Expected Weighted On-base Average (xwOBA) is formulated using exit velocity, launch angle and, on certain types of batted balls, Sprint Speed.
In the same way that each batted ball is assigned an expected batting average, every batted ball is given a single, double, triple and home run probability based on the results of comparable batted balls since Statcast was implemented Major League wide in 2015. For the majority of batted balls, this is achieved using only exit velocity and launch angle. As of 2019, "topped" or "weakly hit" balls also incorporate a batter's seasonal Sprint Speed.
All hit types are valued in the same fashion for xwOBA as they are in the formula for standard wOBA: (unintentional BB factor x unintentional BB + HBP factor x HBP + 1B factor x 1B + 2B factor x 2B + 3B factor x 3B + HR factor x HR)/(AB + unintentional BB + SF + HBP), where "factor" indicates the adjusted run expectancy of a batting event in the context of the season as a whole.
Knowing the expected outcomes of each individual batted ball from a particular player over the course of a season -- with a player's real-world data used for factors such as walks, strikeouts and times hit by a pitch -- allows for the formation of said player's xwOBA based on the quality of contact, instead of the actual outcomes. Likewise, this exercise can be done for pitchers to get their expected xwOBA against.
Why it's useful
xwOBA is more indicative of a player's skill than regular wOBA, as xwOBA removes defense from the equation. Hitters, and likewise pitchers, are able to influence exit velocity and launch angle but have no control over what happens to a batted ball once it is put into play.
For instance, Marcell Ozuna produced a .327 wOBA in 2018. But based on the quality of his contact, his xwOBA was .359.