Planet Fitness, Inc. (PLNT) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary and Q&A indicate strong financial performance and optimistic guidance, with increased revenue and EBITDA projections, new club openings, and strategic partnerships. Despite some uncertainties, such as interest expenses and lower comp guidance for 2026, the overall outlook is positive. The increase in Black Card membership pricing and the raised 2025 outlook further support a positive sentiment. Additionally, the Ro partnership and focus on new capabilities enhance growth potential. Thus, the stock price is expected to rise by 2% to 8% over the next two weeks.
Key Financial Performance
Same club sales Grew 6.7% year-over-year. This growth was attributed to the first full year of new Classic Card membership dues, showcasing the brand's value.
Revenue Increased 12% year-over-year. The increase was driven by growth across all segments, including Franchise, Corporate-owned clubs, and Equipment.
Adjusted EBITDA Increased 13% year-over-year. This reflects strong operational performance and cost management.
Adjusted diluted EPS Grew 19% year-over-year. This was driven by overall revenue growth and operational efficiencies.
New club openings 181 new clubs were opened in 2025, an all-time high for Q4 openings. This was achieved despite a competitive real estate market, leveraging franchisee-led acquisitions and partnerships.
Net new members Added 1.1 million net new members in 2025, ending the year with approximately 20.8 million members. Growth was supported by marketing efforts and the High School Summer Pass program.
Black Card penetration Reached 66.5% at the end of Q4, an all-time high, increasing by 260 basis points year-over-year. This reflects the popularity of premium memberships.
Total revenue for Q4 $376.3 million, up from $340.5 million in Q4 2024. Growth was driven by increases in all segments, with Equipment segment revenue growing 15.3%.
Net income for Q4 $60.7 million, with adjusted net income at $69 million. This reflects strong financial performance across the board.
Adjusted EBITDA margin for Q4 38.9%, up from 38.4% in Q4 2024. For the full year, adjusted EBITDA margin increased to 41.7% from 41.3%.
Cash and cash equivalents $607 million as of December 31, 2025, up from $529.5 million in 2024. This increase was supported by strong cash flow generation.
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Operating Highlights
High School Summer Pass program: Achieved record results with over 3.7 million teens completing 19 million workouts. Conversion rate of teen participants to paying members increased to 8.3%.
Black Card amenities test: Testing new amenities like Dry Cold plunge and Red Light sauna, receiving positive feedback from members. Aimed at driving joins, upgrades, and retention.
AI-driven tools for personalized coaching: Piloting AI tools to provide personalized coaching and workout support for members.
International expansion: Surpassed 1 million members and 200 international clubs. Entered Northern Mexico and expanded in markets like Mexico, Australia, and Spain.
Franchisee-led acquisitions: Franchisees acquiring regional gyms and converting them to Planet Fitness locations, aiding footprint expansion in tight real estate markets.
AI-enabled CRM and predictive churn model: Investing in AI-enabled CRM and predictive churn model to enhance member retention and engagement.
Optimized club formats: 95% of new or remodeled clubs adopted optimized formats, with 80% of the system featuring these layouts.
Marketing strategy shift: Extended the 'We are all strong on this Planet' campaign into 2026, reallocating savings from creative development to high-impact media.
Perks partnership with Ro: Most successful Perks program to date, with high download and conversion rates, positioning Planet Fitness in the consumer wellness shift.
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Risk or Challenges
Real Estate Market Challenges: The real estate market remains highly competitive, making it difficult to secure prime locations for new clubs. This could impact the pace of new club openings and overall growth.
Weather-Related Disruptions: Storms and cold weather in late January negatively impacted join trends, which could affect short-term revenue and membership growth.
Higher Membership Cancellation Rates: A slightly higher-than-expected membership cancellation rate was observed, which could impact member retention and revenue stability.
Economic Uncertainty: The company is navigating a competitive real estate market and potential economic uncertainties that could affect consumer spending and franchisee investments.
Supply Chain and Equipment Costs: Increased costs related to equipment sales and reequipment placements could pressure margins, especially as reequipment sales are expected to represent 70% of total segment revenue in 2026.
International Expansion Risks: Expanding into new international markets like Northern Mexico and scaling in existing ones like Spain and Australia involves risks related to market entry, cultural adaptation, and operational execution.
Attrition Trends: Recent attrition trends, although returning to expectations, could pose a risk if they deviate again, impacting long-term member retention.
Franchisee-Led Acquisitions: While franchisee-led acquisitions offer growth opportunities, they also carry risks related to integration, member conversion, and operational alignment.
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Guidance & Outlook
System-wide same club sales growth: Expected growth of 4% to 5% in 2026.
New club openings: Plan to open 180 to 190 new clubs system-wide in 2026, with openings weighted toward the second half of the year, especially the fourth quarter.
Equipment placements: Anticipate 150 to 160 equipment placements in 2026, with reequipment sales representing approximately 70% of total segment revenue and an equipment margin rate of approximately 30%.
Total revenue growth: Projected growth of approximately 9% over 2025.
Adjusted EBITDA growth: Expected growth of approximately 10% over 2025.
Adjusted net income growth: Projected growth in the 4% to 5% range for 2026.
Adjusted diluted EPS: Expected increase between 9% to 10% in 2026, based on approximately 80 million adjusted diluted weighted average shares outstanding.
Net interest expense: Anticipated to be approximately $114 million in 2026, reflecting the annualized impact of 2025 refinancing.
Capital expenditures: Expected to increase between 10% and 15% in 2026.
Depreciation and amortization (D&A): Projected to increase approximately 10% in 2026.
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Shareholder Return Plan
Share Buyback Program: Planet Fitness has returned nearly $800 million to shareholders through buybacks over the last 2 years. Additionally, during the fourth quarter, the company executed a $350 million accelerated share repurchase. For 2026, the company plans to repurchase approximately $150 million worth of shares.
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Key Q&A
Q:What does the '26 guide mean for revenue growth, unit expansion, and EBITDA dollar growth in the out years ('27 and '28)?
A:The '26 guide represents the lowest growth year in the 3-year algorithm due to the reequipped cycle and the sale of California clubs, which impacted top-line growth by 300 basis points and EBITDA by slightly over 200 basis points. Management expects growth to step up in the out years ('27 and '28) as strategic imperatives gain traction, driving revenue and net member growth with significant flow-through to the bottom line.
Q:Can you provide more details about the month of January?
A:January saw healthy join trends initially, but storms in late January significantly impacted join volumes across 2,000 clubs. Post-storm, markets rebounded with healthy join rates in February. Attrition was slightly elevated in January due to the 'cancel anytime' messaging but normalized in February after tweaks to messaging and the digital platform.
Q:How is Black Card penetration and price versus member growth embedded in the guidance?
A:Black Card penetration reached a record 66.5% in Q4, benefiting the rate. The guidance assumes a 75-25 split, with 75% of growth from rate and 25% from volume or membership growth.
Q:What is the significance of a challenging weather January for Planet Fitness?
A:Management has successfully driven net member growth in quarters outside of Q1 through promotions and marketing. Despite the January weather impact, they remain confident in the business momentum, citing a 10% increase in net new members in 2025 and strong join trends prior to the storm.
Q:Can you discuss the shape of the year for EBITDA and EPS guidance for 2026?
A:Comps are expected to be lower in the first half and higher in the second half due to the lapping of the nationwide rollout of member management in Q2. Equipment revenue is backloaded, with around 60% of openings expected in Q4. Margin leverage is expected on an ex-NAF basis, with SG&A being a key area of leverage.
Q:What is the timing of the Black Card price increase, and how will it impact comps and Black Card mix?
A:The Black Card price increase will roll out after the peak join season, likely in Q3. It is embedded in the guidance and expected to contribute to comps, with 75% of growth from rate and 25% from volume.
Q:Are attrition rates back to expected levels after implementing click-to-cancel?
A:Yes, attrition rates are back in line with expectations for February and remain within historical norms. Management expects the annualized attrition rate to stay within the historical average of around 3%.
Q:What is the reason for the $29 million increase in interest expense year-over-year?
A:The increase is due to the refinancing of $400 million of debt at a higher coupon rate of 5.4% (up from 3%) and an additional $350 million in debt for the ASR. There is also an interest income component embedded in the figure.
Q:Why is the 4%-5% comp guidance for 2026 lower than the 6% comp in Q4 2025?
A:The lower guidance reflects the impact of a low club opening year in 2024, with many openings back-end loaded and entering the comp base later. Additionally, the most pronounced impact of the Classic Card price lift has already been realized, and the Black Card price lift will occur after the peak join season.
Q:What is the purpose of the Ro partnership, and how does it benefit members?
A:The Ro partnership provides Planet Fitness members with discounts on GLP-1 products, complementing their health and wellness journey. Early results show high conversion rates, and the partnership aims to attract fitness-minded individuals, particularly first-time gym-goers.
Q:How are join trends tracking, and is it realistic to match the net member growth of 2025?
A:Join trends were strong before the January weather impact, and management is confident in driving strong member growth through 2026. In 2025, net member growth increased by 10% despite challenges, and management sees significant opportunities to reach fitness-minded consumers.
Q:What explains the 10% adjusted EBITDA growth guidance for 2026 compared to the mid-teens 3-year average?
A:2026 is expected to be the lowest growth year in the 3-year algorithm due to known headwinds. Strategic imperatives are gaining traction, and management expects significant flow-through and growth in future years as the model compounds.
Q:How will the increased NAF fund impact member growth?
A:The increased NAF fund will enable new capabilities like dynamic content optimization, AI-enabled CRM, and a predictive churn model, enhancing marketing effectiveness and targeting fitness-minded consumers.
Q:What is the rejoin rate for lapsed members, and how is it being managed?
A:The rejoin rate is in the mid-30% range, with 34.8% in Q4. Management is testing narrower lapsed periods for rejoin offers and continues to market consistently to former members.
Q:What is the potential impact of GLP-1 users on Planet Fitness?
A:GLP-1 users, representing about 13% of the population, are seen as an opportunity for Planet Fitness due to their focus on health and wellness. The brand's judgment-free environment and strength training offerings make it well-positioned to attract these users.
Q:What is the outlook for CapEx growth and corporate-owned clubs?
A:CapEx growth is expected to be around 10%-15%, driven by corporate-owned clubs, relocations, and remodels. Management is exploring opportunities to recycle capital, such as selling clubs in Spain to franchisees, while maintaining a 90-10 split between franchise and corporate-owned clubs.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timing of the Black Card price increase, citing competitive reasons. They also did not provide granular guidance on membership cadence or the exact impact of the Ro partnership and GLP-1 users on member growth.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Black Card
CRM
Fitness brand
Mexico
New Rockin
Perks
President Investor
Rockin Eve
Summer Pass
approach
center
conversion
day
demand
download
efficiency
estate market
example
focus
health
judgment environment
medium
member Planet
member retention
milestone
million
optimization member
participant
partner
perk
position
presence
response
scale
stage
support
technology
teen
term retention
traffic
wellness
workout Planet
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The earnings call summary and Q&A indicate strong financial performance and optimistic guidance, with increased revenue and EBITDA projections, new club openings, and strategic partnerships. Despite some uncertainties, such as interest expenses and lower comp guidance for 2026, the overall outlook is positive. The increase in Black Card membership pricing and the raised 2025 outlook further support a positive sentiment. Additionally, the Ro partnership and focus on new capabilities enhance growth potential. Thus, the stock price is expected to rise by 2% to 8% over the next two weeks.
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