Planet Fitness, Inc. Q1 FY2026 Earnings Call

Good morning, and thank you for joining today's Planet Fitness Q1 Earnings Conference Call. I would now like to hand the call over to Brendon Frey for opening remarks. Please go ahead.

Thank you, operator, and good morning, everyone. Speaking on today's call will be Planet Fitness' Chief Executive Officer, Colleen Keating; and Interim Chief Financial Officer, Tom Fitzgerald. Colleen and Tom will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. Before I turn the call over to Colleen, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during the call. Our release can be found on our investor website along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. With that, I'll now turn it over to Colleen.

Thank you, Brendon, and thank you, everyone, for joining us for the Planet Fitness First Quarter Earnings Call. I'm pleased to have Tom Fitzgerald joining me on today's call, and I'd like to thank Tom for pausing his retirement to step in as Interim CFO. Tom is an accomplished finance leader with a deep understanding of our business and franchise model. I look forward to working with him again to position Planet Fitness to drive growth and shareholder value as we conduct a thoughtful and disciplined search to identify our next permanent CFO. To start today's call, I'll walk through the key drivers of our first quarter performance and review the actions we're taking to refine our go-to-market strategies and reinvigorate member growth. Tom will follow with a review of the financials and outline our updated 2026 guidance. During the first quarter, we grew net new members by more than 700,000, achieved system-wide same club sales growth of 3.5%, increased adjusted EBITDA 19.5% over Q1 2025 and opened 15 new clubs. While our top and bottom line results exceeded expectations, we are not satisfied with our member growth performance. The fitness industry continues to enjoy a number of long-term tailwinds as more people recognize the critical role movement plays in enhancing both physical and mental well-being, preventing disease and enabling longer, healthier lives. As a result, demand for accessible and affordable fitness continues to grow. We saw this momentum in 2025, delivering 6.4% club growth and adding approximately 1.1 million net new members, a 10% increase in net new membership adds over 2024. A recent Health & Fitness Association study cited that fitness memberships for 2025 were up 5.4% over 2024, reflecting that the industry experienced solid growth last year as well. While this favorable backdrop remains in place, during our key Q1 sign-up period, we faced some internal and external headwinds that impacted our join momentum year-to-date. As a result, we are taking targeted actions to reinvigorate member growth. We believe that a combination of four factors most directly affected our performance. First, our marketing largely resonated with a more fitness-minded consumer, yet had less resonance with the fitness beginner or more casual gym goer, traditionally our sweet spot given our differentiated non-intimidating environment. Second, we saw some competitive impacts in certain markets, particularly South Central and Southeast U.S. Third, unfavorable weather conditions affected a number of regions during the quarter; and fourth, macroeconomic pressures and uncertainty weighed on consumers. Our overall performance reflects the strength and resiliency of our model. However, the addition of more than 700,000 net new members during the quarter did not meet our expectations. While this was driven by multiple factors, refining our marketing messaging and targeting is directly within our control. We are making immediate and near-term adjustments to broaden our reach and ensure our messaging is both visible and resonates with the fitness beginner and more casual gym goer. Before I further address that, let me provide some context on how the year has unfolded. Member join trends were solid in the first two weeks of January, partially offset by temporarily elevated churn. Severe cold and winter weather in late January and February disrupted joins, especially as several of the storms fell on Mondays, our busiest join day of the week. We anticipated that our March campaign, Black Card First Month Free, which was very successful during the same time last year, would improve our join momentum over the remainder of Q1 and into Q2. Yet as we moved through March and into early April, our join trends remained below our plan. Guided by consumer research and member behavior, over the past two years, we've evolved our equipment mix to deliver a more balanced combination of strength and cardio equipment, along with additional open floor space. This ensures members can work out their way. At the end of the first quarter, more than 80% of our entire system featured some version of a format-optimized layout or equipment offering. As we've shared previously, our data shows this was the right decision as we enhance the member experience and support long-term engagement, and we shared some of this feedback at our Investor Day last fall. This evolution was a notable shift within our clubs. To broaden our reach and reinforce that people of all fitness levels can achieve their goals at Planet Fitness, in Q4 of 2024, we began to showcase more advanced aspirational gym goers and strength equipment in our marketing, which resonated with a more fitness-minded consumer. This was a shift from the lighthearted approachable tone that had previously been a hallmark of our brand messaging. We were encouraged by our net member growth in 2025 and made the decision to extend the campaign into 2026. However, looking at data from Q4 of last year and Q1 of this year, we saw that our messaging and targeting was successful in driving increased penetration with the fitness-minded consumer, yet we may have pivoted too far. To this end, we've identified two areas where we're sharpening and intensifying our focus this year, driving member acquisition and reinforcing affordability. Let me start with member growth. We believe we have an opportunity to dial up the brand's no-gymtimidation ethos in our creative and messaging to appeal broadly to fitness beginners or more casual gym goers, a differentiator that sets us apart from the rest of the industry and is a critical advantage relative to other high-value low-price peers. To support this, we're testing new marketing initiatives aimed at reigniting net member growth with our target audience at the forefront. We also ran an RFP process in Q1 and recently selected a new creative agency. While we are already refining existing work for Q2 and Q3, we anticipate a new campaign to be in market before year-end to set us up for Q1 2027. Additionally, as we shared at our Investor Day, we are investing in more advanced data-driven marketing tools that allow us to be more agile in our messaging. This includes testing different machine learning models as we modernize our CRM engine as well as building a dynamic content optimization engine for both development of creative assets and dynamic ad serving. These tools will enable us to deliver personalized advertising in real time through the right channels, driving acquisition and retention. While we have seen and are actively addressing increased competition from other high-value low-price brands in certain markets, they generally target a narrower span of fitness levels and age cohorts. In this environment, it is critical that we clearly and consistently message consumers that while our offering has evolved to meet consumer needs, what truly sets Planet Fitness apart is our non-intimidating judgment-free environment. And this is where we can fully leverage our unmatched marketing fund by letting prospective members who are new to fitness know we're the place for them to begin their fitness journey and remain as they progress on that journey. While we know most consumers today are more fitness aware, our sweet spot is the more than 70% of the population that are not a gym member today and who value the welcoming environment at Planet Fitness. We have a clear plan to expand our leadership position, strengthening the Planet Fitness brand, deepening member engagement, shifting elements of our execution to ensure we continue to maintain and extend our leadership in the high-value low-price space and driving membership and unit growth. Now let me turn to our affordability and the everyday value that we offer. Against a macroeconomic backdrop of increasing financial pressure on consumers, we are reinforcing Planet Fitness' long-standing commitment to affordability. Economic data indicates an increasingly uneven economic recovery with higher-income households remaining resilient, while lower-income consumers experience mounting pressure. We want Planet Fitness to be accessible to all consumers who want to improve their health. Our pricing architecture and consumer value proposition is one of our most powerful strategic levers and historically has been a source of disruption and growth for our brand as the leader in the high-value low-price space. While we conducted extensive testing over the past couple of years to support a potential Black Card price increase, the consumer and economic backdrop have shifted. Based on our experience, price increases create a near-term headwind to member joins. As a result, given our decision to prioritize member growth, we have decided to pause the national rollout of our Black Card price increase. At the same time, we are a test-and-learn organization, and our objective is to evolve pricing thoughtfully and in line with our brand promise of democratizing access to fitness while delivering exceptional value. Our test-and-learn approach ensures any pricing change is deliberate, data-driven and true to who we are as a brand, reinforcing our high-value low-price positioning while sustaining our role as the category leader. Given our softer start to the year and the adjustments to our strategies, we are updating certain elements of our full year guidance. Two key factors driving the revisions are the net member growth shortfall in Q1, which has an outsized impact on the year, and our decision to pause an increase to Black Card pricing. Tom will walk through the specifics shortly. These changes also impact the three-year algorithm we shared at Investor Day last November. And as a result, we've made the decision to withdraw that outlook. I want to reaffirm our confidence in our strategy and the many key initiatives that underpinned it, which we outlined at Investor Day. We are continuing with these investments, and they are progressing well and on track. While we are taking action to address current market conditions, we are doing so while leaning into the same initiatives we outlined in November to drive sustainable long-term member growth. Now I'll turn it over to Tom.

Thanks, Colleen. It's a pleasure to be back at Planet Fitness supporting you and the team while we search for a permanent CFO. This is a great brand with an incredibly strong competitive position, and I love the brand, and I love the team. So it was easy to say yes to rejoin Planet on an interim basis. While 2026 is off to a slower start than expected, I believe the factors impacting our momentum have been identified and are addressable through adjustments to our strategies. Before I get into the financials, I would like to provide further insight into what we believe drove the softer net member growth in Q1. In addition to the marketing not resonating with the fitness beginner or more casual gym goers and competitive pressures in certain markets that Colleen spoke to, net member growth was also impacted by higher-than-expected attrition in the first quarter. Now Planet Fitness is committed to delivering an exceptional member experience, ensuring that our members choose to stay with Planet Fitness based on the value we provide, not due to any barriers to cancellation. This is why the company took the lead and rolled out online member management nationally in May of last year. As we have shared before, our monthly attrition has historically been between 3% and 4%. This was true last year even after we introduced online member management more broadly. In January, we experienced elevated churn, which we partially attribute to a heavy rotation of TV advertising that included the use of the phrase "cancel anytime" in the messaging. After adjusting the language, attrition for February and March declined. Though it was still elevated versus last year, the gap was more in line with what we saw in Q4 of last year. For Q1, our attrition rate averaged 3.8% per month, which was within our historical range. For the rest of the year, we expect monthly attrition to continue to be in the top half of our historical range due in part to the implementation of online member management, but also driven by the increased penetration of Gen Z as younger consumers historically churn more than older cohorts. Adding to what Colleen touched on earlier, the headwind from churn was followed by winter storms in January and February. While these weather-related disruptions were known and contemplated when the company issued guidance on the Q4 call in late February, the expectation was that, with better weather, net member growth would improve over the remainder of the quarter, similar to what we had seen in the latter half of December and the first half of January. Unfortunately, this reversion did not materialize to the levels expected for the reasons Colleen and I mentioned earlier. Now to our first quarter results. All of my comments regarding our first quarter performance will be comparing Q1 2026 to Q1 of last year, unless otherwise noted. We opened 15 new clubs compared to 19. We delivered system-wide same club sales growth of 3.5% in the first quarter. Both franchisee and corporate same club sales increased 3.5%. Approximately 90% of our Q1 comp increase was driven by rate growth with the balance being net membership growth. Black Card penetration was 67% at the end of the quarter, an increase of 240 basis points from the prior year. For the first quarter, total revenue was $337 million compared to $277 million, an increase of 22%. The increase was driven by revenue growth across all three segments. A 17% increase in franchise segment revenue was primarily due to an increase in National Ad Fund, or NAF, higher royalty revenue from increased same club sales as well as new clubs, and placement and franchise fees. The increase in NAF revenue was primarily due to a 1% increase in NAF contributions from 2% to 3% for 2026. For the first quarter, the average royalty rate was 6.7%, an increase of 10 basis points from prior year. The 5% increase in revenue in corporate-owned club segment was primarily driven by sales from new clubs as well as increased same club sales. As a reminder, we opened 23 new corporate clubs since January 1, 2025, 11 of which occurred in the fourth quarter. Equipment segment revenue increased 123%. The increase was primarily driven by higher revenue from replacement equipment sales and higher revenue from new franchisee-owned club placement sales. We completed 14 new club placements this quarter compared to 10 last year. For the quarter, replacement equipment accounted for 87% of total equipment revenue compared to 78%. Our cost of revenue, which primarily relates to the cost of equipment sales to franchisee-owned clubs, amounted to $45 million compared to $22 million. Club operations expenses, which relates to our corporate-owned club segment, increased 8% to $88 million compared to $82 million. This increase was primarily due to operating expenses from 23 new clubs opened since January 1, 2025. SG&A for the quarter was flat to prior year at $34 million, while adjusted SG&A was $33 million, an increase of 2%. National Advertising Fund expense was $32 million compared to $22 million, primarily due to the 1 point shift this year in marketing from the local fund to the national fund. Net income was $52 million, adjusted net income was $59 million, and adjusted net income per diluted share was $0.74. Adjusted EBITDA was $140 million, an increase of 20% year-over-year, and adjusted EBITDA margin was 41.5% compared to $117 million with adjusted EBITDA margin of 42.3%. By segment, franchisee adjusted EBITDA was $95 million, and adjusted EBITDA margin decreased from 73.7% to 70.4%. Corporate club adjusted EBITDA was $46 million, and adjusted EBITDA margin decreased from 34.3% to 33.1%. Equipment adjusted EBITDA was $19 million, and adjusted EBITDA margin increased from 26.8% to 31.3%. Now turning to the balance sheet. As of March 31, 2026, we had total cash, cash equivalents and marketable securities of $652 million compared to $607 million on December 31, 2025, which included $81 million and $66 million of restricted cash, respectively, in each period. In Q1 2026, we used $50 million to repurchase approximately 614,000 shares at an average price of $81.47. Moving on to our 2026 outlook. As Colleen noted earlier, given the net member growth trends in the first quarter and our decision to pause the planned national Black Card price increase, we are adjusting our 2026 guidance. We now expect system-wide same club sales growth to be approximately 1%; revenue to grow approximately 7%; adjusted EBITDA to grow approximately 6%; net interest expense to be approximately $111 million; adjusted net income to decrease approximately 2%; adjusted net income per diluted share to grow approximately 4% based on adjusted diluted weighted average shares outstanding of approximately 79 million. Our decision to pause the increase on Black Card accounts for approximately 150 basis points of the reduction in our outlook for same club sales for the year. The rest of the decrease is due to softer net member growth trends. As we think about the composition of same club sales in the future, our goal is to have the majority of growth driven by member growth versus rate growth. Our outlook for unit growth has not changed. We still expect between 180 and 190 new clubs system-wide and anticipate that the cadence of these openings and the related 150 to 160 equipment placements to be weighted to the second half of the year, especially the fourth quarter. We expect that re-equip sales will make up approximately 70% of total equipment segment revenue for the year with an equipment margin rate of approximately 30%. We expect the second and third quarter to each account for approximately 30% of our full year replacement equipment revenue and the fourth quarter to be approximately 15% of the full year. Lastly, we continue to expect capital expenditures to be up 10% to 15% and depreciation and amortization to be up approximately 10%. In closing, we recognize that the operating environment has evolved in ways that require us to make some adjustments and to execute with sharpened focus on our core target. In response, we are taking proactive steps to reinvigorate net member growth and leverage our industry-leading marketing scale. Our focus will be to communicate the unique value proposition of Planet Fitness to a broader audience and ensure we connect with both our current and prospective members in a way that drives sustainable and profitable growth. I will now turn the call back to the operator to open it up for Q&A.

Your first question comes from the line of Simeon Siegel with Guggenheim Securities.

First off, Colleen, can you share any insight on how your conversations with franchisees are going amid everything, specifically their current performance? And for you or Tom, given the notable guidance cut, could you explain how you arrived at the new numbers and how confident you are in them? Do you believe this will be the last cut and that we should be looking at it that way?

Sure. Thanks for the question, Simeon. So from the standpoint of our conversations with franchisees, certainly, we've got alignment on our overarching strategy. Some of the things we're sharing today as it relates to the shift in marketing messaging, this is fairly new news. And we have a town hall with our franchisees next week to share more detail on the go-forward plan.

Yes. Simeon, I'll take the second part on the outlook. I think the big change really is how we're seeing same club sales and net member growth for the year coming out of Q1. I think Colleen a couple of minutes ago outlined the four reasons behind it. And also not taking the Black Card price up, given our net member trends, we think that makes sense. But that obviously has a bit of a headwind on the outlook for the year. But we think absolutely the right strategic move to make. Our approach was to revise the guidance with the idea that we wouldn't lower it for the rest of the year.

Your next question comes from the line of Randy Konik with Jefferies.

So Tom, just to kind of bounce off that a little more. Coming out of the first quarter, are the trends kind of stable from first quarter into the second quarter? Are they getting worse on a net member basis? Can you kind of elaborate on that a little bit in terms of, again, arriving to the annual outlook change?

Yes, Randy. We don't really comment on member growth for the year or project it. To give you some color, as Colleen said we added about 1 million net members in Q1 last year, and this year it was a bit over 700,000, despite having more new clubs year over year. So clearly we expected more, and for the reasons Colleen outlined, a big reason is our marketing shift toward a more fitness-minded target instead of our traditional target. We think beginners and first-timers make up a much bigger pool, so we're going to redirect what is, as you know, an outsized, orders-of-magnitude larger marketing spend than anyone else in the industry back toward where we used to focus. That will take a little time; it's not the flip of a switch, particularly in a franchise system. I think that's principally what we're seeing. We don't comment in the quarter, but we projected the rest of the year based on what we've seen coming out of February after the storms and into and through March.

Maybe I'll add to that. Last March we saw a very strong result from our Black Card First Month Free promotion. We experienced elevated churn in January and weather-related disruptions from January into February, yet we expected March to be strong again because we planned to run that promotion. March ended up being softer than we anticipated, so we carried those trends into our reforecast for the rest of the year since the momentum we expected did not materialize. On marketing, we shift messaging based on a twice-yearly brand health tracker conducted by a third party. When we built the 2025 campaign, Grow Stronger Together and We Are All Strong on This Planet, we were responding to early 2024 findings that we needed to show consumers they could get strong at Planet Fitness and that we had the right complement of strength equipment. Early reads showed the campaign was working and lifted consumer sentiment. More recent data late last year and into this year showed we were penetrating a more fitness-minded consumer. As Brian Povinelli said at Investor Day, our goal is to defend and enhance. This messaging enhanced our position but did not sufficiently defend our core audience. We have historically owned the beginner or gym-timid segment — roughly 70% of the population without a gym membership — and the messaging came across as more intimidating to that group, which the later brand health data reflected. That is driving our pivot in marketing. We plan to refocus where we used to, but that will take time in a franchise system; it is not an overnight change. We projected the rest of the year based on what we saw coming out of February after the storms and through March.

Got it. And then when you think about it, when I look at the Black Card penetration, I believe it was up, and you're talking about a broader price review. What is the kind of messaging there or thought process? Because on one hand you're getting that increased penetration, so that fitness-minded person, I'm assuming, is appreciating the value of those amenities in the Black Card spa, yet are you looking at that from the perspective that our initial pricing to an initial gymgoer looks too high when they see the Black Card price? Or just give us some perspective on why the broader price review and pausing the Black Card. I just want to get some color there.

Absolutely. Great question. I'm glad you asked it. So as we think about the increased penetration that we've been experiencing with Black Card pricing and in the mid- to upper mid-60s in penetration across our membership, since we've narrowed the delta, the increase in the Classic Card price to $15 narrowed the delta between Classic and Black. That increased penetration is giving us price, right? It's giving us organic price lift because we're getting more penetration at the Black Card price of $24.99 versus the Classic price of $15. So to be clear, and we've said this over the past year, we are getting price from the increased penetration. We also, as we've talked about, have seen in the past where we've taken a lift in Black Card pricing that we've experienced a slight headwind on joins and a diminution in penetration, but it builds back over time. Given what we saw in the first quarter and our focus on doubling down on member growth, really leaning into member growth for the rest of the year and the consumer landscape and backdrop, we felt that the most prudent decision was not to put a price headwind when we're doubling down on membership growth. So we've put the pause on the nationwide rollout of a Black Card price elevation. And we're continuing to do price testing in a number of different markets with a couple of different price scenarios. We're always going to be testing, but the Black Card price test was initiated in a much different consumer environment. So we felt it was prudent to refresh our tests, run a couple of new ones and put the pause as we really, really lean in heavy on driving member growth between now and the end of the year.

Your next question comes from the line of Max Rakhlenko with TD Cowen.

Maybe piggybacking a bit on the last question. Tom, can you, just going back to the comp for the year at plus 1%, give us more help? You are still getting the benefit from the Black Card mix, as Colleen discussed. You will be cycling the worst of click-to-cancel in Q2 and Q3, and then in Q4 you start to get the benefit from the waterfall given all the boxes you opened late last year. In that context, how do we build to the 1% comp, and how should we think about the member versus rate contribution for the rest of the year?

Yes Max, I would say you're right: the clubs coming on board toward the end of the year into the comp base helps. It really comes down to member growth. As you know, in our business it's not really what happened last month or last quarter; it's the 12 months prior versus the prior 12 months and also the quarter's net member growth versus the prior quarter's net member growth. Q1 was such a big piece of that net member growth change for the year that it has an outsized impact that works its way through. So I think the rate-volume split in Q1 was 90-10: 90% rate, 10% volume. As Colleen said, we're really doubling down and zeroing in on the primary goal of driving net member growth. We've got to get that split to be different than 90-10; it's unsustainable. In our business you can spend a lot of money to drive net member growth, because net member growth is profitable almost no matter what you do, unless you spend an incredible amount of money very inefficiently. It's almost impossible not to make net member growth profitable. That's the beauty of the model, and that's what we want to rebalance. The way we're calling the year is really based on the absence of the Black Card price increase I mentioned, which was in our original outlook and not rolled nationally, as well as what Colleen and I just discussed about what happened through March; we expected more and didn't get it. So we've got some work to do, and it will take some time to redirect, but we're very confident this is the right approach. Given our outsized spend and position in the industry and the fact that no one really goes after who we go after, we're confident that will fall into place and start to reaccelerate member growth and ultimately comps. It's just going to take a while.

Maybe I'll add for a minute, too, just because I know you're going to model, and I think, because we get asked the question, well, we can share it broadly. The Black Card price was about 150 basis points of the comp for the year. I would also note the seasonality and the subscription nature of the model. A miss in Q1 is harder to make up over the rest of the year. A January join represents 12 months of revenue. If the marketing engine starts kicking at a higher efficiency later in the year, it will take two joins in July to make up a January join because of the seasonality in the subscription model. And I'll remind you that while we had a very strong unit openings year last year, with 181 unit openings, 104 of those were in Q4 and many of them late in Q4. So they won't actually come into the comp until the 13th draft cycle.

Got it. Okay. That's helpful. And then, Colleen, a lot of your comments are around marketing, but there certainly was a lot less color on how you're dealing with a more competitive peer set that, as we all know, it's going to become even more of a challenge over the coming years. So should the takeaway be that in your view, marketing is the biggest issue and not the actual value proposition itself even with an increasing number of peers that arguably offer more for a similar price?

So I think I would say offer different, not offer more. What we're really doubling down on is on the 70% who are not a member of a gym or a club today and are gymtimidated. And we know one of the biggest barriers to joining a gym is that fear of walking through the front door. And I've said that before, our biggest competitor is fear of walking through the front door. As I called out in my remarks, we did see competitive pressure in a couple of very specific geographies. So I called out Southeast, I called out South Central. But do keep in mind, we are five to six times the size of our next largest competitor. So we can't say competition broadly and holistically across the estate is the driver of the softer join momentum in Q1. We do believe, and what we've seen in the brand health track, the data that we've reviewed, is that we're resonating with a more fitness-minded consumer, but that is not as representative of our unique value proposition and the value that we do bring to the table, which is that welcoming all fitness levels, anyone of any age, any fitness level, any body type, you're going to walk into a Planet Fitness and you're going to see somebody who looks like you and feel comfortable in our non-intimidating environment. So we're going to amp that up in the marketing communications to ensure that we're penetrating our core prospective customer base.

But on any changes to the box or anything like that, is that more of a longer-term plan?

What we've seen is that the format optimization is resonating. Bill Bode shared that at our Investor Day, where our NPS indicates that our members appreciate the more balanced complement of strength and cardio. That roughly 50-50 mix on the gym floor and the fact that we've opened up more floor space for people to drop a mat and do their workout their way is resonating. We think the creative has delivered what we set out to do. We wanted to convey that you can get strong at Planet Fitness, but in the creative we dialed up the sweat level of our talent and some of our messaging, and we need to bring back a bit of the lightheartedness and emphasize the approachability and no-gymtimidation that make us so unique and special.

Your next question comes from the line of Joe Altobello with Raymond James.

I guess first question, I'll piggyback off of the competitive pressures question in terms of the quarter. It sounds like it was regionally confined. But what was it about those competitors or maybe those regions that drove that?

Yes, I'll start. Joe, I think it is concentrated. One of the things we've seen historically is that some of them are opening boxes in certain markets fairly aggressively, the newer formats. Sometimes we've seen this with Planet: a new gym opens up near one of ours and we lose some members. But over time we tend to gain them back because they're not comfortable in those environments. I think back to what Colleen was saying: that's really one of the key things about Planet — we're trying to get, primarily, the 70% who don't belong to a gym to start their journey. When you get in, it should feel very different than any other gym; it should not be intimidating and it should be welcoming no matter your fitness level. We just don't think they have the ability to do that. Candidly, when we took the Classic Card up from $10 to $15, we thought some of them would follow. In some of the key markets Colleen mentioned, they haven't. So the headline price is better than ours, and when you get inside there are all kinds of extra fees, add-ons and commitments you have to make. But when you're there, you're there. As we reconsider the approach forward, primarily to compete we need to make sure our environment is even less intimidating than it is today. That's a never-ending quest; we'll never be satisfied. The second piece is redirecting to primarily target the people who don't belong to a gym today.

Got it. That's helpful. I appreciate it, Tom. And maybe secondly, on the macro pressures on member growth. I'm curious when you started to see a shift there because the testing that you did last year, obviously sounded relatively encouraging and allowed you to move forward with the price increase. But I'm curious what the timing was there. And just as a follow-up to that, it looks like it's still $30 in many markets. So is that going to get rolled back?

So I'll start. The testing really started in 2024. So it was a different consumer environment when we initiated that Black Card test. We started that test almost immediately on the heels of the Classic Card price rollout, which was June 28, 2024. So we're going back now nearly two years and a bit of consumer environment. The second part of that question?

Yes, I'll pick it up. We still have some markets at $29, Joe, if that's what you were asking. We want to let it run a little longer to see how the Black Card and Classic Card mix shifts over time. Also, in some of those markets competitors' prices are significantly higher and the cost of doing business is higher, so we're going to let them run for a bit and continue to monitor, but we don't have any plans at the moment to pull those back.

I think that's right. We have a number of market tests underway, but there are no nationwide rollouts for the Black Card price increase, and we also don't have any imminent plans to roll those prices back.

Your next question comes from the line of Jonathan Komp with Baird.

Just a broader question. With nearly 3,000 units and your typical approach of testing and learning, is there anything that holds back your ability or speed to which you can test new initiatives, outside of marketing maybe? And when you think about changing the trend in member trends, could you give us a little more concrete, just your specific plans and maybe confidence levels and any thoughts on timeline?

Sure. I'll start with maybe the ability to test. Certainly, we own about 10% of the fleet, and we can move very quickly with great agility to run tests in our own corporate clubs. So that's a test accelerant. The other thing I'll say is we've got a super engaged franchisee base. And even some of the tests that are in flight right now, we reached out to a number of franchisees and have had great participation. And that tends to be true in our system. When we reach out to franchisees and ask them to participate in a test, we find a lot of engagement and strong participation. So we can move with speed and agility in testing. I will say we may tend to test longer because of the size of our estate to make sure we're really pressure testing and because of the seasonality of our business. So we can launch a test quickly and with agility, we may tend to test a bit longer to make sure that we're capturing regional nuances, really understanding the difference in the control group and capturing some seasonality in the test as well.

John, maybe I'll take the second part of your question and Colleen can add. We are pretty confident that these actions will improve net member growth trends once implemented. Essentially we are returning, in an evolved way, to the approach and targeting that made us successful in the past. We grew faster than the industry for years and reduced the proportion of people without gym memberships, largely because of our marketing. As Colleen noted, we achieved what we set out to do, which reinforces the power of our marketing. Putting a big push behind the right target with the right messaging is not a new idea; it is an evolved version of a long-standing, successful play from our playbook, and that is what gives us the most confidence.

Okay. Great. And then my follow-up, Colleen, in the press release, I think you mentioned confidence in driving enhanced top and bottom line results in 2027. Any more context to that comment and your confidence in driving some re-acceleration after this year and a bit of a reset? And do you see any risk that the trends you're updating guidance for this year creep into less willingness from franchisees to build units?

Yes. I think shifting marketing and messaging takes time: we need to work with the agency to develop new messaging and creative, shoot it, and then test it. Ultimately we will see the greatest return on these initiatives in a later quarter; while we are moving quickly this year, we will best evaluate the benefit in a quarter like Q1 of 2027. We view this year as a building year for some of these initiatives, and we communicated at Investor Day the investments we are making, which are moving forward. We have just gone into an early pilot of our AI-enabled predictive churn model, which we discussed at Investor Day. We are in the early stages of selecting a partner for the dynamic content optimization engine, and we are making very good progress on the AI-enabled CRM next-best-action model, which will be in market or in flight in the back half of the year. That model will go into pilot in the second half in lockstep with our revitalized app. There is a lot in flight this year. As we said, this is a year of building and investing in new tools that will help drive top-line growth in the future, and when that top line grows, because of flow-through, particularly on member revenue, it will have an outsized impact on EBITDA.

Your next question comes from the line of Arpine Kocharyan from UBS.

Your ADA pipeline came down further from 800 to closer to 750 in your latest 10-K. And I think it says including more than 500 clubs over the next three years. Could you just maybe address if you're looking at kind of further pruning ADAs, how that's going? And I understand the more accelerated unit openings would bring that number down faster, but wondering what else is driving that lower?

Yes. I'll start and then, Tom, if you want to chime in. So certainly, part of the diminution on the pipeline is the fact that we had such a strong openings year last year. We had 181 new clubs opened last year. At the same time, and Chip talked about this, there's a slide in our Investor Day deck about this as well, about the ability to take back some territory and resell it. So we've got a new team member on our development team that's actively engaging with franchisees and prospective franchisees. And we're seeing opportunity where we may be able to sell some new territory as well. So we also have talked about population growth and kind of de-urbanization and where transactions happen, we have the ability to recast ADAs, which then in turn kind of fills that pipeline as well. So as we've had transactions occur in our portfolio, we look at the territory. We recast the ADA based on where the population growth has taken place, where there may be another opportunity to support another club in that geography and adjust the ADAs accordingly with a new transaction.

Yes. I may just add to that, Arpine. I think over time we've somewhat shortened the number of years in an ADA. Part of that is we want to see how it's going before we commit so much. It gives us more flexibility and agility, and by shortening the timeline and the average number of years in an ADA, there is a natural reduction in total opportunities.

Your next question comes from the line of Chris O'Cull with Stifel Financial Corp.

I had a follow-up on the Black Card pricing, and I apologize if I missed it, but are you testing any new Black Card pricing structures?

Chris, it's Tom. Good to talk to you again. We, as Colleen said on the call, are going to be testing some things. We're going to be talking to our franchisees about what we want to test. As we typically do, we'll share what it is, where it is and how it's doing at the appropriate time, but it's premature to talk about that now. I think, as we focus on putting net member growth front and center in all that we do, it makes sense to step back and ask, "What are we doing today? And what else do we want to think about and potentially test going forward?" More to come.

It's price and it's the price-value relationship.

Okay. And then, Colleen, my main question is about the marketing changes. How do you envision reworking the message to reach both nonusers and current fitness-minded gym users? I'm trying to understand how you manage the risk of trying to be a gym for everyone without losing the simplicity and clarity of a message targeted at a single group.

Yes. I think we've long been the opposite brand, and it's been our sweet spot to target that very large 70% of the population that is not a member of a gym today. And we want to ensure that our marketing messaging is reaching and resonating with that population.

Yes. I might add, Chris, over the years when we were targeting people who don't belong to a gym, we've also had very fit people in our gyms. You knew one well, and I still see him when I visit our gyms. Part of the non-intimidation is that being a bodybuilder doesn't mean you act like a lunk. That goes back to our no-gymtimidation approach, making sure our members are comfortable. Those are the people who wipe down equipment after use, put it away, and don't bang it on the floor. That's what you see at other places, and it's hard for them to replicate because it's difficult to change who they've attracted compared to who we've attracted.

I think the importance is and what has been our sweet spot is that we attract members of all age cohorts, all fitness levels. And we want to ensure that our marketing is conveying that that environment exists at Planet Fitness.

Your next question comes from the line of Sharon Zackfia with William Blair.

I guess as we think about the impact on more of those new-to-gym members, is there anything you can share on kind of what the membership mix was in new joins of those new-to-gym versus what you've seen historically?

Yes, Sharon. Without being super specific, the last couple of quarters, it's been down a little bit.

Okay. And then, Tom, as I think about kind of the impact of this tough first quarter, it kind of implies flat comps for the rest of the year. Is there any curve to that comp for the rest of the year? And how do we think about member growth? I mean, do you think there is an opportunity to end '26 with more members than you currently have?

Yes, sure. We'll stick with our practice of not projecting or providing an outlook on membership. But I do think you're right, Sharon. We see a gradual step down across the quarters. We don't provide quarterly guidance, as you know, but it's just based on that subscription model that you know and that Colleen and I touched on earlier. That's how we see it.

I will now hand the conference off to Colleen Keating for closing remarks. Colleen, please go ahead.

Thank you. Planet Fitness is a market leader, and the underlying strength of our brand and our business model remains in place. We have a proven track record of successfully navigating market pressures and near-term headwinds. More than 30 years ago, we entered the category as a disruptor, built on a differentiated offering and an unmatched value proposition at an accessible price point. That foundation continues to guide how we operate today, and we look forward to updating you on our progress as we move ahead. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.