XPOF Narrows Q3 Loss, Boosted by Franchise Growth

TL;DR

**XPOF is trimming the fat and focusing on its core, but watch out for those impairment charges.**

AI Summary

Xponential Fitness, Inc. (XPOF) reported a net loss of $6.746 million for the three months ended September 30, 2025, a significant improvement from the $18.149 million net loss in the same period of 2024. For the nine months ended September 30, 2025, the net loss was $8.059 million, substantially lower than the $36.242 million loss in the prior year. Total revenue, net, decreased slightly to $78.824 million for the quarter from $80.530 million in 2024, primarily due to a drop in equipment revenue from $14.681 million to $7.459 million and merchandise revenue from $6.577 million to $4.802 million. However, franchise revenue increased to $51.882 million from $44.458 million. Operating income turned positive at $3.566 million for the quarter, compared to an operating loss of $6.605 million in 2024, driven by a reduction in selling, general and administrative expenses from $46.163 million to $24.664 million. The company recorded a significant impairment of goodwill and other noncurrent assets of $17.568 million for the quarter and $32.411 million for the nine months. Strategic changes include the divestiture of the Lindora brand in September 2025 and an agreement with Fit Commerce to outsource retail merchandising effective December 1, 2025.

Why It Matters

Xponential Fitness's ability to significantly reduce its net loss and achieve operating income, despite a slight revenue dip, signals a potential turning point for investors. The increase in franchise revenue suggests a healthy core business model, while the divestiture of Lindora and outsourcing of retail merchandising indicate a strategic focus on core fitness brands and operational efficiency. This could lead to improved profitability and investor confidence, but the substantial goodwill impairment raises questions about past acquisitions. For employees and customers, a more focused and efficient company could mean better service and a stronger brand portfolio, while the competitive landscape in boutique fitness remains intense, requiring XPOF to execute its strategy effectively.

Risk Assessment

Risk Level: medium — The company reported a significant impairment of goodwill and other noncurrent assets totaling $32.411 million for the nine months ended September 30, 2025, indicating potential overvaluation of past acquisitions. Additionally, total liabilities remain high at $559.000 million against total assets of $355.304 million, and the company continues to operate with a total stockholders' deficit of $320.506 million.

Analyst Insight

Investors should monitor XPOF's continued efforts to streamline operations and grow franchise revenue, particularly the impact of the Fit Commerce agreement. While the reduced net loss is positive, the ongoing goodwill impairments and substantial debt warrant caution. Await further evidence of sustained profitability and debt reduction before considering a significant long position.

Financial Highlights

debt To Equity

N/A

revenue

$78.824M

operating Margin

4.5%

total Assets

$355.304M

total Debt

$359.044M

net Income

-$6.746M

eps

N/A

gross Margin

N/A

cash Position

$41.463M

revenue Growth

-2.1%

Revenue Breakdown

Key Numbers

• $6.746M — Net loss for Q3 2025 (Improved from $18.149M net loss in Q3 2024)
• $8.059M — Net loss for nine months ended Sept 30, 2025 (Improved from $36.242M net loss in the prior year period)
• $78.824M — Total revenue, net for Q3 2025 (Slight decrease from $80.530M in Q3 2024)
• $51.882M — Franchise revenue for Q3 2025 (Increased from $44.458M in Q3 2024)
• $24.664M — Selling, general and administrative expenses for Q3 2025 (Decreased from $46.163M in Q3 2024)
• $3.566M — Operating income for Q3 2025 (Turnaround from $6.605M operating loss in Q3 2024)
• $32.411M — Impairment of goodwill and other noncurrent assets for nine months ended Sept 30, 2025 (Significant charge indicating asset revaluation)
• $355.304M — Total assets as of Sept 30, 2025 (Decreased from $403.397M as of Dec 31, 2024)
• $559.000M — Total liabilities as of Sept 30, 2025 (Decreased from $597.402M as of Dec 31, 2024)
• $320.506M — Total stockholders' deficit as of Sept 30, 2025 (Increased from $310.815M as of Dec 31, 2024)

Key Players & Entities

• Xponential Fitness, Inc. (company) — Registrant and holding company
• XPOF (company) — Ticker symbol
• Fit Commerce (company) — Partner for retail merchandising outsourcing
• Lindora (company) — Divested brand
• Club Pilates (company) — Franchised fitness brand
• StretchLab (company) — Franchised fitness brand
• YogaSix (company) — Franchised fitness brand
• Pure Barre (company) — Franchised fitness brand
• BFT (company) — Franchised fitness brand
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Significant Goodwill and Intangible Asset Impairment [high — financial]: The company recorded an impairment of goodwill and other noncurrent assets of $17.568 million for Q3 2025 and $32.411 million for the nine months ended September 30, 2025. This indicates a substantial write-down of asset values, potentially reflecting a reassessment of future earnings potential or market conditions impacting acquired businesses.
• Divestiture of Lindora Brand [medium — operational]: The divestiture of the Lindora brand in September 2025 represents a strategic shift. While intended to streamline operations, it also means a loss of revenue and potential future growth from that segment.
• Outsourcing of Retail Merchandising [medium — operational]: The agreement with Fit Commerce to outsource retail merchandising, effective December 1, 2025, signifies a move to reduce internal operational complexity. However, it introduces reliance on a third-party provider, which could pose risks if not managed effectively.
• Decreasing Total Assets and Stockholders' Deficit [medium — financial]: Total assets decreased from $403.397 million as of December 31, 2024, to $355.304 million as of September 30, 2025. Concurrently, the total stockholders' deficit increased from $310.815 million to $320.506 million. This trend suggests ongoing challenges in profitability and asset utilization.
• Increased Long-Term Debt [medium — financial]: Long-term debt, net of current portion, increased from $341.742 million as of December 31, 2024, to $348.947 million as of September 30, 2025. This rise in leverage could increase financial risk, especially if operating performance does not improve sufficiently to service the debt.

Industry Context

The fitness industry is characterized by a mix of franchised models, direct-to-consumer offerings, and digital platforms. Xponential Fitness operates within this dynamic landscape, facing competition from established gym chains, boutique fitness studios, and at-home fitness solutions. Trends include a growing demand for personalized fitness experiences, digital integration, and a focus on community.

Regulatory Implications

As a publicly traded company, Xponential Fitness is subject to SEC regulations and accounting standards, requiring accurate financial reporting and disclosures. Changes in franchise laws or consumer protection regulations could also impact its business model. The significant impairment charges may attract scrutiny regarding asset valuation methodologies.

What Investors Should Do

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Key Dates

• 2025-09-30: End of Q3 2025 — Reported improved net loss and positive operating income, driven by SG&A reductions and franchise revenue growth, despite declines in equipment and merchandise revenue.
• 2025-09-30: Divestiture of Lindora Brand — Strategic decision to exit a brand, impacting future revenue streams but potentially improving focus and operational efficiency.
• 2025-12-01: Outsourcing of Retail Merchandising — Transition to a third-party provider for retail merchandising, aiming to streamline operations and reduce costs.

Glossary

Stockholders' deficit

The amount by which total liabilities exceed total assets, resulting in a negative equity position for shareholders. (Xponential Fitness has a significant stockholders' deficit of $320.506 million as of September 30, 2025, indicating that liabilities outweigh assets.)

Impairment of goodwill and other noncurrent assets

A charge taken when the carrying value of goodwill or other long-term assets on the balance sheet is deemed to be higher than their recoverable amount, reflecting a loss in value. (The company recorded substantial impairment charges ($32.411 million for nine months ended Sept 30, 2025), signaling a significant write-down of asset values.)

Right-of-use assets

Assets recognized under lease accounting standards, representing the right to use an underlying asset for the lease term. (These assets decreased from $24.036 million at year-end 2024 to $13.646 million as of September 30, 2025, likely due to lease terminations or expirations.)

Deferred revenue

Revenue that has been received by the company but not yet earned, typically from services or products to be delivered in the future. (Deferred revenue, both current and non-current, represents a significant portion of liabilities ($172.049 million total as of Sept 30, 2025), indicating future revenue streams tied to these obligations.)

Year-Over-Year Comparison

Compared to the prior year period, Xponential Fitness has shown significant improvement in profitability, with net losses narrowing substantially for both the quarter ($6.746M vs $18.149M) and year-to-date ($8.059M vs $36.242M). This was driven by a strong reduction in SG&A expenses, leading to a positive operating income ($3.566M vs -$6.605M loss). However, total revenue saw a slight decrease, primarily due to sharp declines in equipment and merchandise sales, while franchise revenue showed robust growth. New risks related to strategic divestitures and outsourcing have emerged, alongside ongoing concerns about asset impairments and increasing long-term debt.

Key Financial Figures

• $0.0001 — tered Class A common stock, par value $0.0001 per share XPOF New York Stock Excha

Filing Documents

• xpof-20250930.htm (10-Q) — 5641KB
• xpof-ex4_1.htm (EX-4.1) — 85KB
• xpof-ex10_2.htm (EX-10.2) — 247KB
• xpof-ex31_1.htm (EX-31.1) — 19KB
• xpof-ex31_2.htm (EX-31.2) — 19KB
• xpof-ex32_1.htm (EX-32.1) — 11KB
• xpof-ex32_2.htm (EX-32.2) — 11KB
• 0001193125-25-272807.txt ( ) — 20693KB
• xpof-20250930.xsd (EX-101.SCH) — 2177KB
• xpof-20250930_htm.xml (XML) — 4364KB

Financial Statements (Unaudited)

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 59 Item 4.

Controls and Procedures

Controls and Procedures 59 PART II. OTHER INFORMATION 61 Item 1.

Legal Proceedings

Legal Proceedings 61 Item 1A.

Risk Factors

Risk Factors 61 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 61 Item 3. Defaults Upon Senior Securities 61 Item 4. Mine Safety Disclosures 61 Item 5. Other Information 61 Item 6. Exhibits 62

Signatures

Signatures 63

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Xponential Fitness, Inc. Condensed Consolidated Balance Sheets (Unaudited) (amounts in thousands, except per share amounts) September 30, December 31, 2025 2024 Assets Current assets: Cash, cash equivalents and restricted cash $ 41,463 $ 32,739 Accounts receivable, net 18,638 25,884 Inventories 5,661 10,016 Prepaid expenses and other current assets 23,471 10,678 Deferred costs, current portion 4,574 4,598 Notes receivable, net 5,410 232 Total current assets 99,217 84,147 Property and equipment, net 12,134 14,651 Right-of-use assets 13,646 24,036 Goodwill 127,789 135,240 Intangible assets, net 67,290 100,944 Deferred costs, net of current portion 29,088 39,923 Notes receivable from franchisees, net of current portion 22 100 Other assets 6,118 4,356 Total assets $ 355,304 $ 403,397 Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) Current liabilities: Accounts payable $ 15,588 $ 27,011 Accrued expenses 33,326 31,323 Deferred revenue, current portion 23,786 25,912 Current portion of long-term debt 10,097 5,397 Other current liabilities 10,432 18,244 Total current liabilities 93,229 107,887 Deferred revenue, net of current portion 79,263 105,935 Contingent consideration from acquisitions (Note 16) 9,802 17,729 Long-term debt, net of current portion, discount and issuance costs 348,947 341,742 Lease liabilities, net of current portion 16,018 23,858 Other liabilities 11,741 251 Total liabilities 559,000 597,402 Commitments and contingencies (Note 16) Redeemable convertible preferred stock, $ 0.0001 par value, 400 shares authorized, 115 shares issued and outstanding as of September 30, 2025 and December 31, 2024 116,810 116,810 Stockholders' equity (deficit): Undesignated preferred stock, $ 0.0001 pa