Greetings and welcome to the Xponential Fitness second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Patricia Nir, Investor Relations. Thank you, Patricia. You may begin. Thank you, operator. Good afternoon and thank you all for joining our conference call to discuss Xponential Fitness's second quarter 2025 financial results. I am joined by Mike Nuzzo, Chief Executive Officer, Mark King, Former Chief Executive Officer, John Kawaja, President, North America, and John Meloun, Chief Financial Officer. A recording of this call will be posted on the Investor section of our website at investor.xponential.com. We remind you that during this conference call we will make certain forward-looking statements including discussions of our business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC and subsequent filings with the SEC. We assume no obligations to update the information provided on today's call. In addition, we will be discussing certain non-GAAP financial measures in this conference call. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release that was issued earlier today prior to this call. Please also note that all numbers reported in today's prepared remarks refer to global figures unless otherwise noted. As a reminder, in order to ensure period-over-period comparability and consistent with our reporting method since IPO, we present all KPIs on a pro forma basis, meaning for the full KPI history presented, we only include brands that are under ownership as of the current reporting period for the period ended June 30, 2025. This includes BFT, Club Pilates, CycleBar, Lindora, Pure Barre, Rumble, StretchLab, and YogaSix. I will now turn the call over to Mark King, former CEO of Xponential Fitness. Thanks, Patricia, and good afternoon to everyone. Before we discuss the quarter, I want to take a moment to share my enthusiasm for today's announcement that our Board of Directors has unanimously appointed Mike Nuzzo as our Chief Executive Officer. I've had a chance to spend some time with Mike, and I couldn't be more confident in his ability to lead Xponential through its next chapter. Mike brings over 25 years' experience leading consumer, retail, and services businesses with a proven track record of driving scalable growth and expanding into both domestic and international markets. His disciplined, data-driven approach and deep commitment to franchisee success were also particularly compelling to the Board. Previous leadership roles at Eyemart Express, Petco, and GNC clearly demonstrate his ability to build strong brands and execute at scale. Mike has joined the call today too. Share a few thoughts. Mike? Thanks for the kind words. Mark, and congratulations on all your accomplishments at Xponential. I also very much appreciate your help and support in getting me launched today. I am thrilled to be here and honored to be leading this great company. Today is day one and I have a lot to learn, but as a 25-year consumer industry veteran, there is so much to love about Xponential. First, we are in a great space. Boutique fitness has substantial momentum and long-term growth potential as consumers continue to invest more in their health routines. Second, we have amazing studio brands led by passionate and committed franchisees with so much upside potential. Third, Mark and team have made great progress in building a team, supporting foundation, and company culture to drive strong growth and financial returns. You will hear more from me over the coming months, but I know Xponential can elevate and lead the fitness space around innovation, best-in-class franchisee support, and smart and healthy unit growth and expansion. Meaningful progress has been made, but I look forward to helping the team accelerate along the journey, to providing the most impactful member experience, and to becoming one of the most coveted franchisee partners in the industry. Thanks, and I look forward to spending time with all of you. Now I will turn things back to Mark and team to discuss Q2 in more detail. Thanks, Mike, and welcome to the team. With our leadership transition in place, let's now turn to the progress we've made across the business this quarter. We remain focused on execution and continue to make progress against our strategic priorities. We advanced several initiatives we outlined at our Investor and Analyst Day both during and after the quarter, including further expansion of our field operations team, a new retail partnership agreement, and the divestitures of CycleBar and Rumble. Together, these actions reflect the company's ongoing focus on strengthening the business and creating long-term value for our shareholders. Let's now turn to second quarter results. North American system-wide sales of $474 million were up 12% year over year. North American quarterly sales run rate average unit volumes of $659,000 were up 3% year over year. Total members stood at 863,000 at quarter end, up 8% year over year, and same store sales were up 1%. Although year over year growth moderated compared to first quarter, we believe the recent strategic actions will continue to improve performance in future periods. Alongside our new retail agreement, which John Kawaja will speak to in more detail shortly, the recent divestiture of CycleBar and Rumble brands represent another important step in sharpening our strategic focus. These actions enable us to focus our company resources on the brands that generate the highest ROI, including our core brands Club Pilates, Pure Barre, YogaSix, and StretchLab. With a leaner, more focused portfolio, we expect to see improvements in overall portfolio health, a reduction in closure rates, and an increase in average unit volumes. While there will be a period of transition as we right size back office operations, this evolution will ultimately position us to operate more efficiently and focus on our highest return brands. Before turning it over to John Kawaja, I want to take a moment to express how proud I am of what we've accomplished at Xponential Fitness during my time here. I'm confident in both the company's long-term potential and Mike's capabilities to deliver on the operational optimization required for Xponential to become the franchisor of choice in health and wellness. Thank you for your time today, John. Thanks. I want to take a moment to thank Mark. It's been an honor working alongside him. His leadership has set a strong foundation that we're excited to continue building on. Of course, a warm welcome to Mike. With that, I'll provide a brief update on our new retail agreement with Fit Commerce, which has been a key focus area of mine since joining Xponential and was executed post quarter end. As many of you know, our wholesale retail business, historically managed in house, has posed challenges over recent quarters. While our retail operations have contributed to revenue in the past, it has always been a low margin portion of our business that carries significantly more risk and required a significant amount of management's attention. As part of our new agreement, we will outsource this non-core underperforming segment to Fit Commerce, who will be able to deliver elevated design, development, and merchandising, ultimately enhancing service to our business, our franchisees, and our customers. This transition allows us to reallocate resources towards higher margin scalable areas with long term upside and that better align with our strategic priorities. As Mark alluded to, this will allow us to focus on building strong brands and experiences while supporting studio level franchisee operations. Importantly, this partnership will reduce our selling, general, and administrative expenses while introducing annual minimum guaranteed commissions that will scale over time, totaling over $50 million in the initial five year contract period, resulting in higher operating margins than our prior retail strategy. In addition, Fit Commerce will purchase the remaining inventory we have on hand, freeing up working capital. This is a win for our franchisees and certainly a win for Xponential as we expect to see consistent growth in revenue and margin while significantly lowering our retail business's sensitivity to market cycles. Fit Commerce is required to satisfy certain capital requirements by the end of October for the retail agreement to be effective. I'll now turn to some recent updates across a few of our brands. As Club Pilates matures, we are actively focused on strengthening the brand by enhancing monetization strategies, better utilizing existing capacity, bringing larger operators into the franchisee system, and improving our marketing to deliver same store sales growth. With Club Pilates at record high utilization, we have the potential to drive revenue growth through enhanced pricing strategies that reflect demand for classes. We continue to invest in Club Pilates long term growth through product innovation, technology integration, targeted marketing, including experimenting with the new pricing tiers and membership types to determine the right mix of driving additional revenue. The brand's attractive unit level economics have also resulted in several private equity groups acquiring studios. These franchisees have access to growth capital and employ professional operators that understand how to operate efficiently and effectively market within their footprints. Lastly, we are using Club Pilates' significant scale and access to a deep marketing fund to launch a major Club Pilates brand marketing campaign to build brand awareness and expand interest in Club Pilates. It's worth noting that in its entire operating history, Club Pilates has never had a national brand campaign. Pure Barre continues to deliver a strong performance supported by strong same store sales growth this quarter. With the brand's 25th anniversary year approaching, we are planning major marketing campaigns throughout the year to commemorate the milestone, an initiative we anticipate will further accelerate growth in the coming quarters. It's a testament to the passion and dedication of our Pure Barre community that the brand continues to grow same store sales nearly 25 years after its founding. Our strong base of existing members have a deeply devoted dedication to our brand with extremely high levels of engagement and member satisfaction. Interest in barre as a modality has also increased in the last year among younger demographics that are new to barre. Yoga is another modality with significant momentum which YogaSix is capitalizing on. Same store sales continue to perform well and we are continuing to innovate within the brand. We have implemented new teacher training programs to reinforce our category leadership and to attract a broader audience beyond the traditional yoga enthusiast, we've launched a new signature class, Mobility, which blends yoga and functional movement. On StretchLab, we have been focused on diagnosing the challenges facing the brand and are exploring solutions to help support franchisees achieve higher average unit volumes. We are planning to introduce cross studio memberships where access to one studio will unlock access to all studios as previously previewed. We are also focused on introducing state-of-the-art mobility and recovery equipment, which would enable members to come into the studio space outside of their scheduled one-on-one sessions for unassisted stretching. This will be further supplemented by personalized at-home stretching routines available to members. In between studio visits, members will track their progress via centralized technology. Importantly, we expect these changes to drive higher engagement and utilization without adding additional cost. Beyond the initial investment, the tests are running through Q3, and we expect to start rolling out changes to the model in Q1 of 2026. Turning to our field operations team, the initiative is underway as planned. The team is currently training and hitting the road. Next week, we've completed the first wave of hires, with a second wave planned to begin in the fourth quarter. We are also making meaningful progress to reengage or terminate licenses that are lagging over 12 months behind their contractually obligated development schedule, which makes up approximately 40% of our backlog. We do anticipate the number of terminations will be higher in the second half of this year. Our focus remains on partnering with franchisees committed to opening new locations and ending legacy agreements where franchisees' commitments have not been fulfilled. On the sales side, we've implemented a new licensed sales team focused on awarding licenses based on criteria to ensure more timely studio openings. We've also changed our franchise sales process so franchisees are only required to put a non-refundable development fee payment on multi-unit purchases, reducing the franchisees' committed working capital, which will support getting their first unit open more quickly. We're confident these changes will have a positive impact on the health of our development pipeline. We continue to expand on our international efforts with a few noteworthy highlights to call out from the quarter to start. Club Pilates recently crossed a milestone during Q2, hitting 150 international studios open. Club Pilates is performing well internationally, and we are confident we have a significant runway to continue this trajectory. BFT is also gaining further traction, crossing the 50th studio opening in New Zealand in Q2. As part of this growth, we are providing additional support to our master franchisees across the globe. This includes the hiring of a Managing Director of XPONENTIAL Europe who is based in London in April, along with the goal to hire an individual to lead our Asia operations by the end of the year. Thank you for your time. I will now turn the call over to John Meloun to discuss our Q2 results and 2025 outlook in additional detail. Thanks, John, and I'd like to also thank Mark for his leadership and partnership. It's been a pleasure working alongside him during this important chapter for the company. Mike, I'm thrilled to partner with you as we embark on the company's next chapter. We ended the quarter with 3,327 global open studios with 86 gross new studio openings during Q2, with 66 in North America and 20 internationally. There were 57 global studio closures in the second quarter, or about 1.7%, representing an annualized closure rate of 6.9%. 27, or nearly half of the closures in the quarter, were in CycleBar and Rumble brands. We sold 58 licenses during the second quarter, which were largely concentrated in Club Pilates both in North America and internationally. The pace of license sales increased from last quarter as we started selling licenses again in the United States after a temporary pause during which time the 2025 franchise disclosure documents, or FDDs, were issued. At present, we have paused franchise sales in the United States except for sales by exemption as we work to issue FDD Amendments to address the hiring of our new CEO. Among other updates, the FDD Amendments will be ready for use immediately upon issuance in non-registration states. While the FDD registration process with the franchise registration states typically involves more time to process, our base of licenses sold and contractually obligated to open is over 1,400 studios in North America, and we also have over 1,000 international master franchise obligations. As John mentioned, approximately 40% of our global licenses are over 12 months behind their applicable development schedule, and we have started to actively terminate a certain number of these licenses. We believe the actions we are taking related to the management of our licenses will be elevated in the third quarter but normalize in the fourth quarter, noting that terminations can take time given requirements around notification timelines. Second quarter North America system-wide sales of $474 million were up 12% year over year, with growth driven primarily by the 1% same store sales increase within our existing base of open studios coupled with growth from net new studio openings. Approximately 80% of system-wide sales growth was driven by a higher number of actively paying members and approximately 20% by higher pricing and or mix shifts. North American run rate average unit volumes of $659,000 in the second quarter increased 3% from $638,000 in the prior year period. The increase in AUVs was largely driven by a higher number of actively paying members and higher pricing for new members. Given high levels in demand for many of our brands and Club Pilates in particular, we believe there is a significant opportunity to increase revenues through more dynamic pricing methodologies including new price tiers, more stringent cancellation policies, and new package offerings. On a consolidated basis, revenue for the quarter was $76.2 million and down 1% from $76.9 million in the prior year period. 82% of revenue for the quarter was recurring, which we defined as including all revenue streams except for franchise territory revenues and equipment revenues given these materially occur upfront before our studio opens. Turning to the components that make up revenue, franchise revenue for the quarter was $45.4 million, up 5% year over year. This growth was primarily driven by an increase in royalty revenue as system-wide sales were supported by an 8% increase in year over year actively paying memberships and an 11% increase in total visits, offset by lower revenues from license terminations in the period. Equipment revenue was $9.5 million, declining by 26% year over year. This decrease was primarily the result of a 39% year over year lower volume of global installations in the period compared to the same period prior year. Merchandise revenue of $5.6 million was down 8% year over year. The decrease year over year was due to lower sales volumes. As John mentioned earlier, we recently entered into an agreement with Fit Commerce that will have a transformative effect on our retail margins with benefits to our financials expected in 2026. Fit Commerce will be handling all fulfillment and as a result we will no longer have to bear the cost of operating our retail warehouse and the associated overhead. Fit Commerce is also committed to purchasing our remaining inventory, which will free up working capital. Franchise marketing fund revenue of $9.5 million was up 13% year over year, primarily due to continued growth in system-wide sales from a higher number of operating studios in North America in addition to increased sales on a per studio basis. Lastly, other service revenue, which includes sales generated from rebates from processing studio system-wide sales, brand access partnerships, company-owned studios, XPASS and XPLUS, among other items, was $6.3 million, down 3% from the prior year period. The decrease was primarily due to lower brand access fees. Turning to our operating expenses for the quarter, cost of product revenue was $10.5 million, down 25% year over year. The decrease was primarily driven by a lower volume of equipment installations and merchandise sales during the period. Costs of franchise and service revenue were $4 million, down 32% year over year. The decrease in franchise sales commissions was largely due to lower international franchise license sales and lower commission expense from North American franchise license terminations. Selling, general, and administrative expenses of $24.1 million were 35% lower year over year. The decrease in SG&A was primarily due to a decrease in legal expenses driven by nonrecurring insurance recovery receivables and lower restructuring charges. As indicated in our 8-K filing on July 2, 2025, the SEC informed the company that it had concluded its investigation without action. We still expect to receive $15 million in cash reimbursement from our professional insurance policies in the second half of this year. This reimbursement was accrued for as of the end of the quarter and will have no impact to GAAP earnings or EBITDA once received. At present, we have entered into and paid for lease settlement agreements of approximately $31.1 million through the second quarter. As of June 30, 2025, we have approximately $14 million of lease liabilities yet to be settled. We expect most of the remaining liabilities will be settled during the remainder of 2025. Depreciation and amortization expense was $3 million, down 34% compared to the prior year period. Marketing fund expenses were $8.9 million, up 13% year over year, afforded by higher system-wide sales and associated marketing fund revenue contributions. Acquisition and transaction credit was $1.9 million compared to a credit of $1.2 million in the prior year period. As I've noted on prior earnings calls, this includes the contingent consideration activity which is related to the Rumble acquisition earnout and is driven by the share price at quarter end. We mark to market the earnout each quarter and adjust our accruals accordingly. Note that this earnout will persist despite the recent divestiture of the brand. We recorded net income of $1.3 million in the second quarter, or a loss of $0.01 per basic share, compared to a net loss of $14.3 million, or a net loss of $0.30 per basic share in the prior year period. We continue to believe that adjusted net income is a more useful way to measure the performance of our business. A reconciliation of net income and loss to adjusted net income and loss is provided in our earnings press release. Adjusted net income for the second quarter was $14.5 million, or adjusted net income of $0.26 per basic share on a share count of 35 million shares of Class A common stock. Adjusted EBITDA was $28.1 million in the second quarter, up 14% compared to $24.7 million in the prior year period, primarily driven by an increase in high margin royalties in our franchise revenues. Adjusted EBITDA margin was 36.9% in the second quarter, up from 32.1% in the prior year period. Turning to the balance sheet, as of June 30, 2025, cash, cash equivalents, and restricted cash were $38.7 million, up from $26 million as of June 30, 2024. For the six months ended June 30, 2025, net cash provided by operating activities was $8.3 million, which includes $1.9 million in lease settlements. Net cash used in investing activities was $2.9 million, with $2.8 million used on the purchase of property and equipment and intangible assets. Net cash provided by financing activities was $0.5 million, which included $10 million on borrowing of long term debt, $2.7 million in payments on long term debt, $3.8 million in payments on preferred stock dividends, and $2.1 million in payments for taxes related to net share settlement of restricted stock units. Total long term debt was $377.8 million as of June 30, 2025, compared to $330.1 million as of June 30, 2024. The increase in long term debt is primarily due to the company drawing $10 million in additional debt in the first quarter of 2025 for general working capital purposes and $25 million in additional debt in the third quarter of 2024 to address the lease termination payments on previously owned studios and for general working capital purposes. Let's now turn to our outlook for 2025. Our updated guidance reflects the following considerations, which taken together have prompted us to be more conservative. First, the impact of recent brand divestitures and timing of transitioning back office functions. Second, a more conservative revenue outlook in light of current headwinds from the FDD renewal process and a more unpredictable macro environment for the second half of the year. Third, a commitment to increased levels of marketing spend, particularly in Club Pilates and StretchLab, and fourth, room for some organizational realignment with a new incoming CEO for the full year. We are increasing guidance for our global net new studio openings and reducing guidance for system-wide sales, revenue, and adjusted EBITDA. We now project North America system-wide sales to range from $1.78 billion- $1.8 billion, representing a 13% increase at the midpoint from the prior year when removing Rumble and CycleBar from the comparison for comparability and down $155 million from the previous guidance of $1.935 billion- $1.955 billion, which included approximately $120 million for Rumble and CycleBar. For avoidance of doubt, note that in this updated system-wide sales estimate for fiscal year 2025, we have removed any impact from Rumble and CycleBar, including system-wide sales generated by the brands in the first six months of 2025. We expect 2025 global net new studio openings, which is net of closures, to be in the range of 170-1 90, representing a 37% decrease at the midpoint from the prior year. Again, removing Rumble and CycleBar for comparability, we now expect the number of closures to be approximately 5% of the global system this year as a percentage of total open studios, with any impact from Rumble and CycleBar brands removed. Total 2025 revenue is now expected to be between $300 million- $310 million, representing a 5% year-over-year decrease at the midpoint of our guided range and down from previous guidance of $315 million- $325 million. Adjusted EBITDA is now expected to range from $106 million- $111 million, representing a 7% year-over-year decrease at the midpoint of our guided range and down from previous guidance of $120 million- $125 million. This range translates into roughly 35.6% adjusted EBITDA margin at the midpoint. We expect total SG&A to range from $130 million- $140 million. When further excluding the one-time lease restructuring charges and regulatory legal defense expenses, we are expecting SG&A of $110 million- $115 million and a range of $95 million- $100 million when further excluding stock-based costs. In terms of capital expenditure, we anticipate approximately $10 million- $12 million for the year, or approximately 4% of revenue at the midpoint. For the full year, our tax rate is expected to be mid to high single digits. Share counts for purposes of earnings per share calculation to be 34.8 million and $1.9 million in quarterly cash dividends related to our convertible preferred stock. A full explanation of our share count calculation and associated pro forma earnings per share and adjusted earnings per share calculation can be found in the tables at the end of our earnings press release, as well as our corporate structure and capitalization FAQ on our investor website. We anticipate our unlevered free cash flow conversion to be approximately 90% of adjusted EBITDA, as we require minimal capital expenditures to grow the business. We continue to expect our anticipated interest expense in 2025 will be approximately $49 million. Tax expenses to be approximately $10 million, including the cash usage for tax receivable agreement and tax distributions to pre-IPO LLC members, and approximately $8 million in cash dividends related to our convertible preferred stock, resulting in levered adjusted EBITDA cash flow conversion of 28%. This concludes today's prepared remarks. Thank you all for your time today. We'll now open the call for any questions. Operator, thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from review. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. Calling poll for question. Thank you. Our first question comes from the line of Randal Konik with Jefferies. Please proceed. Hey, thanks a lot. Thanks for taking my questions. Just a couple quick things. On the same store sales number in the quarter relative to prior quarter, just any kind of color you can provide on what drove the change in trend line there. Be super helpful. On the Club Pilates commentary, are you talking about looking to take prices up there, that you're starting to reach some capacity so you have the ability to kind of drive up some more revenues per day or perhaps per unit there? Just curious on what you're trying to get at as it pertains to Club Pilates. Lastly, on the 40% of the backlog that's behind schedule, is there a specific banner in particular or a couple banners that are kind of accounting for most of those units being behind schedule? Just a little color there would be super helpful. Thanks. Hey Randy, it's John. Thanks for the question. In relation to same store sales, Q1 was at 4%, reporting Q2 at 1%. What was the shift there? We did see, albeit Club Pilates still in the mid single digit and performing very well, it did have a decrease from the first quarter. That was one of the indications or reasons why same store sales was down in Q2. As well as StretchLab, we did see a little bit of a slight, a greater negative same store sales comp in the second quarter. Those are the two, I would say, scale brands that had a material impact on the shift from Q1 to Q2. I'll answer your second or your third question first and then I'll hand it over to John to talk about pricing. The 40% backlog does include banners like Rumble and CycleBar. When we report on this in Q3, we'll definitely be adjusting any licenses that would have transferred to the new owner. That will be a significant reduction just based off of us transferring those brands over to the new owner. From there, the remaining banners would include Club Pilates, StretchLab, and some amount of YogaSixes in there. You have to remember a lot of the delinquency around our backlog came originally from COVID as that shifted a lot of the original licenses that were sold prior to COVID out of two years. It naturally, organically forced the backlog into delinquency. We've been focused on franchisees and getting immobilized this year. In short order, CycleBar and Rumble create a lot of the delinquent that'll come out in Q2 and then the balance is going to be in StretchLab, YogaSix, and Club Pilates. Hey Randy, it's John. With respect to pricing at Club Pilates, the studios get to a high level of productivity very quickly, and we're intending to lean into pricing and monetization strategies to move same store sales growth, same store sales. We're looking at membership pricing structures, we're looking at cancel and late fees, and also looking at dynamic pricing. Got it. I guess lastly, John. If. You think about the closure rate, I think you said 57 in the quarter, half of those were CycleBar and Rumble. Any kind of feel for just high level when we should kind of see the closure rate bottom out and we move away from that? Is that like a 2026, mid to late 2026 item in your opinion based on numbers you're looking at? Yeah, I think in the second half of 2025 or this year, you're going to start to see the closure rate start to get into closer to that 5% range. The majority of the closures that we're seeing in the present time is, now excluding the CycleBar and Rumble effects, is probably going to be in your international, which BFT has a material presence there. They have some amount of closures that they contribute. Domestically, StretchLab and YogaSix are the two brands that are kind of at scale where we continue to see some amount of what we would call kind of the bottom 10% that are closing. I think you'll see about a 5% closure rate for the year. It'll start to trend down over the second half and probably to answer your question, 2026 is probably you'll start to see us trend down into that mid to low single digit. As you know, the majority of the brands that are opening, particularly Club Pilates, both domestically and internationally, these are brands that have healthier AUV s. You're getting stronger, stronger performance across the portfolio and hence the closure rate will come down. Awesome. Thanks so much, guys. Thank you. Our next question comes from the line of John Heinbockel with Guggenheim Partners. Please proceed. Hey John, can you walk through, you listed four items that are impacting, I guess by design here, profitability in 2025. Can you provide a little more detail on those four? When you think about how many of those kind of have a wraparound into 2026, maybe speak to that. Try to think about what the EBITDA base for 2025 really is heading into 2026. Yeah. Hey John, I think first and foremost it was important for us when we divested Rumble and CycleBar to keep operations supporting those brands to ensure a smooth transition to the new owner. Now with that having happened, there's a rationalization of the corporate support functions and services that we provide that get allocated to the brands that now needs to get relooked at, so that, I think, will largely have that contained in 2025 as we ramp those down. It should not have lasting effects in 2026. System-wide sales, the adjustment to the guide around system-wide sales and the royalty impact, that's something we're seeing more in the present. We did talk about same store sales in Q2, albeit really healthy for Club Pilates, but we're seeing a little bit of softness as we roll into the third quarter. The compounding effect of that obviously lasts unless there's some sort of shift or reaction that makes the trend head back to where we had forecasted. We are seeing a compounding effect in the second half related to lower system-wide sales and obviously the royalty impact that that has. The reaction to that is, we are spending about 25% more marketing dollars in the second half than the first half to try and mitigate those impacts, which there's nothing built into the guide related to some of the possible upsides related to that marketing investment. Again, to be conservative, we're guiding the street down a little bit on the system-wide sales impact. The fourth piece around that is really just with the incoming CEO. We've spent some time talking about the strategy. I think we're largely aligned there, but we do want to give Mike the opportunity to get his arms around the business. We've taken a conservative approach around SG&A, particularly in regards to the costs and what we've built in for the full year. Those are kind of the four areas as far as how much of that lasts into 2026. I think the only real item is really around system-wide sales and whether or not the marketing investments could, you know, create a different trend as we roll into 2026. Most of the Rumble and CycleBar divestitures, as well as the marketing spend and the additional guidance for the CEO, those should be largely contained this year. Just as a follow-up to that, I mean, what the marketing spend is predominantly, you know, in terms of, I don't think it's, it's not brand awareness, right? Is that local social promotions? How does that sort of break out? Yeah, this is John. It's traditionally performance marketing, generating leads and generating conversion of those leads. For our Club Pilates business, we're going to be launching a brand campaign the beginning of October. As we mentioned on the call, it's the first time the company's made an investment of that nature. That is for brand awareness. You know, it's a competitive environment, Pilates, and we believe it's the right time to make that investment. All right, thank you. Thank you. Our next question comes from the line of Joe Altobello with Raymond James. Please proceed. Thanks. Good afternoon, guys. I guess, first question, can you kind. Walk us through where we are. On the FDD renewal process, it seems like, you know, we start to make progress and then unfortunately that. Progress seems to stall. What's taking so long, and what needs to happen in the back half? Yeah. Hey, Joe. I mean with the changing of the CEO, it is required that you would have to amend your FDDs. From that perspective, you know, this is a process that we have to follow to be compliant with that. There are registration states and unregistration states. The non-registration states should be what I believe a fairly quick filing and amendment that will get approved. The registration states have to go through their review based off of the state's requirements. As far as license sales, you know, we did have an impact in the first half as we got the 2025 ones sold. We got momentum into Q2. I do believe we'll be able to maintain that momentum in the second half. This amendment for the CEO should not have a material impact. I don't think the FDDs will materially stay dark as we saw in the beginning of this year. Okay, it sounds like you expect to be able to sell licenses in. All states pretty quickly. We expect to be able to sell licenses in the second half and get back on trend fairly quickly. Yeah. Okay. Maybe secondly, in terms of the portfolio, obviously CycleBar and Rumble being divested, what's the outlook for some of. Your sort of non-core four, if you will. Lindora and BFT in particular? BFT has been a great international brand and has a good presence for us. It actually kind of helped us create more of an international structure. We'll continue to, you know, full speed ahead with BFT on the international front. Club Pilates as well is getting a lot of traction there. Secondarily on Lindora, Lindora is a brand that we bought a couple years ago. We've been evaluating that brand. Like all brands in our portfolio, we'll continually evaluate the performance and make sure that they have a contributing ROI. At this point we have the brands we have. We've divested Rumble and CycleBar and we're focused on growing the business. At this point you can consider those are the brands that we own in the portfolio and we'll continue to operate. Got it. Okay. Welcome Mike and good luck, Mark. Take care. Thanks, Joe. Thanks, Joe. Thank you. Our next question comes from the line of Jonathan Komp with Baird. Please proceed. Yeah, hi, good afternoon, John. I just want to follow up. Could you maybe just update, I think previously on same store sales you were thinking in the mid single digit range. Just any update there in terms of what you're embedding in the guidance, and then just the moderate slowdown you've seen. Have you been able to diagnose or pull out any trend or anything worth mentioning on drivers of the trend that you see there? Yeah, so on same store sales, I think historically we've kind of wrapped our head around a mid single digit, you know, given the lower same store sales comp in Q2. The guide does account for a low single digit as we roll into the second half. Again, you know, with the additional marketing spend, we haven't really built any upside into the second half. You know, we typically do see Q2 and Q3 being the slower quarters, given it's summer and a lot of people on vacation. You typically see a lot of members either freeze their accounts or you see lower, lower visitation. For us, we continue to see good system-wide sales growth. It's just the comp that is a little bit low. We do have brands like, you know, Club Pilates and YogaSix and Pure Barre that are still comping at very healthy ranges, but with some of the other brands like StretchLab having a negative comp, it's pulling it down. At the end of the day, I think you should assume about a low single digit same store sales comp for the second half. Okay, appreciate that. Go ahead. Did you have a follow-up question? John, thought on that, yeah. If I could just change subjects and ask about the focus of the Investor Day, building out better capabilities. Is it best in class franchisor? Just any feedback from the system and franchisees post some of those updates and the early rollout of some of the field initiatives. Just any feedback there and then Mark or Mike if you're there. Welcome. Just curious as we think about transition here, sort of key steps and near-term roadmap there. Thanks again. Sure. This is John. Yes, we've. Excuse me. We've been rolling out our field operations team over the last three months. We've got the first wave hired and trained, and they are ready to hit the road next week. We will be deploying over a double-digit number of field operations people in the field. It's been really well received by the system. They're looking forward to the help, they're looking forward to having people in their studios sharing best practices, and we're excited to get that launched. The question on the transition, this is Mike. Hey Jonathan. It's day one but I have been prepped extremely well. I'm excited to dig in and I feel like I'm coming into the business at a really great time. The team has done some really smart things to position the company for health portfolio management, the new retail merchandise deal, and putting more focus on operations. As we were just talking about marketing, healthy franchise sales, and unit growth, there are still some things to fix and enhance. Overall, I think this is a great foundation for a strategy to build on, and it will allow me to. Get a really quick start. I appreciate the color. Thanks all. Thank you. Our next question comes from the line of Chris O'Cull with Stifel. Please proceed. Chris, you may be muted on your end. Sorry about that. Welcome to the call, Mike, and thanks for taking my questions. My first question is on Club Pilates. Given the high utilization rates and the class demand, why not be more aggressive in terms of infilling markets, which could arguably capture incremental demand while making it harder for competitors to enter the market? Especially given the returns on the Club Pilates studios are already extremely high, I'm just curious, why not be more aggressive with unit openings? Yeah, thanks. This is John. We plan to do just that. We think that there's a significant amount of white space remaining for Club Pilates. We're working with larger, more sophisticated franchisee investors. We just recently sold a 60 pack of Club Pilates, and we do. We agree. We think that there's a lot of opportunity there. These studios, each cohort consistently outperforms the previous years, and these studios get to a high level of productivity very, very quickly. It is a very strong business, and we're bullish about the growth. Okay, and then you mentioned rolling out some marketing campaigns for Club Pilates for the first time ever. Can you just elaborate on the channels you plan to utilize, maybe what the level of initial spend could look like? Sure. We're really looking at all different mediums. The spend is significant in the third and fourth quarter, over $20 million. We think that it's the right time to introduce a brand campaign to strengthen brand awareness and to really position Club Pilates as the leader in the space that it is. Okay. John, maybe just help. I apologize if I missed this earlier, but I was hoping you just bridge the current system-wide sales guidance to the prior guidance. How much of that is due to the divestitures and how much is due to expectations for softer sales at the core brands? Yeah, I mean, $120 million of the drop in the guide is carving out CycleBar and Rumble. The balance is what you can consider the softness in how we see the back end of the year. Okay, great. Thanks, guys. Congratulations, Mark, on the retirement. I hope you enjoy more time on the course. Thanks, Chris. Thank you. Our next question comes from the line of Ryan Meyers with Lake Street Capital Markets. Please proceed. Hey, guys, thanks for taking my question. First one for me, you know, John, how should we be thinking about the Fit Commerce partnership? It sounded like that won't be making an impact until 2026. Just so we get a good. Understanding of kind of the cost savings at that drive-through, you guys think that'd be helpful? Sure. This is John Kawaja. The deal is. We're really excited about the deal. It kicks off on December the 1st. Yes, most of the impact is going to be felt next year, although we will be selling essentially all of our retail inventory to Fit Commerce prior to the start of the deal for modeling purposes. It's a $50 million minimum guaranteed royalty over five years. The first year is around $7 million, and it scales up from there, and the payments happen monthly. It will be helpful to cash flow in 2026 and beyond. Okay, got it. Now that you guys were able to get the SEC investigation resolved, does that help speed up the debt refinance at all? Yeah, with the SEC behind us, our focus has shifted over to starting the process of getting a refinancing done. We are active in that space and looking to try and get something done as soon as we possibly can. Great. Thanks for taking my questions. Thanks, Ryan. Thank you. Our next question comes from the line of Richard Magnusen with B. Riley Securities. Please proceed. Hi. Thank you for taking my call. I just have one question. In the past, you've tested different types of variations in studios such as smaller units. I was wondering, are there any particular variations in these different studios or different brands, whether it's a smaller unit or specific arrangements or layouts within the studio, that have been providing significantly greater efficiencies or other performance that you can talk about? Yeah, there's a couple of things that we're looking at. We're ready to roll out what we call double wides, double Club Pilates, essentially, because of the really strong utilization in studio with that brand. We're really curious to see what that's going to drive. We've also begun the utilization of smaller footprint in StretchLab, where we've gone to 8 bench studios as opposed to 10, which lowers construction costs. It lowers ongoing rent and makes it a better proposition for a better financial proposition for our franchisees with the smaller footprint. Thank you. Thank you. Our next question comes from the line of J.P. Wollam with ROTH Capital Markets. Please proceed. Thanks for taking my questions, guys. If we could just start maybe on the kind of pricing opportunity. I just wanted to understand how much, you know, when you think about the different levers there, you know, price, cancellation fees, tiers, how much is that an opportunity just for Club Pilates versus some of the other brands? Maybe like just one of those levers is an opportunity for the other brands. Can you just kind of break that down? Yeah, we're focused on Club Pilates because of the high utilization in that brand. As we said, the studios get to a high level of productivity very quickly, which presents a challenge on same store sales. The lever to push is pricing and monetization. We're really curious about dynamic pricing. We think there's an opportunity to value the times of the day where the classes are most popular to create a model that will increase revenues. As far as that thinking across other brands, of course, we look at pricing and we look at membership tiers across all of our brands and we're always looking at those things. I think dynamic pricing is the area across really all of our business that has upside opportunity. Great. Thanks for the color. One more maybe for you, Mark. Maybe it's best for John with kind of the 10 year. As we just kind of think post mortem on some of the divestitures, what really are some of the biggest takeaways? Does it just come down to incorrect modality? Is it bad franchise operators that are drawn to the concept? What can you share about your thoughts post the fact that. I'll take a stab at that. I mean, my observation is, you know, we typically buy these brands with small footprints, you know, and I think when you think about growing and distributing the brands, at times the brand awareness around the concept and what it is becomes a challenge. Body Fit Training is a perfect example where you have a very successful brand that was international but very unknown in the U.S. We had a concept that we introduced in Santa Monica, BFT, and we, rather than selling it out of like Southern California, creating a little bit of momentum and then expanding into other markets, we kind of just generally launched it across the U.S. The awareness with consumers isn't there. I think that these first generation of franchisees that, you know, got opened, they struggle and then you kind of, it's hard to get someone to want to buy when there's not validation in that second generation of prospective franchisees coming in. I think that was probably one of the bigger challenges on some of the smaller brands. Cycling as a modality, I think that one was a COVID-impacted modality. It was doing just as well as Club Pilates prior to COVID and just really didn't see the re-ramp. I think there's both how you decide to grow some of these brands and then, you know, shifts in trends, shifts in consumers that could impact them. For me, that's how I kind of view on some of the smaller ones we acquired. Yep, great color. Best of luck going forward, guys. Thank you. Thank you. Our next question comes from the line of Owen Rickert with Northland Capital Markets. Please proceed. Hi, this is Ben on for Owen. Are you seeing any change in churn? Retention patterns post Q1 promotions, especially. As those trial members transition into full memberships? Now, as far as memberships and as far as trends around cancellations or freezes, no real shift in trend that's out of cycle for seasonality. You do typically see Q2 and Q3 being slower just because of the summer months, as I mentioned, with a lot of people on vacation or holiday, and that typically picks up late Q3. Q4 and Q1 are usually your busiest quarter. No off trend shifts in memberships at this moment. Thank you for that. I'll return to queue. Thank you. There are no further questions at this time. I'd like to pass the call back over to John for any closing remarks. Great. Thank you. Thank you all for your time today. We look forward to meeting with many of you at the upcoming marketing events in September and again in November when we report our third quarter results. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.