• Same Club Sales Growth: 4.3% increase in Q3.
• Total Revenue: $292.2 million, up from $277.6 million in the previous year.
• Net Income: $42.4 million.
• Adjusted Net Income: $54.7 million.
• Adjusted Net Income per Diluted Share: $0.64.
• Adjusted EBITDA: $123.1 million with a margin of 42.1%.
• Franchise Adjusted EBITDA Margin: 71.1%.
• Corporate Owned Club Adjusted EBITDA Margin: 39.3%.
• Equipment Segment Adjusted EBITDA Margin: 30%.
• Cash and Cash Equivalents: $530.7 million as of September 30, 2024.
• New Clubs Opened: 21 new clubs in Q3.
• Membership: Approximately 19.6 million members at the end of Q3.
• Black Card Membership: 63.1% of total membership.
• SG&A Expenses: $32.6 million.
• Adjusted SG&A: $31.3 million.
• Cost of Revenue: $45.7 million, a decrease of 15%.
• Outlook for 2024 Revenue Growth: 8% to 9% range.
• Outlook for 2024 Adjusted EBITDA Growth: 8% to 9% range.
• Outlook for 2024 Adjusted Net Income Growth: 8% to 9% range.
• Outlook for 2024 Adjusted EPS Growth: 11% to 12% range.

• Warning! GuruFocus has detected 8 Warning Signs with PLNT.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Planet Fitness Inc (NYSE:PLNT) reported a 4.3% growth in same club sales for Q3, indicating strong performance.
• The company successfully increased its classic card membership price to $15, which is expected to enhance long-term revenue.
• PLNT's strategic initiatives include enhancing member experience and optimizing club formats, which are expected to drive future growth.
• The company has a robust cash position with $530.7 million in cash, cash equivalents, and marketable securities as of September 30, 2024.
• PLNT is expanding internationally, with plans to grow in markets like Mexico, Spain, and Australia, which could significantly increase its global footprint.

Negative Points

• The increase in classic card membership price may lead to short-term softness in net member growth.
• The company faces challenges in maintaining churn rates, particularly in regions like Tennessee where churn remains elevated.
• PLNT's equipment segment revenue decreased by 6.7% due to fewer new club placements and a shift towards more strength equipment.
• The company anticipates a significant increase in SG&A expenses in Q4 due to strategic investments, which could impact short-term profitability.
• There is uncertainty regarding the pace of new club openings in 2025, with the company yet to provide specific guidance.

Q & A Highlights

Q: Can you share insights on the percentage of gross adds that are reactivated members and the response to the higher classic card price? A: About a third of our joins are returning members, with the past quarter seeing about 38% as returning members. We continue to market to former members, and the response to the price increase has been supportive. The $15 price point today represents greater value than the $10 price did 25 years ago, and we expect it to be accretive to average unit volumes (AUVs) after 12 months. - Colleen Keating, CEO

Q: Can you quantify the SG&A investments in the fourth quarter and what they are aimed at? A: While we don't provide specific quarterly guidance, the investments are focused on strategic initiatives, marketing activities, and IT investments to set up for a strong 2024. These are aimed at evolving the brand and positioning for growth. - Tom Fitzgerald, CFO

Q: Could you elaborate on the phasing of strategic priorities, especially with the upcoming Q1 marketing? A: We are finalizing our brand positioning and marketing messaging, using consumer data to inform our approach. The focus is on balancing brand positioning with compelling marketing that drives joins. We are also building our team with key roles like CMO and CDO to support these initiatives. - Colleen Keating, CEO

Q: How are you addressing the opportunity from retail store closures for new club openings? A: We see the closures as an opportunity and are actively engaged with brokers to identify available spaces. Our real estate team works closely with franchisees to develop new clubs in these locations, leveraging the resilience of our business model. - Colleen Keating, CEO

Q: What is the impact of the equipment investment by franchisees on the revenue outlook? A: The investment in additional strength equipment by franchisees is a significant driver of the revenue outlook. It aligns with our strategic move to enhance our equipment mix and supports our Q1 initiatives. The equipment investment is the primary reason for the revenue guidance increase. - Tom Fitzgerald, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.