Xponential Fitness, Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Correction of Previously Issued Financial Statements

Correction of Previously Issued Financial Statements

3 Months Ended

Mar. 31, 2025

Disclosure Correction of Previously Issued Financial Statements [Abstract]

Correction of Previously Issued Financial Statements

Note 2 – Correction of Previously Issued Financial Statements

As previously disclosed in Note 2 of Notes to Consolidated Financial Statements within Part II, Item 8 “Financial Statements and Supplementary Data” in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, subsequent to the issuance of the Company's condensed consolidated financial statements for the period ended March 31, 2024, the Company identified misstatements impacting previously issued financial statements. The Company concluded that the aggregate impact of all the errors did not result in a material misstatement of previously issued condensed consolidated financial statements as of and for the three months ended March 31, 2024. The accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2024, have been corrected from amounts previously reported. The Company has also corrected related amounts within the accompanying footnotes.

The identified misstatements impacting the condensed consolidated financial statements for the three months ended March 31, 2024 include the following, for which the amounts described below are the net impact:

Rebates – Certain agreement terms had not been properly or timely communicated to be considered for their accounting impact resulting in misstatements including understatement of costs of product revenue of $250 and overstatement of merchandise revenue of $366 for the three months ended March 31, 2024.

Revenues – The Company’s evaluation of certain revenue contracts did not appropriately evaluate the accounting for all key terms and conditions, resulting in an understatement of merchandise revenue of $537 and costs of product revenue of $429 for the three months ended March 31, 2024.

Other:

Cost of product revenue – Certain costs and fees related to inventory were not properly expensed in the appropriate period, resulting in an overstatement of cost of product revenue of $937 for the three months ended March 31, 2024.

Impairment of assets – Company did not properly assess the disposition of the Stride brand subsequent to the balance sheet date as an impairment indicator as of the balance sheet date, resulting in an overstatement of selling, general and administrative expenses of $338 and an understatement of cost of product revenue for inventory write downs of $64 for the three months ended March 31, 2024.

Legal Accruals – Certain legal liabilities had not been communicated to be considered for their accounting impact resulting in an overstatement of selling, general and administrative expenses of $328 for the three months ended March 31, 2024.

Equipment inventory – Equipment inventory which had been received by the Company was not properly recorded resulting in an understatement of cost of product revenue of $95 for the three months ended March 31, 2024.

Cost of product revenue – The Company improperly recognized deferred costs related to equipment resulting in an understatement of $273 of costs of product revenue for the three months ended March 31, 2024.

Invoices – The Company did not properly account for certain vendor invoices, including not recognizing expenses in the period incurred, resulting in an overstatement of costs of franchise and service revenue of $74 and an understatement of selling, general and administrative expenses of $128 for the three months ended March 31, 2024.

The impact of the correction of errors to the Company's condensed consolidated statement of operations, condensed consolidated statement of changes to stockholders' equity (deficit) and condensed consolidated statement of cash flows for the three months ended March 31, 2024 are presented below:


Condensed Consolidated Statement of Operations	Three Months Ended March 31, 2024
	As Previously Reported			Adjustments			Reference	As Corrected
Revenue, net:
Merchandise revenue	$	8,173			172		A, B		8,345
Total revenue, net		79,521			172				79,693
Operating costs and expenses:
Costs of product revenue		14,391			175		A, B, C1, C2, C4, C5		14,566
Costs of franchise and service revenue		5,121			(74	)	C6		5,047
Selling, general and administrative expenses		37,155			(535	)	C2, C3, C6		36,620
Total operating costs and expenses		72,133			(434	)			71,699
Operating income		7,388			606				7,994
Loss before income taxes		(4,403	)		606				(3,797	)
Net loss		(4,356	)		606				(3,750	)
Less: Net loss attributable to noncontrolling interests		(1,489	)		219				(1,270	)
Net loss attributable to Xponential Fitness, Inc.	$	(2,867	)	$	387			$	(2,480	)

Net income (loss) per share of Class A common stock:
Basic	$	(0.30	)	$	0.01			$	(0.29	)
Diluted	$	(0.30	)	$	0.01			$	(0.29	)


Condensed Consolidated Statement of Changes to Stockholders' Equity (Deficit)	As Previously Reported

	Additional Paid-In Capital			Receivable from Member/ Shareholder			Accumulated Deficit			Noncontrolling interests			Total Equity (Deficit)
Balance at December 31, 2023	$	521,998		$	(15,426	)	$	(630,127	)	$	(77,547	)	$	(202,794	)
Net loss		—			—			(2,867	)		(1,489	)		(4,356	)
Conversion of Class B shares to Class A shares		(9,264	)		—			—			9,264			—
Payment received from shareholder		—			—			—			—			—
Balance at March 31, 2024	$	506,017		$	(15,775	)	$	(632,994	)	$	(69,807	)	$	(214,251	)


	Adjustments

	Additional Paid-In Capital			Receivable from Member/ Shareholder			Accumulated Deficit			Noncontrolling interests			Total Equity (Deficit)
Balance at December 31, 2023	$	(691	)	$	(14	)	$	(4,052	)	$	(1,981	)	$	(6,738	)
Net income		—			—			387			219			606
Conversion of Class B shares to Class A shares		427			—			—			(427	)		—
Payment received from shareholder		—			14			—			—			14
Balance at March 31, 2024	$	(264	)	$	—		$	(3,665	)	$	(2,189	)	$	(6,118	)


	As Corrected

	Additional Paid-In Capital			Receivable from Member/ Shareholder			Accumulated Deficit			Noncontrolling interests			Total Equity (Deficit)
Balance at December 31, 2023	$	521,307		$	(15,440	)	$	(634,179	)	$	(79,528	)	$	(209,532	)
Net loss		—			—			(2,480	)		(1,270	)		(3,750	)
Conversion of Class B shares to Class A shares		(8,837	)		—			—			8,837			—
Payment received from shareholder		—			14			—			—			14
Balance at March 31, 2024	$	505,753		$	(15,775	)	$	(636,659	)	$	(71,996	)	$	(220,369	)


Condensed Consolidated Statement of Cash Flows	Three Months Ended March 31, 2024
	As Previously Reported			Adjustments			Reclassification			As Corrected
Cash flows from operating activities:
Net loss	$	(4,356	)	$	606		$	—		$	(3,750	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Non-cash lease expense		2,205			19			—			2,224
Change in tax receivable agreement liability		—			—			609			609
Gain from disposal of assets		(2,905	)		(15	)		—			(2,920	)
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable		524			(57	)		—			467
Inventories		(546	)		1,764			—			1,218
Prepaid expenses and other current assets		195			(528	)		—			(333	)
Operating lease liabilities		(1,657	)		(84	)		—			(1,741	)
Deferred costs		283			272			—			555
Accounts payable		4,782			750			—			5,532
Accrued expenses		(2,320	)		(2,742	)		—			(5,062	)
Other current liabilities		2,389			(4,185	)		—			(1,796	)
Other liabilities		(3,525	)		4,186			(609	)		52
Net cash provided by operating activities		2,695			(14	)		—			2,681
Cash flows from financing activities:
Payment received from shareholder		—			14			—			14
Net cash used in financing activities		(3,367	)		14			—			(3,353	)