Executive Summary / Key Takeaways

• Resilient Growth Trajectory: Planet Fitness continues to demonstrate robust financial performance, with Q2 2025 revenue up 13.3% and Adjusted EBITDA up 15.8% year-over-year, driven by strong same-club sales and new club openings, reinforcing its durable, asset-light franchise model.

• Strategic Product & Pricing Pivots: The Classic Card price increase to $15 for new members and the system-wide format optimization to a more balanced cardio-strength equipment mix are enhancing unit economics and member value, with Black Card penetration reaching 65.8% in Q2 2025.
• Digital and Data-Driven Moat: The company's "most downloaded fitness app" and national rollout of online cancellation functionality, coupled with data-informed club optimization, are critical technological differentiators that improve member experience, reduce costs, and strengthen brand loyalty.
• Accelerated Unit Expansion: With 160-170 new clubs projected for 2025 and successful international proof-of-concept in Spain, Planet Fitness is laying the groundwork for a sustained, healthy pace of global growth, supported by improved franchisee economics and a strengthened leadership team.
• Balanced Outlook Amidst Headwinds: While maintaining a conservative full-year outlook for 2025 (e.g., ~6% same-club sales growth, ~10% revenue/EBITDA growth), management acknowledges moderating Classic Card benefits and elevated, though expected to normalize, churn from online cancellations, alongside ongoing macroeconomic volatility.

The Judgement Free Zone: A Differentiated Powerhouse in a Fragmented Market

Planet Fitness, Inc. (NYSE:PLNT), founded in 1992, has cultivated a unique position within the vast and fragmented fitness industry. Its mission to provide a high-quality, welcoming, and non-intimidating "Judgement Free Zone" experience resonates broadly, setting it apart from the estimated 31,000 gyms and clubs in the U.S. alone. This differentiated approach has allowed Planet Fitness to capture a significant market share, with approximately 7% of the U.S. population over the age of 14 now members. The company boasts "twice the unaided awareness versus our next closest gym peer," a gap that is even wider among the rapidly growing Gen Z demographic.

The company's history underscores its resilience. During the Great Financial Crisis (2007-2010), Planet Fitness achieved strong same-club sales growth, expanded its membership, and opened new clubs. More recently, it navigated the global pandemic without a single permanent club closure due to financial reasons, despite widespread shutdowns. This enduring strength is rooted in its high-value, low-price (HVLP) model, which becomes particularly compelling in a volatile macroeconomic environment where consumers may trade down from higher-priced alternatives.

At the heart of Planet Fitness's competitive advantage lies its operational technology and data-driven approach to enhancing member experience and optimizing club performance. The "Planet Fitness app" stands as the "most downloaded fitness app on the App Store," serving as a central hub for member engagement. This digital platform facilitates "well over 80% of our joins," significantly reducing the need for large, costly front desks and lobbies, thereby lowering franchisee build costs. The app also hosts the "PF Perks program," which has seen members save approximately $7 million year-to-date 2024, averaging over $50 per redemption. This extends member value beyond the club's physical walls, fostering loyalty and potentially mitigating churn.

Furthermore, Planet Fitness leverages data to inform its product refinement and format optimization. Observing member utilization, the company has strategically shifted its equipment mix, moving from a large complement of cardio machines to a more balanced 50-50 split between cardio and strength equipment. This includes increasing the number of popular machines like stair climbers while reducing less utilized equipment such as ellipticals. The company also actively tests new Black Card amenities, including Red Light therapy and spray tanning, to continually enhance its premium offering. These data-driven adjustments ensure the clubs remain relevant to evolving consumer preferences, providing tangible benefits like improved member engagement and a stronger competitive moat.

Financial Momentum and Strategic Evolution

Planet Fitness's strategic pivots are translating into robust financial performance. For the second quarter ended June 30, 2025, total revenue climbed to $340.9 million, a 13.3% increase from the prior year. Year-to-date, total revenue reached $617.5 million, up 12.5% compared to the same period in 2024. This growth was broad-based across all three segments: Franchise, Corporate-Owned Clubs, and Equipment.

The Franchise segment, the bedrock of the company's asset-light model, saw revenue increase by 11.0% to $119.7 million in Q2 2025. Royalty revenue, a key driver, grew 11.0% to $81.1 million, fueled by an 8.3% increase in franchise same-club sales and contributions from new clubs. The average royalty rate for Q2 2025 stood at 6.7%, up from 6.6% in the prior year. The Corporate-Owned Clubs segment also delivered strong results, with revenue up 10.8% to $139.0 million, benefiting from same-club sales growth and new club openings, including the eight clubs now operating in Spain. The Equipment segment experienced a 21.5% revenue surge to $82.2 million, primarily driven by higher replacement equipment sales and the favorable impact of an updated equipment mix under the new franchise growth model.

Profitability metrics reflect this strong top-line performance. Adjusted EBITDA for Q2 2025 rose 15.8% year-over-year to $147.6 million, with the Adjusted EBITDA margin expanding to 43.3% from 42.4%. Adjusted Net Income per diluted share saw a significant 21.1% increase to $0.86 in Q2 2025. These figures underscore the operating leverage inherent in the Planet Fitness model, even as the company makes strategic investments.

A pivotal strategic move was the Classic Card price increase from $10 to $15 for new members, implemented in June 2024. This was the first such increase in over 25 years and is expected to provide a low to mid-single-digit percentage increase to existing clubs' top line after approximately a year. This pricing power, combined with the narrowed $10 gap between Classic and Black Card memberships, has driven Black Card penetration to 65.8% by Q2 2025, a 340 basis point increase from the prior year. This higher-tier membership, offering additional amenities, enhances average unit volumes (AUVs) and franchisee profitability.

Competitive Landscape and Strategic Positioning

In the competitive fitness landscape, Planet Fitness stands out not by directly competing on high-intensity training or luxury amenities, but by offering an accessible, non-intimidating, and high-value experience. Its primary competitive advantage is its "Judgement Free Zone" ethos, which directly addresses the "fear of walking in the front door" that deters many potential gym-goers. This unique positioning allows it to attract a broad demographic, including beginners and returning members, and particularly resonates with Gen Z, the fastest-growing segment of its membership.

Compared to traditional, full-service gyms, Planet Fitness offers a significantly lower price point, making it an attractive option for budget-conscious consumers, especially in the current macroeconomic climate. Its asset-light franchise model, with a target of owning approximately 10% of its fleet, allows for rapid expansion and efficient capital allocation, a distinct advantage over capital-intensive, corporate-owned models. The company's scale, with 2,762 clubs and 20.8 million members globally, provides significant purchasing power for equipment and marketing, further enhancing its competitive edge.

The company's digital platform, the "most downloaded fitness app," serves as a technological moat, fostering strong member engagement and providing valuable data for operational improvements. This digital prowess, combined with its data-driven approach to club format optimization, allows Planet Fitness to adapt its offering to consumer preferences more nimbly than many competitors. While direct quantitative comparisons with all niche competitors are challenging to ascertain, Planet Fitness's consistent growth in members and revenue, coupled with its strong brand awareness, indicates a robust competitive standing.

Outlook, Risks, and the Path Forward

Planet Fitness's management has provided a clear outlook for 2025, reflecting confidence in its strategic initiatives while acknowledging potential headwinds. The company expects to open between 160 and 170 new clubs (franchise and corporate) in 2025, with a significant weighting towards the fourth quarter. This pace, while not an immediate return to pre-pandemic levels of 200+ openings, signals a "healthy, steady pace of growth" aimed at establishing a "reliable pattern of expansion." Equipment placements in new franchise clubs are projected at 130 to 140, with re-equip sales expected to comprise approximately 70% of total equipment segment revenue, driven by clubs adopting the new strength equipment mix.

For the full fiscal year 2025, Planet Fitness has narrowed its system-wide same-club sales growth guidance to approximately 6%. Revenue and Adjusted EBITDA are both projected to grow approximately 10% over fiscal year 2024 results. Adjusted Net Income is expected to increase in the 8% to 9% range, with Adjusted Net Income per diluted share growing 11% to 12%. Net interest expense is anticipated to be around $86 million, and capital expenditures are expected to be up approximately 20%.

This outlook incorporates several key assumptions and risks. The benefit from the Classic Card price increase is expected to moderate in the second half of 2025 as it anniversaries. The national rollout of online cancellation functionality, completed in May 2025, has led to a "slightly elevated" attrition rate, which is factored into the guidance. While management expects this churn to moderate after an initial 8-12 week period, the nationwide scale of this rollout presents a new dynamic. The "continuing volatile macroeconomic environment" also necessitates a level of conservatism in the guidance. However, the company has implemented mitigation plans for potential tariff impacts on equipment, leveraging its scale and exploring alternative sourcing, and does not foresee a material impact on 2025 targets at current tariff levels.

Strategic investments in its "blue ribbon team," including new Chief Development Officer and Chief Marketing Officer hires, and a full year of CEO compensation, are expected to keep Adjusted EBITDA growth in line with revenue growth for 2025. These investments are crucial for building a strong foundation to drive future operating leverage and sustainable long-term growth. The successful ramp-up of corporate-owned clubs in Spain, performing comparably to domestic clubs, provides a strong proof-of-concept for international expansion, with plans to refranchise these clubs to recycle capital for future growth.

Conclusion

Planet Fitness stands at a pivotal juncture, having successfully laid a robust foundation for its next chapter of growth. The company's unwavering commitment to its high-value, low-price model, coupled with strategic enhancements to its product, pricing, and member experience, positions it favorably in a health-conscious yet economically sensitive consumer landscape. The recent Classic Card price increase, the widespread adoption of a more balanced strength-to-cardio equipment mix, and the embrace of digital tools for member engagement and operational efficiency are not merely incremental changes; they are fundamental shifts designed to enhance franchisee unit economics and deepen its competitive moat.

While the company prudently factors in macroeconomic volatility and the initial impact of online cancellation on churn, its reiterated 2025 guidance reflects confidence in its strategic direction and the inherent resilience of its business model. The ongoing expansion, particularly the promising international ventures, and the strengthened leadership team underscore a clear path toward accelerated, sustainable growth. For investors, Planet Fitness represents a compelling opportunity in a brand that is not only expanding its physical footprint but also strategically evolving its offering, leveraging its unique operational technology and brand promise to forge a stronger, more profitable future.