Planet Fitness, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Redefining Brand Promise: Continued 'We Are All Strong On This Planet' marketing campaign. Considered Black Card price increase after Classic Card price increase anniversary and online cancel functionality rollout.
• Member Experience: Completed national rollout of online cancel functionality in May. Mid-30% rejoin rate. High School Summer Pass sign-ups outpaced last year, with Gen Z as the fastest-growing membership segment.
• New Club Growth: Opened 23 new clubs. Focus on unit economics, refining product offering. Internationally, celebrated opening of Madrid club. Sold 8 California corporate clubs to focus on East Coast corporate-owned clubs.

Segment Performance

• Franchise Segment: Revenue increased 11% primarily due to higher royalty revenue from increased same club sales, new clubs, national ad funds, and franchisee fees. Average royalty rate was 6.7% (up from 6.6% prior year). Adjusted EBITDA was $86.5 million with a margin of 72.3% (up from 71.9%).
• Corporate-Owned Club Segment: Revenue increased 10.8% driven by increased same club sales and sales from new clubs. Adjusted EBITDA was $56.6 million with a margin of 40.7% (up from 39.5%).
• Equipment Segment: Revenue increased 21.5% primarily from replacement equipment sales. Adjusted EBITDA was $26.4 million with a margin of 32.1% (up from 27.4%).
• Membership: Ended the quarter with 20.8 million members. Systemwide same club sales growth was 8.2%. Black Card penetration was 65.8% at quarter end, a 340 basis point increase from the prior year.

Guidance

• Full year 2025 outlook: Expect 160-170 new clubs (including franchise and corporate), 130-140 equipment placements in new franchise clubs. Revenue to grow ~10%, adjusted EBITDA ~10%, adjusted net income 8-9%, adjusted net income per diluted share 11-12%. Narrowed same club sales growth to ~6% from prior 5-6% range. Factors: Classic Card price increase benefit moderates, elevated attrition from online cancel rollout, macroeconomic environment impact.

Risks

• Elevated attrition rate due to online cancel functionality rollout.
• Impact of macroeconomic environment on consumer spending on fitness services.
• Dependence on franchisee success for continued growth.

Q: Perspective on clubs with new layout vs older format in terms of equipment mix, membership, etc.?

A: Colleen Keating discussed over 70% of clubs will have optimized format with 50-50 cardio/strength mix, increased stair climbers, adjusted ellipticals/arc trainers.

Q: Maintaining comp guide, impact of click-to-cancel, Classic Card price increase, macro environment?

A: Jay Stasz mentioned click-to-cancel impact baked into outlook, Classic Card benefit moderates, macro conservatism, guide reflects all factors.

Q: Adding director of franchise sales, mechanism to add new franchisees?

A: Colleen Keating said need more franchisees, larger franchisees nearing fund horizon, cultivating new relationships.