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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 March 31, 2026


☐	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 April 30, 2026 was 41,877 and 7,298 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 Stockholders' 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	49
Item 4.	Controls and Procedures	49
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	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
	Signatures	54

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Xponential Fitness, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands, except per share amounts)


	March 31,			December 31,
	2026			2025
Assets
Current assets:
Cash, cash equivalents and restricted cash	$	21,470		$	45,863
Accounts receivable, net		20,838			18,449
Inventories		2,504			2,222
Prepaid expenses and other current assets		26,167			24,151
Deferred costs, current portion		3,913			3,671
Notes receivable, net		96			290
Total current assets		74,988			94,646
Property and equipment, net		10,181			10,891
Right-of-use assets		12,797			13,736
Goodwill		127,789			127,789
Intangible assets, net		65,687			66,507
Deferred costs, net of current portion		23,864			24,860
Other assets		7,097			7,205
Total assets	$	322,403		$	345,634
Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)
Current liabilities:
Accounts payable	$	18,086		$	26,282
Accrued expenses		41,827			51,202
Deferred revenue, current portion		20,743			19,324
Current portion of long-term debt		5,250			5,250
Other current liabilities		13,117			13,917
Total current liabilities		99,023			115,975

Deferred revenue, net of current portion		68,137			69,567
Contingent consideration from acquisitions (Note 14)		7,122			10,309
Long-term debt, net of current portion, discount and issuance costs		499,999			500,500
Lease liabilities, net of current portion		13,101			14,243
Other liabilities		6,993			6,993
Total liabilities		694,375			717,587
Commitments and contingencies (Note 14)
Redeemable convertible preferred stock, $0.0001 par value, 400 shares authorized, none issued and outstanding as of March 31, 2026 and December 31, 2025		—			—
Stockholders' equity (deficit):
Undesignated preferred stock, $0.0001 par value, 4,600 shares authorized, none issued and outstanding as of March 31, 2026 and December 31, 2025		—			—
Class A common stock, $0.0001 par value, 500,000 shares authorized, 41,812 and 35,256 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		4			3
Class B common stock, $0.0001 par value, 500,000 shares authorized, 7,303 and 13,738 shares issued, and 7,228 and 13,663 shares outstanding as of March 31, 2026 and December 31, 2025, respectively		—			1
Additional paid-in capital		443,635			489,732
Receivable from shareholder (Note 9)		(17,016	)		(16,603	)
Accumulated deficit		(741,245	)		(740,520	)
Treasury stock, at cost, 75 shares outstanding as of March 31, 2026 and December 31, 2025		(1,697	)		(1,697	)
Total stockholders' deficit attributable to Xponential Fitness, Inc.		(316,319	)		(269,084	)
Noncontrolling interests		(55,653	)		(102,869	)
Total stockholders' deficit		(371,972	)		(371,953	)
Total liabilities, redeemable convertible preferred stock and stockholders' deficit	$	322,403		$	345,634

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 March 31,
	2026			2025
Revenue, net:
Franchise revenue	$	41,154		$	43,894
Equipment revenue		4,351			11,104
Merchandise revenue		653			6,255
Franchise marketing fund revenue		8,712			9,269
Other service revenue		5,844			6,361
Total revenue, net		60,714			76,883
Operating costs and expenses:
Costs of product revenue		3,630			11,972
Costs of franchise and service revenue		3,262			4,097
Selling, general and administrative expenses		30,040			45,545
Impairment of goodwill and other noncurrent assets		—			1,915
Depreciation and amortization		2,252			2,956
Marketing fund expense		11,674			9,357
Acquisition and transaction income		(3,187	)		(8,638	)
Total operating costs and expenses		47,671			67,204
Operating income		13,043			9,679
Other expense (income):
Interest income		(637	)		(619	)
Interest expense		14,494			11,388
Tax receivable agreement expense		—			1,084
Total other expense		13,857			11,853
Loss before income taxes		(814	)		(2,174	)
Income taxes		6			485
Net loss		(820	)		(2,659	)
Less: net loss attributable to noncontrolling interests		(95	)		(736	)
Net loss attributable to Xponential Fitness, Inc.	$	(725	)	$	(1,923	)

Net loss per share of Class A common stock:
Basic	$	(0.02	)	$	(0.10	)
Diluted	$	(0.02	)	$	(0.10	)
Weighted average shares of Class A common stock outstanding:
Basic		37,317			33,910
Diluted		37,317			33,910

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, 2025		35,256	$	3		13,738		$	1			75	$	(1,697	)	$	489,732		$	(16,603	)	$	(740,520	)	$	(102,869	)	$	(371,953	)
Equity-based compensation		—		—		—			—			—		—			1,984			—			—			—			1,984
Net loss		—		—		—			—			—		—			—			—			(725	)		(95	)		(820	)
Conversion of Class B shares to Class A shares		6,435		1		(6,435	)		(1	)		—		—			(47,449	)		—			—			47,449			—
Issuance of Class A common stock under stock-based compensation plans, net of shares withheld for taxes		121		—		—			—			—		—			(632	)		—			—			—			(632	)
Loan to shareholder and accumulated interest		—		—		—			—			—		—			—			(413	)		—			—			(413	)
Distributions paid to Pre-IPO LLC Members		—		—		—			—			—		—			—			—			—			(138	)		(138	)
Balance at March 31, 2026		41,812		4		7,303			—			75		(1,697	)		443,635			(17,016	)		(741,245	)		(55,653	)		(371,972	)

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, 2024		33,660	$	3		14,739		$	1		75	$	(1,697	)	$	503,850		$	(16,891	)	$	(701,837	)	$	(94,244	)	$	(310,815	)
Equity-based compensation		—		—		—			—		—		—			3,281			—			—			—			3,281
Net loss		—		—		—			—		—		—			—			—			(1,923	)		(736	)		(2,659	)
Conversion of Class B shares to Class A shares		1,000		—		(1,000	)		—		—		—			(6,784	)		—			—			6,784			—
Issuance of Class A common stock under stock-based compensation plans, net of shares withheld for taxes		118		—		—			—		—		—			(919	)		—			—			—			(919	)
Loan to shareholder and accumulated interest		—		—		—			—		—		—			—			(384	)		—			—			(384	)
Distributions paid to Pre-IPO LLC Members		—		—		—			—		—		—			—			—			—			(315	)		(315	)
Preferred stock dividend		—		—		—			—		—		—			(1,898	)		—			—			—			(1,898	)
Balance at March 31, 2025		34,778		3		13,739			1		75		(1,697	)		497,530			(17,275	)		(703,760	)		(88,511	)		(313,709	)

See accompanying notes to condensed consolidated financial statements.

Xponential Fitness, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)


	Three Months Ended March 31,
	2026			2025
Cash flows from operating activities:
Net loss	$	(820	)	$	(2,659	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		2,252			2,956
Amortization and write off of debt issuance costs		78			50
Amortization and write off of discount on long-term debt		779			1,333
Change in contingent consideration from acquisitions		(3,187	)		(8,638	)
Non-cash lease expense		939			1,137
Change in tax receivable agreement liability		—			1,084
Bad debt expense		113			249
Equity-based compensation		1,984			3,281
Non-cash interest		(474	)		(358	)
Gain on disposal of assets and lease terminations		(354	)		—
Change in contingent consideration receivable from Lindora		114			—
Impairment of goodwill and other noncurrent assets		—			1,915
Changes in assets and liabilities, net of effect of acquisition:
Accounts receivable		(2,003	)		(3,229	)
Inventories		(282	)		1,696
Prepaid expenses and other current assets		(2,303	)		(4,049	)
Operating lease liabilities		(1,021	)		(1,034	)
Deferred costs		753			607
Notes receivable, net		1			—
Accounts payable		(8,099	)		(245	)
Accrued expenses		(9,875	)		15,299
Other current liabilities		(569	)		(459	)
Deferred revenue		(11	)		(4,480	)
Other assets		296			1,359
Other liabilities		—			3
Net cash provided by (used in) operating activities		(21,689	)		5,818
Cash flows from investing activities:
Purchases of property and equipment		(464	)		(465	)
Purchase of intangible assets		(353	)		(399	)
Notes receivable issued		—			(173	)
Notes receivable payments received		196			40
Net cash used in investing activities		(621	)		(997	)
Cash flows from financing activities:
Borrowings from long-term debt, net of original discount issue		—			10,000
Payments on long-term debt		(1,313	)		(1,374	)
Debt issuance costs		—			(90	)
Payment of preferred stock dividend		—			(1,792	)
Payments of contingent consideration		—			(500	)
Payments for taxes related to net share settlement of restricted share units		(632	)		(919	)
Payments for distributions to Pre-IPO LLC Members		(138	)		(315	)
Net cash provided by (used in) financing activities		(2,083	)		5,010
Increase (decrease) in cash, cash equivalents and restricted cash		(24,393	)		9,831
Cash, cash equivalents and restricted cash, beginning of period		45,863			32,739
Cash, cash equivalents and restricted cash, end of period	$	21,470		$	42,570

See accompanying notes to condensed consolidated financial statements.

Xponential Fitness, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)


	Three Months Ended March 31,
	2026		2025
Supplemental cash flow information:
Interest paid	$	13,966	$	9,910
Income taxes paid, net		123		93
Non-cash investing and financing activities:
Capital expenditures accrued at period end	$	248	$	1,581
Accrued tax withholding related to convertible preferred stock dividend		—		106
Debt issuance costs paid-in-kind - long-term debt		—		10,872
Debt issuance costs exit fees - long-term debt		—		7,248

See accompanying notes to condensed consolidated financial statements.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Note 1 – Nature of Business and Operations

Xponential Fitness, Inc. (“XPO Inc.”), and together with its subsidiaries, (the “Company” or “we,” “us,” and “our”), was formed as a Delaware corporation on January 14, 2020 for the purpose of facilitating an initial public offering (“IPO”) and entered into a series of transactions to implement an internal reorganization. Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being an ownership interest in Xponential Fitness LLC (“XPO LLC”) through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”).

XPO LLC was formed on August 11, 2017 as a Delaware limited liability company for the sole purpose of franchising fitness brands, through its subsidiaries, in several verticals within the boutique fitness industry. XPO LLC is a wholly owned subsidiary of XPO Holdings, which was formed on February 24, 2020, and prior to the IPO, ultimately, H&W Franchise Holdings, LLC (the “Parent”). Prior to the formation of XPO Holdings, the Company was a wholly owned subsidiary of H&W Franchise Intermediate Holdings, LLC (the “Member”).

In connection with the IPO, XPO Inc. entered into a series of transactions to implement an internal reorganization (the “Reorganization Transactions”). The pre-IPO members of XPO Holdings (the “Pre-IPO LLC Members”) who retained their equity ownership in the form of limited liability company units (the “LLC Units”), immediately following the consummation of the Reorganization Transactions are referred to as “Continuing Pre-IPO LLC Members.”

Because XPO Inc. manages and operates the business and controls the strategic decisions and day-to-day operations of XPO LLC through its ownership of XPO Holdings and because it also has a substantial financial interest in XPO LLC through its ownership of XPO Holdings, it consolidates the financial results of XPO LLC and XPO Holdings, and a portion of its net income (loss) is allocated to the noncontrolling interest to reflect the entitlement of the Continuing Pre-IPO LLC Members to a portion of XPO Holdings’ net income or loss.

As the sole managing member of XPO LLC, the Company operates and controls all of the business and affairs of XPO LLC. The Company consolidates XPO LLC on its condensed consolidated financial statements and records a noncontrolling interest related to the Class B units held by the Class B stockholders on its condensed consolidated balance sheet and statement of operations.

As of March 31, 2026, the Company’s portfolio of five brands consisted of: “Club Pilates,” a Pilates facility franchisor; “StretchLab,” a fitness concept offering one-on-one assisted stretching services; “YogaSix,” a yoga concept that concentrates on connecting to one’s body in a way that is energizing; “Pure Barre,” a total body workout concept that uses the ballet barre to perform small isometric movements; and “BFT,” a high-intensity interval training concept that combines functional, high-energy strength, cardio and conditioning-based classes, designed to achieve the unique health goals of its members. The Company, through its boutique fitness brands, licenses its proprietary systems to franchisees who in turn operate studios to promote training and instruction programs to their club members within each vertical. Prior to the divestitures of the CycleBar and Rumble brands in July 2025, the Company, through its ownership of the CycleBar and Rumble brands, franchised boutique fitness studios dedicated to indoor cycling and boxing disciplines, respectively. Additionally, prior to the divestiture of the Lindora brand in September 2025, the Company, through its ownership of the Lindora brand, franchised clinics that provided medically guided wellness and metabolic health solutions to its members. In addition to franchised studios, the Company operated one company-owned transition studio as of March 31, 2026 and 2025.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

On July 3, 2025, the Company and Fit Commerce, a California Corporation (“FC”), entered into a Retail Supply Agreement (the “Agreement”) effective as of December 1, 2025 (the “Effective Date”). The Agreement relates to the outsourcing of the Company’s 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 agreed to purchase the Company’s existing retail inventory, which was completed in accordance with the terms of the agreement. This strategic initiative shifted management of the franchisee retail experience from in-house teams to a dedicated e-commerce provider, allowing the Company to focus on its core business priorities. Pursuant to the Agreement, FC will pay the Company 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 the Company or the Company's franchisees. The domestic Commissions will be paid by FC to the Company based on each contract year (prorated for any partial contract year) in aggregate amount of approximately $50,000 over the five-year period subject to certain adjustments provided in the Agreement, which includes an element of variability in the consideration to which the Company is entitled. 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.

On September 19, 2025, the Company divested the Lindora brand, including the intellectual property, franchise rights and franchise agreements for open studios. On July 24, 2025, the Company divested the CycleBar and Rumble brands, including the intellectual property, franchise rights and franchise agreements for open studios. See Note 3 for additional information.

Basis of presentation – The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the Company has made all adjustments necessary to present fairly the condensed consolidated statements of operations, balance sheets, changes in stockholders' equity (deficit), and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”). Interim results of operations are not necessarily indicative of results of operations to be expected for a full year.

Principles of consolidation – The Company’s consolidated financial statements include the accounts of its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Use of estimates – The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements. Actual results could differ from these estimates under different assumptions or conditions.

Note 2 – Summary of Significant Accounting Policies

Cash, cash equivalents and restricted cash – The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. The Company's restricted cash consists of marketing fund restricted cash, which can only be used for activities that promote the Company’s brands and guarantee of standby letter of credit (See Note 14). Marketing fund restricted cash was $8,503 and $11,406 at March 31, 2026 and December 31, 2025, respectively. The interest earned on marketing fund restricted cash accounts is also restricted for use. Restricted cash was $9,291 and $12,194 at March 31, 2026 and December 31, 2025, respectively.

Accounts receivable, notes receivable and allowance for expected credit losses – Accounts receivable primarily consist of amounts due from franchisees and vendors. These receivables primarily relate to royalties, advertising contributions, equipment and product sales, training, vendor commissions and other miscellaneous charges. The Company’s payment terms on its receivables from franchisees are generally 30 days. Receivables are unsecured; however, the franchise agreements provide the Company the right to withdraw funds from the franchisee’s bank account or to terminate the franchise for nonpayment. Notes receivable primarily consists of loans provided for the establishment of new or transferred franchise studios to various franchisees. These loans have terms of up to ten years and bear interest at a stated fixed rate ranging from 0% to 15% or variable rates based on LIBOR plus a specified margin.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

The Company’s accounts and notes receivable are recorded at net realizable value, which includes an allowance for expected credit losses. On a periodic basis, the Company evaluates its accounts and notes receivable balances and establishes an allowance for expected credit losses. The estimate of expected credit losses is based upon historical bad debts, current receivable balances, age of receivable balances, the franchisee’s or customer’s financial condition and ability to comply with credit terms and current economic trends, all of which are subject to change. Actual uncollected amounts have historically been consistent with the Company’s expectations. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The following table provides a reconciliation of the activity related to the Company’s accounts receivable and notes receivable allowance for credit losses:


	Accounts receivable			Notes receivable		Total
Balance at December 31, 2025	$	1,673		$	43	$	1,716
Bad debt expense recognized during the year		113			—		113
Write-off of uncollectible amounts		(7	)		—		(7	)
Balance at March 31, 2026	$	1,779		$	43	$	1,822

Revenue recognition – The Company’s contracts with customers consist of franchise agreements with franchisees. The Company also enters into agreements to sell merchandise and equipment, training, and on-demand video services. The Company’s revenues primarily consist of franchise license revenues, other franchise related revenues including equipment and merchandise sales and training revenue. In addition, the Company earns on-demand revenue, service revenue and other revenue.

Each of the Company’s primary sources of revenue and their respective revenue policies are discussed further below.

Franchise revenue – The Company enters into franchise agreements for each franchised studio. The Company’s performance obligation under the franchise license is granting certain rights to access the Company’s intellectual property; all other services the Company provides under the franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for as a single performance obligation, which is satisfied over the term of each franchise agreement. Those services include initial development, operational training, preopening support and access to the Company’s technology throughout the franchise term. Fees generated related to the franchise license include development fees, royalty fees, marketing fees, technology fees and transfer fees, which are discussed further below. Variable fees are not estimated at contract inception, and are recognized as revenue when invoiced, which occurs monthly. The Company has concluded that its franchise agreements do not contain any financing components. In certain circumstances, a franchise agreement may be terminated prior to the expiration of the contractual terms, including in connection with termination of a studio. Upon termination, the Company evaluates the remaining deferred franchise revenue associated with the terminated franchise agreement to determine whether its remaining performance obligations have been satisfied. When the original franchise agreement is terminated, any remaining deferred initial franchise fee associated with that studio is generally recognized as revenue at the point in time the termination occurs, provided that the Company has no remaining material performance obligations under the terminated agreement.

Franchise development fee revenue – The Company’s earlier franchise agreements typically operate under ten-year terms with the option for up to two additional five-year successor or renewal terms. Starting in 2025, new franchise agreements operate under ten-year terms with the option for one additional ten-year successor term. The Company determined the successor options are neither qualitatively nor quantitatively material and do not represent a material right. Initial franchise fees are non-refundable, in the case of single unit franchise agreements, and are typically collected upon signing of the franchise agreement. Initial franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over the franchise life, which the Company has determined to be ten years, as the Company fulfills its promise to grant the franchisee the rights to access and benefit from the Company’s intellectual property and to support and maintain the intellectual property.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Prior to the second quarter of 2025, the Company would enter into an area development agreement with certain franchisees. Area development agreements are for a territory in which a developer has agreed to develop and operate a certain number of franchise locations over a stipulated period of time. The related territory is unavailable to any other party and is no longer marketed to future franchisees by the Company. Depending on the number of studios purchased under franchise agreements or area development agreements, the initial franchise fee ranges from $60 (single studio) to $350 (ten studios) and is paid to the Company when a franchisee signs the franchise agreement or the area development agreement. Area development fees are initially recorded as deferred revenue. The development fees are allocated to the number of studios purchased under the development agreement. The revenue is recognized on a straight-line basis over the franchise life for each studio under the development agreement. Development fees and franchise fees are generally recognized as revenue upon the termination of the development agreement with the franchisee.

Starting in the second quarter of 2025, the Company may enter into multi-unit agreements with certain franchisees. Under these agreements, a developer has agreed to develop and operate a certain number of franchise locations over a stipulated period of time. The initial franchise fee ranges from $55 to $65 for each studio. The multi-unit agreement fees are allocated to the number of studios to be developed and as part of the agreement, franchisees are required to remit the full fee associated with the first franchise license and make nonrefundable development fee payments of $10 each to reserve the right to open the subsequent studios as specified. Fees received for franchise licenses are recorded as deferred revenue. Nonrefundable development fee payments are applied towards the multi-unit agreement fees and the remaining balance for each subsequent studio is due upon site selection for the studio and signing of a franchise agreement by the franchisee. Revenue is recognized on a straight-line basis over the franchise life for each studio under the multi-unit agreement. Multi-unit agreement fees and nonrefundable development fee payments are generally recognized as revenue upon the termination of the multi-unit agreement with the franchisee.

The Company may enter into master franchise agreements with master franchisees, under which the master franchisee sells licenses to franchisees in one or more countries, excluding the United States and Canada. The master franchise agreements generally provide a ten-year period under which the master franchisee may sell licenses. The master franchise agreement term ends on the earlier of the expiration or termination of the last franchise agreement sold by the master franchisee. Initial master franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over 20 years.

Franchise royalty fee revenue – Royalty revenue represents royalties earned from each of the franchised studios in accordance with the franchise disclosure document and the franchise agreement for use of the brands’ names, processes and procedures. The royalty rate in the franchise agreement is typically 7% to 8% of the gross sales of each location operated by each franchisee. The royalties are entirely related to the Company’s performance obligation under the franchise agreement and are billed and recognized as franchisee sales occur.

Technology fees – The Company may provide access to third-party or other proprietary technology solutions to the franchisees for a fee. The technology solution may include various software licenses for statistical tracking, scheduling, allowing club members to record their personal workout statistics, music and technology support. The Company bills and recognizes the technology fee as earned each month as the service is performed and access is provided.

Transfer fees – Transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee. Transfer fees are recognized as revenue on a straight-line basis over the term of the new or assumed franchise agreement, unless the original franchise agreement for an existing studio is terminated, in which case the transfer fee is recognized immediately.

Training revenue – The Company provides coach training services either through direct training of the coaches who are hired by franchisees or by providing the materials and curriculum directly to the franchisees who utilize the materials to train their hired coaches. Direct training fees are recognized over time as training is provided. Training fees for materials and curriculum are recognized at the point in time of delivery of the materials.

The Company also offers coach training and final coach certification through online classes. Fees received by the Company for online class training are recognized as revenue over time for the 12-month period that the Company is obligated to provide access to online training content.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Franchise marketing fund revenue – Franchisees are required to pay marketing fees of 2% of their gross sales. The marketing fees are collected by the Company on a monthly basis and are to be used for the advertising, marketing, market research, product development, public relations programs and materials deemed appropriate to benefit brands. The Company’s promise to provide the marketing services funded through the marketing fund is considered a component of the Company’s performance obligation to grant the franchise license. The Company bills and recognizes marketing fund fees as revenue each month as gross sales occur. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue.

Equipment and merchandise revenue – The following revenues are generated as a result of transactions with or related to the Company’s franchisees.

Equipment revenue – The Company sells authorized equipment to franchisees to be used in the franchised studios. Franchisees generally prepay for equipment, and in that circumstance, the revenue is deferred until delivery and installation. Equipment revenue is recognized when control of the equipment is transferred to the franchisee, which is at the point in time when delivery and installation of the equipment at the studio is complete.

Merchandise revenue – Up to December 2025, the Company sold wholesale branded and non-branded merchandise to franchisees for retail sales to customers at studios. For wholesale merchandise sales, the performance obligation was satisfied at the point in time of delivery of the ordered merchandise to the franchisee. For such wholesale merchandise sales, the Company was the principal in the transaction as it controls the merchandise prior to it being delivered to the franchisee. The Company recorded wholesale merchandise revenue and related costs upon delivery on a gross basis. Customers had the right to return and/or receive credit for defective merchandise. Returns and credit for defective merchandise were insignificant for the years ended December 31, 2025, 2024 and 2023. Effective December 1, 2025, the Company entered into an agreement with FC to outsource its retail merchandising, including the manufacturing and distribution, of any retail item sold by a franchisee. Pursuant to the Agreement, FC will pay the Company domestic and foreign commissions as well as direct-to-customer commissions in connection with the sale of products to the Company's franchisees. The domestic Commissions will be paid by FC to the Company 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, which includes an element of variability in the consideration to which the Company is entitled. The Company recognizes revenue on the Commissions in the period in which the Commissions are earned, the consideration is deemed collectible, and the variability is resolved. The Company records 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.

Other revenue – Service revenue – Historically, the revenue from company-owned transition studios has been very limited as the Company typically only owns a small number of studios and only for a short period of time pending the resale of the license to a franchisee. For company-owned transition studios, the Company’s distinct performance obligation is to provide fitness classes to the customer. The company-owned studios sell memberships by individual class and by class packages. Revenue from the sale of classes and class packages for a specified number of classes are recognized over time as the customer attends and utilizes the classes. Revenues from the sale of class packages for an unlimited number of classes are recognized over time on a straight-line basis over the duration of the contract period.

On-demand revenue – The Company grants a subscriber access to an online hosted platform, which contains a library of web-based classes that is continually updated, through monthly or annual subscription packages. Revenue is recognized over time on a straight-line basis over the subscription period.

Other revenue – The Company earns commission income from certain of its franchisees’ use of certain preferred vendors. In these arrangements, the Company is the agent as it is not primarily responsible for fulfilling the orders. Commissions are earned and recognized at the point in time the vendor ships the product to franchisees. In addition, the Company grants vendors access to franchisees' members to provide certain services to the members for a fee. Revenue is recognized over time on a straight-line basis over the access period.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Sales taxes, value added taxes and other taxes that are collected in connection with revenue transactions are withheld and remitted to the respective taxing authorities. As such, these taxes are excluded from revenue. The Company elected to account for shipping and handling as activities to fulfill the promise to transfer the goods. Therefore, shipping and handling fees that are billed to franchisees are recognized in revenue and the associated shipping and handling costs are recognized in cost of product sold as soon as control of the goods transfers to the franchisee.

Shipping and handling fees – Shipping and handling fees billed to customers are recorded in merchandise and equipment revenues. The costs associated with shipping goods to customers are included in costs of product revenue in the condensed consolidated statements of operations.

Comprehensive income – The Company does not have any components of other comprehensive income recorded within the consolidated financial statements and therefore does not separately present a consolidated statement of comprehensive income in the condensed consolidated financial statements.

Fair value measurements – Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, applies to all financial assets and financial liabilities that are measured and reported on a fair value basis and requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. ASC Topic 820 establishes a valuation hierarchy for disclosures of the inputs to valuations used to measure fair value.

This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2 – Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates and yield curves), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 – Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company’s own data.

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accounts payable, accrued expenses, notes payable and other current liabilities. The carrying amounts of these financial instruments approximate fair value due to their short maturities, proximity of issuance to the balance sheet date or variable interest rate.

Recently adopted accounting pronouncements

Financial Instruments-Credit Losses – In July 2025, the FASB issued ASU 2025-05, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This standard allows entities to apply a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC Topic 606, “Revenue from Contracts with Customers.” The standard is effective for fiscal years beginning after December 15, 2025, including interim periods within those annual periods. Early adoption is permitted. The adoption of this guidance is applied prospectively. The adoption of this accounting standard did not have an impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and will lose this qualification on December 31, 2026, which is the last day of the fiscal year after the fifth anniversary of the Company's IPO, or sooner. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, the JOBS Act permits the Company an extended transition period for complying with new or revised accounting standards affecting public companies. The Company has elected to use this extended transition period.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Income Statement Expense Disclosures – In November 2024, the FASB issued ASU No. 2024-03, “Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires disaggregated information about specified categories of expenses included in certain captions presented on the face of the income statement including purchases of inventory, employee compensation, depreciation, amortization, and depletion. ASU 2024-03 is effective for public entities with annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

Business Combinations and Consolidation – In May 2025, the FASB issued ASU No. 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.” ASU No. 2025-03 provides clarifying guidance on determining the accounting acquirer in certain transactions involving VIEs. The update aims to improve consistency and comparability in financial reporting. The guidance will be effective for annual periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. Upon adoption, the guidance will be applied prospectively. The Company is currently evaluating the impact this amended guidance may have but does not expect the adoption of the guidance to have a material impact on its condensed consolidated financial statements.

Intangibles-Goodwill and Other Internal-Use Software – In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use-Software.” This standard modernizes the guidance to reflect the software development approaches currently being used by removing all references to "development stages" from ASC 350-40 Intangibles-Goodwill and Other Internal-Use Software. Under ASU 2025-06, only the following criteria in ASC 350-40-25-12(b) and (c) must be met to begin capitalizing software costs: (i) management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). This standard is effective for fiscal years beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. Upon adoption, the guidance will be applied prospectively, retrospectively, or via a modified prospective transition method. The Company is evaluating the impact this amended guidance may have but does not expect it to have a significant impact on its condensed consolidated financial statements.

Interim Reporting (Topic 270) – In December 2025, the FASB issued ASU 2025-11,“ Interim Reporting (Topic 270): Narrow-Scope Improvements” This standard improves the navigability of the required interim disclosures and clarifies when the guidance is applicable, as well as provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027, and interim reporting periods beginning after December 15, 2028. The Company is evaluating the impact this the new standard may have, but does not expect it to have a significant impact on its consolidated financial statements.

Supplemental balance sheet information


	March 31,		December 31,
	2026		2025
Prepaid expenses and other current assets
Prepaid expenses and other	$	8,805	$	6,989
Contingent consideration receivable, current portion		936		694
Insurance receivable		5,000		5,000
Tax receivables		2,945		2,708
Gift card receivable		8,481		8,760
Total prepaid expenses and other current assets	$	26,167	$	24,151



Accrued expenses
Accrued compensation	$	2,218	$	4,464
Contingent consideration from acquisitions, current portion		—		500
Sales tax accruals		609		711
Legal accruals, current portion		25,105		33,047
Other accruals		13,895		12,480
Total accrued expenses	$	41,827	$	51,202

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)



Other current liabilities
Lease liabilities, current portion	$	4,467	$	4,701
Gift card liability		8,481		8,760
Other current liabilities		169		456
Total other current liabilities	$	13,117	$	13,917


Other liabilities
Legal accruals, net of current portion	$	6,833	$	6,833
Other liabilities		160		160
Total other liabilities	$	6,993	$	6,993


	Three Months Ended March 31,
	2026		2025
Impairment of goodwill and other noncurrent assets
Right-of-use assets		—		1,915
Total impairment of goodwill and other noncurrent assets	$	—	$	1,915

Note 3 – Acquisitions and Dispositions

The Company completed the following acquisitions and dispositions which contain Level 3 fair value measurements related to the recognition of goodwill and intangibles.

Studios

During the three months ended March 31, 2026 and 2025, the Company operated one company-owned transition studio and did not close or refranchised this studio.

When the Company believes that a studio will be refranchised for a price less than its carrying value but does not believe the studio has met the criteria to be classified as held for sale, the Company reviews the studio for impairment. The Company evaluates the recoverability of the studio assets by comparing estimated sales proceeds plus holding period cash flows, if any, to the carrying value of the studio. For studio assets that are not deemed to be recoverable, the Company recognizes impairment for any excess of carrying value over the fair value of the studios, which is based on the expected net sales proceeds. During the three months ended March 31, 2026 and 2025, the Company did not record any impairment charges related to studio assets. See Note 8 for discussion of impairment charges related to right-of-use assets.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Divestiture of CycleBar and Rumble brands – On July 24, 2025, the Company entered into an agreement with a buyer, pursuant to which the Company divested 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 known litigation, pre-litigation, and disputes as of the closing of the divestiture. The Company received total consideration of $7,000, consisting of $2,000 received in the three months ended September 30, 2025, and a promissory note for $5,000. The Company received royalty payments from franchisees associated with the divested brands from the divestiture date until the promissory note was paid in full. During the quarter ended December 31, 2025, the Company received total consideration of $4,708 in cash and retained royalties of $440, which was credited to the buyer's promissory note. The divestiture allows the Company to better focus and utilize its resources on its core brands and other opportunities which better align with its long-term strategies. The divested brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations.

Divestiture of Lindora brand – On September 19, 2025, the Company entered into an agreement with a buyer, pursuant to which the Company divested the Lindora 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. The Company will receive consideration of up to $6,000 from the divestiture of the Lindora brand, which will be received monthly based on 7% of the monthly cash-basis gross revenue of the legacy studio locations. Payments will continue until the earlier of receipt of $6,000 or seven years. At the disposition date the Company determined that the fair value of the estimated contingent consideration receivable was $3,764, of which $456 and $3,308 was included with prepaid expenses and other current assets and other assets, respectively. The fair value of the estimated contingent consideration receivable was determined using probability weighted discounted cash flows through the seven year period. The divestiture allows the Company to better focus and utilize its resources on its other brands. The divested brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations. The Company recorded additional contingent consideration receivable of $60 during the three months ended March 31, 2026, which was recorded as interest income and SG&A expenses in the condensed consolidated statements of operations, respectively. The Company did not receive any consideration during the three months ended March 31, 2026. At March 31, 2026, contingent consideration receivable was $4,550, of which $936 and $3,614 is included with prepaid expenses and other current assets and other assets, respectively, in the condensed consolidated balance sheets.

Note 4 – Contract Liabilities and Costs from Contracts with Customers

Contract liabilities – Contract liabilities consist of deferred revenue resulting from franchise fees (franchise fees, development fees and master franchise fees paid by franchisees), which are recognized over time on a straight-line basis over the franchise agreement term. The Company also receives upfront payments from vendors under agreements that give the vendors access to franchisees’ members to provide certain services to the members (“brand fees”). Revenue from the upfront payments is recognized on a straight-line basis over the agreement term and is reported in other service revenue. Also included in the deferred revenue balance are non-refundable prepayments for merchandise and equipment, as well as revenues for training, service revenue and on-demand fees for which the associated products or services have not yet been provided to the customer. The Company classifies these contract liabilities as either current deferred revenue or non-current deferred revenue in the condensed consolidated balance sheets based on the anticipated timing of delivery. The following table reflects the change in franchise, including area development and multi-unit agreements and brand fee contract liabilities for the three months ended March 31, 2026. Other deferred revenue amounts of $11,184 are excluded from the table as the original expected duration of the contracts is one year or less.


	Franchise development fees			Brand fees			Total
Balance at December 31, 2025		78,161			707			78,868
Revenue recognized that was included in deferred revenue at the beginning of the year (1)		(2,827	)		(184	)		(3,011	)
Increase, excluding amounts recognized as revenue during the period		1,688			151			1,839
Balance at March 31, 2026	$	77,022		$	674		$	77,696

(1)

Includes revenue recognized as a result of terminations of $420 for the three months ended March 31, 2026.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

The following table illustrates estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of March 31, 2026. The expected future recognition period for deferred franchise and area development fees related to unopened studios is based on management’s best estimate of the beginning of the franchise license term for those studios. The Company elected to not disclose short term contracts, sales and usage-based royalties, marketing fees and any other variable consideration recognized on an “as invoiced” basis.


Contract liabilities to be recognized in revenue	Franchise development fees		Brand fees		Total
Remainder of 2026	$	9,168	$	615	$	9,783
2027		8,782		59		8,841
2028		8,739		—		8,739
2029		8,541		—		8,541
2030		8,026		—		8,026
Thereafter		33,766		—		33,766
	$	77,022	$	674	$	77,696

The following table reflects the components of deferred revenue:


	March 31,		December 31,
	2026		2025
Franchise development fees	$	77,022	$	78,161
Brand fees		674		707
Equipment and other		11,184		10,023
Total deferred revenue		88,880		88,891
Non-current portion of deferred revenue		68,137		69,567
Current portion of deferred revenue	$	20,743	$	19,324

Contract costs – Contract costs consist of deferred commissions resulting from franchise and area development sales by third-party and affiliate brokers and sales personnel. The total commission is deferred at the point of a franchise sale. The commissions are evenly split among the number of studios purchased under the development agreement and begin to be amortized when a subsequent or initial franchise agreement is executed. The commissions are recognized on a straight-line basis over the initial ten-year franchise agreement term to align with the recognition of the franchise agreement or area development fees. The Company classifies these deferred contract costs as either current deferred costs or non-current deferred costs in the condensed consolidated balance sheets. The associated expense is classified within costs of franchise and service revenue in the condensed consolidated statements of operations. At March 31, 2026 and December 31, 2025, there were approximately $3,324 and $3,301 of current deferred commission costs and approximately $23,750 and $24,744 in non-current deferred commission costs, respectively. The Company recognized approximately $200 and $400 in costs as a result of terminations for the three months ended March 31, 2026 and 2025, respectively. The Company recognized franchise sales commission expense of approximately $1,095 and $1,368 for the three months ended March 31, 2026 and 2025, respectively.

Note 5 – Property and Equipment

Property and equipment consisted of the following:


	March 31,			December 31,
	2026			2025
Furniture and equipment	$	3,617		$	3,581
Computers and software		20,135			19,283
Vehicles		285			285
Leasehold improvements		7,386			7,386
Construction in progress		954			1,475
Less: accumulated depreciation		(22,196	)		(21,119	)
Total property and equipment	$	10,181		$	10,891

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Depreciation expense for the three months ended March 31, 2026 and 2025 was $1,079 and $986, respectively.

During the year ended December 31, 2025, the Company determined that the carrying amount of certain property and equipment assets exceeded their fair values and recorded an impairment of $2,306. The impairment charges were primarily related to software assets of BFT, for which the Company no longer had established cash flows to support continued recognition of such assets. The fair values of software assets were determined by assumptions that are considered Level 3 inputs.

Note 6 – Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of identifiable net assets acquired related to the original purchase of the various franchise businesses and acquisition of company-owned transition studios. Goodwill is not amortized but is tested annually for impairment or more frequently if indicators of potential impairment exist. The carrying value of goodwill at both March 31, 2026 and December 31, 2025, totaled $127,789. Cumulative goodwill impairment was $55,371 at both March 31, 2026 and December 31, 2025. The impairment charges are included within impairment of goodwill and other noncurrent assets in the Company's condensed consolidated statements of operations.

At December 31, 2025, the goodwill related to the Pure Barre reporting unit of $42,548 is at a heightened risk of future impairment as the fair value of the Pure Barre reporting unit, and its associated assets, exceeded its carrying value by approximately 6%. This meaningful decline in the fair value cushion above the carrying value is driven by decreases to the amount and timing of expected future cash flows, an inability to execute management’s business strategies or general market conditions, such as economic downturns, and changes in interest rates, including discount rates. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates. If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods. At March 31, 2026, the goodwill related to the Pure Barre Reporting unit remains at a heightened risk of future impairment.

At March 31, 2026, the YogaSix and StretchLab reporting units had negative carrying values. The goodwill related to the YogaSix and StretchLab reporting units were $3,927 and $2,770, respectively, as of March 31, 2026.

Intangible assets consisted of the following:


		March 31, 2026							December 31, 2025
	Amortization period (years)	Gross amount		Accumulated amortization			Net amount		Gross amount		Accumulated amortization			Net amount
Trademarks	10	$	7,727	$	(7,527	)	$	200	$	7,727	$	(7,504	)	$	223
Franchise agreements	7.5 – 10		26,960		(26,122	)		838		26,960		(25,294	)		1,666
Intellectual property	5		670		(302	)		368		670		(268	)		402
Web design and domain	3 – 10		412		(393	)		19		412		(390	)		22
Deferred video production costs	3		6,395		(4,840	)		1,555		6,042		(4,555	)		1,487
Other intangible assets	1		560		(560	)		—		560		(560	)		—
Total definite-lived intangible assets			42,724		(39,744	)		2,980		42,371		(38,571	)		3,800
Indefinite-lived intangible assets:
Trademarks	N/A		62,707		—			62,707		62,707		—			62,707
Total intangible assets		$	105,431	$	(39,744	)	$	65,687	$	105,078	$	(38,571	)	$	66,507

Amortization expense was $1,173 and $1,970 for the three months ended March 31, 2026 and 2025, respectively.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

The anticipated future amortization expense of intangible assets is as follows:


	Amount
Remainder of 2026	$	1,444
2027		979
2028		540
2029		17
2030		—
Thereafter		—
Total	$	2,980

Note 7 – Debt

On April 19, 2021, the Company entered into a Financing Agreement with Wilmington Trust, National Association, as administrative agent and collateral agent, and the lenders party thereto (the “Prior Credit Agreement”), which consisted of a $212,000 senior secured term loan facility (the “Term Loan Facility”, and the loans thereunder, each a “Term Loan” and, together, the “Term Loans”). The Company’s obligations under the Prior Credit Agreement were guaranteed by XPO Holdings and certain of the Company’s material subsidiaries and were secured by substantially all of the assets of XPO Holdings and certain of the Company’s material subsidiaries.

Under the Prior Credit Agreement, the Company was required to make: (i) monthly payments of interest on the Term Loans and (ii) quarterly principal payments equal to 0.25% of the original principal amount of the Term Loans. Borrowings under the Term Loan Facility bore interest at a per annum rate of, at the Company’s option, either (a) the term secured overnight financing rate (“Term SOFR”) plus a Term SOFR Adjustment (as defined in the Prior Credit Agreement per the fifth amendment), plus a margin of 6.50% or (b) the Reference Rate (as defined in the Prior Credit Agreement) plus a margin of 5.50%.

The Prior Credit Agreement also contained mandatory prepayments of the Term Loans with: (i) 50% of XPO Holdings’ and its subsidiaries’ Excess Cash Flow (as defined in the Prior Credit Agreement), subject to certain exceptions; (ii) 100% of the net proceeds of certain asset sales and insurance/condemnation events, subject to reinvestment rights and certain other exceptions; (iii) 100% of the net proceeds of certain extraordinary receipts, subject to reinvestment rights and certain other exceptions; (iv) 100% of the net proceeds of any incurrence of debt, excluding certain permitted debt issuances; and (v) up to $60,000 of net proceeds in connection with an initial public offering of at least $200,000, subject to certain exceptions.

On March 14, 2025, the Company entered into an eighth amendment (the “Eighth Amendment”) to the Prior Credit Agreement. The Eighth Amendment extends the final maturity date under the Prior Credit Agreement to August 1, 2027 (the “Final Maturity Date”) and provides for, among other things, additional term loans in an aggregate principal amount of $10,000 (the “Eighth Amendment Incremental Term Loans”), an upfront fee, paid-in-kind, equal to 3% of the (a) aggregate principal amount of term loans outstanding as of the amendment date and (b) the Eighth Amendment Incremental Term Loans funded on the funding date, which were capitalized and added to the outstanding loan principal, and an exit fee of approximately $7,248 payable upon the earlier of the Final Maturity Date or the date all loans under the Prior Credit Agreement have been repaid or prepaid. The exit fee is treated as additional interest expense and is accreted over the life of the loan using the effective interest method and is presented as a reduction to long-term debt in the condensed consolidated balance sheets. The Eighth Amendment also increased the amount of the quarterly principal payments of the loans provided pursuant to the Prior Credit Agreement (including the Eighth Amendment Incremental Term Loans) commencing on March 31, 2025 to $1,374.

On July 24, 2025, the Company entered into a ninth amendment (the “Ninth Amendment”) to the Prior Credit Agreement in connection with the divestiture of the Rumble and CycleBar brands. The Ninth Amendment did not modify the terms of the Prior Credit Agreement. Instead, the Ninth Amendment requires the Company to apply the net proceeds received from the divestiture of the Rumble and CycleBar brands to repayment of the outstanding loan principal.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

On December 8, 2025 (the “ Closing Date”), the Company entered into a Financing Agreement with HPS Investment Partners LLC, as administrative agent and collateral agent, and the lenders party thereto (the “Credit Agreement”), which consisted of a term loan facility in a principal amount of $525,000 (the “ Closing Date Term Loans”) and a revolving credit facility in a principal amount of $25,000 (the “Revolving Loans”). The Closing Date Term Loans and Revolving Loans will bear interest at a rate per annum based upon, at the Company’s option, either the Term SOFR or the Base Rate (as defined in the Credit Agreement), plus, in each case, a leverage-based margin (10.5% at March 31, 2026).

The Company received net proceeds of $506,178 after deducting original issue discount equal to 3.4% of the gross amount of the borrowings under the Credit Agreement. The proceeds of the Closing Date Term Loans were used to (i) fund all outstanding indebtedness under the Prior Credit Agreement aggregating to $387,940 (including an exit fee, make whole premium and accrued interest) (ii) repurchase the convertible preferred shares and (iii) pay the Transaction Expenses (as defined in the Credit Agreement). The proceeds of the Revolving Loans will be used by the Company for working capital and general corporate purposes.

In connection with the Credit Agreement, the Company wrote off a pro rata portion of debt issuance costs related to the Prior Credit Agreement of $249 and wrote off original issue discount of $15,538 related to the repayment of Prior Credit Agreement.

Commencing with the quarter ended March 31, 2026, and subject to customary adjustments, the Company is required to repay (a) on the last Business Day (as defined in the Credit Agreement) of each March, June, September and December (each a “Principal Payment Date”), an aggregate principal amount equal to (i) 0.25% of the aggregate principal amount of all Closing Date Term Loans outstanding on the Closing Date, in respect of the first four Principal Payment Dates (commencing March 31, 2026), (ii) 0.75% of the aggregate principal amount of all Closing Date Term Loans outstanding on the Closing Date, in respect of the next four Principal Payment Dates (i.e., commencing on March 31, 2027) and (iii) 1.25% of the aggregate principal amount of all Closing Date Term Loans outstanding on the Closing Date, in respect of each Principal Payment Date thereafter (i.e., commencing on March 31, 2028). The amount of the quarterly principal payments pursuant to the Credit Agreement is $1,313 for the three months ended March 31, 2026.

The Credit Agreement includes provisions requiring customary mandatory prepayments, including, without limitation, arising from the incurrence of new debt or the receipt of proceeds from certain dispositions or casualty events, in each case, subject to customary exceptions for facilities of this type.

In addition, the Credit Agreement includes subjective acceleration clauses, which could impact debt classification. The Company believes that no events have occurred at March 31, 2026 that would trigger a subjective acceleration clause.

The obligations of the Company under the Credit Agreement are jointly and severally guaranteed by XPO Holdings and certain subsidiaries of Holding (collectively, the “Guarantors”, and together with the Company, the “Loan Parties”) and are secured by a first priority lien on substantially all of the Loan Parties assets, subject to customary exceptions.

The Credit Agreement contains various conditions to borrowing and certain customary affirmative and negative covenants, including, without limitation, covenants that restrict the ability of XPO Holdings, the Company and its certain subsidiaries to incur debt, grant liens, make investments, make restricted payments and dispose of assets. The Credit Agreement includes a financial covenant requiring the Company to maintain a Total Net Leverage Ratio (as defined in the Credit Agreement) not to exceed a certain threshold (pursuant to the table as set forth in Section 7.12 of the Credit Agreement) as of the last day of each Test Period (as defined in the Credit Agreement) commencing with March 31, 2026. The Credit Agreement also contains customary events of default. The Closing Date Term Loans will mature five years after the Closing Date and the Revolving Loans will terminate five years after the Closing Date. As of March 31, 2026, the Company was in compliance with these covenants.

The Company incurred debt issuance costs of $0 and $90 for the three months ended March 31, 2026 and 2025, respectively. Debt issuance cost amortization and write off amounted to $78 and $50 for the three months ended March 31, 2026 and 2025, respectively, which were recorded as interest expense in the consolidated statements of operations. Unamortized debt issuance costs as of March 31, 2026 and December 31, 2025, were $1,394 and $1,538, respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets. Unamortized original issue discount as of March 31, 2026 and December 31, 2025, was $17,045 and $18,626, respectively, and is presented as a reduction to long-term debt in the condensed consolidated balance sheets.

Xponential Fitness, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except per share amounts)

Principal payments on outstanding balances of long-term debt as of March 31, 2026 were as follows:


	Amount
Remainder of 2026	$	3,938
2027		15,750
2028		26,250
2029		26,250
2030		451,500
Total	$	523,688

The carrying value of the Company’s long-term debt approximated fair value as of March 31, 2026 and December 31, 2025 due to the variable interest rate, which is a Level 2 input.

Note 8 – Leases

The Company leases office space, company-owned transition studios, warehouse, training centers and a video recording studio. Certain real estate leases include one or more options to renew. The Company has in the past guaranteed lease agreements for certain franchisees. See Note 14 of Notes to Condensed Consolidated Financial Statements for additional information.

Right-of-use (“ROU”) assets from operating leases are subject to the impairment guidance in ASC Topic 360, Property, Plant, and Equipment, and are reviewed for impairment when indicators of impairment are present. ASC Topic 360 requires three steps to identify, recognize and measure impairment. If indicators of impairment are present (Step 1), the Company performs a recoverability test (Step 2) comparing the sum of the estimated undiscounted cash flows attributable to the ROU asset in question to the carrying amount. If the undiscounted cash flows used in the recoverability test are less than the carrying amount, the Company estimates the fair value of the ROU asset and recognizes an impairment loss when the carrying amount exceeds the estimated fair value (Step 3). When determining the fair value of the ROU asset, the Company estimates what market participants would pay to lease the assets assuming the highest and best use in the assets' current forms. The Company recognized ROU asset impairment charges of $0 and $1,915 during the three months ended March 31, 2026 and 2025, related to studio exits in conjunction with its restructuring plan discussed in Note 15. The impairment charges were recorded within impairment of goodwill and other assets in the condensed consolidated statements of operations.

Supplemental balance sheet information related to leases is summarized as follows:


Operating leases	Balance Sheet Location	March 31, 2026		December 31, 2025
ROU assets, net	Right-of-use assets	$	12,797	$	13,736
Lease liabilities, short-term	Other current liabilities	$	4,467	$	4,701
Lease liabilities, long-term	Lease liability	$	13,101	$	14,243

The following table presents the components of lease expense during the three months ended March 31, 2026 and 2025:


	Three months ended March 31,
	2026		2025
Operating lease costs	$	1,341	$	1,971
Variable lease costs		233		208
Total	$	1,574	$	2,179

The following table presents the supplemental cash flow information related to operating leases during the three months ended March 31, 2026 and 2025:


	Three months ended March 31,
	2026		2025
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,281	$	1,635

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Xponential Fitness, Inc. 10-Q