Executive Summary / Key Takeaways

• Planet Fitness ($PLNT) is solidifying its market leadership in the high-value, low-price fitness segment, demonstrating resilience and consistent growth despite macroeconomic volatility. The company's strategic focus on enhancing franchisee economics, optimizing club formats with increased strength equipment, and refining its marketing approach is driving robust financial performance.
• The company reported strong Q3 2025 results, with system-wide same club sales growth of 6.9% and a 13% increase in total revenue, leading to an upward revision of its full-year 2025 guidance for revenue, Adjusted EBITDA, and adjusted net income. This performance is underpinned by strong member engagement and increasing Black Card penetration.
• Planet Fitness is strategically leveraging technology, including its highly utilized app and planned AI integration for personalized member experiences and targeted marketing, to deepen member loyalty and operational efficiency. The decision to raise the Black Card price to $29.99 after the 2026 peak join season, following extensive testing, is expected to be accretive to Average Unit Volume (AUV).
• The company's asset-light, highly franchised model, coupled with initiatives to reduce build costs and improve franchisee IRRs, is poised to accelerate new club growth, with a target of returning to 200 annual openings in the coming years. International expansion, particularly the successful "proof of concept" in Spain, offers significant long-term growth avenues.
• While facing competitive pressures and the initial impact of online cancellation functionality, Planet Fitness's differentiated "Judgement Free Zone" brand, cost leadership, and expanding network continue to attract a broad demographic, especially Gen Z, positioning it for sustained market share gains and shareholder value creation.

The Judgement Free Zone's Enduring Appeal

Planet Fitness, Inc. (NYSE:PLNT) has carved out a distinctive and highly successful niche in the global fitness industry. Founded in 1992, the company's mission to provide a high-quality, welcoming, and non-intimidating fitness experience—dubbed the "Judgement Free Zone"—at an unbeatable value has resonated deeply with a broad consumer base. This foundational strategy has enabled Planet Fitness to demonstrate remarkable resilience through various economic cycles, including the Great Financial Crisis and the global pandemic, without a single club permanently closing for financial reasons. As of September 30, 2025, Planet Fitness boasted approximately 20.7 million members across 2,795 owned and franchised locations spanning 50 U.S. states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, Australia, and Spain.

The fitness industry is experiencing a "golden age," with consumers increasingly prioritizing health and well-being. This trend, coupled with population growth and de-urbanization, presents significant opportunities for Planet Fitness to expand its high-value offering into new geographies and deepen its penetration in existing markets. The company's reach is unparalleled, with a Planet Fitness club located within a 12-minute drive of 170 million people in the U.S.. This extensive accessibility, combined with its differentiated brand promise, positions Planet Fitness to capture a growing community of fitness-minded consumers.

Technological Edge and Member Experience

Planet Fitness's "technology" extends beyond traditional gym equipment, encompassing a robust digital ecosystem designed to enhance member experience and operational efficiency. The company leverages its highly utilized mobile app, which is among the most downloaded fitness apps, as a primary touchpoint for member engagement. This platform is central to its strategy for personalizing the member journey.

The company is actively integrating artificial intelligence (AI) to further refine its digital capabilities. This includes developing AI-enabled CRM systems and digital content optimization to deliver more targeted marketing messages and personalize workout plans for members. These initiatives aim to create a deeper sense of loyalty and emotional connection, driving retention and ultimately, revenue. For example, the app facilitates access to "perks" programs, which saw over $7 million in redemptions year-to-date in 2025, with redemption rates growing over the last five years. This digital engagement strategy is crucial for maintaining relevance and stickiness in a competitive landscape increasingly influenced by digital fitness solutions.

Beyond digital, Planet Fitness is innovating its physical club offerings. The company is testing new Black Card amenities such as dry cold plunge and red light technology to add further value to its premium membership tier. These additions are informed by member feedback and the understanding that recovery and renewal are important components of a comprehensive fitness routine. The strategic intent is to invigorate the Black Card Spa offering, ensuring it remains a compelling differentiator for the $29.99 Black Card membership, which will be implemented after the peak join season in 2026.

Strategic Imperatives Driving Growth

Planet Fitness's growth narrative is built upon four strategic imperatives: redefining its brand promise, enhancing member experience, refining its product and optimizing its format, and accelerating new club growth. These pillars are interconnected, each contributing to a cohesive strategy for market expansion and sustained profitability.

The "We're All Strong on This Planet" marketing campaign, launched in late 2024, exemplifies the redefined brand promise. This campaign effectively highlights the company's expanded strength equipment offerings, welcoming atmosphere, and supportive community, resonating particularly well with younger consumers, including Gen Z. The success of programs like the 2025 High School Summer Pass, which saw record participation with over 3.7 million teens completing 19 million free workouts (a 30% increase from last year), underscores the brand's ability to build loyalty and attract future paying members. This program alone represented an investment of nearly $170 million in waived membership dues in 2025.

Product refinement and format optimization are critical operational details. By the end of 2025, nearly 80% of system-wide clubs are expected to feature an optimized format, with 95% of franchisees developing or renovating clubs in 2025 electing to build one of these newer layouts. This includes a more balanced mix of cardio and strength equipment, a direct response to consumer research and member behavior indicating a stronger preference for strength training. The company has also strategically reduced lobby and locker room sizes to dedicate more space to the gym floor, which not only enhances the member experience but also reduces build costs for franchisees.

Accelerating new club growth is paramount. Planet Fitness has made significant strides in enhancing franchisee unit economics through a new growth model rolled out in 2024. This model includes reductions in build costs, extensions of capital investment timelines, and the elimination of certain fees. The Classic Card price increase from $10 to $15 in June 2024, the first in over 25 years, further bolstered top-line growth and franchisee profitability. These initiatives are bringing new club unlevered Internal Rates of Return (IRRs) closer to pre-pandemic levels, incentivizing franchisees to expand. The company aims to return to opening 200 new clubs per year in a few years, emphasizing a "healthy, sustainable long-term growth" trajectory.

Competitive Landscape: Dominating the Value Segment

Planet Fitness operates within a vast and fragmented fitness industry, where it holds a prominent position in the high-value, low-price segment. Its primary competitive advantage lies in its unique "Judgement Free Zone" brand, which directly addresses "gymtimidation"—a significant barrier to gym membership and usage. This inclusive atmosphere, combined with its aggressive cost leadership, differentiates Planet Fitness from both premium and boutique fitness concepts.

Compared to high-end competitors like Life Time Group Holdings (LTH), Planet Fitness's model emphasizes affordability and accessibility over luxury amenities. While LTH targets higher-income demographics with comprehensive facilities and personalized services, Planet Fitness's straightforward, no-frills approach attracts a broader, more price-sensitive market. This strategy allows Planet Fitness to achieve superior cost control and potentially higher margins in core operations due to lower overhead. Its extensive network and widespread presence also provide a significant advantage over boutique fitness franchisors like Xponential Fitness (XPOF), which focuses on diverse, specialized workout formats. While XPOF excels in niche experiences, Planet Fitness offers a scalable, everyday fitness solution with broad market penetration.

Against other convenience-focused chains like 24 Hour Fitness, Planet Fitness competes effectively on both price and its non-intimidating environment. The company's strong brand recognition and extensive network effects create substantial barriers to entry for new competitors, allowing it to defend its market share. A recent consumer insights study highlighted Planet Fitness's outperformance over several other fitness brands in making members "feel welcomed" and strong positive associations with "convenient location, value for money, price, easy access and machine variety and availability". Furthermore, Planet Fitness boasts twice the unaided brand awareness compared to its next closest gym peer, with an even greater gap among Gen Z consumers.

The company's asset-light, highly franchised model, while occasionally leading to inconsistent execution across locations, generally supports operational efficiency and robust cash flow generation. The recent decision by franchisees to shift 1 percentage point of marketing funding from local to national advertising underscores their confidence in the corporate marketing strategy and aims to unlock new, more efficient marketing opportunities to drive member growth.

Financial Performance: A Robust Foundation

Planet Fitness's financial performance in the third quarter of 2025 and year-to-date reflects the positive impact of its strategic initiatives. Total revenue for Q3 2025 reached $330.3 million, a 13% increase from the prior year. For the nine months ended September 30, 2025, total revenue grew by 12.7% to $947.9 million. This growth was broad-based across all three segments: Franchise, Corporate-owned clubs, and Equipment.

The Franchise segment, the highest-margin business, saw revenue increase by 11% to $113.7 million in Q3 2025, contributing $82.4 million to Segment Adjusted EBITDA, a 13.2% year-over-year increase. Franchise same club sales grew by a robust 7.1% in Q3 2025, with approximately $4.4 million of the royalty revenue increase attributed to this growth. The Corporate-owned clubs segment generated $137.8 million in revenue in Q3 2025, up 7.6%, with Segment Adjusted EBITDA of $53.7 million, a 6.6% increase. Corporate same club sales also showed solid growth at 6.0%. The Equipment segment experienced significant momentum, with revenue surging 27.8% to $78.8 million in Q3 2025, driven by higher sales of both new and replacement equipment to franchisees. This segment's Adjusted EBITDA grew 28.3% to $23.7 million. Consolidated Adjusted EBITDA for Q3 2025 was $140.8 million, marking a 14.4% increase year-over-year, with an Adjusted EBITDA margin of 42.6%.

Net income attributable to Planet Fitness, Inc. for Q3 2025 was $58.8 million, or $0.70 per diluted share, compared to $42.0 million, or $0.50 per diluted share, in Q3 2024. Adjusted net income per diluted share for Q3 2025 was $0.80.

Liquidity remains strong, with $577.9 million in total cash, cash equivalents, and marketable securities as of September 30, 2025. The company utilized approximately $100 million to repurchase and retire 950,000 shares of its stock in Q3 2025, demonstrating a commitment to returning capital to shareholders. Management is confident that its current liquidity and operational cash flow will adequately cover debt service, capital expenditures, and working capital needs for at least the next 12 months.

Outlook and Guidance: Charting a Course for Accelerated Expansion

Planet Fitness has raised its full-year 2025 outlook, signaling confidence in its strategic execution and market position. The company now expects system-wide same club sales growth of approximately 6.5%, an increase from its previous 6% guidance. Revenue is projected to grow approximately 11%, up from 10%. Adjusted EBITDA is anticipated to increase by approximately 12%, an improvement from the prior 10% guidance. Adjusted net income is expected to rise in the 13% to 14% range, significantly up from the previous 8% to 9% forecast, with adjusted net income per diluted share growing in the 16% to 17% range.

This revised guidance is underpinned by several key assumptions. The momentum in the Equipment segment, driven by franchisees adopting new club formats and reequips, is a significant contributor. The benefits from the Classic Card price increase, implemented in June 2024, will continue to drive rate growth, although this benefit is expected to moderate over time as more members anniversary the change. The nationwide rollout of online cancellation functionality in May 2025 led to a "slightly elevated cancel rate" initially, but this is expected to moderate after approximately 12 weeks. Management also notes that the option for easy cancellation could lead to a "lift in the join conversion" due to increased consumer confidence.

For 2025, Planet Fitness is confident in opening between 160 and 170 new clubs, including both franchise and corporate locations, and completing 130 to 140 equipment placements in new franchise clubs. This reflects a commitment to accelerating growth at a "healthy and steady pace," with the goal of returning to 200 new club openings annually in a few years. International expansion, particularly the "wildly successful" entry into Spain, is a key component of this long-term growth roadmap, with plans to refranchise these corporate-owned clubs in the medium term to recycle capital for further expansion.

The company has also made a strategic decision to raise the Black Card membership price to $29.99 after the peak join season in 2026. This move, informed by extensive testing, is expected to be "accretive to the AUV". While a temporary decrease in Black Card acquisition rate is anticipated, historical trends suggest a rebound within the year. Capital expenditures are projected to be up approximately 20% in 2025, with net interest expense around $86 million and depreciation and amortization at approximately $155 million.

Risks and Considerations

Despite a compelling growth story, Planet Fitness faces several risks. Competition in the health and fitness industry remains high, and the company's success depends on its ability to anticipate and satisfy consumer preferences. While its "Judgement Free Zone" brand is a strong differentiator, a shift in consumer sentiment or increased competition from specialized or technologically advanced fitness offerings could impact membership growth and retention.

Rising costs related to new club construction and maintenance, including inflation and supply chain disruptions, could adversely affect the attractiveness of the franchise model and franchisee unit economics. Although Planet Fitness has implemented mitigation strategies for tariff impacts, such as negotiating with manufacturers and exploring alternative production markets, sustained or increased tariffs could still pose a challenge.

The national rollout of online cancellation functionality, while aligning with consumer preferences, introduced a period of "slightly elevated cancel rate". While management anticipates moderation, sustained higher attrition could impact same club sales and profitability. Furthermore, the company's dependence on a limited number of suppliers for equipment and certain products could lead to business disruptions. The accounting treatment of goodwill and other long-lived assets also presents a risk of future asset impairments, which could reduce earnings.

Conclusion

Planet Fitness is strategically positioned for continued growth, leveraging its unique value proposition and a proactive approach to market dynamics. The company's commitment to enhancing franchisee economics, optimizing club formats with a balanced mix of strength and cardio equipment, and refining its marketing strategy is clearly yielding positive results, as evidenced by its strong Q3 2025 performance and upwardly revised 2025 guidance. The planned Black Card price increase in 2026, coupled with ongoing technological enhancements and international expansion, underscores a clear roadmap for sustained Average Unit Volume (AUV) growth and market leadership.

While challenges such as competitive pressures, rising costs, and the integration of new cancellation policies exist, Planet Fitness's resilient business model, strong brand equity, and focus on member experience provide a robust foundation. The company's ability to attract and retain a broad demographic, particularly the fitness-minded Gen Z, through its "Judgement Free Zone" and innovative programs like the High School Summer Pass, reinforces its competitive moat. Investors should recognize Planet Fitness's strategic evolution as a compelling narrative of a value leader poised for accelerated, sustainable growth in the expanding global fitness market.