Planet Fitness' Q1 2025 Results: Growth Amid Growing Pains

Planet Fitness (NYSE: PLNT) delivered a mixed performance in its Q1 2025 earnings report, showcasing strong operational momentum but falling short of Wall Street’s financial expectations. The company’s shares dropped over 3% in premarket trading as investors reacted to a miss on both revenue and earnings per share (EPS), despite robust membership growth and expansion. This article dissects the results, evaluates the drivers behind the stock’s reaction, and assesses the path forward for the fitness giant.

Key Financial Highlights

Planet Fitness reported total revenue of $276.7 million, a 11.5% year-over-year increase but below the consensus estimate of $279.8 million. Adjusted EPS came in at $0.59, missing the $0.62 target. The miss was driven by underperformance in corporate-owned stores, where revenue rose 9.2% to $133.7 million—$2.6 million below expectations—and same-club sales grew only 5.1%, lagging the franchise segment’s 6.2% growth.

The Equipment segment, however, shone: revenue surged 28.7% to $27.8 million, with adjusted EBITDA jumping 55.1% to $7.4 million, fueled by higher sales to franchisees and improved margins. Meanwhile, franchise revenue grew 10.7% to $115.2 million, aligning with estimates.

Operational Strengths and Challenges

Membership Growth: Planet Fitness added 900,000 members in Q1, bringing its total to 20.6 million—a record high. This underscores the enduring demand for its “Judgment Free Zone” model, which emphasizes affordability and inclusivity.

Store Expansion: The company opened 19 new clubs (16 franchise, 3 corporate), bringing total locations to 2,741 globally. Full-year guidance remains intact: 160–170 new clubs in 2025.

Weakness in Corporate Stores: While franchise operations thrived, corporate-owned clubs lagged. Same-store sales growth slowed to 5.1% from 6.2% in Q1 2024, hinting at potential execution challenges or competitive pressures in markets with higher operational control.

Stock Price Reaction and Analyst Sentiment

The stock’s premarket decline reflected investors’ focus on near-term misses over long-term trends. Analysts had anticipated stronger revenue growth (13.2% vs. the actual 11.5%) and higher EPS. The $1.3 million revenue shortfall in corporate stores, combined with a $2.7 million miss in Adjusted EBITDA, amplified concerns about margin pressure.

Zacks Investment Research downgraded the stock to a “Hold” rating, citing the earnings miss and broader market comparisons. While Planet Fitness’ $586.3 million in cash and disciplined capital allocation (e.g., $50 million in share buybacks) offer stability, the stock’s 6.6% monthly gain lagged the broader market’s 11.5% rise.

The Bigger Picture: Why Investors Should Stay Cautiously Optimistic

Despite the Q1 stumble, Planet Fitness’ core strengths remain intact. Its judgment-free value proposition continues to attract members, with 20.6 million now under contract—up 4.6% from year-end 2024. The franchise model, which accounts for 85% of new clubs, remains a low-risk growth engine, leveraging partner capital while boosting recurring revenue via fees and equipment sales.

The Equipment segment’s rapid growth (28.7% revenue rise) is particularly promising. As Planet Fitness standardizes its equipment mix and scales production, margins here could further expand, acting as a profit buffer against macroeconomic headwinds like tariffs or inflation.

However, risks persist. The company’s guidance assumes 5–6% system-wide same-club sales growth, which hinges on maintaining member retention and avoiding price sensitivity. Meanwhile, the fitness industry’s competitive landscape—marked by digital fitness platforms and boutique studios—could pressure same-store sales in corporate locations.

Conclusion: A Story of Resilience, But Execution Matters

Planet Fitness’ Q1 results highlight a company growing its core business but struggling to meet elevated expectations. The 11.5% revenue growth and record membership numbers demonstrate demand for its model, while the Equipment segment’s outperformance suggests untapped profit potential. Yet, the stock’s reaction underscores the premium investors place on precise financial execution.

Investors should weigh two key questions:
1. Can corporate-owned stores reverse their slowing same-store sales trend?
2. Will margin pressures from tariffs or operational costs be offset by the Equipment segment’s gains?

If Planet Fitness can deliver on its full-year guidance—10% revenue growth and 160+ new clubs—while improving corporate store performance, the stock could recover. However, with shares down 3% post-earnings and analyst estimates likely to be trimmed, patience may be required.

For now, the judgment-free zone of Planet Fitness’ model remains intact—but the market’s judgment on its stock is far from free of doubt.