Planet Fitness Q1 2025 Earnings Report

Planet Fitness EPS Results

• Actual EPS: $0.59
• Consensus EPS: $0.62
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: $0.53

Planet Fitness Revenue Results

• Actual Revenue: $276.66 million
• Expected Revenue: $279.80 million
• Beat/Miss: Missed by -$3.14 million
• YoY Revenue Growth: +11.60%

Planet Fitness Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 8:00AM ET

Planet Fitness (NYSE:PLNT), together with its subsidiaries, franchises and operates fitness centers under the Planet Fitness brand. The company operates through three segments: Franchise, Corporate-Owned Stores, and Equipment. The company is involved in franchising business in the United States, Puerto Rico, Canada, Panama, Mexico, and Australia. It engages in the sale of fitness equipment to franchisee-owned stores in the United States, Canada, and Mexico. In addition, the company operates corporate-owned stores in the United States and Canada. Planet Fitness, Inc. was founded in 1992 and is headquartered in Hampton, New Hampshire.

Planet Fitness Q1 2025 Earnings Call Transcript

Key Takeaways

• Membership and Sales Growth: Planet Fitness ended Q1 with 20.6 million members, adding ~900 000 members year-over-year, drove 6.1% system-wide same-club sales growth, and opened 19 new clubs globally for a total of 2 741 locations.
• Brand and Promotions: The new “All Strong” creative campaign and a balanced equipment mix improved brand perception and purchase intent across fitness levels, while 10-day trials, flash sales, and a first-month-free Black Card offer contributed to a >30% rejoin rate and 65% Black Card penetration (+300 bps).
• Member Engagement: Club utilization hit a five-year high with members averaging 6.7 visits per month, Gen Z remained the fastest-growing demographic, and the High School Summer Pass program returns to drive cost-effective conversions.
• Cost Mitigation: Despite tariff uncertainty, Planet Fitness leveraged scale and vendor partnerships to offset potential equipment and build-out cost increases, and sees no material impact to 2025 targets at current tariff levels.
• Financial Performance and Outlook: Q1 revenue rose 11.5% to $276.7 million and adjusted EBITDA grew 10% to $117 million, and the company reiterated its 2025 guidance for ~160–170 new clubs, 10% revenue and EBITDA growth, and 8–9% adjusted net income growth.

Presentation

[Operator]

Thank you for standing by to the Planet Fitness First Quarter twenty twenty five Call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask question. To ask a question, you may press followed by the number 1 on your touchdown phone. To review your question, please press 1 again.

[Operator]

It is my pleasure to introduce your host, miss Susie Paragallo. Begin.

[Stacey Caravella, VP, IR at Planet Fitness]

Thank you, operator, and good morning, everyone. Speaking on today's call will be Planet Fitness' Chief Executive Officer, Colleen Keating and Chief Financial Officer, Jay Stasz. They will be available for questions during the Q and A session following the prepared remarks. Today's call is being webcast live and recorded for replay. Before I turn the call over to Colleen, I'd like to remind everyone that the language on forward looking statements included in our earnings release also applies to our comments made during the call.

[Stacey Caravella, VP, IR at Planet Fitness]

Our release can be found on our investor website along with any reconciliation of non GAAP financial measures mentioned on the call with their corresponding GAAP measures. Now I will turn the call over to Colleen.

[Colleen Keating, CEO at Planet Fitness]

Thank you, Stacy, and thank you everyone for joining us for the Planet Fitness first quarter earnings call. We were pleased to end the first quarter with 20,600,000 members, an increase of approximately 900,000 from the end of twenty twenty four. We grew system wide same club sales by 6.1% and opened 19 new clubs globally, bringing our total club count to 2,741. Given the strength and durability of our model, we delivered this healthy growth against a backdrop of increasing volatility in the macroeconomic environment. As a leader in the high value low price fitness category, we've successfully grown our model for over thirty years while navigating a variety of different market conditions throughout our history.

[Colleen Keating, CEO at Planet Fitness]

Before I go deeper into our first quarter performance, I'd like to highlight why we're confident that we're well positioned to execute our strategy and deliver on our 2025 expectations. At the same time, we are mindful of the broader macroeconomic conditions including consumer sentiment and tariff uncertainty. During the great financial crisis between 02/2010, we achieved strong same club sales growth, we grew our membership and opened new clubs. Prior to 2020, we had 53 quarters of positive same club sales growth. More recently, we weathered a global pandemic without one club permanently closing due to financial reasons, even though our clubs were shut down and did not collect member dues for an average of six months.

[Colleen Keating, CEO at Planet Fitness]

We are a resilient brand and continue to strengthen our leadership position by offering consumers a place to get a high quality workout at an incredible value in our judgment free environment. Now let's review the progress we've made on our four strategic imperatives during the first quarter. As a reminder, these four strategic imperatives are redefining our brand promise and communicating it through our marketing, enhancing member experience, refining our product and optimizing our format, and accelerating new club growth. Let me start with redefining our brand. We were pleased with our first quarter net member growth, which was in line with our expectations.

[Colleen Keating, CEO at Planet Fitness]

We kicked off the year with our new creative, a campaign that communicates that we are all strong on this planet. It focuses on our shift to a more balanced complement of equipment in our clubs, our welcoming judgment free atmosphere, and the supportive community that we offer all our members. Based on research we conducted during the quarter, the campaign improved brand perception across all fitness levels and enhanced the perceived value of a Planet Fitness membership. We also saw an increase in purchase intent from former members as we highlighted the capital HV aspects of our offering and we had a strong 30 plus percent rejoin rate during the quarter. Looking ahead, we will augment our ability to test, learn and make data driven decisions as we evolve our brand.

[Colleen Keating, CEO at Planet Fitness]

We have a pipeline of testing projects currently underway that range from pricing to changes in the physical layout of our clubs. During the first quarter, we used several different promotional strategies that tested successfully in 2024. In addition to our typical ten day offers, we ran two classic card two day flash sales and a first month free Black Card offer, both of which contributed to our membership growth during the period. We continue to see strong Black Card penetration with 65% of our membership at that tier as of the end of the quarter, a nearly 300 basis point increase from Q1 of last year. Consumers continue to recognize the value of the Black Card with the gap between the Classic and Black Card memberships only $10 We will hold on a decision on a system wide Black Card price change until after we anniversary the Classic Card price increase, which you will recall went into effect on June twenty eight of last year.

[Colleen Keating, CEO at Planet Fitness]

As for member activity, our members were more engaged during the first quarter of this year and visited a club an average of 6.7 times per month, the highest quarter utilization in five years. This is an encouraging data point as we think about retention in general and in the context of our click to cancel rollout. Gen Z continues to lead our membership growth and has been the fastest growing demographic group of our membership since 2021. To further this momentum, we're excited to announce that we will be running the High School Summer Pass program again this year. This has been incredibly successful at building brand loyalty and is a cost effective program that has yielded a mid single digit conversion rate to paying members over the past few years.

[Colleen Keating, CEO at Planet Fitness]

Now to member experience and product refinement. We hold a highly differentiated position in the high value, low price sector of the fitness industry. We bring a top quality, judgment free fitness experience to life and foster meaningful relationships with our members who span a broad spectrum of age, socioeconomic, and fitness levels. Our clubs have many stories from members who have had life changing experiences because of their memberships. We truly do make fitness accessible to almost everyone, having clubs within a twelve minute drive of 170,000,000 people in The United States.

[Colleen Keating, CEO at Planet Fitness]

We're proactively tailoring our offering to respond to evolving customer needs. Based on insights from consumer research and member behavior, we expanded our footprint of strength equipment and opened up spaces within our clubs for members to do more functional training. We believe that this move will enhance member experience, providing them with the ideal equipment mix and environment to achieve their workouts their way. As part of the research that we conducted during the quarter, we asked consumers if they thought they could get strong at Planet Fitness. The majority of respondents who had seen our ads noted that they believe that we have the equipment for building strength and that we are a gym they can grow with.

[Colleen Keating, CEO at Planet Fitness]

This feedback further supports our decision to expand strength equipment in our clubs. At the end of the first quarter, nearly 1,800 clubs had the more balanced mix of equipment with the remainder of the clubs expected to have it by the end of the year. And finally, to our efforts to accelerate new club growth. During the first quarter, I continued to visit more clubs, now 125 globally, including a trip to Australia where I celebrated the opening of a new club with our Australia team and many of our members. Similar to my trips to Mexico and Spain, my biggest takeaway is that our format and brand offering resonates with fitness minded consumers across geographies and generations.

[Colleen Keating, CEO at Planet Fitness]

In fact, our clubs in Spain continue to have strong ramps, and we recently opened our eighth club in the country. As evidence of their healthy performance, we believe we will be in a position to refranchise the clubs and future development rights in the medium term. We remain steadfastly focused on unit economics. We made two foundational changes in 2024 giving our franchisees the opportunity to improve club IRRs, the new growth model and the Classic Card price increase for new members. Franchisee sentiment was positive coming into 2025 and was bolstered by strong first quarter member growth and revenue growth that had the added rate benefit from the Classic Card price increase.

[Colleen Keating, CEO at Planet Fitness]

As I stated earlier, we are a resilient brand and have historically emerged from prior periods of market uncertainty in an even stronger position. That said, I would be remiss if I didn't touch on tariffs. Our teams are in discussion with our vendors and working through what potential tariff impacts mean to our business and franchisee unit economics. We are taking a thoughtful approach focused on the things we can control to continue to execute on our strategic imperatives. We are in communication with our franchisees and at current tariff levels do not see a material impact to our 2025 targets.

[Colleen Keating, CEO at Planet Fitness]

As such, we are reiterating our growth targets for this year. I am pleased with the progress we've made thus far in 2025 and I am excited about the opportunities that lie ahead for Planet Fitness. I look forward to sharing more of our progress with you. Now I will turn it over to Jay.

[Jay Stasz, CFO at Planet Fitness]

Thanks, Colleen. We're pleased that we're starting to see results from our focus on the strategic imperatives that led to a strong first quarter performance in line with our expectations against the backdrop of increasing volatility in the macroeconomic environment. Given that we're a fitness brand that sells an experience, we are generally less impacted by tariffs and we expect to be able to address these impacts on our equipment at the current levels without adjusting our guidance ranges at this time. We are intensely focused on our franchisee unit economics and we're taking a thoughtful approach to rising input costs. We're working in partnership with our vendors and our franchisees to navigate potential cost increases.

[Jay Stasz, CFO at Planet Fitness]

Due to our size and scale in our long term vendor relationships, we have mitigated a sizable portion of our system wide exposure to tariffs on equipment at today's levels. We are leveraging our scale to negotiate with manufacturers to offset these costs, exploring alternative markets for producing products and bringing equipment into The US ahead of potential tariff implementation deadlines. Before I get to our first quarter results, I'd also like to address how we're approaching click to cancel. We remain committed to delivering a great member experience, and we want to make the cancellation process as seamless as the join process. Given that the challenge to the regulation did not did not result in any changes to the ruling, we're underway with rolling out online cancel functionality system wide to meet the mandated deadline of May 14.

[Jay Stasz, CFO at Planet Fitness]

As you may recall, more than 35% of our system had clicked to cancel before April, including all of our corporate clubs where we enabled it more than eighteen months ago. Now we are enabling it across the rest of our portfolio because we believe it is the right thing to do for our members. As of this week, online cancel is available to members in more than 50% of our US clubs. The national rollout before the mandated deadline is included in our outlook for 2025 including our same club sales growth outlook. As a reminder, generally the largest impact of the cancel rate occurs in the first couple of months and diminishes as time goes on.

[Jay Stasz, CFO at Planet Fitness]

Now to our first quarter results. All of my comments regarding our first quarter performance will be comparing Q1 twenty twenty five to Q1 of last year unless otherwise noted. We opened 19 new clubs compared to 25. We delivered system wide same club sales growth of 6.1 in the first quarter. Franchisee same club sales increased 6.2% and corporate same club sales increased 5.1%.

[Jay Stasz, CFO at Planet Fitness]

Approximately 74% of our Q1 comp increase was driven by rate growth with the balance being net membership growth. Black Card penetration was approximately 65% at the end of the quarter, an increase of two eighty basis points from the prior year. For the first quarter, revenue was $276,700,000 compared to $248,000,000 an increase of 11.5%. The increase was driven by revenue growth across all three segments. A 10.7% increase in franchise segment revenue was primarily due to higher royalty revenue from increased same club sales as well as new clubs, an increase in national ad funds as well as franchise fees.

[Jay Stasz, CFO at Planet Fitness]

For the first quarter, the average royalty rate was 6.6% consistent year over year. The 9.2% increase in revenue in the corporate owned club segment was primarily driven by increased same club sales as well as sales from new clubs. As a reminder, we opened 21 new corporate clubs in 2024, '8 of which occurred in the fourth quarter. Equipment segment revenue increased 28.7%. The increase was driven by higher revenue from replacement equipment sales, partially offset by lower revenue from new franchisee owned club placement sales.

[Jay Stasz, CFO at Planet Fitness]

We completed 10 new club placements this quarter compared to 14 last year. For the quarter, replacement equipment accounted for 78% of total equipment revenue compared to 58%. Our cost of revenue, which primarily relates to the cost of equipment sales to franchisee owned clubs, amounted to $22,500,000 compared to $19,000,000 expense, which relates to our corporate owned clubs segment, increased 9.9% to $81,700,000 from $74,400,000 The increase was primarily due to operating expenses from '24 new clubs opened since 01/01/2024. SG and A for the quarter was $34,300,000 compared to $29,200,000 while adjusted SG and A was $32,500,000 compared to $27,300,000 an increase of 19.1%. The primary driver of the increase to adjusted SG and A was higher expense due to increased compensation from recent executive hires and investment in our strategic imperatives.

[Jay Stasz, CFO at Planet Fitness]

National advertising fund expense was $21,900,000 compared to $19,800,000 an increase of 10.9% in line with our franchise segment revenue increase. Net income was $42,100,000 adjusted net income was $50,000,000 and adjusted net income per diluted share was $0.59 Adjusted EBITDA was 117,000,000 an increase of 10.1% year over year and adjusted EBITDA margin was 42.3% in line with our expectations compared to $106,300,000 with adjusted EBITDA margin of 42.9%. By segment, franchise adjusted EBITDA was $84,900,000 and adjusted EBITDA margin increased from 73.2% to 73.7%. Corporate Club adjusted EBITDA was $45,800,000 and adjusted EBITDA margin decreased from 34.6 percent to 34.3%. Equipment adjusted EBITDA was $7,400,000 and adjusted EBITDA margin increased from 22.2% to 26.8%, which was driven by the change to the equipment mix that we made last year, but didn't go into effect until the second quarter of twenty twenty four.

[Jay Stasz, CFO at Planet Fitness]

Now turning to the balance sheet. As of 03/31/2025, we had total cash, cash equivalents and marketable securities of 5 and $86,300,000 compared to $529,500,000 on 12/31/2024, which included $56,600,000 and $56,500,000 of restricted cash respectively in each period. In Q1 twenty twenty five, we used $50,000,000 to repurchase approximately 544,000 shares. Moving on to our 2025 outlook, which we provided in our press release this morning. As I noted earlier, our outlook assumes tariffs at the current levels.

[Jay Stasz, CFO at Planet Fitness]

We continue to expect between one hundred and sixty and one hundred and seventy new clubs, which includes both franchise and corporate locations. We expect that the quarterly cadence will be weighted towards the second half and the fourth quarter of twenty twenty five similar to 2024. We also continue to expect between one hundred and thirty and one hundred and forty equipment placements in new franchise clubs and again we expect that quarterly cadence will be weighted like 2024. We expect that re equipped sales will make up approximately 70% of total equipment segment revenue for the full year. As I noted earlier, we are reiterating our guidance targets with the exception of CapEx, which we are bringing down slightly.

[Jay Stasz, CFO at Planet Fitness]

The following targets represent growth over fiscal year twenty twenty four results. System wide same club sales growth to be between 56%, revenue to grow approximately 10%, adjusted EBITDA to grow approximately 10%, adjusted net income to increase in the 8% to 9% range, adjusted net income per diluted share to grow in the 11% to 12% range based on adjusted diluted weighted average shares outstanding of approximately 84,500,000.0 inclusive of approximately 1,000,000 shares we expect to repurchase in 2025 in line with what we've previously communicated. We also expect 2025 net interest expense of approximately $86,000,000 inclusive of the annualized impact of our 2024 refinancing. Lastly, we continue to expect D and A to be flat to 2024 and we now expect CapEx to be up approximately 20%. I will now turn the call back to the operator to open it up for Q and A.

[Operator]

Ladies and gentlemen, at this time, we will be conducting a question and answer session. Our first question comes from the line of Simeon Siegel from BMO. Please go ahead.

[Simeon Siegel, Managing Director at BMO Capital Markets]

Thanks. Hey, morning, everyone. Nice job. Hope you're all doing well.

[Colleen Keating, CEO at Planet Fitness]

Good morning.

[Simeon Siegel, Managing Director at BMO Capital Markets]

So Colleen, sixty five percent Black Card penetration is a pretty wild jump. Anything one time ish we should consider about this quarter? Or do you think, I guess, absent any potential price decisions, that that's a new base? And then, Jay, just maybe pricing versus new memberships within the comp, how do you think about that over the year? Any way to think about or help us think about what's the new $15 price impact versus again this really impressive Black Card penetration jump on overall company level pricing?

[Simeon Siegel, Managing Director at BMO Capital Markets]

Thanks guys.

[Colleen Keating, CEO at Planet Fitness]

Sure. Good morning. Good to hear from you. On Black Card penetration, as we've talked about, this is the narrowest gap we've had between the Classic Card pricing and the Black Card pricing since the inception of the Black Card at roughly $10.99 So we've been trending with increased Black Card penetration over the past couple of quarters Q3, Q4 of last year as well as Q1. '1 difference that we'll call out for Q1 was that in March, we ran a Black Card first month free promotion that was quite successful.

[Colleen Keating, CEO at Planet Fitness]

We tested this in Q4. This was one of the marketing tests that we ran last year in Q4. It performed successfully. So we ran it again in March of this year.

[Jay Stasz, CFO at Planet Fitness]

Yes. Simeon, this is Jay. Good morning. Good to hear from you. In terms of your question, obviously, we've reiterated the guidance.

[Jay Stasz, CFO at Planet Fitness]

We've reiterated the comp of 5% to 6%. And in the quarter, we had a nice split on the rate roughly 74% driving 74% of the comp and volume being 26%. As we think about anniversarying the classic card price increase on June 28, right, the beauty of our subscription models that we will continue to get rate benefit after that point because of the tenure of our membership as well as the continued and we just talked about the increase on the Black Card penetration that we're seeing. So as we think about the comp for the year in the future quarters, certainly we would expect the next quarter to be roughly comparable seventy-thirty kind of a split between rate and volume. And then that might drift down slightly in the back half just again as we anniversary that June 28, but not a material change, Probably 65% to 70% driven by rate and a little bit of uptick on volume.

[Simeon Siegel, Managing Director at BMO Capital Markets]

That's great. Thanks guys. Thanks. Best of luck for the rest of year.

[Colleen Keating, CEO at Planet Fitness]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Sharon Zackfia from William Blair.

[Sharon Zackfia, Partner & Head of Consumer Equity Research & Analyst - Restaurants, Lifestyle & Leisure Brands at William Blair & Company, L.L.C]

Hi, good morning. Thanks for taking the question. I know, your business has always been very insulated from from the macro environment, and it certainly seems like you had a healthy first quarter this year despite, like, having had some crazy weather during the high member sign up season. Can you talk, about kind of any signs of any macro, volatility impacting your business or if you're seeing anything change on the competitive environment as maybe some of your peers that are less well positioned are are trying to scramble in a more volatile consumer climate? Thank you.

[Colleen Keating, CEO at Planet Fitness]

I'll start maybe. First, I think the fact that we reiterated our comp guidance is indicative of what we've seen with the consumer coming through the quarter. And as I mentioned, even during the GFC, our business performed really well with very strong member growth and revenue growth. So again, we feel like we've got a very resilient business, very durable cash flows, and we reach a a very broad spectrum of membership. We span, you know, we we span a pretty broad income demographic as well.

[Colleen Keating, CEO at Planet Fitness]

And the other thing we've talked about is with with Gen z's and millennials being such a substantial proportion of our membership and really Gen z's continuing to be the greatest proportion of our member joins, fitness is really a part of their lifestyle. So as we've seen, you know, a little bit of the, you know, the consumer sentiment and and pullback in consumer spending, you know, what we've generally seen is is less spending on product, but maintained spending on experiences. And when we think about Gen Zs and millennials, not only are we inexperienced, we're really, you know, we're really a part of their lifestyle. So we're feeling confident about about the, you know, the the the consumer and our member. That's reflected in the reiteration of our guidance.

[Jay Stasz, CFO at Planet Fitness]

Yeah. And Sharon, just a couple of points. I mean, obviously, this business continues to be a great value to the members and potential members. You know, we're excited about that. We think it fits in well with the current macro environment.

[Jay Stasz, CFO at Planet Fitness]

And to put a finer point on Colleen's information right during the great financial crisis, you know, strong same club sales growth. We also built our membership and open stores during that time. So we feel good about that. And look, think we in this kind of environment, we could benefit from a trade down from some of the higher priced clubs.

[Operator]

Thank you. Our next question comes from the line of John Heinbockel from Guggenheim. Please go ahead.

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

Colleen, I'm curious, how

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

do you think philosophically about Black Card pricing? I know you're going to punt on it right until after you cycle White Card. But there's is there a member opportunity to go after, particularly in this macro? You know, and and you push pricing out a little bit further, particularly with with Black Card penetration performing as well as it has. I mean, how do you how do you think about that?

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

And then I don't know I know you were testing 2799 and 2999. You know, is there any material difference in in how members reacted to those?

[Colleen Keating, CEO at Planet Fitness]

So, you know, I think as we as we evaluate what we've seen coming through the test, we're really looking at what's most accretive to the AUV of the club. And as I indicated in my remarks, we're not going to make a call or announce a decision on it until after we anniversary Classic card price increase. So that we're not coming through the front half of this year with an increase on both Classic and Black. At the same time, we've seen great Black Card penetration with the narrowed delta between Classic and Black. I will say, historically, we have taken price on Black Card every several years.

[Colleen Keating, CEO at Planet Fitness]

So every few years, we've taken price on Black Card. So that will continue to be kind of our perspective that Classics, anchor and the entry point and that there's probably more price elasticity in black. And in the testing, we haven't seen a significant difference between the $27.99 test and the $29.99 test when we were testing both last year. And currently, we're only testing the $29.99 now.

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Max Roklinko from TD Cowen. Please go ahead.

[Max Rakhlenko, Managing Director at TD Cowen]

Great. Thanks a lot and congrats on a really nice quarter. So first, one q is typically about 60% of the year's net adds. How do you think, about that again for for this year? Do you think that that'll be the case?

[Max Rakhlenko, Managing Director at TD Cowen]

Or given some of the easy compares, could that even be a little bit lower?

[Jay Stasz, CFO at Planet Fitness]

No, Matt. This is Jay. And, yeah, historically, right, I think we've talked about that 60%. And post COVID, right, we haven't really seen that relationship hold true, so I would not anchor to that. I would say that, you know, we don't guide to membership count, specifically, but that relationship, that percent's, higher, I would say, not lower, and it is not the 60%.

[Max Rakhlenko, Managing Director at TD Cowen]

Got it. Okay. And then how should we think about the cadence, over the next few quarters just in the context of click to cancel rolling out fully in 2Q? Could we see a bit of a pickup in churn as I think you previously talked about sort of each twelve weeks? Or how are you just thinking about the model here for the next few quarters?

[Jay Stasz, CFO at Planet Fitness]

Yeah. Max, this is Jen. I'll start on the click to cancel. I mean, a couple of data points. We have a plan to roll it out in a prorated, you know, in a consistent basis between now and the deadline of May 14.

[Jay Stasz, CFO at Planet Fitness]

We've started that process. And just for backdrop, right, previous to this, we had about 35% of our system was on click to cancel. That included a handful of states that were already mandated as well as 100% of our corporate clubs, which we did about eighteen months ago. And so now we're in the process of rolling out the remainder of our clubs to be fully compliant by the May 14 deadline. As of today, we have about 50% of our system with click to cancel functionality.

[Jay Stasz, CFO at Planet Fitness]

And we have contemplated this in our outlook, in our guidance that we started last year and then that we've just reiterated. So it is contemplated in there. And to your point, as we do the rollout, the largest impact is typically in the first month or two, when that optionality is rolled out. But then we see it normalize, you know, in the weeks and months after that.

[Max Rakhlenko, Managing Director at TD Cowen]

And the impact potentially on joins is, the customer experience improves, and we've heard that maybe it actually helps joins a little bit as an offset.

[Colleen Keating, CEO at Planet Fitness]

Yeah. I'll talk about that.

[Colleen Keating, CEO at Planet Fitness]

We you know, in a in a fairly small, small test, we did see an uptick in conversion when we added the click to cancel or or, you know, one click cancellation option in the join flow. So we do think once it's in you know, rolled out across the entire state, it could we could see potentially could see it again based on a, you know, based on a fairly small test. We could see some lift in in join conversion because of consumer confidence that they can cancel as easily as they join.

[Max Rakhlenko, Managing Director at TD Cowen]

Great. Thanks a lot and best regards.

[Colleen Keating, CEO at Planet Fitness]

Sure. Thank you.

[Operator]

Thank you. Our next question comes from the line of Shan Hu from BNP Paribas. Please go ahead.

[Xian Siew, Analyst at BNP Paribas]

Hi, guys. Thanks for the question. Understanding that some franchises might have wanted to wait a little bit to see how pricing would play out in the key kind of January ad period before leaning into new openings. And it seems like one q ads were really solid considering a tough macro. So maybe could you give some color on how franchisees are evaluating that ad period and maybe if they're sounding more positive on openings going forward.

[Colleen Keating, CEO at Planet Fitness]

Maybe I'll start. You know, I think when you look at our guidance openings guidance for this year versus where we finished last year, I think that's, reflective of franchisee sentiment around openings. As in years past, similar to last year, our openings are back end loaded in the year with the heaviest quarter for openings still being Q4. And I think that's less reflective of questions around pricing and more reflective of wanting to get open ahead of the highest joint quarter of the year. Getting clubs open in Q4 sets them up for very favorable ramp in coming into the first quarter.

[Xian Siew, Analyst at BNP Paribas]

Okay. Got it. Thanks. And then on the comps, you know, nice growth in what first quarter. How much do you think, I guess, new formats and the the strength allocation, is is helping there and also the new advertising efforts.

[Xian Siew, Analyst at BNP Paribas]

How how do you kind of balance some of the or evaluate which which drivers are kind of the biggest ones?

[Colleen Keating, CEO at Planet Fitness]

You wanna start and I'll

[Jay Stasz, CFO at Planet Fitness]

Yeah.

[Jay Stasz, CFO at Planet Fitness]

I can start. I mean, look, we don't we don't bifurcate that. It you know, it's it's difficult to do that. We feel good about the comps that we had. We did run that black card first month free promotion in March, which had a bit of a headwind to our comp, which we expect to get back within the year and have a slight benefit to the comps in Qs two through four.

[Jay Stasz, CFO at Planet Fitness]

But I think, look, like we said, we you know, we're pleased with the quarter. We we landed where we expected and we're starting to see the green shoots from the all the work that the teams are doing, but certainly in the repositioning of the brand and the focus on strength and getting stronger together. We're optimistic.

[Colleen Keating, CEO at Planet Fitness]

Maybe I'll add on that from a format standpoint. We gave our franchisees the who are who are opening clubs in 2025. Coming into the year, we gave them the opportunity to look at the traditional equipment layout or equipment mix and the new equipment mix. Not one franchisee chose the more traditional. They all took the new rebalanced mix of equipment with the balance of strength and cardio.

[Colleen Keating, CEO at Planet Fitness]

So I think that discretionary choice is really reflective of their buy in and what they're seeing and hearing from their membership. What our members are looking for in our clubs and this new mix, this new equipment mix and new layout is answering that call.

[Xian Siew, Analyst at BNP Paribas]

Great. Thanks guys and good luck.

[Colleen Keating, CEO at Planet Fitness]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Rahul Krotepali from JPMorgan. Please go ahead.

[Rahul Krotthapalli, Vice President - Equity Research at JP Morgan]

Good morning, guys. Colleen, you have had a tremendous exposure to private equity industry throughout your career. There has been a lot of talk on content around private equity pain and assets getting repriced in this macro. Can you discuss how do you see the landscape shaking out, especially in the context of franchise ownership? And how you see the mix of ownership of the clubs change or evolve over time?

[Rahul Krotthapalli, Vice President - Equity Research at JP Morgan]

And the follow-up is all on the advertising costs. A lot has been discussed again in how low advertising cost could get, especially, as agencies given to AI models and the large brands in the consumer and the Internet industry are catching up on this. How is the organization thinking about this strategy given this is such a critical driver for brands growth going forward?

[Colleen Keating, CEO at Planet Fitness]

Yeah. So so two two separate questions. I'll, you know, I'll take the first one, which is kind of the PE, the PE landscape. And we have a nice complement, I would say, our franchise base, among our club ownership of individual owners as well as PE. We see new interest maybe from kind of family office as well.

[Colleen Keating, CEO at Planet Fitness]

But at the end of the day, our PE owners have been great owners and have developed a lot of clubs with us, generally have been well capitalized and are smart owners as well. We're pleased with the balance again of individual owners and PE in the portfolio today. And then I'll shift to kind of ad costing and ad costs and marketing strategy. We certainly see an opportunity to continue to leverage the breadth of our spend. And as you know, as our revenue increases, so too do our ad funds.

[Colleen Keating, CEO at Planet Fitness]

So our very robust ad fund is growing every year. We do see opportunity to leverage that spend and look at how we're procuring the advertising in a more efficient way. And of course, we're always doing work to test the effectiveness of the advertising and make sure that we're being not only efficient, but also effective in how we're spending it. As you know, Brian Plovenelli joined as our new CMO in mid February. He's been out engaging with our franchisees, with our agencies and with our marketing committees.

[Colleen Keating, CEO at Planet Fitness]

We again see an opportunity to continue a good success coming through Q1 with the new brand messaging. It landed well. And we saw favorability in visits to our our website, favorability in search and the effectiveness of how that marketing messaging landed, as, you know, as I referenced in my remarks. But, you know, more to more to come as as Brian, you know, kinda gets his arms around it as well.

[Rahul Krotthapalli, Vice President - Equity Research at JP Morgan]

Appreciate the color.

[Operator]

Thank you. Our next question comes from the line of Martin Mitella from Raymond James. Please go ahead.

[Martin Mitela, Senior Equity Research Associate at Raymond James]

Good morning. This is Martin on for Joe Altobello. I was just wondering about 900 ks ads this quarter. Was that sort of within expectations or just trying an idea around there?

[Jay Stasz, CFO at Planet Fitness]

Yeah. That was within our expectations. We felt good about that result. And as Colleen has alluded, right, I think franchisees were pleased with the first quarter and and, you know, the cadence of and effectiveness of the promotion. Yeah, we feel good about where we're at and not only on the member trends, but the entire p and l.

[Martin Mitela, Senior Equity Research Associate at Raymond James]

Nice. And can you just speak to churn? I mean, not necessarily about click to cancel, but given the price increase.

[Jay Stasz, CFO at Planet Fitness]

Yeah. I mean, churn continues to run-in line with our expectations and gotten down to kind of historical norms after the price increased pretty quickly last year, and we're continuing to see those trends. So right in line with our expectations and pretty consistent year over year.

[Martin Mitela, Senior Equity Research Associate at Raymond James]

Great. Thank you very much and good luck.

[Martin Mitela, Senior Equity Research Associate at Raymond James]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Alex Perry from Bank of America. Please go ahead.

[Lucas Hudson, Equity Research Analyst at Bank of America]

Hi. This is Lucas Hudson on for Alex. Thanks for taking my questions. Just considering are you guys considering any other changes to the club format? You know, you recently added straight equipment, was met with positive reception.

[Lucas Hudson, Equity Research Analyst at Bank of America]

Are you considering any new equipment ads?

[Colleen Keating, CEO at Planet Fitness]

I'll I'll start. We're testing a couple of different, couple of different formats and, different levels of amenities in, in some clubs. As well, we added the, you know, the minimal three pieces of plate loaded across 65% of the estate last year. We've got we've got a number of clubs that have augmented the number of of pieces of plate loaded and, you know, continuing to test other strength modalities in a number of clubs. So we've you know, we believe it's important that we're that we continue to be kind of a test and learn environment.

[Colleen Keating, CEO at Planet Fitness]

So we're always testing new pieces of equipment and in communication with our equipment manufacturers to understand kinda what are the hottest pieces, following trends, listening to our consumers and our members, and we'll we'll continue to test, you know, again, be a test and learn environment.

[Lucas Hudson, Equity Research Analyst at Bank of America]

Very helpful. And then a quick follow-up if I may. Are you guys gonna change any of the black card offering or any adding or looking at adding any other premium offerings for the black card members?

[Colleen Keating, CEO at Planet Fitness]

I'll talk a little bit about that. We have we have in a number of our clubs added added some red light that has performed quite well. We've tested spray tanning in some of our clubs and, you know, in certain geographies, and some of that has been well received as well. And we're looking at some other without, you know, without signaling all of the things that that we're looking at. There are there are some other amenities that that we're evaluating for the optimization of the Black Card spot.

[Lucas Hudson, Equity Research Analyst at Bank of America]

Perfect. Well, luck in the quarter.

[Colleen Keating, CEO at Planet Fitness]

Thank you.

[Operator]

Our last question comes from the line of JP Wollam from ROTH Capital Partners. Please go ahead.

[John-Paul Wollam, Equity Research Associate at Roth Capital Partners, LLC]

Great. Good morning. Thanks for taking my questions. If we could just start, two quick questions on development. One, could you just kind of touch on big box availability been somewhat challenged recently?

[John-Paul Wollam, Equity Research Associate at Roth Capital Partners, LLC]

And then the second one is sort of a follow-up to an earlier question. But, you know, I would assume that kind of with the development guide, most of those units are whether under construction or at least kind of in the process. But I'm wondering just given the macro environment and kind of tariff concerns, how much are you having conversations with franchisees about future pipeline and maybe some hesitancy there?

[Colleen Keating, CEO at Planet Fitness]

Maybe I'll start and then Jay can get into some of the specifics on, Ontario. So, you know, from a big box availability standpoint, it really is a tale of different geographies. You know, there are some geographies where we're seeing availability ease, and then there are other geographies that have remained, a bit tighter. You know, there is some there have been a number of big box retailers that have announced closures. We've talked about that on prior calls.

[Colleen Keating, CEO at Planet Fitness]

I think it was a JLL article a couple of months ago that talked about, you know, kind of a forecast of 9,900, you know, significant retail closures on the horizon, and we're continuing to see retail bankruptcies. So, you know, we do believe that there will be more and more second generation space coming available based on what we're reading, you know, both consumer sentiment and what we're seeing in the in the broader retail sector. So, you know, that's that's just a a touch on the macro. And as far as bigger box availability, we do have some franchisees that are they're traditionally building larger than a 20,000 square foot club, maybe upwards of a 30,000 square foot club. But, again, the availability is really you know, it it varies by by geography.

[Colleen Keating, CEO at Planet Fitness]

And, you know, I'll let Jay get into some of the specifics. But again, as I mentioned in my remarks, from a tariff impact standpoint, you know, given what we have line of sight to today, so tariffs at the current levels, we don't see a material impact and that gave us the confidence to reiterate our openings guidance for this year. But Jay, don't know if you want to Yeah.

[Jay Stasz, CFO at Planet Fitness]

Jay, yeah, just a follow-up on that. I mean, the tariffs and certainly one of the biggest impacts is the equipment and that I mean, the team has done great work across the board to mitigate the impact. But certainly on the equipment at tariff levels, at the current levels that they're at, we feel good and not overly material and that's embedded in the guidance that we've reiterated. We do have line of sight kind of to your question around or top of mind is the build out costs. To your point, for '25, we've reiterated the development plans and many of the franchisees are very far down the path in terms of leases and construction.

[Jay Stasz, CFO at Planet Fitness]

But that said, the team also was working on certain build out materials to work with the vendors, you know, whether they that's HVAC or other things to really, you know, do what we can to offset the impact of the tariffs. So that's another body of work that the team is is doing today. We've got a little bit less line of sight to, you know, exactly how it's all gonna flow down from a, you know, a GC cost impact. But again, it's something that we think we can manage through and work to offset in '25. And then as we think about it, we haven't provided long term guidance at this point.

[Jay Stasz, CFO at Planet Fitness]

We are expecting to have an Investor Day later in the year where we'll give more color on that.

[Colleen Keating, CEO at Planet Fitness]

Maybe just add two other points on that. Again, with if there's greater tariff impact in other sectors and building slows in other sectors, that could have some favorability. Again, speculative at this point, but that could have some favorability on construction labor costs, GC costs and trades and subs. And the other thing I'll say is, we've this is a pretty low OpEx model. So we're not we're not burdened with a with a heavy heavy OpEx impact from from tariffs.

[Colleen Keating, CEO at Planet Fitness]

And lastly, the most important thing to unit economics is the top line. And as we're seeing our marketing messaging land, we saw good join volume coming out of the quarter and our format new you know, the new newly optimized format is resonating with consumers. I think the top line is the most important component. We're keenly focused on that.

[John-Paul Wollam, Equity Research Associate at Roth Capital Partners, LLC]

Understood. I appreciate the color there. If I could just one follow-up on member rejoins. I know over the last few quarters you've talked about it being strong. So one, you know, does it did that strength continue through your strong winter season?

[John-Paul Wollam, Equity Research Associate at Roth Capital Partners, LLC]

And two, any comments on how you're seeing, black card in terms of members rejoining?

[Colleen Keating, CEO at Planet Fitness]

So we don't don't bifurcate. We do internally, but we don't share bifurcation of Black Card rejoin versus classic rejoin. We shared last year, q three, we had a 38% rejoin rate. Q four, thirty 7% rejoin rate. It was a little bit lower in q one, but, you know, keep in mind, it's it's on a on a higher base of joins.

[Colleen Keating, CEO at Planet Fitness]

Right? So still very, very strong, mid-30s rejoin rate in Q1.

[John-Paul Wollam, Equity Research Associate at Roth Capital Partners, LLC]

Perfect. Appreciate the color and best of luck going forward.

[Operator]

Our last question comes from the line of Randy Konik from Jefferies. Please go ahead.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Hey, guys. How are you? Sorry, I've been dealing with a ton of calls this morning. So I apologize if you kind of addressed this. But maybe, Colleen, just talk through you know, give us an update on not just Spain, but just kinda other markets or how you're thinking about international development, beyond in the you know, not just this year, but, like, in the next, you know, few years.

[Randal Konik, Managing Director at Jefferies & Company Inc]

How do we think about that, you know, that that part of the model going forward? Thanks.

[Colleen Keating, CEO at Planet Fitness]

Yeah. So our, you know, our inner thanks for the question, Randy, and, good to hear from you. Our, our our Spain clubs are performing very well. We're seeing ramps on those clubs that are equal to or in some cases even slightly favorable to our our domestic ramps. So I'm really encouraged about how the brand is resonating in, you know, in our first European market.

[Colleen Keating, CEO at Planet Fitness]

So while we're not ready to talk about which which markets we'll go to next, I, you know, I guess you can you can read you can glean from that that that the brand's performing well in our first European market. I spent some time in Australia this past quarter and great performance, great club performance there, participated in a grand opening with the team and had an opportunity to talk to not only some members, but one of the one of the largest retail landlords in Australia. Spent some time with with a couple of representatives from that organization. And, again, brand is resonating really well. Numbers are very strong.

[Colleen Keating, CEO at Planet Fitness]

So we continue to see international as, as part of our growth roadmap.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Super helpful. And then, again, I don't know if you addressed this, but, I'll ask it. We had heard in the pipeline that, I think franchisees were happy with you know, as you change the the white card to 15, it it gets closer in price point to the black card, you know, almost encouraging a new member to kinda join the black, black card relative to the white card, given a better relative value. Maybe kinda update update us on that kind of framework if that is happening. And if that is, how do you think about the cadence of, you know, black card price change again over the next few years?

[Randal Konik, Managing Director at Jefferies & Company Inc]

How should we think about that? Thanks.

[Colleen Keating, CEO at Planet Fitness]

Yeah. So I did touch on this a little bit earlier. Might have been, when you were on another call. We will we're gonna anniversary the classic card price increase before we make a decision to to move on black card. What we have seen again, looking at what's most accretive to AUVs, we have seen significant favorability in black card penetration with the narrowed gap now, you know, roughly $10, 9 dollars and 90 9 cents between classic and black.

[Colleen Keating, CEO at Planet Fitness]

We are no longer running the 2799 test and the 2999. We've maintained $29.99 in a number of the geographies. We sunset $27.99 because we weren't seeing a material difference between the $27.99 and the 29.99 And the other thing I touched on is we're looking at the black card spa offerings. We started some things like like red light therapy and and cryo spray tanning. So we're continuing to evaluate the black card offerings and what's resonating most with consumers, and all of that will help inform when is the right time to to make a move on on black card pricing.

[Colleen Keating, CEO at Planet Fitness]

And the other thing I said earlier is that, you know, we have traditionally taken price on black card with more frequency where we've anchored to kind of classic as the entry price point for a longer a longer span. So you'll you'll continue to see us take a look at black card pricing and and take Black Card pricing on a periodic basis.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Super helpful. Thanks guys.

[Jay Stasz, CFO at Planet Fitness]

Thanks Randy.

[Operator]

Thank you. This concludes our question and answer session. I would like to turn the call back over to Colleen for closing remarks.

[Colleen Keating, CEO at Planet Fitness]

Thank you. Thank you, operator, and thank you for the thoughtful questions. I'll just close by saying that I'm quite encouraged by our performance during the first quarter of twenty twenty five. We continue to be focused on boosting the economic value proposition for all our stakeholders as the franchisor, franchisees, and members to ultimately deliver even more value for our shareholders. Thank you.

[Operator]

This concludes today's conference. You may now disconnect.

Participants

Executives

• Stacey Caravella, VP, IR
• Colleen Keating, CEO
• Jay Stasz, CFO

Analysts

• Simeon Siegel, Managing Director at BMO Capital Markets
• Sharon Zackfia, Partner & Head of Consumer Equity Research & Analyst - Restaurants, Lifestyle & Leisure Brands at William Blair & Company, L.L.C
• John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities
• Max Rakhlenko, Managing Director at TD Cowen
• Xian Siew, Analyst at BNP Paribas
• Rahul Krotthapalli, Vice President - Equity Research at JP Morgan
• Martin Mitela, Senior Equity Research Associate at Raymond James
• Lucas Hudson, Equity Research Analyst at Bank of America
• John-Paul Wollam, Equity Research Associate at Roth Capital Partners, LLC
• Randal Konik, Managing Director at Jefferies & Company Inc