10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-40638

Xponential Fitness, Inc.

(Exact name of registrant as specified in its charter)


Delaware	84-4395129
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
17877 Von Karman Ave., Suite 100 Irvine, CA	92614
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 346-3000

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
symbol(s)

    Name of each exchange on which registered

    Class A common stock, par value $0.0001 per share

    XPOF

    New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares (in thousands) of the registrant’s Class A common stock and Class B common stock as of November 1, 2024 was 32,287 and 16,016 shares, respectively.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Changes to Stockholder's Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50
PART II.	OTHER INFORMATION	51
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
Signatures		53

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Xponential Fitness, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands, except per share amounts)


	September 30,			December 31,
	2024			2023
Assets
Current assets:
Cash, cash equivalents and restricted cash	$	37,774		$	37,094
Accounts receivable, net (Note 10)		29,552			32,751
Inventories		10,608			14,724
Prepaid expenses and other current assets		8,341			5,856
Deferred costs, current portion		9,022			6,620
Notes receivable from franchisees, net		279			203
Total current assets		95,576			97,248
Property and equipment, net		18,840			19,502
Right-of-use assets		34,160			71,413
Goodwill		163,036			171,601
Intangible assets, net		117,753			120,149
Deferred costs, net of current portion		41,616			46,541
Notes receivable from franchisees, net of current portion		103			802
Other assets		1,093			1,442
Total assets	$	472,177		$	528,698
Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)
Current liabilities:
Accounts payable	$	21,297		$	19,119
Accrued expenses		21,467			14,088
Deferred revenue, current portion		28,560			34,674
Current portion of long-term debt		5,397			4,760
Other current liabilities		17,423			19,666
Total current liabilities		94,144			92,307

Deferred revenue, net of current portion		108,799			117,305
Contingent consideration from acquisitions (Note 16)		15,494			8,666
Long-term debt, net of current portion, discount and issuance costs		342,038			319,261
Lease liability		33,501			70,141
Other liabilities		1,537			9,152
Total liabilities		595,513			616,832
Commitments and contingencies (Note 16)
Redeemable convertible preferred stock, $0.0001 par value, 400 shares authorized, 115 shares issued and outstanding as of September 30, 2024 and December 31, 2023		116,810			114,660
Stockholders' equity (deficit):
Undesignated preferred stock, $0.0001 par value, 4,600 shares authorized, none issued and outstanding as of September 30, 2024 and December 31, 2023		—			—
Class A common stock, $0.0001 par value, 500,000 shares authorized, 32,191 and 30,897 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		3			3
Class B common stock, $0.0001 par value, 500,000 shares authorized, 16,091 and 16,566 shares issued, and 16,016 and 16,491 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		2			2
Additional paid-in capital		516,582			521,998
Receivable from shareholder (Note 10)		(16,508	)		(15,426	)
Accumulated deficit		(654,095	)		(630,127	)
Treasury stock, at cost, 75 shares outstanding as of September 30, 2024 and December 31, 2023		(1,697	)		(1,697	)
Total stockholders' deficit attributable to Xponential Fitness, Inc.		(155,713	)		(125,247	)
Noncontrolling interests		(84,433	)		(77,547	)
Total stockholders' deficit		(240,146	)		(202,794	)
Total liabilities, redeemable convertible preferred stock and stockholders' deficit	$	472,177		$	528,698

See accompanying notes to condensed consolidated financial statements.

Xponential Fitness, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(amounts in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue, net:
Franchise revenue	$	44,458		$	36,425		$	129,232		$	104,524
Equipment revenue		14,681			12,564			41,506			40,086
Merchandise revenue		6,538			8,456			20,593			24,021
Franchise marketing fund revenue		8,565			6,948			24,777			19,776
Other service revenue		6,249			16,042			20,421			40,058
Total revenue, net		80,491			80,435			236,529			228,465
Operating costs and expenses:
Costs of product revenue		17,071			12,709			44,328			40,967
Costs of franchise and service revenue		4,867			3,559			15,822			11,305
Selling, general and administrative expenses (Note 10)		46,164			43,908			120,308			116,003
Impairment of goodwill and other assets		4,502			4,671			16,591			11,909
Depreciation and amortization		4,226			4,216			13,179			12,701
Marketing fund expense		6,423			5,817			20,785			16,289
Acquisition and transaction expenses (income)		3,664			(1,923	)		6,962			(17,433	)
Total operating costs and expenses		86,917			72,957			237,975			191,741
Operating income (loss)		(6,426	)		7,478			(1,446	)		36,724
Other expense (income):
Interest income		(481	)		(24	)		(1,231	)		(1,189	)
Interest expense		11,843			10,638			34,644			27,242
Other expense		51			1,845			913			3,097
Total other expense		11,413			12,459			34,326			29,150
Income (loss) before income taxes		(17,839	)		(4,981	)		(35,772	)		7,574
Income taxes		131			202			216			212
Net income (loss)		(17,970	)		(5,183	)		(35,988	)		7,362
Less: net income (loss) attributable to noncontrolling interests		(5,971	)		(1,801	)		(12,020	)		2,348
Net income (loss) attributable to Xponential Fitness, Inc.	$	(11,999	)	$	(3,382	)	$	(23,968	)	$	5,014

Net income (loss) per share of Class A common stock:
Basic	$	(0.29	)	$	0.91		$	(0.88	)	$	1.08
Diluted	$	(0.29	)	$	(0.50	)	$	(0.88	)	$	(0.17	)
Weighted average shares of Class A common stock outstanding:
Basic		32,177			32,260			31,704			32,025
Diluted		32,177			40,223			31,704			39,988

See accompanying notes to condensed consolidated financial statements.

Xponential Fitness, Inc.

Condensed Consolidated Statements of Changes to Stockholders' Equity (Deficit)

(Unaudited)

(amounts in thousands)


	Class A Common Stock				Class B Common Stock					Treasury Stock
	Shares		Amount		Shares			Amount		Shares		Amount			Additional Paid-In Capital			Receivable from Shareholder			Accumulated Deficit			Noncontrolling interests			Total Equity (Deficit)
Balance at December 31, 2023		30,897	$	3		16,566		$	2		75	$	(1,697	)	$	521,998		$	(15,426	)	$	(630,127	)	$	(77,547	)	$	(202,794	)
Equity-based compensation		—		—		—			—		—		—			3,252			—			—			1			3,253
Net loss		—		—		—			—		—		—			—			—			(2,867	)		(1,489	)		(4,356	)
Conversion of Class B shares to Class A shares		78		—		(78	)		—		—		—			(9,264	)		—			—			9,264			—
Issuance of Class A common stock under stock-based compensation plans		607		—		—			—		—		—			—			—			—			—			—
Loan to shareholder and accumulated interest		—		—		—			—		—		—			—			(349	)		—			—			(349	)
Distributions paid to Pre-IPO LLC Members		—		—		—			—		—		—			—			—			—			(36	)		(36	)
Preferred stock dividend		—		—		—			—		—		—			(1,863	)		—			—			—			(1,863	)
Adjustment of preferred stock to redemption value		—		—		—			—		—		—			(8,106	)		—			—			—			(8,106	)
Balance at March 31, 2024		31,582		3		16,488			2		75		(1,697	)		506,017			(15,775	)		(632,994	)		(69,807	)		(214,251	)
Equity-based compensation		—		—		—			—		—		—			4,884			—			—			1			4,885
Net loss		—		—		—			—		—		—			—			—			(9,102	)		(4,560	)		(13,662	)
Conversion of Class B shares to Class A shares		398		—		(398	)		—		—		—			(2,851	)		—			—			2,851			—
Issuance of Class A common stock under stock-based compensation plans		180		—		—			—		—		—			74			—			—			—			74
Loan to shareholder and accumulated interest		—		—		—			—		—		—			—			(360	)		—			—			(360	)
Distributions paid to Pre-IPO LLC Members		—		—		—			—		—		—			—			—			—			(206	)		(206	)
Preferred stock dividend		—		—		—			—		—		—			(2,150	)		—			—			—			(2,150	)
Adjustment of preferred stock to redemption value		—		—		—			—		—		—			2,012			—			—			—			2,012
Balance at June 30, 2024		32,160		3		16,090			2		75		(1,697	)		507,986			(16,135	)		(642,096	)		(71,721	)		(223,658	)
Equity-based compensation		—		—		—			—		—		—			4,400			—			—			1			4,401
Net loss		—		—		—			—		—		—			—			—			(11,999	)		(5,971	)		(17,970	)
Vesting of Class B Shares		—		—		1			—		—		—			—			—			—			—			—
Issuance of Class A common stock under stock-based compensation plans		31		—		—			—		—		—			—			—			—			—			—
Loan to shareholder and accumulated interest		—		—		—			—		—		—			—			(373	)		—			—			(373	)
Distributions paid to Pre-IPO LLC Members		—		—		—			—		—		—			—			—			—			(6,742	)		(6,742	)
Preferred stock dividend		—		—		—			—		—		—			(1,898	)		—			—			—			(1,898	)
Adjustment of preferred stock to redemption value		—		—		—			—		—		—			6,094			—			—			—			6,094
Balance at September 30, 2024		32,191	$	3		16,091		$	2		75	$	(1,697	)	$	516,582		$	(16,508	)	$	(654,095	)	$	(84,433	)	$	(240,146	)

See accompanying notes to condensed consolidated financial statements.

Xponential Fitness, Inc.

Condensed Consolidated Statements of Changes to Stockholders' Equity (Deficit)

(Unaudited)

(amounts in thousands)


	Class A Common Stock				Class B Common Stock					Treasury Stock
	Shares		Amount		Shares			Amount		Shares		Amount			Additional Paid-In Capital			Receivable from Shareholder			Accumulated Deficit			Noncontrolling interests			Total Equity (Deficit)
Balance at December 31, 2022		27,571	$	3		21,647		$	2		75	$	(1,697	)	$	505,186		$	(16,369	)	$	(641,903	)	$	(53,284	)	$	(208,062	)
Equity-based compensation		—		—		—			—		—		—			5,598			—			—			14			5,612
Net loss		—		—		—			—		—		—			—			—			(9,983	)		(4,996	)		(14,979	)
Conversion of Class B shares to Class A shares		4,926		—		(4,926	)		—		—		—			(2,332	)		—			—			2,332			—
Preferred stock dividend		—		—		—