10q10k10q10k.net

What changed in XPEL, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of XPEL, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+335 added−221 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in XPEL, Inc.'s 2025 10-K

335 paragraphs added · 221 removed · 164 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

37 edited+25 added−5 removed39 unchanged
Biggest changeThe inclusion of the Company’s website address in this Annual Report does not include or incorporate by reference the information on or accessible through the Company’s website, and the information contained on or accessible through the website should not be considered as part of this Annual Report. 10 The Company will make its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports (and amendments to those reports) filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act, available on the Company’s website as soon as reasonably practicable after the Company electronically files or furnishes such materials with the Securities and Exchange Commission or, “SEC”.
Biggest changeThe Company makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports (and amendments to those reports) filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act, available on the Company’s website as soon as reasonably practicable after the Company electronically files or furnishes such materials with the Securities and Exchange Commission or, “SEC”.
XPEL also continues to expand its delivery channels by acquiring select installation facilities in key markets and acquiring international partners to enhance our global reach. As we expand globally, we strive to tailor our distribution model to adapt to target markets. We believe this flexibility allows us to penetrate and grow market share more efficiently.
XPEL also continues to expand its delivery channels by acquiring select installation facilities in key markets and international partners to enhance our global reach. As we expand globally, we strive to tailor our distribution model to adapt to target markets. We believe this flexibility allows us to penetrate and grow market share more efficiently.
Programs and benefits differ internationally for a variety of reasons, such as local legal requirements, market practices and negotiations with work councils, trade unions and other employee representative bodies, but the Company strives to offer competitive pay and benefits in each jurisdiction in which it has operations. Available Information XPEL was incorporated in Nevada in 2003.
Programs and benefits differ internationally for a variety of reasons, such as local legal requirements, market practices and negotiations with work councils, trade unions and other employee representative 12 bodies, but the Company strives to offer competitive pay and benefits in each jurisdiction in which it has operations. Available Information XPEL was incorporated in Nevada in 2003.
Related laws may govern the manner in which we store or transfer sensitive information or impose obligations on us in the event of a security breach or inadvertent disclosure of such information. International jurisdictions impose different, and sometimes more stringent, consumer and privacy protections. Our products are subject to export controls, including the U.S.
Related laws may govern the manner in which we store or transfer sensitive information or impose obligations on us in the event of a security breach or inadvertent disclosure of such information. International jurisdictions impose different, and sometimes more stringent, consumer and privacy protections. 9 Our products are subject to export controls, including the U.S.
The Company recycles plastic cores, film waste, corrugated boxes and other material related to our conversion operations. We utilize third-party software to monitor our progress on this objective. Intellectual Property and Brand Protection We own intellectual property rights, including numerous patents, copyrights and trademarks, that support key aspects of our brand and products.
The Company recycles plastic cores, film waste, corrugated boxes and other material related to our conversion operations. We utilize third-party software to monitor our progress on this objective. Intellectual Property and Brand Protection We own intellectual property rights, including numerous patents, licenses, copyrights and trademarks, that support key aspects of our brand and products.
Software: A key component of our product offering is our Design Access Platform (“DAP”). DAP is a proprietary SAAS platform and database consisting of over 80,000 vehicle applications used by the Company and its customers to cut automotive protection film into vehicle panel shapes for both paint protection film and window film products.
Software: A key component of our product offering is our Design Access Platform (“DAP”). DAP is a proprietary SAAS platform and database consisting of over 90,000 vehicle applications used by the Company and its customers to cut automotive protection film into vehicle panel shapes for both paint protection film and window film products.
We commit significant resources to keep the pattern database updated with a goal toward having a pattern for every panel of every vehicle. When new vehicle models are introduced to the market, we strive to create the pattern as soon as possible. Our patterns and software increase installer efficiency and reduce waste.
We commit significant resources to keep the pattern database updated with a goal toward having a pattern for every panel of every vehicle. When new vehicle models are introduced to the market, we strive to create the pattern as soon as practicable. Our patterns and software increase installer efficiency and reduce waste.
The products fall into three categories: • Products where we own or license the intellectual property or, “IP” – the Company owns or licenses the underlying IP for product construction or for one or more components of the product and could seek to have the products made at a variety of manufacturing locations.
The products fall into the following categories: • Products where we own or license the intellectual property or, “IP” – the Company owns or licenses the underlying IP for product construction or for one or more components of the product and could seek to have the products made at a variety of manufacturing locations.
During 2024, we completed five acquisitions in furtherance of this objective. We believe our channel strategy uniquely positions us to be wherever the demand takes us and is a key part of our ability to drive sustained growth.
During 2025, we completed five acquisitions in furtherance of this objective. We believe our channel strategy uniquely positions us to be wherever the demand takes us and is a key part of our ability to drive sustained growth.
Within the market for surface and paint protection film, our principal competitors include Eastman Chemical Company (under the LLumar and Suntek brands) and several other smaller companies. For more information, see Risk Factors— The after-market automotive product supply business is highly competitive. Competition presents an ongoing threat to the success of our Company.
Within the market for surface and paint protection film, our principal competitors include Eastman Chemical Company (under the LLumar and Suntek brands), numerous suppliers in Korea and China and several other smaller companies. For more information, see Risk Factors — The after-market automotive product supply business is highly competitive. Competition presents an ongoing threat to the success of our Company.
Environmental Matters General We are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations governing, among other things, the generation, storage, handling, use and transportation 9 of hazardous materials; the emission and discharge of hazardous materials into the environment; and the health and safety of our employees.
Government Regulation and Legislation General We are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations governing, among other things, the generation, storage, handling, use and transportation of hazardous materials; the emission and discharge of hazardous materials into the environment; and the health and safety of our employees.
For the year ended December 31, 2024, approximately 63.8% of the Company’s consolidated revenue was through this channel. We offer a suite of services to complement our products for our aftermarket installer customers and strive to create value for being an XPEL dealer.
For the year ended December 31, 2025, approximately 51% of the Company’s consolidated revenue was through this channel. We offer a suite of services to complement our products to our aftermarket installer customers and strive to create value for being an XPEL dealer.
New car dealerships have multiple options to sell our products: • outsourcing the installation of film to the after-market which is the most common option; • developing an in-house program where the dealerships hire and train their own employees to install the product (which is purchased directly from us); and, • utilizing third-party labor to install the product in the dealership facility either on a pre-load basis or after the sale.
New car dealerships have multiple options to sell our products: • outsourcing the installation of film to the after-market which is the most common option; • developing an in-house program where the dealerships hire and train their own employees to install the product (which is purchased directly from us); or, • utilizing third-party labor to install the product in the dealership facility either on a pre-load basis or after the sale. 6 We are agnostic as to who applies our products to new vehicles.
Government Regulation and Legislation 8 The manufacturing, packaging, storage, distribution, advertising and labeling of our products and our business operations all must comply with extensive federal, state and foreign laws and regulations and consumer protection laws.
The manufacturing, packaging, storage, distribution, advertising and labeling of our products and our business operations all must comply with extensive federal, state and foreign laws and regulations and consumer protection laws.
Online and Catalog Sales XPEL offers certain products such as paint protection kits, car wash products, after-care products and installation tools via its website. Revenues from this channel are negligible, but we believe that by offering these products on our website, we increase brand awareness.
Online Sales XPEL offers certain products such as paint protection kits, car wash products, after-care products and installation tools sold via its website, other websites and marketplaces such as Amazon.com. Revenues from this channel are negligible, but we believe that by offering these products on our website, we increase brand awareness.
The Company believes its products and services provide dealerships with a set of unique options to increase their gross profit per vehicle. Suppliers The Company’s products are sourced from a number of suppliers or manufactured by various third-party contract manufacturers.
The Company believes its products and services provide dealerships with a set of unique options to increase their gross profit per vehicle. Manufacturing and Supply Chain During 2025, the Company’s products were sourced from a number of suppliers or manufactured by various third-party contract manufacturers.
Sales and Distribution We sell and distribute our products through independent installers, new car dealerships, third-party distributors, Company-owned installation centers, Automobile Original Equipment Manufacturers, Protex Canada’s franchisees, and online. Independent Installers We offer complete turn-key solutions to independent installers, which includes XPEL protection films, installation training, access to our proprietary DAP software, marketing support and lead generation.
Sales and Distribution We sell and distribute our products through independent installers, new car dealerships, third-party distributors, Company-owned installation centers, OEMs, Protex Canada’s franchisees, and online. Independent After-market Installers We offer complete turn-key solutions, which include XPEL protection films, installation training, access to our proprietary DAP software, marketing support and lead generation to independent after-market installers.
The Company has a perpetual license to United States Patent No. 8,765,263 “Multilayer Polyurethane Protective Films”. • Products that are made for us on an exclusive basis – the Company does not own all the underlying IP, but has products manufactured by a third party solely for the Company on an exclusive basis. • Products that we source from suppliers on a non-exclusive basis – the Company does not own the underlying IP but sources products on commercial terms from a third party.
The Company has a perpetual license to United States Patent No. 8,765,263 “Multilayer Polyurethane Protective Films”. • Products that we source from suppliers on a non-exclusive basis – the Company does not own the underlying IP but sources products on commercial terms from a third party.
We believe these intellectual property rights, combined with our brand name and reputation, provide us with a competitive advantage. We protect our intellectual property rights in the United States and many international jurisdictions. We aggressively pursue and defend our intellectual property rights to protect our distinctive brand and products.
We believe these intellectual property rights, combined with our brand name and reputation, provide us with a competitive advantage. We protect our intellectual property rights in the United States and many international jurisdictions.
Surface and Paint Protection film sales represented approximately 53.9% of our consolidated revenue for the year ended December 31, 2024. Automotive Window Film (or Tint): We sell several lines of automotive window or tint films, primarily under the XPEL PRIME brand name, which exhibit a range of performance characteristics and appearances.
Automotive Window Film (or Tint): We sell several lines of automotive window or tint films, primarily under the XPEL PRIME brand name, which exhibit a range of performance characteristics and appearances. Automotive window film sales represented approximately 16.6% of our consolidated revenue for the year ended December 31, 2025.
The Company is ISO 14001:2015 registered and accredited. We have incurred and expect to continue to incur costs to maintain or achieve compliance with environmental, health and safety laws and regulations. To date, these costs have not been material to the Company. Recycling The Company strives to be a good steward of the environment.
The Company is ISO 14001:2015 registered and accredited. We have incurred and expect to continue to incur costs to maintain or achieve compliance with environmental, health and safety laws and regulations. To date, these costs have not been material to the Company.
These locations serve wholesale and retail customers in their respective markets. Some of our Company-owned installation centers are located in geographic areas where we also serve customers in our independent installer channel, which could be perceived to generate channel conflict.
Some of our Company-owned installation centers are located in geographic areas where we also serve customers in our independent installer channel, which could be perceived to generate channel conflict.
For more information, see Risk Factor— A material disruption from our contract manufacturers or suppliers, or our inability to obtain a sufficient supply of product from alternate suppliers, could cause us to be unable to meet customer demands or increase our costs .
For more information, see Risk Factor— A material disruption from our contract manufacturers or suppliers, or our inability to obtain a sufficient supply of product from alternate suppliers, could cause us to be unable to meet customer demands or increase our costs and Risk Factor - Our planned investment in manufacturing and supply chain assets exposes us to execution risks. .
Services Installation Services: We offer installation services for the installation of all of our products in our various channels. We have over 400 installation technicians who are highly trained to install our products effectively and efficiently. Total installation labor revenue represented approximately 17.7% of our consolidated revenue for the year ended December 31. 2024.
Services Installation Services: We offer installation services for the installation of all of our products through our various sales channels. We have over 640 installation technicians who are highly trained to install our products effectively and efficiently. Installation labor revenue represented approximately 18.3% of our consolidated revenue for the year ended December 31, 2025.
We support all of these options for new car dealerships through the sales and support to our after-market customers, training and support to dealerships who want to build an in-house program and through our Dealership Services business which provides third-party installation services at dealership locations. 6 XPEL also offers 24/7 customer service for independent installers and new car dealerships where we provide installation, software and training support via our website and telephone technical support services.
We support all of these options for new car dealerships through the sales and support to our after-market customers, training and support to dealerships who want to build an in-house program and through our Dealership Services business which provides third-party installation services at dealership locations.
Most of the products sold are for automotive applications. Paint protection film, our flagship product, is a self-adhesive, clear film designed to be applied to painted surfaces of automobiles and other surfaces. We sell a variety of product lines each with their own unique characteristics, warranties and intended uses.
Surface and Paint Protection Film: Our primary products are paint and surface protection films. Most of the products sold are for automotive applications. Paint protection film, our flagship product, is a self-adhesive film designed to be applied to painted surfaces of automobiles and other surfaces.
Internationally, while our initial market entry was primarily through indirect distribution, we desire to ultimately sell directly to the majority of the top twenty-five car markets in the world which is an important element of our acquisition strategy. Products Surface and Paint Protection Film : Our primary products are paint and surface protection films.
Internationally, while our initial market entry has primarily been through indirect distribution, we desire to ultimately sell directly to the majority of the top 25 car markets in the world, which is an important element of our acquisition strategy. To that end, we have acquired distributors in several international markets including India, Thailand, Japan and, most recently, China.
In the future, we intend to continue to seek intellectual property protection for our products and enforce our rights against those who infringe on these valuable assets. Human Capital Resources On December 31, 2024, the Company employed approximately 1,143 people (full-time equivalents), with approximately 710 employed in the United States and 433 employed internationally.
We utilize legal and brand protection resources to initiate claims and litigation to protect our intellectual property assets. In the future, we intend to continue to seek intellectual property protection for our products and enforce our rights against those who infringe on these valuable assets.
The Company’s film products (including paint protection film and automotive and architectural window films) are produced using various roll-to-roll manufacturing processes performed entirely by third parties. The Company internalizes many conversion operations including quality assurance, inspection, rewinding, boxing and packaging for many of its products at its facilities around the world.
The Company’s film products (including paint protection film and automotive and architectural window films) are produced using various roll-to-roll manufacturing processes.
We believe that the ability to recruit, retain, develop, protect and fairly compensate our global workforce greatly contributes to the Company’s success.
Human Capital Resources On December 31, 2025, the Company employed approximately 1,337 people (full-time equivalents), with approximately 729 employed in the United States and 608 employed internationally. We believe that the ability to recruit, retain, develop, protect and fairly compensate our global workforce greatly contributes to the Company’s success.
The Company either owns or licenses the relevant IP or has alternative substitutes to continue to operate for the material portion of products sold. The loss of our relationship with any of our suppliers or contract manufacturers could result in the delay of the manufacture and delivery of some of our automotive film products.
These investments are expected to lower costs, improve quality and maximize logistical manufacturing efficiency. The loss of our relationship with any of our suppliers or contract manufacturers could result in the delay of the manufacture and delivery of some of our automotive film products.
Distributors In various parts of the world, XPEL operates primarily through third-party distributors under written agreements with the Company to develop a market or a region under our supervision and direction. These distributors may sell to other distributors or customers who ultimately install the product on an end customer’s vehicle.
XPEL also offers 24/7 customer service for independent installers and new car dealerships where we provide installation, software and training support via our website and telephone technical support services. Distributors In various parts of the world, XPEL operates primarily through third-party distributors under written agreements with the Company to develop a market or a region under our supervision and direction.
Due to the nature of this channel, product margins are generally less than other channels. For the year ended December 31, 2024, approximately 13.8% of the Company’s consolidated revenue was through this channel. In China, we operate through a sole distributor under a distribution agreement, Shanghai Xing Ting Trading Co., Ltd., which we refer to as the China Distributor.
These distributors may sell to other distributors or customers who ultimately install the product on an end customer’s vehicle. Due to the nature of this channel, product margins are generally less than other channels. For the year ended December 31, 2025, approximately 16% of the Company’s consolidated revenue was through this channel.
Competition 7 The Company principally competes with other manufacturers and distributors of automotive protective film products.
We believe that continued investment in research and development will be essential to maintaining our market position and responding to evolving customer and regulatory requirements. Competition The Company principally competes with other manufacturers and distributors of automotive protective film products.
We have processes and procedures in place to identify and protect our intellectual property assets on a global basis. We utilize legal and brand protection resources to initiate claims and litigation to protect our intellectual property assets.
We aggressively pursue and defend our intellectual property rights to protect our distinctive brand and products, although we cannot assure you that our intellectual property rights will not be challenged or circumvented by competitors or third parties. We have processes and procedures in place to identify and protect our intellectual property assets on a global basis.
The Company’s product lines continue to grow and include both film and non-film products.
The Company conducts many conversion operations including quality assurance, inspection, rewinding, boxing and packaging for many of its products at its facilities around the world. 8 The Company’s product lines continue to grow and include both film and non-film products.
The Company has currently opted to pursue an “asset-light” manufacturing model whereby third-party suppliers and manufacturers are used to supply the Company with the majority of its products. We routinely evaluate building or buying manufacturing assets for some of our products, but we believe that our asset-light model best suits the Company at the present time.
Historically, the Company has pursued an “asset-light” manufacturing model whereby third-party suppliers and manufacturers have been used to supply the Company with the majority of its products. Moving forward, to further enhance our core business, we will be investing in manufacturing and supply chain assets in order to drive lower costs and better control the quality of our products.
Removed
Automotive window film sales represented approximately 15.7% of our consolidated revenue for the year ended December 31, 2024.
Added
We offer both clear and colored paint protection film as well as a variety of product lines each with their own unique characteristics, warranties and intended uses. Surface and paint protection film sales represented approximately 52.4% of our consolidated revenue for the year ended December 31, 2025.
Removed
We are agnostic as to who applies our products to new vehicles.
Added
Company-Owned Installation Centers XPEL operates 34 Company-owned installation centers: fourteen in the United States, nine in Canada, two in both India and Taiwan, and one each in the United Kingdom, Germany, Australia, Mexico, Japan, Thailand, and China. These locations serve wholesale and retail customers in their respective markets.
Removed
Approximately 5.7% of our consolidated revenue for the year ended December 31, 2024, was derived from sales to the China Distributor. We consider our relations with the China Distributor to be good, but the loss of our relationship could result in the delay of the distribution and a decrease in marketing of our products in China.
Added
Research and Development Our research and development activities are central to our competitive position and long-term growth strategy.
Removed
For more information, see Risk Factors— We currently rely on one distributor of our products and services in China.
Added
We focus our R&D efforts on developing innovative protective film technologies, enhancing product performance characteristics, and improving manufacturing processes across our paint protection film, automotive tint, and architectural tint product lines. 7 Product Development Initiatives Our R&D team is dedicated to advancing the performance, durability, and aesthetic qualities of our protective film products.
Removed
The loss of this relationship, or a material disruption in sales by this distributor, could severely harm our business” and “A significant percentage of our revenue is generated from our business in China, a market that is associated with certain risks.” Company-Owned Installation Centers XPEL operates 23 Company-owned installation centers: ten in the United States, nine in Canada and one each in the United Kingdom, Australia, Mexico, and Taiwan.
Added
Key areas of focus include the development of self-healing polyurethane and polymer technologies for our paint protection films, enhanced optical clarity and heat rejection capabilities for our automotive and architectural tint products, and improved adhesive formulations that facilitate installation while ensuring long-term bonding performance.
Added
We also invest in developing products with superior resistance to yellowing, cracking, and delamination under prolonged environmental exposure, including UV radiation and temperature fluctuation. Collaboration and Intellectual Property We collaborate with third-party research institutions, materials science laboratories, and technology partners to supplement our internal R&D capabilities and remain at the forefront of protective film innovation.
Added
We protect our proprietary technologies through a combination of patents, trade secrets, and confidentiality agreements. We believe our intellectual property portfolio provides meaningful competitive advantages, although we cannot assure you that our intellectual property rights will not be challenged or circumvented by competitors or other third parties.
Added
Future Initiatives Looking ahead, we plan to continue investing in next-generation protective film technologies, including films with enhanced environmental sustainability profiles, advanced ceramic and nano-particle infused tint products, and smart film technologies capable of dynamic light and heat modulation.
Added
The Company either owns or licenses the relevant IP or has alternative substitutes to continue to operate for the material portion of products sold. Moving forward, the Company has determined that it will invest in manufacturing and supply chain assets which will complement the third party manufacturers for certain products.
Added
China We also operate through a majority‑owned subsidiary organized in the People’s Republic of China (“PRC”). The following summary describes certain material laws and regulations applicable to our operations, including those affecting our PRC subsidiary, our employees in China, and our sales into the PRC market.
Added
Given the pace of regulatory change in the PRC, the U.S.‑China bilateral environment, and global trade and data governance frameworks, new or revised laws could impose additional requirements or restrictions on our business.
Added
Corporate, Foreign Investment and Operating Permissions in the PRC Foreign investment in the PRC is regulated by the Foreign Investment Law and related implementing regulations, together with the Special Administrative Measures (Negative List) for Foreign Investment Access.
Added
Our current activities are not on the Negative List and are conducted through a majority‑owned PRC subsidiary, subject to customary corporate registrations and licenses. Certain sectors may require additional filings or approvals with competent authorities such as the Ministry of Commerce, the State Administration for Market Regulation and local bureaus.
Added
If our business scope changes or if the Negative List is revised to include our activities, we could be required to obtain additional permissions or restructure certain operations. 10 Employment, Labor and Social Insurance in the PRC Our PRC subsidiary employs PRC nationals and is subject to the PRC Labor Contract Law and implementing rules governing employment contracts, working hours, wages, termination and severance.
Added
We are also required to make contributions to social insurance and housing funds for employees in accordance with national and local regulations. Non‑compliance can result in fines, back payments and other administrative penalties. PRC Data, Cybersecurity and Privacy Requirements Our PRC operations collect, process and transmit data in the ordinary course of business.
Added
The PRC Cybersecurity Law, Data Security Law and Personal Information Protection Law impose obligations relating to data security, classification and protection, personal information processing, cross‑border data transfers, security assessments and potential cybersecurity review by the Cyberspace Administration of China (“CAC”).
Added
Depending on the volume and nature of data processed, or the classification of our systems as “critical information infrastructure,” we may be required to complete filings, certifications or security assessments before transferring certain data outside the PRC or before listing‑related activities that implicate cybersecurity review thresholds.
Added
PRC Foreign Exchange, Cash Management and Dividend Remittance The PRC maintains a foreign exchange control system administered by the State Administration of Foreign Exchange (“SAFE”).
Added
Our ability to receive dividends or intercompany payments from our PRC subsidiary is subject to PRC regulations on profit distribution, tax clearance and SAFE registration, and may require conversion of Renminbi (“RMB”) into foreign currency at authorized banks. PRC law also imposes restrictions on loans, guarantees and certain related‑party transactions.
Added
Product Compliance, Licensing and Industry‑Specific Regulation We must comply with national standards, product certification, labeling and safety requirements applicable to our products in the PRC, as well as obtain any sector‑specific permits required for manufacturing, distribution or after‑sales services. Regulatory regimes differ by industry and may be revised with limited advance notice.
Added
Market entry and continued sales may depend on obtaining and maintaining approvals such as China Compulsory Certification or other sectoral clearances. Supply Chain, Human Rights and Customs To the extent our supply chain includes PRC‑sourced components or manufacturing, we are subject to evolving import, customs, human rights and forced‑labor‑related measures that can affect shipment clearance and supplier selection.
Added
Government Influence and Evolving Regulatory Environment PRC laws and policies are subject to rapid change and may be applied with significant administrative discretion. Government actions to guide industry development, promote national initiatives, adjust foreign investment policies, strengthen data governance, or address public interest concerns can affect our operations, contractual arrangements, workforce and cross‑border activities.
Added
The foregoing summary does not purport to be exhaustive and is qualified in its entirety by reference to applicable statutes and regulations. Additional information about related risks appears in Item 1A, “ Risk Factors. ” 11 Recycling The Company strives to be a good steward of the environment.
Added
The Company’s culture is driven by certain principles: • humility; • ownership and accountability; • celebrate and recognize achievement; • inclusion and belonging; and • having a “NO TOMORROW” attitude in your daily activities. These principles are known as “XPEL Behaviors” and are incorporated into employee performance reviews.
Added
The inclusion of the Company’s website address in this Annual Report does not include or incorporate by reference the information on or accessible through the Company’s website, and the information contained on or accessible through the website should not be considered as part of this Annual Report.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

68 edited+134 added−46 removed121 unchanged
Biggest changeOur bylaws provide that, with certain limited exceptions, unless we consent in writing to the selection of an alternative forum, the state and federal courts located in Bexar County, Texas will be the sole and exclusive forum for any stockholder (including any beneficial owner) to bring any (i) derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of, or a claim based on, breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder to us or our stockholders, (iii) any action asserting a claim against us or any current or former director, officer, employee or stockholder arising pursuant to any provision of Chapters 78 and 92 of the Nevada Revised Statutes or our articles of incorporation or bylaws or (iv) any action asserting a claim against us or any current or former director, officer, employee or stockholder (including any beneficial owner of stock) governed by the internal affairs doctrine.
Biggest changeOur bylaws provide that, with certain limited exceptions, unless we consent in writing to the selection of an alternative forum, the Eighth Judicial District Court of Clark County, Nevada (or, if the Eighth Judicial District Court of Clark County, Nevada does not have jurisdiction, any other state court located within the State of Nevada) will be the sole and exclusive forum for any actions, suits or proceedings, whether civil, administrative or investigative (i) brought in the name or right of the Company or on its behalf, (ii) asserting a claim for breach of any fiduciary duty owed by any current or former director, officer, employee or agent of the Company to the Company or the Company’s stockholders, (iii) any internal action (as defined in Nevada Revised Statutes (“NRS”) 78.046) including any action asserting a claim against the Company arising pursuant to any provision of NRS Chapters 78 or 92A, the articles of incorporation or these Bylaws, or any agreement as to which the NRS confers jurisdiction on the district court of the State of Nevada, (iv) to interpret, apply, enforce or determine the validity of the articles of incorporation or these Bylaws or (v) asserting a claim governed by the internal affairs doctrine.
These risks include: • changes in general economic and political conditions in countries where we operate, particularly in emerging markets; • the imposition of trade protection measures, including increased tariffs, and import or export licensing requirements, restrictions, tariffs or exchange controls; • fluctuating exchange rates; • relatively more severe economic conditions in some international markets than in the U.S.; • the difficulty of enforcing agreements and collecting receivables through non-U.S. legal systems; • the difficulty of communicating and monitoring standards and directives across our global facilities; • the possibility of terrorist action affecting us or our operations; • the threat of nationalization and expropriation; • difficulty in staffing and managing widespread operations in non-U.S. labor markets; • changes in tax treaties, laws or rulings that could have a material adverse impact on our effective tax rate; • limitations on repatriation of earnings; • the difficulty of protecting intellectual property in non-U.S. countries; and • changes in and required compliance with a variety of non-U.S. laws and regulations.
These risks include: • changes in general economic and political conditions in countries where we operate, particularly in emerging markets; • the imposition of trade protection measures, including increased tariffs, and import or export licensing requirements, restrictions, tariffs or exchange controls; • fluctuating exchange rates; • relatively more severe economic conditions in some international markets than in the U.S.; • the difficulty of enforcing agreements and collecting receivables through non-U.S. legal systems; • the difficulty of communicating and monitoring standards and directives across our global facilities; 30 • the possibility of terrorist action affecting us or our operations; • the threat of nationalization and expropriation; • difficulty in staffing and managing widespread operations in non-U.S. labor markets; • changes in tax treaties, laws or rulings that could have a material adverse impact on our effective tax rate; • limitations on repatriation of earnings; • the difficulty of protecting intellectual property in non-U.S. countries; and • changes in and required compliance with a variety of non-U.S. laws and regulations.
Our degree of leverage could have important consequences for the holders of our Common Stock, including increasing our vulnerability to general economic and industry conditions; requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; restricting us from making strategic acquisitions or 25 causing us to make non-strategic divestitures, limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.
Our degree of leverage could have important consequences for the holders of our Common Stock, including increasing our vulnerability to general economic and industry conditions; requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; restricting us from making strategic acquisitions or causing us to make non-strategic divestitures, limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.
In addition, the publication of intentional misinformation may also result in lawsuits, the uncertainty and expense of which could adversely impact our business, financial condition, cash flows and reputation. While utilizing all available tools to defend ourselves and our assets against these short seller efforts, there is limited regulatory control, making such efforts an ongoing concern for any public company.
In addition, the publication of intentional misinformation may also result in lawsuits, the uncertainty and expense of which could adversely impact our business, financial condition, cash flows and reputation. 36 While utilizing all available tools to defend ourselves and our assets against these short seller efforts, there is limited regulatory control, making such efforts an ongoing concern for any public company.
The successful execution of our strategy is dependent upon our ability to effectively manage the risks inherent in a growing labor force including: • the unionization of our workforce; • increased employee-related legal exposure; • our ability to effectively manage labor costs in lower demand environments; • our ability to motivate and retain our employees; If we are unable to successfully manage these and other employee-related risks. our business, financial condition and results of operations could be materially affected.
The successful execution of our strategy is dependent upon our ability to effectively manage the risks inherent in a growing labor force including: • the unionization of our workforce; • increased employee-related legal exposure; • our ability to effectively manage labor costs in lower demand environments; • our ability to motivate and retain our employees; 15 If we are unable to successfully manage these and other employee-related risks, our business, financial condition and results of operations could be materially affected.
Other factors that may cause fluctuations in our revenue and operating results include: • any failure to maintain strong customer relationships; • any failure of significant customers, including distributors, to renew their agreements with us; • variations in the demand for our services and products and the use cycles of our services and products by our customers; • changes in our pricing policies or those of our competitors; and • general economic, industry and market conditions and those conditions specific to our business.
Other factors that may cause fluctuations in our revenue and operating results include: • any failure to maintain strong customer relationships; • any failure of significant customers, including distributors, to renew their agreements with us; 26 • variations in the demand for our services and products and the use cycles of our services and products by our customers; • changes in our pricing policies or those of our competitors; and • general economic, industry and market conditions and those conditions specific to our business.
Any such disruption or failure by us to obtain a sufficient supply of our products to satisfy customer demand could increase our costs and reduce our sales, either of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our contract manufacturers and suppliers could be subject to various supply chain disruptions.
Any such disruption or failure by us to obtain a sufficient supply of our products to satisfy customer demand could increase our costs and reduce our sales, either of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 13 Our contract manufacturers and suppliers could be subject to various supply chain disruptions.
Any such charges could significantly harm our business, financial condition, results of operations and the price of our securities. Estimates and assumptions are made on an ongoing basis for the following: revenue recognition, capitalization of software development costs, impairment of long-lived assets, inventory reserves, allowances for doubtful accounts, fair value for business combinations, and impairment of goodwill.
Any such charges could significantly harm our business, financial condition, results of operations and the price of our securities. Estimates and assumptions are 16 made on an ongoing basis for the following: revenue recognition, capitalization of software development costs, impairment of long-lived assets, inventory reserves, allowances for doubtful accounts, fair value for business combinations, and impairment of goodwill.
Such issuances may have a dilutive effect on our earnings per share, which could materially adversely affect the market price of our Common Stock. Anti-takeover provisions could make a third-party acquisition of us difficult. Our bylaws eliminate the ability of stockholders to call special meetings or take action by written consent.
Such issuances may have a dilutive effect on our earnings per share, which could materially adversely affect the market price of our Common Stock. 38 Anti-takeover provisions could make a third-party acquisition of us difficult. Our bylaws eliminate the ability of stockholders to call special meetings or take action by written consent.
These dealerships have a strong profit motive and are historically very good at selling accessories and other products. Going forward, if the dealership model were to change in the form of fewer franchised dealerships, changes in 17 franchise laws or the possibility of manufacturer owned distribution, the prospects in this channel may diminish.
These dealerships have a strong profit motive and are historically very good at selling accessories and other products. Going forward, if the dealership model were to change in the form of fewer franchised dealerships, changes in franchise laws or the possibility of manufacturer owned distribution, the prospects in this channel may diminish.
If OEM production volumes were negatively impacted due to economic, regulatory or competitive reasons, we may incur excess labor costs associated with the reduced demand. 18 Infringement of our intellectual property could impact our ability to compete effectively. Our intellectual property, particularly our patterns, is susceptible to being copied without our authorization.
If OEM production volumes were negatively impacted due to economic, regulatory or competitive reasons, we may incur excess labor costs associated with the reduced demand. Infringement of our intellectual property could impact our ability to compete effectively. Our intellectual property, particularly our patterns, is susceptible to being copied without our authorization.
Intellectual property protection, however, may not preclude competitors from developing products similar to ours or from challenging our names or products. Further, as we expand on a multi-national level and in some jurisdictions where the protection of intellectual property rights is less robust, the risk of competitors duplicating our proprietary technologies increases.
Intellectual property protection, however, may not preclude competitors from developing products similar to ours or from challenging our names or products. Further, as we expand on a multi-national level and in some jurisdictions where the protection of intellectual property rights is less 33 robust, the risk of competitors duplicating our proprietary technologies increases.
In addition, the public stock markets experience extreme price and trading volume volatility, particularly in growth sectors of the market. This volatility has significantly affected the market prices of securities of 27 many companies for reasons often unrelated to the operating performance of the specific companies. The broad market fluctuations may adversely affect the market price of our Common Stock.
In addition, the public stock markets experience extreme price and trading volume volatility, particularly in growth sectors of the market. This volatility has significantly affected the market prices of securities of many companies for reasons often unrelated to the operating performance of the specific companies. The broad market fluctuations may adversely affect the market price of our Common Stock.
The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business. 13 We currently depend on the continued services and performance of our executive officers, Ryan L. Pape, our President and Chief Executive Officer and Barry R.
The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business. We currently depend on the continued services and performance of our executive officers, Ryan L. Pape, our President and Chief Executive Officer and Barry R.
We also rely to a large extent on the efficient and uninterrupted operation of complex information technology systems, infrastructure, and 24 hardware (together “IT systems”), some of which are within our control and some of which are within the control of third parties, to accumulate, process, store, and transmit large amounts of confidential information and other data.
We also rely to a large extent on the efficient and uninterrupted operation of complex information technology systems, infrastructure, and hardware (together “IT systems”), some of which are within our control and some of which are within the control of third parties, to accumulate, process, store, and transmit large amounts of confidential information and other data.
Furthermore, all Common Stock beneficially owned by persons who are not our affiliates 28 and have beneficially owned such shares for at least one year may be sold at any time by these existing stockholders in accordance with Rule 144 of the Securities Act.
Furthermore, all Common Stock beneficially owned by persons who are not our affiliates and have beneficially owned such shares for at least one year may be sold at any time by these existing stockholders in accordance with Rule 144 of the Securities Act.
Upon a default under our credit facilities, the lenders could also foreclose against any collateral securing such obligations, which may be all or substantially all of our assets. If that occurred, we may not be able to continue to operate as a going concern.
Upon a default under our credit facilities, 35 the lenders could also foreclose against any collateral securing such obligations, which may be all or substantially all of our assets. If that occurred, we may not be able to continue to operate as a going concern.
In addition, currency variations could have a material adverse effect on margins on sales of our products in countries outside of the U.S. If we fail to manage our growth effectively, our business, financial condition and results of operations may suffer.
In addition, currency variations could have a material adverse effect on margins on sales of our products in countries outside of the U.S. 31 If we fail to manage our growth effectively, our business, financial condition and results of operations may suffer.
Additionally, if we raise additional capital by making offerings of debt or shares of preferred stock, upon our liquidation, holders of our debt securities and shares of preferred stock, and lenders with respect to other borrowings, may receive distributions of our available assets before the holders of our Common Stock.
Additionally, if we raise additional capital by making offerings of debt or shares of preferred stock, upon our liquidation, holders of our debt securities and shares of preferred stock, and 37 lenders with respect to other borrowings, may receive distributions of our available assets before the holders of our Common Stock.
These stockholders have the ability to substantially control our operations and direct our policies including the outcome of matters submitted to our stockholders for approval, such as the election of directors and any acquisition or merger, consolidation or sale of all or substantially all of our assets.
These stockholders may have the ability to control our operations and direct our policies including the outcome of matters submitted to our stockholders for approval, such as the election of directors and any acquisition or merger, consolidation or sale of all or substantially all of our assets.
It remains unclear what the U.S. administration or foreign governments, including China, Canada and Mexico will or will not do with respect to tariffs, the U.S.MCA or other international trade agreements and policies.
It remains unclear what the U.S. administration or foreign governments, including China, Canada, Mexico and India will or will not do with respect to tariffs, the U.S.MCA or other international trade agreements and policies.
Emerging markets 21 can present many risks, including cultural differences (such as employment and business practices), compliance risks, economic and government instability, exchange rate fluctuations and the imposition of foreign exchange and capital controls.
Emerging markets can present many risks, including cultural differences (such as employment and business practices), compliance risks, economic and government instability, exchange rate fluctuations and the imposition of foreign exchange and capital controls.
These provisions in our bylaws could make it more difficult for a third party to acquire us without the approval of our board. In addition, the Nevada corporate statute also contains certain provisions that could make an acquisition by a third party more difficult. Our directors and officers have substantial control over us.
These provisions in our bylaws could make it more difficult for a third party to acquire us without the approval of our board. In addition, the Nevada corporate statute also contains certain provisions that could make an acquisition by a third party more difficult. Our directors and officers may have control over us.
Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against other various foreign currencies in markets where we operate, could continue to have a material adverse effect on our reported revenue in future periods.
Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against other various foreign currencies in markets where we operate, could have a material adverse effect on our reported revenue in future periods.
Macroeconomic developments, such as the impact of the Russo-Ukrainian war, Israeli-Hamas conflict, elevated inflation, higher interest rates, restrictive trade policies or the occurrence of events that lead to uncertainty or instability in economic, political or market conditions, could have a material adverse effect on our business, financial condition and results of operations.
Macroeconomic developments, such as the impact of the Russo-Ukrainian war, elevated inflation, higher interest rates, restrictive trade policies or the occurrence of events that lead to uncertainty or instability in economic, political or market conditions, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to retain and acquire new customers, our financial performance may be materially and adversely affected. 20 We are exposed to political, regulatory, economic and other risks that arise from operating a multinational business. Sales outside of the U.S. for the year ended December 31, 2024 accounted for approximately 42.8% of our consolidated revenue.
If we are unable to retain and acquire new customers, our financial performance may be materially and adversely affected. We are exposed to political, regulatory, economic and other risks that arise from operating a multinational business. Sales outside of the U.S. for the year ended December 31, 2025 accounted for approximately 44.2% of our consolidated revenue.
Our bylaws provide that the state and federal courts located in Bexar County, Texas will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our bylaws provide that the state located in Clark County, Nevada will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
We believe that our ability to compete effectively depends upon many factors both within and beyond our control, including: • the usefulness, ease of use, performance, and reliability of our products compared to our competitors; • the timing and market acceptance of products, including developments and enhancements to our products or our competitors’ products; • customer service and support efforts; • marketing and selling efforts; • our financial condition and results of operations; • acquisitions or consolidation within our industry, which may result in more formidable competitors; 16 • our ability to attract, retain, and motivate talented employees; • our ability to cost-effectively manage and grow our operations; • our ability to meet the demands of local markets in high-growth emerging markets, including some in which we have limited experience; and • our reputation and brand strength relative to that of our competitors.
Certain competitors could use strong or dominant positions in one or more markets to gain a competitive advantage against us. 25 We believe that our ability to compete effectively depends upon many factors both within and beyond our control, including: • the usefulness, ease of use, performance, and reliability of our products compared to our competitors; • the timing and market acceptance of products, including developments and enhancements to our products or our competitors’ products; • customer service and support efforts; • marketing and selling efforts; • our financial condition and results of operations; • acquisitions or consolidation within our industry, which may result in more formidable competitors; • our ability to attract, retain, and motivate talented employees; • our ability to cost-effectively manage and grow our operations; • our ability to meet the demands of local markets in high-growth emerging markets, including some in which we have limited experience; and • our reputation and brand strength relative to that of our competitors.
Therefore, if the U.S. dollar strengthens in relation to the principal non-U.S. currencies from which we derive revenue as compared to a prior period, our U.S. dollar-reported revenue and income will effectively be decreased to the extent of the change in currency valuations and vice-versa.
Our financial statements reflect translation of items denominated in non-U.S. currencies to U.S. dollars. Therefore, if the U.S. dollar strengthens in relation to the principal non-U.S. currencies from which we derive revenue as compared to a prior period, our U.S. dollar-reported revenue and income will effectively be decreased to the extent of the change in currency valuations and vice-versa.
Most of our services we provide to OEMs involve our labor installing product either in their facilities or in adjacent facilities that we lease. If OEMs decided to hire and utilize their own labor for the installation of products, our business could be impacted.
Changes in OEM accessorization strategies or production volumes could impact our business. Most of our services we provide to OEMs involve our labor installing product either in their facilities or in adjacent facilities that we lease. If OEMs decided to hire and utilize their own labor for the installation of products, our business could be impacted.
If we are unable to successfully manage the production of quality film produced by our contract manufacturers on a timely basis, our ability to meet the demand of our customers may be severely impacted. Our asset-light business model exposes us to product quality and variable cost risks.
If we are unable to successfully manage the production of quality film produced by our contract manufacturers on a timely basis, our ability to meet the demand of our customers may be severely impacted. Any continued reliance on contract manufacturers and suppliers exposes us to product quality and variable cost risks.
Our directors and executive officers, together with their affiliates and related persons, beneficially owned, in the aggregate, approximately 9.3% of our outstanding Common Stock as of February 28, 2025.
Our directors and executive officers, together with their affiliates and related persons, beneficially owned, in the aggregate, approximately 9.4% of our outstanding Common Stock as of February 27, 2026.
While we attempt to minimize our exposure to economic or market fluctuations by offering a balanced mix of end markets and geographic regions, any of the above factors, individually or in the aggregate, or a significant or sustained downturn in a specific end market or geographic region could reduce demand for our products and services, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
While we attempt to minimize our exposure to economic or market fluctuations by offering a balanced mix of end markets and geographic regions, any of the above factors, individually or in the aggregate, or a significant or sustained downturn in a specific end market or geographic region could reduce demand for our products and services, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 39 A public health crisis could impact our business A public health crisis, including a pandemic, could impact all geographic regions where we sell or produce products, creating business disruptions that could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If paint were replaced with other technologies such as film-based products at the point of manufacture, or if machined-based application of paint protection film was developed, the need for paint protection film or the labor services provided by our sales and distribution channels could be reduced.
If paint were replaced with other technologies such as film-based products at the point of manufacture, or if machined-based application of paint protection film was developed, the need for paint protection film or the labor services provided by our sales and distribution channels could be reduced. 27 We create patterns for our DAP platform through a combination of technology and skilled labor.
Different estimates, judgments and assumptions reasonably could be used that would have a material effect on the consolidated financial statements, and changes in these estimates, judgments and assumptions are likely to occur from period to period in the future.
GAAP” or “GAAP”) require the use of estimates, judgments and assumptions that affect the reported amounts. Different estimates, judgments and assumptions reasonably could be used that would have a material effect on the consolidated financial statements, and changes in these estimates, judgments and assumptions are likely to occur from period to period in the future.
Acquisitions involve numerous other risks, including: • diversion of management time and attention from daily operations; • difficulties integrating acquired businesses, technologies and personnel into our business; • difficulties in obtaining and verifying the financial statements and other business information of acquired businesses; • inability to obtain required regulatory approvals; • potential loss of key employees, key contractual relationships or key customers of acquired companies or of ours; • assumption of the liabilities and exposure to unforeseen liabilities of acquired companies; and • dilution of interests of holders of our common stock through the issuance of equity securities or equity-linked securities.
Acquisitions involve numerous other risks, including: • diversion of management time and attention from daily operations; • difficulties integrating acquired businesses, technologies and personnel into our business; • difficulties in obtaining and verifying the financial statements and other business information of acquired businesses; • inability to obtain required regulatory approvals; • potential loss of key employees, key contractual relationships or key customers of acquired companies or of ours; • assumption of the liabilities and exposure to unforeseen liabilities of acquired companies; and • dilution of interests of holders of our Common Stock through the issuance of equity securities or equity-linked securities. 29 If we are unable to maintain our network of sales and distribution channels, it could adversely affect our net sales, profitability and the implementation of our growth strategy.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which is likely to negatively affect our business and the market price of our Common Stock. Risks Related to Our Business and Industry We are highly dependent on the automotive industry.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which is likely to negatively affect our business and the market price of our Common Stock.
The Foreign Corrupt Practices Act, or FCPA, and similar anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business.
Foreign Corrupt Practices Act and similar anti-corruption laws outside the U.S. could have a material adverse effect on us. The Foreign Corrupt Practices Act, or FCPA, and similar anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business.
Increased regulatory scrutiny of dealerships that inhibit or change their selling process or how they interface with consumers could impact our revenue, Dealerships are subject to changes in regulatory rules, or requirements proposed or imposed by the Federal Trade Commission, Consumer Protection Agency or States Attorney Generals, that could change industry-accepted practices with regard to sales and/or offering of accessories to consumers.
Dealerships are subject to changes in regulatory rules, or requirements proposed or imposed by the Federal Trade Commission, Consumer Protection Agency or States Attorney Generals, that could change industry-accepted practices with regard to sales and/or offering of accessories to consumers.
As of February 28, 2025, we had 27,652,226 shares of Common Stock outstanding of which 2,572,842 shares were held by affiliates. All of the shares of Common Stock held by affiliates are restricted or controlled securities under Rule 144 promulgated under the Securities Act of 1933 as amended (the “Securities Act”).
As of February 27, 2026, we had 27,604,183 shares of Common Stock outstanding of which 2,584,071 shares were held by affiliates. All of the shares of Common Stock held by affiliates are restricted or controlled securities under Rule 144 promulgated under the Securities Act of 1933 as amended (the “Securities Act”).
If we are not able to maintain our sales and distribution channels, we could experience a decline in sales, as well as reduced market share, as consumers may decide to purchase competing products that are more easily obtainable.
We believe that this network of distribution channels enables us to efficiently reach consumers at a variety of points of sale. If we are not able to maintain our sales and distribution channels, we could experience a decline in sales, as well as reduced market share, as consumers may decide to purchase competing products that are more easily obtainable.
We rely on the ability of contract manufacturers and suppliers to deliver adequate supplies of quality film. If contract manufacturers and suppliers are unable to deliver products that meet quality standards, we may lack recourse or the ability to make the quality improvements ourselves. Our asset-light model for manufacturing trades lower fixed costs for higher variable costs.
We rely on the ability of contract manufacturers and suppliers to deliver adequate supplies of quality film. If contract manufacturers and suppliers are unable to deliver products that meet quality standards, we may lack recourse or the ability to make the quality improvements ourselves.
Legal, Regulatory and Compliance Risks We may incur material losses and costs as a result of product liability and warranty claims. The Company faces an inherent risk of exposure to product liability claims if the use of its products results, or is alleged to result, in personal injury and/or property damage.
The Company faces an inherent risk of exposure to product liability claims if the use of its products results, or is alleged to result, in personal injury and/or property damage. If the Company manufactures a defective product, it may experience material product liability losses.
If one or more of the research analysts ceases to cover us or fails to publish reports on us regularly, demand for our Common Stock could decrease, which could cause the price or trading volume to decline. 26 Short sellers of our stock may be manipulative and may have driven down and may again drive down the market price of our common stock.
If one or more of the research analysts ceases to cover us or fails to publish reports on us regularly, demand for our Common Stock could decrease, which could cause the price or trading volume to decline.
Our competitors may also develop products, features, or services that are similar to ours or that achieve greater market acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. Certain competitors could use strong or dominant positions in one or more markets to gain a competitive advantage against us.
Our competitors may also develop products, features, or services that are similar to ours or that achieve greater market acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies.
The failure or inadequacy of our IT systems, the compromise, disruption, degradation, manipulation, loss, theft, destruction, or unauthorized disclosure or use of confidential information, or the unauthorized access to, disruption of, or interference with our products and services that rely on IT systems, could impair our ability to secure and maintain intellectual property rights; result in a product manufacturing interruption or failure, or in the interruption or failure of products or services that rely on IT systems; damage our operations, customer relationships, or reputation; and cause us to lose trade secrets or other competitive advantages.
Breaches resulting in the compromise, disruption, degradation, manipulation, loss, theft, destruction, or unauthorized disclosure or use of confidential information, or the unauthorized access to, disruption of, or interference with our products and services, can occur in a variety of ways, including but not limited to, negligent or wrongful conduct by employees or others with permitted access to our systems and information, or wrongful conduct by hackers, competitors, certain governments, or other current or former company personnel. 34 The failure or inadequacy of our IT systems, the compromise, disruption, degradation, manipulation, loss, theft, destruction, or unauthorized disclosure or use of confidential information, or the unauthorized access to, disruption of, or interference with our products and services that rely on IT systems, could impair our ability to secure and maintain intellectual property rights; result in a product manufacturing interruption or failure, or in the interruption or failure of products or services that rely on IT systems; damage our operations, customer relationships, or reputation; and cause us to lose trade secrets or other competitive advantages.
We maintain an aggressive approach to defending our intellectual property. If we are unable to adequately protect our intellectual property or if our patterns become widely available without our permission, our revenue could be impacted.
In addition, the Company is routinely exposed to trademark infringement and attempts to counterfeit our products. We maintain an aggressive approach to defending our intellectual property. If we are unable to adequately protect our intellectual property or if our patterns become widely available without our permission, our revenue could be impacted.
Commensurate with our increased focus on servicing dealerships and OEMs, we have substantially increased our labor force over the last few years.
If we are unable to effectively manage our growing labor force, our business could be impacted. Commensurate with our increased focus on servicing dealerships and OEMs, we have substantially increased our labor force over the last few years.
If the Company manufactures a 22 defective product, it may experience material product liability losses. Whether or not its products are defective, the Company may incur significant costs to defend product liability claims. It also could incur significant costs in correcting any defects, lose sales and suffer damage to its reputation.
Whether or not its products are defective, the Company may incur significant costs to defend product liability claims. It also could incur significant costs in correcting any defects, lose sales and suffer damage to its reputation. Product liability insurance coverage may not be adequate for the liabilities and may not continue to be available on acceptable terms.
If we 15 are unable to successfully mitigate these cost increases, supply interruptions and/or labor shortages, our results of operations could be affected. Our operating results can be adversely affected by inflation, changes in the cost or availability of raw materials, labor, energy, transportation and other necessary supplies and services.
Our operating results can be adversely affected by inflation, tariffs, changes in the cost or availability of raw materials, labor, energy, transportation and other necessary supplies and services.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would likely negatively affect our business and the market price of our Common Stock.
As a result, stockholders could lose confidence in our financial and other public reporting, which would likely negatively affect our business and the market price of our Common Stock. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prevent fraud.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
If new or enhanced products fail to attract or retain customers or to generate sufficient revenue, operating margin, or other value to justify certain investments, our business may be adversely affected. If we are not successful with new approaches to monetization, we may not be able to maintain or grow our revenue as anticipated or recover any associated development costs.
If new or enhanced products fail to attract or retain customers or to generate sufficient revenue, operating margin, or other value to justify certain investments, our business may be adversely affected.
The Chinese government continues to exercise significant control over the Chinese economy through regulation and state ownership, and imposing industrial policies and through strategically allocating resources, controlling payment of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to selected industries or companies.
In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth through strategically allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to selected industries or companies.
If we do not succeed in attracting, hiring, and integrating effective personnel, or retaining and motivating existing personnel, our business could be adversely affected. A material disruption from our contract manufacturers or suppliers, or our inability to obtain a sufficient supply of products from alternate suppliers, could cause us to be unable to meet customer demands or increase our costs.
Operational Risks A material disruption from our contract manufacturers or suppliers, or our inability to obtain a sufficient supply of products from alternate suppliers, could cause us to be unable to meet customer demands or increase our costs.
We have established a liability reserve under these warranties based on a review of historical warranty claims. Our liability reserve for warranties as of the year ended December 31, 2024 was $0.7 million. The warranty reserve may not be sufficient to cover the costs associated with future warranty claims.
Our liability reserve for warranties as of the year ended December 31, 2025 was $0.3 million. The warranty reserve may not be sufficient to cover the costs associated with future warranty claims. A significant increase in these costs could adversely affect the Company’s operating results for future periods in which these additional costs materialize.
Strategic Risks If changes to our existing products or introduction of new products or services do not meet our customers’ expectations or fail to generate revenue, we could lose our customers or fail to generate any revenue from such products or services and our business may be harmed.
Our products must be engineered to fit specific vehicle applications; inaccuracies in fitment data, electronic catalog content, or application coverage can lead to installation difficulties, elevated returns, warranty claims, and reputational damage If changes to our existing products or introduction of new products or services do not meet our customers’ expectations or fail to generate revenue, we could lose our customers or fail to generate any revenue from such products or services and our business may be harmed.
If the Company sells poor-quality products or uses defective materials, the Company may incur unforeseen costs in excess of what it has reserved in its financial statements. These costs could have a material adverse effect on the Company’s business, financial condition, operating cash flows and ability to make required debt payments. We sell our products under limited warranties.
These costs could have a material adverse effect on the Company’s business, financial condition, operating cash flows and ability to make required debt payments. We sell our products under limited warranties. We have established a liability reserve under these warranties based on a review of historical warranty claims.
We depend on our relationships with independent installers and new car dealerships and their ability to sell and service our products. Any disruption in these relationships could harm our sales. The largest portion of our products are distributed through independent installers and new car dealerships.
Any disruption in these relationships could harm our sales. The largest portion of our products are distributed through independent installers and new car dealerships. We do not have direct control over the management or the business of these independent installers and new car dealerships, except indirectly through terms as negotiated with us.
We expect to analyze and evaluate the acquisition of strategic businesses or product lines with the potential to strengthen our industry position or enhance our existing set of product and service offerings. We may not be able to identify suitable acquisition candidates, obtain financing or have sufficient cash necessary for acquisitions or successfully complete acquisitions in the future.
We expect to analyze and evaluate the acquisition of strategic businesses, including manufacturing assets, or product lines with the potential to strengthen our industry position or enhance our existing set of product and service offerings.
Any of the foregoing matters could have a material adverse effect on the Company’s business, financial condition, operating cash flows and ability to make required debt payments. Violations of the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws outside the U.S. could have a material adverse effect on us.
Warranty reserves may need to be adjusted from time to time in the future if actual warranty claim experience differs from estimates. Any of the foregoing matters could have a material adverse effect on the Company’s business, financial condition, operating cash flows and ability to make required debt payments. 32 Violations of the U.S.
Any improper actions could subject us to civil or criminal penalties, including material monetary fines, or other adverse actions including denial of import or export privileges, and could damage our reputation and business prospects. 23 Changes in U.S. administrative policy, including changes to existing trade agreements and any resulting changes in international relations, could adversely affect our financial performance.
Nonetheless, our policies and procedures may not always protect us from actions that would violate U.S. or non-U.S. laws. Any improper actions could subject us to civil or criminal penalties, including material monetary fines, or other adverse actions including denial of import or export privileges, and could damage our reputation and business prospects.
We create patterns for our DAP platform through a combination of technology and skilled labor. If technology for pattern creation were improved or if paint protection film properties fundamentally changed, our proprietary patterns could become more widely available, and our business could be negatively impacted.
If technology for pattern creation were improved or if paint protection film properties fundamentally changed, our proprietary patterns could become more widely available, and our business could be negatively impacted. Similarly, our automotive and architectural window films could be impacted by changes or enhancements from automotive manufacturers or window manufacturers that would reduce the need for our products.
Financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP” or “GAAP”) require the use of estimates, judgments and assumptions that affect 14 the reported amounts.
The preparation of our financial statements involves the use of estimates, judgments and assumptions, and our financial statements may be materially affected if such estimates, judgments and assumptions prove to be inaccurate. Financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S.
While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition While Russia’s invasion of Ukraine and the Israel-Hamas conflict have not had a material direct impact on our business, and our related direct exposure is limited, the nature and degree of the effects of these conflicts, as well as the other effects of the current business environment over time remain uncertain.
While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition Volatility in currency exchange rates could have a material adverse effect on our financial condition, results of operations and cash flows.
Because some of our independent installer and new car dealership customers also may offer our competitors’ products, our competitors may incent such customers to favor their products.
Should the terms of doing business with them change, our business may be disrupted, which could have an adverse effect on our business, financial condition, results of operations and cash flows. Because some of our independent installer and new car dealership customers also may offer our competitors’ products, our competitors may incent such customers to favor their products.
If we are unable to maintain our network of sales and distribution channels, it could adversely affect our net sales, profitability and the implementation of our growth strategy. Our ability to continue to grow our business depends on our ability to maintain effective sales and distribution channels in each of the markets in which we operate.
Our ability to continue to grow our business depends on our ability to maintain effective sales and distribution channels in each of the markets in which we operate. We make use of a variety of distribution channels, including independent installers, new car dealerships, distributors and franchisees.
Acquisitions and investments may involve significant cash expenditures, debt 19 issuance, equity issuance, operating losses and expenses.
We may not be able to identify suitable acquisition candidates, obtain financing or have sufficient cash necessary for acquisitions or successfully complete acquisitions in the future. Acquisitions and investments may involve significant cash expenditures, debt issuance, equity issuance, operating losses and expenses.
Removed
Operational Risks We currently rely on one distributor of our products and services in China. The loss of this relationship, or a material disruption in sales by this distributor, could severely harm our business.
Added
If we do not manage or control the quality of our products, we may be unable to meet customer demands and incur higher costs . We are generally responsible for the quality of our products manufactured at third party manufacturers or our own facilities.
Removed
The Company distributes all of its products in China through the China distributor, with sales to such distributor representing approximately 5.7% of our consolidated revenue for the year ended December 31, 2024. The China Distributor places orders with us on a prepaid basis at a price set by us, which we may change with 30 days’ notice.
Added
We may have limited recourse to third party manufacturers for the costs of quality or we may incur higher costs if we do not control or manage quality issues in our own facilities. Our results depend on the timely availability of raw materials, components, and commodities at acceptable prices.
Removed
The China Distributor then generates orders, sells and distributes our products to its end customers in China.
Added
Our results depend on the timely availability of raw materials, components, and commodities at acceptable prices. We source key inputs from a limited number of suppliers and, in some cases, from single‑source or sole‑source suppliers.
Removed
Any failure by the China Distributor to perform its obligations, including a failure to procure sufficient orders of our products to satisfy customer demand or a failure to adequately market our products, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Added
Disruptions arising from supplier financial distress, capacity constraints, quality issues, labor shortages, geopolitical events, trade restrictions, sanctions, pandemics, natural disasters, or transportation bottlenecks may lead to shortages, extended lead times, production delays, and increased costs that we may not be able to pass through to customers.
Removed
While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among different sectors of the economy. The Chinese economy remains under pressure and is impacted by challenges with the country’s real estate market which affects domestic consumption and has historically been a source of funds for government stimulus and individual wealth.
Added
Volatility in prices for resins, chemicals, energy, and freight can compress margins, especially under fixed‑price or long‑term contracts. Changes in tariffs and trade policies affecting automotive parts and accessories, port congestion, container availability, and customs detentions can delay imports and increase costs.
Removed
The Chinese government has implemented various measures to generate economic growth and strategically allocate resources. Some of these measures may benefit the Chinese economy overall, but may have a negative effect on us. Any slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations.
Added
If a significant supplier is located in a region subject to political instability, export controls, or forced‑labor enforcement actions, our ability to source on expected timelines could be adversely affected. Our planned investment in manufacturing and supply chain assets exposes us to execution risks.

… 168 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−0 removed5 unchanged
Biggest changeThe Audit Committee of the Board oversees XPEL’s cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The Director of Enterprise Systems briefs the Audit Committee on the effectiveness of the Company’s cyber risk management program, typically on a quarterly basis.
Biggest changeThe Director of Enterprise Systems briefs the Audit Committee on the effectiveness of the Company’s cyber risk management program, typically on a quarterly basis. The Audit Committee reports information about cybersecurity risks to the entire Board of Directors.
The underlying controls of the cyber risk management program are based on recognized best practices and standards for cybersecurity and information technology, including those set forth in the 30 International Organization Standardization (“ISO”) 27001 standard. The Company has an annual assessment, performed by a third party, of the Company’s cyber risk management program against this standard.
The underlying controls of the cyber risk management program are based on recognized best practices and standards for cybersecurity and information technology, including those set forth in the International Organization Standardization (“ISO”) 27001 standard. The Company has an annual assessment, performed by a third party, of the Company’s cyber risk management program against this standard.
The Director of Enterprise Systems manages the third-party service provider engaged to monitor the Company’s cybersecurity environment and is regularly updated by the third-party service provider on the cybersecurity activities. The Director of Enterprise Systems has 22 years of experience in information technology and is supported by a team with additional relevant experience and related certifications.
The Director of Enterprise Systems manages the third-party service provider engaged to monitor the Company’s cybersecurity environment and is regularly updated by the third-party service provider on the cybersecurity activities.
Added
The Director of Enterprise Systems has over 23 years of experience in information technology and is supported by a team with additional relevant experience and related certifications. 40 The Audit Committee of the Board oversees XPEL’s cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeCountry or Region Installation and Sales Locations Warehouse Locations Administrative, Training, and Other Locations Leased Square Footage United States 14 3 1 333,200 Continental Europe 3 1 2 88,451 Canada 12 3 1 105,199 Mexico 1 1 — 13,659 United Kingdom 1 1 — 14,835 Asia and Asia Pacific 8 1 — 65,639 We believe that our facilities are suitable for their purpose and are sufficient to support our current business needs.
Biggest changeCountry or Region Installation and Sales Locations Warehouse Locations Administrative, Training, and Other Locations Leased Square Footage United States 20 3 1 349,105 Continental Europe 4 2 3 90,938 Canada 13 4 3 121,342 Mexico 1 1 — 13,659 United Kingdom 1 1 — 14,835 Asia and Asia Pacific 13 6 3 251,229 We believe that our facilities are suitable for their purpose and are sufficient to support our current business needs.
A summary of our principal facilities as of December 31, 2024 is set forth in the chart below.
A summary of our principal facilities as of December 31, 2025 is set forth in the chart below.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−1 removed2 unchanged
Biggest changeItem 3. Legal Proceedings 31 From time to time, we are made parties to actions filed or have been given notice of potential claims relating to the ordinary conduct of our business, including those pertaining to commercial disputes, product liability, patent infringement and employment matters. On August 8, 2024, a securities class action complaint, Greg Adishian v.
Biggest changeItem 3. Legal Proceedings From time to time, we are made parties to actions filed or have been given notice of potential claims relating to the ordinary conduct of our business, including those pertaining to commercial disputes, product liability, patent infringement and employment matters.
As a result, the current estimates of the potential impact on our financial position, results of operations and cash flows for the proceedings and claims described in the notes to our consolidated financial statements could change in the future. Item 4. Mine Safety Disclosures Not applicable. Part II
As a result, the current estimates of the potential impact on our financial position, results of operations and cash flows for the proceedings and claims described in the notes to our consolidated financial statements could change in the future. Item 4. Mine Safety Disclosures Not applicable. Part II 41
Removed
XPEL, Inc., et. al., case number 5:24-cv-00873, was filed against the Company in the United States District Court for the Western District of Texas. The complaint named as defendants the Company and certain of its officers for making false and misleading statements regarding the Company's financial outlook. On December 23, 2024, the plaintiff voluntarily dismissed this case without prejudice.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+6 added−1 removed4 unchanged
Biggest changeWe have chosen to use the Russell 2000 Index rather than an industry or line-business index because we do not believe our company is comparable to companies in a particular industry or line-of-business such as after-market automotive or consumer discretionary product companies and we have not used a peer group of companies because our major competitors are either much larger than we are and their competitive products constitute small lines of business for these companies or other competitors are private companies.
Biggest changeWe have chosen to use the Russell 2000 Index rather than an industry or line-business index because we do not believe our company is comparable to companies in a particular industry or line-of-business such as after-market automotive or consumer discretionary product companies and we have not used a peer group of companies because our major competitors are either much larger than we are and their competitive products constitute small lines of business for these companies or other competitors are private companies. 42 Purchases of Equity Securities In May 2025, the Board approved a stock repurchase program that authorized the Company to purchase up to $50 million of the Company’s Common Stock.
The following data and graph show a comparison of the cumulative total stockholder return for XPEL’s common stock, the Russell 2000 Index and the S&P 500 Index from December 31, 2020 through 32 December 31, 2024.
The following data and graph show a comparison of the cumulative total stockholder return for XPEL’s Common Stock, the Russell 2000 Index and the S&P 500 Index from December 31, 2020 through December 31, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s Common Stock is traded on The Nasdaq Stock Market LLC under the symbol “XPEL”. Holders As of February 28, 2025, there were eight stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s Common Stock is traded on The Nasdaq Stock Market LLC under the symbol “XPEL”. Holders As of February 27, 2026, there were eight stockholders of record.
Removed
Purchases of Equity Securities In the year ended December 31, 2024 we did not repurchase any shares of our Common Stock. Item 6. [Reserved]
Added
The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities and other factors. The repurchase program may be suspended or discontinued at any time.
Added
It is XPEL’s intention to comply with applicable securities laws, including insider trading laws, when engaging in transactions in the Company’s common stock.
Added
The following table provides information relating to our purchases of our Common Stock during the three months ended December 31, 2025: Total number of shares (or units) purchased (a)(b) Average Price paid per share (or unit) (a)(b) Total number of shares (or units) purchased as part of publicly announced plans or programs (c) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (d)(e) October 1-31 — $ — — $ — November 1-30 78,624 38.16 78,624 46,999,708 December 1-31 — — — — Total 78,624 $ 38.16 78,624 $ 46,999,708 (a)(b) In May 2025, the Company's Board of Directors authorized the Company to repurchase up to $50 million of the Company's common stock.
Added
The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities and other factors. The repurchase program may be suspended or discontinued at any time.
Added
(c) The repurchase program may be suspended or discontinued at any time. 43 (d) Shares that may be purchased under the program exclude shares of Common Stock that may be surrendered to satisfy statutory minimum tax withholding obligations in connection with the vesting of restricted stock units and performance stock units issued to employees.
Added
(e) Excludes a 1% excise tax imposed by the Inflation Reduction Act. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+4 added−4 removed16 unchanged
Biggest changeThe following tables summarize revenue results for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands): Year Ended December 31, % Change % of Total Revenue 2024 2023 2022 2024 vs 2023 2023 vs 2022 2024 2023 2022 Product Revenue Paint protection film $ 226,710 $ 229,880 $ 192,374 (1.4) % 19.5 % 53.9 % 58.0 % 59.4 % Window film 77,666 67,951 54,370 14.3 % 25.0 % 18.5 % 17.1 % 16.8 % Other 14,473 13,575 11,430 6.6 % 18.8 % 3.4 % 3.5 % 3.5 % Total $ 318,849 $ 311,406 $ 258,174 2.4 % 20.6 % 75.8 % 78.6 % 79.7 % Service Revenue Software $ 8,061 $ 6,518 $ 5,213 23.7 % 25.0 % 1.9 % 1.6 % 1.6 % Cutbank credits 17,015 17,626 16,317 (3.5) % 8.0 % 4.0 % 4.4 % 5.0 % Installation labor 74,478 58,477 42,828 27.4 % 36.5 % 17.7 % 14.8 % 13.2 % Training and other 1,997 2,266 1,461 (11.9) % 55.1 % 0.6 % 0.6 % 0.5 % Total $ 101,551 $ 84,887 $ 65,819 19.6 % 29.0 % 24.2 % 21.4 % 20.3 % Total $ 420,400 $ 396,293 $ 323,993 6.1 % 22.3 % 100.0 % 100.0 % 100.0 % 36 Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product.
Biggest changeThe following tables summarize revenue results for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands): Year Ended December 31, % Change % of Total Revenue 2025 2024 2023 2025 vs 2024 2024 vs 2023 2025 2024 2023 Product Revenue Paint protection film $ 249,401 $ 226,710 $ 229,880 10.0 % (1.4) % 52.4 % 53.9 % 58.0 % Window film 94,544 77,666 67,951 21.7 % 14.3 % 19.9 % 18.5 % 17.1 % Other 15,910 14,473 13,575 9.9 % 6.6 % 3.3 % 3.4 % 3.5 % Total $ 359,855 $ 318,849 $ 311,406 12.9 % 2.4 % 75.6 % 75.8 % 78.6 % Service Revenue Software $ 8,729 $ 8,061 $ 6,518 8.3 % 23.7 % 1.8 % 1.9 % 1.6 % Cutbank credits 16,530 17,015 17,626 (2.9) % (3.5) % 3.5 % 4.0 % 4.4 % Installation labor 87,049 74,478 58,477 16.9 % 27.4 % 18.3 % 17.7 % 14.8 % Other 4,037 1,997 2,266 102.2 % (11.9) % 0.8 % 0.6 % 0.6 % Total $ 116,345 $ 101,551 $ 84,887 14.6 % 19.6 % 24.4 % 24.2 % 21.4 % Total $ 476,200 $ 420,400 $ 396,293 13.3 % 6.1 % 100.0 % 100.0 % 100.0 % Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product.
Service revenue consists of revenue from fees for DAP software access, cutbank credit revenue, which represents the value of pattern access provided with eligible product revenue, revenue from the labor portion of installation sales in our Company-owned installation centers, labor revenue from our dealership services business, and revenue from training services provided to our customers.
Service revenue consists of revenue from fees for DAP software access, cutbank credit revenue, which represents the value of pattern access provided with eligible product revenue, revenue from the labor portion of installation sales in our Company-owned installation centers, revenue from our dealership services business and revenue from training services provided to our customers.
Management uses EBITDA (1) to compare our operating performance on a consistent basis, (2) to calculate incentive compensation for our employees, (3) for planning purposes including the preparation of our internal annual operating budget, (4) to evaluate the performance and effectiveness of our operational strategies, and (5) to assess compliance with various metrics associated with the agreements governing our indebtedness.
Management uses EBITDA (1) to compare our operating performance on a consistent basis, (2) to calculate incentive compensation for our employees, (3) for planning purposes including the preparation of our internal annual operating budget, (4) to evaluate the performance and effectiveness of 44 our operational strategies, and (5) to assess compliance with various metrics associated with the agreements governing our indebtedness.
Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from the management of the acquired entities. 41 Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Cost is determined on a weighted average cost basis.
Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from the management of the acquired entities. Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Cost is determined on a weighted average cost basis.
The Credit Agreement provides for 2 financial covenants, as follows. As of the last day of each fiscal quarter: 1. XPEL shall not allow its Consolidated Total Leverage Ratio to exceed 3.50 to 1.00, and 2. XPEL shall not allow its Consolidated Interest Coverage Ratio to be less than 3.00 to 1.00.
The Credit Agreement provides for two financial covenants, as follows. As of the last day of each fiscal quarter: 1. XPEL shall not allow its Consolidated Total Leverage Ratio to exceed 3.50 to 1.00, and 2. XPEL shall not allow its Consolidated Interest Coverage Ratio to be less than 3.00 to 1.00.
In addition to the applicable interest rate, the Credit Agreement 40 includes a commitment fee ranging from 0.20% to 0.25% per annum for the unused portion of the aggregate commitment and an applicable margin ranging from 0.00% to 0.50% for Base Rate Loans and 1.00% to 1.50% for Adjusted Term SOFR Loans.
In addition to the applicable interest rate, the Credit Agreement includes a commitment fee ranging from 0.20% to 0.25% per annum for the unused portion of the aggregate commitment and an applicable margin ranging from 0.00% to 0.50% for Base Rate Loans and 1.00% to 1.50% for Adjusted Term SOFR Loans.
Discussions of the periods prior to the year ended December 31, 2023 that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 and the discussion therein for the year ended December 31, 2023 compared to the year ended December 31, 2022 is incorporated by reference into this Annual Report.
Discussions of the periods prior to the year ended December 31, 2024 that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 and the discussion therein for the year ended December 31, 2024 compared to the year ended December 31, 2023 is incorporated by reference into this Annual Report.
EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations; and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure. 35 Results of Operations This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2024 and 2023 and year-over-year comparisons between those years.
EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations; and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure. 45 Results of Operations This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2025 and 2024 and year-over-year comparisons between those years.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Executive Summary Set forth below is summary financial information for the years ended December 31, 2024, 2023, and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary Set forth below is summary financial information for the years ended December 31, 2025, 2024, and 2023.
See Note 14 of the Notes to our Consolidated Financial Statements for further information.
See Note 15 of the Notes to our Consolidated Financial Statements for further information.
The decrease in service gross margin percentage was primarily due to a higher percentage of lower margin installation labor revenue relative to other higher margin service revenue components. Operating Expenses Sales and marketing expenses for the year ended December 31, 2024 increased 34.7% compared to 2023.
The decrease in service gross margin percentage was primarily due to a higher percentage of lower margin installation labor revenue relative to other higher margin service revenue components. Operating Expenses Sales and marketing expenses for the year ended December 31, 2025 increased 19.4% compared to 2024.
These expenses represented 10.2% and 8.0% of consolidated revenue for the years ended December 31, 2024 and 2023, respectively. This increase was due mainly to increased personnel, and additional marketing projects including sponsorships and increased marketing efforts to dealerships and end customers. General and administrative expenses for the year ended December 31, 2024 increased 18.4% compared to 2023.
These expenses represented 10.7% and 10.2% of consolidated revenue for the years ended December 31, 2025 and 2024, respectively. This increase was due mainly to increased personnel, and additional marketing projects including sponsorships and increased marketing efforts to dealerships and end customers. General and administrative expenses for the year ended December 31, 2025 increased 15.7% compared to 2024.
The increase in product gross margin percentages was primarily due to decreases in product costs, favorable changes in product mix and improved operating leverage. Service gross margin increased approximately $9.3 million for the year ended December 31, 2024, and represented 57.4% and 57.7% of total service revenue for the years ended December 31, 2024 and 2023, respectively.
The increase in product gross margin percentages was primarily due to decreases in product costs, favorable changes in product mix and improved operating leverage. Service gross margin increased approximately $6.8 million for the year ended December 31, 2025, and represented 56.0% and 57.4% of total service revenue for the years ended December 31, 2025 and 2024, respectively.
Other product revenue for the year ended December 31, 2024 grew 6.6% to $14.5 million and represented 3.4% of total consolidated revenue. This increase was driven by an increase in demand for our non-film related products such as ceramic coating, plotters, chemicals and other film installation tools and accessories. Our FUSION ceramic coating product revenue grew 4.1% to $6.4 million.
Other product revenue for the year ended December 31, 2025 grew 9.9% to $15.9 million and represented 3.3% of total consolidated revenue. This increase was driven by an increase in demand for our non-film related products such as ceramic coating, plotters, chemicals and other film installation tools and accessories.
Income Tax Expense Our provision for income taxes was $11.3 million in the year ended December 31, 2024 as compared to $13.2 million in the year ended December 31, 2023. Our effective income tax rates for the years ended December 31, 2024 and 2023 were 19.9% and 20.0%, respectively.
Income Tax Expense Our provision for income taxes was $12.5 million in the year ended December 31, 2025 as compared to $11.3 million in the year ended December 31, 2024. Our effective income tax rates for the years ended December 31, 2025 and 2024 were 19.5% and 19.9%, respectively.
Cash flows provided by operations totaled approximately $47.8 million for the year ended December 31, 2024, compared to $37.4 million for the year ended December 31, 2023.
Cash flows provided by operations totaled approximately $66.9 million for the year ended December 31, 2025, compared to $47.8 million for the year ended December 31, 2024.
Cash flows used in financing activities during the year ended December 31, 2024 totaled approximately $19.3 million compared to cash use of $7.3 million in the prior year. This use of cash was due primarily to net repayments on our credit facilities.
Cash flows used in financing activities during the year ended December 31, 2025 totaled approximately $3.7 million compared to cash used of $19.3 million in the prior year. This change was due primarily to the timing of repayments on our credit facility, which was fully repaid in 2024.
At December 31, 2024, these rates were 7.5% and 5.6%, respectively. Both the margin applicable to the interest rate and the commitment fee are dependent on XPEL’s Consolidated Total Leverage Ratio. The Credit Agreement's maturity date is April 6, 2026.
At December 31, 2025, these rates were 6.8% and 4.8%, respectively. Both the margin applicable to the interest rate and the commitment fee are dependent on XPEL’s Consolidated Total Leverage Ratio. The Credit Agreement's maturity date is September 11, 2028.
As of December 31, 2024, we had cash and cash equivalents of $22.1 million, and we had approximately $128.1 million in funds available under our credit facilities. For the year ended December 31, 2024, cash flows provided by operations were $47.8 million.
As of December 31, 2025, we had cash and cash equivalents of $50.9 million, and we had approximately $128.3 million in funds available under our credit facilities. For the year ended December 31, 2025, cash flows provided by operations were $66.9 million.
Product revenue increased 2.4% during the year ended December 31, 2024 as compared to 2023 and represented 75.8% of our consolidated 2024 revenue. Within this category, revenue from our paint protection film product line decreased 1.4% as compared to the prior year and represented 53.9% of total consolidated revenue for the year ended December 31, 2024.
Product revenue increased 12.9% during the year ended December 31, 2025 as compared to 2024 and represented 75.6% of our consolidated 2025 revenue. Within this category, revenue from our paint protection film product line increased 10.0% as compared to the prior year and represented 52.4% of total consolidated revenue for the year ended December 31, 2025.
Net Income Net income for the year ended December 31, 2024 decreased by 13.8% to $45.5 million. 39 Liquidity and Capital Resources The primary sources of liquidity for our business are available cash and cash equivalents, cash flows provided by operations, and borrowings under our credit facilities.
Net Income Net income for the year ended December 31, 2025 increased by 13.4% to $51.6 million. 48 Liquidity and Capital Resources The primary sources of liquidity for our business are available cash and cash equivalents, cash flows provided by operations, and borrowings under our credit facilities.
As of December 31, 2024 and December 31, 2023, no balance was outstanding on this facility. Critical Accounting Estimates We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates.
Critical Accounting Estimates We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates.
We define EBITDA as net income plus (a) total depreciation and amortization, (b) interest expense, net, and (c) income tax expense. 34 The following table is a reconciliation of Net Income to EBITDA for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands): 2024 % of Total Revenue 2023 % of Total Revenue 2022 % of Total Revenue Net Income $ 45,489 10.8 % $ 52,800 13.3 % $ 41,381 12.8 % Interest 996 0.2 % 1,248 0.3 % 1,410 0.4 % Taxes 11,289 2.7 % 13,231 3.3 % 10,584 3.3 % Depreciation 5,820 1.4 % 4,534 1.1 % 3,433 1.1 % Amortization 5,877 1.4 % 5,059 1.3 % 4,401 1.4 % EBITDA $ 69,471 16.5 % $ 76,872 19.4 % $ 61,209 18.9 % Use of Non-GAAP Financial Measures EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The following table is a reconciliation of Net Income to EBITDA for the years ended December 31, 2025, 2024, and 2023 (dollars in thousands): 2025 % of Total Revenue 2024 % of Total Revenue 2023 % of Total Revenue Net Income $ 51,589 10.8 % $ 45,489 10.8 % $ 52,800 13.3 % Interest 83 — % 996 0.2 % 1,248 0.3 % Taxes 12,472 2.6 % 11,289 2.7 % 13,231 3.3 % Depreciation 6,264 1.3 % 5,820 1.4 % 4,534 1.1 % Amortization 6,990 1.5 % 5,877 1.4 % 5,059 1.3 % EBITDA $ 77,398 16.3 % $ 69,471 16.5 % $ 76,872 19.4 % Use of Non-GAAP Financial Measures EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
We engaged an independent third-party valuation specialist to assist with the fair value allocation of the purchase price paid for our various acquisitions to intangible assets.
Any unallocated portion is recognized as goodwill. We engaged an independent third-party valuation specialist to assist with the fair value allocation of the purchase price paid for our various acquisitions.
Year Ended December 31, % Change 2024 % of Total Revenue 2023 % of Total Revenue 2022 % of Total Revenue 2024 vs. 2023 2023 vs. 2022 Total Revenue $ 420,400 100.0 % $ 396,293 100.0 % $ 323,993 100.0 % 6.1 % 22.3 % Total Cost of Sales 243,040 57.8 % 233,879 59.0 % 196,481 60.6 % 3.9 % 19.0 % Gross Margin 177,360 42.2 % 162,414 41.0 % 127,512 39.4 % 9.2 % 27.4 % Total Operating Expenses 118,213 28.1 % 95,442 24.1 % 73,575 22.7 % 23.9 % 29.7 % Operating Income 59,147 14.1 % 66,972 16.9 % 53,937 16.6 % (11.7) % 24.2 % Other Expenses 2,369 0.6 % 941 0.2 % 1,972 0.6 % 151.8 % (52.3) % Income Tax 11,289 2.7 % 13,231 3.3 % 10,584 3.3 % (14.7) % 25.0 % Net Income $ 45,489 10.8 % $ 52,800 13.3 % $ 41,381 12.8 % (13.8) % 27.6 % Company Overview We are a supplier of protective films, coatings and related services primarily to the automobile aftermarket, new car dealerships and OEMs.
Year Ended December 31, % Change 2025 % of Total Revenue 2024 % of Total Revenue 2023 % of Total Revenue 2025 vs. 2024 2024 vs. 2023 Total Revenue $ 476,200 100.0 % $ 420,400 100.0 % $ 396,293 100.0 % 13.3 % 6.1 % Total Cost of Sales 275,181 57.8 % 243,040 57.8 % 233,879 59.0 % 13.2 % 3.9 % Gross Margin 201,019 42.2 % 177,360 42.2 % 162,414 41.0 % 13.3 % 9.2 % Total Operating Expenses 138,370 29.1 % 118,213 28.1 % 95,442 24.1 % 17.1 % 23.9 % Operating Income 62,649 13.2 % 59,147 14.1 % 66,972 16.9 % 5.9 % (11.7) % Other (Income) Expense (1,412) (0.3) % 2,369 0.6 % 941 0.2 % (159.6) % 151.8 % Income Tax 12,472 2.6 % 11,289 2.7 % 13,231 3.3 % 10.5 % (14.7) % Net Income $ 51,589 10.8 % $ 45,489 10.8 % $ 52,800 13.3 % 13.4 % (13.8) % Company Overview We are a supplier of protective films, coatings and related services primarily to the automobile aftermarket, new car dealerships and OEMs.
Debt obligations, including balances outstanding on committed credit facilities and contingent liabilities, as of December 31, 2024 and December 31, 2023 totaled approximately $2.1 million and $20.2 million, respectively.
Balances outstanding on contingent liabilities and debt totaled approximately $20.0 million and $2.1 million as of December 31, 2025 and December 31, 2024, respectively.
As of December 31, 2023, the Company had an outstanding balance of $19.0 million under the Credit Agreement. Borrowings under the Credit Agreement bear interest, at XPEL’s option, at a rate equal to either (a) Base Rate or (b) Adjusted Term SOFR.
As of December 31, 2025 and December 31, 2024, the Company had no outstanding balances under this agreement. Borrowings under the Credit Agreement bear interest, at XPEL’s option, at a rate equal to either (a) Base Rate or (b) Adjusted Term SOFR.
Future liquidity and capital resource requirements We expect to fund ongoing operating expenses, capital expenditures, acquisitions, interest payments, tax payments, credit facility maturities, future lease obligations, and payments for other long-term liabilities with cash flow from operations. In the short-term, we are contractually obligated to make lease payments and make payments on contingent liabilities related to certain completed acquisitions.
Future liquidity and capital resource requirements We expect to fund ongoing operating expenses, capital expenditures, acquisitions, interest payments, tax payments, credit facility maturities, future lease obligations, and payments for other long-term liabilities with cash flow from operations and borrowings under our credit facility.
Interest Expense Interest expense decreased 20.2% to $1.0 million in the year ended December 31. 2024 compared to the year ended December 31. 2023. This decrease was due to the reduction in the amount of our debt facility throughout the year.
Interest Expense Interest expense decreased from $1.0 million to $0.1 million in the year ended December 31, 2025 compared to the year ended December 31, 2024. This decrease was due to limited drawdowns on our debt facility throughout the year.
All capitalized terms in this description of the credit facility that are not otherwise defined in this report have the meaning assigned to them in the Credit Agreement. Obligations under the Credit Agreement are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in all of XPEL’s material property and assets.
Obligations under the Credit Agreement are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in all of XPEL’s material property and assets.
Gross Margin The following table summarizes gross margin for product and services for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands): Year Ended December 31, % Change % of Category Revenue 2024 2023 2022 2024 vs 2023 2023 vs 2022 2024 2023 2022 Product $ 119,058 $ 113,398 $ 88,269 5.0 % 28.5 % 37.3 % 36.4 % 34.2 % Service 58,302 49,016 39,243 18.9 % 24.9 % 57.4 % 57.7 % 59.6 % Total $ 177,360 $ 162,414 $ 127,512 9.2 % 27.4 % 42.2 % 41.0 % 39.4 % Product gross margin for the year ended December 31, 2024 increased approximately $5.7 million, or 5.0%, over the year ended December 31, 2023 and represented 37.3% and 36.4% of total product revenue for the years ended December 31, 2024 and 2023, respectively.
Refer to the Gross Margin section below for discussion of this cost relative to revenue. 47 Gross Margin The following table summarizes gross margin for product and services for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands): Year Ended December 31, % Change % of Category Revenue 2025 2024 2023 2025 vs 2024 2024 vs 2023 2025 2024 2023 Product $ 135,888 $ 119,058 $ 113,398 14.1 % 5.0 % 37.8 % 37.3 % 36.4 % Service 65,131 58,302 49,016 11.7 % 18.9 % 56.0 % 57.4 % 57.7 % Total $ 201,019 $ 177,360 $ 162,414 13.3 % 9.2 % 42.2 % 42.2 % 41.0 % Product gross margin for the year ended December 31, 2025 increased approximately $16.8 million, or 14.1%, over the year ended December 31, 2024 and represented 37.8% and 37.3% of total product revenue for the years ended December 31, 2025 and 2024, respectively.
Accordingly, we believe that EBITDA provides useful information in understanding and evaluating our operating performance in the same manner as management.
Accordingly, we believe that EBITDA provides useful information in understanding and evaluating our operating performance in the same manner as management. We define EBITDA as net income plus (a) total depreciation and amortization, (b) interest expense, net, and (c) income tax expense.
These costs represented 17.9% and 16.1% of total consolidated revenue for the years ended December 31, 2024 and 2023, respectively. The increase was due mainly to increases in personnel, 38 occupancy costs, depreciation and amortization, and information technology costs to support the ongoing growth of the business.
These costs represented 18.3% and 17.9% of total consolidated revenue for the years ended December 31, 2025 and 2024, respectively. The increase was due mainly to increases in personnel costs, occupancy costs, depreciation and amortization primarily related to acquisitions and acquisition-related professional fees.
Cash flows used in investing activities totaled approximately $18.4 million during the year ended December 31, 2024 compared to cash use of $26.4 million for the year ended December 31, 2023. This decrease in cash used was due to a reduction in expenditures for acquisitions in the year ended December 31, 2024. Financing activities.
Cash flows used in investing activities totaled approximately $33.8 million during the year ended December 31, 2025 compared to cash used of $18.4 million for the year ended December 31, 2024. This increase in cash used was due primarily to an increase in acquisition activity primarily related to our China acquisition during the year ended December 31, 2025. Financing activities.
Certain of the most critical estimates that require significant judgment are as follows: Business Combinations The accounting for a business combination requires the excess of the purchase price for the acquisition over the net book value of assets acquired to be allocated to the identifiable assets of the acquired entity. Any unallocated portion is recognized as goodwill.
We identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. 50 Certain of the most critical estimates that require significant judgment are as follows: Business Combinations The accounting for a business combination requires the excess of the purchase price for the acquisition over the fair market value of assets acquired to be allocated to the identifiable assets of the acquired entity.
The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors for the years ended December 31, 2024 and 2023 (dollars in thousands): Year Ended December 31, % % of Total Revenue 2024 2023 2024 vs 2023 2024 2023 United States $ 240,569 $ 224,839 7.0 % 57.2 % 56.7 % Canada 52,139 43,506 19.8 % 12.4 % 11.0 % China 24,148 41,576 (41.9) % 5.7 % 10.5 % Continental Europe 39,564 34,883 13.4 % 9.4 % 8.8 % Middle East/Africa 20,887 16,472 26.8 % 5.0 % 4.2 % United Kingdom 14,604 13,438 8.7 % 3.5 % 3.4 % Asia Pacific 16,825 11,943 40.9 % 4.0 % 3.0 % Latin America 11,664 8,737 33.5 % 2.8 % 2.2 % Other — 899 (100.0) % 0.0 % 0.2 % Total $ 420,400 $ 396,293 6.1 % 100.0 % 100.0 % Revenue Product Revenue.
The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors for the years ended December 31, 2025 and 2024 (dollars in thousands): Year Ended December 31, % % of Total Revenue 2025 2024 2025 vs 2024 2025 2024 United States $ 265,756 $ 240,569 10.5 % 55.8 % 57.2 % Canada 49,545 52,139 (5.0) % 10.4 % 12.4 % North America 315,301 292,708 7.7 % 66.2 % 69.6 % China 39,921 24,148 65.3 % 8.4 % 5.7 % Asia Other 20,895 16,825 24.2 % 4.4 % 4.0 % Asia Pacific 60,816 40,973 48.4 % 12.8 % 9.7 % EU, UK, and Africa 64,095 53,983 18.7 % 13.5 % 12.9 % India and Middle East 24,984 21,072 18.6 % 5.2 % 5.0 % Latin America 11,004 11,664 (5.7) % 2.3 % 2.8 % Total $ 476,200 $ 420,400 13.3 % 100.0 % 100.0 % 46 Revenue Product Revenue.
Automotive window film revenue grew 12.5% to $65.8 million for the year ended December 31, 2024 and represented 84.7% of total window film revenue and 15.7% of total consolidated revenue for the year ended December 31. 2024 . This increase was due to continued channel focus, increased product adoption in multiple regions and increased demand.
This increase was driven by continued demand resulting from increased product adoption in multiple regions for automotive window film. Our windshield protection film revenue for the year ended December 31, 2025 was $7.0 million and represented 7.4% of total window film revenue and 1.5% of total consolidated revenue. Our windshield protection film product was launched during the fourth quarter 2024.
During 2024, service revenue grew 19.6% over service revenue for the year ended December 31, 2023. 37 Within the service revenue category, software revenue increased 23.7% from the year ended December 31, 2023. This increase was due primarily to increases in customers subscribing to our software. Cutbank credit revenue decreased 3.5% from the year ended December 31, 2023.
During 2025, service revenue grew 14.6% over service revenue for the year ended December 31, 2024. Within the service revenue category, software revenue increased 8.3% during the year ended December 31, 2025. This increase was due to an increase in total subscribers to our DAP software.
Total installation revenue (labor and product combined) at our Company-owned installation centers for the year ended December 31, 2024 increased 27.4% over the year ended December 31, 2023. Adjusted product revenue, which combines the cutbank credit revenue service component with product revenue, increased by 2.1% from the year ended December 31, 2023 due mainly to the same factors described above.
These increases were primarily due to increased demand across our dealership services and OEM networks. Adjusted product revenue, which combines the cutbank credit revenue service component with product revenue, increased by 12.1% from the year ended December 31, 2024 due mainly to the same factors described above.
Product costs in the year ended December 31, 2024 increased 0.9% over the year ended December 31, 2023, commensurate with the growth in product revenue. Cost of service revenue grew 20.6% during the year ended December 31, 2024, commensurate with the related serviced revenue growth. Refer to the Gross Margin section below for discussion of this cost relative to revenue.
Product costs in the year ended December 31, 2025 increased 12.1% over the year ended December 31, 2024, commensurate with the growth in product revenue. Cost of service revenue grew 18.4% during the year ended December 31, 2025, commensurate with the related serviced revenue growth.
This decrease was due primarily to the decrease in paint protection film revenue. Installation labor revenue increased 27.4% from the year ended December 31, 2023, due mainly to strong demand across our dealership service and OEM businesses.
Installation labor revenue increased 16.9% from the year ended December 31, 2024, due mainly to strong demand across our dealership service and OEM businesses. Total installation revenue (labor and product combined) for the year ended December 31, 2025 increased 17.0% over the year ended December 31, 2024.
XPEL Canada Corp., a wholly-owned subsidiary of XPEL, Inc., also has a CAD $4.5 million revolving credit facility. This facility can be utilized to fund our working capital needs in Canada. This facility bears interest at the Royal Bank of Canada’s prime rate plus 0.25% per annum and is guaranteed by the parent company.
The Company also has a CAD $4.5 million (approximately $3.3 million USD as of December 31, 2025) revolving credit facility through a financial institution in Canada, and is maintained by XPEL Canada Corp., a wholly-owned subsidiary of XPEL. This Canadian facility is utilized to fund the Company's working capital needs in Canada.
In the long-term, we are contractually obligated to make lease payments, pay contingent liabilities as they are earned, and repay borrowings on our line of credit. We believe that we have sufficient cash and cash equivalents, as well as borrowing capacity, to cover our estimated short-term and long-term funding needs.
In the short-term, we are contractually obligated to make lease payments and make payments on contingent liabilities related to certain completed acquisitions. In the long-term, we are contractually obligated to make lease payments, for contingent liabilities, and for repayment of borrowings on our line of credit.
Architectural window film revenue increased 9.4% to $10.4 million and represented 13.4% of total window film revenue and 2.5% of total consolidated revenue for the year ended December 31, 2024. This increase was due mainly to increased product awareness and adoption in most of our regions.
The total increase in paint protection film sales was due to increased demand for our film products across multiple regions. Revenue from our window film product line grew 21.7% during the year ended December 31, 2025 and represented 19.9% of our consolidated annual 2025 revenue.
Credit Facilities The Company has a revolving credit facility providing for secured revolving loans and letters of credit in an aggregate amount of up to $125.0 million, which is subject to the terms of a credit agreement dated April 6, 2023 (the "Credit Agreement"). As of December 31, 2024, the Company had no outstanding balance under this agreement.
The Amendment, among other things, extended the maturity of the Credit Agreement from April 6, 2026 to September 11, 2028. The Credit Agreement provides for secured revolving loans and letters of credit in an aggregate amount of up to $125 million, which is subject to the terms of the Credit Agreement.
This increase was driven primarily by increased channel focus and increased demand for our ceramic coating products. Geographically, we experienced continued growth in most of our regions including 7.0% growth in the US region, our most mature market. These increases were primarily due to increasing product awareness and adoption. Service revenue.
The increase in China was driven primarily by increased demand and incremental direct revenue resulting from the completion of the acquisition of our China distributor late in the third quarter 2025. Other increases were primarily due to increasing product awareness and adoption. Service revenue.
The increase in operating cash flows for the year ended December 31, 2024 was driven primarily by a reduction in inventory purchases partially offset by a decline in net income and other changes in working capital. Investing activities .
The increase in operating cash flows for the year ended December 31, 2025 was mainly due to an increase in net income, reduced inventory purchases, and an increase in accounts payable and other accrued liabilities due to normal payment cycle timing offset by increased accounts receivable related to increased revenue and approximately $5.5 million resulting from a transition services agreement related to our China acquisition Investing activities .
Removed
This decrease was primarily the result of a decline in sales into China offset by increases in most other operating regions. Sales into China were negatively impacted as our distributor continued to sell through excess inventory levels during the year.
Added
Geographically, we experienced continued growth in most of our regions during the year ended December 31, 2025 including growth of 65.3%, 24.2%, and 18.7% in China, Asia-Other, and EU/UK/Africa respectively. Additionally, we saw 10.5% growth in the US region, our largest market.
Removed
Revenue from our window film product line grew 14.3% during the year ended December 31, 2024 and represented 18.5% of our consolidated annual 2024 revenue. This product line includes both automotive and architectural window film.
Added
In addition, if an opportunity presents itself, we may sell debt or equity securities, although we may not be able to complete such financing on terms acceptable to us or at all.
Removed
Foreign Currency Exchange Loss Foreign currency loss for the year ended December 31, 2024 was $1.4 million compared to a foreign currency gain of $.3 million for the year ended December 31, 2023. This increase in foreign currency loss was due to the significant strengthening of the U.S. dollar during the year.
Added
We believe that we have sufficient cash and cash equivalents, as well as borrowing capacity, to cover our estimated short-term and long-term funding needs. 49 Credit Facilities On September 11, 2025, XPEL entered into the Amendment to the Credit Agreement with Wells Fargo Bank, N.A., as Administrative Agent, and other lenders party thereto.
Removed
We identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements.
Added
This facility bears interest at the Royal Bank of Canada’s prime rate plus 0.25% per annum and is guaranteed by the parent company. As of December 31, 2025 and December 31, 2024, the Company had no outstanding balances under the Credit Agreement. As of December 31, 2025 and December 31, 2024, the Company was in compliance with all debt covenants.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+1 added−0 removed3 unchanged
Biggest changeIf our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations. 42
Biggest changeOur inability or failure to do so could adversely affect our business, financial condition and results of operations.
We do not currently have any derivative contracts to hedge our exposure to interest rate risk. During each of the periods presented, we have not experienced a significant effect on our business due to changes in interest rates.
We do not currently have any derivative contracts to hedge our exposure to interest rate risk.
Added
During each of the periods presented, we have not experienced a significant effect on our business due to changes in interest rates. 51 If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.

Other XPEL 10-K year-over-year comparisons