Planet Fitness Q4 Sales Jump 19.4%, Helped By Franchise And Equipment Demand

Planet Fitness, Inc. (PLNT) reported robust financial results for the fourth quarter of 2024, with total revenue increasing 19.4% to $340.5 million from $285.1 million in the prior-year Q4 period. This significant growth was driven by strong performance in the franchise and equipment segments, as well as a 5.5% increase in system-wide same-club sales. Here's a closer look at the factors contributing to Planet Fitness' impressive results and its bullish outlook for 2025.

Franchise Segment Revenue Growth

The franchise segment revenue increased by 11.0% to $109.0 million, with several key factors contributing to this growth:

1. Higher royalty revenue: $5.6 million, of which $3.5 million was due to a franchise same-club sales increase of 5.7%.
2. New clubs opened since October 1, 2023: $1.3 million, before they moved into the same-club sales base.
3. Higher royalties on annual fees: $0.7 million.
4. Increased placement revenue: $3.1 million.
5. Rise in franchise and other fees: $1.7 million.

The franchise segment Adjusted EBITDA increased by 9.8% to $74.7 million, primarily due to the higher franchise segment revenue, partially offset by higher National Advertising Fund (NAF) expense, cost of revenue, and selling, general, and administrative expense.

Corporate-Owned Clubs Segment Revenue Growth

The corporate-owned clubs segment revenue increased by 8.5% to $126.3 million, driven by:

1. Corporate-owned clubs included in the same-club sales base: $3.6 million, of which $1.5 million was attributable to a same-club sales increase of 4.4%.
2. Higher annual fee revenue and other fees: $1.1 million and $1.2 million, respectively.
3. New clubs opened since October 1, 2023: $6.4 million, before they moved into the same-club sales base.

Equipment Segment Revenue Surge

The equipment segment revenue surged by 49.2% to $105.1 million, primarily due to:

1. Higher revenue from equipment sales to existing franchisee-owned clubs: $30.4 million, including additional strength equipment sold in the fourth quarter of 2024.
2. Higher revenue from equipment sales to new franchisee-owned clubs: $4.3 million.

Strategic Shift and Membership Growth

Planet Fitness implemented a new economic model for club operations and raised the new member Classic Card price for the first time in over 25 years. This strategic shift has optimized unit economics for franchisees while maintaining the brand's accessibility, potentially accelerating franchise development and improving profitability across the system. The company added 1 million net new members in 2024, bringing total membership to 19.7 million.

International Expansion and Growth Opportunities

Planet Fitness' international expansion strategy is gaining momentum, with the opening of five clubs in Spain during 2024. Although there was a $3.4 million drag on corporate-owned club segment EBITDA in the near term, this investment positions PLNT for long-term growth in the European market. For 2025, management's guidance of 10% revenue and adjusted EBITDA growth aligns with their historical performance trajectory, suggesting continued strong member acquisition and retention, while the planned 160-170 new locations demonstrate confidence in their expansion strategy.

Planet Fitness' strong Q4 and full-year 2024 results, coupled with its bullish outlook for 2025, demonstrate the company's resilience and growth potential in the competitive fitness landscape. By maintaining its high-value, low-price business model, optimizing unit economics for franchisees, and expanding its global footprint, Planet Fitness is well-positioned to deliver increased shareholder value in the coming years.