Participants

Stacey Caravella; Investor Relations; Planet Fitness Inc

Colleen Keating; CEO; Planet Fitness Inc

Jay Stasz; Incoming CFO; Planet Fitness Inc

Tom Fitzgerald; Chief Financial Officer; Planet Fitness Inc

Simeon Siegel; Analyst; BMO Capital Markets

Sharon Zackfia; Analyst; William Blair

Jonathan Komp; Analyst; Baird

Rahul Krotthapalli; Analyst; JPMorgan

Megan Clark; Analyst; Morgan Stanley

John Heinbockel; Analyst; Guggenheim Partners

Joseph Altobello; Analyst; Raymond James

Max Rakhlenko; Analyst; TD Cohen

Randal Konik; Analyst; Jefferies

Presentation

Operator

My name is Kayla and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 Planet Fitness earnings call.
All lines been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, please press star and one.
I would now like to turn the call over to Stacey Caravella, Vice President of Investor Relations. You may begin.

Stacey Caravella

Thank you, operator, and good morning, everyone. Speaking on today's call will be Planet Fitness, Chief Executive Officer, Colleen Keating, Chief Financial Officer, Tom Fitzgerald. Also joining us is Jay Stasz as our newly appointed CFO effective on November 15th. They will all be available for questions during the Q&A session. Following the prepared remarks. Today's call is being webcast live and recorded for replay.
Before I turn the call over to colleagues, 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. Our release can be found on our investor website, along with any reconciliation of non-GAAP financial measures mentioned on the call with Evercore, the funding GAAP measures. Now I will turn the call over to Colleen .

Colleen Keating

Thank you, Stacy, and thank you, everyone, for joining us for the Planet Fitness Q3 earnings call. I'm thrilled to be here speaking with you this morning to talk about our quarterly results and the strength of our business. During the third quarter, we grew same club sales by 4.3%, delivered 5.3% range. New growth, and we ended the quarter was approximately $19.6 million members. I'm proud of our performance and of the important work our team has done to execute on our near-term focus areas while laying the foundation for our longer-term ambitions.
We also announced last week that we appointed Jay as Chief Financial Officer effective November 15th. Jay joined us on Monday and is working with Tom to ensure a smooth transition. Tom will be staying with us through the end of December and will remain as a consultant until the end of the first quarter. Jay brings more than 25 years of experience developing high performing collaborative finance teams and supporting meaningful growth and value creation. I'm eager to work closely with Jay to support our team members and franchisees as we provide high quality and accessible fitness experiences for our members and to ultimately increase value for shareholders.
Before I address our Q3 performance, I'd like to give Jay a chance to introduce himself. Jay.

Jay Stasz

Thanks going. I'm very excited to be part of the Planet Fitness team. It's a strong brand with a clear mission and value proposition for its members as well as a compelling business model. I look forward to leveraging my skills and experience to support the company and its franchisees as it enters a new phase of growth and also eager to partner with all our stakeholders, including investors and analyst community. Now that calling.

Colleen Keating

Thanks, Jay. I wanted to take a step back and share a few of my thoughts and observations from my first few months. The CEO. During the quarter, we held our franchisee conference. It was my first opportunity to address our franchise system in person and share my strategic imperatives with them to align our goals as they assess their capital deployment plans for 2025 and beyond. In my first 100 days, I visited more than 50 Planet Fitness clubs, putting into action one of my core principles of feet on the street.
I heard from our franchisees managers and team members and gathered by own observations about how our members are experiencing our clubs. I've seen a lot of gym's in my day. And when you're in one of our clubs, you know, you're in a Planet Fitness there, bright, clean and energizing with a friendly, welcoming and approachable feel yet. What really excites me is that we have an opportunity to build on our quality and modernize our experience to ensure our equipment layout and floor plan consistently deliver for our members today and keep us relevant for tomorrow.
Early consumer data and testing validates this opportunity. Another thing that continues to stand out to me is that our members made the important decision to join of Planet Fitness Club, which is very different than a store that has transactions with customers. This is where our members feel a sense of belonging and support, which is why we're putting renewed emphasis on the club at our members. And importantly, we are all committed to delivering a high value member experience included in our corporate team.
This renewed focus and formed a few changes. We've implemented to communicate our culture of shared accountability, renaming our corporate headquarters to the club support center, transitioning our corporate e-mail addresses and using clubs instead of stores when referring to a Planet Fitness location. A notable milestone during the quarter is that we raised the price of our classic card membership for all new members to $15 adjusted for inflation, the $10 price in 1998 when we introduced it would be about $20 today. In other words, the $15 classic card price isn't even better value than $10 was when it was established more than five years ago. We felt it was prudent to implement the price increase ahead of Q3 to leave time for the market to absorb it before Q1, which has historically been our highest quarter for member growth. We believe the long-term benefits from the new price will outweigh any near term softness in net member growth.
Based on what we saw during our tests, we expect that existing clubs will see a low to mid single digit percentage increase their top line after approximately a year of the price increase being in place. Our price increase applies to new joins only and classic cardmembers who joined prior to the increase, maintain the legacy $10 pricing, which could have favorability on our churn rate.
At the same time, we believe the price increase will have an even greater impact for new clubs as most of their classic card members will be paying $15 per month. Tom will address the impact of the increase on Q3 later in his remarks. Additionally, we wrapped up our annual high school summer pass program. During Q3, nearly $3 million high school students participated collectively logging more than $12 million workouts.
We've invested more than $300 million in waived membership dues to promote used health and wellness. During the four years that we've run the program. We're incredibly proud to have had a meaningful impact on the lives of millions of teens as we introduce them to positive health and fitness habits and build brand loyalty. With this important generation.
Let me now turn to a recap of our four strategic imperatives that will guide us during our next phase of growth. We're making several important pivots to evolve our brand to focus on what matters most to our members and to ensure that we maintain our industry leadership. First is to redefine our brand strategy and pull it through our marketing. Second is enhancing our member experience. Third is refining our product and optimizing our format. And fourth is accelerating new club growth. I'll start with redefining our brand strategy.
We're evolving our strategy to go beyond getting people off the couch. We're broadening our audience to include current and previous members and nonmembers and competitive members. We continue to see a significant percentage of our joint score to former Fitness members. We want to convey that we welcome beginners and returning gym goers in a recent consumer survey that we conducted, including both members and nonmembers. There was a proportion of respondents who did not see Planet Fitness as a place where they can progress or advance on their fitness journey. Presenting a clear area of opportunity for us.
We are doubling down on our efforts to establish Planet Fitness club that welcomes all fitness levels from beginners to more advanced, whether they're starting a fitness journey or running another Marathon where the club for anyone who was speaking of fitness community with no gym limitation were member support each other to fulfill the promise of growing stronger together. We believe this is the right evolution at the right time for our brands.
This focus was part of our marketing messaging for our strong choice October sale. We ran a social media campaign in late summer that compared our EUR75 dumbbell to a higher priced gym's dumbbell of equal weight, which demonstrated value while evolving our humor to convey that we take fitness seriously, but we don't take ourselves too seriously Munich the high value of a Planet Fitness membership versus primarily focusing on our low price and using our marketing to demonstrate the breadth of high quality top tier equipment in our clubs. Looking ahead, our first quarter marketing plans are well underway and we're actively working on new creative assets with our agency partners. We're also excited to be returning for our 10th year as the presenting sponsor of the Times Square New Year's Eve celebration.
Lastly, on brand strategy. We're encouraged by the progress we're making in our ongoing search for a Chief Marketing Officer, and we look forward to providing an update in the future. Now to our second imperative enhancing member experience. We want numbers to know that the value of their Planet Fitness membership goes beyond the four walls of the club freezing technology to enhance the member experience and drive value and engagement.
Planet Fitness is the most downloaded fitness app on the App Store. This gives us a great opportunity to deliver content to support our members on their wellness and fitness journey even when they're not in one of our clubs, whether that's doing work out on the PF App or taking advantage of discounts through PF Perks program steel since counts with relevant partners can enhance the member value proposition beyond the club experience and potentially help to reduce churn.
Year to date, our members have saved a total of approximately $7 million with an average of more than $50 per redemption through our Perks program. So we know there's significant potential as we continue to grow the offerings in the PF App. We're also rolling out a more uniform way to collect member feedback on a system-wide basis. Many of our franchisees have consumer feedback systems in place, but now we're implementing a standardized system to analyze this information across our estate.
This will give us better line of sight and enable us to be faster to respond to member feedback about their experiences in our clubs. We're also confident that enhancing our member experience will further improve AUVs. This leads to our third strategic imperative, refining our product and optimizing our format. This is about updating our experience to meet the needs of today's consumer. We're not putting something in a club just because we've always done it that way.
We're modernizing our offering based on what consumers value today, while being made mindful of our franchisees, P&L's and capital obligations. Preserving our efficient operating model remains an important aspect of our business.
For example, we've moved from a large span of cardio equivalent to a more balanced footprint of cardio and strength. two years ago, the standard was roughly 100 pieces of cardio. And today it's about 70. We did this based on industry trends that showed consumer preference for strength as well as how we observed members using the equipment in our clubs.
This saves our franchisees money on newbuilds and really equipped while making our clubs more relevant for today's member. So they don't feel like they need to graduate to another gym. In collaboration with our franchisees, we rolled out a program to add additional pieces of strength equipment in existing clubs before it becomes the standard for newbuilds and reequip in 2025. More than 60% of our clubs are more than 1,700 will have the additional pieces of strength equipment in place by the end of this year. Through voluntary often by our franchisees, the uptake greatly exceeded our expectations, which will drive equipment sales up in Q4 and beyond what was included in our outlook. Tom will address how this impacts our full year guidance.
We're also working to optimize the space within existing clubs, removing some of the less utilized cardio equipment frees up floor space, allowing franchisees to move the equipment from the 30 minute workout area to other places on the clubs for this provides additional floor space for members to grab them mat and wait and do their work out in an open area in the club I need we observed when visiting our clubs and speaking with our club managers, this is a great example of a format optimization pivot.
We were able to maybe quickly that does not add any cost to our franchisees. Finally, our imperative is accelerating new club growth. We have a responsibility to put club economics in the Sightline of everything we do. Our goal is to drive the top line while enhancing the bottom line and reduce capital cost to enable our system to turn up the after burners on growth.
Before I joined Planet Fitness, two critical pieces were in place to enhance what we're already strong club level returns, the new growth model and the decision to increase the classic card price. While we've been discussing the new growth model for several quarters now, it's important to note that clubs that were built are underway and equipment replacement cycle in Q2 and Q3 were the first to see the cost benefits from this initiative. Clubs that opened in Q3 also had the added benefit of the price increase. While these are meaningful changes, we are continuing to look for ways to reduce the new club build cost to further enhance the economics for our franchisees.
Looking ahead, we have a tremendous opportunity to grow domestically in both new and existing markets across the country. Our long-term target of 5,000 clubs in the US is based primarily on our 20,000 square foot traditional Planet Fitness. At the same time, we continue to work on smaller footprint clubs for infill locations and for less populated areas, which would further our domestic opportunity. We also have plans to grow internationally in strategic markets where we can achieve scale density and market leadership.
We will continue to build our presence in newer markets such as Mexico, Spain and Australia. We're also excited about the progress we're making in our search for a Chief Development Officer and will provide updates when appropriate.
In(inaudible). During our recent franchisee conference, there was palpable enthusiasm for continued growth with Planet Fitness. We laid out our plans to redefine our brand positioning and brand promise and showed an early peak get some of the marketing in the works to drive joins. We also shared tools and initiatives to enhance our member experience and reduce churn, including some cool tech enhancements on the horizon. And we reiterated our commitment to refining our product offering to stay relevant for two days member while being mindful of build costs.
We are invigorated by the spirit of excitement across our suite systems and look forward to discussing updates on our progress and our 2025 outlook on our call in February. Now I will turn it over to Tom.

Tom Fitzgerald

Thanks, Cally. Before I get to our third quarter results, I'd like to address the power of our US book. Lloyd's franchise model and its ability to generate significant free cash flow model enables us to continuously assess the best use of our cash and how we can leverage our balance sheet.
To enhance shareholder about since 2017, we returned more than $1.3 billion to shareholders via share repurchases. Most recently, during the quarter, we completed a $280 million accelerated share repurchase agreements that we entered into following or $800 million securitized transaction in Q2. Over $2 million share repurchase authorization went into place today. We are five traunches of fixed route securitized debt of $2.2 billion at a blended rate of approximately 4.5% in our net leverage ratio of 3.7 times is about where it was last year. Despite the upsize, we believe the combination of our asset-light franchise model and strong Club economics sets us up to take advantage of our long-term growth opportunities and continue to enhance shareholder value.
Now to our third quarter results. All of my comments regarding our quarter performance will be comparing Q3 2024 for Q3 of last year, unless otherwise noted, we opened 21 new clubs compared to 26. We delivered system wide same club sales growth of 4.3% in the third quarter. Franchisees. Same club sales increased 4.5%. In corporate same club sales increased 3.4% to approximately 50% of our Q3 conference call. This was driven by net member growth with the balance being rate growth, 63.1% of our membership, our Black Card members compared to 62.1%.
As Colleen noted earlier, the results in Q three are consistent with and slightly better than what we expected after increasing the price of our costs occurred from turns of $3 in late June. Our expectations were based on our extensive testing of the price increase across several markets. Typically, there's not a lot of that member growth in the third quarter of any given year with the class record price increase in June, we expected a slight decline in membership in Q three, which was more than offset by the rate improvement on costs recovered and higher block Hardman. For the third quarter, total revenue was $292.2 million compared to $277.6 million to the increase was driven by revenue growth across the franchise and corporate owned segments, 4.3% increases. Franchise segment revenue was primarily due to increases in royalties, new clubs, the national ad fund revenue.
For the third quarter, the average royalty rate was 6.7%, up from 6.6%. The 13.1% increase in revenue and corporate owned club segment was primarily driven by same club sales growth, annual and other fees as well as new clubs. Equipment segment revenue decreased 6.7%. Decrease was primarily driven by lower revenue from equipment sales through new franchisees, Joan clubs, which was due to fewer new club placements, as well as the shift to more strength equipment versus cardio. As we noted last quarter, the shift in the equivalent mix brings down the overall equipment sales on a per club basis. Now, as a reminder, we are keeping our profit dollars neutral. We completed 15 new club placements this quarter compared to 22 last year. For the quarter, replacement equipment accounted for 85% of total equipment revenue compared to 79. Our cost of revenue, which primarily relates to the cost of equipment sales to franchisee-owned clubs, was $45.7 million compared to $53.8 million, a decrease of 15%.
Cost of risk decreased at a higher rate than revenue, primarily due to the equipment mix shift I just described. Club operation expenses, which relates to our corporate owned club segment, increased to $71.6 million from $63.1 million. SG&A for the quarter was $32.6 million compared to $33.3 million. Adjusted SG&A was $31.3 million, which includes a $1.3 million adjustment for CEO transition related expenses compared to $30.7 million, which included $2.5 million for CEO two. There's two related expenses. National advertising fund expense was $19.7 million compared to $17.6 million. Net income was $42.4 million. Adjusted net income was $54.7 million and adjusted net income per diluted share was $0.64. Adjusted EBITDA was $123.1 million and adjusted EBITDA margin was 42.1% compared to $111.9 million with adjusted EBITDA margin of 40.3%. By segment franchise adjusted EBITDA was $72.8 million and adjusted EBITDA margin was 71.1%. Corporate Globe adjusted EBITDA was $50.4 million and adjusted EBITDA margin was 39.3%. For equipment. Adjusted EBITDA was $18.5 million and adjusted EBITDA margin was 30%. Now turning to the balance sheet.
As of September 30th, 2024, we had total cash, cash equivalents and marketable securities of $530.7 million compared to $447.9 million on December 31st, 2023, which included $67.8 million and $46.3 million of restricted cash, respectively. In each period. In Q3 2024, we retired approximately 700,000 shares of the approximately $4 million retired in total year to date upon final settlement of the ASR.
Finally, our outlook for 2024, we're reiterating our new club growth targets and continue to expect between 140 and 150 new clubs, which includes both franchise and corporate locations as well as between 120 and 130 equivalent placements in new franchise slopes. Now I'll discuss our outlook revisions with only two months remaining in the year, we're tightening our range for same club sales growth through 4% to 5% from 3% to 5%.
I was calling noted our franchisees purchased additional pieces of strength equipment that we are placing in clubs during Q4. We expect an additional approximately $20 million to our equipment segment revenue in the fourth quarter as a result. Additionally, this drives up the percentage of equipment segment revenue from reequip sales approximately 70% for the full year.
We've also made the decision to make a couple of investments in Q4 to set ourselves up for a successful 2025, which will flow through our SG&A. Therefore, we now expect the following targets that represent growth over fiscal year in 2023 results revenue to grow the 8% to 9% range, up from 4% to 6%. Adjusted EBITDA will grow in the 8% to 9% range, which was previously 7% to 9%. Adjusted net income to increase in the 8% to 9% range, up from 4% to 6% and adjusted earnings per diluted share to grow in the 11% to 12% range from 7% to 9% based on adjusted diluted weighted average shares outstanding of approximately $86.5 million. Inclusive of this year shares repurchased as part of the ASR agreement.
We also continue to expect 2024 net interest expense of approximately $75 million, excluding the write-off of deferred financing costs associated with our debt refinancing transaction. Lastly, we now expect CapEx to be up approximately 20% in D&A to be up approximately 10%.
Finally, I'd like to thank all the investors and analysts who have interacted with over my five years here. It has been a privilege to serve as your CFO at Planet Fitness work alongside such a dedicated and passionate team. I will miss these calls and the interactions with our analysts and shareholders. But I can't begin to do well, but also does so much good. I'm proud of the work we've done here is the team to deliver value for our franchisees and our shareholders. And I'm excited to see the results from the growth initiatives that Colleen and the team are working on, which I believe will create even more value for all stakeholders for the years to come. I will now turn the call back to Colleen.

Colleen Keating

On behalf of the entire Planet Fitness team, I want to thank Tom for his contributions and dedication to Planet Fitness. Since joining the company in 2020. I'm incredibly appreciative of Tom extending his retirement date and remaining SEF throughout the search process and for working with Jay two ensure a smooth transition. Tom has been a great partner to me since I joined the company, and we wish him all the best as he joins the everyday Saturday club.
I'll now turn the call back to the operator to open it up for Q&A.

Question and Answer Session

Operator

(Operator instructions)
Our first question comes from the line of Simeon Siegel with BMO Capital Markets. Your line is open.

Simeon Siegel

Thanks, everyone, and congrats on the ongoing momentum. Really nice to see. Welcome, Jay, looking forward to working with you. And then Tom, thanks again for everything. Just sending best wishes on your next chapter. I hope you don't miss us too much group. Great here about the returning gym members calling. Any color you can share on a percentage of gross adds will be our reactivated members. Maybe can you speak to the broader opportunity you might see there as you look at the other currently lapsed members? And then just any further color you'd be willing to share on customer and then also perhaps the franchisee response to the higher classic card price and then maybe the impact on the potential opportunity blocker. Thank you.

Colleen Keating

Yes, I'll start with kind of returning members. We typically see about a third of our joins our returning members. This past quarter was a bit higher. We had about 38% of our joints this past quarter were returning members. And I think the second the to build on that was do we see more our opportunity on it. Then we will continue to market to former members and invite them back and think that the welcoming experience that are that we provide a planet and our unique and differentiated offering is why we see such a such a high proportion of members.
Rejoining I touched in my remarks. We're quite focused on member experience and making sure that we're evolving our format. So that were attractive to returning gym goers and also to folks who have or who have them, so by members of our clubs or other clubs in the past. So again, not just to begin Hydrogen. And then you do the next part was response to the to the to the price increase from our members and our franchisees on again, I think as I mentioned, we thought the timing was right to kind of seed the new pricing in front of us after that.
That's not our highest joined quarter and give our market and opportunity to kind of adjust to the new pricing before we get into Q1 on yet, we see strong momentum. And as I mentioned in my remarks, the $15 price point today represents an even greater value than $10. It was when we established that price point of 25 years ago, more than 25 years ago. And the response from our franchisees has been of has been quite supportive and we see it accretive to AUV.s up at the 12-month mark for existing clubs on and quite favorable for new clubs openings on the US. I'll have a majority (inaudible) at that minimum threshold.

Simeon Siegel

Great. Thank you so much. Best of luck for the rest of the year.

Operator

And your next question comes from the line of Sharon Zackfia with William Blair. Your line is open.

Sharon Zackfia

Good morning. And I guess I wanted to follow-up, Tom, I named by the way, I can't wait to blame the never-ending vacation club or whatever it wasn't for sale every day under the evidence added. I can't wait to put that on linked. And so on SG&A, I think you talked about some investments in the fourth quarter, obviously to get the new guidance on that revenue, John, they've got to be a really big increase in SG&A from a year over year. Can you quantify that for the fourth quarter and what those investments are as you're looking towards CD and more growth and 25?

Tom Fitzgerald

Yes, I'll start and maybe calling a load of. So you know, share. We don't give a lot of quarters the guidance. But what I would say is as we looked at those strategic initiatives, the choline has had the team focused on here since he arrived and some of the marketing activity that choose discussed and evolving the brand, the brand's position coming into Q1, we wanted to make sure that we were investing behind that as well as some IT investments to really sort of 2024 to be a strong year. So I think we thought it was prudent given where we were. You might be a touch conservative as well in terms of how we've thought about, but I wanted to make sure we were thinking about the near term in the long term.

Sharon Zackfia

And is there anything there are some incremental efforts to stimulate franchise development or is that not from an element of the SG&A spend?

Tom Fitzgerald

No other than member growth, always scopes of work with aspect of it. As you know.

Sharon Zackfia

Great. Thank you.

Operator

Your next question comes from the line of Jonathan Komp with Baird. Your line is open.

Jonathan Komp

Yes, good morning, and thank you, Colleen. That's an interesting to see the system move so quickly on the shift of the equipment and the strength equipment. And you mentioned, Tom, just if you think about the other strategic priorities you laid out, could you maybe talk a little bit more about the phasing or time line or what should we should expect from especially coming up on the all important Q1 period, our marketing? And just any more context around your phasing of some of the other initiatives?

Colleen Keating

Yes. I think as it relates to the brand positioning and marketing were on are coming down, the home stretch on the brand work and our brand positioning. And we've already started a bit of testing with some of our new marketing messaging, and we're developing the creative that will launch for Q1. We've used a lot of consumer data and a lot of customer insights to help inform that messaging.
And I think it's important to note, though, that we will strike the balance of bringing through the brand positioning, which we're calling YPF and also so marrying that with our marketing messaging that is compelling and odd and drives join. So we called out YPF now on symbol will use both the brand positioning and the communication of our evolution from strength in our mix and format while also highlighting that the price value that we offer and making sure that that's also well communicated in the marketing messaging.
So I'd say that's an urgency I'd say underpinning all of it. I touched on a couple of the new roles on making sure that we've got the right team and I call it the Blue Ribbon team, making sure we're building our Blue Ribbon teams. I'm leaning in very heavily on the the recruitment of the CMO and the CDO. We're making excellent progress there and have really strong focus we now and year end.
And you heard me talk about the execution already on the things that are affecting that experience. And so getting of getting the the format optimization floorplan optimization rate on the support that we've received from our franchisees in that endeavor has been really quite quite encouraging. And I think the government, as I mentioned in my remarks on, it's about delivering that in a way that's also the accretive to the member experience and also favorable from a unit economic standpoint and an operating cost standpoint for our franchisees.
And it is as it relates to accelerated growth on driving joins enhancing BO, increasing membership, enhancing the member experience and being mindful of franchisee economics. Those are the things that culminate in our ability to accelerate growth.

Jonathan Komp

That's great. We'll look forward to progress on those fronts. Just one follow-up then on units. Could you maybe just talk about that in the short term visibility or from Q4? It looks like you need a little bit of an uptick from the Q4 opening pace last year. So just confidence and visibility there. And then I know it's too early. I understand the economics for newbuilds that are opening up here. But just given the initiatives given morale in the system there, given International, should we should we think that 2024 for the floor on the pace of openings or any other directional color on what could we look forward? Thanks again.

Tom Fitzgerald

Hey, John, it's Tom. I'll take that. So in terms of Q4, you're right, it is more weighted than it was last year to Q4, but still well below what we've done historically. We've done more than 100, and I think it was back in 2019, we were north of 100. So the employed openings that we have for this year is still below the, but to your point, it's up a little bit from last year.
So we feel confident with the team tracks the rigor rigorously with our franchisees. And that's why we feel good about reaffirming where we said we would be. And I appreciate you're wondering, though, understand where 2024 and what that means in terms of it being a floor? You know, I think Colleen we'll get to 2025 calling and Jay will on our next call. But we certainly think we have all the elements in place to come in terms of the strategic initiatives, as well as the new growth model in the classic card processing that we put in place here in the last 12 months to create the right momentum around new unit growth.
You know whether, what that number ends up being in 2025 and beyond will come to that. But we certainly feel good about all the activity that we've put in place to accelerate the growth of new units, both domestically and internationally.
Thank you

Jonathan Komp

Thank you, Tom.

Tom Fitzgerald

Thank you. Jonathan

Operator

And your next question comes from the line of Rahul Krotthapalli with JPMorgan. Your line is open.

Rahul Krotthapalli

Good morning, guys. Thanks for the detailed update call in on Dalmine. Definitely miss you have more than it would. Thank all of my I have two part question on the first one is on a lot of retail store closures will have seen recently that came into the market. I think almost like more than 4,000 boxes, those are how are you on franchises taking advantage of those to see if any of the supply can be used for repurposing into a Planet Fitness gym, on the real, the supply that actually give us more confidence for the system's ability to accelerate store openings next year. And I have a follow-up.

Colleen Keating

Yes, I'll start. I'll start and maybe Tom can build on that. I think you're right, we I read a recent study that said, there are about 53 hundred closures last year and they'll be north of 6,000 closures this year. And we do see we do see that as an opportunity for Planet Fitness and work in partnership with our franchisees are our real estate team is engaged with with brokers on a very regular basis to have line of sight to where space maybe maybe becoming available. And then partnering with our franchisees are not availability where there's an opportunity to develop a new club.
So on, I think you're spot on and we're seeing we're seeing the same trends on. We know that's market-specific. It's not in every it's not in every market, but there are there's a lot of space coming online. And I think the other thing, and we've talked about a little bit, but have an opportunity to talk about it more is really the resilience of our business and the durability of our cash flows from when you think about, you know, even coming through a yellow, a once-in-a-lifetime global pandemic, where our clubs were closed for in some municipalities for extended periods of time, we did not have one club closed permanent closure during COVID for financial reasons.
I think that absolutely speaks to the resilience of our business and should make us very attractive to developers and landlords towards when space becomes available because of their confidence in our ability to fulfill lease terms. So on, we see that as a certainly a potential tailwind.

Rahul Krotthapalli

Perfect. Thanks for that. On. The follow-up is on the FPS. You saw the new collective gas and rolling up that we saw recently. Can you remind us what percentage of clubs today have this feature activity across the franchisees on how should we think about the churn trends, given some of the trends we have seen in the past with Tennessee and California and some of the steps you guys roll out before?

Colleen Keating

Yes, I'll start and then have come from maybe we can build on it on. So today, all of our all of our corporate clubs have quit to cancel available and have had it in place for roughly a year. And across the estate, about 35% of our membership is in clubs or geographies where they have were quick to cancel is available to them. What we've seen generally is that in some cases, there's a there's a small initial spike in churn and rather on. However, that churn rate moderates and then the particularly in our corporate clubs, we've returned to normal churn rates on, as I said, they've had click to cancel in place for about a year.
There's one exception to that. That's the state of Tennessee where the churn rate has remained elevated. But again, that's that's one date out of turn on. And again, it's really moderated back to normal and across most of the estate coming on at anything North Dakota.

Rahul Krotthapalli

Perfect. Thanks, guys.

Operator

And your next question comes from the line of Megan Clark with Morgan Stanley. Your line is open.

Megan Clark

Hi, thanks. Good morning. Thanks for taking your questions. And Tom, thanks again, as I referenced that for everything and maybe a question for you, Tom, and I think you said the change in the revenue guide does seem to be mostly driven by this extra equipment that you're seeing franchisees in only the pull forward here. But we also did take up that comp guide. So wanted to say if you could just talk more about the drivers there and what's driving the better outlook for the comp. Is that is it turn? Is it better elasticity following the price increase, what you're seeing as it relates to bock our penetration and understand there's kind of a lot of puts and takes and has been a lot guys going on this year. So was just hoping you could maybe give a finer point as to what's coming in a bit better than your expectations on the clinics.

Tom Fitzgerald

It wasn't really an equipment pull forward Megan . It was an incremental investment in that our franchisees made and will become part of the standard package go going forward. So we're quite encouraged as Colleen so that they saw but they are aligned with the strategic move to have more strengths equivalent as part of our mix and to put some of these pieces and pretty quickly to signal that for the all-important Q1.
So we knew right, that is the lion's share of the revenue uptick. In terms of the outlook in terms of our same club sales, you know, we've tightened that range to the high end for the reasons that we discussed on the call on in the prepared remarks. But I think we don't get too specific when we talk about the elements of what we saw in the testing and what we have experienced secure in Q3.
But I think suffice it to say that the acquisition side was a little stronger than what we saw in our books being in deal in that first quarter of testing, so to speak, compared to what we saw in Q3. And the black card mix was also, some favorable as we saw in the testing. So the lion's share was really on the acquisition side to allow us to tighten the guide.
And that's a component of the revenue improvement for the full year. But the bigger piece was the equipment piece.

Megan Clark

Okay. And maybe bigger picture, what you're seeing is obviously great that you're seeing a better uptake on inbox penetration obviously drives in a better flow through for the franchisees. But I think historically, you've talked about that churn on Black Card penetration or Black Card members is higher than white card. So I guess when you only do you think about going forward and the model and that low to mid single digit uptake you're talking about like how does the whole point is to drive better Black Card retention related to that?

Tom Fitzgerald

Yes. So, um, in our history, recent history last few years that I've been here, the Black Card attrition rate is very in line with our costs occurred attrition rate. There's virtually no difference. So I think that speaks to despite the price increases that we've taken from the attrition has remained, you know, in line with the class occurred back when the classic cargoes to and some So it's quite a testament to the value that people get with the block or you know, and we've talked about you probably heard us talk about this move and that's when we advertise the lines are confusing launch will use a different a phrase, but the vast majority of our marketing dollars to go to support the cost of corn price to know solar to evaluate 15.
But when people sign up no more online way more online than we have seen historically, six out of Turner plus are taking the higher price Black Card from even though they probably thought they were signing up for use of return of 15, they're signing up for (inaudible). So it's really encouraging to us to think that all the amenities and some elements of the black or create such a value. The retains its membership very much in line with costs occurred.

Megan Clark

Okay, great. That's helpful. Thank you so much.

Operator

Your next question comes from the line of John Heinbockel with Guggenheim Partners. Your line is open.

John Heinbockel

I wanted to start with some sort of bridging the brand message right between new joins off the couch and experienced people. You maybe talk about that. We are seeing churn rates increase, you have more serious Fitness members. I know maybe to go somewhere else and then you're going to get more engagement, right? Sort of more visits per person. How do you think about capacity in the clubs, particularly in the busiest times?

Colleen Keating

Yes . So I think I'll talk to the marketing messaging first, and then I'll speak to kind of capacity in the club. I think we were in our consumer testing that we've been doing over the last several months to help inform kind of the brand messaging brand promise on. We still see a tremendous opportunity to welcome of first-time gym goers or first time club goers in our environment of know, gym limitation, at the same time, some of the consumer testing told us that we had an opportunity to shift the mix. So again, it's we're still we're not we're not endeavor going to be a club for lungs.
We are endeavoring to meet the needs of our broad base of members wherever they're at on their fitness journey. And we think that the 80% is a bit different today. You can't look at the news feed without reading something about health and well-being of the importance of strengths. We know that Agency's millennials are the largest proportion of our joins and they've kind of grown up seeing their parents go to the gym, and I have fitness as part of their lifestyle. So on the 80% is a bit more educated about fitness and wellness today. And we want to make sure that that the format in the club and the mix of equipment is enabling us to be attractive to that, that broader consumer base.
And then as it relates to capacity, I think one of the things we're looking at in our format optimization and what are the things I've experienced even in spending time in our clubs, talking with our club managers and a better understanding how our members are utilizing our clubs is that we build capacity with increasing the complement of strengths and with opening up floor space with the shift in, for instance, in the 30 minutes circuit that I spoke to on, that's enabling today's member to achieve the workout that they're looking to achieve inside our club. So we think we're building capacity with our format optimization.

Tom Fitzgerald

John, I might just add to that, John. Today we have a pre-COVID we had over 7,000 members per club and on in any given 30 day period, about 50% of group members use the club. And those that did came in about five times or so. Now we have 40% of the folks who use it in a 30 day period. The comment a little more often six times, six plus times . But as you know, we have a quite a few clubs across the country, including some of our corporate clubs that have well over 10,000 members in the US.
So, you know, and then review once it gets to about 12,000, some of franchisee or corporate club needs to be another club to alleviate the capacity issue. So they're still on average a lot of room even during the peak periods of the early part of the week of and particularly in Q1 where there's for the most part, capacity is not a macro issue across our system.

Colleen Keating

I think there was a study done and it was really around high school summer past, but it was a peak utilization month is March most clubs don't approach 75% of available capacity. So generally, we see we've got headroom on capacity for.

John Heinbockel

Thanks to a record year. And then a quick follow up with some of the Black Card pricing test rising is still in test mode as well. Is it fair to say you want to keep it there until the black or white card increases kind of worked its way through the system or? No?

Tom Fitzgerald

Yes, John, of what we've told the franchisees in the test is we'd like to run the based on where we sit today. We'd like to run that through Q1 to see how it plays out in the important period of membership growth with the classic card price mill at 15. So I think as you know, with artists, they run longer and it is important to factor in or to let it run through Tier-1 often, so that's what we're doing.

John Heinbockel

Thank you. Got it. From.

Operator

And your next question comes from the line of Joe Altobello with Raymond James. Your line is open.

Joseph Altobello

Thanks. Good morning. So look, I might have been asked and answered, but I think we want to ask about the economic model for franchisees. Are you guys are contemplating any additional changes to that? I think probably you mentioned that you're looking for other ways to reduce club build calls that wasn't sure how impactful those might be.

Colleen Keating

Yes, I can I'll touch on and Tom and Tom can do one versus is the classic car price increased. However, with the new growth model, we anticipated reducing build cost by about 10% on the shift in mix from cardio, the strength of the reduction of about 30% of the cardio equipment, the longer we equip lifecycle for both equipment, both books strength and cardio equipment and the fact that the life cycle is longer on strengths.
All of those are accretive to the unit economics. At the same time. And we're continuing to look at ways we can reduce the front end cost to build cost of the club without any denigration in in member experience. So we're continuing to look at the front desk format. For example, we've got a smaller front desk format now that most of our joins our online on, we don't need a big front desk to accommodate people signing up at the front desk. More than 80% of our joins our are online today.
So that reduces cost. It is no denigration to the to the member experience US book, but one example. So continuing to look at buildout costs on to find ways to enhance the economics for our for our franchisees.

Tom Fitzgerald

And Joe, I think the other testament to the model is we still actions of transactions in our system where people are coming in from the outside to invest and franchisees because the returns are attractive. So we're going to absolutely.

Joseph Altobello

Just follow up on that. You mentioned the October sale. Could you give us a little bit of insight into how that might versus expectations that maybe versus other sales you've got around there from a year given the higher velocity card?

Tom Fitzgerald

Yes, I'll take that, Joe. You know, it's because it is in the quarter, we typically don't go into a lot of detail on our sales. But given it's in the quarter, we're just keeping our covenants components to three.

Joseph Altobello

Okay, understood. Thank you.

Operator

And your next question comes from the line of Max Rakhlenko with TD Cohen. Your line is open.

Max Rakhlenko

Great. Thanks a lot, and congrats on the nice quarter. Tom, you're always welcome at ICR. If you want to come join us in January at assessing, right, very good mix of items. So can you go about a one last modeling question, but when you talked about the low to mid single digit lift from the classical hard for a price increase, just how should we think about that mix in terms of the split between price and members? And just how conservative do think that that outlook is off for now? And then separately, can you just remind us what the new GM waterfall looks like as well?

Tom Fitzgerald

Yes. So on Maxi, based on the testing we ran, we call the ball low to mid-single digits, and some of that does is impacted by the actual mix of the existing club. In terms of classic Carbon Black Card, you know, if you're coming from a higher place in black card mix, it's going to be different than if you have a relatively low mix and in black card. So it does the does sort of very there, I think you know, the railroads that we see in our new clubs is, you know, as we've said through the years of COVID, as it has continued to improve as COVID, as you know further, and there are the worst of COVID is in the rearview mirror. So we're sort of back in the 1st year of comp sits in the, you know, 40 plus percent range.
And then, so we put it into income in the comp base after 12 months. Then after that, it's in low to mid 10s and then it sort of mid-single digits in the low to mid-single digits after that. So very similar to what we've seen before, not quite all the way back to where it was pretty darn close.

Max Rakhlenko

Got it. That's helpful. And then just quickly, how are you guys thinking about the mix between corporate and franchise? gym's is 10% still the right mix that we should think about? Or is there a preference to gravitate lower or potentially higher?

Tom Fitzgerald

I think we are thinking on that mix hasn't changed. We like the 10% and you've probably heard us say, you know, based on our development and franchisee development of the, one gets ahead of the other in any given year and it's 9% or 11% or we do a small tuck-in acquisition or get rid of a few quotes here or there that may move. But 10% plus or minus is still the sweet spot for how we see it.

Max Rakhlenko

Got it. Thanks. I appreciate the invite to ICR.

Operator

And your next question comes from the line of Randal Konik with Jefferies. Your line is open.

Randal Konik

Yes, hi, guys. I got on the call late here, so I apologize to our earnings this morning on cash. Does contemplated or thought about any type of taking the white card price to 15 across the board like Netflix Does have you thought about that at all? I mean, you did have a little bit of a membership production, but not all that much in all. I just wanted to get your thoughts on that kind of pricing policy as you contemplate that. Thanks.

Tom Fitzgerald

Colleen, and they'll start that. And we've always thought that's an important element for us. If somebody has decided to join, we get it's different than we think that's a positive. And we think of somebody joins us and has been with us for a few years. In the case of the classic card is paying $10 We still have people with a black art to repaying 1999.
You know, we think that we want them to remain as members and therefore, we don't want to take their price up. We're in the volume game, not not the rig game when it comes to growth. That's how we think about same code sales and the sustainability of that over time. So it doesn't mean and some of our agreements do have the flexibility more recently to take the price up some on members, but we have yet to exit to to them to do that because we think our past practice is more is more important, to have that lifelong.
And I think that's another element where we can get more credit for the value that we provide. But it is something that we think has been an important component for our growth over the last 20 years.

Randal Konik

Got it. And I guess just one last follow-up here is just extending again upon International's or kind of escalations. I think you spoke about all Mexico, Spain, Australia. Why those markets are of those markets? Is there one or two lead candidates would be more pressing and the others kind of expand more quickly. Just how do we think about the global story here beyond what's already been built out in Canada and et cetera? Like what can be more you want to be what could be like the third biggest country in your opinion, fourth biggest country in the next few years as you as you look at it?

Tom Fitzgerald

Yes, I'll start that, Randy. So I think you've probably heard us say we feel good about how the model translates, um, it's done well. In Canada. The membership levels when we opened a new club in Mexico are orders of magnitude greater than the than they are in the US. So it's we think the the reason why it resonates is because it's a simple model fits in in these countries don't have access because either the locations there's plentiful, patients were more importantly, the prices too high.
And so what we see and you know, we've all through the model a little bit from based on the country, but very little and it's not like a brand. And I've been around other brands, you probably follow more, whether it's food or apparel or something. It there's a lot more to have to tweak to make the new the entry into the new country successful because tastes are different. Styles are different, fits are different. Pallets are different for us. It's not you're going to run on it. I don't know that treadmills the same.
No matter what time zone you're in or what continent neuron. So it's a model that translates well. And we think for the most part, brands in those countries serve people who were already in the market, they're not really trying to bring people into the market. And we've seen that we have the ability to do that in every case through ventured. So that's what's exciting about it for us, whether we want to measure our pace and progress. But we think countries like Mexico and Canada and Australia and Spain, they're big countries. They can have a meaningful impact to the brand as we build out our footprint over time.

Randal Konik

Super helpful. Thanks. Got it.

Operator

At this time, I would like to turn the call back over to the CEO Colleen Keating.

Colleen Keating

Well, thank you, everyone, for your thoughtful questions and your shared enthusiasm for Planet Fitness. I'm so excited for the opportunity to lead this brand. As we enter our next chapter of growth, we're focused on boosting the economic value proposition for all our stakeholders. Franchise is members and ultimately delivering even more value for our shareholders.

Operator

Thank you for joining us today. This concludes today's conference call. You may now disconnect.