Xponential Fitness, Inc.
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 8, 2025
XPOF$4.65+5.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0000950170-25-068272
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0000950170-25-105975
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 146 current paragraphs.
63 unchanged; 48 reworded; 23 added; 1 removed; 0 previous and 12 current paragraphs rearranged.
Tables are not compared: 15 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Appointment of new Chief Executive Officer and Director
Current report
On August 7, 2025, we announced that our board of directors had unanimously appointed Mr. Mike Nuzzo as Chief Executive Officer effective August 7, 2025. Mr. Nuzzo also joined our board of directors. Mr. Nuzzo succeeds Mark King, who chose to retire from his position as Chief Executive Officer and as a member of our board of directors, also effective August 7, 2025. On July 30, 2025, we entered into an employment agreement with Mr. Nuzzo in connection with his appointment as Chief Executive Officer, to be effective as of August 7, 2025. Mr. Nuzzo brings more than 25 years of executive leadership in the retail and consumer services sectors across strategic, operational, financial, and growth-focused disciplines.
Current report
Rumble and CycleBar divestiture
Current report
On July 24, 2025, we entered into an agreement with a buyer to divest the CycleBar and Rumble brands, including the intellectual property, franchise rights and franchise agreements for open studios, and retained certain liabilities, including liabilities related to known litigation, pre-litigation, and disputes as of the closing of the divestiture. We will receive total consideration of $7.0 million, including an initial cash payment of $2.0 million and a final payment of $5.0 million due within 60 days from the divestiture of the CycleBar and Rumble brands. We believe the divestiture allows us to better focus and utilize our resources on our core brands and other opportunities which better align with our long-term strategies.
Current report
Retail supply agreement
Current report
On July 3, 2025, we and Fit Commerce, a California Corporation (“FC”), entered into a Retail Supply Agreement (the “Agreement”) to be effective as of December 1, 2025 (the “Effective Date”). All capitalized terms in this “retail supply agreement” section not otherwise defined herein shall have the meanings ascribed to them in the Agreement. The Agreement relates to the outsourcing of our retail merchandising, including the manufacturing and distribution, of any retail item sold by a franchisee, subject to terms and conditions outlined in the Agreement. In addition, FC has agreed to purchase the Company’s existing retail inventory, subject to certain exceptions, no later than the Effective Date of the Agreement. This strategic initiative shifts management of the franchisee retail experience from our in-house teams to a dedicated e-commerce provider, allowing us to focus on core business priorities.
Current report
Pursuant to the Agreement, FC will pay us domestic and foreign commissions as well as direct-to-customer commissions (each, a “Commission” and collectively, “Commissions”) in connection with the sale of Products to us or our franchisees. The domestic Commissions will be paid by FC to us based on each Contract Year (prorated for any partial Contract Year) in a minimum aggregate amount of $50 million over the five-year period subject to certain adjustments provided in the Agreement.
Current report
Additionally, pursuant to the Agreement, FC is required to have a minimum amount of equity at its inception, including an amount in asset-based lending credit facilities and in inventory financing from FC’s vendors (collectively, the “Capital”). If such Capital is not fully funded by October 31, 2025, the Agreement will be null and void with no further obligation between the parties except those stated in the prior and underlying agreements.
Current report
Reflects the number of development fee payments on future franchise licenses received by us and unused as of period end. The number of development fee payments on future franchise licenses is not included in the franchise licenses sold count.
Current report
Development fee payments on future franchise licenses
Current report
As part of a multi-unit agreement, franchisees purchase an initial franchise license and make nonrefundable development fee payments to reserve the right to open additional studios. The number of development fee payments on future franchise licenses sold in North America reflect the number of development fee payments received by us and unused as of period end. The number of development fee payments on future franchise licenses is not included in the licenses sold count. The remaining balance of the franchise license fee for each additional studio is due upon site selection for the studio and signing of a franchise agreement by the franchisee. The number of development fee payments on future franchise licenses is a useful indicator of the number of additional licenses that may be sold in the future, although it is not certain that these development fee payments will result in a sold license. Management reviews the number of development fee payments on future franchise licenses to help monitor and forecast license sales and studio growth.
Current report
Other service revenue. Other service revenue was $6.3 million in the three months ended June 30, 2025, compared to $6.4 million in the three months ended June 30, 2024, a decrease of 3%. The decrease was primarily due to a $0.2 million decrease in other preferred vendor commission revenue and brand fee revenue.
Current report
Impairment of goodwill and other noncurrent assets. Impairment of goodwill and other noncurrent assets was $12.9 million in the three months ended June 30, 2025, compared to $12.1 million in the three months ended June 30, 2024, an increase of $0.8 million. The increase was due to impairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment of trademark of $3.4 million related to the CycleBar reporting unit, and other noncurrent asset impairments of $2.0 million compared to write down of franchise agreements and goodwill of $12.1 million related to the CycleBar reporting unit in the prior year period.
Current report
Comparison of the six months ended June 30, 2025 and 2024
Current report
Equipment revenue. Equipment revenue was $20.6 million in the six months ended June 30, 2025, compared to $26.8 million in the six months ended June 30, 2024, a decrease of $6.2 million, or 23%. Most equipment revenue is recognized in the period when the equipment is installed. The decrease in equipment revenue was primarily driven by a decrease in global equipment installations in the six months ended June 30, 2025, compared to the prior year period, driven by a decrease in studio openings compared to the prior year period and consistent with the decrease in franchise license sales in recent periods.
Current report
Merchandise revenue. Merchandise revenue was $11.9 million in the six months ended June 30, 2025 compared to $14.5 million in the six months ended June 30, 2024, a decrease of $2.6 million, or 18%. The decrease was due primarily to a decrease in demand from studios and a decrease in vendor rebates compared to the prior period.
Current report
Franchise marketing fund revenue. Franchise marketing fund revenue was $18.7 million in the six months ended June 30, 2025, compared to $16.2 million in the six months ended June 30, 2024, an increase of $2.5 million, or 16%. The increase was primarily due to an increase in number of operating studios in North America since June 30, 2024.
Current report
Costs of product revenue. Costs of product revenue was $22.5 million in the six months ended June 30, 2025, compared to $28.5 million in the six months ended June 30, 2024, a decrease of $6.0 million, or 21%, compared to a decrease in related revenues of 21%. The decrease in cost of product revenue was primarily driven by a decrease in global equipment installations in the three months ended June 30, 2025, compared to the prior year period. Costs of product revenue as a percentage of related revenue was 69% in both the six months ended June 30, 2025, and 2024.
Current report
Selling, general and administrative expenses. Selling, general and administrative expenses were $69.6 million in the six months ended June 30, 2025, compared to $73.6 million in the six months ended June 30, 2024, a decrease of $4.0 million, or 5%. The decrease was primarily attributable to a decrease in salaries and wages of $0.2 million related to a lower average number of company-owned transition studios; a decrease in occupancy expenses of $0.5 million primarily related to a decrease in the number of company-owned transition studios; a decrease in equity-based compensation expense of $2.2 million primarily due to a decrease in the number of equity-classified restricted stock units (“RSUs”) outstanding during the current year period and an increase in forfeitures over the prior year period; a decrease in marketing and advertising expenses of $1.7 million; and lower restructuring and related charges of $8.3 million in the current year period; partially offset by an increase in legal expenses of $8.0 million (net of nonrecurring insurance credits of $29.8 million in the current period) related to various legal matters; and a net increase in other variable expenses of $0.9 million.
Current report
Impairment of goodwill and other assets. Impairment of goodwill and other assets was $14.8 million in the six months ended June 30, 2025, compared to $12.1 million in the six months ended June 30, 2024, an increase of $2.8 million, or 23%. The increase was due to impairments of goodwill of $5.1 million and $2.3 million related to the BFT and Lindora reporting units, respectively, impairment of trademark of $3.4 million related to the CycleBar reporting unit, and other noncurrent asset impairments of $3.9 million compared to write down of franchise agreements and goodwill of $12.1 million related to the CycleBar reporting unit in the prior year period.
Current report
interest-bearing bank accounts, which was $1.3 million in the six months ended June 30, 2025, compared to $0.8 million in the six months ended June 30, 2024.
Current report
Other expense. Other expense consists of TRA expense, which was $2.0 million in the six months ended June 30, 2025, compared to $0.9 million in the six months ended June 30, 2024.
Current report
Income taxes. Income taxes were (154.5%) of pre-tax book income (loss) in the six months ended June 30, 2025, compared to (0.5%) in the six months ended June 30, 2024.
Removed paragraphs (1)
Previous report
Impairment of goodwill and other noncurrent assets. Impairment of goodwill and other noncurrent assets was $1.9 million in the three months ended March 31, 2025, compared to $0.0 million in the three months ended March 31, 2024, an increase of $1.9 million. The increase was due to impairment of right-of use assets.
Reworded paragraphs (48)
Previous wording
The following Management’s Discussion and Analysis gives effect to the correction of the Company’s condensed consolidated financial statements for the three months ended March 31, 2024, as more fully described in Note 2 of Notes to Condensed Consolidated Financial Statements.
Current wording
The following Management’s Discussion and Analysis gives effect to the correction of the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2024, as more fully described in Note 2 of Notes to Condensed Consolidated Financial Statements.
Previous wording
Xponential Fitness LLC (“XPO LLC”), the principal operating subsidiary of Xponential Fitness, Inc. (the “Company” or “XPO Inc.,” “we,” “us,” and “our”), is one of the leading global franchisors of boutique health and wellness brands. Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being a 71.7% ownership interest in XPO LLC through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”).
Current wording
Xponential Fitness LLC (“XPO LLC”), the principal operating subsidiary of Xponential Fitness, Inc. ( “XPO Inc.”), and together with its subsidiaries, ( the “Company” or “we,” “us,” and “our”), is one of the leading global franchisors of boutique health and wellness brands. Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being a 71.9% ownership interest in XPO LLC through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”).
Previous wording
As of March 31, 2025, 2,806 studios were open in North America (consists of Canada, the United States and U.S. Territories) and franchisees were contractually committed to open 1,509 additional studios under existing franchise agreements. In addition, as of March 31, 2025, we had 492 studios open internationally and our master franchisees were contractually obligated to sell licenses to franchisees to open an additional 1,027 new studios, of which master franchisees have sold 229 licenses for studios not yet opened as of March 31, 2025.
Current wording
As of June 30, 2025, 2,823 studios were open in North America (consists of Canada, the United States and U.S. Territories) and franchisees were contractually committed to open 1,461 additional studios under existing franchise agreements. In addition, as of June 30, 2025, we had 504 studios open internationally and our master franchisees were contractually obligated to sell licenses to franchisees to open an additional 1,013 new studios, of which master franchisees have sold 246 licenses for studios not yet opened as of June 30, 2025.
Previous wording
During the three months ended March 31, 2025 and 2024, we generated revenue outside the United States of $2.6 million and $3.6 million, respectively. As of March 31, 2025 and December 31, 2024, we did not have material assets located outside of the United States. No franchisee accounted for more than 5% of our revenue. We operate in one segment for financial reporting purposes.
Current wording
During the six months ended June 30, 2025 and 2024, we generated revenue outside the United States of $5.3 million and $7.1 million, respectively. As of June 30, 2025 and December 31, 2024, we did not have material assets located outside of the United States. No franchisee accounted for more than 5% of our revenue. We operate in one segment for financial reporting purposes.
Previous wording
On April 10, 2023, we received notice of an investigation from the Commissioner of California’s Department of Financial Protection and Innovation (“DFPI”) related to our compliance with California’s Franchise Investment Law. In addition, on April 26, 2024, we received a request for information from the Office of the Attorney General of the State of Maryland related to our compliance with Maryland’s Franchise Registration and Disclosure Law. As a result of both of those inquiries, the Company was unable to offer and sell franchises in California or Maryland, except in cases where an exemption permitted sales to persons who met specific criteria. On November 4, 2024, without admission of wrongdoing, we entered into a Consent Order with the DFPI to resolve the matter. The Company has also received inquiries from the Office of the Attorney General of the State of New York, the Washington Department of Financial Institutions, and the Minnesota Department of Commerce regarding the Company’s compliance with applicable franchise laws.
Current wording
In addition, on April 26, 2024, we received a request for information from the Office of the Attorney General of the State of Maryland related to our compliance with Maryland’s Franchise Registration and Disclosure Law. As a result of the inquiry, the Company has been unable to offer and sell franchises in Maryland, except in cases where an exemption permitted sales to persons who met specific criteria. The Maryland matter is ongoing. The Company is aware of investigations being conducted by the Office of the Attorney General of the State of New York, the Washington Department of Financial Institutions, and the Virginia Division of Securities and Retail Franchising regarding the Company’s compliance with applicable franchise laws.
Previous wording
In March 2025, we issued 2025 Franchise Disclosure Documents (“FDDs”) for the BFT, Club Pilates, CycleBar, Pure Barre, Rumble, Stretch Lab, and Yoga Six franchise programs. The franchisors can offer and sell franchises in most states using the 2025 FDDs and continue pursuit of registration of the FDDs from the few remaining states that still require registration. Given the prior pause on franchise sales, while we completed the process of updating and renewing the FDDs, our inability to sell licenses for an extended period has slowed our growth and could result in a reduction in our anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition.
Current wording
In March 2025, the 2025 Franchise Disclosure Documents (“FDDs”) were issued for the BFT, Club Pilates, CycleBar, Pure Barre, Rumble, Stretch Lab, and Yoga Six franchise programs. The franchisors can offer and sell franchises in most states using the 2025 FDDs (except for Rumble and CycleBar due to the divestiture discussed above). The franchisors continue pursuit of registration of the FDDs in the few remaining states that still require registration and the pause on offering or selling franchises is ongoing in these states. The inability to sell licenses for an extended period has slowed growth and could result in a reduction in anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition.
Previous wording
In the third quarter of 2023, we began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations. The plan was approved and initiated in the third quarter of 2023 and is expected to continue throughout 2025; however, the ultimate timing of the completion of our restructuring plan will depend on lease termination negotiations. During the fourth quarter of 2023 our restructuring plan was expanded due to the addition of Rumble company-owned transition studios to the restructuring plan and a refranchising plan that was terminated by the Company due to the refranchisor’s non-compliance with the franchise agreements and the subsequent closure of certain studios. This refranchise termination resulted in us incurring losses for contract termination expenses, other expenses associated with exiting the studios, and loss contingencies related to the refranchisor’s unpaid payroll. During the three months ended March 31, 2025 and 2024, we recognized total restructuring charges of $2.4 million, net of gains, and $6.8 million, net of gains, respectively, primarily for contract termination and other associated costs, loss (gain) on lease terminations and sale or disposal of assets, impairment of right-of-use assets and other restructuring charges.
Current wording
In the third quarter of 2023, we began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations. The plan was approved and initiated in the third quarter of 2023 and is expected to continue throughout 2025; however, the ultimate timing of the completion of our restructuring plan will depend on lease termination negotiations. During the fourth quarter of 2023 our restructuring plan was expanded due to the addition of Rumble company-owned transition studios to the restructuring plan and a refranchising plan that was terminated by the Company due to the refranchisor’s non-compliance with the franchise agreements and the subsequent closure of certain studios. This refranchise termination resulted in us incurring losses for contract termination expenses, other expenses associated with exiting the studios, and loss contingencies related to the refranchisor’s unpaid payroll. During the three and six months ended June 30, 2025, we recognized total restructuring charges of $1.5 million, net of gains, and $3.9 million, net of gains, respectively, primarily for contract termination and other associated costs, loss (gain) on lease terminations and sale or disposal of assets, impairment of right-of-use assets and other restructuring charges.
Previous wording
We expect to recognize additional restructuring charges throughout 2025 totaling between approximately $5.2 million to $9.0 million for rent expense, including amortization of the right-of-use assets and accretion of the operating lease liability, lease termination gains or losses, and other variable lease costs related to company-owned transition studios and other restructuring charges. We are considering subleases or negotiating lease terminations for operating leases for certain studios for which we have lease liabilities recorded and the expected cash payments and expenses to exit the lease may be greater than expected rent expense for that period, depending on the outcome of lease negotiations. Cash outflows related to these lease terminations are expected to be incurred throughout 2025.
Current wording
We expect to recognize additional restructuring charges throughout 2025 totaling between approximately $13.1 million to $16.8 million for rent expense, including amortization of the right-of-use assets and accretion of the operating lease liability, lease termination gains or losses, and other variable lease costs related to company-owned transition studios and other restructuring charges. We are considering subleases or negotiating lease terminations for operating leases for certain studios for which we have lease liabilities recorded and the expected cash payments and expenses to exit the lease may be greater than expected rent expense for that period, depending on the outcome of lease negotiations. Cash outflows related to these lease terminations are expected to be incurred throughout 2025.
Previous wording
The following table sets forth our key performance indicators for the three months ended March 31, 2025 and 2024:
Current wording
The following table sets forth our key performance indicators for the three and six months ended June 30, 2025 and 2024:
Previous wording
The following tables present additional information related to our studio and license key performance indicators for the three months ended March 31, 2025 and 2024:
Current wording
The following tables present additional information related to our studio and license key performance indicators for the three and six months ended June 30, 2025 and 2024 :
Previous wording
System-wide sales represent gross sales by all studios in North America. System-wide sales includes sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance. System-wide sales growth is driven by new studio openings and increases in same store sales. Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.
Current wording
System-wide sales represent gross sales by all studios in North America. System-wide sales includes sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance.
Previous wording
In addition to the number of new studios opened and studios no longer operating during a period, we track the number of total studios operating at the end of a reporting period. This number represents studios that have already opened, are generating revenue, and are regularly holding classes, though this number could include some number of studios that have temporarily suspended operations, but that are not permanently closed and have not yet met the definition for a Studio No Longer Operating. The number of studios that have temporarily suspended operations is an immaterial percentage of our total studio base. Please see the table in the “Same Store Sales” section, subheader “North America studios contributing to same store sales.” The line “studios without 13 months of consecutive sales as of the last month that had positive sales within the period being measured” is an indicator for the number of North America traditional location studios that are older than 13 months, and that have had a recent or current disruption in sales, but that are still included in the Number of Studios Operating count. For the three months ended March 31, 2025 and 2024, this represented 0.2% and 2.3%, respectively, of our North America studio base. While nearly all our franchised studios are licensed to franchisees, from time to time we operate a limited number of company-owned transition studios (typically as we take possession of a studio following a franchisee ceasing to operate it and as we prepare it to be licensed to a new franchisee). Management reviews the number of studios operating at a given point in time in order to help forecast system-wide sales, franchise revenue and other revenue streams.
Current wording
In addition to the number of new studios opened and studios no longer operating during a period, we track the number of total studios operating at the end of a reporting period. This number represents studios that have already opened, are generating revenue, and are regularly holding classes, though this number could include some number of studios that have temporarily suspended operations, but that are not permanently closed and have not yet met the definition for a Studio No Longer Operating. The number of studios that have temporarily suspended operations is an immaterial percentage of our total studio base. Please see the table in the “Same Store Sales” section, sub header “North America studios contributing to same store sales.” The line “studios without 13 months of consecutive sales as of the last month that had positive sales within the period being measured” is an indicator for the number of North America traditional location studios that are older than 13 months, and that have had a recent or current disruption in sales, but that are still included in the Number of Studios Operating count. For the three and six months ended June 30, 2025, this represented 0.2% of our North America studio base compared to 0.7% for the three and six months ended June 30, 2024. While nearly all our franchised studios are licensed to franchisees, from time to time we operate a limited number of company-owned transition studios (typically as we take possession of a studio following a franchisee ceasing to operate it and as we prepare it to be licensed to a new franchisee). Management reviews the number of studios operating at a given point in time in order to help forecast system-wide sales, franchise revenue and other revenue streams.
Previous wording
The following tables contain information about changes in the number of our North America operating studios for the three months ended March 31, 2025 and 2024, respectively:
Current wording
The following tables contain information about changes in the number of our North America operating studios for the three and six months ended June 30, 2025 and 2024, respectively:
Previous wording
The following table sets forth the total number of operating studios internationally for the three months ended March 31, 2025 and 2024:
Current wording
The following table sets forth the total number of operating studios internationally for the three and six months ended June 30, 2025 and 2024:
Previous wording
The following table sets forth the total number of operating studios globally for the three months ended March 31, 2025 and 2024:
Current wording
The following table sets forth the total number of operating studios globally for the three and six months ended June 30, 2025 and 2024:
Previous wording
As of March 31, 2025, we estimate approximately one third of our global license obligations are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. This delay in development has resulted in delays in studio openings and may also lead to increased terminations, which could have a negative long-term impact on our business and operating results.
Current wording
As of June 30, 2025, we estimate approximately forty percent of our global license obligations are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. This delay in development has resulted in delays in studio openings and may also lead to increased terminations, which could have a negative long-term impact on our business and operating results.
Previous wording
The following table reconciles our North America operating studios for the three months ended March 31, 2025 and 2024, respectively, to the total studios contributing to both AUV (LTM as of period end) and Quarterly AUV (run rate):
Current wording
The following table reconciles our North America operating studios for the three and six months ended June 30, 2025 and 2024, respectively, to the total studios contributing to both AUV (LTM as of period end) and Quarterly AUV (run rate):
Previous wording
Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include monthly sales for any traditional studio location in North America. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendar months ago as of any month within the measurement period, the respective comparable months will be included. We measure same store sales based solely upon monthly sales as derived through the designated point-of-sale system. This measure highlights the performance of existing studios, while excluding the impact of new studio openings. Management reviews same store sales to assess the health of the franchised studios.
Current wording
Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales to include monthly sales for any traditional studio location in North America. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendar months ago as of any month within the measurement period, the respective comparable months will be included. We measure same store sales based solely upon monthly sales as derived through the designated point-of-sale system. This measure highlights the performance of existing studios, while excluding the impact of new studio openings. Management reviews same store sales to assess the health of the franchised studios.
Previous wording
The following table reconciles our North America operating studios for the three months ended March 31, 2025 and 2024, respectively, to the total studios contributing to same store sales:
Current wording
The following table reconciles our North America operating studios for the three and six months ended June 30, 2025 and 2024, respectively, to the total studios contributing to same store sales:
Previous wording
The following table presents our condensed consolidated results of operations for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents our condensed consolidated results of operations for the three and six months ended June 30, 2025 and 2024:
Previous wording
The following table presents our condensed consolidated results of operations for the three months ended March 31, 2025 and 2024 as a percentage of revenue:
Current wording
The following table presents our condensed consolidated results of operations for the three and six months ended June 30, 2025 and 2024 as a percentage of revenue:
Previous wording
Total revenue. Total revenue was $76.9 million in the three months ended March 31, 2025, compared to $79.7 million in the three months ended March 31, 2024, a decrease of $2.8 million, or 4%. The decrease in total revenue was primarily due to a decrease in equipment revenue due to a decrease in equipment installations and a decrease in merchandise revenue, partially offset by an increase in franchise revenue.
Current wording
Total revenue, net. Total revenue was $76.2 million in the three months ended June 30, 2025, compared to $76.9 million in the three months ended June 30, 2024, a decrease of $0.7 million, or 1%. The decrease in total revenue was primarily due to a decrease in equipment revenue due to a decrease in equipment installations and a decrease in merchandise revenue, partially offset by an increase in franchise revenue and franchise marketing fund revenue.
Previous wording
Franchise revenue. Franchise revenue was $43.9 million in the three months ended March 31, 2025, compared to $41.8 million in the three months ended March 31, 2024, an increase of $2.1 million, or 5%. Franchise revenue consisted of franchise royalty fees of $32.5 million, franchise territory fees of $3.9 million, technology fees of $4.4 million and training fees of $3.1 million in the three months ended March 31, 2025, compared to franchise royalty fees of $27.5 million, franchise territory fees of $7.3 million, technology fees of $4.2 million and training fees of $2.8 million in the three months ended March 31, 2024. The increase in franchise royalty fees, technology fees and training fees was primarily due to an increase in same store sales and increase in number of operating studios globally since March 31, 2024. The decrease in franchise territory fees is primarily attributed to a decrease of $2.4 million, or 75%, in revenue recognized as a result of franchise agreement terminations year-over-year to $0.8 million in the three months ended March 31, 2025, compared to $3.2 million in the prior year period.
Current wording
Franchise revenue. Franchise revenue was $45.4 million in the three months ended June 30, 2025, compared to $43.0 million in the three months ended June 30, 2024, an increase of $2.3 million, or 5%. Franchise revenue consisted of franchise royalty fees of $33.7 million, franchise territory fees of $4.4 million, technology fees of $4.4 million and training fees of $2.9 million in the three months ended June 30, 2025, compared to franchise royalty fees of $28.5 million, franchise territory fees of $7.4 million, technology fees of $4.2 million and training fees of $2.9 million in the three months ended June 30, 2024. The increase in franchise royalty fees and technology fees was primarily due to an increase in number of operating studios globally since June 30, 2024. The decrease in franchise territory fees is primarily attributed to a decrease of $3.0 million, or 83%, in revenue recognized as a result of franchise agreement terminations year-over-year to $0.6 million in the three months ended June 30, 2025, compared to $3.6 million in the prior year period.
Previous wording
Equipment revenue. Equipment revenue was $11.1 million in the three months ended March 31, 2025, compared to $13.9 million in the three months ended March 31, 2024, a decrease of $2.8 million, or 20%. Most equipment revenue is recognized in the period when the equipment is installed. The decrease in equipment revenue was primarily driven by a decrease in global equipment installations in the three months ended March 31, 2025, compared to the prior year period.
Current wording
Equipment revenue. Equipment revenue was $9.5 million in the three months ended June 30, 2025, compared to $12.9 million in the three months ended June 30, 2024, a decrease of $3.4 million, or 26%. Most equipment revenue is recognized in the period when the equipment is installed. The decrease in equipment revenue was primarily driven by a decrease in global equipment installations in the three months ended June 30, 2025, compared to the prior year period, driven by a decrease in studio openings compared to the prior year period and consistent with the decrease in franchise license sales in recent periods.
Previous wording
Merchandise revenue. Merchandise revenue was $6.3 million in the three months ended March 31, 2025, compared to $8.3 million in the three months ended March 31, 2024, a decrease of $2.1 million, or 25%. The decrease was primarily due to lower demand from studios and a decrease in vendor rebates compared to the prior period.
Current wording
Merchandise revenue. Merchandise revenue was $5.6 million in the three months ended June 30, 2025, compared to $6.1 million in the three months ended June 30, 2024, a decrease of $0.5 million, or 8%. The decrease was primarily due to lower demand from studios and a decrease in vendor rebates compared to the prior period.
Previous wording
Franchise marketing fund revenue. Franchise marketing fund revenue was $9.3 million in the three months ended March 31, 2025, compared to $7.8 million in the three months ended March 31, 2024, an increase of $1.4 million, or 18%. The increase was primarily due to an increase in same store sales and an increase in number of operating studios in North America since March 31, 2024 .
Current wording
Franchise marketing fund revenue. Franchise marketing fund revenue was $9.5 million in the three months ended June 30, 2025, compared to $8.4 million in the three months ended June 30, 2024, an increase of $1.1 million, or 13%. The increase was primarily due to an increase in number of operating studios in North America since June 30, 2024.
Previous wording
Costs of product revenue. Costs of product revenue was $12.0 million in the three months ended March 31, 2025, compared to $14.6 million in the three months ended March 31, 2024, a decrease of $2.6 million, or 18%, compared to a decrease in related revenues of 22%. Costs of product revenue as a percentage of related revenue increased to 69% in the three months ended March 31, 2025, from 65% in the comparable prior year period. The increase was partly due to an increase in write downs of slow-moving inventory in the current year period. Additionally, in the prior year period we had a higher percentage of sales relating to non-branded merchandise for which we earn a commission with no corresponding cost of revenue compared to the current year period.
Current wording
Costs of product revenue. Costs of product revenue was $10.5 million in the three months ended June 30, 2025, compared to $13.9 million in the three months ended June 30, 2024, a decrease of $3.4 million, or 25%, compared to a decrease in related revenues of 21%. The decrease in cost of product revenue was partially driven by a decrease in global equipment installations in the three months ended June 30, 2025, compared to the prior year period. Costs of product revenue as a percentage of related revenue decreased to 69% in the three months ended June 30, 2025, from 73% in the comparable prior year period. The decrease was partly due to a decrease in write downs of slow-moving inventory in the current year period.
Previous wording
Costs of franchise and service revenue. Costs of franchise and service revenue was $4.1 million in the three months ended March 31, 2025, compared to $5.0 million in the three months ended March 31, 2024, a decrease of $1.0 million, or 19%. The decrease was primarily due to a $1.5 million decrease in franchise sales commissions, consistent with the related franchise territory revenue decrease. The decrease in cost of franchise and service revenue is also attributed to a decrease of $1.0 million, or 71%, in costs recognized as a result of franchise agreement terminations year-over-year to $0.4 million in the three months ended March 31, 2025, compared to $1.4 million in the prior year period.
Current wording
Costs of franchise and service revenue. Costs of franchise and service revenue was $4.0 million in the three months ended June 30, 2025, compared to $5.8 million in the three months ended June 30, 2024, a decrease of $1.9 million, or 32%. The decrease was primarily due to a $2.0 million decrease in franchise sales commissions, consistent with the related franchise territory revenue decrease. The decrease in cost of franchise and service revenue is also attributed to a decrease of $1.5 million, or 79%, in costs recognized as a result of franchise agreement terminations year-over-year to $0.4 million in the three months ended June 30, 2025, compared to $1.9 million in the prior year period.
Previous wording
Selling, general and administrative expenses. Selling, general and administrative expenses were $45.5 million in the three months ended March 31, 2025, compared to $36.6 million in the three months ended March 31, 2024, an increase of $8.9 million, or 24%. The increase was primarily attributable to an increase in legal expenses of $15.6 million (net of insurance reimbursements) related to various legal matters including government investigations; an increase in salaries and wages of $0.3 million; and a net increase in other variable expenses of $2.3 million, partially offset by lower restructuring and related charges of $7.2 million in the current year period; a decrease in occupancy expenses of $0.6 million primarily due to a decrease in the number of company-owned transition studios; a decrease of $0.7 million in equity-based compensation expense due to an increase in forfeitures over the prior year period, and a decrease in marketing and advertising expenses of $0.8 million.
Current wording
Selling, general and administrative expenses. Selling, general and administrative expenses were $24.1 million in the three months ended June 30, 2025, compared to $37.0 million in the three months ended June 30, 2024, a decrease of $12.9 million, or 35%. The decrease was primarily attributable to a decrease in legal expenses of $7.6 million (driven by nonrecurring insurance credits of $15.0 million in the current period) related to various legal matters including government investigations; a decrease of $1.5 million in equity-based compensation expense due to an increase in forfeitures over the prior year period; a decrease in marketing and advertising expenses of $0.9 million; lower restructuring and related charges of $1.0 million in the current year period; a decrease in salaries and wages of $0.5 million; and a net decrease in other variable expenses of $1.4 million.
Previous wording
Depreciation and amortization. Depreciation and amortization expense was $3.0 million in the three months ended March 31, 2025, compared to $4.4 million in the three months ended March 31, 2024, a decrease of $1.5 million, or 33%. The decrease was primarily due to a decrease in fixed assets related to impairment of software assets and a decrease in intangible assets due to impairments during the year ended December 31, 2024.
Current wording
Depreciation and amortization. Depreciation and amortization expense was $3.0 million in the three months ended June 30, 2025, compared to $4.5 million in the three months ended June 30, 2024, a decrease of $1.5 million, or 34%. The decrease was primarily due to a decrease in fixed assets related to impairment of software assets and a decrease in intangible assets due to impairments during the year ended December 31, 2024.
Previous wording
Marketing fund expense. Marketing fund expense was $9.4 million in the three months ended March 31, 2025, compared to $6.5 million in the three months ended March 31, 2024, an increase of $2.8 million, or 44%. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue. For the three months ended March 31, 2025, marketing fund expense was $0.1 million higher than marketing fund revenue as the Company’s spending increased after a slowdown in the second half of 2024.
Current wording
Marketing fund expense. Marketing fund expense was $8.9 million in the three months ended June 30, 2025, compared to $7.8 million in the three months ended June 30, 2024, an increase of $1.0 million, or 13%. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue. For the three months ended June 30, 2025, marketing fund revenue was $0.6 million higher than marketing fund expense, however marketing fund expense is expected to increase in the second half of 2025.
Previous wording
Acquisition and transaction expense (income). Acquisition and transaction income was $8.6 million in the three months ended March 31, 2025, compared to expense of $4.5 million in the three months ended March 31, 2024, a decrease to expense of $13.2 million, or 291%. These charges primarily represent the non-cash change in contingent consideration related to 2021 and 2024 business acquisitions.
Current wording
Acquisition and transaction income. Acquisition and transaction income was $1.9 million in the three months ended June 30, 2025, compared to income of $1.2 million in the three months ended June 30, 2024, a decrease of $0.7 million, or 57%. These charges primarily represent the non-cash change in contingent consideration related to 2021 and 2024 business acquisitions.
Previous wording
Interest income. Interest income primarily consists of interest on notes receivable and interest income received from various interest-bearing bank accounts, which was $0.6 million in the three months ended March 31, 2025, compared to $0.4 million in the three months ended March 31, 2024.
Current wording
Interest income. Interest income primarily consists of interest on notes receivable and interest income received from various interest-bearing bank accounts, which was $0.7 million in the three months ended June 30, 2025, compared to $0.4 million in the three months ended June 30, 2024.
Previous wording
Interest expense. Interest expense was $11.4 million in the three months ended March 31, 2025 compared to $11.5 million in the three months ended March 31, 2024, a decrease of $0.2 million, or 1%. Interest expense consists of interest on long-term debt, accretion of earn-out liabilities and amortization and write off of deferred loan costs and debt discount. The decrease was primarily due to a decrease in interest rates in the current year and a $0.2 million write off of debt issuance costs and debt discount related to credit agreement amendments in the comparable prior year period, partly offset by higher average debt balances in the current year period.
Current wording
Interest expense. Interest expense was $13.0 million in the three months ended June 30, 2025, compared to $11.3 million in the three months ended June 30, 2024, an increase of $1.7 million, or 15%. Interest expense consists of interest on long-term debt, accretion of earn-out liabilities and amortization and write off of deferred loan costs and debt discount. The increase was primarily due to higher average debt balances in the current year period, partly offset by lower average interest rates on our credit agreement.
Previous wording
Other expense. Other expense consists of TRA expense, which was $1.1 million in the three months ended March 31, 2025, compared to $0.6 million in the three months ended March 31, 2024.
Current wording
Other expense. Other expense consists of TRA expense, which was $0.9 million in the three months ended June 30, 2025, compared to $0.3 million in the three months ended June 30, 2024.
Previous wording
Income taxes (benefit). Income taxes (benefit) was (22.3%) of our share of pre-tax book loss in the three months ended March 31, 2025, compared to 1.2% in the three months ended March 31, 2024.
Current wording
Income taxes (benefit). Income taxes was 18.8% of our share of pre-tax book income in the three months ended June 30, 2025, compared to (0.9%) of pre-tax book loss in the three months ended June 30, 2024.
Previous wording
Other service revenue. Other service revenue was $6.4 million in the three months ended March 31, 2025, compared to $7.9 million in the three months ended March 31, 2024, a decrease of $1.5 million, or 19%. The decrease was primarily due to a $1.3 million decrease in package and memberships revenue due to a lower average number of company-owned transition studios.
Current wording
Other service revenue. Other service revenue was $12.6 million in the six months ended June 30, 2025, compared to $14.3 million in the six months ended June 30, 2024, a decrease of $1.7 million, or 12%. The decrease was primarily due to a $1.2 million decrease in package and memberships revenue due to a lower average number of company-owned transition studios.
Previous wording
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, is helpful to investors because it provides consistency and comparability with past financial performance. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate and present similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as tools for comparison. A reconciliation is provided below for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.
Current wording
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when collectively taken, is helpful to investors because it provides consistency and comparability with past financial performance. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate and present similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as tools for comparison. A reconciliation is provided below for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.
Previous wording
We define adjusted EBITDA as EBITDA (net income/loss before interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity-based compensation and related employer payroll taxes, acquisition and transaction expenses (income) (including change in contingent consideration and transaction bonuses), litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions) and other contemplated corporate transactions, expense related to the remeasurement of our TRA obligation, expense related to loss on impairment or write down of goodwill and other assets, loss (gain) and ongoing expenses related to brand divestitures and wind down (including ongoing expenses directly related to the divested or wound down brands for arrangements that existed prior to divestiture or wind down), transformation initiative costs (primarily consisting of third-party professional consulting fees related to modifications of our business strategy and cost saving initiatives), and restructuring and related charges incurred in connection with our restructuring plan that we do not believe reflect our underlying business performance and affect comparability. EBITDA and adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry.
Current wording
We define adjusted EBITDA as EBITDA (net income/loss before interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity-based compensation and related employer payroll taxes, acquisition and transaction expenses (income) (including change in contingent consideration and transaction bonuses), litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business net of insurance reimbursements), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions) and other contemplated corporate transactions, expense related to the remeasurement of our TRA obligation, expense related to loss on impairment or write down of goodwill and other noncurrent assets, loss and ongoing expenses related to brand divestitures and wind down (including ongoing expenses directly related to the divested or wound down brands for arrangements that existed prior to divestiture or wind down), transformation initiative costs (primarily consisting of third-party professional consulting fees related to modifications of our business strategy and cost saving initiatives), and restructuring and related charges incurred in connection with our restructuring plan that we do not believe reflect our underlying business performance and affect comparability. EBITDA and adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry.
Previous wording
The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with GAAP, to adjusted EBITDA for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents a reconciliation of net income (loss), the most directly comparable financial measure calculated in accordance with GAAP, to adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (12)
Current report — wording carried from elsewhere
On April 10, 2023, we received notice of an investigation from the Commissioner of California’s Department of Financial Protection and Innovation (“DFPI”) related to our compliance with California’s Franchise Investment Law. On November 4, 2024, without admission of wrongdoing, we entered into a Consent Order with the DFPI to resolve the matter.
Current report — wording carried from elsewhere
Reflects the number of licenses for studios which have already been sold, but not yet opened, by master franchisees under master franchise agreements, net of terminations.
Current report — wording carried from elsewhere
System-wide sales growth is driven by new studio openings and increases in same store sales. Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.
Current report — wording carried from elsewhere
The following is a discussion of our consolidated results of operations for the six months ended June 30, 2025 versus the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Total revenue. Total revenue was $153.1 million in the six months ended June 30, 2025, compared to $156.6 million in the six months ended June 30, 2024, a decrease of $3.5 million, or 2%. The decrease in total revenue was primarily due to a decrease in equipment revenue due to a decrease in equipment installations and a decrease in merchandise revenue, partially offset by an increase in franchise revenue and franchise marketing fund revenue.
Current report — wording carried from elsewhere
Franchise revenue. Franchise revenue was $89.2 million in the six months ended June 30, 2025, compared to $84.8 million in the six months ended June 30, 2024 , an increase of $4.5 million, or 5%. Franchise revenue consisted of franchise royalty fees of $66.2 million, franchise territory fees of $8.1 million, technology fees of $8.8 million and training fees of $6.1 million in the six months ended June 30, 2025, compared to franchise royalty fees of $56.0 million, franchise territory fees of $14.7 million, technology fees of $8.3 million and training fees of $5.8 million in the six months ended June 30, 2024. The increase in franchise royalty fees, technology fees and training fees was primarily due to an increase in number of operating studios globally since June 30, 2024 (including studios related to the Lindora acquisition in the first quarter of 2024), partly offset by a decrease in franchise territory fees. The decrease in franchise territory fees is primarily attributed to a decrease of $5.4 million, or 79%, in revenue recognized as a result of franchise agreement terminations year-over-year to $1.4 million in the six months ended June 30, 2025, compared to $6.8 million in the prior year period.
Current report — wording carried from elsewhere
Costs of franchise and service revenue. Costs of franchise and service revenue was $8.1 million in the six months ended June 30, 2025, compared to $10.9 million in the six months ended June 30, 2024, a decrease of $2.8 million, or 26%. The decrease was primarily due to a $3.5 million decrease in franchise sales commissions, consistent with the related franchise territory revenue decrease.
Current report — wording carried from elsewhere
Depreciation and amortization. Depreciation and amortization expense was $5.9 million in the six months ended June 30, 2025, compared to $9.0 million in the six months ended June 30, 2024, a decrease of $3.0 million, or 34%. The decrease was primarily due to a decrease in fixed assets related to impairment of software assets and a decrease in intangible assets due to impairments during the year ended December 31, 2024.
Current report — wording carried from elsewhere
Marketing fund expense. Marketing fund expense was $18.2 million in the six months ended June 30, 2025, compared to $14.4 million in the six months ended June 30, 2024, an increase of $3.9 million, or 27% and is consistent with the increase in franchise marketing fund revenue. Marketing fund expenses are recorded as incurred, which may not occur in the same period as the recognition of franchise marketing fund revenue. For the six months ended June 30, 2025, marketing fund revenue was $0.5 million higher than marketing fund expense, however marketing fund expense is expected to increase in the second half of 2025.
Current report — wording carried from elsewhere
Acquisition and transaction expenses (income). Acquisition and transaction income was $10.6 million in the six months ended June 30, 2025, compared to expense of $3.3 million in the six months ended June 30, 2024, an increase in income of $13.9 million, or 420%. These charges primarily represent the non-cash change in contingent consideration related to 2021 and 2024 business acquisitions.
Current report — wording carried from elsewhere
Interest income. Interest income primarily consists of interest on notes receivable and interest income received from various
Current report — wording carried from elsewhere
Interest expense. Interest expense was $24.4 million in the six months ended June 30, 2025, compared to $22.8 million in the six months ended June 30, 2024, an increase of $1.6 million, or 7%. Interest expense consists of interest on long-term debt, accretion of earn-out liabilities and amortization of deferred loan costs and debt discount. The increase was primarily due to higher average debt balances in the current year period, partly offset by lower average interest rates on our credit agreement.