Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Document Document And Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Xponential Fitness, Inc. | |
Entity Central Index Key | 0001802156 | |
Title of 12(b) Security | Class A common stock, par value $0.0001 per share | |
Trading Symbol | XPOF | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity File Number | 001-40638 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-4395129 | |
Entity Address, Address Line One | 17877 Von Karman Ave. | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Irvine | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92614 | |
City Area Code | (949) | |
Local Phone Number | 346-3000 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Current Fiscal Year End Date | --12-31 | |
Class A | ||
Document Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 30,891,038 | |
Class B | ||
Document Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 16,566,027 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
Current Assets: | |||
Cash, cash equivalents and restricted cash | $ 51,880 | $ 37,370 | |
Accounts receivable, net (Note 10) | 27,714 | 25,555 | |
Inventories | 16,339 | 10,864 | |
Prepaid expenses and other current assets | 13,531 | 6,294 | |
Deferred costs, current portion | 6,507 | 4,131 | |
Notes receivable from franchisees, net | 1,113 | 1,520 | |
Total current assets | 117,084 | 85,734 | |
Property and equipment, net | 20,293 | 18,524 | |
Right-of-use assets | [1] | 77,353 | 30,079 |
Goodwill | 165,661 | 165,697 | |
Intangible assets, net | 122,450 | 137,175 | |
Deferred costs, net of current portion | 45,958 | 43,620 | |
Notes receivable from franchisees, net of current portion | 1,181 | 1,067 | |
Other assets | 1,252 | 795 | |
Total assets | 551,232 | 482,691 | |
Current Liabilities: | |||
Accounts payable | 24,097 | 16,185 | |
Accrued expenses | 13,389 | 12,295 | |
Deferred revenue, current portion | 37,000 | 31,996 | |
Current portion of long-term debt | 5,195 | 3,035 | |
Other current liabilities | 21,840 | 9,265 | |
Total current liabilities | 101,521 | 72,776 | |
Deferred revenue, net of current portion | 115,229 | 109,465 | |
Contingent consideration from acquisitions (Note 16) | 10,303 | 28,182 | |
Long-term debt, net of current portion, discount and issuance costs | 319,053 | 133,039 | |
Lease liability | 74,678 | 30,583 | |
Other liabilities | 7,440 | 8,633 | |
Total liabilities | 628,224 | 382,678 | |
Commitments and contingencies (Note 16) | |||
Stockholders' equity (deficit): | |||
Additional paid-in capital | 502,606 | 505,186 | |
Receivable from Member/shareholder (Note 10) | (15,026) | (16,369) | |
Accumulated deficit | (624,210) | (641,903) | |
Treasury stock, at cost, 74,525 shares outstanding as of September 30, 2023 and December 31, 2022 | (1,697) | (1,697) | |
Total stockholders' deficit attributable to Xponential Fitness, Inc. | (138,322) | (154,778) | |
Noncontrolling interests | (68,974) | (53,284) | |
Total stockholders' deficit | (207,296) | (208,062) | |
Total liabilities, redeemable convertible preferred stock and stockholders' deficit | 551,232 | 482,691 | |
Redeemable Convertible Preferred Stock | |||
Current Liabilities: | |||
Redeemable convertible preferred stock, $0.0001 par value, 400,000 shares authorized, 114,660 and 200,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 130,304 | 308,075 | |
Undesignated Preferred Stock | |||
Stockholders' equity (deficit): | |||
Undesignated preferred stock, $0.0001 par value, 4,600,000 shares authorized, none issued and outstanding as of September 30, 2023 and December 31, 2022 | 0 | 0 | |
Class A Common Stock | |||
Stockholders' equity (deficit): | |||
Common stock | 3 | 3 | |
Class B Common Stock | |||
Stockholders' equity (deficit): | |||
Common stock | $ 2 | $ 2 | |
[1] (1) Includes impact of write off of abandoned right-of-use assets of $ 5,122 and impairment charge of $ 92 related to the restructuring plan. See Note 17 for additional information. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Treasury stock, shares | 74,525 | 74,525 |
Undesignated Preferred Stock | ||
Preferred stock, Par value | $ 0.0001 | $ 0.0001 |
Preferred stock, Share authorized | 4,600,000 | 4,600,000 |
Preferred stock, Share issued | 0 | 0 |
Preferred stock, share outstanding | 0 | 0 |
Redeemable Convertible Preferred Stock | ||
Redeemable preferred stock, Par value | $ 0.0001 | $ 0.0001 |
Redeemable preferred stock, Share authorized | 400,000 | 400,000 |
Redeemable preferred stock, Share issued | 114,660 | 200,000 |
Redeemable preferred stock, Share outstanding | 114,660 | 200,000 |
Class A Common Stock | ||
Common stock, Par value | $ 0.0001 | $ 0.0001 |
Common stock, Share authorized | 500,000,000 | 500,000,000 |
Common stock, Share issued | 31,477,165 | 27,571,312 |
Common stock, Share outstanding | 31,477,165 | 27,571,312 |
Class B Common Stock | ||
Common stock, Par value | $ 0.0001 | $ 0.0001 |
Common stock, Share authorized | 500,000,000 | 500,000,000 |
Common stock, Share issued | 16,566,027 | 21,647,447 |
Common stock, Share outstanding | 16,491,502 | 21,572,922 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue, net: | ||||
Total revenue, net | $ 80,435 | $ 63,763 | $ 228,465 | $ 173,685 |
Operating costs and expenses: | ||||
Selling, general and administrative expenses | 48,579 | 32,841 | 127,912 | 96,082 |
Depreciation and amortization | 4,216 | 4,154 | 12,701 | 11,225 |
Marketing fund expense | 5,817 | 4,260 | 16,289 | 12,696 |
Acquisition and transaction expenses (income) | (1,923) | 16,290 | (17,433) | (5,793) |
Total operating costs and expenses | 72,957 | 74,196 | 191,741 | 162,750 |
Operating income (loss) | 7,478 | 10,433 | 36,724 | 10,935 |
Other (income) expense: | ||||
Interest income | (24) | (402) | (1,189) | (1,209) |
Interest expense | 10,638 | 3,333 | 27,242 | 9,060 |
Other expense | 1,845 | 0 | 3,097 | 0 |
Total other expense | 12,459 | 2,931 | 29,150 | 7,851 |
Income (loss) before income taxes | (4,981) | (13,364) | 7,574 | 3,084 |
Income taxes (benefit) | 202 | (308) | 212 | (158) |
Net income (loss) | (5,183) | (13,056) | 7,362 | 3,242 |
Less: net income (loss) attributable to noncontrolling interests | (1,801) | (5,918) | 2,348 | 1,065 |
Net income (loss) attributable to Xponential Fitness, Inc. | $ (3,382) | $ (7,138) | $ 5,014 | $ 2,177 |
Net income (loss) per share of Class A common stock: | ||||
Basic | $ 0.91 | $ (1.53) | $ 1.08 | $ 0.28 |
Diluted | $ (0.5) | $ (1.53) | $ (0.17) | $ 0.05 |
Weighted average shares of Class A common stock outstanding: | ||||
Basic | 32,260 | 26,156 | 32,025 | 24,782 |
Diluted | 40,223 | 26,156 | 39,988 | 62,823 |
Franchise revenue | ||||
Revenue, net: | ||||
Total revenue, net | $ 36,425 | $ 30,006 | $ 104,524 | $ 83,128 |
Equipment revenue | ||||
Revenue, net: | ||||
Total revenue, net | 12,564 | 11,770 | 40,086 | 31,930 |
Merchandise revenue | ||||
Revenue, net: | ||||
Total revenue, net | 8,456 | 6,264 | 24,021 | 19,100 |
Franchise marketing fund revenue | ||||
Revenue, net: | ||||
Total revenue, net | 6,948 | 5,172 | 19,776 | 14,544 |
Other service revenue | ||||
Revenue, net: | ||||
Total revenue, net | 16,042 | 10,551 | 40,058 | 24,983 |
Product revenue | ||||
Operating costs and expenses: | ||||
Costs of revenue | 12,709 | 11,840 | 40,967 | 34,951 |
Franchise and service revenue | ||||
Operating costs and expenses: | ||||
Costs of revenue | $ 3,559 | $ 4,811 | $ 11,305 | $ 13,589 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes to Stockholders'/Member's Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock Member Class A Common Stock | Common Stock Member Class B Common Stock | Treasury Stock | Additional Paid-In Capital | Receivable from Member/ Shareholder | Accumulated Deficit | Noncontrolling Interest | Noncontrolling Interest Post NCI Rebalancing |
Beginning Balance at Dec. 31, 2021 | $ (210,469) | $ 2 | $ 2 | $ (10,600) | $ (643,833) | $ 443,960 | |||
Beginning balance, Shares at Dec. 31, 2021 | 23,898 | 22,969 | |||||||
Equity-based compensation | 14,627 | $ 2,423 | 12,204 | ||||||
Net income (loss) | (15,179) | (7,519) | (7,660) | ||||||
Conversion of Class B shares to Class A shares | 517,283 | (517,283) | |||||||
Conversion of Class B shares to Class A shares, Shares | 351 | (351) | |||||||
Payment of preferred stock dividends | (3,250) | (3,250) | |||||||
Adjustment of preferred stock to redemption value | (50,931) | (50,931) | |||||||
Vesting of Class B Shares | 1,947 | ||||||||
Ending Balance at Mar. 31, 2022 | (265,202) | $ 2 | $ 2 | 465,525 | (10,600) | (651,352) | (68,779) | ||
Ending balance, Shares at Mar. 31, 2022 | 24,249 | 24,565 | |||||||
Beginning Balance at Dec. 31, 2021 | (210,469) | $ 2 | $ 2 | (10,600) | (643,833) | 443,960 | |||
Beginning balance, Shares at Dec. 31, 2021 | 23,898 | 22,969 | |||||||
Net income (loss) | 3,242 | ||||||||
Liability-classified restricted stock units vested | 0 | ||||||||
Proceeds from disgorgement of stockholders short-swing profits (Note 10) | 0 | ||||||||
Payment received from shareholder | 0 | ||||||||
Ending Balance at Sep. 30, 2022 | (180,643) | $ 3 | $ 2 | 528,807 | (14,219) | (641,656) | (53,580) | ||
Ending balance, Shares at Sep. 30, 2022 | 27,561 | 21,651 | |||||||
Beginning Balance at Mar. 31, 2022 | (265,202) | $ 2 | $ 2 | 465,525 | (10,600) | (651,352) | (68,779) | ||
Beginning balance, Shares at Mar. 31, 2022 | 24,249 | 24,565 | |||||||
Equity-based compensation | 3,807 | 3,861 | (54) | ||||||
Net income (loss) | 31,477 | 16,834 | 14,643 | ||||||
Conversion of Class B shares to Class A shares | (7,387) | 7,387 | |||||||
Conversion of Class B shares to Class A shares, Shares | 2,883 | (2,883) | |||||||
Payment of preferred stock dividends | (3,250) | (3,250) | |||||||
Adjustment of preferred stock to redemption value | 127,821 | 127,821 | |||||||
Vesting of Class B Shares | 5 | ||||||||
Vesting of restricted stock units | 54 | ||||||||
Ending Balance at Jun. 30, 2022 | (105,347) | $ 2 | $ 2 | 586,570 | (10,600) | (634,518) | (46,803) | ||
Ending balance, Shares at Jun. 30, 2022 | 27,186 | 21,687 | |||||||
Equity-based compensation | 3,621 | 3,597 | 24 | ||||||
Net income (loss) | (13,056) | (7,138) | (5,918) | ||||||
Conversion of Class B shares to Class A shares | 883 | (883) | |||||||
Conversion of Class B shares to Class A shares, Shares | 64 | (64) | |||||||
Payment of preferred stock dividends | (3,250) | (3,250) | |||||||
Adjustment of preferred stock to redemption value | (57,096) | (57,096) | |||||||
Vesting of Class B Shares | 28 | ||||||||
Vesting of restricted share units, net of shares withheld for taxes, Shares | 311 | ||||||||
Vesting of restricted share units, net of shares withheld for taxes | (1,896) | $ 1 | (1,897) | ||||||
Loan to shareholder and accumulated interest | (3,619) | (3,619) | |||||||
Ending Balance at Sep. 30, 2022 | (180,643) | $ 3 | $ 2 | 528,807 | (14,219) | (641,656) | (53,580) | ||
Ending balance, Shares at Sep. 30, 2022 | 27,561 | 21,651 | |||||||
Beginning Balance at Dec. 31, 2022 | (208,062) | $ 3 | $ 2 | $ (1,697) | 505,186 | (16,369) | (641,903) | (53,284) | |
Beginning balance, Shares at Dec. 31, 2022 | 27,571 | 21,647 | 75 | ||||||
Equity-based compensation | 5,612 | 5,598 | $ 14 | ||||||
Net income (loss) | (14,979) | (9,983) | (4,996) | ||||||
Conversion of Class B shares to Class A shares | (2,332) | 2,332 | |||||||
Conversion of Class B shares to Class A shares, Shares | 4,926 | (4,926) | |||||||
Payment of preferred stock dividends | (2,069) | (2,069) | |||||||
Adjustment of preferred stock to redemption value | (62,660) | (62,660) | |||||||
Vesting of Class B Shares | 10 | ||||||||
Vesting of restricted share units, net of shares withheld for taxes, Shares | 402 | ||||||||
Vesting of restricted share units, net of shares withheld for taxes | (7,935) | (7,935) | |||||||
Deemed contribution from redemption of preferred stock | 12,679 | 12,679 | |||||||
Liability-classified restricted stock units vested | 2,250 | 2,250 | |||||||
Loan to shareholder and accumulated interest | (3,587) | (3,587) | |||||||
Ending Balance at Mar. 31, 2023 | (278,751) | $ 3 | $ 2 | $ (1,697) | 438,038 | (19,956) | (639,207) | (55,934) | |
Ending balance, Shares at Mar. 31, 2023 | 32,899 | 16,731 | 75 | ||||||
Beginning Balance at Dec. 31, 2022 | (208,062) | $ 3 | $ 2 | $ (1,697) | 505,186 | (16,369) | (641,903) | (53,284) | |
Beginning balance, Shares at Dec. 31, 2022 | 27,571 | 21,647 | 75 | ||||||
Net income (loss) | 7,362 | ||||||||
Liability-classified restricted stock units vested | 2,250 | ||||||||
Proceeds from disgorgement of stockholders short-swing profits (Note 10) | 516 | ||||||||
Payment received from shareholder | (8,062) | ||||||||
Ending Balance at Sep. 30, 2023 | (207,296) | $ 3 | $ 2 | $ (1,697) | 502,606 | (15,026) | (624,210) | (68,974) | |
Ending balance, Shares at Sep. 30, 2023 | 31,477 | 16,566 | 75 | ||||||
Beginning Balance at Mar. 31, 2023 | (278,751) | $ 3 | $ 2 | $ (1,697) | 438,038 | (19,956) | (639,207) | (55,934) | |
Beginning balance, Shares at Mar. 31, 2023 | 32,899 | 16,731 | 75 | ||||||
Equity-based compensation | 5,611 | 5,608 | 3 | ||||||
Net income (loss) | 27,524 | 18,379 | 9,145 | ||||||
Conversion of Class B shares to Class A shares | (1,332) | 1,332 | |||||||
Conversion of Class B shares to Class A shares, Shares | 141 | (141) | |||||||
Payment of preferred stock dividends | (1,857) | (1,857) | |||||||
Adjustment of preferred stock to redemption value | 45,551 | 45,551 | |||||||
Vesting of Class B Shares | 2 | ||||||||
Vesting of restricted share units, net of shares withheld for taxes, Shares | 180 | ||||||||
Vesting of restricted share units, net of shares withheld for taxes | (176) | (176) | |||||||
Loan to shareholder and accumulated interest | (1,683) | (1,683) | |||||||
Receivable from shareholder arising from the Rumble studios acquisition | (1,450) | (1,450) | |||||||
Consideration related to the Rumble studios acquisition | 1 | 1 | |||||||
Payment received from shareholder | 1,290 | 1,290 | |||||||
Distributions paid to Pre-IPO LLC Members | (532) | (532) | |||||||
Ending Balance at Jun. 30, 2023 | (204,472) | $ 3 | $ 2 | $ (1,697) | 485,832 | (21,798) | (620,828) | (45,986) | |
Ending balance, Shares at Jun. 30, 2023 | 33,220 | 16,592 | 75 | ||||||
Equity-based compensation | 3,092 | 3,091 | 1 | ||||||
Net income (loss) | (5,183) | (3,382) | (1,801) | ||||||
Conversion of Class B shares to Class A shares | 14,235 | (14,235) | |||||||
Conversion of Class B shares to Class A shares, Shares | 27 | (27) | |||||||
Payment of preferred stock dividends | (1,863) | (1,863) | |||||||
Adjustment of preferred stock to redemption value | 51,435 | 51,435 | |||||||
Vesting of Class B Shares | 1 | ||||||||
Vesting of restricted stock units | 240 | ||||||||
Repurchase and retirement of Class A common stock, Shares | (2,010) | ||||||||
Repurchase and retirement of Class A common stock | (50,378) | (50,378) | |||||||
Excise tax on share repurchases | (262) | (262) | |||||||
Proceeds from disgorgement of stockholders short-swing profits (Note 10) | 516 | 516 | |||||||
Payment received from shareholder | 6,772 | 6,772 | |||||||
Distributions paid to Pre-IPO LLC Members | (6,953) | (6,953) | |||||||
Ending Balance at Sep. 30, 2023 | $ (207,296) | $ 3 | $ 2 | $ (1,697) | $ 502,606 | $ (15,026) | $ (624,210) | $ (68,974) | |
Ending balance, Shares at Sep. 30, 2023 | 31,477 | 16,566 | 75 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 7,362 | $ 3,242 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 12,701 | 11,225 |
Amortization and write off of debt issuance cost | 416 | 94 |
Amortization of discount on long-term debt | 2,032 | 454 |
Change in contingent consideration from acquisitions | (17,528) | (5,791) |
Amortization of right-of-use assets | 9,729 | 1,450 |
Bad debt expense (recovery) | 850 | (526) |
Equity-based compensation | 15,647 | 23,920 |
Non-cash interest | (857) | (679) |
Write down of goodwill and brand assets | 11,817 | 3,656 |
Gain on disposal of assets | (770) | (90) |
Changes in assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | (2,535) | (6,592) |
Inventories | (5,376) | (6,810) |
Prepaid expenses and other current assets | (7,237) | (5,529) |
Operating lease liabilities | (4,027) | (1,398) |
Deferred costs | (4,743) | (1,248) |
Notes receivable, net | 1 | 25 |
Accounts payable | 7,302 | 7,497 |
Accrued expenses | 1,656 | (1,555) |
Other current liabilities | 4,953 | 599 |
Deferred revenue | 7,536 | 13,993 |
Other assets | (458) | (129) |
Other liabilities | (277) | 1,663 |
Net cash provided by operating activities | 38,194 | 37,471 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (6,156) | (5,660) |
Proceeds from sale of assets | 60 | 65 |
Purchase of studios | (164) | 0 |
Purchase of intangible assets | (2,420) | (6,840) |
Notes receivable issued | (581) | (1,782) |
Notes receivable payments received | 666 | 2,643 |
Net cash used in investing activities | (8,595) | (11,574) |
Cash flows from financing activities: | ||
Borrowings from long-term debt | 189,150 | 5,480 |
Payments on long-term debt | (3,014) | (2,220) |
Debt issuance costs | (411) | (49) |
Payment of preferred stock dividend and deemed cash dividend | (5,677) | (13,000) |
Payment of contingent consideration | (1,412) | (1,336) |
Payments for taxes related to net share settlement of restricted share units | (8,111) | (1,897) |
Payment for tax receivable agreement | (1,163) | 0 |
Payments for redemption of preferred stock | (130,766) | 0 |
Payments for distributions to Pre-IPO LLC Members | (7,485) | 0 |
Repurchase of Class A common stock | (50,378) | 0 |
Payment received from shareholder | 8,062 | 0 |
Loan to shareholder | (4,400) | (3,300) |
Proceeds from disgorgement of stockholders short-swing profits (Note 10) | 516 | 0 |
Net cash used in financing activities | (15,089) | (16,322) |
Increase in cash, cash equivalents and restricted cash | 14,510 | 9,575 |
Cash, cash equivalents and restricted cash, beginning of period | 37,370 | 21,320 |
Cash, cash equivalents and restricted cash, end of period | 51,880 | 30,895 |
Supplemental cash flow information: | ||
Interest paid | 24,631 | 8,013 |
Income taxes paid | 1,673 | 2,570 |
Noncash investing and financing activity: | ||
Capital expenditures accrued | 567 | 1,536 |
Adjustment of convertible preferred stock to redemption value | (34,326) | (19,794) |
Liability-classified restricted stock units vested | 2,250 | 0 |
Deemed contribution from redemption of convertible preferred stock | 12,679 | 0 |
Accrued tax withholding related to convertible preferred stock dividend | 114 | 0 |
Intangible asset acquired in exchange for deferred revenue | $ 0 | $ 4,800 |
Nature of Business and Operatio
Nature of Business and Operations | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Operations | Note 1 – Nature of Business and Operations Xponential Fitness, Inc. (the “Company” or “XPO Inc.”), was formed as a Delaware corporation on January 14, 2020. On July 23, 2021, the Company completed an initial public offering (“IPO”) of 10,000 shares of Class A common stock 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 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”). As of September 30, 2023 , the Company’s portfolio of ten brands consists of: “Club Pilates,” a Pilates facility franchisor; “CycleBar,” a premier indoor cycling franchise; “StretchLab,” a fitness concept offering one-on-one assisted stretching services; “Row House,” a rowing concept that provides an effective and efficient workout centered around the sport of rowing; “YogaSix,” a yoga concept that concentrates on connecting to one’s body in a way that is energizing; “AKT,” a dance-based cardio workout concept that combines toning, interval and circuit training; “Pure Barre,” a total body workout concept that uses the ballet barre to perform small isometric movements; “Stride,” a running concept that offers treadmill-based high-intensity interval training and strength-training; “Rumble,” a boxing concept that offers boxing-inspired group fitness classes; 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 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. In addition to franchised studios, the Comp any operated 31 and 40 co mpany-owned transition studios as of September 30, 2023 and 2022, respectively. 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. Immediately following the closing of the IPO, XPO LLC is the predecessor of the Company for financial reporting purposes. As the sole managing member of XPO LLC, the Company operates and controls all of the business and affairs of XPO LLC. The Reorganization Transactions are accounted for as a reorganization of entities under common control. As a result, the condensed consolidated financial statements of the Company recognize the assets and liabilities received in the Reorganization Transactions at their historical carrying amounts, as reflected in the historical consolidated financial statements 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. 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, 2022, 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Segment and geographic information – T he Company operates in one reportable and operating segment. The Company genera ted $ 3,351 and $ 10,338 of revenue outside the United States during the three and nine months ended September 30, 2023 , respectively, and $ 3,104 and $ 9,060 during the three and nine months ended September 30, 2022, respectively. As of September 30, 2023 and December 31, 2022 , the Company did not have material assets located outside of the United States. 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 has marketing fund restricted cash, which can only be used for activities that promote the Company’s brands. In July 2022, the Company issued a $ 750 standby letter of credit to a third-party financing company, who provides loans to the Company's qualified franchisees. The standby letter of credit is contingent upon the failure of franchisees to perform according to the terms of underlying contracts with the third party. The Company deposited cash in a restricted account as collateral for the standby letter of credit. In addition, the Company, as a guarantor, is required to recognize, at inception of the guaranty, a liability for the fair value of the obligation undertaken in issuing the guarantee. See Note 16 for further discussion of such obligations guaranteed. The Company's restricted cash consists of marketing fund restricted cash and guarantee of standby letter of credit. Restricted cash was $ 8,179 and $ 5,381 at September 30, 2023 and December 31, 2022 , respectively. Accounts receivable and allowance for doubtful accounts – 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. 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. On a periodic basis, the Company evaluates its accounts receivable balance and establishes an allowance for doubtful accounts based on a number of factors, including evidence of the franchisee’s ability to comply with credit terms, economic conditions and historical receivables. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Credit Losses – Effective January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, which required the recognition of expected credit losses for accounts and notes receivable. The adoption of the new standard did not have a material impact on the Company's condensed consolidated financial statements as the expected credit loss model was not significantly different from the Company's prior policy and methodology for determining the allowance for doubtful accounts. For additional information refer to section below titled “Recently adopted accounting pronouncements.” The Company’s accounts and notes receivable are recorded at net realizable value, which includes an appropriate allowance for estimated credit losses. The estimate of credit losses is based upon historical bad debts, current receivable balances, age of receivable balances, the customer’s financial condition and current economic trends, all of which are subject to change. Actual uncollected amounts have historically been consistent with the Company’s expectations. The Company’s payment terms on its receivables from franchisees are generally 30 days . 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 January 1, 2023 $ 865 $ 719 $ 1,584 Bad debt expense recognized during the period 531 319 850 Write-off of uncollectible amounts ( 499 ) ( 71 ) ( 570 ) Balance at September 30, 2023 $ 897 $ 967 $ 1,864 Accrued expenses – Accrued expenses consisted of the following: September 30, December 31, 2023 2022 Accrued compensation $ 3,449 $ 4,611 Contingent consideration from acquisitions, current portion 1,266 2,203 Sales tax accruals 1,718 3,186 Legal accruals 417 464 Other accruals 6,539 1,831 Total accrued expenses $ 13,389 $ 12,295 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, restricted cash, accounts receivable, notes receivable, accounts payable, accrued expenses and notes payable. 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. Redeemable convertible preferred stock – T he redeemable convertible preferred stock (the “Convertible Preferred”) becomes redeemable at the option of the holder as of a specific date unless an event that is not probable of occurring happens before that date. Therefore, the Company determined that it is probable that the Convertible Preferred will become redeemable based on the passage of time. The Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. Noncontrolling interests – Noncontrolling interests represent the economic interests of XPO LLC held by Class B common stockholders. Income or loss is attributed to the noncontrolling interests based on the weighted average LLC interests outstanding during the period. The noncontrolling interests' ownership percentage can fluctuate over time as the Class B common stockholders may elect to exchange their shares of Class B common stock for Class A common stock. Earnings (loss) per share – Basic earnings (loss) per share is calculated by dividing the earnings (loss) attributable to Class A common stockholders by the number of weighted-average shares of Class A common stock outstanding. Shares of Class B common stock do not share in the earnings of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings (loss) per share of Class B common stock under the two-class method has not been presented. Diluted earnings per share adjusts the basic e arnings per share calculation for the potential dilutive impact of common shares such as equity awards using the treasury-stock method. Diluted earnings per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potentially dilutive common shares would have an anti-dilutive effect. Shares of Class B common stock are considered potentially dilutive shares of Class A common stock; however, in loss periods related amounts are excluded from the computation of diluted earnings per share of Class A common stock because the effect would be anti-dilutive under the if-converted and two-class methods. Income taxes – The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities (“DTAs” and “DTLs”) for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. The Company recognizes DTAs to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If the Company determines that it would be able to realize DTAs in the future in excess of the net recorded amount, an adjustment to the DTA valuation allowance would be made, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC Topic 740 on the basis of a two-step process in which the Company (1) determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company does not have any uncertain tax positions. The Company recognizes potential interest and penalties, if any, related to income tax matters in income tax expense. The Company did no t incur any interest or penalties for the three and nine months ended September 30, 2023 and 2022 . Recently adopted accounting pronouncements – Credit Losses – In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326).” This standard provides a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses and applies to trade and notes receivables. The adoption of this accounting standard on January 1, 2023 did not have a material impact on the Company's condensed consolidated financial statements as the expected credit loss model was not significantly different from the prior policy and methodology for determining the allowance for doubtful accounts. For additional information refer to section above titled “Credit Losses.” Reference Rate Reform – In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” ("ASU 2020-04"). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the expected transition away from reference rates that are expected to be discontinued, such as London Interbank Offered Rate (“LIBOR”). ASU 2020-04 was effective upon issuance. In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” ("ASU 2022-06"). ASU 2022-06 defers the sunset date of ASC Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC Topic 848. ASU 2022-06 was effective upon issuance. The adoption of this accounting standard did not have a material impact on the Company's condensed consolidated financial statements. Business Combinations – In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” ("ASU 2021-08"). ASU 2021-08 primarily addresses the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amendment improves comparability by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. This results in better comparability for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years with early adoption permitted. The adoption of this accounting standard, effective January 1, 2023, did not have an impact on the Company's condensed 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”). 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. |
Acquisitions and Dispositions
Acquisitions and Dispositions | 9 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Acquisitions and Dispositions | 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 On June 5, 2023 , the Company entered into an Asset Purchase Agreement to purchase 14 studios to operate as company-owned transition studios from the original founder sellers of the Rumble brand, which was acquired by the Company in 2021 (the “ Rumble Sellers”) and were franchisees and shareholders of the Company. This acquisition is expected to enhance the operational performance of the 14 Rumble studios as the Company prepares them to be licensed to new franchisees. The transaction was accounted for as a business combination using the acquisition method of accounting, which requires the assets acquired to be recorded at their respective fair value as of the date of the transaction. The Company also entered into a mutual termination agreement with the Rumble Sellers to terminate their existing franchise agreements, resulting in cash received and a gain of $ 3,500 , which is included within selling, general and administrative expenses. Under the Asset Purchase Agreement, consideration for the acquisition included $ 1 , which was recorded as a reduction to receivable from shareholder. The Company also agreed to assume liabilities aggregating $ 1,450 , which is expected to be reimbursed to the Company upon the sale of XPO Inc. common stock owned by the Rumble Sellers . In connection with the transaction, the Company wrote down intangible assets related to franchise agreements, net of reacquired franchise rights, in the amount of $ 7,238 (see Note 7) . The Company determined the estimated fair values assigned to assets acquired and liabilities assumed after review and consideration of relevant information as of the acquisition date. The fair values are based on management's estimates and assumptions, which include Level 3 unobservable inputs, and are determined using generally accepted valuation techniques. The following summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price allocation: Amount Accounts receivable $ 154 Inventories 98 Property and equipment 1,113 Right-of-use assets 42,016 Goodwill 4,133 Deferred revenue ( 3,269 ) Lease liabilities ( 44,244 ) Reduction to receivable from shareholder $ 1 The resulting goodwill is primarily attributable to synergies from the integration of studios, increased expansion for market opportunities and the expansion of studio membership and is expected to be tax deductible. The fair value of the property and equipment was based on the replacement cost method. The fair value of the right of use assets was determined using the income approach. The deferred revenue represents prepaid classes and class packages. The Company will recognize revenue over time as the members attend and utilize the classes. The fair value of the reacquired franchise rights after termination of the existing franchise agreements was based on the excess earnings method and is considered to have an eight-year life. The acquisition was not material to the results of operations of the Company. During the nine months ended September 30, 2023 , the Company did no t incur any transaction costs directly related to the acquisition of 14 Rumble studios. During the nine months ended September 30, 2023, the Company entered into an agreement with a franchisee under which the Company repurchas ed one studio t o operate as a company-owned transition studio. The purchase price for the acquisition was $ 164 , less $ 8 of net deferred revenue and deferred costs resulting in total purchase consideration of $ 156 . The following summarizes the aggregate fair values of the assets acquired and liabilities assumed: Amount Property and equipment $ 19 Reacquired franchise rights 137 Total purchase price $ 156 During the nine months ended September 30, 2023 and 2022, the Company refranchised operations at 78 and 16 company-owned transition studios, respectively, received proceeds of $ 60 and $ 0 , respectively, and recorded a net loss o f $ 594 and $ 0 on disposal of the studio assets, respectively . During the nine months ended September 30, 2023 and 2022, the Company also ceased operations at 14 and 0 company-owned transition studios, respectively. The Company is actively seeking to refranchise or close company-owned transition studios under its restructuring plan that started in the third quarter of 2023. See Note 17 for further discussion of the Company's restructuring plan. 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 and nine months ended September 30, 2023 and 2022 , the Company did no t record any impairment charges related to studio assets. See Note 9 for discussion of impairment charges related to right-of-use assets during the quarter ended September 30, 2023. BodyFit Trademark In the quarter ended June 30, 2022, the Company entered into a Trademark Acquisition Agreement with Vitalize, LLC dba Bodybuilding.com (the "Seller"), whereby the Company acquired all rights, titles, and interests in and to the BodyFit trademark in the United States. The acquisition was recorded as an asset acquisition. The aggregate purchase consideration for the acquisition was $ 10,300 . The purchase price consisted of $ 5,500 of cash consideration and $ 4,800 of noncash consideration, which was recorded as a contract liability. The Trademark Acquisition Agreement is subject to termination due to a third-party right of first refusal. The likelihood of exercise of the right of first refusal was considered remote as of September 30, 2023 . |
Contract Liabilities and Costs
Contract Liabilities and Costs from Contracts with Customers | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Contract Liabilities and Costs from Contracts with Customers | Note 4 – Contract Liabilities and Costs from Contracts with Customers Contract liabilities – Contract liabilities consist of deferred revenue resulting from 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 development and brand fee contract liabilities for the nine months ended September 30, 2023 . Other deferred revenue amounts o f $ 23,918 ar e excluded from the table as the original expected duration of the contracts is one year or less . Franchise Brand fees Total Balance at December 31, 2022 $ 116,244 $ 6,641 $ 122,885 Revenue recognized that was included in deferred ( 12,025 ) ( 3,339 ) ( 15,364 ) Deferred revenue recorded as settlement in ( 1,278 ) — ( 1,278 ) Increase, excluding amounts recognized as revenue 21,354 714 22,068 Balance at September 30, 2023 $ 124,295 $ 4,016 $ 128,311 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 September 30, 2023. The expected future recognition period for deferred franchise 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 in Franchise Brand fees Total Remainder of 2023 $ 2,211 $ 1,536 $ 3,747 2024 10,199 1,652 11,851 2025 10,703 414 11,117 2026 12,002 414 12,416 2027 12,809 — 12,809 Thereafter 76,371 — 76,371 $ 124,295 $ 4,016 $ 128,311 The following table reflects the components of deferred revenue: September 30, December 31, 2023 2022 Franchise and area development fees $ 124,295 $ 116,244 Brand fees 4,016 6,641 Equipment and other 23,918 18,576 Total deferred revenue 152,229 141,461 Non-current portion of deferred revenue 115,229 109,465 Current portion of deferred revenue $ 37,000 $ 31,996 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 franchise agreement is executed. The commissions are recognized on a straight-line basis over the initial 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 September 30, 2023 and December 31, 2022 , there were approximately $ 3,963 and $ 3,589 of current deferred costs and approximately $ 45,399 and $ 43,445 in non-current deferred costs, respectively. The Company recognized franchise sales commission expense of approximatel y $ 1,419 and $ 5,200 for the three and nine months ended September 30, 2023 , respectively, and $ 2,968 and $ 8,318 for the three and nine months ended September 30, 2022 , respectively. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Notes Receivable | Note 5 – Notes Receivable The Company previously provided unsecured advances or extended financing related to the purchase of the Company’s equipment or franchise fees to various franchisees. These arrangements have terms of up to 18 months with interest typically based on LIBOR plus 700 basis points with an initial interest free period. The Company also provided loans to various franchisees through its relationship with Intensive Capital Inc. (“ICI”). The Company accrues the interest as an addition to the principal balance as the interest is earned. Activity related to these arrangements is presented within operating activities in the condensed consolidated statements of cash flows. The Company has also provided loans 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 . The Company accrues interest as an addition to the principal balance as the interest is earned. Activity related to these loans is presented within investing activities in the condensed consolidated statements of cash flows. At September 30, 2023 and December 31, 2022, the principal balance of the notes receivable was approximately $ 3,261 and $ 3,306 , respectively. The Company evaluates loans for collectability upon issuance of the loan and records interest only if the loan is deemed collectable. To the extent a loan becomes past due, the Company ceases the recording of interest in the period that a reserve on the loan is established. On a periodic basis, the Company evaluates its notes receivable balance and establishes an allowance for doubtful accounts, based on a number of factors, including evidence of the franchisee’s ability to comply with the terms of the notes, economic conditions and historical collections. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 6 – Property and Equipment Property and equipment consisted of the following: September 30, December 31, 2023 2022 Furniture and equipment $ 4,307 $ 4,182 Computers and software 19,516 14,075 Vehicles 635 171 Leasehold improvements 8,606 7,533 Construction in progress 1,491 3,115 Less: accumulated depreciation ( 14,262 ) ( 10,552 ) Total property and equipment $ 20,293 $ 18,524 Depreciation expense for the three and nine months ended September 30, 2023, was $ 1,480 and $ 4,125 , respectively, and $ 1,054 and $ 2,720 for the three and nine months ended September 30, 2022 , respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 7 – 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. During the nine months ended September 30, 2023, there was an increase of $ 4,133 in previously reported goodwill due to the acquisition of 14 Rumble studios as discussed in Note 3. The carrying value of goodwill at September 30, 2023 and December 31, 2022, totaled $ 165,661 and $ 165,697 , respectively, net of cumulative impairment of $ 7,545 and $ 3,376 at September 30, 2023 and December 31, 2022, respectively. During the quarter ended September 30, 2022, the Company determined it was necessary to re-evaluate goodwill of the AKT reporting unit for impairment due to declines in forecasted and actual cash flows. Therefore, the Company performed a quantitative assessment of the fair value of the reporting unit using an income approach with assumptions that are considered Level 3 inputs and concluded that the carrying value of the AKT reporting unit exceeded its fair value, resulting in a goodwill impairment of $ 3,376 . The fair value of the reporting unit was determined by discounting estimated future cash flows, which were calculated based on revenue and expense long-term growth assumptions ranging from 2.0 % to 5.0 %, at a weighted average cost of capital (discount rate) of 16.0 %. In addition, the Company determined that the trademark and franchise agreements intangible assets related to the AKT reporting unit were also impaired and recognized an impairment loss of $ 280 in the third quarter of 2022. During the quarter ended September 30, 2023, the Company determined it was necessary to re-evaluate goodwill of the Stride and Row House reporting units for impairment due to indicators of potential impairment resulting from a decline in forecasted and actual cash flows. Therefore, the Company performed a quantitative assessment of the fair value of the reporting units using an income approach with assumptions that are considered Level 3 inputs and concluded that the carrying value of the Stride and Row House reporting units exceeded their fair value, resulting in a goodwill impairment of $ 3,469 and $ 700 , respectively, resulting in no goodwill remaining for the Stride and Row House reporting units . The fair value of the reporting units was determined by discounting estimated future cash flows, which were calculated based on revenue and expense long-term growth assumptions ranging from 8.0 % to 43.0 %, at a weighted average cost of capital (discount rate) of 16.0 %. Th e impairment charge is included within selling, general and administrative expenses in the Company's condensed consolidated statements of operations. In addition, the Company determined that the franchise agreements intangible assets and trademarks related to Stride and Row House were also impaired and recognized an aggregate impairment loss of $ 230 for the franchise agreements and an aggregate impairment loss of $ 180 for the trademarks in the third quarter of 2023. Intangible assets consisted of the following: September 30, 2023 December 31, 2022 Amortization Gross Accumulated Net Gross Accumulated Net Trademarks 10 $ 20,710 $ ( 3,969 ) $ 16,741 $ 21,110 $ ( 2,606 ) $ 18,504 Franchise agreements 7.5 – 10 57,700 ( 28,243 ) 29,457 69,100 ( 25,143 ) 43,957 Reacquired franchise rights 6.2 – 8 1,437 ( 62 ) 1,375 — — — Web design and domain 3 – 10 430 ( 279 ) 151 430 ( 196 ) 234 Deferred video production costs 3 5,408 ( 3,289 ) 2,119 4,046 ( 2,173 ) 1,873 Total definite-lived intangible assets 85,685 ( 35,842 ) 49,843 94,686 ( 30,118 ) 64,568 Indefinite-lived intangible assets: Trademarks N/A 72,607 — 72,607 72,607 — 72,607 Total intangible assets $ 158,292 $ ( 35,842 ) $ 122,450 $ 167,293 $ ( 30,118 ) $ 137,175 Amortization expense w as $ 2,736 and $ 8,576 , for the three and nine months ended September 30, 2023 , respectively, and $ 3,100 and $ 8,505 for the three and nine months ended September 30, 2022, respectively. During the nine months ended September 30, 2023, the Company recorded a write down of franchise agreements, net of reacquired franchise rights, in the amount of $ 7,238 in connection with the acquisition of 14 Rumble studios as discussed in Note 3, which is included within selling, general and administrative expenses. The anticipated future amortization expense of intangible assets is as follows: Amount Remainder of 2023 $ 2,718 2024 10,379 2025 9,729 2026 6,618 2027 5,288 Thereafter 15,111 Total $ 49,843 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 8 – 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 “Credit Agreement”), which consists 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 Credit Agreement are guaranteed by XPO Holdings and certain of the Company’s material subsidiaries and are secured by substantially all of the assets of XPO Holdings and certain of the Company’s material subsidiaries. Under the Credit Agreement, the Company is 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 bear 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 Credit Agreement per the fifth amendment discussed below), plus a margin of 6.50 % or (b) the Reference Rate (as defined in the Credit Agreement) plus a margin of 5.50 % ( 12.05 % at September 30, 2023). The Credit Agreement also contains mandatory prepayments of the Term Loans with: (i) 50 % of XPO Holdings’ and its subsidiaries’ Excess Cash Flow (as defined in the 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. Unless agreed in advance, a ll voluntary prepayments and certain mandatory prepayments of the Term Loan made (i) on or prior to the first anniversary of the closing date are subject to a 2.0 % premium on the principal amount of such prepayment and (ii) after the first anniversary of the closing date and on or prior to the second anniversary of the closing date are subject to a 0.50 % premium on the principal amount of such prepayment. Otherwise, the Term Loans may be paid without premium or penalty, other than customary breakage costs with respect to SOFR Term Loans. The Credit Agreement contains customary affirmative and negative covenants, including, among other things: (i) to maintain certain total leverage ratios, liquidity levels and EBITDA levels; (ii) to use the proceeds of borrowings only for certain specified purposes; (iii) to refrain from entering into certain agreements outside of the ordinary course of business, including with respect to consolidation or mergers; (iv) restricting further indebtedness or liens; (v) restricting certain transactions with affiliates; (vi) restricting investments; (vii) restricting prepayments of subordinated indebtedness; (viii) restricting certain payments, including certain payments to affiliates or equity holders and distributions to equity holders; and (ix) restricting the issuance of equity. As of September 30, 2023, the Company was in compliance with these covenants. The Credit Agreement also contains customary events of default, which could result in acceleration of amounts due under the Credit Agreement. Such events of default include, subject to the grace periods specified therein, failure to pay principal or interest when due, failure to satisfy or comply with covenants, a change of control, the imposition of certain judgments and the invalidation of liens the Company has granted. On October 8, 2021, the Company entered into an amendment (the “ Amendment ” ) to the Credit Agreement. The Amendment provides for, among other things, additional Term Loans in an aggregate principal amount of $ 38,000 (the “2021 Incremental Term Loan”), the proceeds of which were used to fund the BFT acquisition and the payment of fees, costs and expenses related to the Amendment. The Amendment also (i) increased the amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the 2021 Incremental Term Loan) commencing on December 31, 2021 and (ii) amended the amount of the prepayment premium applicable in the event the 2021 Incremental Term Loan is prepaid within two years of the effective date of the Amendment. On September 30, 2022, the Company entered into a third amendment (the “Third Amendment ” ) to the Credit Agreement. The Third Amendment provides for, among other things, additional Term Loans in an aggregate principal amount of $ 7,500 (the “2022 Incremental Term Loan”), the proceeds of which were used for the acquisition of BodyFit trademark and general corporate purposes, including funding working capital and the payment of fees, costs and expenses related to the Third Amendment. The Third Amendment also (i) increased the amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the 2022 Incremental Term Loan) commencing on December 31, 2022 to $ 759 and (ii) amended the amount of the prepayment premium applicable in the event the 2022 Incremental Term Loan is prepaid within two years of the effective date of the Third Amendment. On January 9, 2023, the Company entered into a fourth amendment (the "Fourth Amendment") to the Credit Agreement. The Fourth Amendment provides for, among other things, additional Term Loans in an aggregate principal amount of $ 130,000 (the "January 2023 Incremental Term Loan"), the proceeds of which were used to fund the Repurchase Transactions (see Note 11) and the payment of fees, costs and expenses related to the Amendment and the Repurchase Transactions. The Fourth Amendment also (i) increased the amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the January 2023 Incremental Term Loan) to $ 1,065 commencing on June 30, 2023 and (ii) amended the amount of the prepayment premium applicable in the event the January 2023 Incremental Term Loan is prepaid. In connection with the Fourth Amendment, the Company wrote off a pro rata portion of debt issuance costs related to the Term Loans aggregating $ 265 , which was included in interest expense for the nine months ended September 30, 2023. On August 3, 2023, the Company entered into a fifth amendment (the "Fifth Amendment") to the Credit Agreement. The Fifth Amendment provides for, among other things, additional Term Loans in an aggregate principal amount of $ 65,000 (the "August 2023 Incremental Term Loan"), the proceeds of which were used for funding the accelerated share repurchase program (see Note 12); the payment of fees, costs and expenses related to the Fifth Amendment; and general corporate purposes. The Fifth Amendment also (i) increased the amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the August 2023 Incremental Term Loan) to $ 1,190 commencing on September 30, 2023 and (ii) replaces the benchmark interest rate based on the LIBOR rate (and related LIBOR-based mechanics) applicable to the loans under the Credit Agreement with a benchmark interest rate based on the forward-looking Term SOFR (and related Term SOFR-based mechanics). In connection with the Fifth Amendment, the Company wrote off a pro rata portion of debt issuance costs related to the Term Loans aggregating $ 84 , which was included in interest expense for the three and nine months ended September 30, 2023. The Company incurred debt issuance costs of $ 411 and $ 49 for the nine months ended September 30, 2023 and 2022, respectively. Debt issuance cost amortization and write off amounted to $ 119 and $ 416 f or the three and nine months ended September 30, 2023 , respectively, and $ 30 and $ 94 for the three and nine months ended September 30, 2022, respectively. Unamortized debt issuance costs as of September 30, 2023 and December 31, 2022, were $ 265 and $ 270 , respectively, and are presented as a reduction to long-term debt in the condensed consolidated balance sheets. Unamortized original issue discount as of September 30, 2023 and December 31, 2022, was $ 5,196 and $ 1,378 , r espectively, and is presented as a reduction to long-term debt in the condensed consolidated balance sheets. Principal payments on outstanding balances of long-term debt as of September 30, 2023 were as follows: Amount Remainder of 2023 $ 1,190 2024 4,760 2025 323,758 Total $ 329,708 The carrying value of the Company’s long-term debt approximated fair value as of September 30, 2023 and December 31, 2022 , due to the variable interest rate, which is a Level 2 input, or proximity of debt issuance date to the balance sheet date. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 9 – 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 exercise of lease renewal options is at the Company's sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and lease payment obligation, respectively. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. When readily determinable, the Company uses the rate implicit in the lease contract in determining the present value of lease payments. If the implicit rate is not provided, the Company uses its incremental borrowing rate based on information available at the lease commencement date, including the lease term. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company lease terms may include options to extend or terminate the lease. Currently, it is not reasonably certain that the Company will exercise those options and therefore, the Company utilized the initial, noncancelable, lease term to calculate the lease assets and corresponding liabilities for all leases. The Company has certain insignificant short-term leases with an initial term of twelve months or less that are not recorded in the condensed consolidated balance sheets. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company applied the practical expedient as an accounting policy for classes of underlying assets that have fixed payments for non-lease components, to not separate non-lease components from lease components and instead to account for them together as a single lease component, which increases the amount of lease assets and corresponding liabilities. ROU assets from operating leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment , and are reviewed for impairment when indicators of impairment are present. ASC 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 estimated what market participants would pay to lease the assets assuming the highest and best use in the assets' current forms. During the three and nine months ended September 30, 2023, the Company recognized ROU asset impairment charges of $ 92 , r elated to studio exits in conjunction with its restructuring plan (see Note 17). The impairment charges were recorded as selling, general and administrative expenses in the condensed consolidated statements of operations. Supplemental balance sheet information related to leases are summarized as follows: Operating leases Balance Sheet Location September 30, December 31, 2022 ROU assets, net (1) Right-of-use assets $ 77,353 $ 30,079 Lease liabilities, short-term Other current liabilities $ 12,975 $ 3,786 Lease liabilities, long-term Lease liability $ 74,678 $ 30,583 (1) Includes impact of write off of abandoned right-of-use assets of $ 5,122 and impairment charge of $ 92 related to the restructuring plan. See Note 17 for additional information. Components of lease expense during the three and nine months ended September 30, 2023 and 2022, are summarized as follows: Three Months Ended September 30, 2023 2022 Third-party leases Total Related-party lease Third-party leases Total Operating lease costs $ 4,663 $ 4,663 $ 80 $ 983 $ 1,063 Variable lease costs 589 589 — 207 207 Short-term lease costs — — — — — Total $ 5,252 $ 5,252 $ 80 $ 1,190 $ 1,270 Nine Months Ended September 30, 2023 2022 Third-party leases Total Related-party lease Third-party leases Total Operating lease costs $ 9,990 $ 9,990 $ 239 $ 2,513 $ 2,752 Variable lease costs 1,354 1,354 — 594 594 Short-term lease costs — — — 108 108 Total $ 11,344 $ 11,344 $ 239 $ 3,215 $ 3,454 Supplemental cash flow information related to operating leases during the three and nine months ended September 30, 2023 and 2022, are summarized as follows: Three Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 5,576 $ 1,038 Lease liabilities arising from new ROU assets $ 4,011 $ 10,305 Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 10,356 $ 2,783 Lease liabilities arising from new ROU assets $ 66,175 $ 10,305 Other information related to leases is summarized as follows: September 30, 2023 December 31, 2022 Weighted average remaining lease term (years) 6.7 7.5 Weighted average discount rate 8.7 % 8.8 % Maturities of lease liabilities as of September 30, 2023 are summarized as follows: Amount Remainder of 2023 $ 7,796 2024 16,654 2025 17,373 2026 17,523 2027 16,712 Thereafter 41,798 Total future lease payments 117,856 Less: imputed interest 30,203 Total $ 87,653 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 – Related Party Transactions The Company has numerous transactions with the pre-IPO Member and pre-IPO Parent and its affiliates. The significant related party transactions consist of borrowings from and payments to the Member and other related parties under common control of the Parent. In March 2021, the Company recorded a distribution to the Parent of $ 10,600 , which the Parent used to fund a note payable under a debt financing obligation in connection with the acquisition of Rumble. The Company earned interest at the rate of 11 % per annum on the receivable from the Parent. In connection with the Reorganization Transactions, the Parent merged with and into the Member. XPO Inc. recorded $ 10,600 receivable from shareholder, as the Rumble Seller is a shareholder of XPO Inc., for the debt financing provided to the Rumble Seller. In July 2022, the Company entered into a settlement agreement with the Rumble Sellers to resolve disputes related to the acquisition and related agreements. Under the terms of the settlement, the Company will prospectively reduce the interest rate on the debt financing provided to the Rumble Sellers from 11 % per annum to 7.5 % per annum if payment is in cash or 10 % per annum if payment is in payment in kind and extend the maturity date of the debt financing. In 2022, the Rumble Sellers borrowed an additional $ 5,050 under the debt financing agreement which was recorded as receivable from shareholder within equity. In January and April 2023, the Rumble Sellers borrowed an additional $ 3,100 and $ 1,300 , respectively, under the debt financing agreement which were recorded as receivable from shareholder within equity. During the three and nine months ended September 30, 2023, the Company record ed $ 0 and $ 871 of interest in kind, respectively, which was recorded as an increase to receivable from shareholder within equity. During the nine months ended September 30, 2023 , the Company received $ 8,062 cash as partial payment for the receivable from shareholder. In September 2019, the Company entered into a five-year building lease agreement, expiring August 31, 2024 , with Von Karman Production LLC, which is owned by the Company’s Chief Executive Officer. Pursuant to the lease, the Company was obligated to pay monthly rent of $ 25 for the initial twelve months of the lease term with subsequent 3 % annual rent increa ses. The Company recorded expense related to this lease of $ 80 and $ 239 in the three and nine months ended September 30, 2022. In September 2022, the Company's Chief Executive Officer sold the building to an unaffiliated third party. The Company entered into a building lease agreement with the new owner. In December 2022, the Company entered into an agreement with the former owner of Row House, pursuant to which contingent consideration relating to the 2017 acquisition of Row House was settled in exchange for the issuance of 105 RSUs, which vest in full on the fourth anniversary of the grant date. As a result of the agreement, the Company recorded a reduction to the contingent consideration liability of $ 1,220 with an offsetting increase in additional paid-in capital and reclassified the former owner's outstanding note receivable of $ 1,834 to additional paid-in capital. In addition, pursuant to the agreement, the Company issued a four-year multi-tranche term loan with an option to borrow up to $ 20 per month in the aggregate principal amount of $ 960 bearing interest of 8.5 % per annum, which was recorded as a liability and offsetting reduction in additional paid-in capital. The outstanding receivable from shareholder and the multi-tranche term loan are collateralized by 75 shares of Class B common stock held by the former owner, which were reclassified to treasury stock, and by the 105 RSUs. As of September 30, 2023 , the former owner of Row House borrowed $ 240 , which was recorded as a reduction to liability. In March 2023, Spartan Fitness Holdings, LLC (“Spartan Fitness”), which currently owns and operates 69 Club Pilates studios, entered into a unit purchase agreement with Snapdragon Spartan Investco LP (the “Spartan SPV”), a special purpose vehicle controlled and managed by a member of the Company’s board of directors, pursuant to which Spartan SPV agreed to invest in the equity of Spartan Fitness. In addition, the same member of the Company’s board of directors also invested as a limited partner in the Spartan SPV. Spartan Fitness intends to use the investment from Spartan SPV to fund expansion of Club Pilates studios, among other concepts. Spartan Fitness also owns the rights to 80 Club Pilates licenses to open additional new units. The Company recorded franchise and marketing fund revenue aggregating $ 1,368 and $ 4,380 , during the three and nine months ended September 30, 2023, respectively, from studios owned by Spartan Fitness. The Company earns revenues and has accounts receivable from franchisees who are also officers of the Company. Revenues from these affiliates, primarily related to franchise revenue, marketing fund revenue, package and memberships revenue and merchandise revenue, wer e $ 126 and $ 396 for the three and nine months ended September 30, 2023 , respectively, and $ 679 and $ 2,018 for the three and nine months ended September 30, 2022, respectively. Included in accounts receivable as of September 30, 2023 and December 31, 2022, is $ 2 an d $ 4 , respectively, for such sales. In August 2023, the Company received payments from an officer and a director of the Company totaling $ 516 related to disgorgement of short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Company recognized these proceeds as a capital contribution from stockholders and the amounts were recorded as increases to additional paid-in capital on the condensed consolidated balance sheets. |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock | 9 Months Ended |
Sep. 30, 2023 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Preferred Stock | Note 11 – Redeemable Convertible Preferred Stock On July 23, 2021, the Company issued and sold in a private placement 200 newly issued shares of Series A-1 Convertible Preferred Stock, par value $ 0.0001 per share (the “Convertible Preferred”), for aggregate cash proceeds of $ 200,000 , before deduction for offering costs. Holders of shares of Convertible Preferred are entitled to quarterly coupon payments at the rate of 6.50 % of the fixed liquidation preference per share, initially $ 1,000 per share. In the event the quarterly preferential coupon is not paid in cash, the fixed liquidation preference automatically increases at the Paid-in-Kind rate of 7.50 %. The Convertible Preferred has an initial conversion price equal to $ 14.40 per share, is mandatorily convertible in certain circumstances and is redeemable at the option of the holder beginning on the date that is eight years from the IPO or upon change of control. At issuance, the Company assessed the Convertible Preferred for any embedded derivatives. The Company determined that the Convertible Preferred represented an equity host under ASC Topic 815, Derivatives and Hedging . The Company’s analysis was based on consideration of all stated and implied substantive terms and features of the hybrid financial instrument and weighing those terms and features on the basis of the relevant facts and circumstances. Certain embedded features in the Convertible Preferred require bifurcation. However, the fair value of such embedded features was immaterial upon issuance and as of September 30, 2023. The Convertible Preferred ranks senior to the Company’s common stock with respect to the payment of dividends and distribution of assets upon liquidation, dissolution and winding up. It is entitled to receive any dividends or distributions paid in respect of the common stock on an as-converted basis and has no stated maturity and will remain outstanding indefinitely unless converted into common stock or repurchased by the Company. Series A preferred stock will vote on an as-converted basis with the Class A and Class B common stock and will have certain rights to appoint additional directors, including up to a majority of the Company’s board of directors, under certain limited circumstances relating to an event of default or the Company’s failure to repay amounts due to the Convertible Preferred holders upon a redemption. Shares of Series A-1 preferred stock are non-voting; however, any shares of Series A-1 preferred stock issued to any of the lenders party to the Credit Agreement will convert on a one-to-one basis to shares of Series A preferred stock when permitted under relevant antitrust restrictions. At any time after July 23, 2029, upon a sale of the Company, or at any time after the occurrence and continuance of an event of default, holders of the Convertible Preferred have the right to require the Company to redeem all, but not less than all, of the Preferred shares then outstanding at a redemption price in cash equal to the greater of (i) the fair market value per share of Preferred Stock (based on the average volume-weighted average price per share of Class A common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the redemption notice), and (ii) the fixed liquidation preference, plus accrued and unpaid dividends. The Convertible Preferred is recorded as mezzanine equity (temporary equity) on the condensed consolidated balance sheets because it is not mandatorily redeemable but does contain a redemption feature at the option of the Preferred holders that is considered not solely within the Company’s control. On January 9, 2023, pursuant to a preferred stock repurchase agreement (the “Repurchase Agreement”) between the Company and certain holders of the Convertible Preferred, the Company repurchased 85 shares of Convertible Preferred for an aggregate payment of $ 130,766 . The excess of fair market value of $ 12,679 over the consideration transferred was treated as deemed contribution and resulted in a decrease to accumulated deficit and was included in the calculation of loss per share. At September 30, 2023 and December 31, 2022, the Company recognized the preferred maximum redemption value of $ 130,304 and $ 308,075 , respectively, which is the maximum redemption value on the earliest redemption date based on fair market value per share of Convertible Preferred (based on the average volume-weighted average price per share of Class A common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the redemption notice and 115 and 200 outstanding shares of Convertible Preferred at September 30, 2023 and December 31, 2022, respectively). The recording of the preferred maximum redemption value was treated as deemed contribution, which was included in the calculation of earnings (loss) per share and resulted in a net increase of $ 34,326 and $ 19,794 to additional paid-in-capital for the nine months ended September 30, 2023 and 2022 , respectively. |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholder's Equity (Deficit) | Note 12 – Stockholder's Equity (Deficit) Common stock – In February 2023, the Company entered into an underwriting agreement with certain existing stockholders, affiliates of H&W Investco and our Chief Executive Officer (collectively the “Selling Stockholders” ) and certain underwriters named therein, pursuant to which the Selling Stockholders sold an aggregate of 5,000 shares of Class A common stock in a secondary public offering at a public offering price of $ 24.50 per share. All of the shares sold in this offering were offered by the Selling Stockholders. In addition, the Selling Stockholders granted the underwriters a 30-day option to purchase up to an additional 750 shares of the Company's Class A common stock, which was fully exercised on February 15, 2023. The shares sold in the offering consisted of (i) 2,276 existing shares of Class A common stock and (ii) 3,474 newly-issued shares of Class A common stock issued in connection with the exchange of LLC units held by the Selling Stockholders. Simultaneously, 3,474 shares of Class B common stock were surrendered by the Selling Stockholders and canceled. The Company did not receive any proceeds from the sale of shares of Class A common stock offered by the Selling Stockholders. Additionally, during the three and nine months ended September 30, 2023, pursuant to the Amended Limited Liability Company Agreement of XPO Holdings (“Amended LLC Agreement”), certain Continuing Pre-IPO LLC Members exchanged their LLC units for 27 and 1,620 sh ares of Class A common stock on a one-for-one basis, respectively. Noncontrolling interests – Following the IPO, XPO Inc. is the sole managing member of XPO LLC and, as a result, consolidates the financial results of XPO LLC. The Company reported noncontrolling interests representing the economic interests in XPO LLC held by the Continuing Pre-IPO LLC Members. Under the Amended LLC agreement, the Continuing Pre-IPO LLC Members are able to exchange their LLC Units for shares of Class A common stock on a one-for-one basis (simultaneously cancelling an equal number of shares of Class B common stock of the exchanging member), or at the option of the Company for cash. In December 2021, the Company and the Continuing Pre-IPO LLC Members amended the LLC agreement of XPO Holdings, removing the redemption option in cash, except to the extent that the cash proceeds to be used to make the redemption in cash are immediately available and were directly raised from a secondary offering of the Company's equity securities. During 2023 and 2022, the Company experienced a change in noncontrolling interests ownership due to the conversion of Class B to Class A shares and as such, has rebalanced the related noncontrolling interests balance. The Company calculated the rebalancing based on the net assets of XPO LLC, after considering the preferred shareholders' claim on the net assets of XPO LLC. The Company used the liquidation value of the preferred shares for such rebalancing. The following table summarizes the ownership of XPO LLC as of September 30, 2023: Owner Units Owned Ownership percentage XPO Inc. 31,477,165 66 % Noncontrolling interests 16,566,027 34 % Total 48,043,192 100 % Accelerated Share Repurchase program – On August 1, 2023, the Company's board of directors approved a $ 50,000 accelerated share repurchase program (the "ASR Program") to repurchase shares of the Company's Class A common stock. The Company accounted for the ASR Program as two separate transactions, a repurchase of the Company’s Class A common stock and an equity-linked contract indexed to the Company’s Class A common stock that met certain accounting criteria for classification in stockholders' equity. Under the ASR Program, the Company paid a fixed amount of $ 50,000 on August 9, 2023, to a third-party financial institution and received an initial delivery of 2,010 shares of the Company’s Class A common stock, which were retired immediately. The initial delivery of shares of the Company’s Class A common stock represented approximately 80 % of the fixed amount paid of $ 50,000 , which was based on the share price of the Company's Class A common stock on the date of ASR Program execution. The payment of $ 50,000 was recorded as reductions to stockholders' equity, consisting of a $ 40,000 decrease in additional paid-in capital, which reflects the value of the initial shares received and immediately retired, and a $ 10,000 decrease in additional paid-in capital, which reflects the value of the Class A common stock that remains to be delivered by the financial institution pending final settlement. Under the ASR Program, the Company also incurred $ 439 in associated costs, consisting primarily of legal fees and a 1 % excise tax, which were recorded as a decrease in additional paid-in capital on the Company’s condensed consolidated statements of stockholders’ equity. The final number of shares to be received by the Company will be based on the daily volume-weighted average stock price of the Company’s Class A common stock during the duration of the ASR Program, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Program agreement. At settlement, under certain circumstances, the financial institution may be required to deliver additional shares of Class A common stock to the Company, or under certain circumstances, the Company may be required to deliver shares of Class A common stock or to make a cash payment, at its election, to the financial institution. The final settlement under the ASR Program is scheduled to occur in the fourth quarter of 2023, as set forth in the ASR Program agreement (see Note 18). |
Equity Compensation
Equity Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Compensation | Note 13 – Equity Compensation Profit interest units – Under the pre-IPO plan, the Parent granted time-based and performance-based profit interest units to certain key employees of the Company and its subsidiaries. Subsequent to the IPO, the profit interest units converted to Class B shares. Stock-based compensation related to profit interest units increases noncontrolling interests. The performance-based grants were awarded with vesting conditions based on performance targets connected to the value received from change of control of the Parent and were subject to certain forfeiture provisions prior to vesting. In June 2021, the Parent amended previously issued profit interest units with performance-based vesting conditions that were based on performance targets connected to the value received from change of control of the Parent. The vesting condition, as amended, was based on the average trading price of XPO Inc. common stock exceeding the IPO threshold price, as defined in the amendment. The amendment of these units was treated as a modification with the compensation cost of the amended units of $ 18,127 recognized over the new estimated service period through November 2022. In March 2022, the units vested when the average trading price condition was met. The Company recognized $ 12,003 of expense during the nine months ended September 30, 2022 . The fair value of the time-based grants was recognized as compensation expense over the vesting period (generally four years ) and was calculated using a Black-Scholes option-pricing model. The Company recognized expense of $ 1 and $ 18 during the three and nine months ended September 30, 2023 , respectively, and $ 24 and $ 171 during the three and nine months ended September 30, 2022, respectively, which was included within selling, general and administrative expenses. At September 30, 2023, the Company had $ 4 of unrecognized compensation expense. The unrecognized compensation expense is expected to be recognized over a weighted average period of approximately 0.86 years for the time-based grants. Liability classified restricted stock units – In November 2021, the Company granted restricted stock unit ("RSU") awards with performance conditions of meeting certain EBITDA targets through the year ending December 31, 2024. The awards were granted with fixed dollar valuation and the number of shares granted depends on the trading price at the closing date of the period in which the EBITDA target is met. As such, these awards are classified as a liability. Management performs a regular assessment to determine the likelihood of meeting the targets and adjusts the expense recognized if necessary. During the first quarter of 2023, the performance condition of an award with a total fixed dollar value of $ 2,250 was met and 101 unit s were earned and issued as shares. As of September 30, 2023, management believes that the EBITDA targets for the remaining RSU awards will be achieved and is accordingly recognizing expense ratably over the vesting period. The Company recognized expense of $ 444 and $ 1,332 during the three and nine months ended September 30, 2023 , respectively, and $ 623 and $ 1,865 during the three and nine months ended September 30, 2022, respectively. At September 30, 2023, the Company had $ 2,265 of unrecognized expense relating to these grants. Equity classified restricted stock units – The following table summarizes activity for RSUs for the nine months ended September 30, 2023: Shares Weighted Average Outstanding at December 31, 2022 2,102 $ 18.25 Issued 342 24.75 Vested ( 1,007 ) 17.31 Forfeited, expired, or canceled ( 54 ) 21.20 Outstanding at September 30, 2023 1,383 $ 18.77 RSUs are valued at the Company’s closing stock price on the date of grant, and generally vest over a one - to four-year period. Compensation expense for RSUs is recognized on a straight-line basis. During 2022, included in the RSUs described above, the Company granted 171 performance-based RSUs at a weighted average grant-date closing price of $ 18.25 per share. The performance-based RSUs are recognized as expense on a straight-line basis over the vesting period of three to four years. Management performs a regular assessment to determine the likelihood of meeting the related metrics and adjusts the expense recognized if necessary. During 2022, the performance metrics related to 18 performance-based RSUs fell below the minimum threshold and as a result, the Company cancelled these previously granted performance-based RSUs. During the first quarter of 2023, 36 units were earned and issued as shares. As of September 30, 2023, the achievement of remaining performance metrics is considered probable. Total compensation expense recognized for RSUs was $ 3,091 and $ 14,297 d uring the three and nine months ended September 30, 2023 , respectively, and $ 3,597 and $ 9,881 during the three and nine months ended September 30, 2022, respectively. Due to the Company's full valuation allowance on its net deferred tax assets, there is no income tax benefit on the unvested RSUs. The Company recognized an income tax benefit (expense) on vested RSUs of ($ 51 ) and $ 787 during the three and nine months ended September 30, 2023 , respectively, and $ 388 and $ 434 during the three and nine months ended September 30, 2022, respectively. At September 30, 2023, the Company had $ 22,944 of total unamortized compensation expense related to non-vested RSUs. That cost is expected to be recognized over a weighted-average period of 2.17 years. |
Income Taxes and Tax Receivable
Income Taxes and Tax Receivable Agreement | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Income Taxes and Tax Credits [Abstract] | |
Income Taxes and Tax Receivable Agreement | Note 14 – Income Taxes and Tax Receivable Agreement The Company is the managing member of XPO Holdings and, as a result, consolidates the financial results of XPO Holdings in the condensed consolidated financial statements. XPO Holdings is a pass-through entity for U.S. federal and most applicable state and local income tax purposes following a corporate reorganization effected in connection with the IPO. As an entity classified as a partnership for tax purposes, XPO Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by XPO Holdings is passed through to and included in the taxable income or loss of its members, including the Company. The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from XPO Holdings, based on its 66 % economic interest in XPO Holdings. The provision for income taxes differs from the amount of income tax computed by applying the applicable U.S. statutory federal income tax rate of 21 % to income (loss) before income taxes due to XPO Holdings’ pass-through structure for U.S. income tax purposes, state taxes, preferred stock dividends, non-deductible expenses, change in fair value of contingent consideration and the valuation allowance against the deferr ed tax asset. The effective tax rate for the three and nine months ended September 30, 2023 , is ( 4.0 %) and 2.8 %, respectively, and 2.3 % and ( 5.1 %) for the three and nine months ended September 30, 2022, respectively. During the three and nine months ended September 30, 2023 the Company recognized income tax expense of $ 202 and $ 212 , respectively, on its share of pre-tax book income, exclusive of the noncontrolling interest of 34 %. During the three and nine months ended September 30, 2022 , the Company recognized income tax benefit of $ 308 and $ 158 on its share of pre-tax book income, exclusive of the noncontrolling interest of 44 %. As of September 30, 2023, management determined based on applicable accounting standards and the weight of all available evidence, it was not more likely than not (“MLTN”) that the Company will generate sufficient taxable income to realize its deferred tax assets including the difference in tax basis in excess of the financial reporting value for its investment in XPO Holdings. Consequently, the Company has established a full valuation allowance against its deferred tax assets as of September 30, 2023. In the event that management subsequently determines that it is MLTN that the Company will realize its deferred tax assets in the future over the recorded amount, a decrease to the valuation allowance will be made, which will reduce the provision for income taxes. The Company is subject to taxation and files income tax returns in the United States federal jurisdiction, many state and foreign jurisdictions. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. The Company’s tax returns remain open for examination in the U.S. for years 2018 through 2022. The Company's foreign subsidiaries are generally subject to examination for four years following the year in which the tax obligation originated. The years subject to audit may be extended if the entity substantially understates corporate income tax. The Company does not expect a significant change in unrecognized tax benefits during the next 12 months. Tax Receivable Agreement – In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA”) pursuant to which the Company is generally required to pay to the other parties thereto in the aggregate 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realizes as a result of (i) certain favorable tax attributes acquired from the Blocker Companies in the Mergers (including net operating losses and the Blocker Companies’ allocable share of existing tax basis), (ii) increases in the Company's allocable share of existing tax basis and tax basis adjustments that resulted or may result from (x) the IPO Contribution and the Class A-5 Unit Redemption, (y) future taxable redemptions and exchanges of LLC Units by Continuing Pre-IPO LLC Members and (z) certain payments made under the TRA, and (iii) deductions attributable to imputed interest pursuant to the TRA (the “TRA Payments”). The Company expects to benefit from the remaining 15 % of any tax benefits that it may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in XPO Holdings or the Company. To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid. The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Company generates each year and the tax rate then applicable. The Company calculates the liability under the TRA using a complex TRA model, which includes an assumption related to the fair market value of assets. The payment obligations under the TRA are obligations of XPO Inc. and not of XPO Holdings. Payments are generally due under the TRA within a specified period of time following the filing of the Company’s tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of LIBOR (or a replacement rate) plus 100 basis points from the due date (without extensions) of such tax return. The TRA provides that if (i) there is a material breach of any material obligations under the TRA; or (ii) the Company elects an early termination of the TRA, then the TRA will terminate and the Company's obligations, or the Company's successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any LLC Units that have not been exchanged are deemed exchanged for the fair market value of the Company's Class A common stock at the time of termination. The TRA also provides that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, the TRA will not terminate but the Company’s or the Company’s successor’s obligations with respect to tax benefits would be based on certain assumptions, including that the Company or the Company’s successor would have sufficient taxable income to fully utilize the increased tax deductions and tax basis and other benefits covered by the TRA. As of September 30, 2023 , the Company has concluded, based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject to the TRA would not be realized. Therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such deferred tax assets. Except for $ 2,755 and $ 1,144 of the current and non-current portions of the TRA, respectively, $ 76,691 of the TRA liability was not recorded as of September 30, 2023 . If utilization of the deferred tax asset subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note 15 – Earnings (Loss) Per Share Basic earnings (loss) per share has been calculated by dividing net income (loss) attributable to Class A common stockholders by the weighted average number of shares of Class A common stock outstanding for the period. Diluted earnings (loss) per share of Class A common stock has been computed by dividing net income attributable to XPO Inc. by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. Because a portion of XPO Holdings is owned by parties other than the Company, those parties participate in earnings and losses at the XPO Holdings level. Additionally, given the organizational structure of XPO Inc, a parallel capital structure exists at XPO Holdings such that the shares of XPO Holdings are redeemable on a one-to-one basis with the XPO Inc. shares. In order to maintain the one-to-one ratio, the preferred stock issued at the XPO Inc. level also exists at the XPO Holdings level. The Company applies the two-class method to allocate undistributed earnings or losses of XPO Holdings, and in doing so, determines the portion of XPO Holdings’ income or loss that is attributable to the Company and accordingly reflected in income or loss available to common stockholders in the Company’s calculation of basic earnings (loss) per share. Due to the attribution of only a portion of the preferred stock dividends issued by XPO Holdings to the Company in first determining basic earnings (loss) per share at the subsidiary level, the amounts presented as net income (loss) attributable to noncontrolling interests and net income (loss) attributable to XPO Inc. presented below will not agree to the amounts presented on the condensed consolidated statement of operations. Diluted earnings (loss) per share attributable to common stockholders adjusts the basic earnings or losses per share attributable to common stockholders and the weighted average number of shares of Class A common stock outstanding to give effect to potentially dilutive securities. The potential dilutive impact of redeemable Convertible Preferred shares and Class B common stock is evaluated using the as-if-converted method. The potential dilutive effects of Class B common stock were determined to be anti-dilutive for the three and nine months ended September 30, 2023 and were excluded from the computation of diluted earnings per share. Because the Company reported a net loss for the three months ended September 30, 2022, all potentially dilutive common stock equivalents are antidilutive and have been excluded from the calculation of diluted net loss per share. Weighted average shares of Class B common stock were 16,503 and 17,206 for the three and nine months ended September 30, 2023 , respectively, and 21,685 and 22,313 for the three and nine months ended September 30, 2022, respectively. The potentially dilutive impact of RSUs is calculated using the treasury stock method. The following table presents the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Numerator: Net income (loss) $ ( 5,183 ) $ ( 13,056 ) $ 7,362 $ 3,242 Less: net (income) loss attributable to noncontrolling interests ( 14,976 ) 33,271 ( 14,127 ) ( 6,295 ) Less: dividends on preferred shares ( 1,863 ) ( 3,250 ) ( 5,789 ) ( 9,750 ) Add: deemed contribution (dividend) 51,435 ( 57,096 ) 34,326 19,794 Add: deemed contribution from redemption of convertible preferred stock — — 12,679 — Net income (loss) attributable to XPO Inc. - basic 29,413 ( 40,131 ) 34,451 6,991 Add: net income (loss) attributable to non-controlling interests — — — 6,295 Add: dividends on preferred shares 1,863 — 5,789 9,750 Less: deemed (contribution) dividend ( 51,435 ) — ( 34,326 ) ( 19,794 ) Less: Deemed contribution from redemption of convertible preferred stock — — ( 12,679 ) - Net income (loss) attributable to XPO Inc. - diluted $ ( 20,159 ) $ ( 40,131 ) $ ( 6,765 ) $ 3,242 Denominator: Weighted average shares of Class A common stock outstanding - basic 32,260 26,156 32,025 24,782 Effect of dilutive securities: Rumble Class A common stock — — — 1,300 Restricted stock units — — — 539 Convertible preferred stock 7,963 — 7,963 13,889 Conversion of Class B common stock to Class A common stock — — — 22,313 Weighted average shares of Class A common stock outstanding - diluted 40,223 26,156 39,988 62,823 Net earnings (loss) per share attributable to Class A common stock - basic $ 0.91 $ ( 1.53 ) $ 1.08 $ 0.28 Net earnings (loss) per share attributable to Class A common stock - diluted $ ( 0.50 ) $ ( 1.53 ) $ ( 0.17 ) $ 0.05 Anti-dilutive shares excluded from diluted earnings (loss) per share of Class A common stock: Rumble Class A common stock — 1,300 — — Restricted stock units 1,342 2,121 1,342 — Conversion of Class B common stock to Class A common stock 16,492 21,651 16,492 — Convertible preferred stock — 13,889 — — Accelerated Purchase Program - final settlement 589 — 589 — Rumble contingent shares 2,024 2,024 2,024 2,024 Profits interests, time vesting 1 15 1 15 |
Contingencies and Litigation
Contingencies and Litigation | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Litigation | Note 16 – Contingencies and Litigation Litigation – In connection with the October 2021 acquisition of BFT, the Company agreed to indemnify the seller for certain claims and lawsuits against the seller that existed at the acquisition date. The claims and lawsuits relate to alleged patent and trademark infringements. Plaintiff alleges that plaintiff has suffered, and is likely to continue to suffer, loss and damage due to breach of the patents by the seller and is seeking damages or in the alternative an account of profits. The seller has filed a cross-claim alleging that the defendant’s two Australian patents are, and always have been, invalid and that they should be revoked. The Court held a trial in December 2020, and on February 14, 2022, the Court issued a decision holding that the plaintiff’s claims of infringement were invalid and that even if they were valid, the seller did not infringe upon these patents and trademarks. In addition, plaintiff has brought related claims for patent infringement against the seller in the United States District Court for Delaware. In November 2022, the Court ruled in favor of the seller on a motion for summary judgment. In April 2023, plaintiff dismissed their appeal of that ruling, concluding the matter. The Company is subject to normal and routine litigation brought by former or current employees, customers, franchisees, vendors, landlords or others. The Company intends to defend itself in any such matters. The Company believes that the ultimate determination of liability in connection with legal claims pending against it, if any, will not have a material adverse effect on its business, annual results of operations, liquidity or financial position; however, it is possible that the Company’s business, results of operations, liquidity or financial condition could be materially affected in a particular future reporting period by the unfavorable resolution of one or more matters or contingencies during such period. The Company accrued for estimated legal liabilities and has entered into certain settlement agreements to resolve legal disputes and recorde d $ 417 a nd $ 464 , which is included in accrued expenses in the condensed consolidated balance sheets, as of September 30, 2023 and December 31, 2022, respectively. Contingent consideration from acquisitions – In connection with the 2017 acquisition of Row House, the Company agreed to pay to the sellers 20 % of operational or change of control distributions, subject to distribution thresholds, until the date on which a change in control or liquidation of Row House occurs. The Company determines the estimated fair value using a discounted cash flow approach, giving consideration to the market valuation approach, which is a Level 3 measurement. Inputs used in the methodology primarily included sales forecasts, projected future cash flows and discount rate commensurate with the risk involved. During the three and nine months ended September 30, 2022 , the Company recorded an increase of $ 120 and $ 380 to contingent consideration, respectively, which was recorded as acquisition and transaction expenses. In December 2022, the Company entered into an agreement with the former owner of Row House (see Note 10), which settled the contingent consideration. As a result of the agreement, in December 2022, the Company recorded a reduction to the contingent consideration liability of $ 1,220 with an offsetting increase in additional paid-in capital. In connection with the Reorganization Transactions, the Parent merged with and into the Member. The Company recorded contingent consideration equal to the fair value of the shares issu ed in connection with the Rumble acquisition of $ 23,100 and $ 10,600 receivable from shareholder for debt financing provided to the Rumble Seller. The shares issued to the Rumble Seller are treated as a liability on the Company's balance sheet as they are subject to vesting conditions. The fair value of the contingent consideration is measured at estimated fair value using a Monte Carlo simulation analysis. During the three and nine months ended September 30, 2023 , the Company recorded a decrease to contingent consideration of $ 3,356 and $ 18,533 , respectively, which was recorded as acquisition and transaction income. During the three and nine months ended September 30, 2022 , the Company recorded an increase of $ 16,170 and a decrease of $ 6,030 to contingent consideration, respectively, which was recorded as acquisition and transaction expense (income). In November 2022, the contingency related to 1,300 shares of Class A common stock expired and the $ 27,850 contingent consideration related to those shares was reclassified to additional paid-in capital. At September 30, 2023 and December 31, 2022 , contingent consideration totals $ 9,157 and $ 27,690 , respectively, recorded as contingent consideration from acquisitions in the condensed consolidated balance sheets. In connection with the October 2021 acquisition of BFT, the Company agreed to pay contingent consideration to the seller consisting of quarterly cash payments based on the sales of the franchise system and equipment packages in the U.S. and Canada, as well as a percentage of royalties collected by the Company, provided that aggregate minimum payments of $ 5,000 AUD (approximately $ 3,694 USD based on the currency exchange rate as of the purchase date) are required to be paid to the seller for the two-year period ending December 31, 2023 and the aggregate amount of such payments for the two-year period ending December 31, 2023 is subject to a maximum of $ 14,000 AUD (approximately $ 10,342 USD based on the currency exchange rate as of the purchase date). At the acquisition date, the Company determined that the fair value of the estimated contingent consideration liability was $ 9,388 . The Company recorded additional contingent consideration o f $ 31 and $ 124 d uring the three and nine months ended September 30, 2023 , respectively, and $ 154 and $ 496 during the three and nine months ended September 30, 2022, respectively, which was recorded as interest expense. The Company recorded additional contingent consideration of $ 1,338 a nd $ 1,005 du ring the three and nine months ended September 30, 2023 , respectively, and $ 0 and ($ 141 ) during the three and nine months ended September 30, 2022, respectively, which was recorded as acquisition and transaction expense (income). In addition, the Company paid contingent consideration of $ 1,412 du ring the three and nine months ended September 30, 2023 and $ 0 and $ 1,336 during the three and nine months ended September 30, 2022, respectively. At September 30, 2023 and December 31, 2022, contingent consideration w as $ 1,266 and $ 2,203 recorded as accrued expenses, respectively, a nd $ 1,146 a nd $ 492 recorded as contingent consideration from acquisitions, respectively, in the condensed consolidated balance sheets. In addition, in connection with the October 2021 acquisition of BFT, the Company entered into a Master Franchise Agreement (“MFA”) with an affiliate of the Seller (the “Master Franchisee”), pursuant to which the Company granted the Master Franchisee the master franchise rights for the BFT TM brands in Australia, New Zealand and Singapore. In exchange, the Company will receive certain fees and royalties, including a percentage of the revenue generated by the Master Franchisee under the MFA. The MFA contains an option for the Company to repurchase the master franchise rights granted under the MFA in either 2023 or 2024 at a purchase price based on the Master Franchisee’s EBITDA. If the Company (or a designee of the Company) does not exercise the option pursuant to the terms of the MFA, then the Company might be required to pay a cancellation fee to the Master Franchisee which might be material to the Company. If the Master Franchisee rejects an offer to repurchase the franchise rights, then the cancellation fee is not required to be paid. Letter of credit – In July 2022, the Company issued a $ 750 standby letter of credit to a third-party financing company, who provides loans to the Company's qualified franchisees. The standby letter of credit is contingent upon the failure of franchisees to perform according to the terms of underlying contracts with the third party. The Company deposited cash in a restricted account as collateral for the standby letter of credit. The Company has determined the fair value of these guarantees at inception was not material, and as of September 30, 2023 and December 31, 2022, $ 150 an d $ 0 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively. Lease guarantees –The Company has guaranteed lease agreements for certain franchisees. The Company’s maximum obligation, as a result of its guarantees of leases, is approximately $ 3,102 as of September 30, 2023 and would only require payment upon default by the primary obligor. The Company has determined the fair value of these guarantees at inception is not material, and as of September 30, 2023 and December 31, 2022 , no accrual has been recorded for the Company’s potential obligation under its guaranty arrangement. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Note 17 – Restructuring In the third quarter of 2023, the Company began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve the Company’s 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 2023 and 2024. The Company expects to recognize additional restructuring charges throughout 2023 and 2024 totaling approximately $ 8,500 to $ 10,500 , for accelerated right-of-use asset amortization related to company-owned transition studios with a cease use date in the fourth quarter of 2023 and other restructuring charges. During the three and nine months ended September 30, 2023 , the Company recognized restructuring charges of $ 6,325 , primarily for accelerated amortization of right-of-use assets, loss on sale or disposal of assets, and other restructuring charges. All charges were recorded as selling, general and administrative expenses and costs of product revenue in the condensed consolidated statements of operations. The components of the restructuring charges are as follows: Three and Nine 2023 Write off of abandoned right-of-use assets (1) $ 5,214 Loss on sale or disposal of assets (2)(3) 633 Other restructuring costs (1) 478 Total restructuring charges $ 6,325 (1) These charges are recorded in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations. (2) Charges of $ 248 recorded in cost of product revenues and charges of $ 385 recorded in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations. (3) Loss on sale or disposal of assets represents net losses on sales or disposal of studio assets primarily related to studio property and equipment. The following table provides the components of and changes in the Company’s restructuring charges, included in accounts payable on the condensed consolidated balance sheets: September 30, 2023 Balance at December 31, 2022 $ — Charges incurred 478 Payments ( 476 ) Balance at September 30, 2023 $ 2 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18 – Subsequent Events On October 2, 2023, the final settlement of the Company's $ 50,000 ASR Program occurred, and the Company received an additional 589 shares of the Company's Class A common stock from the third-party financial institution. In total under the ASR Program, the Company repurchased and immediately retired 2,599 shares of Class A common stock. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | 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, 2022, 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 | 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 | 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. |
Segment and geographic Information | Segment and geographic information – T he Company operates in one reportable and operating segment. The Company genera ted $ 3,351 and $ 10,338 of revenue outside the United States during the three and nine months ended September 30, 2023 , respectively, and $ 3,104 and $ 9,060 during the three and nine months ended September 30, 2022, respectively. As of September 30, 2023 and December 31, 2022 , the Company did not have material assets located outside of the United States. |
Cash, cash equivalents and restricted cash | 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 has marketing fund restricted cash, which can only be used for activities that promote the Company’s brands. In July 2022, the Company issued a $ 750 standby letter of credit to a third-party financing company, who provides loans to the Company's qualified franchisees. The standby letter of credit is contingent upon the failure of franchisees to perform according to the terms of underlying contracts with the third party. The Company deposited cash in a restricted account as collateral for the standby letter of credit. In addition, the Company, as a guarantor, is required to recognize, at inception of the guaranty, a liability for the fair value of the obligation undertaken in issuing the guarantee. See Note 16 for further discussion of such obligations guaranteed. The Company's restricted cash consists of marketing fund restricted cash and guarantee of standby letter of credit. Restricted cash was $ 8,179 and $ 5,381 at September 30, 2023 and December 31, 2022 , respectively. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts – 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. 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. On a periodic basis, the Company evaluates its accounts receivable balance and establishes an allowance for doubtful accounts based on a number of factors, including evidence of the franchisee’s ability to comply with credit terms, economic conditions and historical receivables. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Credit loss | Credit Losses – Effective January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, which required the recognition of expected credit losses for accounts and notes receivable. The adoption of the new standard did not have a material impact on the Company's condensed consolidated financial statements as the expected credit loss model was not significantly different from the Company's prior policy and methodology for determining the allowance for doubtful accounts. For additional information refer to section below titled “Recently adopted accounting pronouncements.” The Company’s accounts and notes receivable are recorded at net realizable value, which includes an appropriate allowance for estimated credit losses. The estimate of credit losses is based upon historical bad debts, current receivable balances, age of receivable balances, the customer’s financial condition and current economic trends, all of which are subject to change. Actual uncollected amounts have historically been consistent with the Company’s expectations. The Company’s payment terms on its receivables from franchisees are generally 30 days . 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 January 1, 2023 $ 865 $ 719 $ 1,584 Bad debt expense recognized during the period 531 319 850 Write-off of uncollectible amounts ( 499 ) ( 71 ) ( 570 ) Balance at September 30, 2023 $ 897 $ 967 $ 1,864 |
Comprehensive income | 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 | 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, restricted cash, accounts receivable, notes receivable, accounts payable, accrued expenses and notes payable. 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. |
Redeemable convertible preferred stock | Redeemable convertible preferred stock – T he redeemable convertible preferred stock (the “Convertible Preferred”) becomes redeemable at the option of the holder as of a specific date unless an event that is not probable of occurring happens before that date. Therefore, the Company determined that it is probable that the Convertible Preferred will become redeemable based on the passage of time. The Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. |
Noncontrolling interests | Noncontrolling interests – Noncontrolling interests represent the economic interests of XPO LLC held by Class B common stockholders. Income or loss is attributed to the noncontrolling interests based on the weighted average LLC interests outstanding during the period. The noncontrolling interests' ownership percentage can fluctuate over time as the Class B common stockholders may elect to exchange their shares of Class B common stock for Class A common stock. |
Earnings (loss) per share | Earnings (loss) per share – Basic earnings (loss) per share is calculated by dividing the earnings (loss) attributable to Class A common stockholders by the number of weighted-average shares of Class A common stock outstanding. Shares of Class B common stock do not share in the earnings of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings (loss) per share of Class B common stock under the two-class method has not been presented. Diluted earnings per share adjusts the basic e arnings per share calculation for the potential dilutive impact of common shares such as equity awards using the treasury-stock method. Diluted earnings per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potentially dilutive common shares would have an anti-dilutive effect. Shares of Class B common stock are considered potentially dilutive shares of Class A common stock; however, in loss periods related amounts are excluded from the computation of diluted earnings per share of Class A common stock because the effect would be anti-dilutive under the if-converted and two-class methods. |
Income taxes | Income taxes – The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities (“DTAs” and “DTLs”) for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. The Company recognizes DTAs to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If the Company determines that it would be able to realize DTAs in the future in excess of the net recorded amount, an adjustment to the DTA valuation allowance would be made, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC Topic 740 on the basis of a two-step process in which the Company (1) determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company does not have any uncertain tax positions. The Company recognizes potential interest and penalties, if any, related to income tax matters in income tax expense. The Company did no t incur any interest or penalties for the three and nine months ended September 30, 2023 and 2022 . |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements – Credit Losses – In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326).” This standard provides a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses and applies to trade and notes receivables. The adoption of this accounting standard on January 1, 2023 did not have a material impact on the Company's condensed consolidated financial statements as the expected credit loss model was not significantly different from the prior policy and methodology for determining the allowance for doubtful accounts. For additional information refer to section above titled “Credit Losses.” Reference Rate Reform – In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” ("ASU 2020-04"). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the expected transition away from reference rates that are expected to be discontinued, such as London Interbank Offered Rate (“LIBOR”). ASU 2020-04 was effective upon issuance. In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” ("ASU 2022-06"). ASU 2022-06 defers the sunset date of ASC Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC Topic 848. ASU 2022-06 was effective upon issuance. The adoption of this accounting standard did not have a material impact on the Company's condensed consolidated financial statements. Business Combinations – In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” ("ASU 2021-08"). ASU 2021-08 primarily addresses the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amendment improves comparability by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. This results in better comparability for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years with early adoption permitted. The adoption of this accounting standard, effective January 1, 2023, did not have an impact on the Company's condensed consolidated financial statements. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements – The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Reconciliation of Activity Related to Accounts Receivable, Other Receivables and Notes Receivable Allowance for Credit Losses | 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 January 1, 2023 $ 865 $ 719 $ 1,584 Bad debt expense recognized during the period 531 319 850 Write-off of uncollectible amounts ( 499 ) ( 71 ) ( 570 ) Balance at September 30, 2023 $ 897 $ 967 $ 1,864 |
Summary of Accrued Expenses | Accrued expenses – Accrued expenses consisted of the following: September 30, December 31, 2023 2022 Accrued compensation $ 3,449 $ 4,611 Contingent consideration from acquisitions, current portion 1,266 2,203 Sales tax accruals 1,718 3,186 Legal accruals 417 464 Other accruals 6,539 1,831 Total accrued expenses $ 13,389 $ 12,295 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Studios | |
Business Acquisition [Line Items] | |
Summary of Aggregate Fair Values of the Assets Acquired And Liabilities Assumed | The following summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price allocation: Amount Accounts receivable $ 154 Inventories 98 Property and equipment 1,113 Right-of-use assets 42,016 Goodwill 4,133 Deferred revenue ( 3,269 ) Lease liabilities ( 44,244 ) Reduction to receivable from shareholder $ 1 The following summarizes the aggregate fair values of the assets acquired and liabilities assumed: Amount Property and equipment $ 19 Reacquired franchise rights 137 Total purchase price $ 156 |
Contract Liabilities and Cost_2
Contract Liabilities and Costs from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Changes in Franchise Development and Brand Fee Contract Liabilities | The following table reflects the change in franchise development and brand fee contract liabilities for the nine months ended September 30, 2023 . Franchise Brand fees Total Balance at December 31, 2022 $ 116,244 $ 6,641 $ 122,885 Revenue recognized that was included in deferred ( 12,025 ) ( 3,339 ) ( 15,364 ) Deferred revenue recorded as settlement in ( 1,278 ) — ( 1,278 ) Increase, excluding amounts recognized as revenue 21,354 714 22,068 Balance at September 30, 2023 $ 124,295 $ 4,016 $ 128,311 |
Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligation | 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 September 30, 2023. The expected future recognition period for deferred franchise 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 in Franchise Brand fees Total Remainder of 2023 $ 2,211 $ 1,536 $ 3,747 2024 10,199 1,652 11,851 2025 10,703 414 11,117 2026 12,002 414 12,416 2027 12,809 — 12,809 Thereafter 76,371 — 76,371 $ 124,295 $ 4,016 $ 128,311 |
Summary of Components of Deferred Revenue | The following table reflects the components of deferred revenue: September 30, December 31, 2023 2022 Franchise and area development fees $ 124,295 $ 116,244 Brand fees 4,016 6,641 Equipment and other 23,918 18,576 Total deferred revenue 152,229 141,461 Non-current portion of deferred revenue 115,229 109,465 Current portion of deferred revenue $ 37,000 $ 31,996 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment consisted of the following: September 30, December 31, 2023 2022 Furniture and equipment $ 4,307 $ 4,182 Computers and software 19,516 14,075 Vehicles 635 171 Leasehold improvements 8,606 7,533 Construction in progress 1,491 3,115 Less: accumulated depreciation ( 14,262 ) ( 10,552 ) Total property and equipment $ 20,293 $ 18,524 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following: September 30, 2023 December 31, 2022 Amortization Gross Accumulated Net Gross Accumulated Net Trademarks 10 $ 20,710 $ ( 3,969 ) $ 16,741 $ 21,110 $ ( 2,606 ) $ 18,504 Franchise agreements 7.5 – 10 57,700 ( 28,243 ) 29,457 69,100 ( 25,143 ) 43,957 Reacquired franchise rights 6.2 – 8 1,437 ( 62 ) 1,375 — — — Web design and domain 3 – 10 430 ( 279 ) 151 430 ( 196 ) 234 Deferred video production costs 3 5,408 ( 3,289 ) 2,119 4,046 ( 2,173 ) 1,873 Total definite-lived intangible assets 85,685 ( 35,842 ) 49,843 94,686 ( 30,118 ) 64,568 Indefinite-lived intangible assets: Trademarks N/A 72,607 — 72,607 72,607 — 72,607 Total intangible assets $ 158,292 $ ( 35,842 ) $ 122,450 $ 167,293 $ ( 30,118 ) $ 137,175 |
Schedule of Anticipated Future Amortization Expense of Intangible Assets | The anticipated future amortization expense of intangible assets is as follows: Amount Remainder of 2023 $ 2,718 2024 10,379 2025 9,729 2026 6,618 2027 5,288 Thereafter 15,111 Total $ 49,843 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Principal Payments on Outstanding Balances of Long-term Debt | Principal payments on outstanding balances of long-term debt as of September 30, 2023 were as follows: Amount Remainder of 2023 $ 1,190 2024 4,760 2025 323,758 Total $ 329,708 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of supplemental balance sheet information related to leases | Supplemental balance sheet information related to leases are summarized as follows: Operating leases Balance Sheet Location September 30, December 31, 2022 ROU assets, net (1) Right-of-use assets $ 77,353 $ 30,079 Lease liabilities, short-term Other current liabilities $ 12,975 $ 3,786 Lease liabilities, long-term Lease liability $ 74,678 $ 30,583 (1) Includes impact of write off of abandoned right-of-use assets of $ 5,122 and impairment charge of $ 92 related to the restructuring plan. See Note 17 for additional information. |
Summary of components of lease expense | Components of lease expense during the three and nine months ended September 30, 2023 and 2022, are summarized as follows: Three Months Ended September 30, 2023 2022 Third-party leases Total Related-party lease Third-party leases Total Operating lease costs $ 4,663 $ 4,663 $ 80 $ 983 $ 1,063 Variable lease costs 589 589 — 207 207 Short-term lease costs — — — — — Total $ 5,252 $ 5,252 $ 80 $ 1,190 $ 1,270 Nine Months Ended September 30, 2023 2022 Third-party leases Total Related-party lease Third-party leases Total Operating lease costs $ 9,990 $ 9,990 $ 239 $ 2,513 $ 2,752 Variable lease costs 1,354 1,354 — 594 594 Short-term lease costs — — — 108 108 Total $ 11,344 $ 11,344 $ 239 $ 3,215 $ 3,454 |
Schedule of supplemental cash flow information related to operating leases | Supplemental cash flow information related to operating leases during the three and nine months ended September 30, 2023 and 2022, are summarized as follows: Three Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 5,576 $ 1,038 Lease liabilities arising from new ROU assets $ 4,011 $ 10,305 Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 10,356 $ 2,783 Lease liabilities arising from new ROU assets $ 66,175 $ 10,305 |
Schedule of other information related to leases | Other information related to leases is summarized as follows: September 30, 2023 December 31, 2022 Weighted average remaining lease term (years) 6.7 7.5 Weighted average discount rate 8.7 % 8.8 % |
Schedule of future minimum lease payments | Maturities of lease liabilities as of September 30, 2023 are summarized as follows: Amount Remainder of 2023 $ 7,796 2024 16,654 2025 17,373 2026 17,523 2027 16,712 Thereafter 41,798 Total future lease payments 117,856 Less: imputed interest 30,203 Total $ 87,653 |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Summary of Ownership of XPO LLC | The following table summarizes the ownership of XPO LLC as of September 30, 2023: Owner Units Owned Ownership percentage XPO Inc. 31,477,165 66 % Noncontrolling interests 16,566,027 34 % Total 48,043,192 100 % |
Equity Compensation (Tables)
Equity Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Restricted Stock Units Activity | The following table summarizes activity for RSUs for the nine months ended September 30, 2023: Shares Weighted Average Outstanding at December 31, 2022 2,102 $ 18.25 Issued 342 24.75 Vested ( 1,007 ) 17.31 Forfeited, expired, or canceled ( 54 ) 21.20 Outstanding at September 30, 2023 1,383 $ 18.77 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Earnings Per Share | The following table presents the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Numerator: Net income (loss) $ ( 5,183 ) $ ( 13,056 ) $ 7,362 $ 3,242 Less: net (income) loss attributable to noncontrolling interests ( 14,976 ) 33,271 ( 14,127 ) ( 6,295 ) Less: dividends on preferred shares ( 1,863 ) ( 3,250 ) ( 5,789 ) ( 9,750 ) Add: deemed contribution (dividend) 51,435 ( 57,096 ) 34,326 19,794 Add: deemed contribution from redemption of convertible preferred stock — — 12,679 — Net income (loss) attributable to XPO Inc. - basic 29,413 ( 40,131 ) 34,451 6,991 Add: net income (loss) attributable to non-controlling interests — — — 6,295 Add: dividends on preferred shares 1,863 — 5,789 9,750 Less: deemed (contribution) dividend ( 51,435 ) — ( 34,326 ) ( 19,794 ) Less: Deemed contribution from redemption of convertible preferred stock — — ( 12,679 ) - Net income (loss) attributable to XPO Inc. - diluted $ ( 20,159 ) $ ( 40,131 ) $ ( 6,765 ) $ 3,242 Denominator: Weighted average shares of Class A common stock outstanding - basic 32,260 26,156 32,025 24,782 Effect of dilutive securities: Rumble Class A common stock — — — 1,300 Restricted stock units — — — 539 Convertible preferred stock 7,963 — 7,963 13,889 Conversion of Class B common stock to Class A common stock — — — 22,313 Weighted average shares of Class A common stock outstanding - diluted 40,223 26,156 39,988 62,823 Net earnings (loss) per share attributable to Class A common stock - basic $ 0.91 $ ( 1.53 ) $ 1.08 $ 0.28 Net earnings (loss) per share attributable to Class A common stock - diluted $ ( 0.50 ) $ ( 1.53 ) $ ( 0.17 ) $ 0.05 Anti-dilutive shares excluded from diluted earnings (loss) per share of Class A common stock: Rumble Class A common stock — 1,300 — — Restricted stock units 1,342 2,121 1,342 — Conversion of Class B common stock to Class A common stock 16,492 21,651 16,492 — Convertible preferred stock — 13,889 — — Accelerated Purchase Program - final settlement 589 — 589 — Rumble contingent shares 2,024 2,024 2,024 2,024 Profits interests, time vesting 1 15 1 15 |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Components of Restructuring Charges | The components of the restructuring charges are as follows: Three and Nine 2023 Write off of abandoned right-of-use assets (1) $ 5,214 Loss on sale or disposal of assets (2)(3) 633 Other restructuring costs (1) 478 Total restructuring charges $ 6,325 (1) These charges are recorded in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations. (2) Charges of $ 248 recorded in cost of product revenues and charges of $ 385 recorded in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations. (3) Loss on sale or disposal of assets represents net losses on sales or disposal of studio assets primarily related to studio property and equipment. |
Schedule of Changes in Restructuring Charges | The following table provides the components of and changes in the Company’s restructuring charges, included in accounts payable on the condensed consolidated balance sheets: September 30, 2023 Balance at December 31, 2022 $ — Charges incurred 478 Payments ( 476 ) Balance at September 30, 2023 $ 2 |
Nature of Business and Operat_2
Nature of Business and Operations - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 23, 2021 shares | Feb. 28, 2023 shares | Sep. 30, 2023 shares | Sep. 30, 2023 Studio Brand shares | Sep. 30, 2022 Studio | |
Number of brands | Brand | 10 | ||||
Number of company-owned studios | Studio | 31 | 40 | |||
Class A Common Stock | |||||
Number of shares issued | 5,000,000 | ||||
Initial Public Offering | Class A Common Stock | |||||
Number of shares issued | 10,000 | 27,000 | 1,620,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Segment | Sep. 30, 2022 USD ($) Segment | Dec. 31, 2022 USD ($) | Jul. 31, 2022 USD ($) | |
Accounting Policies [Line Items] | ||||||
Number of reportable segment | Segment | 1 | |||||
Number of operating segment | Segment | 1 | |||||
Revenue from related parties | $ 3,351,000 | $ 3,104,000 | $ 10,338,000 | $ 9,060,000 | ||
Letter of Credit | $ 20,000 | $ 750,000 | ||||
Restricted cash | $ 8,179,000 | $ 8,179,000 | $ 5,381,000 | |||
Contract with customer, threshold period | 30 days | 30 days | ||||
Interest or penalties | $ 0 | $ 0 | $ 0 | $ 0 | ||
Letter Of Credit Member | ||||||
Accounting Policies [Line Items] | ||||||
Letter of Credit | $ 750,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of The Activity Related to Accounts Receivable Other Receivables And Notes Receivable Allowance For Credit Losses (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Receivable, allowance for credit loss, beginning balance | $ 1,584 |
Bad debt expense recognized during the period | 850 |
Write-off of uncollectible amounts | (570) |
Receivable, allowance for credit loss, ending balance | 1,864 |
Accounts Receivable | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Receivable, allowance for credit loss, beginning balance | 865 |
Bad debt expense recognized during the period | 531 |
Write-off of uncollectible amounts | (499) |
Receivable, allowance for credit loss, ending balance | 897 |
Notes Receivable | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Receivable, allowance for credit loss, beginning balance | 719 |
Bad debt expense recognized during the period | 319 |
Write-off of uncollectible amounts | (71) |
Receivable, allowance for credit loss, ending balance | $ 967 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation | $ 3,449 | $ 4,611 |
Contingent consideration from acquisitions, current portion | 1,266 | 2,203 |
Sales tax accruals | 1,718 | 3,186 |
Legal accruals | 417 | 464 |
Other accruals | 6,539 | 1,831 |
Total accrued expenses | $ 13,389 | $ 12,295 |
Acquisitions and Dispositions -
Acquisitions and Dispositions - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Jun. 05, 2023 USD ($) Studio | Oct. 13, 2021 USD ($) | Oct. 13, 2021 AUD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Studio | Sep. 30, 2022 USD ($) Studio | Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | |||||||||
Proceeds from sale of assets | $ 60,000 | $ 65,000 | |||||||
(Gain) loss on disposal of assets | 770,000 | $ 90,000 | |||||||
Consideration resulted in goodwill | $ 165,661,000 | $ 165,661,000 | $ 165,697,000 | ||||||
Asset Purchase Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Date of asset purchase agreement | Jun. 05, 2023 | ||||||||
Studios | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of studios repurchased | Studio | 1 | ||||||||
Number of studios purchased | Studio | 14 | 14 | |||||||
Aggregate purchase price for the acquisition | $ 164,000 | ||||||||
Net deferred revenue and deferred costs | 8,000 | ||||||||
Total purchase consideration | $ 156,000 | ||||||||
Number of studios refranchised | Studio | 78 | 16 | |||||||
Number of ceased studios | Studio | 14 | 0 | |||||||
Proceeds from sale of assets | $ 60,000 | $ 0 | |||||||
(Gain) loss on disposal of assets | (594,000) | 0 | |||||||
Consideration resulted in goodwill | $ 4,133,000 | ||||||||
Transaction costs directly related to the acquisitions | 0 | ||||||||
Reduction to receivable from shareholder | 1,000 | ||||||||
Intangible assets | $ 7,238,000 | 7,238,000 | 7,238,000 | ||||||
Studios | Asset Purchase Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of studios purchased | Studio | 14 | ||||||||
Reduction to receivable from shareholder | $ 1,000 | ||||||||
Receivable from shareholder | 1,450,000 | ||||||||
Studios | Selling General and Administrative Expenses | Asset Purchase Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Gain on termination | $ 3,500,000 | ||||||||
Studios | Level 3 | Selling General and Administrative Expenses | |||||||||
Business Acquisition [Line Items] | |||||||||
Impairment charges | $ 0 | $ 0 | $ 0 | $ 0 | |||||
BFT Acquisition | Asset Purchase Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Aggregate minimum payments for next two years | $ 3,694,000 | $ 5,000 | |||||||
Aggregate maximum amount payment to seller | $ 10,342,000 | $ 14,000 | |||||||
BodyFit Trademark | |||||||||
Business Acquisition [Line Items] | |||||||||
Aggregate purchase price for the acquisition | $ 10,300,000 | ||||||||
Total purchase consideration | 5,500,000 | ||||||||
Noncash consideration | $ 4,800,000 | ||||||||
Rumble | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of studios purchased | Studio | 14 |
Acquisitions and Dispositions_2
Acquisitions and Dispositions - Summary of Preliminary Estimated Fair Values of the Assets Acquired And Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 05, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 165,661 | $ 165,697 | |
Studios | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 154 | ||
Inventories | 98 | ||
Property and equipment | $ 19 | 1,113 | |
Right-of-use assets | 42,016 | ||
Goodwill | 4,133 | ||
Deferred revenue | (3,269) | ||
Lease liabilities | (44,244) | ||
Reduction to receivable from shareholder | $ 1 |
Acquisitions and Dispositions_3
Acquisitions and Dispositions - Summary of Aggregate Fair Values of the Assets Acquired And Liabilities Assumed (Details) - Studios - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 05, 2023 |
Business Acquisition [Line Items] | ||
Property and equipment | $ 19 | $ 1,113 |
Intangible assets | 7,238 | $ 7,238 |
Total purchase price | 156 | |
Franchise Rights [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 137 |
Contract Liabilities and Cost_3
Contract Liabilities and Costs from Contracts with Customers - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Contract Liabilities And Costs From Contracts With Customers Line Items | |||||
Other deferred revenue | $ 152,229 | $ 152,229 | $ 141,461 | ||
Expected duration of contracts | one year or less | ||||
Deferred costs, current portion | 6,507 | $ 6,507 | 4,131 | ||
Deferred costs, net of current portion | 45,958 | 45,958 | 43,620 | ||
Franchise Agreements | |||||
Contract Liabilities And Costs From Contracts With Customers Line Items | |||||
Deferred costs, current portion | 3,963 | 3,963 | 3,589 | ||
Deferred costs, net of current portion | 45,399 | 45,399 | 43,445 | ||
Equipment and Other | |||||
Contract Liabilities And Costs From Contracts With Customers Line Items | |||||
Other deferred revenue | 23,918 | 23,918 | $ 18,576 | ||
Franchise revenue | |||||
Contract Liabilities And Costs From Contracts With Customers Line Items | |||||
Sales commission and fees | $ 1,419 | $ 2,968 | $ 5,200 | $ 8,318 |
Contract Liabilities and Cost_4
Contract Liabilities and Costs from Contracts with Customers - Summary of Changes in Franchise development and Brand Fee Contract Liabilities (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Contract Liabilities And Costs From Contracts With Customers Line Items | |
Balance at December 31, 2022 | $ 122,885 |
Revenue recognized that was included in deferred revenue at the beginning of the year | (15,364) |
Deferred revenue recorded as settlement in purchase accounting | (1,278) |
Increase, excluding amounts recognized as revenue during the year | 22,068 |
Balance at September 30, 2023 | 128,311 |
Franchise Development Fees | |
Contract Liabilities And Costs From Contracts With Customers Line Items | |
Balance at December 31, 2022 | 116,244 |
Revenue recognized that was included in deferred revenue at the beginning of the year | (12,025) |
Deferred revenue recorded as settlement in purchase accounting | (1,278) |
Increase, excluding amounts recognized as revenue during the year | 21,354 |
Balance at September 30, 2023 | 124,295 |
Brand Fees | |
Contract Liabilities And Costs From Contracts With Customers Line Items | |
Balance at December 31, 2022 | 6,641 |
Revenue recognized that was included in deferred revenue at the beginning of the year | (3,339) |
Increase, excluding amounts recognized as revenue during the year | 714 |
Balance at September 30, 2023 | $ 4,016 |
Contract Liabilities and Cost_5
Contract Liabilities and Costs from Contracts with Customers - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligation (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 128,311 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 3,747 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 11,851 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 11,117 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 12,416 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2027-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 12,809 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2028-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 76,371 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | |
Franchise Development Fees | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 124,295 |
Franchise Development Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 2,211 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 months |
Franchise Development Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 10,199 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Franchise Development Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 10,703 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Franchise Development Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 12,002 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Franchise Development Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2027-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 12,809 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Franchise Development Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2028-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 76,371 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | |
Brand Fees | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 4,016 |
Brand Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 1,536 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 months |
Brand Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 1,652 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Brand Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 414 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Brand Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, remaining performance obligation amount | $ 414 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Brand Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2027-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Brand Fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2028-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Line Items | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period |
Contract Liabilities and Cost_6
Contract Liabilities and Costs from Contracts with Customers - Summary of Components of Deferred Revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Contract Liabilities And Costs From Contracts With Customers Line Items | ||
Total deferred revenue | $ 152,229 | $ 141,461 |
Deferred revenue, net of current portion | 115,229 | 109,465 |
Deferred revenue, current portion | 37,000 | 31,996 |
Franchise and Area Development Fees | ||
Contract Liabilities And Costs From Contracts With Customers Line Items | ||
Total deferred revenue | 124,295 | 116,244 |
Brand Fees | ||
Contract Liabilities And Costs From Contracts With Customers Line Items | ||
Total deferred revenue | 4,016 | 6,641 |
Equipment and Other | ||
Contract Liabilities And Costs From Contracts With Customers Line Items | ||
Total deferred revenue | $ 23,918 | $ 18,576 |
Notes Receivable - Additional I
Notes Receivable - Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Loans And Leases Receivable Disclosure [Line Items] | ||
Unsecured advances arrangement term | 18 months | |
Notes receivable, principal balance | $ 3,261 | $ 3,306 |
Unsecured Advances | ||
Loans And Leases Receivable Disclosure [Line Items] | ||
Loans receivables variable rate description | LIBOR plus 700 basis points | |
Loans receivable, basis spread on variable rate | 7% | |
Loans For Establishment Of New Or Transferred Franchise Studios | ||
Loans And Leases Receivable Disclosure [Line Items] | ||
Loans receivables variable rate description | variable rates based on LIBOR plus a specified margin | |
Notes receivable, term | 10 years | |
Loans For Establishment Of New Or Transferred Franchise Studios | Minimum | ||
Loans And Leases Receivable Disclosure [Line Items] | ||
Notes receivable interest rate | 0% | |
Loans For Establishment Of New Or Transferred Franchise Studios | Maximum | ||
Loans And Leases Receivable Disclosure [Line Items] | ||
Notes receivable interest rate | 15% |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property Plant And Equipment [Line Items] | ||
Less: accumulated depreciation | $ (14,262) | $ (10,552) |
Total property and equipment | 20,293 | 18,524 |
Furniture and Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment gross | 4,307 | 4,182 |
Computers and Software | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment gross | 19,516 | 14,075 |
Vehicles | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment gross | 635 | 171 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment gross | 8,606 | 7,533 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment gross | $ 1,491 | $ 3,115 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 1,480 | $ 1,054 | $ 4,125 | $ 2,720 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 05, 2023 USD ($) Studio | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Studio | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Goodwill [Line Items] | ||||||
Goodwill | $ 165,661 | $ 165,661 | $ 165,697 | |||
Impairment charge | $ 3,376 | $ 7,545 | $ 3,376 | |||
Weighted average cost of capital discount rate | 16% | 16% | 16% | 16% | ||
Impairment of Intangible Assets, Indefinite-Lived (Excluding Goodwill) | $ 280 | |||||
Amortization expense | $ 2,736 | $ 3,100 | $ 8,576 | $ 8,505 | ||
Studios | ||||||
Goodwill [Line Items] | ||||||
Goodwill | $ 4,133 | |||||
Number of studios purchased | Studio | 14 | 14 | ||||
Intangible assets | $ 7,238 | $ 7,238 | $ 7,238 | |||
Rumble | ||||||
Goodwill [Line Items] | ||||||
Goodwill increased due to acquisition | $ 4,133 | |||||
Number of studios purchased | Studio | 14 | |||||
Stride | ||||||
Goodwill [Line Items] | ||||||
Impairment charge | $ 3,469 | |||||
Impairment of Intangible Assets, Indefinite-Lived (Excluding Goodwill) | 230 | |||||
Row House | ||||||
Goodwill [Line Items] | ||||||
Impairment charge | 700 | |||||
Impairment of Intangible Assets, Indefinite-Lived (Excluding Goodwill) | $ 180 | |||||
Maximum | ||||||
Goodwill [Line Items] | ||||||
Estimated future net cash flows discounted rate | 43% | 5% | 43% | 5% | ||
Minimum | ||||||
Goodwill [Line Items] | ||||||
Estimated future net cash flows discounted rate | 8% | 2% | 8% | 2% |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 85,685 | $ 94,686 |
Accumulated amortization | (35,842) | (30,118) |
Total | 49,843 | 64,568 |
Gross amount | 158,292 | 167,293 |
Net amount | $ 122,450 | 137,175 |
Trademark | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 10 years | |
Gross amount | $ 20,710 | 21,110 |
Accumulated amortization | (3,969) | (2,606) |
Total | 16,741 | 18,504 |
Gross amount | 72,607 | 72,607 |
Net amount | 72,607 | 72,607 |
Franchise Agreements | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Gross amount | 57,700 | 69,100 |
Accumulated amortization | (28,243) | (25,143) |
Total | $ 29,457 | 43,957 |
Franchise Agreements | Minimum | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 7 years 6 months | |
Franchise Agreements | Maximum | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 10 years | |
Reacquired franchise rights | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 1,437 | |
Accumulated amortization | (62) | |
Total | $ 1,375 | |
Reacquired franchise rights | Minimum | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 6 years 2 months 12 days | |
Reacquired franchise rights | Maximum | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 8 years | |
Web Design and Domain | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 430 | 430 |
Accumulated amortization | (279) | (196) |
Total | $ 151 | 234 |
Web Design and Domain | Minimum | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 3 years | |
Web Design and Domain | Maximum | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 10 years | |
Deferred Video Production Costs | ||
Acquired Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 3 years | |
Gross amount | $ 5,408 | 4,046 |
Accumulated amortization | (3,289) | (2,173) |
Total | $ 2,119 | $ 1,873 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Anticipated Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2023 | $ 2,718 | |
2024 | 10,379 | |
2025 | 9,729 | |
2026 | 6,618 | |
2027 | 5,288 | |
Thereafter | 15,111 | |
Total | $ 49,843 | $ 64,568 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Aug. 03, 2023 | Jan. 09, 2023 | Apr. 19, 2021 | Dec. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Oct. 08, 2021 | |
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | $ 411,000 | $ 49,000 | $ 411,000 | $ 49,000 | |||||
Amortization of debt issuance cost | 119,000 | 30,000 | 416,000 | 94,000 | |||||
Unamortized debt issuance costs | $ 270,000 | 265,000 | 265,000 | ||||||
Original issue discount on long term debt | 1,378,000 | $ 5,196,000 | $ 5,196,000 | ||||||
2021 Incremental Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount | $ 38,000,000 | ||||||||
Two Thousand Twenty Two Incremental Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal payments due | $ 759,000 | ||||||||
Debt instrument, face amount | $ 7,500,000 | $ 7,500,000 | |||||||
January 2023 Incremental Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal payments due | $ 1,065,000 | ||||||||
Debt instrument, face amount | $ 130,000,000 | ||||||||
August 2023 Incremental Term Loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal payments due | $ 1,190,000 | ||||||||
Debt instrument, face amount | $ 65,000,000 | ||||||||
Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior secured term loan facility | $ 212,000,000 | ||||||||
Percentage of principal payments equal to original principal | 0.25% | ||||||||
Percentage of subsidiaries excess cash flow subject to certain exceptions | 50% | ||||||||
Percentage of net proceeds of certain asset sales and insurance/condemnation events | 100% | ||||||||
Net proceeds of certain extraordinary receipts, subject to reinvestment rights and certain other exceptions | 100% | ||||||||
Percentage of net proceeds of any incurrence of debt, excluding certain permitted debt issuances | 100% | ||||||||
Percentage of premium on the principal amount of closing date | 2% | ||||||||
Percentage of premium on the principal amount of prepayment | 0.50% | ||||||||
Term Loan Facility | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Net proceeds in connection with initial public offering | $ 60,000,000 | ||||||||
Term Loan Facility | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Initial public offering subject to certain expectations | $ 200,000,000 | ||||||||
Term Loan Facility | SOFR | |||||||||
Debt Instrument [Line Items] | |||||||||
Borrowings under the term loan facility bear interest at a per annum rate | 6.50% | ||||||||
Term Loan Facility | Reference Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Borrowings under the term loan facility bear interest at a per annum rate | 5.50% | 12.05% | 12.05% | ||||||
Term Loan Facility | Interest Expense [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs and debt discount amortized | $ 265,000 | ||||||||
Term Loan Facility | Interest Expense [Member] | August 2023 Incremental Term Loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs and debt discount amortized | $ 84,000 |
Debt - Schedule of Principal Pa
Debt - Schedule of Principal Payments on Outstanding Balances of Long-term Debt (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 1,190 |
2024 | 4,760 |
2025 | 323,758 |
Total | $ 329,708 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | |||
Right-of-use assets | [1] | $ 77,353 | $ 30,079 |
Lease liabilities, short-term | 12,975 | 3,786 | |
Lease liabilities, long-term | $ 74,678 | $ 30,583 | |
[1] (1) Includes impact of write off of abandoned right-of-use assets of $ 5,122 and impairment charge of $ 92 related to the restructuring plan. See Note 17 for additional information. |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Leases [Abstract] | ||
Write off of abandoned right-of-use assets | $ 5,122 | |
Impairment charge | $ 92 | $ 92 |
Leases - Summary of Components
Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease costs | $ 4,663 | $ 1,063 | $ 9,990 | $ 2,752 |
Variable lease costs | 589 | 207 | 1,354 | 594 |
Short-term lease costs | 108 | |||
Total | 5,252 | 1,270 | 11,344 | 3,454 |
Related Party Lease [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease costs | 80 | 239 | ||
Total | 80 | 239 | ||
Third Party Leases [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease costs | 4,663 | 983 | 9,990 | 2,513 |
Variable lease costs | 589 | 207 | 1,354 | 594 |
Short-term lease costs | 108 | |||
Total | $ 5,252 | $ 1,190 | $ 11,344 | $ 3,215 |
Leases - Schedule of suppleme_3
Leases - Schedule of supplemental cash flow information related to operating leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Payment for Pension and Other Postretirement Benefits [Abstract] | ||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 5,576 | $ 1,038 | $ 10,356 | $ 2,783 |
Lease liabilities arising from new ROU assets | $ 4,011 | $ 10,305 | $ 66,175 | $ 10,305 |
Leases - Schedule of Other Info
Leases - Schedule of Other Information Related to Leases (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Weighted average remaining lease term (years) | 6 years 8 months 12 days | 7 years 6 months |
Weighted average discount rate | 8.70% | 8.80% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Lessee, Lease, Description [Line Items] | |
Remainder of 2023 | $ 7,796 |
2024 | 16,654 |
2025 | 17,373 |
2026 | 17,523 |
2027 | 16,712 |
Thereafter | 41,798 |
Total future lease payments | 117,856 |
Less imputed interest | 30,203 |
Total | $ 87,653 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Leases [Abstract] | ||
ROU asset impairment charges | $ 92 | $ 92 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Aug. 31, 2023 USD ($) | Jul. 31, 2022 USD ($) | Mar. 31, 2021 USD ($) | Sep. 30, 2019 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) Studio | Sep. 30, 2022 USD ($) Studio | Dec. 31, 2022 USD ($) | Apr. 30, 2023 USD ($) | Jan. 31, 2023 USD ($) | Jul. 23, 2021 USD ($) | |
Related Party Transaction [Line Items] | ||||||||||||
Total revenue, net | $ 80,435,000 | $ 63,763,000 | $ 228,465,000 | $ 173,685,000 | ||||||||
Revenue from related parties | 3,351,000 | 3,104,000 | $ 10,338,000 | $ 9,060,000 | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 750,000 | $ 20,000 | ||||||||||
Number of company-owned studios | Studio | 31 | 40 | ||||||||||
Additional number of company owned studios | Studio | 80 | |||||||||||
Related party disgorgement of short-swing profits | $ 516,000 | 516,000 | $ 516,000 | $ 0 | ||||||||
Common Class B [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Borrowings | 75 | |||||||||||
Row House | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Contingent consideration liability | 1,220,000 | |||||||||||
Reclassification of Outstanding Notes Receivable | 1,834,000 | |||||||||||
Debt instrument, face amount | 240,000 | 240,000 | ||||||||||
Row House | Restricted Stock Units | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Borrowings | 105 | |||||||||||
Franchise Revenue, Marketing Fund Revenue and Merchandise Revenue | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Accounts receivable, related parties | 2,000 | 2,000 | $ 4,000 | |||||||||
Revenue from related parties | 126,000 | 679,000 | 396,000 | 2,018,000 | ||||||||
Multi tranche term loan | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Line of Credit Facility, Expiration Period | 4 years | |||||||||||
Line of Credit Facility, Annual Principal Payment | $ 960,000 | |||||||||||
Line of Credit Facility, Interest Rate During Period | 8.50% | |||||||||||
Multi tranche term loan | Restricted Stock Units | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Borrowings | $ 105 | |||||||||||
Rumble Holdings L L C [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Contribution to related party | $ 10,600,000 | |||||||||||
Interest rate on receivables from parent | 11% | |||||||||||
Percentage of payment in cash | 10% | |||||||||||
Interest receivable | 0 | 0 | 871,000 | |||||||||
Debt instrument, face amount | $ 5,050,000 | $ 1,300,000 | $ 3,100,000 | |||||||||
Cash | 8,062,000 | 8,062,000 | ||||||||||
Rumble Holdings L L C [Member] | Maximum | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Interest rate on debt financing | 11% | |||||||||||
Rumble Holdings L L C [Member] | Minimum | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Interest rate on debt financing | 7.50% | |||||||||||
Rumble Holdings L L C [Member] | Receivable from Stockholder | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Receivable from shareholder for debt financing provided to seller | $ 10,600,000 | |||||||||||
Von Karman Production L L C [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Payment of monthly rent | $ 25,000 | |||||||||||
Lessee, term of contract | 5 years | |||||||||||
Lease expiration date | Aug. 31, 2024 | |||||||||||
Operating lease, expense | $ 80,000 | $ 239,000 | ||||||||||
Percentage of annual rent increase subsequent initial twelve months | 3% | |||||||||||
Spartan Fitness [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Total revenue, net | $ 1,368,000 | $ 4,380,000 | ||||||||||
Number of company-owned studios | Studio | 69 |
Redeemable Convertible Prefer_2
Redeemable Convertible Preferred Stock - Additional Information (Details) - Convertible Preferred Stock - USD ($) | Jan. 09, 2023 | Jul. 23, 2021 | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Temporary Equity [Line Items] | |||||
Preferred stock redemption value | $ 130,304,000 | $ 308,075,000 | |||
Convertible preferred stock, shares repurchased | 85 | ||||
Convertible preferred stock, aggregate payment | $ 130,766,000 | ||||
Excess of fair value from convertible preferred stock | $ 12,679,000 | ||||
Preferred stock, share outstanding | 115 | 200 | |||
Deemed contribution resulted in increased additional paid in capital | $ 34,326,000 | $ 19,794,000 | |||
Private Placement [Member] | |||||
Temporary Equity [Line Items] | |||||
Convertible preferred stock, shares issued | 200 | ||||
Convertible preferred stock, par value | $ 0.0001 | ||||
Proceeds from issuance of convertible preferred stock | $ 200,000,000 | ||||
Preferred stock dividend rate | 6.50% | ||||
Convertible preferred stock, liquidation preference value | $ 1,000 | ||||
Convertible fixed liquidation preference increased PIK rate | 7.50% | ||||
Convertible preferred initial conversion price | $ 14.4 | ||||
Convertible preferred stock redemption term | 8 years | ||||
Preferred stock, share outstanding | 200 |
Stockholder's Equity (Deficit_2
Stockholder's Equity (Deficit) - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Aug. 09, 2023 | Aug. 01, 2023 | Feb. 15, 2023 | Jul. 23, 2021 | Feb. 28, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Class of Stock [Line Items] | ||||||||
Repurchase of Class A common stock | $ 50,378 | $ 0 | ||||||
Associated costs | $ 439 | |||||||
Share Repurchase program, Excise Tax | 1% | |||||||
Accelerated Share Repurchase program | ||||||||
Class of Stock [Line Items] | ||||||||
Repurchase of Class A common stock | $ 50,000 | |||||||
Repurchase Of Initial Public Offering Shares | 2,010 | |||||||
Percentage of Repurchase of Common Stock | 80% | |||||||
Payments For Repurchase of Common Stock Initial Delivery | $ 50,000 | |||||||
Common stock repurchase | 50,000 | |||||||
Accelerated Share Repurchase program | Additional Paid-In Capital | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock repurchase | 40,000 | |||||||
Class A Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued | 5,000,000 | |||||||
Shares Issued, Price Per Share | $ 24.5 | |||||||
Class A Common Stock | Accelerated Share Repurchase program | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock repurchase | $ 50,000 | |||||||
Class A Common Stock | Accelerated Share Repurchase program | Additional Paid-In Capital | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock repurchase | $ 10,000 | |||||||
Class B Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued | 3,474,000 | |||||||
Initial Public Offering | Class A Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued | 10,000 | 27,000 | 1,620,000 | |||||
Underwriters | Class A Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued | 750,000 | |||||||
Secondary Public Offering [Member] | Class A Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of shares, Number | 2,276,000 | |||||||
Secondary Public Offering [Member] | Class B Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of shares, Number | 3,474,000 |
Stockholder's Equity (Deficit_3
Stockholder's Equity (Deficit) - Summary of Ownership of XPO LLC (Details) | 9 Months Ended |
Sep. 30, 2023 shares | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Units Owned | 48,043,192,000 |
XPO Inc. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Units Owned | 31,477,165,000 |
Noncontrolling Interests | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Units Owned | 16,566,027,000 |
XPO LLC | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Ownership percentage | 100% |
XPO LLC | XPO Inc. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Ownership percentage | 66% |
XPO LLC | Noncontrolling Interests | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Ownership percentage | 34% |
Equity Compensation - Additiona
Equity Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Unrecognized compensation expense | $ 2,265 | $ 2,265 | |||||
compensation expense | 444 | $ 623 | 1,332 | $ 1,865 | |||
Income tax benefit (expense) | (202) | 308 | $ (212) | 158 | |||
Number of Performance-Based Restricted Stock Units, Minimum Threshold | 18 | ||||||
Selling General and Administrative Expenses | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
compensation expense | 1 | 24 | 171 | ||||
Performance Based Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Vesting conditions modification | The amendment of these units was treated as a modification with the compensation cost of the amended units of $18,127 recognized over the new estimated service period through November 2022. In March 2022, the units vested when the average trading price condition was met. The Company recognized $12,003 of expense during the nine months ended September 30, 2022. | ||||||
Compensation cost of the amended units | $ 18,127 | ||||||
compensation expense | 12,003 | ||||||
Time Based Profit Interest Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Accelerated compensation expense | 4 | $ 4 | |||||
Compensation expense, expected weighted average period for recognition | 10 months 9 days | ||||||
Time Based Profit Interest Units | Selling General and Administrative Expenses | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
compensation expense | $ 18 | ||||||
Restricted Stock Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Weighted Average Grant Date Fair Value per Share, Issued | $ 24.75 | ||||||
compensation expense | 3,091 | 3,597 | $ 14,297 | 9,881 | |||
Income tax benefit (expense) | (51) | $ 388 | $ 787 | $ 434 | |||
Compensation expense, expected weighted average period for recognition | 2 years 2 months 1 day | ||||||
Number of shares issued | 101 | ||||||
Stock Issued During Period, Value, New Issues | $ 2,250 | ||||||
Restricted Stock Units | Minimum | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Restricted Stock Units | Maximum | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Performance Based Restricted Stock Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Weighted Average Grant Date Fair Value per Share, Issued | $ 18.25 | ||||||
Accelerated compensation expense | $ 22,944 | $ 22,944 | |||||
Number of Shares Available for Grant | 171 | ||||||
Number of shares issued | 36 |
Equity Compensation - Summary o
Equity Compensation - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of units, Outstanding, Beginning balance | shares | 2,102 |
Number of units, Issued | shares | 342 |
Number of shares,Vested | shares | (1,007) |
Number of units, Forfeited, expired, or canceled | shares | (54) |
Number of units, Outstanding, Ending balance | shares | 1,383 |
Weighted Average Grant Date Fair Value per Share, Beginning balance | $ / shares | $ 18.25 |
Weighted Average Grant Date Fair Value per Share, Issued | $ / shares | 24.75 |
Weighted Average Grant Date Fair Value per Share, Vested | $ / shares | 17.31 |
Weighted Average Grant Date Fair Value per Share, Forfeited, expired, or canceled | $ / shares | 21.2 |
Weighted Average Grant Date Fair Value per Share, Ending balance | $ / shares | $ 18.77 |
Income Taxes and Tax Receivab_2
Income Taxes and Tax Receivable Agreement - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Valuation Allowance [Line Items] | ||||
Federal income tax rate | 21% | |||
Income tax benefit | $ 202 | $ (308) | $ 212 | $ (158) |
Pre-tax book income (loss) of noncontrolling interest | 34% | 44% | ||
Effective tax rate | (4.00%) | 2.30% | 2.80% | (5.10%) |
Income tax return examination description | The Company’s tax returns remain open for examination in the U.S. for years 2018 through 2022. | |||
Foreign subsidiaries tax examination period in which tax obligation originated | 4 years | |||
Percentage of benefits expected to realize from tax benefits | 15% | |||
Payment obligation basis spread on interest rate | 100% | |||
Current portion of the TRA liability | $ 2,755 | $ 2,755 | ||
Noncurrent portion of the TRA liability | 1,144 | 1,144 | ||
Unrecorded TRA liability | $ 76,691 | $ 76,691 | ||
XPO Holdings [Member] | ||||
Valuation Allowance [Line Items] | ||||
Economic interest in subsidiary | 66% |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Class B | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 16,503 | 21,685 | 17,206 | 22,313 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule Presents Calculation of Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||||||
Net income (loss) | $ (5,183) | $ 27,524 | $ (14,979) | $ (13,056) | $ 31,477 | $ (15,179) | $ 7,362 | $ 3,242 |
Less: net (income) loss attributable to noncontrolling interests | (14,976) | 33,271 | (14,127) | (6,295) | ||||
Less: dividends on preferred shares | (1,863) | (3,250) | (5,789) | (9,750) | ||||
Add: deemed contribution (dividend) | 51,435 | (57,096) | 34,326 | 19,794 | ||||
Add: deemed contribution from redemption of convertible preferred stock | 12,679 | 0 | ||||||
Net income (loss) attributable to XPO Inc. - basic | 29,413 | (40,131) | 34,451 | 6,991 | ||||
Add: net income (loss) attributable to non-controlling interests | 14,976 | (33,271) | 14,127 | 6,295 | ||||
Add: dividends on preferred shares | 1,863 | 3,250 | 5,789 | 9,750 | ||||
Less: deemed (contribution) dividend | (51,435) | (34,326) | (19,794) | |||||
Less: Deemed contribution from redemption of convertible preferred stock | (12,679) | |||||||
Net income (loss) attributable to XPO Inc. - diluted | $ (20,159) | $ (40,131) | $ (6,765) | $ 3,242 | ||||
Denominator: | ||||||||
Weighted average shares of Class A common stock outstanding - basic | 32,260 | 26,156 | 32,025 | 24,782 | ||||
Weighted average shares of Class A common stock outstanding - diluted | 40,223 | 26,156 | 39,988 | 62,823 | ||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Net earnings (loss) per share attributable to Class A common stock - basic | $ 0.91 | $ (1.53) | $ 1.08 | $ 0.28 | ||||
Net earnings (loss) per share attributable to Class A common stock - diluted | $ (0.5) | $ (1.53) | $ (0.17) | $ 0.05 | ||||
Rumble Class A Common Stock | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 1,300 | 1,300 | ||||||
Restricted Stock Units | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 1,342 | 2,121 | 1,342 | 539 | ||||
Convertible Preferred Stock | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 7,963 | 13,889 | 7,963 | 13,889 | ||||
Conversion of Class B Common Stock to Class A Common Stock | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 16,492 | 21,651 | 16,492 | 22,313 | ||||
Rumble Contingent Shares | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 2,024 | 2,024 | 2,024 | 2,024 | ||||
Profit Interest Units Time Vesting | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 1 | 15 | 1 | 15 | ||||
Accelerated Purchase Program | ||||||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings (loss) Per Share, Amount | 589 | 589 |
Contingencies and Litigation -
Contingencies and Litigation - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Nov. 01, 2022 USD ($) shares | Oct. 13, 2021 USD ($) | Oct. 13, 2021 AUD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2023 | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jul. 31, 2022 USD ($) | Jul. 23, 2021 USD ($) | |
Loss Contingencies [Line Items] | |||||||||||
Increase (decrease) in contingent consideration | $ 1,220,000 | ||||||||||
Payment for contingent consideration liability investing activities | $ 1,412,000 | $ 0 | $ 1,412,000 | $ 1,336,000 | |||||||
Line of credit facility, additional borrowings | 20,000 | $ 750,000 | |||||||||
Letter of credit accrued potential obligation | 150,000 | 150,000 | 0 | ||||||||
Maximum obligation of guarantees of leases | 3,102,000 | 3,102,000 | |||||||||
Acquisition and Transaction Expense | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Additional contingent consideration | 1,338,000 | 0 | 1,005,000 | (141,000) | |||||||
Row House | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Contingent consideration liability | 1,220,000 | ||||||||||
Percentage of operational or change of control distributions | 20% | ||||||||||
Row House | Acquisition and Transaction Expense | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Increase (decrease) in contingent consideration | 120,000 | 380,000 | |||||||||
Rumble Holdings LLC | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Contingent consideration liability | 9,157,000 | 9,157,000 | 27,690,000 | ||||||||
Acquisition and transaction expenses (income) | 3,356,000 | 16,170,000 | 18,533,000 | 6,030,000 | |||||||
Contingent consideration related to shares | $ 27,850,000 | ||||||||||
Fair value of shares issued in acquisition | $ 23,100,000 | ||||||||||
Rumble Holdings LLC | Common Class A [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of shares issued to fund the acquisition | shares | 1,300 | ||||||||||
BFT Acquisition | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Contingent consideration liability | $ 9,388,000 | ||||||||||
BFT Acquisition | Asset Purchase Agreement | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Aggregate minimum payments for next two years | 3,694,000 | $ 5,000 | |||||||||
Aggregate maximum amount payment to seller | $ 10,342,000 | $ 14,000 | |||||||||
Receivable from Stockholder | Rumble Holdings LLC | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Receivable from shareholder for debt financing provided to seller | $ 10,600,000 | ||||||||||
Accrued Expenses | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Legal settlement amount | 417,000 | 417,000 | 464,000 | ||||||||
Additional contingent consideration | 31,000 | $ 154,000 | 124,000 | $ 496,000 | |||||||
Accrued Expenses | BFT Acquisition | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Contingent consideration liability | 1,266,000 | 1,266,000 | 2,203,000 | ||||||||
Contingent consideration from acquisitions | $ 1,146,000 | $ 1,146,000 | $ 492,000 |
Restructuring - Additional Info
Restructuring - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2024 | Dec. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 6,325 | $ 6,325 | ||
Forecast | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 10,500 | $ 8,500 |
Restructuring - Schedule of Com
Restructuring - Schedule of Components of Restructuring Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | ||
Restructuring and Related Activities [Abstract] | |||
Write off of abandoned right-of-use assets (1) | [1] | $ 5,214 | $ 5,214 |
Loss on sale or disposal of assets (2)(3) | [2],[3] | 633 | 633 |
Other restructuring costs (1) | [1] | 478 | 478 |
Total restructuring charges | $ 6,325 | $ 6,325 | |
[1] These charges are recorded in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations. Charges of $ 248 recorded in cost of product revenues and charges of $ 385 recorded in selling, general and administrative expenses on the Company’s condensed consolidated statements of operations. Loss on sale or disposal of assets represents net losses on sales or disposal of studio assets primarily related to studio property and equipment. |
Restructuring - Schedule of C_2
Restructuring - Schedule of Components of Restructuring Charges (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 6,325 | $ 6,325 |
Cost of Product Revenues | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 248 | 248 |
Selling General and Administrative Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 385 | $ 385 |
Restructuring - Schedule of Cha
Restructuring - Schedule of Changes in Restructuring Charges (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Restructuring and Related Activities [Abstract] | |
Beginning balance | $ 0 |
Charges incurred | 478 |
Payments | (476) |
Ending balance | $ 2 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - Accelerated Share Repurchase program - USD ($) $ in Thousands | Oct. 02, 2023 | Aug. 09, 2023 | Aug. 01, 2023 |
Subsequent Event [Line Items] | |||
Common stock repurchase | $ 50,000 | ||
Class A Common Stock | |||
Subsequent Event [Line Items] | |||
Common stock repurchase | $ 50,000 | ||
Subsequent Event | Class A Common Stock | |||
Subsequent Event [Line Items] | |||
Common stock repurchase | $ 50,000 | ||
Convertible preferred stock, shares repurchased | 589 | ||
Repurchased and retired | 2,599 |