Planet Fitness Q1 Earnings Call Highlights
Planet Fitness (NYSE:PLNT) reported stronger-than-expected first-quarter revenue and profit, but management said member growth fell short of expectations and outlined a reset of its marketing and pricing strategy aimed at reigniting joins among fitness beginners and casual gym users.
Chief Executive Officer Colleen Keating said the company added more than 700,000 net new members in the first quarter, posted systemwide same-club sales growth of 3.5%, increased adjusted EBITDA 19.5% from the prior year and opened 15 new clubs. However, she said the company was “not satisfied” with its member growth performance during the key first-quarter sign-up period.
Keating said demand for affordable fitness remains supported by long-term industry tailwinds, but Planet Fitness faced a combination of internal and external pressures early in the year. She cited marketing that resonated more with fitness-minded consumers than with beginners, competitive pressure in certain markets, unfavorable weather and broader macroeconomic uncertainty affecting consumers.
“While our top and bottom line results exceeded expectations, we are not satisfied with our member growth performance,” Keating said.
Marketing Shift Aimed at Beginners
Keating said Planet Fitness had shifted its messaging in late 2024 to emphasize strength equipment and more advanced gym users after the company updated club layouts to include a more balanced mix of strength and cardio equipment. More than 80% of the system had some version of a format-optimized layout or equipment offering by the end of the first quarter, she said.
The company’s recent campaigns succeeded in increasing penetration with more fitness-minded consumers, Keating said, but may have moved too far away from the “light-hearted, approachable tone” historically associated with the brand. She said the company plans to “dial up” its “no gym-timidation” message to reach the more than 70% of the population that does not currently belong to a gym.
Planet Fitness ran a request-for-proposal process in the first quarter and recently selected a new creative agency. Keating said the company is refining existing marketing work for the second and third quarters and expects a new campaign to be in market before year-end, positioning the brand for the first quarter of 2027.
The company is also investing in more data-driven marketing tools, including machine learning models, a modernized customer relationship management engine and a dynamic content optimization engine. Keating said those tools are intended to deliver more personalized advertising in real time and support both acquisition and retention.
Pricing Plans Revised as Company Prioritizes Joins
Keating said Planet Fitness has decided to pause a national rollout of a Black Card price increase, despite prior testing. She said the consumer and economic backdrop has changed since testing began, and price increases have historically created a near-term headwind to member joins.
“Given our decision to prioritize member growth, we have decided to pause the national rollout of our Black Card price increase,” Keating said.
Management said the company will continue testing pricing in select markets. Interim Chief Financial Officer Tom Fitzgerald said some markets remain at a $29 Black Card price, and the company does not currently plan to roll those prices back.
Keating said Black Card penetration was benefiting from the smaller gap between the Classic membership price and the Black Card price. Fitzgerald said Black Card penetration reached 67% at the end of the quarter, up 240 basis points from the prior year.
First-Quarter Revenue Rises 22%
Fitzgerald said first-quarter revenue rose 22% to $337 million from $277 million a year earlier, driven by growth across franchise, corporate-owned club and equipment segments.
- Franchise segment revenue increased 17%, helped by higher National Ad Fund revenue, royalty revenue from same-club sales and new clubs, and placement and franchise fees.
- Corporate-owned club revenue rose 5%, driven by sales from new clubs and higher same-club sales.
- Equipment segment revenue increased 123%, primarily due to higher replacement equipment sales and new franchisee-owned club placement sales.
Fitzgerald said the company completed 14 new club placements in the quarter, compared with 10 a year earlier. Replacement equipment represented 87% of equipment revenue, up from 78% last year.
Net income was $52 million, adjusted net income was $59 million and adjusted net income per diluted share was $0.74. Adjusted EBITDA rose 20% year over year to $140 million, while adjusted EBITDA margin was 41.5%, compared with 42.3% in the prior-year period.
As of March 31, Planet Fitness had cash, cash equivalents and marketable securities of $652 million, including $81 million of restricted cash. The company repurchased approximately 614,000 shares for $50 million during the quarter at an average price of $81.47.
Attrition and Weather Weighed on Membership Trends
Fitzgerald said higher-than-expected attrition also affected first-quarter net member growth. He said Planet Fitness’ monthly attrition has historically been between 3% and 4%, and the first-quarter attrition rate averaged 3.8% per month, within that historical range.
In January, attrition was elevated, which Fitzgerald said the company partially attributed to TV advertising that included the phrase “cancel anytime.” After the company adjusted the language, attrition declined in February and March, though it remained higher than the prior year.
Weather was another factor. Keating said severe cold and winter storms in late January and February disrupted joins, particularly because several storms fell on Mondays, the company’s busiest join day. Management expected a March Black Card First Month Free promotion to improve momentum, but join trends remained below plan into early April.
Guidance Cut and Three-Year Outlook Withdrawn
Planet Fitness reduced its 2026 outlook, citing the first-quarter member growth shortfall and the decision to pause the national Black Card price increase. Fitzgerald said the company now expects systemwide same-club sales growth of approximately 1%, revenue growth of approximately 7% and adjusted EBITDA growth of approximately 6%.
The company also expects net interest expense of approximately $111 million, adjusted net income to decrease approximately 2% and adjusted net income per diluted share to grow approximately 4%, based on adjusted diluted weighted average shares outstanding of approximately 79 million.
Fitzgerald said pausing the Black Card price increase accounts for approximately 150 basis points of the reduction in the same-club sales outlook, with the remainder tied to softer net member growth trends. The company’s unit growth outlook is unchanged, with 180 to 190 new systemwide clubs expected in 2026.
Keating said the guidance changes also affect the three-year algorithm the company presented at its investor day last November, leading Planet Fitness to withdraw that outlook. She said the company remains confident in its broader strategy and continues to invest in initiatives aimed at long-term member growth.
“Planet Fitness is a market leader, and the underlying strength of our brand and our business model remains in place,” Keating said in closing remarks.
About Planet Fitness (NYSE:PLNT)
Planet Fitness, Inc is a franchisor and operator of fitness centers based in Hampton, New Hampshire. Established in 1992, the company designs and equips its clubs to offer a non-intimidating workout environment, often marketed under its “Judgment Free Zone” philosophy. Planet Fitness markets affordable membership plans and a variety of cardio and strength-training equipment, positioning itself to attract casual and first-time gym users.
The company operates through a network of franchised and company-owned clubs.
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