XPOF 10-K & 10-Q changes, risk factors and insider trading
Xponential Fitness, Inc. · NYSE · Services-Miscellaneous Amusement & Recreation · CIK 1802156 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to Our Business and Industry:”
New heading “Risks Related to Our Organizational Structure:”
New heading “Risks Related to Our Class A Common Stock:”
New heading “Our business and operations could be negatively impacted by the recent changes in executive leadership.”
New heading “We, franchisees and master franchisees rely heavily on information systems provided by a single provider, and any material failure, interruption, weakness or termination with such supplier may prevent us from effectively operating our business and damage our reputation.”
New heading “Changes in trade policies, including tariffs, could adversely affect our business.”
New heading “Our reliance on a single third-party supplier for most retail products exposes us to operational and financial risks.”
New heading “Sustainability issues may have an adverse effect on our business, financial condition and results of operations and damage our reputation.”
New heading “We have identified a material weakness in our internal control over financial reporting that could, if not remediated, result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations.”
New heading “Activist investors could cause us to incur substantial costs, divert management’s attention, and have an adverse effect on our business.”
Removed heading “Our performance may be negatively impacted by our recent Chief Executive Officer transition”
Removed heading “Our investments in underperforming studios have been and may be unsuccessful, which could adversely affect our business, results of operations, cash flows and financial condition.”
Removed heading “In January 2024 we acquired a weight loss and wellness brand which is subject to healthcare and related laws.”
Removed heading “We, master franchisees and franchisees rely heavily on information systems provided by a single provider, and any material failure, interruption, weakness or termination with such supplier may prevent us from effectively operating our business and damage our reputation.”
Removed heading “Environmental, social and governance (“ESG”) issues may have an adverse effect on our business, financial condition and results of operations and damage our reputation.”
Removed heading “If we are unable to accurately forecast demand of our retail products and adequately manage our inventory, our operating results could be adversely affected.”
Removed heading “Risks Related to our Convertible Preferred Stock”
Removed heading “The terms of our convertible preferred stock have provisions that could result in a change of control of our Board in the case of an event of default by us, including our failure to pay amounts due upon redemption of the convertible preferred stock.”
Removed heading “The Convertible Preferred impacts our ability to pay dividends on our Class A common stock and imposes certain negative covenants on us.”
Removed heading “The Convertible Preferred ranks senior to the Class A common stock.”
Largest changes
“Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. …”see in full comparison
see in full comparisonOn December 5, 2023, we were contacted by the Securities and Exchange Commission (the “SEC”), requesting that we provide it with certain information and documents.We received notice on May 7, 2024 of an investigation by the U.S. Attorney’s Office for the Central District of California (the “USAO”).On July 29, 2024, we received a civil investigative demand from the United States Federal Trade Commission (the “FTC”). On December 12, 2024, the Company received a subpoena from the Office of the Attorney General of the State of New York (the “NYAG”).We intend to cooperate fully with theSEC, USAO, FTC and NYAGUSAO inthesethisinvestigations,investigation, and we have incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with matters relating to or arising from these investigations. We cannot predict or provide any assurance as to the timing, outcome or consequences ofthesethisinvestigations.investigation. If theanyUSAOof these agencies werewas to conclude that enforcement action is appropriate, we could be required to pay civil penalties and fines, andtheyit could impose other sanctions against us or against our current and former officers and directors. In addition, our board of directors, management and employees may expend a substantial amount of time onthethisSEC, USAO, FTC, and NYAG investigations,investigation, diverting resources and attention that would otherwise be directed toward our operations and implementation of our business strategy, all of which could materially adversely affect our business, financial condition and results of operations.
“Investors, franchisees, employees, regulators, legislators and other stakeholders are increasingly focused on sustainability matters and related disclosures, including with respect to cybersecurity, data privacy and protection, talent and climate. …”see in full comparison
“Investors, franchisees, employees, regulators, legislators and other stakeholders are increasingly focused on ESG matters and related disclosures, including with respect to cybersecurity, data privacy and protection, talent and climate. …”see in full comparison
“The terms of our convertible preferred stock have provisions that could result in a change of control of our Board in the case of an event of default by us, including our failure to pay amounts due upon redemption of the convertible preferred stock.”see in full comparison
“We have identified a material weakness in our internal control over financial reporting that could, if not remediated, result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations.”see in full comparison
Full comparison: every changed paragraph (154)
Our business is subject to a number of risks, some of which are discussed below. The risk factors discussed in this section should be considered together with all of the other information contained in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. If any of the following risks actually occurs, our business, prospects, results of operations, cash flows and financial condition could suffer materially, the trading price of our Class A common stock could decline and you could lose all or part of your investment. We provide these disclosures to convey our views on risks or circumstances that could significantly and adversely influence the Company and its securities going forward. Any references to prior events are included solely as illustrative examples and should not be taken as an exhaustive list, nor as an indication of whether such events have occurred in the past or how likely they are to occur in the future. This Annual Report on Form 10-K also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described in this section. The principal risk factors are:
The following is a summary of the principal risks that could adversely affect our business, operations and financial results:
Risks Related to Our Business and Industry:
Risk Factor Summary
Our financial results are affected by the financial results of masterour franchisees and master franchisees.
Our performance may be negatively impacted by our recent changes in executive leadership.
Our performance may be negatively impacted by our recent Chief Executive Officer transition.
Our plannedgrowth growthstrategy could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.
We, master franchisees and master franchisees could be subject to claims related to health and safety risks to customers that arise while at our and franchisees’ studios.
We, franchisees, master franchisees, franchisees or our third-party service providers may fail to properly maintain the confidentiality and integrity of our customer personal data.
Failure by us, franchisees, master franchisees, franchisees or third-party service providers to comply with existing or future data privacy laws and regulations could have a material adverse effect on our business.
Environmental, social and governance issues may have an adverse effect on our business.
Changes in trade policies, including tariffs, could adversely affect our business.
We and our franchisees are dependent on certain music licenses to permit franchisees to use music in their studios.
Our reliance on a single third-party supplier for most retail products exposes us to operational and financial risk.
If we are unable to accurately forecast demand of our retail products and adequately manage our inventory, our operating results could be adversely affected.
Changes in sustainability issues may have an adverse effect on our business.
Risks Related to Our Organizational Structure:
The terms of our convertible preferred stock have provisions that could result in a change of control of our Board in the case of an event of default by us.
Our convertible preferred stock impacts our ability to pay dividends on our Class A common stock and imposes certain negative covenants on us.
Our convertible preferred stock ranks senior to our Class A common stock.
Risks Related to Our Class A Common Stock:
Material weakness identified in our internal control over financial reporting could, if not remediated, result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations.
Activist investors could have an adverse effect on our business.
Our financial results are affected by the operating and financial results of, and our relationships with, masterour franchisees and master franchisees.
A substantial portion of our revenue comes from royalties generated by franchised studios and studios franchised through master franchisees, other fees and commissions generated from activities associated with franchisees and equipment sales and leases to franchisees. As a result, our financial results are largely dependent upon the operational and financial results of franchisees. As of December 31, 2024,2025, we had 2,7582,606 open studios in the North America Region and master franchisees with 475491 studios operating internationally. Negative economic conditions, including inflationinflation, tariffs and the effect of decreased consumer confidence or changes in consumer behavior, or any continued disruptions in franchisees’ operations, could materially harm franchisees’ financial condition, which would cause our royalty and other revenues to decline and, as a result, materially and adversely affect our business, results of operations, cash flows and financial condition. In addition, if franchisees fail to renew their franchise agreements with us, or otherwise cease operating, our royalty and other revenues may decrease, which in turn could materially and adversely affect our business, results of operations, cash flows and financial condition.
Any decline in the capital markets, increases in financing costs, or limits on credit availability may negatively affect the ability of current or prospective franchisees to access the financial or management resources that they need to open or continue operating the studios contemplated by their agreements with us. Franchisees generally depend upon financing from banks or other financial institutions in order to construct and open new studios and to provide working capital. If there is a decline in the credit environment, financing may become difficult to obtain for some or all of our current and prospective franchisees. If current or prospective franchisees face difficulty obtaining financing, the number of our franchised studios may decrease, franchise fee revenues and royalty revenues could decline and our planned growth may slow, which would negatively impact our business, results of operations, cash flows and financial condition.
The number of new studios that actually open in the future may differ materially from the number of U.S. licenses sold and international licenses to be sold via master franchise agreements. As of December 31, 2024,2025, we had 1,607832 studios in the North America Region contractually obligated to be opened under existing franchise agreements and 1,043767 licenses to be sold internationally via master franchise agreements in respect of studios that had not yet opened. Historically, a portion of our licenses sold have not ultimately resulted in new studios. From December 31, 20232024 to December 31, 2024,2025, 352284 licenses were terminated in the North America Region and 7665 were terminated internationally. As of December 31, 2025, we estimate approximately 30% of our licenses contractually obligated to open in these locations are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. We expect that terminations may increase over time, however, the timing and number of such terminations is unknown. The historic conversion rate of signed studio commitments to new studio locations may not be indicative of the conversion rate we will experience in the future, and the total number of new studios that actually open in the future may differ materially from the number of licenses sold that we have at any point in time. In addition, the timing of new studio openings is sometimes delayed for a variety of reasons, and delayed openings would adversely affect our business, results of operations, cash flows and financial condition.
Our business and operations could be negatively impacted by the recent changes in executive leadership.
We depend upon our senior management team to direct our strategy and operations. On August 7, 2025, we announced Michael Nuzzo as our Chief Executive Officer to succeed Mark King, who retired from his position as Chief Executive Officer. On November 12, 2025, we announced certain additional leadership changes, including the appointment of Gavin M. O’Connor as our Chief Legal Counsel and Administrative Officer. Key management transitions such as these, involve inherent risk. As with any change in personnel at an executive officer level, there will be a period of transition as our management team assimilates. If we do not successfully manage these transitions, it could be viewed negatively by our franchisees, employees or investors and could have an adverse impact on our business, financial condition, and operating results. With the change in leadership, there is also a risk to retention of other members of senior management, as well as to continuity of business initiatives, plans, and strategies through the transition period and if we are unable to execute an orderly transition, our business may be adversely affected.
Our future success depends, in part, on the services of our senior management team and other key employees at our corporate headquarters, as well as on our ability to recruit, retain and motivate key employees. We have in the recent past experienced turnover of key employees and competition to hire such employees can be intense. The inability to identify, attract, develop, integrate and retain qualified employees required to expand our activities, or the additional loss of current key employees, could adversely affect our operating efficiency and financial condition. We heavily rely on the continued service and performance of our senior management team. Likewise, we have identified the need to add trained accounting staff to address weaknesses in internal controls over financial reporting identified in this report. During 2025 we experienced significant senior management turnover including a change in our Chief Executive Officer and Chief Legal Counsel. If our senior management team, including any new hires that we make in the future, fails to work together effectively and to execute our plans and strategies on a timely basis, our business and future growth prospects could be harmed.
Additionally, the loss of any key personnel could make it more difficult to manage our operations, reduce our employee retention, impair our ability to compete or have other negative effects on our business. Although we have entered into employment offer letters with certain of our key personnel, these letters have no specific duration and constitute at-will employment. We do not maintain key person life insurance policies on any of our employees.
We have experienced operating losses in the past and may experience operating losses in the future. For example, we had a net loss of $53.7 million for the year ended December 31, 2025 and a net loss of $98.7 million for the year ended December 31, 2024 and a net loss of $6.4 million for the year ended December 31, 2023,2024, and we cannot be certain that we will achieve or maintain profitability and may incur operating losses in the future. We expect our operating expenses to increase in the future as we increase our sales and marketing efforts, expand our operating infrastructure and expand into new geographies. Our revenue growth may slow or our revenue may decline for a number of other reasons, including reduced demand for new franchises, reduced demand for the services and products offered by franchisees, increased competition, reduction in openings of new studios, a decrease in the growth or reduction in the size of our overall market or if we cannot capitalize on growth opportunities. If our revenue does not grow at a greater rate than our operating expenses, we may not be able to maintain profitability.profitability and could result in noncompliance with our debt covenants.
Recessionary economic cycles, low consumer confidence, inflation, higher interest rates, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors that may negatively affect our ability to attract franchisees and a decrease in discretionary consumer spending could reduce demand for health, fitness and wellness services and products, which could adversely affect our revenue and operating margins and make opening new studios more difficult. In recent years, the United States and other significant economic markets have experienced cyclical downturns and worldwide economic conditions remain uncertain. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions. Unfavorable economic conditions may decrease demand for our franchises and may also affect our ability to adjust pricing. In addition, unfavorable economic conditions, such as persistent inflation and rising cost of living, may lead consumers to have lower disposable income and reduce the frequency with which they purchase our and franchisees’ services and products. In addition, disasters or outbreaks, such as a pandemic, as well as any resulting recession, depression or other long-term economic impact in our key markets, could negatively impact consumer spending in the impacted regions or depending upon the severity, globally, which could adversely impact our or franchisees’ operating results. This could result in operational disruptions or fewer transactions or limitations on the prices we and franchisees can charge for services and products, either of which could reduce our sales and operating margins. All of these factors could have a material adverse impact on our results of operations and growth strategy.
Any decline in the capital markets, increases in financing costs, or limits on credit availability may negatively affect the ability of current or prospective franchisees to access the financial or management resources that they need to open or continue operating the studios contemplated by their agreements with us. Franchisees generally depend upon financing from banks or other financial institutions in order to construct and open new studios and to provide working capital. The U.S. federal government shutdown that took place for 43 days in 2025 affected prospective and current franchisees ability to secure Small Business Administration (SBA) loans, which are a common source of financing for franchisees. If there is a decline in the credit environment, financing may become difficult to obtain for some or all of our current and prospective franchisees. If current or prospective franchisees face difficulty obtaining financing, the number of our franchised studios may decrease, franchise fee revenues and royalty revenues could decline and our growth may slow, which would negatively impact our business, results of operations, cash flows and financial condition.
We, franchisees and master franchisees rely heavily on information systems provided by a single provider, and any material failure, interruption, weakness or termination with such supplier may prevent us from effectively operating our business and damage our reputation.
We and franchisees in the North America Region, rely heavily on information systems provided by ClubReady, LLC (“ClubReady”), including the point-of-sale processing systems in our franchised studios and other information systems managed by ClubReady, to interact with franchisees and customers and to collect and maintain customer information or other personally identifiable information, including for the operation of studios, collection of cash, management of our equipment supply chain, accounting, staffing, payment of obligations, ACH transactions, credit and debit card transactions and other processes and procedures. Our and franchisees’ ability to efficiently and effectively manage studios depends significantly on the reliability and capacity of these systems, and any potential failure of ClubReady to provide quality uninterrupted service is beyond our and franchisees' control. We have previously experienced a dispute with ClubReady and while that dispute has been resolved amicably, there is no guarantee a dispute will not arise in the future.
Franchisees outside of North America also rely on information systems provided by third parties, and any disruption in such information systems could negatively impact such franchisees' operations, including sales at franchised studios.
We acquired StretchLab in November 2017, AKT in March 2018, YogaSix in July 2018, Rumble in March 2021, BFT in October 2021, and Lindora in January 2024. We launched our digital platform offerings in 2019 and XPASS in 2021. We may launch additional brands, services or products in the future. We cannot assure you that any new brands, services or products we launch will be accepted by consumers, that we will be able to recover the costs incurred in developing new brands, services or products, or that new brands, services or products will be successful.
If new brands, services or products are not as successful as we anticipate, it could have a material adverse effect on our business, results of operations, cash flows and financial condition. We have divested and may, in the future, divest certain assets or brands that do not meet our strategic objectives or growth targets. With respect to any potential future divestiture, we may encounter difficulty finding potential acquirers or other divestiture options on favorable terms. Any future divestiture could affect our profitability as a result of the gains or losses on such sale of a business or brand and the loss of the revenue resulting from such sale or the costs or liabilities that we retain has in the past, and may in the future, negatively impact profitability and cash flow subsequent to any divestiture. For example, during the year ended December 31, 2024 we divested two of our former brands Row House and Stride and wound down franchise operations of our AKT brand, all of which resulted in losses for us.
Our franchise model subjects us to a number of risks, any one of which may impact our royalty and other revenues collected from franchisees, harm the goodwill associated with our brands, and materially and adversely impact our business, results of operations, cash flows and financial condition.
Franchisee bankruptcies. A franchisee bankruptcy could have a substantial negative impact on our ability to collect payments due under our agreements with such franchisee. In the event of a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreement or agreements, area development agreementagreement, multi-unit agreements or any other agreements pursuant to Section 365 of the U.S. Bankruptcy Code, in which case there would be no further royalty payments or any other payments from such franchisee, and we may not ultimately recover those payments in a bankruptcy proceeding of such franchisee in connection with a damage claim resulting from such rejection.
In addition, each of our franchise agreements has ana expirationterm date.that Uponexpires upon the expiration of a franchise agreement,term, we or the franchisee may, or may not, elect to renewenter theinto a successor franchise agreement. The award of a successor franchise agreement renewal is contingent on, among other requirements, the franchisee’s execution of the then-current form of franchise agreement (which may include increased royalty rates, advertising fees and other fees and costs), the satisfaction of certain conditions (includingwhich may include studio renovation and modernization and other requirements) and the payment of a renewal fee. If a franchisee is unable or unwilling to satisfy any of these requirements,requirements and applicable notice, cure, and other requirements under state law have been provided, then the expiring franchise agreement will terminateexpire uponat the expirationend of its term.
In addition, we, master franchisees, and master franchisees are subject to various regulatory efforts, such as efforts to enforce employment laws, which include efforts to categorize franchisors as the co-employers of their franchisees’ employees, legislation to categorize independent contractors as employees, legislation to categorize individual franchised businesses as large employers for the purposes of various employment benefits, and other legislation or regulations that may have a disproportionate impact on franchisors and/or franchised businesses. These efforts may impose greater costs and regulatory burdens on us and franchisees, and negatively affect our ability to attract and retain franchisees.
We are currently involved in lawsuits related to certain of the above-described matters. In the ordinary course of business, we are also the subject of regulatory actions regarding the enforceability of the non-compete clauses included in our franchise agreements. In particular, certain states have public policies that may call into question the enforceability of non-compete clauses. Regardless, however, of whether any claim brought against us in the future is valid or we are liable, such a claim would be expensive to defend and may divert time, money and other valuable resources away from our operations and, thereby, hurt our business.
Franchise agreements and franchisee relationships. Franchisees develop and operate their studios under terms set forth in our area developmentdevelopment, multi-unit and franchise agreements, respectively. These agreements give rise to long-term relationships that involve a complex set of obligations and cooperation. We have a standard set of agreements that we typically use with franchisees. However, we reserve the right to negotiate terms of our franchise agreements with individual franchisees or groups of franchisees (e.g., a franchisee association). We and franchisees may not always maintain a positive relationship or interpret our agreements in the same way. Our failure to have positive relationships with franchisees could individually or in the aggregate cause us to change or modify our business practices, which may make our franchise model less attractive to franchisees or their customers.
Recessionary economic cycles, low consumer confidence, inflation, higher interest rates, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors that may negatively affect our ability to attract franchisees and a decrease in discretionary consumer spending could reduce demand for health, fitness and wellness services and products, which could adversely affect our revenue and operating margins and make opening new studios more difficult. In recent years, the United States and other significant economic markets have experienced cyclical downturns and worldwide economic conditions remain uncertain. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions. Unfavorable economic conditions may decrease demand for our franchises. In addition, unfavorable economic conditions, such as persistent inflation and rising cost of living, may lead consumers to have lower disposable income and reduce the frequency with which they purchase our and franchisees’ services and products. In addition, disasters or outbreaks, such as a pandemic, as well as any resulting recession, depression or other long-term economic impact in our key markets, could negatively impact consumer spending in the impacted regions or depending upon the severity, globally, which could adversely impact our or franchisees’ operating results. This could result in operational disruptions or fewer transactions or limitations on the prices we and franchisees can charge for services and products, either of which could reduce our sales and operating margins. All of these factors could have a material adverse impact on our results of operations and growth strategy.
Our performance may be negatively impacted by our recent Chief Executive Officer transition
On June 17, 2024, we announced that Mark King had been named our Chief Executive Officer to replace Brenda Morris who had been serving as our interim Chief Executive Officer following the suspension and resignation of our former Chief Executive Officer and founder Anthony Geisler. There are a number of risks associated with a Chief Executive Officer transition, any of which may harm us. If the new Chief Executive Officer is unsuccessful at leading the management team or is unable to articulate and execute our strategy and vision, our business may be harmed, and our stock price may decline. If we do not successfully manage our Chief Executive Officer transition, it could be viewed negatively by our franchisees, employees or investors and could have an adverse impact on our business, financial condition, and operating results. With the change in leadership, there is a risk to retention of other members of senior management, such as the resignations of both our Chief Operating Officer and President during the fourth quarter of 2024, as well as to continuity of business initiatives, plans, and strategies through the transition period and if we are unable to execute an orderly transition, our business may be adversely affected.
Our future success depends, in part, on the services of our senior management team and other key employees at our corporate headquarters, as well as on our ability to recruit, retain and motivate key employees. Competition for such employees can be intense, and the inability to identify, attract, develop, integrate and retain the additional qualified employees required to expand our activities, or the loss of current key employees, could adversely affect our operating efficiency and financial condition. We heavily rely on the continued service and performance of our senior management team, including each of our brand presidents, who provide leadership, contribute to the core areas of our business and help us to efficiently execute our business. Likewise, we have identified the need to add trained accounting staff to address weaknesses in internal controls over financial reporting identified in this report. During 2024 we experienced significant senior management turnover including a change in chief executive officer and the resignation of both our chief operating officer and our president. If our senior management team, including any new hires that we make in the future, fails to work together effectively and to execute our plans and strategies on a timely basis, our business and future growth prospects could be harmed.
Additionally, the loss of any key personnel could make it more difficult to manage our operations, reduce our employee retention and revenue and impair our ability to compete. Although we have entered into employment offer letters with certain of our key personnel, these letters have no specific duration and constitute at-will employment. We do not maintain key person life insurance policies on any of our employees.
Our investments in underperforming studios have been and may be unsuccessful, which could adversely affect our business, results of operations, cash flows and financial condition.
From time to time, we have taken ownership of underperforming studios with a view to improving the operating results of the studio and ultimately re-licensing it to a different franchisee. In the third quarter of 2023, we announced a restructuring plan that involves exiting company-owned transition studios. As a result, the number of company-owned transition studios has decreased from the prior year. As of December 31, 2024, we had ownership of one such studio, compared to 22 studios as of December 31, 2023. While we have no plans to take ownership of underperforming studios going forward, we continue to incur restructuring expenses related to our previous ownership of company-owned transition studios. Additionally, cash outflows related to company-owned transition studio lease terminations are expected to be incurred throughout 2025.
From time to time, we also make cash support payments to franchisees of underperforming studios. The support payments are intended to help franchisees improve their studios. The support payments may not be sufficient to help franchisees improve their results, and we may never realize a return on the support payments, which could materially and adversely affect our business, results of operations, cash flows and financial condition.
From time to time, we have taken ownership of underperforming studios with a view to improving the operating results of the studio and ultimately re-licensing it to a different franchisee. In the third quarter of 2023, we announced a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations. As a result, the number of company-owned transition studios has significantly decreased. As of December 31, 2025 and 2024, we had ownership of only one such studio, compared to 22 studios as of December 31, 2023. While we have no plans to take ownership of underperforming studios going forward, we continue to incur restructuring expenses related to our previous ownership of company-owned transition studios. Additionally, cash outflows related to company-owned transition studio lease terminations are expected to be incurred throughout 2026. Such restructuring activities may also divert management's attention from our core business, increase expenses on a short-term basisbusiness and lead to potential disputes with the employees, customers or suppliers of the affected studios. Additionally, we may not be able to fully realize the cost savings and benefits initially anticipated from the restructuring plan, the expected charges may be greater than expected, including payments for lease terminations, and we may not be able to reach agreement with contractual counterparties, any of which could negatively impact our business.
We operate in a dynamic and rapidly evolving market, contending with a diverse array of competitors spanning multiple segments of the health and wellness industry. Our competitive environment includes boutique fitness studios, personal trainers, large-scale health and fitness clubs, at-home fitness solutions, digital wellness platforms, metabolic health providers, and AI-driven fitness applications. Additionally, we compete in the franchise market, where potential franchisees evaluate opportunities across both boutique fitness brands and entirely different industries.
As technology reshapes consumer expectations and engagement models, competition is intensifying, with both emerging and established players innovating rapidly. Market participants are increasingly leveraging artificial intelligence,intelligence (“AI”), predictive analytics, and immersive digital experiences to personalize engagement, enhance operational efficiency, and scale at unprecedented speeds. The convergence of fitness, health, and technology has also given rise to integrated wellness ecosystems that blend AI-powered coaching, biometric tracking, and connected hardware, further redefining industry standards.
Metabolic health and weight management providers, leveraging medical and wellness-based interventions.
Well-capitalized competitors with substantial financial reserves, proprietary technology, and aggressive market expansion strategies can swiftly disrupt traditional business models, optimize franchise operations through automation, and enhance customer experiences through digital-first approaches. If we do not continuously innovate, leverage data-driven intelligence, and integrate advanced technology across our digital and physical offerings, including rapidly evolving technological developments in AI, we risk losing market position to these technologically advanced competitors. Failure to compete effectively could have an adverse effect on our business, results of operations, cash flows and financial condition.
The success of our business depends on our and franchisees’ ability to attract and retain customers. Our and franchisees’ marketing efforts may not be successful in attracting customers to studios, and customer engagement may materially decline over time, especially at studios in operation for an extended period of time. Customers may cancel their memberships at any time after giving proper advance notice, subject to an initial minimum term applicable to certain memberships. Franchisees may also cancel or suspend memberships if a customer fails to provide payment. In addition, franchised studios experience attrition and must continually engage existing customers and attract new customers in order to maintain membership levels. In order to increase membership levels, we may from time to time allow franchisees to offer promotions or lower monthly dues or annual fees. If we and franchisees are not successful in optimizing price or in increasing membership levels in new and existing studios, growth in monthly membership dues or annual fees may suffer. Any decrease in our average dues or fees or higher membership costs may adversely impact our business, results of operations, cash flows and financial condition.
Management's Discussion & Analysis (MD&A)
New heading “Rumble and CycleBar divestiture”
New heading “Retail supply agreement”
New heading “Development fee payments on future franchise licenses”
Removed heading “This Management’s Discussion and Analysis gives effect to the correction of the Company’s consolidated financial statements for the years ended December 31, 2023 and 2022, as more fully described in Note 2 of Notes to Consolidated Financial Statements.”
Removed heading “Divestiture of Stride and Row House Brands”
Removed heading “Wind down of AKT brand franchise operations”
Removed heading “Comparison of the years ended December 31, 2023 and December 31, 2022”
Removed heading “Operating Costs and Expenses”
Removed heading “Other Expense (Income), net”
Largest changes
“The Credit Agreement contains various conditions to borrowing and certain customary affirmative and negative covenants, including, without limitation, covenants that restrict our ability to incur debt, grant liens, make investments, make restricted payments and dispose of assets. …”see in full comparison
“During the quarter ended December 31, 2024, we determined it was necessary to re-evaluate goodwill of the BFT and Rumble reporting units for impairment due to indicators of potential impairment resulting from a decline in forecasted and actual cash flows. …”see in full comparison
“Selling, general and administrative expenses. Selling, general and administrative expenses were $176.9 million in the year ended December 31, 2024, compared to $168.9 million in the year ended December 31, 2023, an increase of $8.0 million, or 5%. …”see in full comparison
“Selling, general and administrative expenses. Selling, general and administrative expenses were $152.0 million in the year ended December 31, 2025, compared to $176.9 million in the year ended December 31, 2024, a decrease of $24.9 million, or 14%. …”see in full comparison
Impairment of goodwill and other assets. Impairment of goodwill and other assets was $32.7 million in the year ended December 31, 2025, compared to $62.6 million in the year ended December 31, 2024,see in full comparisoncomparedato $16.8 million in the year ended December 31, 2023, an increasedecrease of$45.8$29.8 million, or273%.48%. Theincreasedecrease was primarily due toaimpairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment of trademark of $3.4 million related to the CycleBar trademark, impairment of trademark, franchise agreement and deferred video production cost intangible assets of $12.7 million related to BFT, and other noncurrent asset impairments of $9.2 million compared to write down of franchise agreements intangible asset and goodwill of $30.3 million related tothe BFT reporting unit,BFT, a write down of goodwill of $10.3 million related tothe Rumble reporting unit,Rumble, a write down of franchise agreements intangible assets, trademark, and goodwill of $12.6 million related tothe CycleBar reporting unit,CycleBar, a write down of right-of-use assets of $7.0 million, and other impairments of $2.4 million primarily related to our Xpass platform in thecurrent year compared to a $7.2 million intangible assets write down related to the acquisition of 14 Rumble studios, a $4.7 million write down of goodwill and intangible assets related to Stride and Row House, and a $4.8 million write down of goodwill and intangible assets related to Rumble in theprior year period.
“The Credit Agreement contains customary affirmative and negative covenants, including, among other things: (i) to maintain certain total leverage ratios, liquidity levels and EBITDA levels (in each case, as discussed further in the Credit Agreement); (ii) to use the proceeds of borrowings only for certain specified purposes; (iii) to refrain from entering into certain agreements outside of the ordinary course of business, including with respect to consolidation or mergers; (iv) restricting further indebtedness or liens; (v) restricting certain transactions with our affiliates; …”see in full comparison
Full comparison: every changed paragraph (133)
This Management’s Discussion and Analysis gives effect to the correction of the Company’s consolidated financial statements for the years ended December 31, 2023 and 2022, as more fully described in Note 2 of Notes to Consolidated Financial Statements.
Xponential Fitness LLC (“XPO LLC”), the principal operating subsidiary of Xponential Fitness, Inc. (“XPO Inc.”), and together with its subsidiaries, (the “Company” or “XPO Inc.,” “we,” “us,” and “our”), is one of the leading global franchisors of boutique health and wellness brands. Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being a 69.5%72.0% ownership interest in XPO LLC through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”).
We operate a diversified platform of eightfive brands spanning across verticals including Pilates, indoor cycling, barre, stretching, boxing,strength functional training, metabolic healthtraining and yoga. In partnership with its franchisees and master franchisees, XPO LLC offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout the North America Region and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 3028 additional countries as of December 31, 2024.2025. The Company's portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; CycleBar, the largest indoor cycling brand in the United States; StretchLab, a concept offering one-on-one and group stretching services; YogaSix, the largest franchised yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest barre brand in the United States; Rumble, a boxing-inspired full-body workout;and BFT, a functional training and strength-based program; and Lindora, a provider of medically guided wellness and metabolic health solutions, which was acquired on January 2, 2024.program.
As of December 31, 2024,2025, 2,7582,606 studios were open in the North America Region (consists of Canada, the United States and U.S. territoriesTerritories) and franchisees were contractually committed to open 1,607832 additional studios under existing franchise agreements. In addition, as of December 31, 2024,2025, we had 475491 studios open internationally and our master franchisees were contractually obligated to sell licenses to franchisees to open an additional 1,043767 new studios, of which master franchisees have sold 237192 licenses for studios not yet opened as of December 31, 2024.2025.
On August 7, 2025, we announced that our board of directors had unanimously appointed Mr. Michael Nuzzo as Chief Executive Officer effective August 7, 2025. Mr. Nuzzo also joined our board of directors. Mr. Nuzzo succeeded Mark King, who retired from his position as Chief Executive Officer and as a member of our board of directors, also effective August 7, 2025. On July 30, 2025, we 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. Mr. Nuzzo brings more than 25 years of executive leadership in the retail and consumer services sectors across strategic, operational, financial, and growth-focused disciplines. In addition, on November 12, 2025, we announced the appointment of Gavin M. O’Connor as our Chief Legal Counsel and Administrative Officer.
On May 10, 2024, Mr. Anthony Geisler, our former Chief Executive Officer and member of our board of directors, was removed by our board of directors from his duties and suspended indefinitely as Chief Executive Officer. At that time, our board of directors appointed Ms. Brenda Morris, a member of our board of directors since 2019, to serve as our interim Chief Executive Officer. On May 13, 2024, Mr. Geisler resigned as Chief Executive Officer, effective immediately. Additionally, our board of directors withdrew its nomination of Mr. Geisler as a Class III director in connection with our 2024 Annual Meeting of Stockholders and his term as a director expired on May 30, 2024.
On June 17, 2024, we announced that our board of directors had unanimously appointed Mr. Mark King as Chief Executive Officer effective June 17, 2024. Mr. King also joined our board of directors. At that time, Ms. Morris ceased serving as interim Chief Executive Officer but continues to serve as a member of our board of directors. Mr. King is a highly innovative, growth-oriented leader with an established track record scaling iconic global consumer brands and franchisors.
On November 1, 2024, Mr. Ryan Junk tendered his resignation as our Chief Operating Officer effective November 4, 2024. On December 11, 2024, Ms. Sarah Luna tendered a written resignation as our President. Ms. Luna’s last day of employment was December 13, 2024.
In January 2025 we announced the appointment of four seasoned executives to our leadership team. The appointments include John Kawaja as President of North America; Tim Weiderhoft as Chief Operating Officer of North America; Kevin Beygi as Chief Technology Officer; and Eric Simon as Chief Development Officer. Prior to being promoted to President of North America, Mr. Kawaja served as the Company’s President of Wholesale. Previously, Mr. Kawaja was President at TaylorMade Golf Company and the Head of Marketing for North America at Adidas Group. Prior to joining the Company as Chief Operating Officer of North America, Mr. Weiderhoft was Chief Operating Officer and Vice President of Franchising for Central Bark USA, Chief Executive Officer at Wow Wow Hawaiian Lemonade, and Vice President of Franchise Development at Massage Envy Franchising LLC. Prior to joining the Company as Chief Technology Officer, a newly created role at the Company, Mr. Beygi was Director of Data Analytics, Enablement and Operations for Microsoft Corporation, and held senior advisory roles with The Walt Disney Company, MISO, Shell and Total Energies. Prior to joining the Company as Chief Development Officer, another newly created role at the Company, Mr. Simon was Senior Vice President of Franchise Sales and Development at The Joint Chiropractic, Director of Franchise Development at AAMCO Transmission and Total Car Care, and International Development Manager for The UPS Store.
Lindora AcquisitionDivestiture
On December 1, 2023, we entered into an agreement to acquire Lindora Franchise, LLC, a Delaware limited liability company, the franchisor of the “Lindora” wellness brand (the “Lindora Franchisor”), for cash consideration of $8.5 million. The transaction also includes up to $1.0 million of contingent consideration which is subject to the achievement of certain milestones. The Lindora Franchisor was a subsidiary of Lindora Wellness, Inc. (“Lindora Wellness”). Lindora Wellness has owned and operated each of the Lindora clinics in California for at least 25 years and currently owns and operates 30 Lindora clinics in California and a single Lindora clinic in the state of Washington. Immediately prior to the execution of the purchase agreement on December 1, 2023, Lindora Wellness signed 31 franchise agreements with the Lindora Franchisor pursuant to which Lindora Wellness will continue to operate its Lindora clinics as a franchisee of the Lindora Franchisor. The acquisition of the Lindora Franchisor was completed on January 2, 2024. Lindora complements our existing brands and will help us deliver on consumers’ increasing demand for a holistic approach to health. See Note 4 of Notes to Consolidated Financial Statements for additional information.
Divestiture of Stride and Row House Brands
On February 13, 2024, we entered into an agreement with a buyer, pursuant to which we divested the Stride brand, including the intellectual property, franchise rights and franchise agreements for open studios. The buyer of the Stride brand is a former member of management and one of our shareholders. We received no consideration from the divestiture of the Stride brand and will assist the buyer with transition support including cash payments of approximately $0.3 million payable over the 12-month period following divestiture.
On MaySeptember 20,19, 2024,2025, we entered into an agreement with a buyer, pursuantbuyer to which we divesteddivest the Row HouseLindora 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. We receivedexpect noto receive total consideration fromof up to $6.0 million based on 7% of the monthly cash-basis gross revenue of the legacy studio locations, which was recorded at the estimated fair value of $3.8 million at the divestiture ofdate. We believe the Rowdivestiture Houseallows brand.us to better focus and utilize our resources on our core brands and other opportunities which better align with our long-term strategies.
Rumble and CycleBar divestiture
On July 24, 2025, we entered into an agreement with a buyer to divest 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 certain known litigation, pre-litigation, and disputes as of the closing of the divestiture. We received total consideration of $6.7 million in cash and retained royalties of $0.4 million, which was credited to the buyer's promissory note of $5.0 million. We believe the divestiture allows us to better focus and utilize our resources on our core brands and other opportunities which better align with our long-term strategies.
Retail supply agreement
On July 3, 2025, we and Fit Commerce, a California Corporation (“FC”), entered into a Retail Supply Agreement (the “Agreement”) which became effective as of December 1, 2025 (the “Effective Date”). The Agreement relates to the outsourcing of our 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 purchased $4.5 million of our existing retail inventory on the Effective Date of the Agreement. This strategic initiative shifted 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 us 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 us or our franchisees. The domestic Commissions will be paid by FC to us based on each contract year (prorated for any partial contract year) in an aggregate amount of approximately $50.0 million over the five-year period subject to certain adjustments provided in the Agreement. On November 10, 2025, the Company entered into an amendment to the Agreement, pursuant to which certain non-material modifications were made to the provisions governing the purchase of the Company's existing retail inventory.
These divestitures allow us to better focus and utilize our resources on our other brands.
Wind down of AKT brand franchise operations
During the three months ended September 30, 2024, we announced the wind down of AKT franchise operations. As part of the wind down, we began terminating franchise agreements with existing AKT studios and signed a licensing agreement with a former franchisee for no consideration received. As of December 31, 2024, there were no operational AKT studios, with the exception of the studio operating under a licensing agreement.
On April 10, 2023, we received notice of an investigation from the Commissioner of California’s Department of Financial Protection and Innovation (“DFPI”) related to our compliance with California’s Franchise Investment Law. In addition, on April 26, 2024, we received a request for information from the Office of the Attorney General of the State of Maryland related to our compliance with Maryland’s Franchise Registration and Disclosure Law. As a result of both of those inquiries, the Companyinquiry, waswe have been unable to offer and sell franchises in California or Maryland, except in cases where an exemption permitted sales to persons who met specific criteria. On November 4, 2024, without admission of wrongdoing, we entered into a Consent Order with the DFPI to resolve the matter. The CompanyMaryland hasmatter alsois received inquiries from the Office of the Attorney General of the State of New York, the Office of the Attorney General of the State of Maryland, the Washington Department of Financial Institutions, and the Minnesota Department of Commerce regarding the Company’s compliance with applicable franchise laws.ongoing.
Additionally, we previously received notice of investigation from the State of Washington's Department of Financial Institutions (“DFI”), the Virginia Division of Securities and Retail Franchising (“VDSRF”), and the Office of the Attorney General of the State of New York (“NYAG”) related to our compliance with relevant state franchise laws. On August 12, 2025, without admission of wrongdoing, we entered into a consent order with DFI to resolve the matter. Similarly, on February 12, 2026, without admission of wrongdoing, the Company signed a settlement order with VDSRF to resolve the matter, which the VDSRF will be countersigning shortly. The NYAG matter is ongoing.
In March 2025, the 2025 Franchise Disclosure Documents (“FDDs”) were issued for the BFT, Club Pilates, CycleBar, Pure Barre, Rumble, Stretch Lab, and Yoga Six franchise programs, and then amended in August 2025 and again on February 19, 2026 for the BFT, Club Pilates, Pure Barre, Stretch Lab, and Yoga Six franchise programs. As a result, offers and sales of franchises are temporarily paused in the following registration states-- California, Hawaii, Illinois, Minnesota, New York, North Dakota, Rhode Island, Virginia, and Washington —until each state completes its review and registration of the amended FDDs. Pure Barre, however, may continue selling in Illinois and New York because it qualifies for an exemption. Separately, offers in Maryland are paused due to an ongoing regulatory inquiry. In all listed states, sales may proceed where an applicable exemption permits sales to persons who meet specific criteria.
WeThe areFDDs alsowill inbe the process of updatingupdated and renewingrenewed thefor FDDs and, as a result, have paused selling franchises in all states, except in cases where an exemption permits sales to persons who met specific criteria.2026. Upon the issuance of the 20252026 FDDs, the franchisors will begin offering and selling franchises in states that do not require registration of the FDDs. In the remaining states that require registration of the FDDs, we will continue to pause all sales until registration is obtained from the relevant regulatory agencies, except in cases where an exemption permits sales to persons who metmeet specific criteria. Sales will resume promptly following such approvals, subject to any applicable waiting periods. OurAny inability to sell licenses for an extended period hascan result in slowed our growth and could result in a reduction in our anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition.
In the third quarter of 2023, we began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations. The plan was approved and initiated in the third quarter of 2023 and iswas expected to continueconclude throughoutin 2025; however, the ultimate timing of the completion of our restructuring plan will depend on lease termination negotiations.negotiations, which is expected to continue throughout 2026. During the fourth quarter of 2023, our restructuring plan was expanded due to the addition of Rumble company-owned transition studios to the restructuring plan and a refranchising plan that was terminated by the Company due to the refranchisor’s non-compliance with the franchise agreements and the subsequent closure of certain studios. This refranchise termination resulted in us incurring losses for contract termination expenses, other expenses associated with exiting the studios, and loss contingencies related to the refranchisor’s unpaid payroll. During the years ended December 31, 20242025 and 2023,2024, we recognized total restructuring charges of $29.6$10.6 million, net of gains, and $14.0$29.6 million, net of gains, respectively, primarily for contract termination and other associated costs, loss (gain) on lease terminations and sale or disposal of assets, impairment of right-of-use assets, and other restructuring charges.
We expect to recognize additional restructuring charges throughout 20252026 totaling between approximately $7.1$7.4 million to $10.8$11.0 million for rent expense, including amortization of the right-of-use assets and accretion of the operating lease liability, lease termination gains or losses, and other variable lease costs related to company-owned transition studios and other restructuring charges. We are considering subleases or negotiating lease terminations for operating leases for certain studios for which we have lease liabilities recorded and the expected cash payments and expenses to exit the lease may be greater than expected rent expense for that period, depending on the outcome of lease negotiations. Cash outflows related to these lease terminations are expected to be incurred throughout 2025.2026. As of December 31, 2025, there were nine leases held by us related to divested brands that account for $6.3 million of our total lease liabilities.
Once completed we estimate annualized savings of approximately $13.5 million to $15.5 million underas a result of the restructuring plan. Additionally,However, we may not be able to fully realize the cost savings and benefits initially anticipated from the restructuring plan,plan the expected charges may be greater than expected, andas we may not be able to reach agreement with contractual counterparties, anyor the charges may be greater than expected. Any reduction in the amount of whichannualized couldsavings we expect to achieve would negatively impact our business. See Note 1917 of Notes to Consolidated Financial Statements for additional information.
Licensing new qualified franchisees, selling additional licenses to existing franchisees and opening studios. Our growth depends upon our successability into licensingsuccessfully license new studios to new and existing franchisees. We believe our success in attracting new franchisees and attractingexpanding our relationships with our existing franchisees to invest in additional studios has resulted from our diverse offering of attractive brands, corporate level support, training provided to franchisees and the opportunity to realize attractive returns on their invested capital. We also believe our significant investments in centralized systems and infrastructure help support new and existing franchisees. To continue to attract qualified new franchisees, sell additional studios to existing franchisees and assist franchisees in opening their studios, we plan to continue to invest in our brands to enable them to deliver positive consumer experiences and in our integrated services at the brand level to support franchisees.
International and domestic expansion. We continue to invest in increasing the number of franchisees outside of the North America.America Region. We have developed strong relationships and executed committed development contracts with master franchisees to propel our international growth. We plan to continue to invest in these relationships and seek new relationships and opportunities, including through acquisitions and partnerships, in countries that we have targeted for expansion. In the U.S., we may from time to time consider acquisition of and partnership with certain complimentary assets or businesses that can enhance and expand our brands and operations.
All metrics in this “Key Performance Indicators” section are presented on an adjusted basis to reflectremove historical information of Lindora prior to the acquisition by the Company in January 2024 and on an adjusted basis to remove historical information for both Stride and Row House prior to their divestitures by the Company in February 2024 and May 2024, respectively.respectively, CycleBar and Rumble prior to their divestitures by the Company in July 2025, and Lindora prior to its divestiture in September 2025. Historical information has not been adjusted to reflect the wind down of AKT. All references to these metrics in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” use this same basis of reporting, unless noted otherwise.
Reflects the number of development fee payments on future franchise licenses received by us and unused under multi-unit agreements as of period end. The number of development fee payments on future franchise licenses is not included in the franchise licenses sold count.
(2)
(3)
Reflects the new studio openings, net of terminations.
System-wide sales represent gross sales by all studios in the North America.America Region. System-wide sales includes sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance. System-wide sales growth is driven by new studio openings and increases in same store sales. Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.
A studio is considered no longer operating and excluded from the total number of studios operating if (a) the Company has reason to believe, after reasonable inquiry, that the studio is permanently closed, with no plans for re-opening or relocation, or (b) it has no sales for nine consecutive months or more, whichever comes first. If a studio deemed to be no longer operating subsequently generates sales at a future date, it re-enters the operating studio count (and the number of studios no longer operating is reduced). Studios classified as no longer operating are deemed permanently closed. Furthermore, studios no longer operating also includes de-branded studios (studios that exit our franchise system and continue to operate independently under non-Xponential branding).
Please see the table in the “Same Store Sales” section, subheadersub header “North America studios contributing to same store sales.” The line “studios without 13 months of consecutive sales as of the last month that had positive sales within the period being measured” is an indicator for the number of the North America Region traditional location studios that are older than 13 months, and that have had a recent or current disruption in sales, but that are still included in the Numbernumber of Studiosstudios Operatingoperating count. For the years ended December 31, 2024,2025, 20232024 and 2022,2023, this represented 0.5%,0.0%, 0.5%,0.4%, and 0.6%,0.4%, respectively, of our North America Region studio base. While nearly all our franchised studios are licensed to franchisees, from time to time we operate a limited number of company-owned transition studios (typically as we take possession of a studio following a franchisee ceasing to operate it and as we prepare it to be licensed to a new franchisee). Management reviews the number of studios operating at a given point in time in order to help forecast system-wide sales, franchise revenue, and other revenue streams.
The following tables contain information about changes in the number of our North America Region operating studios for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively:
(4)
Excludes one company-owned transition studio operated at December 31, 2025 under the Rumble brand, which was divested in the third quarter of 2025. As of December 31, 2025, the Company continues to operate this studio.
The number of licenses sold in the North America Region and globally reflect the cumulative number of licenses sold by us (or, outside of the North America,America Region, by or to our master franchisees), since inception through the date indicated. The number of licenses sold is not reduced by terminations. The number of licenses sold does not generally include license renewals or licenses issued in connection with a change in ownership of operating studios. Licenses contractually obligated to open refer to licenses sold net of opened studios and terminations. Licenses contractually obligated to be sold internationally reflect the number of licenses that master franchisees are contractually obligated to sell to franchisees to open internationally that have not yet opened as of the date indicated. The number of licenses contractually obligated to open is a useful indicator of the number of studios that may open in the future, although it is not certain that these studios will open. Management reviews the number of licenses sold and the number of licenses contractually obligated to open to help monitor and forecast studio growth, system-wide sales and revenue streams.
As of December 31, 2024,2025, we estimate approximately 30% of our licensesglobal contractuallylicense obligated to open in North Americaobligations are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. This delay in development has resulted in delays in studio openings and may also lead to increased terminations, which could have a negative long term impact on our business and operating results.
Development fee payments on future franchise licenses
As part of a multi-unit agreement, franchisees purchase an initial franchise license and make nonrefundable development fee payments to reserve the right to open additional studios. The number of development fee payments on future franchise licenses sold in the North America Region reflect the number of development fee payments received by us and are unused as of period end. The number of development fee payments on future franchise licenses is not included in the licenses sold count. The remaining balance of the franchise license fee for each additional studio is due upon site selection for the studio and signing of a franchise agreement by the franchisee. The number of development fee payments on future franchise licenses is a useful indicator of the number of additional licenses that may be sold in the future, although it is not certain that these development fee payments will result in a sold license. Management reviews the number of development fee payments on future franchise licenses to help monitor and forecast license sales and studio growth.
AUV is calculated by dividing sales during the applicable period for all studios contributing to AUV by the number of studios contributing to AUV. All traditional studio locations in the North America Region are included in the AUV calculation, as long as they meet certain time since opening and sales criteria (as defined immediately below). In particular, AUV (LTM as of period end) and Quarterly AUV (run rate) are calculated as follows:
AUV (LTM as of period end) consists of the average sales for the trailing 12 calendar months for all traditional studio locations in the North America Region that opened at least 13 calendar months ago as of the measurement date and that have generated positive sales for each of the last 13 calendar months as of the measurement date.
Quarterly AUV (run rate) consists of average quarterly sales for all traditional studio locations in the North America Region that had opened at least six calendar months ago as of the beginning of the respective quarter, and that have non-zero sales in the respective quarter (including nominal or negative sales figures; the only figures excluded are exact $0 amounts in the quarter), multiplied by four.
The following table reconciles our North America Region operating studios for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively, to the total studios contributing to both AUV (LTM as of period end) and Quarterly AUV (run rate):
Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include monthly sales for any traditional studio location in the North America.America Region. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendarscalendar months ago as of any month within the measurement period, the respective comparable months will be included. We measure same store sales based solely upon monthly sales as derived through the designated point-of-sale system. This measure highlights the performance of existing studios, while excluding the impact of new studio openings. Management reviews same store sales to assess the health of the franchised studios.
The following table reconciles our North America Region operating studios for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively, to the total studios contributing to same store sales:
Total revenue. Total revenue was $314.9 million in the year ended December 31, 2025, compared to $320.3 million in the year ended December 31, 2024, compareda to $317.9 million in the year ended December 31, 2023, an increasedecrease of $2.4$5.5 million, or 1%.2%. The increasedecrease in total revenue was primarily due to anlower increaseequipment revenue due to a decrease in theequipment numberinstallations ofand openlower studios,in merchandise revenue, partially offset by aan decreaseincrease in otherfranchise servicerevenue and franchise marketing fund revenue.
Franchise revenue. Franchise revenue was $192.6 million in the year ended December 31, 2025, compared to $174.5 million in the year ended December 31, 2024, comparedan toincrease $143.2of $18.1 million, or 10%. Franchise revenue consisted of franchise royalty fees of $130.0 million, franchise territory fees of $34.9 million, technology fees of $15.7 million and training fees of $12.0 million in the year ended December 31, 2023,2025, ancompared increase of $31.3 million, or 22%. Franchise revenue consisted ofto franchise royalty fees of $118.3 million, franchise territory fees of $27.9 million, technology fees of $16.9 million and training fees of $11.4 million in the year ended December 31, 2024, compared to franchise royalty fees of $94.6 million, franchise territory fees of $21.9 million, technology fees of $15.7 million and training fees of $11.0 million in the year ended December 31, 2023.2024. The increase in franchise royalty fees, technology fees and training fees was primarily due to ana increasehigher inroyalty samerate storefor salescertain andnew anstudios, increasepartially inoffset numberby ofa operatingdecrease studios globally since December 31, 2023 (including studios relateddue to thebrand Lindora acquisitiondivestitures in the firstcurrent quarter of 2024), which also contributed to the increase in franchise territory fees.year. The increase in franchise territory fees is alsoprimarily attributed to an increase of $6.2$7.6 million, or 101%,62%, in revenue recognized as a result of franchise agreement terminations year-over-year to $12.3$19.9 million in the year ended December 31, 2024.2025, compared to $12.3 million in the prior year period.
Equipment revenue. Equipment revenue was $35.0 million in the year ended December 31, 2025, compared to $54.2 million in the year ended December 31, 2024, compared to $56.5 million in the year ended December 31, 2023, a decrease of $2.3$19.2 million, or 4%.35%. Most equipment revenue is recognized in the period when the equipment is installed. GlobalThe decrease in equipment revenue was primarily due to a decrease in global equipment installations in the year ended December 31, 2024, decreased2025, compared to the prior year period, primarilydriven dueby to thea decrease in studio openings compared to the prior year period.period Theand averageconsistent revenuewith perthe installation increaseddecrease in thefranchise yearlicense ended December 31, 2024, when compared to the year ended December 31, 2023. The increasesales in averagerecent revenue is due to brand mix and international versus domestic mix.periods.
Merchandise revenue. Merchandise revenue was $23.9 million in the year ended December 31, 2025, compared to $27.2 million in the year ended December 31, 2024, compared to $33.3 million in the year ended December 31, 2023, a decrease of $6.1$3.3 million, or 18%.12%. The decrease in merchandise revenue was primarily due primarily to athe decreaseimpact inof divested brands and lower overall demand from studios,studios currentcoupled yearwith sales promotions and a lower number of company-owned transition studioschange in strategy to outsource our retail merchandise inventory compared to the current yearprior period.
Franchise marketing fund revenue. Franchise marketing fund revenue was $36.5 million in the year ended December 31, 2025, compared to $34.0 million in the year ended December 31, 2024, compared to $27.3 million in the year ended December 31, 2023, an increase of $6.7$2.5 million, or 25%.7%. The increase was primarily due to an increase in same store sales and an increase in number of operating studios in the North America Region since December 31, 2023 (including studios related to the Lindora acquisition in the first quarter of 2024).2024.
Costs of product revenue. Costs of product revenue was $42.4 million in the year ended December 31, 2025, compared to $59.5 million in the year ended December 31, 2024, compared to $60.3 million in the year ended December 31, 2023, a decrease of $0.9$17.1 million, or 1%,29%, compared to a decrease in related revenues of 9%.28%. The decrease in cost of product revenue was partially attributable to a decrease in global equipment installations in the year ended December 31, 2025, compared to the prior year period. Costs of product revenue as a percentage of related revenue increaseddecreased to 73%72% in the year ended December 31, 2024,2025, from 67%73% in the comparable prior year ended December 31, 2023.period. The increasedecrease was primarily due to current year sales promotions, that decreased gross margin and an increase in write downs of slow-moving inventory.inventory in the current year period. Additionally, in the prior year period we had a higher percentage of sales relating to non-branded merchandise for which we earn a commission with no corresponding cost of revenue compared to the current year period.
Costs of franchise and service revenue. Costs of franchise and service revenue was $22.3 million in the year ended December 31, 2025, compared to $21.8 million in the year ended December 31, 2024, compared to $16.0 million in the year ended December 31, 2023, an increase of $5.8$0.5 million, or 36%.2%. The increase was primarily due to a $3.7$1.3 million increase in franchise sales commissions, partially offset by a $0.5 million decrease in costs related to brand access fee revenue. This increase is consistent with the increase in related franchise territory revenue increase. The increase in cost of franchise and service revenue is also attributed to an increase of $3.2 million, or 113%, in costs recognized as a result of franchise agreement terminations year-over-year to $6.1 million in the year ended December 31, 2024.revenue.
Selling, general and administrative expenses. Selling, general and administrative expenses were $152.0 million in the year ended December 31, 2025, compared to $176.9 million in the year ended December 31, 2024, a decrease of $24.9 million, or 14%. The decrease was primarily attributable to a decrease in legal expenses of $1.9 million (including nonrecurring insurance credits of $34.8 million in the current period) related to various legal matters including government investigations; a decrease of $2.6 million in equity-based compensation expense due to an increase in forfeitures over the prior year period; lower restructuring and related charges of $22.2 million in the current year period; a decrease in marketing and advertising expenses of $2.1 million, an increase in gain on divestitures of brands of $3.7 million; and a $0.3 million decrease in bad debt expense, partially offset by an increase in salaries and wages of $2.3 million; a $4.1 million increase in loss on guaranty of franchisee third-party loans; and a net increase in other variable expenses of $1.5 million.
What changed in the latest 10-Q
Risk Factors
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the six months ended June 30, 2026 and 2025”
Largest changes
“Selling, general and administrative expenses. Selling, general and administrative expenses were $62.1 million in the six months ended June 30, 2026, compared to $69.6 million in the six months ended June 30, 2025, a decrease of $7.6 million, or 11%. …”see in full comparison
“Impairment of goodwill and other assets. Impairment of goodwill and other assets was $0.0 million in the six months ended June 30, 2026, compared to $14.8 million in the six months ended June 30, 2025, a decrease of $14.8 million, or 100%. The decrease was due to impairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment of trademark of $3.4 million related to the CycleBar reporting unit, and other noncurrent asset impairments of $3.9 million in the prior year.”see in full comparison
Impairment of goodwill and other noncurrent assets. Impairment of goodwill and other noncurrent assets was $0.0 million in the three months endedsee in full comparisonMarchJune31,30, 2026, compared to$1.9$12.9 million in the three months endedMarchJune31,30, 2025, a decrease of$1.9$12.9 million due to impairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment ofright-oftrademarkuseofassets.$3.4 million related to the CycleBar reporting unit, and other noncurrent asset impairments of $2.0 million.
Selling, general and administrative expenses. Selling, general and administrative expenses weresee in full comparison$30.0$32.0 million in the three months endedMarchJune31,30, 2026, compared to$45.5$24.1 million in the three months endedMarchJune31,30, 2025,aandecreaseincrease of$15.5$7.9 million, or34%.33%. Thedecreaseincrease was primarily attributable toaandecreaseincrease in legal expenses of$12.3$5.7 million(including nonrecurring insurance credits of $2.2 million in the current period)related to various legal matters including government investigations; an increase of $2.8 million in professional services and financial transaction fees, decrease in contingent consideration receivable of $3.7 million related to Lindora divestiture and an increase in marketing and advertising expenses of $1.1 million. The overall increase in selling, general and administrative expenses was partially offset by a decrease in salaries and wages of$1.7$1.4 million due to a reduction in headcount; a decrease of$1.3$1.0 million in equity-based compensation expense due to an increase in forfeitures over the prior year period;$0.1$0.9 million decrease in bad debtexpenseexpense, lower restructuring and related charges of $1.1 million in the current year period, anetdecrease in other variable expenses of$1.0$0.5 million;partially offset byand a$0.4$0.5 millionincreasedecrease in loss on guaranty of franchisee third-partyloans and higher restructuring and related charges of $0.5 million in the current year period.loans.
“Additionally, we previously received notice of investigation from the State of Washington's Department of Financial Institutions (“DFI”), the Virginia Division of Securities and Retail Franchising (“VDSRF”), and the Office of the Attorney General of the State of New York (“NYAG”) related to our compliance with relevant state franchise laws. On August 12, 2025, without admission of wrongdoing, we entered into a consent order with DFI to resolve the matter. …”see in full comparison
Full comparison: every changed paragraph (75)
We operate a diversified platform of five brands spanning across verticals including Pilates, barre, stretching, strength training and yoga. In partnership with its franchisees and master franchisees, XPO LLC offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout the North America Region and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico and 2829 additional countries as of MarchJune 31,30, 2026. The Company's portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; StretchLab, a concept offering one-on-one and group stretching services; YogaSix, the largest franchised yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest barre brand in the United States; and BFT, a functional training and strength-based program.
As of MarchJune 31,30, 2026, 2,6292,645 studios were open in the North America Region (consists of Canada, the United States and U.S. Territories) and franchisees were contractually committed to open 789694 additional studios under existing franchise agreements. In addition, as of MarchJune 31,30, 2026, we had 508520 studios open internationally and our master franchisees were contractually obligated to sell licenses to franchisees to open an additional 750739 new studios, of which master franchisees have sold 182198 licenses for studios not yet opened as of MarchJune 31,30, 2026.
During the threesix months ended MarchJune 31,30, 2026 and 2025, we generated revenue outside the United States of $2.2$4.9 million and $2.6$5.3 million, respectively. As of MarchJune 31,30, 2026 and December 31, 2025, we did not have material assets located outside of the United States. No franchisee accounted for more than 10% of our revenue. We operate in one segment for financial reporting purposes.
On September 19, 2025, we entered into an agreement with a buyer to divest the Lindora brand, including the intellectual property, franchise rights and franchise agreements for open studios, and retained certain liabilities, including liabilities related to litigation, pre-litigation, and disputes as of the closing of the divestiture. WeUnder expectthe terms of the agreement, we are entitled to receive total consideration of up to $6.0 million based on 7% of the monthly cash-basis gross revenue of the legacy studio locations,locations. whichBased wason recordedcurrent atinformation and operating results of the estimatedlegacy fairstudio value of $3.8 million atlocations, the divestitureCompany date.currently expects to receive consideration lower than the contractual maximum amount. We believe the divestiture allows us to better focus and utilize our resources on our core brands and other opportunities which better align with our long-term strategies.
Pursuant to the Agreement, FC will pay us 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 us or our franchisees. The domestic Commissions will be paid by FC to us based on each contract year (prorated for any partial contract year) in aggregate amount of approximately $50.0 million over the five-year period subject to certain adjustments provided in the Agreement, which includes an element of variability in the consideration to which we are entitled. We recognizesrecognize revenue on the Commissions in the period in which the Commissions are earned, the consideration is deemed collectible, andwhich may include timing of the variability is resolved.collections. We record revenue related to the commissions within other service revenues on the condensed consolidated statements of operations. On November 10, 2025, the Company entered into an amendment to the Agreement, pursuant to which certain non-material modifications were made to the provisions governing the purchase of the Company's existing retail inventory.
Paused offering or sellingSelling franchises
On April 26, 2024, we received a request for information from the Office of the Attorney General of the State of Maryland related to our compliance with Maryland’s Franchise Registration and Disclosure Law. As a result of the inquiry, we have been unable to offer and sell franchises in Maryland, except in cases where an exemption permitted sales to persons who met specific criteria. The Maryland matter is ongoing.
Additionally, we previously received notice of investigation from the State of Washington's Department of Financial Institutions (“DFI”), the Virginia Division of Securities and Retail Franchising (“VDSRF”), and the Office of the Attorney General of the State of New York (“NYAG”) related to our compliance with relevant state franchise laws. On August 12, 2025, without admission of wrongdoing, we entered into a consent order with DFI to resolve the matter. Similarly, on February 12, 2026, without admission of wrongdoing, the Company signed a settlement order with VDSRF to resolve the matter, which the VDSRF will be countersigning shortly. The NYAG matter is ongoing.
In March 2025, the 2025 Franchise Disclosure Documents (“FDDs”) were issued for the BFT, Club Pilates, CycleBar, Pure Barre, Rumble, Stretch Lab, and Yoga Six franchise programs, and then amended in August 2025 and again on February 19, 2026 for the BFT, Club Pilates, Pure Barre, Stretch Lab, and Yoga Six franchise programs. As a result, offers and sales of franchises are temporarily paused in the following registration states-- California, Hawaii, Illinois, Minnesota, New York, North Dakota, Rhode Island, Virginia, and Washington —until each state completes its review and registration of the amended FDDs. Pure Barre, however, may continue selling in Illinois and New York because it qualifies for an exemption. Separately, offers in Maryland are paused due to an ongoing regulatory inquiry. In all listed states, sales may proceed where an applicable exemption permits sales to persons who meet specific criteria.
In April 2026, we issued 2026 FDDs for the BFT, Club Pilates, Pure Barre, Stretch Lab, and Yoga Six franchise programs.programs and amended them in June 2026. The franchisors can offer and sell franchises in most states using the 2026 FDDs and continue pursuit of registration of the FDDs from the few remaining states that still require registration. In the remaining states that require registration of the FDDs, we will continue to pause all sales until registration is obtained from the relevant regulatory agencies, except in cases where an exemption permits sales to persons who meet specific criteria. Sales will resume promptly following such approvals,approvals registration, subject to any applicable waiting periods. Registration may be further delayed by subsequent amendments to FDDs. Any inability to sell licenses for an extended period can result in slowed growth and could result in a reduction in anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition.
In the third quarter of 2023, we began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations. The plan was approved and initiated in the third quarter of 2023 and was expected to conclude in 2025; however, the ultimate timing of the completion of our restructuring plan will depend on lease termination negotiations, which is expected to continue throughout 2026. During the fourth quarter of 2023, our restructuring plan was expanded due to the addition of Rumble company-owned transition studios to the restructuring plan and a refranchising plan that was terminated by the Company due to the refranchisor’s non-compliance with the franchise agreements and the subsequent closure of certain studios. This refranchise termination resulted in us incurring losses for contract termination expenses, other expenses associated with exiting the studios, and loss contingencies related to the refranchisor’s unpaid payroll. During the three and six months ended MarchJune 31,30, 2026 and 2025,2026, we recognized total restructuring charges of $1.1$0.2 million, net of gains, and $2.4$1.3 million, net of gains, respectively, primarily for contract termination and other associated costs, loss (gain) on lease terminations and sale or disposal of assets, impairment of right-of-use assets and other restructuring charges.
We expect to recognize additional restructuring charges throughout 2026 totaling between approximately $9.2$8.2 million to $12.9$11.7 million for rent expense, including amortization of the right-of-use assets and accretion of the operating lease liability, lease termination gains or losses, and other variable lease costs related to company-owned transition studios and other restructuring charges. We are considering subleases or negotiating lease terminations for operating leases for certain studios for which we have lease liabilities recorded and the expected cash payments and expenses to exit the lease may be greater than expected rent expense for that period, depending on the outcome of lease negotiations. Cash outflows related to these lease terminations are expected to be incurred throughout 2026. As of MarchJune 31,30, 2026, there were sevensix leases held by us related to divested brands that account for $5.6$3.9 million of our total lease liabilities.
The following table sets forth our key performance indicators for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following tables present additional information related to our studio and license key performance indicators for the three and six months ended MarchJune 31,30, 2026 and 2025:
In addition to the number of new studios opened and studios no longer operating during a period, we track the number of total studios operating at the end of a reporting period. This number represents studios that have already opened, are generating revenue, and are regularly holding classes, though this number could include some number of studios that have temporarily suspended operations, but that are not permanently closed and have not yet met the definition for a studio no longer operating. The number of studios that have temporarily suspended operations is an immaterial percentage of our total studio base. Please see the table in the “Same Store Sales” section, sub header “North America studios contributing to same store sales.” The line “studios without 13 months of consecutive sales as of the last month that had positive sales within the period being measured” is an indicator for the number of the North America Region traditional location studios that are older than 13 months, and that have had a recent or current disruption in sales, but that are still included in the number of studios operating count. For the three and six months ended MarchJune 31,30, 2026, this represented 0.2%0.1% and 0.1% of our North America studio base, respectively, compared to 0.3% and 0.2% for the three and six months ended MarchJune 31,30, 2025, respectively. While all our franchised studios are licensed to franchisees, we operate a company-owned transition studio under the Rumble brand, which was divested in the third quarter of 2025 (the table below excludes this studio). Typically, when we take possession of a studio following a franchisee ceasing to operate it we prepare it to be licensed to a new franchisee. Management reviews the number of studios operating at a given point in time in order to help forecast system-wide sales, franchise revenue and other revenue streams.
The following tables contain information about changes in the number of our North America operating studios for the three and six months ended MarchJune 31,30, 2026 and 2025. respectively:
The following table sets forth the total number of operating studios internationally for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table sets forth the total number of operating studios globally for the three and six months ended MarchJune 31,30, 2026 and 2025:
As of MarchJune 31,30, 2026, we estimate approximately 35% of our global license obligations are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. This delay in development has resulted in delays in studio openings and may also lead to increased terminations, which could have a negative long-term impact on our business and operating results.
The following table reconciles our North America Region operating studios for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively, to the total studios contributing to both AUV (LTM as of period end) and Quarterly AUV (run rate):
The following table reconciles our North America Region operating studios for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively, to the total studios contributing to same store sales:
The following table presents our condensed consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table presents our condensed consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 as a percentage of revenue:
Comparison of the three months ended MarchJune 31,30, 2026 and 2025
The following is a discussion of our consolidated results of operations for the three months ended MarchJune 31,30, 2026 versus the three months ended MarchJune 31,30, 2025.
Total revenue, net. Total revenue was $60.7$66.0 million in the three months ended MarchJune 31,30, 2026, compared to $76.9$76.2 million in the three months ended MarchJune 31,30, 2025, a decrease of $16.2$10.2 million, or 21%.13%. The decrease in total revenue was primarily due to lower merchandise revenue and lower equipment revenue duerelated to a decrease in equipment installations and lower merchandise revenue.installations.
Franchise revenue. Franchise revenue was $41.2$44.0 million in the three months ended MarchJune 31,30, 2026, compared to $43.9$45.4 million in the three months ended MarchJune 31,30, 2025, ana decrease of $2.7$1.4 million, or 6%.3%. Franchise revenue consisted of franchise royalty fees of $31.9$32.0 million, franchise territory fees of $3.3$6.2 million, technology fees of $3.3 million and training fees of $2.7$2.5 million in the three months ended MarchJune 31,30, 2026, compared to franchise royalty fees of $32.5$33.7 million, franchise territory fees of $3.9$4.4 million, technology fees of $4.4 million and training fees of $3.1$2.9 million in the three months ended MarchJune 31,30, 2025. The decrease in franchise royalty fees was primarily due to a decrease in same store sales coupled with a decrease due to brand divestitures in 2025. The decreaseincrease in franchise territory fees is primarily attributed to divestiturean increase of brands$2.0 in 2025, coupled with a decrease of $0.4 million, or 48%,million in revenue recognized as a result of franchise agreement terminations year-over-year to $0.4$2.6 million in the three months ended MarchJune 31,30, 2026, compared to $0.8$0.6 million in the prior year period.
Equipment revenue. Equipment revenue was $4.4$7.1 million in the three months ended MarchJune 31,30, 2026, compared to $11.1$9.5 million in the three months ended MarchJune 31,30, 2025, a decrease of $6.8$2.5 million, or 61%.26%. Most equipment revenue is recognized in the period when the equipment is installed. The decrease in equipment revenue was primarily due to a decrease in global equipment installations in the three months ended MarchJune 31,30, 2026, compared to the prior year period, driven by a decrease in studio openings compared to the prior year period and consistent with the decrease in franchise license sales in recent periods.
Merchandise revenue. Merchandise revenue was $0.7$0.5 million in the three months ended MarchJune 31,30, 2026, compared to $6.3$5.6 million in the three months ended MarchJune 31,30, 2025, a decrease of $5.6$5.1 million, or 90%. The decrease in merchandise revenue was primarily due to the change in strategy to outsource our retail merchandise inventory and lower overall demand from studios compared to the prior period.
Franchise marketing fund revenue. Franchise marketing fund revenue was $8.7 million in the three months ended MarchJune 31,30, 2026, compared to $9.3$9.5 million in the three months ended MarchJune 31,30, 2025, a decrease of $0.6$0.7 million, or 6%.8%. The decrease was primarily due to a decrease in same store sales and the impact of divested brands compared to the prior year period.
Other service revenue. Other service revenue was $5.8$5.6 million in the three months ended MarchJune 31,30, 2026, compared to $6.4$6.3 million in the three months ended MarchJune 31,30, 2025, a decrease of $0.5$0.6 million, or 8%.10%. The decrease was primarily due to a $0.3$0.4 million decrease in vendor commission and brand access fee revenues and less than $0.1 million decrease in package and memberships revenue.
Costs of product revenue. Costs of product revenue was $3.6$5.6 million in the three months ended MarchJune 31,30, 2026, compared to $12.0$10.5 million in the three months ended MarchJune 31,30, 2025, a decrease of $8.3$4.9 million, or 70%,47%, compared to a decrease in related revenues of 71%.50%. The decrease in cost of product revenue was primarily driven by a reduction in global equipment installations and strategic shift to outsource retail merchandise inventory and a reduction in global equipment installations during the three months ended MarchJune 31,30, 2026, compared to the prior year period. Costs of product revenue as a percentage of related revenue increased to 73% in the three months ended MarchJune 31,30, 2026, from 69% in the comparable prior year period.
Costs of franchise and service revenue. Costs of franchise and service revenue waswere $3.3$4.2 million in the three months ended MarchJune 31,30, 2026, compared to $4.1$4.0 million in the three months ended MarchJune 31,30, 2025, aan decreaseincrease of $0.8$0.2 million, or 20%.6%. The decreaseincrease was primarily due to a $0.3$0.8 million decreaseincrease in franchise sales commissions andpartially offset by a $0.3$0.5 million decrease in costs related to brand accesstechnology fee revenue.revenue Thisand decreaseother revenue, consistent with the related revenue decrease. The overall increase is consistent with the decreaseincrease in related franchise territory revenue.
Selling, general and administrative expenses. Selling, general and administrative expenses were $30.0$32.0 million in the three months ended MarchJune 31,30, 2026, compared to $45.5$24.1 million in the three months ended MarchJune 31,30, 2025, aan decreaseincrease of $15.5$7.9 million, or 34%.33%. The decreaseincrease was primarily attributable to aan decreaseincrease in legal expenses of $12.3$5.7 million (including nonrecurring insurance credits of $2.2 million in the current period) related to various legal matters including government investigations; an increase of $2.8 million in professional services and financial transaction fees, decrease in contingent consideration receivable of $3.7 million related to Lindora divestiture and an increase in marketing and advertising expenses of $1.1 million. The overall increase in selling, general and administrative expenses was partially offset by a decrease in salaries and wages of $1.7$1.4 million due to a reduction in headcount; a decrease of $1.3$1.0 million in equity-based compensation expense due to an increase in forfeitures over the prior year period; $0.1$0.9 million decrease in bad debt expenseexpense, lower restructuring and related charges of $1.1 million in the current year period, a net decrease in other variable expenses of $1.0$0.5 million; partially offset byand a $0.4$0.5 million increasedecrease in loss on guaranty of franchisee third-party loans and higher restructuring and related charges of $0.5 million in the current year period.loans.
Impairment of goodwill and other noncurrent assets. Impairment of goodwill and other noncurrent assets was $0.0 million in the three months ended MarchJune 31,30, 2026, compared to $1.9$12.9 million in the three months ended MarchJune 31,30, 2025, a decrease of $1.9$12.9 million due to impairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment of right-oftrademark useof assets.$3.4 million related to the CycleBar reporting unit, and other noncurrent asset impairments of $2.0 million.
Depreciation and amortization. Depreciation and amortization expense was $2.3$1.8 million in the three months ended MarchJune 31,30, 2026, compared to $3.0 million in the three months ended MarchJune 31,30, 2025, a decrease of $0.7$1.2 million, or 24%.41%. The decrease was primarily due to a decrease in fixedintangible assets related to impairment of software assets and a decrease in intangible assets due to impairments during the yearthree months ended DecemberJune 31,30, 2025.
Marketing fund expense. Marketing fund expense was $11.7$11.4 million in the three months ended MarchJune 31,30, 2026, compared to $9.4$8.9 million in the three months ended MarchJune 31,30, 2025, an increase of $2.3$2.6 million, or 25%.29%. The increase reflected the timing of incremental marketing spend, as the Company front-loaded more investment in the firstsecond quarter of 2026 compared with the firstsecond quarter of 2025. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue. For the three months ended MarchJune 31,30, 2026, marketing fund revenue was $3.0$2.7 million lower than marketing fund expense.
Acquisition and transaction expense (income). Acquisition and transaction incomeexpense was $3.2$1.4 million in the three months ended MarchJune 31,30, 2026, compared to $8.6$1.9 million income in the three months ended MarchJune 31,30, 2025, a decrease of $5.5$3.4 million, or 63%.175%. These charges primarily represent the non-cash change in contingent consideration related to 2021 and 2024 business acquisitions.
Interest income. Interest income primarily consists of interest on notes receivable and interest income received from various interest-bearing bank accounts, which was $0.6$0.7 million in the three months ended MarchJune 31,30, 2026, compared to $0.6$0.7 million in the three months ended MarchJune 31,30, 2025.
Interest expense. Interest expense was $14.5$14.9 million in the three months ended MarchJune 31,30, 2026, compared to $11.4$13.0 million in the three months ended MarchJune 31,30, 2025, an increase of $3.1$2.0 million, or 27%.15%. Interest expense consists of interest on long-term debt, accretion of earn-out liabilities and amortization and write off of deferred loan costs and debt discount. The increase was primarily due to higher average debt balances in the current year period, partly offset by lower average interest rates on our credit agreement.
Other expense. Other expense consists of TRA expense, which was $0.0 million in the three months ended MarchJune 31,30, 2026, compared to $1.1$0.9 million in the three months ended MarchJune 31,30, 2025. The decrease was due to the absence of TRA expense in the current period. There is no TRA expense, as the Company recorded a pretax book loss after discrete items for the three months ended MarchJune 31,30, 2026 , as compared to pretax book income for the three months ended MarchJune 31,30, 2025.
Income taxes (benefit). Income taxes was (1.4%) of our share of pre-tax book loss in the three months ended June 30, 2026, compared to 18.8% of pre-tax book loss in the three months ended June 30, 2025. The decrease in income tax expense was primarily driven by pre-tax book loss after discrete items in the current period as compared to pre-tax book income after discrete items in the prior period.
Comparison of the six months ended June 30, 2026 and 2025
The following is a discussion of our consolidated results of operations for the six months ended June 30, 2026 versus the six months ended June 30, 2025.
Total revenue. Total revenue was $126.7 million in the six months ended June 30, 2026, compared to $153.1 million in the six months ended June 30, 2025, a decrease of $26.4 million, or 17%. The decrease in total revenue was primarily due to a decrease in equipment revenue due to a decrease in equipment installations and a decrease in merchandise revenue.
Franchise revenue. Franchise revenue was $85.1 million in the six months ended June 30, 2026, compared to $89.2 million in the six months ended June 30, 2025, a decrease of $4.1 million, or 5%. Franchise revenue consisted of franchise royalty fees of $63.9 million, franchise territory fees of $9.4 million, technology fees of $6.6 million and training fees of $5.2 million in the six months ended June 30, 2026, compared to franchise royalty fees of $66.2 million, franchise territory fees of $8.1 million, technology fees of $8.8 million and training fees of $6.1 million in the six months ended June 30, 2025. The decrease in franchise royalty fees was primarily due to a decrease in same store sales coupled with a decrease due to brand divestitures in 2025. The increase in franchise territory fees is primarily attributed to an increase of $1.6 million in revenue recognized as a result of franchise agreement terminations year-over-year to $3.0 million in the six months ended June 30, 2026, compared to $1.4 million in the prior year period.
Equipment revenue. Equipment revenue was $11.4 million in the six months ended June 30, 2026, compared to $20.6 million in the six months ended June 30, 2025, a decrease of $9.2 million, or 45%. Most equipment revenue is recognized in the period when the equipment is installed. The decrease in equipment revenue was primarily driven by a decrease in global equipment installations in the six months ended June 30, 2026, compared to the prior year period, driven by a decrease in studio openings compared to the prior year period and consistent with the decrease in franchise license sales in recent periods.
Merchandise revenue. Merchandise revenue was $1.2 million in the six months ended June 30, 2026, compared to $11.9 million in the six months ended June 30, 2025, a decrease of $10.7 million, or 90%. The decrease in merchandise revenue was primarily due to the change in strategy to outsource our retail merchandise inventory and lower overall demand from studios compared to the prior period.
Franchise marketing fund revenue. Franchise marketing fund revenue was $17.4 million in the six months ended June 30, 2026, compared to $18.7 million in the six months ended June 30, 2025, a decrease of $1.3 million, or 7%. The decrease was primarily due to a decrease in same store sales and the impact of divested brands compared to the prior year period.
Other service revenue. Other service revenue was $11.5 million in the six months ended June 30, 2026, compared to $12.6 million in the six months ended June 30, 2025, a decrease of $1.1 million, or 9%. The decrease was primarily due to a $1.0 million decrease in vendor commission and brand access fee revenues.
Costs of product revenue. Costs of product revenue was $9.2 million in the six months ended June 30, 2026, compared to $22.5 million in the six months ended June 30, 2025, a decrease of $13.3 million, or 59%, compared to a decrease in related revenues of 73%. The decrease in cost of product revenue was primarily driven by a strategic shift to outsource retail merchandise inventory and a decrease in global equipment installations in the six months ended June 30, 2026, compared to the prior year period. Costs of product revenue as a percentage of related revenue increased to 73% in the six months ended June 30, 2026 from 69% in the comparable prior year period.
Costs of franchise and service revenue. Costs of franchise and service revenue were $7.5 million in the six months ended June 30, 2026, compared to $8.1 million in the six months ended June 30, 2025, a decrease of $0.6 million, or 7%. The decrease was primarily due to a $0.5 million decrease in franchise sales commissions, consistent with the related franchise territory revenue decrease.
Selling, general and administrative expenses. Selling, general and administrative expenses were $62.1 million in the six months ended June 30, 2026, compared to $69.6 million in the six months ended June 30, 2025, a decrease of $7.6 million, or 11%. The decrease was primarily attributable to a decrease in salaries and wages of $3.0 million due to a reduction in headcount, a decrease in legal expenses of $6.6 million (including nonrecurring insurance credits of $2.2 million in the current period) related to various legal matters including government investigations; a decrease of $2.3 million in equity-based compensation expense due to higher forfeitures in the prior year period; $1.1 million decrease in bad debt expense, lower restructuring and related charges of $0.6 million in the current year period, a $0.6 million decrease in loss on guaranty of franchisee third-party loans and a decrease in other variable expenses of $0.8 million. The decrease in selling, general and administrative expenses was partially offset by an increase of $2.5 million in professional services and financial transaction fees, decrease in contingent consideration receivable of $3.7 million related to Lindora divestiture and an increase in marketing and advertising expenses of $1.2 million.
Impairment of goodwill and other assets. Impairment of goodwill and other assets was $0.0 million in the six months ended June 30, 2026, compared to $14.8 million in the six months ended June 30, 2025, a decrease of $14.8 million, or 100%. The decrease was due to impairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment of trademark of $3.4 million related to the CycleBar reporting unit, and other noncurrent asset impairments of $3.9 million in the prior year.
Depreciation and amortization. Depreciation and amortization expense was $4.0 million in the six months ended June 30, 2026, compared to $5.9 million in the six months ended June 30, 2025, a decrease of $1.9 million, or 32%. The decrease was primarily due to a decrease in fixed assets related to impairment of software assets and a decrease in intangible assets due to impairments during the year ended December 31, 2025.
Marketing fund expense. Marketing fund expense was $23.1 million in the six months ended June 30, 2026, compared to $18.2 million in the six months ended June 30, 2025, an increase of $4.9 million, or 27%. The increase reflected the timing of incremental marketing spend, as the Company front-loaded more investment in the six months ended June 30, 2026 compared with the prior year. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue. For the six months ended June 30, 2026, marketing fund revenue was $5.7 million lower than marketing fund expense.
Acquisition and transaction expenses (income). Acquisition and transaction income was $1.7 million in the six months ended June 30, 2026, compared to income of $10.6 million in the six months ended June 30, 2025, a decrease in income of $8.8 million, or 83%. These charges primarily represent the non-cash change in contingent consideration related to 2021 and 2024 business acquisitions.
Interest income. Interest income primarily consists of interest on notes receivable and interest income received from various interest-bearing bank accounts, which was $1.3 million in the six months ended June 30, 2026, compared to $1.3 million in the six months ended June 30, 2025.
Interest expense. Interest expense was $29.4 million in the six months ended June 30, 2026, compared to $24.4 million in the six months ended June 30, 2025, an increase of $5.1 million, or 21%. Interest expense consists of interest on long-term debt, accretion of earn-out liabilities and amortization of deferred loan costs and debt discount. The increase was primarily due to higher average debt balances in the current year period, partly offset by lower average interest rates on our credit agreement.
IncomeOther taxesexpense. (benefit).Other Incomeexpense taxesconsists of TRA expense, which was (0.7%)$0.0 of our share of pre-tax book incomemillion in the threesix months ended MarchJune 31,30, 2026, compared to (22.3%)$2.0 of pre-tax book lossmillion in the threesix months ended MarchJune 31,30, 2025.
XPOF insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 2 trade dates, 200,005 shares, about $964.1K) and open-market sales in 0 filings. Net open-market shares: 200,005 (purchases minus sales); net value about $964.1K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-07 | Nuzzo Michael |
Shares withheld for tax | 22,221 | $5.03 | $111.8K |
| 2026-07-01 | Grabowski Mark |
Grant/award | 4,881 | — | — |
| 2026-07-01 | Lee Rachel H. |
Grant/award | 4,773 | — | — |
| 2026-07-01 | Yang Tseli Lily |
Grant/award | 4,411 | — | — |
| 2026-07-01 | Parent Haughey Nicole |
Grant/award | 4,158 | — | — |
| 2026-06-29 | Grabowski Mark |
Grant/award | 15,959 | — | — |
| 2026-06-29 | Yang Tseli Lily |
Grant/award | 15,959 | — | — |
| 2026-06-29 | Lee Rachel H. |
Grant/award | 15,959 | — | — |
| 2026-06-29 | Parent Haughey Nicole |
Grant/award | 15,959 | — | — |
| 2026-06-11 | Parra Danielle Porto |
Grant/award | 219,905 | — | — |
| 2026-05-20 | Cocke Travis W. |
Open-market purchase | 5,002 | $5.50 | $27.5K |
| 2026-05-20 | Cocke Travis W. |
Open-market purchase | 12,074 | $5.50 | $66.4K |
| 2026-05-20 | Cocke Travis W. |
Open-market purchase | 12,073 | $5.50 | $66.4K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 23,599 | $4.64 | $109.5K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 4,889 | $4.77 | $23.3K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 1,645 | $4.77 | $7.8K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 23,599 | $4.64 | $109.5K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 26,656 | $4.70 | $125.3K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 26,656 | $4.70 | $125.3K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 4,720 | $4.83 | $22.8K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 4,720 | $4.83 | $22.8K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 24 | $4.83 | $116 |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 23 | $4.83 | $111 |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 3,969 | $4.77 | $18.9K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 3,969 | $4.77 | $18.9K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 11,800 | $4.77 | $56.3K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 11,799 | $4.77 | $56.3K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 9,778 | $4.64 | $45.4K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 11,044 | $4.70 | $51.9K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 1,956 | $4.83 | $9.4K |
| 2026-05-19 | Cocke Travis W. |
Open-market purchase | 10 | $4.83 | $48 |
Well-known investors holding XPOF (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 1,954,304 | $13.5M | 0.01% | Added 9% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 71,323 | $493.6K | 0.0% | Added 90% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 51,225 | $354.5K | 0.0% | Reduced 45% |
| Renaissance Technologies | 2026-06-30 | 35,200 | $243.6K | 0.0% | Reduced 46% |
| Millennium Management (Israel Englander) | 2026-06-30 | 11,996 | $83.0K | 0.0% | Reduced 85% |