Xponential Fitness(XPOF) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information Filing Details 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] - Period Ended: June 30, 2025[2] - Registrant Status: Accelerated filer and Emerging growth company[3] - Outstanding Shares as of July 31, 2025: Class A common stock: 35,097 thousand shares; Class B common stock: 13,738 thousand shares[3] 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) 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 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] - Goodwill decreased from $135,240 thousand to $127,789 thousand, and intangible assets, net, decreased from $100,944 thousand to $94,350 thousand[8] 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 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] - 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] 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) 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] - Equity-based compensation contributed $3,281 thousand and $2,666 thousand for the periods ended March 31, 2025, and June 30, 2025, respectively[13] - 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] Condensed Consolidated Statements of Cash Flows 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] - 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] 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 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 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] - Lindora, a provider of medically guided wellness and metabolic health solutions, was acquired on January 2, 2024[26][31] - 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] Note 2 – Correction of Previously Issued Financial Statements 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] - 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][40] 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,