PLNT Q1 2025: Black Card Penetration Hits 65%, Up 300bps
- Strong Premium Membership Appeal: The company reported 65% Black Card penetration with nearly a 300 basis point increase from the prior year, demonstrating robust consumer demand and pricing power for its premium offerings.
- Resilient Business in Volatile Environments: Executives highlighted that during past downturns such as the Great Financial Crisis, the brand maintained solid same club sales, membership growth, and even benefited from trade-down effects as consumers shifted towards value experiences, reflecting the durability of its model.
- Successful Product and Format Innovations: Franchisees unanimously adopted the new, rebalanced equipment mix, which aligns with evolving member preferences and enhances the customer experience, supporting ongoing comp growth and strengthening brand differentiation.
- Reliance on aggressive promotional tactics: The call mentioned that promotions like the Black Card first month free in March created a headwind to comps, indicating that continued reliance on such promotions could pressure margins and add volatility to organic growth.
- Potential macroeconomic headwinds: Despite management’s confidence, discussions addressed volatile consumer sentiment and spending pullbacks, which could adversely affect membership growth and overall revenue if economic conditions worsen.
- Uncertain membership growth benchmarks: The traditional benchmark of Q1 membership performance (historically around 60%) is no longer a reliable indicator post-COVID, introducing uncertainty in forecasting future membership growth trends.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +11.5% (from $248,017K to $276,662K) | Total Revenue increased by roughly 11.5% in Q1 2025, driven by sustained same club sales improvements and continued operational execution building on previous period performance, which helped grow revenues from $248,017K in Q1 2024 to $276,662K in Q1 2025. |
Net Income | +20% (from $34,973K to $42,079K) | Net Income rose by about 20% YoY due to the compounding effects of higher revenue and likely improved margins and operating efficiencies that built on gains from the previous period’s performance, increasing profitability from $34,973K to $42,079K in Q1 2025. |
Equipment Revenue | +28.6% (from $21,619K to $27,813K) | Equipment Revenue surged by approximately 28.6% YoY, primarily because of significant increases in equipment sales to existing franchisee-owned clubs, which reversed trends from the previous period where sales to new clubs were lower; this momentum in existing club sales supported a rise from $21,619K to $27,813K. |
Operating Cash Flow | +49% (from $89,732K to $133,927K) | Operating Cash Flow increased by nearly 49% YoY, reflecting enhanced cash conversion from higher operating income and improved working capital management from the previous period’s performance, climbing from $89,732K in Q1 2024 to $133,927K in Q1 2025. |
End Cash Position | +15% (from $347,897K to $400,491K) | The End Cash Position grew by approximately 15% YoY, which can be attributed to stronger operating cash flows and effective liquidity management compared to the previous period, boosting the position from $347,897K to $400,491K. |
Total Assets | +1.4% (from $3,048,181K to $3,091,922K) | Total Assets exhibited a modest growth of about 1.4% YoY, driven by incremental increases in current assets such as cash, receivables, and marketable securities relative to the previous period, reflecting overall steady asset management from $3,048,181K in Q3 2024 to $3,091,922K in Q1 2025. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
System-wide same club sales growth | FY 2025 | 5% to 6% | No guidance provided | no current guidance |
Revenue growth | FY 2025 | Approximately 10% | No guidance provided | no current guidance |
Adjusted EBITDA growth | FY 2025 | Approximately 10% | No guidance provided | no current guidance |
Adjusted net income growth | FY 2025 | 8% to 9% | No guidance provided | no current guidance |
Adjusted net income per diluted share growth | FY 2025 | 11% to 12% | No guidance provided | no current guidance |
Net interest expense | FY 2025 | Approximately $86 million | No guidance provided | no current guidance |
Capital Expenditures (CapEx) | FY 2025 | Up approximately 25% | No guidance provided | no current guidance |
Depreciation and Amortization (D&A) | FY 2025 | Expected to be flat | No guidance provided | no current guidance |
New club openings | FY 2025 | Between 160 and 170 new clubs | No guidance provided | no current guidance |
Equipment placements in new franchise clubs | FY 2025 | Between 130 and 140 | No guidance provided | no current guidance |
Reequipped sales | FY 2025 | Approximately 70% of total equipment segment revenue | No guidance provided | no current guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue Growth | Q1 2025 | Expected to grow approximately 10% | Q1 2024 revenue was 248,017, and Q1 2025 revenue was 276,662, reflecting ~11.6% YoY growth | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Premium Membership and Pricing Strategy | Q4 2024: Focus on a classic card price increase from $10 to $15 boosting value perceptions and a 64% Black Card penetration. Q3 2024: Discussion on testing Black Card pricing at $19.99 while maintaining legacy pricing for current members. Q2 2024: Launched pricing tests at $27.99 and $29.99 for the Black Card and emphasized pricing strategy to lift AUVs. | Q1 2025: Black Card penetration improved further to 65% with increased promotional tactics (e.g., Black Card first month free) and testing a $29.99 price point. This builds on the historical narrow gap between classic and Black Card pricing. | Consistent emphasis on premium membership upsell with gradual price testing and a narrow pricing gap strategy. The approach remains positive with incremental improvements in Black Card penetration and promotional support. |
Franchise Growth, New Club Expansion, and Unit Economics | Q4 2024: Reported 86 new clubs added, initiated international expansion including Spain, and detailed efforts to improve club-level returns with new growth models and cost reductions. Q3 2024: Opened 21 new clubs, emphasized the asset-light franchise model and improvements in unit economics through a cost‐reducing growth model. Q2 2024: Set targets for 140–150 new clubs and discussed lowering build costs by 10% to restore pre-COVID IRRs. | Q1 2025: Opened 19 new clubs globally, with annual targets between 160–170 new clubs, while reinforcing strategies to optimize franchisee economics and mitigate rising input costs through vendor negotiations. | Steady and positive emphasis on expansion and unit economics. Despite seasonal differences (e.g., lower Q1 club count), long-term targets and cost efficiency remain central, with reinforcement of a strong franchise and international growth model. |
Cost Optimization and Club Build Innovations | Q4 2024: Discussed reductions in build costs, floor plan optimization, additional strength equipment upgrades (over 60% adoption), and enhanced economic models (including elimination of fees) to improve club IRRs. Q3 2024: Highlighted a shift in equipment mix, smaller front desk formats, and a new growth model leading to a 10% reduction in club build costs, along with voluntary rollouts of new strength equipment. Q2 2024: Focused on a new growth model including a 10% build cost reduction and adjusted equipment replacement timings. | Q1 2025: Expanded cost mitigation strategies by addressing tariffs, managing rising equipment costs (evidenced by a noted increase in cost of revenue), and continued offering new equipment mix options and innovations in club formats as part of a global expansion effort. | Ongoing focus on reducing costs and innovating club layouts. Although earlier periods emphasized internal cost model changes, Q1 2025 adds external challenges (tariffs) to the narrative, maintaining a positive outlook on cost efficiency and club innovation. |
Macroeconomic Headwinds and Regulatory Challenges | Q2 2024, Q3 2024, Q4 2024: These periods did not include discussion on macroeconomic headwinds or regulatory challenges. | Q1 2025: Introduced discussion on resilience in volatile economic environments, noting historical resilience (e.g., during the Great Financial Crisis and pandemic), detailed mitigation of tariff impacts, and noted regulatory compliance efforts with online cancellation systems. | Emerging topic in Q1 2025. Previously not discussed, this period introduces external economic and regulatory challenges, reflecting an increased focus on navigating headwinds and ensuring compliance while maintaining growth despite volatility. |
Real Estate Constraints and Expansion Opportunities | Q2 2024: Discussed space availability, price per sq ft, and opportunities arising from retail bankruptcies along with strategic site evaluation for population growth. Q4 2024: Noted challenges with limited space (about 4% vacancy) and partnerships with franchisees to secure optimal locations. Q3 2024: No mention of this topic. | Q1 2025: No mention of real estate constraints or related expansion opportunities. | Reduced emphasis in the current period. While previously discussed in Q2 and Q4 2024, real estate constraints have dropped off in Q1 2025, suggesting either resolution of prior challenges or a shift in focus to other growth drivers. |
Membership Growth Benchmarks, Retention, and Churn Concerns | Q2 2024: Addressed softer-than-expected membership growth early in the quarter and discussed churn concerns tied to member experience along with strategies to refine brand and improve retention. Q3 2024: Reported about 19.6 million members, detailed same-club sales growth, highlighted consistent retention between membership tiers, and noted temporary churn spikes from click-to-cancel rollouts. Q4 2024: Reported 1 million member growth to 19.7 million members, high engagement (6.5 visits/month), and manageable churn despite pricing adjustments and gradual rollout of cancellation features. | Q1 2025: Membership grew to 20.6 million with ~900,000 new members; noted highest club utilization in five years (6.7 monthly visits) and stable churn trends (with rejoin rate slightly lower than in Q4/Q3 but still strong), supported by promotional programs and the online cancellation functionality rollout. | Consistently positive sentiment on membership growth and retention. Despite pricing changes, membership and engagement continue to increase, and churn remains stable (with minor adjustments), reinforcing a strong value proposition and member loyalty across periods. |
Leadership Development and Strategic Guidance | Q2 2024: Emphasized the need to build a blue-ribbon team with upcoming leadership searches (e.g., Chief Development Officer) and refining growth ambitions. Q3 2024: Detailed several leadership transitions (new CFO Jay Stasz, upcoming searches for CMO and Chief Development Officer) and strategic imperatives on brand, member experience, product optimization, and club growth. Q4 2024: Highlighted leadership changes (e.g., Colleen Keating’s early tenure, addition of Jay Stasz as CFO, Chip Olson as Chief Development Officer) and a strategic framework of four imperatives guiding growth. | Q1 2025: No detailed discussion on leadership development was provided; the focus shifted to progress on strategic imperatives and execution across multiple domains rather than on new leadership changes. | Slight de‐emphasis in Q1 2025. After active leadership transitions and strategic messaging in previous periods, Q1 2025 centers more on execution of established strategies rather than discussing further leadership development. |
Business Model Resilience in Volatile Economic Environments | Q3 2024: Emphasized resilience with a focus on dependable cash flows, noting that during the COVID-19 pandemic no club closed permanently for financial reasons, reinforcing the model’s strength. Q4 2024 and Q2 2024: Did not mention this topic. | Q1 2025: Reiterated the resilience of the business model by drawing on historical performance during crises (Great Financial Crisis, global pandemic), detailing continued consumer demand for fitness and strategies (e.g., trade down effect) that reinforce its durability despite macroeconomic challenges. | Re-emerging focus in Q1 2025. While briefly mentioned in Q3 2024, it has been expanded in Q1 2025 to highlight the company’s robust performance amid volatile economic conditions, lending a positive and confident sentiment to the outlook. |
Reliance on Aggressive Promotional Tactics | Q2 2024, Q3 2024, Q4 2024: No discussion on aggressive promotional tactics was recorded. | Q1 2025: No discussion on aggressive promotional tactics is included. | Not present. This topic remains absent in both previous and current periods, indicating it is not a focal point of commentary. |
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Black Card Pricing
Q: Why is Black Card penetration unusually high?
A: Management explained that 65% Black Card penetration was driven by strong promotional activity—including a first-month free offer—and reflects structural pricing advantages that typically reset every few years. -
Pricing Test Results
Q: Are pricing tests showing material differences?
A: They observed little difference between the $27.99 and $29.99 tests, opting to maintain the $29.99 level in selected markets. -
Pricing Timing
Q: When will Black Card prices be adjusted?
A: They will reconsider pricing only after anniversarying the classic card increase, as historical practice shows adjustments occur on a multi-year cycle. -
Macro Environment
Q: Are there signs of macro volatility affecting business?
A: Management noted resilient performance with no significant adverse macro impacts, emphasizing stable membership and revenue growth despite economic headwinds. -
Tariff & Development Costs
Q: How are tariffs impacting development costs?
A: Cost pressures from tariffs are being mitigated through vendor negotiations and strategic build-out adjustments, keeping overall development on track. -
Franchise Sentiment
Q: What is franchise sentiment on new openings?
A: Franchisees remain positive, favoring a back-end loaded approach to capitalize on peak joining periods, which aligns with current guidance. -
Cancellation Impact
Q: Will click-to-cancel boost churn?
A: The rollout is anticipated to have a short-term churn impact during the first couple of months, with levels normalizing thereafter. -
Cancellation Benefit
Q: Does easier cancellation improve join conversion?
A: Early tests show that the simplified, one-click cancellation option builds consumer confidence and has the potential to increase conversion rates. -
Same Club Comps
Q: What is driving same club comp growth?
A: The improved equipment mix and effective promotional strategies—such as the Black Card free month—are together enhancing comp performance. -
Ownership & Ad Spend
Q: How is PE mix and ad spend strategy evolving?
A: The balance between individual and PE ownership remains strong while targeted, efficient ad spend under new leadership is supporting robust growth. -
Churn Trends
Q: How is churn trending post-price increase?
A: Churn has quickly stabilized, returning to historical norms after the recent price adjustments, which supports overall membership durability. -
Club Format Enhancements
Q: Will there be further changes in club formats?
A: They continue to test new equipment and design options to enhance the member experience without planning major immediate changes. -
Premium Benefits
Q: Are Black Card premium benefits expanding?
A: Additional amenities like Red Light Therapy and cryo spray tanning are being evaluated to further enhance the Black Card offering. -
Member Rejoins
Q: How are member rejoin rates performing?
A: Rejoin rates remain robust in the mid-30% range, even as overall join volumes have risen, indicating strong member loyalty. -
Quarterly Join Cadence
Q: Is Q1 typically 60% of annual joins?
A: Post-COVID membership dynamics have shifted, and the first-quarter share now appears comparable or slightly higher than the historical 60% pattern. -
International Growth
Q: What is the outlook for international expansion?
A: Early performance in Spain and Australia is encouraging, and international markets are viewed as a key area for future growth.