after adjustments and favorable changes in working capital[19](index=19&type=chunk) - Investing cash flow improved by **$8.9 million**, mainly due to the absence of a business acquisition (Lindora in prior year) and reduced purchases of property and equipment[19](index=19&type=chunk) Metric (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $8,341 | $5,682 | | Net cash used in investing activities | $(2,860) | $(11,761) | | Net cash provided by (used in) financing activities | $459 | $(4,998) | | Increase (decrease) in cash, cash equivalents and restricted cash | $5,940 | $(11,077) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's business, accounting policies, corrections to prior financial statements, acquisitions, debt, leases, related party transactions, equity, income taxes, earnings per share, contingencies, litigation, restructuring, and segment information [Note 1 – Nature of Business and Operations](index=10&type=section&id=Note%201%20%E2%80%93%20Nature%20of%20Business%20and%20Operations) Xponential Fitness, Inc. operates as a holding company, franchising boutique health and wellness brands, with a portfolio of eight brands as of June 30, 2025, following recent divestitures and an acquisition - Portfolio of eight brands as of June 30, 2025: Club Pilates, CycleBar, StretchLab, YogaSix, Pure Barre, Rumble, BFT, and Lindora[26](index=26&type=chunk) - Lindora, a provider of medically guided wellness and metabolic health solutions, was acquired on **January 2, 2024**[26](index=26&type=chunk)[31](index=31&type=chunk) - Divested Stride brand on **February 13, 2024**, and Row House brand on **May 20, 2024**, and announced the wind down of AKT franchise operations during Q3 2024[27](index=27&type=chunk) [Note 2 – Correction of Previously Issued Financial Statements](index=11&type=section&id=Note%202%20%E2%80%93%20Correction%20of%20Previously%20Issued%20Financial%20Statements) The company identified and corrected misstatements in its previously issued condensed consolidated financial statements for the three and six months ended June 30, 2024, impacting various revenue and expense items - Misstatements identified impacting previously issued financial statements for the three and six months ended June 30, 2024[35](index=35&type=chunk) - Corrections included adjustments for rebates, revenue recognition issues, improper expense recognition for inventory-related costs, asset impairment assessment, legal accruals, and unrecorded equipment inventory[36](index=36&type=chunk)[40](index=40&type=chunk) Impact on Net Loss Attributable to Xponential Fitness, Inc. (in thousands) | Period | As Previously Reported | Adjustments | As Corrected | | :----- | :--------------------- | :---------- | :----------- | | 3 Months Ended June 30, 2024 | $(9,102) | $(461) | $(9,563) | | 6 Months Ended June 30,

Core Insights - Xponential Fitness reported revenue of $76.21 million for the quarter ended June 2025, reflecting a year-over-year decline of 0.4% and an EPS of $0.26 compared to -$0.03 a year ago, indicating a significant improvement in profitability [1] - The revenue fell short of the Zacks Consensus Estimate of $77.16 million by 1.23%, while the EPS exceeded the consensus estimate of $0.19 by 36.84% [1] Financial Performance Metrics - Same store sales were reported at 1%, significantly lower than the estimated 3.9% by analysts [4] - Franchise revenue was $45.35 million, slightly below the average estimate of $45.58 million, but showed a year-over-year increase of 5.4% [4] - Franchise marketing fund revenue reached $9.46 million, surpassing the $9.32 million estimate, with a year-over-year growth of 12.9% [4] - Merchandise revenue was $5.61 million, slightly above the estimate of $5.56 million, but represented a year-over-year decline of 4.6% [4] - Other service revenue was $6.27 million, close to the estimated $6.29 million, showing a minor year-over-year decrease of 0.6% [4] - Equipment revenue was reported at $9.51 million, below the $9.77 million estimate, marking a significant year-over-year decline of 26.4% [4] Stock Performance - Xponential Fitness shares have returned +3.6% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Xponential Fitness reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and showing a significant improvement from a loss of $0.03 per share a year ago, indicating a positive earnings surprise of +36.84% [1] Financial Performance - The company posted revenues of $76.21 million for the quarter ended June 2025, which was a slight miss compared to the Zacks Consensus Estimate by 1.23%, and a decrease from year-ago revenues of $76.52 million [2] - Over the last four quarters, Xponential Fitness has surpassed consensus EPS estimates only once, while it has topped consensus revenue estimates three times [2] Stock Performance - Xponential Fitness shares have declined approximately 23.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $80.08 million, and for the current fiscal year, it is $0.50 on revenues of $318.8 million [7] - The trend of estimate revisions for Xponential Fitness was unfavorable prior to the earnings release, which may impact future stock movements [6] Industry Context - The Leisure and Recreation Services industry, to which Xponential Fitness belongs, is currently ranked in the bottom 26% of over 250 Zacks industries, suggesting potential challenges for the stock's performance [8]

Financial Data and Key Metrics Changes - North American system-wide sales reached $474 million, up 12% year over year [11][28] - North American quarterly run rate average unit volumes increased by 3% to 659,000 [11][28] - Total members at quarter end stood at 863,000, reflecting an 8% year-over-year increase [11] - Same store sales increased by 1% [11][28] - Consolidated revenue for the quarter was $76.2 million, down 1% from the prior year [28] - Adjusted net income for the second quarter was $14.5 million, or $0.26 per basic share [37] - Adjusted EBITDA was $28.1 million, up 14% compared to the prior year period [37] Business Line Data and Key Metrics Changes - Franchise revenue for the quarter was $45.4 million, up 5% year over year, driven by an 8% increase in actively paying memberships [29] - Equipment revenue declined by 26% year over year to $9.5 million, primarily due to a 39% decrease in global installations [29] - Merchandise revenue was down 8% year over year to $5.6 million [30] - Franchise marketing fund revenue increased by 13% year over year to $9.5 million [31] Market Data and Key Metrics Changes - Club Pilates reached record high utilization, with plans to enhance monetization strategies [17] - Pure Barre is planning major marketing campaigns for its 25th anniversary, anticipating further growth [18] - Yoga Six continues to perform well with new teacher training programs and innovative class offerings [19] - StretchLab is exploring solutions to support franchisees and improve average unit volumes [20] Company Strategy and Development Direction - The company is focusing on strengthening its core brands, including Club Pilates, Pure Barre, Yoga Six, and StretchLab, while divesting from underperforming brands like Cycle Bar and Rumble [12][10] - A new retail partnership with Fit Commerce aims to enhance service and reduce costs, with expected benefits starting in 2026 [14][30] - The company is committed to increasing marketing spend, particularly for Club Pilates and StretchLab, to drive growth [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the company and the fitness industry, highlighting the momentum in boutique fitness [8][9] - The company anticipates a more conservative revenue outlook due to recent brand divestitures and macroeconomic headwinds [39] - Management expects to see improvements in overall portfolio health and a reduction in closure rates with a more focused brand strategy [12] Other Important Information - The company ended the quarter with 3,327 global open studios, with 86 new openings during Q2 [25] - There were 57 global studio closures in the second quarter, with nearly half attributed to Cycle Bar and Rumble [25] - The company has over 1,400 studios in North America and over 1,000 international master franchise obligations [27] Q&A Session Summary Question: What drove the change in same store sales trend? - Management noted that same store sales decreased from 4% in Q1 to 1% in Q2, primarily due to performance in Club Pilates and StretchLab [47][48] Question: What is the status of the 40% backlog behind schedule? - The backlog includes brands like Rumble and Cycle Bar, with some contributions from Club Pilates, StretchLab, and Yoga Six [49][50] Question: What are the plans for pricing at Club Pilates? - Management confirmed intentions to implement pricing and monetization strategies to drive same store sales growth [51] Question: When should we expect the closure rate to stabilize? - Management anticipates the closure rate to trend down to around 5% by the end of 2025, with improvements expected in 2026 [52][53] Question: Can you elaborate on the four items impacting profitability in 2025? - Management discussed the impact of brand divestitures, system-wide sales adjustments, increased marketing spend, and the new CEO's strategic alignment [56][60] Question: What is the outlook for the FDD renewal process? - Management expects to resume license sales in the second half of the year following necessary amendments due to the CEO transition [64][66] Question: What is the strategy for non-core brands like Lindora and BFT? - Management confirmed ongoing evaluation of Lindora while expressing confidence in BFT's international growth [68][69] Question: What is the expected impact of the FitCommerce partnership? - The partnership is expected to provide significant cost savings and cash flow benefits starting in 2026 [95][96]

Financial Performance - System-wide sales reached $474 million, a 12% year-over-year increase[15] - Run-Rate Average Unit Volume (AUV) was $659,000, up 3% year-over-year[15] - Total revenue was $76 million, a 1% year-over-year decrease[21] - Adjusted EBITDA was $28 million, a 14% year-over-year increase, with a 37% margin[21, 32] - Adjusted net earnings per share were $026[29] Studio and License Growth - The company has 3,327 global studios, a 7% year-over-year increase[26] - The company has 6,344 global licenses, a 4% year-over-year increase[26] Strategic Initiatives - The company completed the divestitures of Rumble and CycleBar brands[14] - The company entered into a Fit Commerce agreement, guaranteeing a minimum of $50 million in commissions over a 5-year contract[10, 24] Full Year 2025 Guidance - The company expects between 170 and 190 net new studio openings globally[34] - The company expects system-wide sales to be between $178 billion and $18 billion[34] - The company expects revenue to be between $300 million and $310 million[34] - The company expects Adjusted EBITDA to be between $106 million and $111 million[34]

[Executive Summary & Q2 2025 Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Financial%20Highlights) Xponential Fitness reported Q2 2025 results, emphasizing global performance and adjusted KPIs, excluding divested brands [Introduction](index=1&type=section&id=Introduction) Xponential Fitness, a leading global franchisor, reported Q2 2025 results, emphasizing global numbers and adjusted KPIs - Xponential Fitness, Inc. (NYSE: XPOF) is one of the leading global franchisors of boutique health and wellness brands[2](index=2&type=chunk) - All financial data and KPI information are presented on an adjusted basis to include full historical data for all brands in the portfolio as of June 30, 2025, and to exclude information for brands not owned as of that date[3](index=3&type=chunk) [Key Financial and Operational Highlights (Q2 2025 vs Q2 2024)](index=1&type=section&id=Financial%20Highlights%3A%20Q2%202025%20Compared%20to%20Q2%202024) Q2 2025 saw increased system-wide sales and Adjusted EBITDA, significant net income improvement, and continued operational growth - CEO Mark King highlighted progress on key initiatives, including team expansion, a new retail partnership, and the divestiture of CycleBar and Rumble, with guidance revised for 2026 investments[5](index=5&type=chunk) Q2 2025 Financial and Operational Highlights | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | System-wide sales (global) | $473.5M | N/A | +12% | | Quarterly AUV (run rate) | $659,000 | $638,000 | +3% | | Total members | 863,000 | N/A | +8% | | Gross new studios opened | 86 | N/A | N/A | | Reported revenue | $76.2M | $76.9M | -1% | | North America same store sales growth | 1% | 7% | -6 percentage points | | Net income | $1.3M | $(14.3)M | Significant improvement | | Basic EPS | $(0.01) | $(0.30) | Significant improvement | | Adjusted net income | $14.5M | $0.03M | Significant improvement | | Adjusted basic EPS | $0.26 | $(0.04) | Significant improvement | | Adjusted EBITDA | $28.1M | $24.7M | +14% | [Detailed Second Quarter 2025 Financial Results](index=2&type=section&id=Results%20for%20the%20Second%20Quarter%20Ended%20June%2030%2C%202025) This section details Q2 2025 financial performance, including revenue, net income, and Adjusted EBITDA, with corrected 2024 figures [Revenue and Operating Performance](index=2&type=section&id=Revenue%20and%20Operating%20Performance) Total revenue slightly decreased year-over-year due to lower equipment and merchandise sales, offset by franchise growth Q2 2025 Revenue Breakdown (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | Change (YoY) | | :------------------------ | :-------- | :-------- | :----------- | | Franchise revenue | $45,353 | $43,020 | +5.4% | | Equipment revenue | $9,509 | $12,925 | -26.4% | | Merchandise revenue | $5,613 | $6,134 | -8.5% | | Franchise marketing fund revenue | $9,461 | $8,380 | +12.9% | | Other service revenue | $6,272 | $6,444 | -2.6% | | **Total revenue, net** | **$76,208** | **$76,903** | **-0.9%** | - The decrease in total revenue was driven by lower equipment revenue (resulting from a decline in installations) and merchandise sales, partially offset by higher franchise and franchise marketing fund revenue[8](index=8&type=chunk) - The accompanying financial information for the three and six months ended June 30, 2024, has been corrected from amounts previously reported, with details included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2025[36](index=36&type=chunk) [Net Income and Adjusted Net Income](index=2&type=section&id=Net%20Income%20and%20Adjusted%20Net%20Income) Net income reached **$1.3 million** in Q2 2025, a significant improvement from a prior year loss, with adjusted net income at **$14.5 million** Q2 2025 Net Income and EPS | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :---------- | :---------- | | Net income | $1.3M | $(14.3)M | | Basic EPS | $(0.01) | $(0.30) | | Adjusted net income | $14.5M | $0.03M | | Adjusted basic EPS | $0.26 | $(0.04) | | Class A Common Stock shares (basic) | 35.0M | 31.8M | [Adjusted EBITDA](index=2&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA increased by **14%** year-over-year to **$28.1 million** in Q2 2025, reflecting improved operational performance Q2 2025 Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------- | :---------- | :---------- | :----------- | | Adjusted EBITDA | $28.1M | $24.7M | +14% | [Liquidity and Capital Resources](index=2&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$38.7 million** in cash, with total long-term debt at **$377.8 million**, and **$8.3 million** net cash from operations Liquidity and Debt (as of June 30, 2025) | Metric | Amount (in millions) | | :-------------------------------- | :------------------- | | Cash, cash equivalents and restricted cash | $38.7 | | Total long-term debt | $377.8 | | Net cash provided by operating activities (6 months ended June 30, 2025) | $8.3 | [2025 Financial Outlook](index=2&type=section&id=2025%20Outlook) The company updated its full-year 2025 guidance, reflecting divestitures and investments, impacting studio openings, revenue, and Adjusted EBITDA [Updated Full Year 2025 Guidance](index=2&type=section&id=Updated%20Full%20Year%202025%20Guidance) Xponential Fitness updated its full-year 2025 guidance, projecting decreases in studio openings and revenue, but increased North America system-wide sales - Guidance and year-over-year comparisons for net new studio openings and system-wide sales exclude CycleBar and Rumble results in both periods due to divestiture[12](index=12&type=chunk) Full Year 2025 Guidance (Updated vs. Previous) | Metric | Updated Guidance (2025) | Change from 2024 (midpoint) | Previous Guidance (2025) | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------------- | | Net new studio openings | 170 to 190 | -37% | N/A | | North America system-wide sales | $1.780B to $1.800B | +13% | N/A | | Revenue | $300.0M to $310.0M | -5% | $315.0M to $325.0M | | Adjusted EBITDA | $106.0M to $111.0M | -7% | $120.0M to $125.0M | | Tax rate | Mid-to-high-single digits | N/A | N/A | [Non-GAAP Reconciliation Note](index=3&type=section&id=Non-GAAP%20Reconciliation%20Note) Quantitative reconciliation of estimated full-year Adjusted EBITDA to GAAP measures is not feasible due to high variability and low visibility of certain items - The Company is not able to provide a quantitative reconciliation of the estimated full year Adjusted EBITDA for fiscal year ending December 31, 2025, without unreasonable efforts due to the high variability, complexity, and low visibility with respect to certain items such as taxes, TRA remeasurements, and income and expense from changes in fair value of contingent consideration from acquisitions[14](index=14&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides an overview of Xponential Fitness, its non-GAAP measures, forward-looking statements, and conference call details [About Xponential Fitness, Inc.](index=3&type=section&id=About%20Xponential%20Fitness%2C%20Inc.) Xponential Fitness is a leading global franchisor of boutique health and wellness brands, operating six brands across 49 U.S. states and 30 countries - Xponential Fitness operates a diversified platform of six brands spanning modalities including Pilates, barre, stretching, strength training, metabolic health, and yoga, with its portfolio including Club Pilates, StretchLab, YogaSix, Pure Barre, BFT, and Lindora[17](index=17&type=chunk)[19](index=19&type=chunk) - The company has franchise, master franchise, and international expansion agreements in 49 U.S. states, Puerto Rico, and 30 additional countries[17](index=17&type=chunk) [Non-GAAP Financial Measures (Definitions)](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA to evaluate performance, excluding non-operating items, as supplemental to GAAP - Non-GAAP financial measures, including EBITDA, Adjusted EBITDA, adjusted net income (loss), and adjusted net earnings (loss) per share, are used to evaluate operating performance by excluding certain non-operating or non-recurring items such as equity-based compensation, acquisition and transaction expenses, litigation expenses, TRA remeasurement, impairment of goodwill, brand divestiture costs, transformation initiative costs, and restructuring charges[20](index=20&type=chunk)[40](index=40&type=chunk) - Non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP[20](index=20&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section discusses forward-looking statements regarding future performance and strategies, subject to risks and uncertainties that may cause actual results to differ - Forward-looking statements relate to expected business growth, projected new studio openings, profitability, anticipated industry trends, projected financial and performance information (such as system-wide sales), competitive position, and ability to execute business strategies[21](index=21&type=chunk)[22](index=22&type=chunk) - Risks and uncertainties that may cause actual results to differ materially include the outcome of government investigations and litigation, ability to retain key management, relationships with franchisees, difficulties in studio openings, international expansion risks, loss of reputation, geopolitical uncertainty, trade policies, general economic conditions, and other risks described in SEC filings[22](index=22&type=chunk) [Second Quarter 2025 Conference Call](index=3&type=section&id=Second%20Quarter%202025%20Conference%20Call) Xponential Fitness hosted a conference call on August 7, 2025, to discuss its Q2 2025 financial results, with replay details provided - The Company hosted a conference call on August 7, 2025, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its second quarter 2025 financial results[15](index=15&type=chunk) - A live webcast of the conference call was available on the Company's Investor Relations site, and a telephonic replay was available until 11:59 p.m. ET on Thursday, August 21, 2025[16](index=16&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities slightly decreased from December 2024 to June 2025, while total stockholders' deficit increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :------------------------------------------ | :------------ | :------------------ | :------- | | Cash, cash equivalents and restricted cash | $38,679 | $32,739 | +$5,940 | | Total current assets | $102,693 | $84,147 | +$18,546 | | Goodwill | $127,789 | $135,240 | -$7,451 | | Total assets | $399,815 | $403,397 | -$3,582 | | Total current liabilities | $112,887 | $107,887 | +$5,000 | | Long-term debt, net of current portion | $352,554 | $341,742 | +$10,812 | | Total liabilities | $596,171 | $597,402 | -$1,231 | | Total stockholders' deficit | $(313,166) | $(310,815) | -$2,351 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue was **$76.2 million**, with operating income significantly improving to **$14.8 million**, resulting in **$1.3 million** net income Condensed Consolidated Statements of Operations Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :--------- | :--------- | :------- | | Total revenue, net | $76,208 | $76,903 | -$695 | | Total operating costs and expenses | $61,385 | $79,992 | -$18,607 | | Operating income (loss) | $14,823 | $(3,089) | +$17,912 | | Total other expense | $13,165 | $11,122 | +$2,043 | | Net income (loss) | $1,346 | $(14,343) | +$15,689 | | Net income (loss) attributable to Xponential Fitness, Inc. | $969 | $(9,563) | +$10,532 | | Basic EPS | $(0.01) | $(0.30) | +$0.29 | - The accompanying financial information for the three and six months ended June 30, 2024, has been corrected from amounts previously reported[36](index=36&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$8.3 million** for the six months ended June 30, 2025, with decreased investing and positive financing cash flows Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | Change | | :-------------------------------- | :--------- | :--------- | :------- | | Net cash provided by operating activities | $8,341 | $5,682 | +$2,659 | | Net cash used in investing activities | $(2,860) | $(11,761) | +$8,901 | | Net cash provided by (used in) financing activities | $459 | $(4,998) | +$5,457 | | Increase (decrease) in cash, cash equivalents and restricted cash | $5,940 | $(11,077) | +$17,017 | | Cash, cash equivalents and restricted cash, end of period | $38,679 | $26,017 | +$12,662 | [Net Income (Loss) to GAAP EPS](index=9&type=section&id=Net%20Income%20(Loss)%20to%20GAAP%20EPS) This section details GAAP basic and diluted EPS calculation, showing a basic loss per share of **$(0.01)** for Q2 2025, a significant improvement GAAP EPS Calculation (Three Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------------------------------- | :--------- | :--------- | | Net income (loss) attributable to XPO Inc. - diluted | $1,346 | $(14,343) | | Less: net loss attributable to noncontrolling interests | $156 | $4,827 | | Less: dividends on preferred shares | $(1,898) | $(2,150) | | Net loss attributable to XPO Inc. - basic and diluted | $(396) | $(9,654) | | Weighted average shares of Class A common stock outstanding—basic and diluted | 34,972 | 31,806 | | Net loss per share attributable to Class A common stock - basic | $(0.01) | $(0.30) | [Reconciliations of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliations%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations from GAAP net income (loss) to non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted Net Income Reconciliation to Adjusted EBITDA (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------------------------- | :--------- | :--------- | | Net income (loss) | $1,346 | $(14,343) | | Interest expense, net | $12,274 | $10,869 | | Income taxes | $312 | $132 | | Depreciation and amortization | $2,973 | $4,517 | | **EBITDA** | **$16,905** | **$1,175** | | Equity-based compensation | $2,666 | $4,196 | | Acquisition and transaction expenses (income) | $(1,915) | $(1,217) | | Impairment of goodwill and other noncurrent assets | $12,928 | $12,089 | | Restructuring and related charges | $1,263 | $2,325 | | **Adjusted EBITDA** | **$28,100** | **$24,686** | Reconciliation to Adjusted Net Income (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------------------------- | :--------- | :--------- | | Net income (loss) | $1,346 | $(14,343) | | Acquisition and transaction expenses (income) | $(1,915) | $(1,217) | | Impairment of goodwill and other noncurrent assets | $12,928 | $12,089 | | Restructuring and related charges | $1,263 | $2,325 | | **Adjusted net income** | **$14,513** | **$29** | | Adjusted net earnings (loss) per share - basic | $0.26 | $(0.04) |

Company Overview - Xponential Fitness, Inc. is a boutique fitness brand franchisor operating in the U.S., Canada, and several international markets [1] - The company primarily generates revenues through franchise license fees, along with additional income from equipment and merchandise sales [1] Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the financial drivers of a company, often revealed through a DCF model valuation [1] - This approach allows for flexibility beyond traditional investment categories such as value, dividend, or growth investing, considering all prospects of a stock to assess risk-to-reward [1]

Group 1 - Xponential Fitness (XPOF) shares increased by 35.4% to close at $10.1, following a period of 22% loss over the past four weeks, indicating a significant recovery in investor sentiment [1][2] - The rise in shares is attributed to the conclusion of an SEC probe that began in December 2023, which raised concerns over potential securities fraud and accounting issues, but ended with no enforcement action [2] - The company is expected to report quarterly earnings of $0.15 per share, reflecting a year-over-year increase of 600%, with revenues projected at $77.16 million, up 0.8% from the previous year [3] Group 2 - The consensus EPS estimate for Xponential Fitness has remained unchanged over the last 30 days, suggesting that the stock's price movement may not sustain without trends in earnings estimate revisions [4] - Xponential Fitness holds a Zacks Rank of 3 (Hold), while another company in the same industry, OneSpaWorld (OSW), has a Zacks Rank of 2 (Buy) and has shown a 1.5% increase in its last trading session [5][6] - OneSpaWorld's consensus EPS estimate has increased by 2.6% over the past month to $0.24, representing a year-over-year change of 20% [6]