Revenue outlook boosts Planet Fitness stock price

• Planet Fitness reported earnings and revenue that topped Wall Street’s expectations.
• The gym chain also boosted its revenue outlook for the year.
• Shares of Planet Fitness jumped after the earnings report.

The stock's price increased significantly following the company's third-quarter earnings report, which exceeded expectations on both revenue and profit margins, and resulted in an upward revision of its annual forecast.

According to LSEG, formerly known as Refinitiv, the company's performance exceeded Wall Street analysts' expectations.

• Earnings per share: 59 cents, adjusted, vs. 55 cents expected
• Revenue: $277.6 million vs. $268.2 million expected

In the quarter ending September 30, Planet Fitness recorded a profit of $39.1 million, or 46 cents per share, compared to $26.9 million, or 32 cents per share, in the previous year. After adjusting for one-time items, the company's per-share earnings were 59 cents.

Revenue jumped nearly 14% to $277.6 million.

The company has revised its revenue growth forecast for the year to 14%, surpassing its earlier guidance of 12% and exceeding analysts' predictions of 11.6%.

Following the departure of former CEO Chris Rondeau, Interim CEO Craig Benson led the company's quarterly earnings call with analysts and investors.

In mid-September, the gym chain's board removed Rondeau as CEO, surprising both investors and employees. The company did not provide any further information on his departure during the earnings call, but Benson confirmed that the search for his successor is progressing smoothly. Since Rondeau's departure, Planet Fitness shares have rebounded, but they are still down more than 20% year to date.

In the press release, Benson detailed Planet Fitness' growth strategy for the future.

Benson announced that Planet Fitness is modifying its store-level return model to enhance the appeal of opening and operating new stores in different environments. The adjustments include delaying some capital investments, such as replacing equipment and completing remodels, to ensure long-term growth for both the company and its franchisees.

In mid-October, franchise owners received updated agreement details with significant changes to the business structure.

• To eliminate the initial $20,000 franchise fees, the franchise agreement was extended from 10 years to 12 years.
• shortening grace periods for franchisees from 12 to six months.
• reequip periods extended to free up capital and reduce store spending.

CFO Tom Fitzgerald stated on the call that he believes the changes we implemented were the most effective in releasing funds, allowing us to invest in new store growth and enhance the returns of those new stores.

In over 100 test markets, the company is currently conducting experiments on raising the price of its "Classic Membership" from $10 to $15, as confirmed by Fitzgerald.

"Ultimately, our goal is to avoid sacrificing member growth," he stated.