Planet Fitness, Inc. (PLNT) FY 2024 MD&A

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context requires otherwise, references in this report to the “Company,” “we,” “us” and “our” refer to Planet Fitness, Inc. and its consolidated subsidiaries.

Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 31, 2023.

Overview

We are one of the largest and fastest-growing franchisors and operators of fitness centers in the world by number of members and locations, with a highly recognized national brand. Our mission is to enhance people’s lives and democratize fitness by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone, where anyone—and we mean anyone—can feel they belong. Our bright, clean clubs are typically 20,000 square feet, with a large selection of high-quality, purple and yellow Planet Fitness-branded cardio, circuit- and strength equipment and friendly staff trainers who offer unlimited free fitness instruction to all our members in small groups through our PE@PF

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program. We offer this differentiated fitness experience starting at only $15 per month to new members for our standard Classic Card membership. This exceptional value proposition is designed to appeal to a broad population, inclusive of all fitness levels from beginners to athletes. We and our franchisees fiercely protect Planet Fitness’ community atmosphere—a place where you do not need to be fit before joining and where progress toward achieving your fitness goals (big or small) is supported and applauded by our staff and fellow members.

As of December 31, 2024, we had approximately 19.7 million members and 2,722 clubs in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, Australia and Spain. Of our 2,722 clubs, 2,445 were franchised and 277 were corporate-owned.

As of December 31, 2024, we had contractual commitments to open approximately 900 new clubs.

Composition of Revenues, Expenses and Cash Flows

Revenues

We generate revenue from three primary sources:

•Franchise segment revenue: Franchise segment revenue relates to services we provide to support our franchisees and includes royalties, contributions to our NAFs (“NAF revenue”), franchise fees, upfront fees from ADAs, transfer fees, equipment placement revenue, membership join fees and other fees associated with our franchisee-owned clubs. Franchise segment revenue generally does not include the sale of tangible products by us to our franchisees. Our franchise segment revenue comprised 35.8% and 36.2% of our total revenue for the years ended December 31, 2024 and 2023, respectively.

•Corporate-owned club segment revenue: Includes monthly membership dues, enrollment fees, annual fees, and other fees paid by our members as well as retail sales. This source of revenue comprised 42.5% and 41.9% of our total revenue for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, approximately 93% of members at our corporate clubs paid their monthly dues by EFT.

•Equipment segment revenue: Includes equipment revenue for new franchisee-owned clubs as well as replacement equipment for existing franchisee-owned clubs, in the U.S., Canada and Mexico. Franchisee-owned clubs are generally required to replace their equipment every five to nine years. This source of revenue comprised 21.7% and 21.9% of our total revenue for the years ended December 31, 2024 and 2023, respectively.

See Item 8: Financial Statements and Supplementary Data - Note 2(e) for further discussion on our revenue streams and revenue recognition policies.

Expenses

We primarily incur the following expenses:

•Cost of revenue: Primarily includes the direct costs associated with equipment sales, including freight costs, to new and existing franchisee-owned clubs in the U.S., Canada and Mexico. Cost of revenue also includes the cost of retail merchandise sold at our corporate-owned clubs. Our cost of revenue changes primarily based on equipment sales volume.

•Club operations: Includes the direct costs associated with our corporate-owned clubs, primarily payroll, rent, utilities, supplies, maintenance, insurance, and local and national advertising. The components of club operations remain relatively stable for each club. Our statements of operations do not include, and we are not responsible for, any costs associated with operating franchisee-owned clubs.

•Selling, general and administrative expenses: Consists of costs primarily associated with administrative, corporate-owned club and franchisee support functions related to our existing business as well as growth and development activities, including certain costs to support equipment placement and assembly services. These costs primarily consist of payroll, information technology, marketing, legal, accounting, and insurance related expenses.

•NAF Expense: Consists of expenses incurred on behalf of the NAFs (“NAF expense”). The use of amounts received by the NAFs are restricted to advertising, product development, public relations, merchandising, and administrative expenses and programs to increase sales and further enhance the public reputation of the Planet Fitness brand.

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Cash flows

We generate a significant portion of our cash flows from monthly and annual membership dues, royalties, NAF revenue and various fees related to transactions involving our franchisee-owned clubs. We oversee the membership billing process, as well as the collection of our royalties, NAF revenue and certain other fees, through our third-party hosted point-of-sale systems in the United States and Canada. We bill monthly dues to our corporate-owned club members on or around the 17th of each month and bill annual fees once per year to each member based upon when the member signed their membership agreement. Our royalties and certain other fees are generally deducted on or around the billing dates of each month from these membership billings by the processor prior to the net billings being remitted to the franchisees, although our billing and collection practices vary in certain international markets. Our franchisees are responsible for maintaining the membership billing records and collection of member dues for their respective clubs through the point-of-sale system. Our royalties are generally based on monthly and annual membership billings for the franchisee-owned clubs without regard to the collections of those billings by our franchisees. The amount and timing of the collection of royalties and membership dues and fees at corporate-owned clubs is, therefore, generally fairly predictable.

Our corporate-owned clubs also historically generate strong operating margins and cash flows, as a significant portion of our costs are fixed or semi-fixed, such as rent and labor.

Equipment sales to new and existing franchisee-owned clubs also generate significant cash flows. Franchisees generally pay in advance, provide evidence of a committed financing arrangement for such equipment or provide evidence of sufficient liquidity or availability under an existing credit facility.

Recent Transactions

Securitized Financing Facility

On June 12, 2024, the Company completed the Series 2024-1 Issuance pursuant to which the Master Issuer issued the 2024 Notes in an aggregate outstanding principal amount of $800 million. In connection with such Series 2024-1 Issuance, the Master Issuer repaid the outstanding principal amount (and all accrued and unpaid interest thereon) of the 2018 Class A-2-II Notes. See Note 10 to the consolidated financial statements.

Share repurchases

During 2024, the Company repurchased and retired 4,072,773 shares of Class A common stock for a total cost of $300.0 million. See “—Share Repurchase Program” below for more information.

Florida Acquisition

On April 16, 2023, the Company purchased from one of its franchisees a majority of the assets associated with four clubs operating in Florida (the “Florida Acquisition”) for approximately $26.3 million in cash consideration. See Note 4 to the consolidated financial statements.

Equity Method Investments

On June 23, 2023, the Company acquired a 12.5% ownership interest for $10.0 million in Planet Fitmex, LLC, which is classified as an equity method investment as a result of its organizational structure. During the remainder of 2023, the Company invested an additional $25.6 million in the form of cash and received $17.0 million worth of equity interests for the contribution of five clubs that were acquired from a franchisee in October 2023 in connection with a legal settlement. Following such additional investments, the Company’s ownership stake increased to 33.2% with a total investment of $52.6 million. See Note 7 to the consolidated financial statements.

Seasonality

Our results are subject to seasonality fluctuations in that member joins are typically higher in January as compared to other months of the year. In addition, our quarterly results may fluctuate significantly because of several factors, including the timing of club openings, timing of price increases for enrollment fees and monthly membership dues and general economic conditions.

Our Segments

We operate and manage our business in three business segments: Franchise, Corporate-owned clubs and Equipment. Our Franchise segment includes operations related to our franchising business in the United States, Puerto Rico, Canada, Panama, Mexico and Australia, as well as revenues and expenses of the NAFs. Our Corporate-owned clubs segment includes operations with respect to all corporate-owned clubs throughout the U.S., Canada, and Spain. The Equipment segment includes the sale of equipment to franchisee-owned clubs in the U.S, Canada and Mexico.

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We evaluate the performance of our segments and allocate resources to them based on revenue and adjusted earnings before interest, taxes, depreciation and amortization, referred to as Segment Adjusted EBITDA. Revenue and Segment Adjusted EBITDA for all operating segments include only transactions with unaffiliated customers and do not include intersegment transactions.

Segment Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, adjusted for the impact of certain non-cash and other items that the Operating Decision Maker (“CODM”) does not consider in her evaluation of ongoing performance of the segment’s core operations. For additional information, see Note 19 to the consolidated financial statements.

The following tables summarize revenue and Adjusted EBITDA broken out by our segments:

(1) Corporate and other Adjusted EBITDA includes adjusted corporate overhead costs, such as payroll and related benefit costs and professional services that are not directly attributable to any individual segment and thus are unallocated.

(2) Segment Adjusted EBITDA plus the Adjusted EBITDA of corporate and other is equal to Adjusted EBITDA. Adjusted EBITDA is a metric that is not presented in accordance with GAAP. Refer to “—Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our business is performing include total monthly dues and annual fees from members (which we refer to as system-wide sales), the number of new club openings, same club sales for both corporate-owned and franchisee-owned clubs, net member growth, average royalty fee percentages for franchisee-owned clubs, PF Black Card penetration percentage, Adjusted EBITDA, Segment Adjusted EBITDA, four-wall Adjusted EBITDA, Royalty adjusted four-wall EBITDA, Adjusted net income, and Adjusted net income per share, diluted. See “—Non-GAAP Financial Measures” below for more information.

Total monthly dues and annual fees from members (system-wide sales)

We review the total amount of dues we bill to our members on a monthly basis, which allows us to assess changes in the performance of our corporate-owned and franchisee-owned clubs from period to period, any competitive pressures, local or regional membership traffic patterns and general market conditions that might impact our club performance. System-wide sales is an operating measure that includes monthly membership dues and annual fee billings by franchisees that are not revenue realized by the Company in accordance with GAAP, as well as monthly membership dues and annual fee billings by the Company’s corporate-owned clubs. While the Company does not record sales by franchisees as revenue, and such sales are not included in the Company’s consolidated financial statements, the Company believes that this operating measure aids in understanding how the Company derives its royalty revenue and is important in evaluating its performance. We bill monthly dues on or around the 17th of every month and bill annual fees once per year to each member based upon when the member signed their membership agreement. System-wide sales were $4.8 billion and $4.5 billion during the years ended December 31, 2024 and 2023, respectively.

Number of new club openings

The number of new club openings reflects clubs opened during a particular reporting period for both corporate-owned and franchisee-owned clubs. Opening new clubs is an important part of our growth strategy and we expect the majority of our future new clubs will be franchisee-owned. Before we obtain the certificate of occupancy or report any revenue for new corporate-

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owned clubs, we incur pre-opening costs, such as rent expense, labor expense and other operating expenses. Our clubs open with an initial start-up period requirement of higher than normal marketing spend and operating expenses may also be higher, particularly as a percentage of monthly revenue. New clubs may not be profitable and their revenue may not follow historical patterns. The following table shows the growth in our corporate-owned and franchisee-owned club base:

(1) The term “debranded” refers to a franchisee-owned club whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. We retain the right to prevent debranded clubs from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s club with another club located in close proximity with our prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining club.

Same club sales

Same club sales refers to year-over-year sales comparisons for the same club sales base of both corporate-owned and franchisee-owned clubs. We define the same club sales base to include those clubs that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same club sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned clubs.

Several factors affect our same club sales in any given period, including the following:

•the number of clubs that have been in operation for more than 12 months;

•the percentage mix and pricing of PF Black Card and standard Classic Card memberships in any period;

•growth in total net memberships per club;

•consumer recognition of our brand and our ability to respond to changing consumer preferences;

•overall economic trends, particularly those related to consumer spending;

•our and our franchisees’ ability to operate clubs effectively and efficiently to meet consumer expectations;

•marketing and promotional efforts;

•local competition;

•trade area dynamics; and

•opening of new clubs in the vicinity of existing locations.

We present same club sales as compared to the same period in the prior year for all clubs that have been open and for which monthly membership dues have been billed for longer than 12 months, beginning with the 13th month and thereafter, as applicable. Same club sales of our international clubs are calculated on a constant currency basis, meaning that we translate the

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current year’s same club sales of our international clubs at the same exchange rates used in the prior year. Since opening new clubs is a significant component of our revenue growth, same club sales is only one measure of how we evaluate our performance.

Clubs acquired from or sold to franchisees are removed from the franchisee-owned or corporate-owned same club sales base, as applicable, upon the ownership change and for the 12 months following the date of the ownership change. These clubs are included in the corporate-owned or franchisee-owned same club sales base, as applicable, following the twelfth month after the acquisition or sale. These clubs remain in the system-wide same club sales base in all periods. The following table shows our same club sales:

Net member growth

Net member growth refers to the net change in total members in relation to total clubs over time. We capture all membership changes daily through our point-of-sale system. We monitor a combination of membership growth, average members per club, average monthly dues and transfers from or to an individual club location. We seek to make it simple for members to join, whether online, through our mobile application or in-club, and, while some memberships require a cancellation fee, we offer, and require our franchisees to offer, a non-committal membership option. This approach to memberships is part of our commitment to appeal to a broad population, inclusive of all fitness levels from beginners to athletes. As a result, we do not rely upon membership attrition as an operating metric in assessing our performance. We primarily attribute our membership growth to the continued net member growth in existing clubs as well as the growth of our system-wide club base.

Average royalty fee percentages for the franchisee-owned clubs

The average royalty fee percentage represents royalties collected by us from our franchisees as a percentage of the monthly membership dues and annual fees that are billed by the franchisees to their member base. We have varying royalty fee structures with our franchisee base, ranging from a tiered monthly fee to a royalty of 7.0% of total monthly dues and annual membership fees across our franchisee base. Our royalty fee in the U.S. and Canada has increased over time to a current rate of 7.0% and 6.59%, respectively, for new franchisees.

PF Black Card penetration percentage

Our PF Black Card penetration percentage represents the number of our recurring billing members that have opted to enroll in our PF Black Card membership program as a percentage of our total recurring billing membership base. PF Black Card members pay higher monthly membership dues than our standard Classic Card membership and receive additional benefits for these additional fees. These benefits include access to all of our clubs system-wide, guest privileges and access to exclusive areas in our clubs that provide amenities such as water massage beds, massage chairs, tanning equipment and more. We view PF Black Card penetration percentage as a critical metric in assessing the performance and growth of our business.

Non-GAAP Financial Measures

We refer to Adjusted EBITDA, four-wall Adjusted EBITDA, Royalty adjusted four-wall EBITDA, Adjusted net income and Adjusted net income per share, diluted as we use these measures to evaluate our operating performance and we believe these measures are useful to investors in evaluating our performance. Adjusted EBITDA, four-wall Adjusted EBITDA, Royalty adjusted four-wall EBITDA, Adjusted net income and Adjusted net income per share, diluted, as presented in this Form 10-K, are supplemental measures of our performance that are neither required by, nor presented in accordance with GAAP and should not be considered as substitutes for GAAP metrics such as net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted. Our presentation of Adjusted EBITDA, four-wall Adjusted EBITDA, Royalty adjusted four-wall EBITDA, Adjusted net income and Adjusted net income per share, diluted should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

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We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, as adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company’s core operations. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of certain expenses and other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors. Our Board of Directors also uses Adjusted EBITDA as a key metric to assess the performance of management. Our CODM also uses Segment Adjusted EBITDA, which is Adjusted EBITDA specific to each of our three reportable segments, to assess the financial performance of and allocate resources to our segments in accordance with ASC 280, Segment Reporting. Corporate overhead costs not directly attributable to any individual segment are not allocated to the three segments and are included in Corporate and Other Adjusted EBITDA within Adjusted EBITDA.

Four-wall Adjusted EBITDA is an assessment of our average corporate-owned club-level profitability for clubs included in the same-club-sales base, which includes local and national advertising expense and adjusts for certain administrative and other items that we do not consider in our evaluation of individual club-level performance. Royalty adjusted four-wall EBITDA then applies the current royalty rate to our four-wall Adjusted EBITDA. Accordingly, we believe that Royalty adjusted four-wall EBITDA is comparable to a franchise club under our current franchise agreement and is useful to investors to assess the operating performance of an average club in our system. Management also uses such metrics in assessing club-level operating performance over time.

Adjusted net income assumes that all net income is attributable to Planet Fitness, Inc., which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-cash and other items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing Adjusted net income by the total weighted-average shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented. We believe Adjusted net income and Adjusted net income per share, diluted, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period.

Reconciliations of Non-GAAP Financial Measures

A reconciliation of net income, the most directly comparable GAAP measure, to Adjusted EBITDA is set forth below:

(1) Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned clubs.

(2) Represents severance related expenses recorded in connection with a reduction in force in 2024 and the elimination of the President and Chief Operating Officer position in 2023.

(3) Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for, and stock-based compensation associated with certain equity awards granted to the Company’s new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

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(4) Represents costs associated with legal matters in which the Company is a defendant. In 2023, this represents an increase in the legal reserve, net of legal fees paid, related to preliminary terms of a settlement agreement (the “Preliminary Settlement Agreement”). The legal reserve was subsequently paid in 2023.

(5) Represents a gain (loss) related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.

(6) Represents the Company’s pro-rata portion of the basis difference related to intangible asset amortization expense in its equity method investees, which is included within losses from equity-method investments, net of tax on our consolidated statements of operations.

(7) Represents certain other gains and charges that we do not believe reflect our underlying business performance.

A reconciliation of net income, the most directly comparable GAAP measure, to Adjusted net income and the computation of Adjusted net income per share, diluted, are set forth below:

(1) Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned clubs.

(2) Represents severance related expenses recorded in connection with a reduction in force in 2024 and the elimination of the President and Chief Operating Officer position in 2023.

(3) Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for, and stock-based compensation associated with certain equity awards granted to the Company’s new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

(4) Represents costs associated with legal matters in which the Company is a defendant. In 2023, this represents an increase in the legal reserve, net of legal fees paid, related to the Preliminary Settlement Agreement. The legal reserve was subsequently paid in 2023.

(5) Represents a gain (loss) related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.

(6) Represents the Company’s pro-rata portion of the basis difference related to intangible asset amortization expense in its equity method investees, which is included within losses from equity-method investments, net of tax on our consolidated statements of operations.

(7) Represents certain other gains and charges that we do not believe reflect our underlying business performance.

(8) Represents a loss on extinguishment of debt as a result of the repayment of the 2018-1 Class A-2-I notes prior to the anticipated repayment date.

(9) Includes $10.6 million and $12.4 million of amortization of intangible assets, other than favorable leases, for the years ended December 31, 2024 and 2023, respectively, recorded in connection with the 2012 Acquisition, and $38.6 million and $39.1 million of amortization of intangible assets for the years ended December 31, 2024 and 2023, respectively, created in connection with historical acquisitions of franchisee-owned clubs. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, in each period.

(10) Represents corporate income taxes at an assumed effective tax rate of 25.9% for both the years ended December 31, 2024 and 2023, applied to adjusted income before income taxes.

(11) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc.

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A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted, is set forth below:

(1) Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares of Class A common stock outstanding (see Note 15 to our consolidated financial statements included elsewhere in this form 10-K).

(2) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. as of the beginning of the period presented. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and shares of Class B common stock for shares of Class A common stock.

(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.

(4) Represents corporate income taxes at an assumed effective tax rate of 25.9% for both the years ended December 31, 2024 and 2023, applied to adjusted income before income taxes.

A reconciliation of the Corporate-owned clubs Segment Adjusted EBITDA to four-wall Adjusted EBITDA to Royalty adjusted four-wall EBITDA, is set forth below:

(1) Includes the impact of clubs open less than 13 months and those which have not yet opened.

(2) Reflects administrative costs attributable to the Corporate-owned clubs segment but not directly related to club operations.

(3) Reflects certain intercompany charges and other fees which are eliminated in consolidation.

(4) Represents the impact of certain purchase accounting adjustments associated with the 2012 Acquisition and our historical acquisitions of franchisee-owned clubs. These are primarily related to fair value adjustments to deferred rent.

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(5) Includes the effect of royalties at a rate of 7.0% on gross monthly and annual membership billings as if the clubs were similar to a franchisee-owned club at the current franchise royalty rate.

Results of Operations

Comparison of the years ended December 31, 2024 and December 31, 2023

The following table sets forth a comparison of our consolidated statements of operations in dollars and as a percentage of total revenue:

Revenue

Total revenues were $1,181.7 million in the year ended December 31, 2024, compared to $1,071.3 million in the year ended December 31, 2023, an increase of $110.3 million, or 10.3%.

Franchise segment revenue was $423.2 million in the year ended December 31, 2024, compared to $387.9 million in the year ended December 31, 2023, an increase of $35.3 million, or 9.1%.

Franchise revenue was $344.3 million in the year ended December 31, 2024, compared to $317.9 million in the year ended December 31, 2023, an increase of $26.4 million, or 8.3%. Included in franchise revenue is royalty revenue of $286.3 million, franchise and other fees of $34.8 million and placement revenue of $20.9 million for the year ended December 31, 2024, compared to royalty revenue of $260.7 million, franchise and other fees of $33.6 million and placement revenue of $19.8 million for the year ended December 31, 2023. Of the $25.5 million increase in royalty revenue, $13.9 million was attributable to a franchise same club sales increase of 5.2%, $6.2 million was attributable to new clubs opened since January 1, 2023 before

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they move into the same club sales base and $5.4 million was from higher royalties on annual fees. The $1.2 million increase in franchise and other fees was primarily attributable to an increase in PF Perks revenue and the $1.1 million increase in placement revenue was primarily driven by higher replacement equipment placements. Also impacting franchise revenue was a $1.4 million decrease in revenue associated with the sale of HVAC units to franchisees.

National advertising fund revenue was $78.9 million in the year ended December 31, 2024, compared to $70.0 million in the year ended December 31, 2023, an increase of $8.9 million, or 12.7%. This increase was primarily attributable to $4.6 million from higher same club sales and new clubs opened since January 1, 2023 and $3.7 million from the collection of national advertising fund revenue on annual fees.

Revenue from our corporate-owned clubs segment was $502.3 million in the year ended December 31, 2024, compared to $449.3 million in the year ended December 31, 2023, an increase of $53.0 million, or 11.8%. This increase was primarily attributable to $41.7 million from the corporate-owned clubs in the same club sales base, of which $23.6 million was attributable to a same clubs sales increase of 4.5%, $8.7 million was attributable to higher annual fee revenue and $9.4 million was attributable to other fees. Additionally, $11.3 million was from new clubs opened and acquired since January 1, 2023 before they move into the same club sales base.

Equipment segment revenue was $256.1 million in the year ended December 31, 2024, compared to $234.1 million in the year ended December 31, 2023, an increase of $22.0 million, or 9.4%. This increase was primarily attributable to higher revenue from equipment sales to existing franchisee-owned clubs of $28.3 million, which included additional strength equipment sold in the fourth quarter of 2024, partially offset by lower revenue from equipment sales to new franchisee-owned clubs of $6.3 million. In the year ended December 31, 2024, we had equipment sales to 124 new franchisee-owned clubs compared to 135 in the prior year.

Cost of revenue

Cost of revenue, which primarily relates to our equipment segment, was $197.1 million in the year ended December 31, 2024, compared to $190.0 million in the year ended December 31, 2023, an increase of $7.1 million, or 3.7%. This increase was primarily attributable to higher equipment sales to existing franchisee-owned clubs, including costs associated with the additional strength equipment sold in the fourth quarter of 2024, as described above.

Club operations

Club operations expense, which relates to our Corporate-owned clubs segment, was $290.5 million in the year ended December 31, 2024 compared to $253.6 million in the year ended December 31, 2023, an increase of $36.9 million, or 14.5%. This increase was primarily attributable to $21.2 million from clubs included in our same club sales base as a result of higher rent and occupancy, payroll, operational, and marketing expenses and $15.7 million from new clubs opened and acquired since January 1, 2023 before they move into the same club sales base, of which $1.7 million was attributable to the opening and operating of five clubs in Spain during 2024.

Selling, general and administrative

Selling, general and administrative expense was $129.1 million in the year ended December 31, 2024, compared to $124.9 million in the year ended December 31, 2023, an increase of $4.2 million, or 3.4%. This increase was primarily attributable to higher consulting costs as a result of increased investments in our strategic imperatives to accelerate growth and higher payroll related expenses relating to our CEO transition, partially offset by lower marketing expenses.

National advertising fund expense

National advertising fund expense was $79.0 million in the year ended December 31, 2024, compared to $70.1 million in the year ended December 31, 2023, an increase of $8.9 million, or 12.7%. This increase was primarily a result of higher advertising and marketing expenditures due to higher national advertising revenue as described above.

Depreciation and amortization

Depreciation and amortization expense was $160.3 million in the year ended December 31, 2024, compared to $149.4 million in the year ended December 31, 2023, an increase of $10.9 million, or 7.3%. This increase was primarily attributable to new clubs opened and acquired since January 1, 2023.

Other losses, net

Other losses, net was $1.3 million in the year ended December 31, 2024, compared to $10.4 million in the year ended December 31, 2023. The decrease was primarily the result of a legal reserve recorded in the prior year period and the Company’s allowance for expected credit losses on its held-to-maturity debt security.

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Interest income

Interest income was $23.1 million in the year ended December 31, 2024, compared to $17.7 million in the year ended December 31, 2023, an increase $5.4 million, or 30.3%. This increase was primarily due to a higher balance of cash and cash equivalents and investments in marketable securities with higher yielding interest rates in the current year compared to the prior year.

Interest expense

Interest expense primarily consists of interest on long-term debt as well as the amortization of deferred financing costs.

Interest expense was $100.0 million in the year ended December 31, 2024, compared to $86.6 million in the year ended December 31, 2023, an increase of $13.5 million, or 15.5%. This increase was primarily from higher interest expense related to the issuance of the 2024 Notes in June 2024 and the write-off of deferred financing costs associated with the prepayment of the 2018 Notes.

Other (expense) income, net

Other (expense) income, net was an expense of $0.5 million in the year ended December 31, 2024, compared to income of $3.5 million in the year ended December 31, 2023. This decrease was primarily attributable to the remeasurement of our tax benefit arrangements due to changes in our deferred state tax rate.

Provision for income taxes

Income tax expense was $68.4 million for the year ended December 31, 2024, compared to $58.5 million for the year ended December 31, 2023, an increase of $9.9 million, or 17.0%. This increase is primarily attributable to our higher income before taxes in the current year compared to the prior year.

The Company’s effective tax rate was 27.7% for the year ended December 31, 2024, compared to 28.2% in the prior year. The decrease in the effective income tax rate was primarily due to a deferred tax benefit in 2024 related to remeasurement of deferred tax assets in comparison to a deferred tax expense in 2023, as well as lower non-deductible executive compensation expense in 2024 compared to 2023.

Losses from equity-method investments

Losses from equity-method investments was $4.0 million in the year ended December 31, 2024, compared to $2.0 million in the year ended December 31, 2023. This increase was primarily attributable to the full-year impact of losses recorded in the current year from one of the Company’s equity-method investments that was acquired during the prior year. The Company has incurred losses on its equity method investments to date primarily as a result of the investees, who are franchisee operators of Planet Fitness clubs, opening new clubs in each period and due to the accounting for basis differences in accordance with the equity method of accounting. For additional information, see Note 7 to the consolidated financial statements.

Segment results

Franchise

Franchise Segment Adjusted EBITDA was $301.1 million in the year ended December 31, 2024, compared to $273.0 million in the year ended December 31, 2023, an increase of $28.1 million, or 10.3%. This increase was primarily due to higher franchise and NAF revenue of $26.4 million and $8.9 million, respectively, and $3.1 million of lower selling, general and administrative expense, partially offset by $8.9 million of higher NAF expense.

Corporate-owned clubs

Corporate-owned clubs Segment Adjusted EBITDA was $188.8 million in the year ended December 31, 2024, compared to $173.3 million in the year ended December 31, 2023, an increase of $15.4 million, or 8.9%. This increase was primarily attributable to $21.1 million from the corporate-owned same clubs sales increase of 4.5%, partially offset by $3.4 million from the opening and operating of five clubs in Spain during 2024 and $2.3 million from new and acquired clubs since January 1, 2023 before they move into the same club sales base.

Equipment

Equipment Segment Adjusted EBITDA was $71.8 million in the year ended December 31, 2024, compared to $56.4 million in the year ended December 31, 2023, an increase of $15.4 million, or 27.4%. This increase was primarily driven by higher equipment sales to existing franchisee-owned clubs, which included additional strength equipment sold in the fourth quarter of 2024, and higher margin equipment sales related to an updated equipment mix as a result of the adoption of the franchise growth model, as described above.

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Liquidity and Capital Resources

As of December 31, 2024, we had $293.2 million of cash and cash equivalents, $114.2 million of short-term marketable securities, $65.7 million of long-term marketable securities and $56.5 million of restricted cash.

We require cash principally to fund day-to-day operations, to finance capital investments, to service our outstanding debt and tax benefit arrangements and to address our working capital needs. Based on our current level of operations, we believe that with our available cash balance, the cash generated from our operations, and amounts available under our Variable Funding Notes will be adequate to meet our anticipated debt service requirements and obligations under our tax benefit arrangements, capital expenditures and working capital needs for at least the next 12 months. Our ability to continue to fund these items could be adversely affected by the occurrence of any of the events described under “Risk Factors.” There can be no assurance that our business will generate sufficient cash flows from operations or otherwise to enable us to service our indebtedness, including our Securitized Senior Notes, or to make anticipated capital expenditures. Our future operating performance and our ability to service, extend or refinance our indebtedness will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Summary of Cash Flows

Operating activities

Net cash provided by operating activities of $343.9 million for the year ended December 31, 2024 was primarily attributable to $174.2 million of net income and $234.2 million of adjustments to reconcile net income to net cash provided by operating activities, primarily consisting of depreciation and amortization, deferred tax expense, stock-based compensation expense, amortization of deferred financing costs, loss on extinguishment of debt and other adjustments, partially offset by a $64.6 million working capital cash outflow. The working capital cash outflow was primarily attributable to a decrease in the tax benefit arrangement liability as a result of payments made during 2024, an increase in accounts receivable due to higher equipment sales to existing franchisee-owned clubs, and an increase in other assets and other current assets primarily from other receivables and general prepaid expenses. The working capital cash outflow was partially offset by an increase in accounts payable and accrued expenses primarily from an increase in payables related to equipment orders, an increase in leases primarily from new corporate-owned clubs in 2024, and an increase in deferred revenue primarily from increased annual billings revenue.

Net cash provided by operating activities of $330.3 million for the year ended December 31, 2023 was primarily attributable to $147.0 million of net income and $211.1 million of adjustments to reconcile net income to net cash provided by operating activities, primarily consisting of depreciation and amortization, deferred tax expense, stock-based compensation expense and other adjustments, partially offset by a $27.9 million working capital cash outflow. The working capital cash outflow was primarily attributable to a decrease in the tax benefit arrangement liability as a result of payments made during 2023 and a decrease in other liabilities and other current liabilities primarily from the release of a legal reserve settled in 2023. The working capital cash outflow was partially offset by an increase in leases from new corporate-owned clubs in 2023, a decrease in accounts receivable primarily from the timing of equipment sales, and an increase in deferred revenue primarily from increased annual billings revenue.

Investing activities

For the year ended December 31, 2024, net cash used in investing activities was $208.7 million compared to $340.0 million in the year ended December 31, 2023, a decrease of $131.3 million. This decrease is primarily attributable to lower cash used for acquisitions and other investments of $80.2 million and for the purchase of marketable securities, net of maturities, of $71.0 million, partially offset by $19.1 million from higher capital expenditures. Capital expenditures for the years ended December 31, 2024 and 2023 were as follows:

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Financing activities

For the year ended December 31, 2024, net cash used in financing activities was $105.0 million compared to net cash used in financing activities of $141.4 million in the year ended December 31, 2023, a decrease of $36.4 million. The primary drivers of the decrease were a $200.0 million increase in net cash provided from long-term debt, consisting of $800.0 million of borrowings, $587.9 million of repayment of long-term debt and principal payments and $12.1 million of deferred financing costs incurred, and a $12.7 increase in cash provided primarily from option exercise proceeds, partially offset by a $175.2 million increase in cash used for share repurchases in 2024.

Securitized Financing Facility

Planet Fitness Master Issuer LLC (the “Master Issuer”), a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, is the master issuer of outstanding senior secured notes under a securitized financing facility that was entered into in August 2018. In June 2024, the Master Issuer completed a refinancing transaction with respect to this facility under which the Master Issuer issued the Series 2024-1 Class A-2 Notes with initial principal amounts totaling $800 million. The net proceeds from the sale of the Series 2024-1 Class A-2 Notes were used to repay in full the Master Issuer’s outstanding Series 2018-1 Class A-2-II Notes, including the payment of transaction costs. The remaining funds were used, together with cash on hand, to fund a $280 million accelerated share repurchase agreement.

In February 2022, the Master Issuer also issued the Series 2022-1 Class A-1 Notes, which allow for the drawing of up to $75 million of Variable Funding Notes, including a letter of credit facility. The 2022 Variable Funding Notes are undrawn as of December 31, 2024.

Except as noted above, there were no material changes to the terms of any debt obligations in the year ended December 31, 2024. The Company was in compliance with its debt covenants as of December 31, 2024. See Note 10 to the consolidated financial statements contained in Item 8 herein for further information related to our long-term debt obligations.

Share Repurchase Program

2022 share repurchase program

On November 4, 2022, the Company’s board of directors approved a share repurchase program of up to $500.0 million, which replaced the $500.0 million 2019 share repurchase program.

On June 12, 2024, the Company entered into a $280.0 million accelerated share repurchase agreement (the “ASR Agreement”) with Citibank, N.A. (the “Bank”). Pursuant to the terms of the ASR Agreement, on June 14, 2024, the Company paid the Bank $280.0 million in cash and received 3,090,507 shares of the Company’s Class A common stock, which were retired, and the Company recorded an increase to accumulated deficit of $224.0 million, representing 80% of the total ASR Agreement value based on the closing price of the Company’s Class A common stock on the commencement date of the transaction. Final settlement of the ASR Agreement occurred on September 16, 2024. At final settlement, the Bank delivered 668,432 additional shares of the Company’s Class A common stock, which were retired by the Company. The final number of shares repurchased was determined based on the volume-weighted average stock price of the Company’s Class A common stock of $76.88 during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreement. The ASR Agreement had been evaluated as an unsettled forward contract indexed to our Class A common stock, with $56.0 million classified as an increase to accumulated deficit at the original date of payment.

Additionally, the Company repurchased and retired 313,834 shares of Class A common stock for a total cost of $20.0 million during the year ended December 31, 2024. A share repurchase excise tax of $2.5 million was recorded in connection with the Company’s share repurchases during the year ended December 31, 2024.

2024 share repurchase program

On June 13, 2024, the Company’s board of directors approved a share repurchase program of up to $500.0 million to replace the 2022 share repurchase program contingent upon the completion of the ASR Agreement. The new share repurchase program

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became effective on September 16, 2024 upon the completion of the ASR Agreement. As of December 31, 2024, there is $500.0 million remaining under the 2024 Share Repurchase Program.

The timing of purchases and amount of stock repurchased will be subject to the Company’s discretion and will depend on market and business conditions, the Company’s general working capital needs, stock price, applicable legal requirements and other factors. Our ability to repurchase shares at any particular time is also subject to the terms of the Indenture governing the Securitized Senior Notes. Purchases may be effected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing. The Company may terminate the program at any time.

Contractual Obligations and Commitments

The following table presents contractual obligations and commercial commitments as of December 31, 2024.

(1) Long-term debt payments include scheduled principal payments only.

(2)Interest on long-term debt is based on the contractual interest rate through the anticipated repayment dates of the outstanding senior secured notes.

(3) Timing of payments under tax benefit arrangements is estimated.

(4) Advertising purchase commitments include commitments for the NAFs.

(5) Purchase obligations consists of open purchase orders primarily related to equipment to be sold to franchisees. For the majority of our equipment purchase obligations, our policy is to require the franchisee to provide us with either a deposit or proof of a committed financing arrangement.

Off-Balance Sheet Arrangements

As of December 31, 2024, our off-balance sheet arrangements consisted of guarantees of lease agreements for certain franchisees. Our maximum total commitment under these agreements is approximately $4.5 million and would only require payment upon default by the primary obligor. The estimated fair value of these guarantees at December 31, 2024 was not material, and no accrual has been recorded for our potential obligation under these arrangements. In 2019, in connection with a real estate partnership, the Company began guaranteeing certain leases of its franchisees up to a maximum period of 10 years, with earlier expiration dates if certain conditions are met. See Note 17 to our consolidated financial statements included elsewhere in this Form 10-K for more information regarding these operating leases and guarantees.

Critical Accounting Policies and Estimates

Our discussion and analysis of operating results and financial condition are based upon our consolidated financial statements included elsewhere in this Form 10-K. The preparation of our financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures of contingent assets and liabilities. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from those estimates. While estimates and judgments are applied in arriving at many reported amounts, we believe that the following critical accounting estimates involve a higher degree of judgment and complexity.

Business combinations

We account for business combinations using the purchase method of accounting which results in the assets acquired and liabilities assumed being recorded at fair value at the date of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed will be recognized as goodwill.

The valuation methodologies used are based on the nature of the asset or liability. The significant assets and liabilities measured at fair value include property and equipment, intangible assets, and favorable and unfavorable leases. For the 2012 Acquisition,

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intangible assets consisted of trade and brand names, member relationships, franchisee relationships related to both our franchise and equipment segments, non-compete agreements, order backlog and favorable and unfavorable leases. For other acquisitions, which consist of acquisitions of clubs from franchisees, intangible assets generally consist of member relationships, re-acquired franchise rights, and favorable and unfavorable leases.

The Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities, including third-party valuation experts. The fair value of trade and brand names is estimated using the relief from royalty method, an income approach to valuation, which includes projecting future system-wide sales and other estimates. Membership relationships and franchisee relationships are valued based on an estimate of future revenues and costs related to the respective contracts over the remaining expected lives. Our valuation includes assumptions related to the projected attrition and renewal rates on those existing franchise and membership arrangements being valued. Re-acquired franchise rights are valued using an excess earnings approach. The valuation of re-acquired franchise rights is determined using a multi-period excess earnings method under the income approach. For re-acquired franchise rights with terms that are either favorable or unfavorable (from our perspective) to the terms included in our current franchise agreements, a gain or charge is recorded at the time of the acquisition to the extent of the favorability or unfavorability, respectively. Favorable and unfavorable operating leases are recorded based on differences between contractual rents under the respective lease agreements and prevailing market rents at the lease acquisition date, and are recorded as a component of the right-of-use (“ROU”) asset. Real and personal property asset valuation is determined using the replacement cost approach.

Income taxes

Deferred income taxes are recognized for the expected future tax consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied in the years in which temporary differences are expected to be recovered or settled. The principal items giving rise to temporary differences are the use of accelerated depreciation and certain basis differences resulting from acquisitions and the recapitalization transactions. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

In determining the provision for income taxes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate the carrying value of our deferred tax assets on a quarterly basis. In completing this evaluation, we consider all available positive and negative evidence. Such evidence includes historical operating results, the existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if permitted under the tax law, expectations for future pre-tax operating income, the time period over which our temporary differences will reverse, and the implementation of feasible and prudent tax planning strategies. Estimating future taxable income is inherently uncertain and requires judgment.

As of December 31, 2024, we had $468.8 million of net deferred tax assets, net of valuation allowances. We expect to realize future tax benefits related to the utilization of these assets. As of December 31, 2024, the Company has provided a valuation allowance of $6.6 million against the portion of its deferred tax assets for which the Company does not have sufficient positive evidence to support its recoverability.

We recognize the effects of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Tax Benefit Arrangements

As described in Note 16 to the consolidated financial statements included in Part II, Item 8, we are a party to the tax benefit arrangements under which we are contractually committed to pay certain non-controlling interest holders 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions. Amounts payable under the tax benefit arrangements are contingent upon, among other things, (i) generation of future taxable income over the term of the tax benefit arrangements and (ii) future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the tax benefit arrangements to utilize the tax benefits, then we would not be required to make the related payments. Therefore, we would only recognize a liability for tax benefit arrangement payments if we determine it is probable that we will generate sufficient future taxable income over the term of the tax benefit arrangements to utilize the related tax benefits. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions. As of December 31, 2024, we recognized $466.9 million of liabilities relating to our obligations under the tax benefit arrangements. We concluded that we would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred. Changes in the liability resulting from historical exchanges under these tax benefit arrangements may occur based on changes in anticipated future taxable income, changes in applicable tax rates or other changes in tax attributes that may occur and impact the expected future tax benefits to be received by the Company. Changes in the projected liability under these tax benefit arrangements are

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and will be recorded as a component of other income (expense) each period. The projection of future taxable income involves significant judgment. Actual taxable income may differ from estimates, which could significantly impact the liability under the tax benefit arrangements and the Company’s consolidated results of operations.

Investments and allowance for expected credit losses

Our held-to-maturity debt security is reported at amortized cost. We reserve for expected credit losses on our held-to-maturity debt securities through the allowance for expected credit losses. The allowance for expected credit losses estimate reflects a lifetime loss estimate and is based on historical loss information for assets with similar risk characteristics, adjusted for management’s expectations. Adjustments for management’s expectations may be based on factors such as investee earnings performance, recent financing rounds at reduced valuations, changes in the regulatory, economic or technological environment of an investee or doubt about an investee’s ability to continue as a going concern. An increase or a decrease in the allowance for expected credit losses is recorded through other gain (loss) as a credit loss expense or a reversal thereof. The allowance for expected credit losses is presented as a deduction from the amortized cost of the held-to-maturity debt securities. A held-to-maturity investment security and its allowance for expected credit losses is written off when deemed uncollectible.

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