Planet Fitness Reports 67 Percent Increase in Q1 2022 Revenue

Planet Fitness, Hampton, New Hampshire, reported first quarter 2022 revenue of $186.7 million, a 66.9 percent increase over first quarter 2021.

The number is also an increase over first quarter 2019 revenue, the last first quarter not impacted by the COVID-19 pandemic. Revenue for first quarter 2019 was $148.8 million.

"Over the past two-plus years of operating during the pandemic, we've learned to be nimble and resilient while staying true to our mission of providing a high-quality, affordable fitness experience in a welcoming, non-intimidating environment," Planet Fitness CEO Chris Rondeau said in a media release.

During first quarter 2022, Planet Fitness completed the acquisition of Sunshine Fitness, one of the company’s best-performing franchisees as well as a refinancing of a portion of its debt, Rondeau said.

“We are bullish on the future and believe that the acquisition strengthens our powerful business model by enhancing our corporate store team and diversifying the geographic profile of our corporate-owned stores, and the refinancing further supports our business model by locking in low rates on a significant portion our debt," he said.

For 2022, the company anticipates a revenue increase in the mid-50 percent range with system-wide same-store sales in the low double-digit percentage range.

More First Quarter Results

Performance for the quarter could have been higher except for some impact in January due to the omicron variant of COVID-19.

"Like many businesses, we were impacted by the ups and downs of consumer sentiment around COVID-19 during the first quarter," Rondeau said on a call with analysts on May 10. "The Omicron variant led to a softness in our January join trend, compared to pre-pandemic levels. This was not surprising given that the. US Census Bureau estimated that approximately 14 million Americans were directly or indirectly impacted by the virus at some point during the month."

Omicron also impacted usage for Planet Fitness. In January, it slipped below the 90 percent index in 2019 that the company had most of 2021, Rondeau said. Higher member usage historically corresponds with higher join activity. But as the quarter progressed, both joins and usage rebounded.

Although net membership growth for February and March this year outpaced 2019, it wasn't enough to make up for January softness. The company ended the quarter with 16.2 million memberships.

For first quarter 2022, system-wide same store sales increased 15.9 percent while system-wide sales increased $196 million to $961 million, from $765 million in the prior year period, the company reported May 10.

Franchise segment revenue increased $16 million (25 percent) to $80.1 million from $64.1 million in the prior year period. That number blows away the $65.8 million in franchise segment revenue the company reported in first quarter 2019.

The increase in franchise segment revenue for first quarter 2022 was primarily due to a $9.9 million increase in franchise royalty revenue, a $2.4 million increase in National Advertising Fund (NAF) revenue, a $2 million increase in franchise and other fees, and a $1.5 million increase in placement revenue. Of the $9.9 million increase in royalty revenue, $5.7 million was primarily attributable to a same-store sales increase of 15.8 percent in franchisee-owned stores, $4.5 million was attributable to new stores opened since Jan. 1, 2021, and stores that were not open for all of the prior year period due to COVID-related temporary closures, and $1.2 million was from higher royalties on annual fees.

Partially offsetting the royalty revenue increases was a decrease of approximately $1.6 million as a result of 114 franchisee-owned stores becoming corporate-owned stores as a result of the acquisition of Sunshine Fitness Growth Holdings, LLC in first quarter 2022.

Corporate-owned stores segment revenue increased $38.3 million (101.1 percent) to $76.2 million from $37.9 million in the prior year period. That is just slightly higher than corporate-owned sales from first quarter 2019 when the company reported $38 million.

Of the increase in first quarter 2022 corporate-owned stores segment revenue, $28.7 million was attributable to the acquisition of 114 stores in the Sunshine Acquisition, $5 million was from new stores opened since Jan. 1, 2021, and stores that were not open for all of the prior year period due to COVID-related temporary closures, and $4.6 million was from the corporate-owned store same store sales increase of 17 percent.

Equipment segment revenue increased $20.5 million (206.2 percent) to $30.4 million from $9.9 million in the prior year period, driven by higher equipment sales to new and existing franchisee-owned stores in the quarter compared to first quarter 2021. In first quarter 2022, the company had equipment sales to 33 new franchisee-owned stores compared to 18 in the prior year period. Despite the increase in revenue in the equipment segment compared to 2021, that number is still lower than first quarter 2019 when the company reported equipment segment revenue of $45 million.

Other details from first quarter 2022:

  • Net income attributable to Planet Fitness Inc. was $16.5 million compared to $5.6 million in the prior year period.
  • Net income increased $12.2 million to $18.4 million, compared to $6.2 million in the prior year period.
  • Adjusted net income increased $20 million to $29 million compared to $9.1 million in first quarter 2021.
  • Adjusted EBITDA increased $33.6 million to $77.3 million from $43.7 million in the prior year period.
  • Planet Fitness opened 37 clubs during the quarter, bringing system-wide total stores to 2,291 as of March 31, 2022.