Great. Good morning, everybody. Randy Konik of Jefferies. Really pleased to have Planet Fitness management with us this morning to go over some questions that I'm sure are on your minds. With me, Colleen Keating, the company's CEO, and Jay Stasz, the company's CFO. So what I'd like to do is ask some questions of the management team, and hopefully you get a lot out of the conversation. So you know what? Let's jump right in. So Colleen, look, in 2025, you added some people to your C-suite, some really good talent in the business. You hosted your first ever analyst day for the company under your stewardship. And you gave us some long-term outlooks at that analyst day, which proved to be very compelling. When you look back at 2025, how do you think about the accomplishments you had? And kind of walk through that a little bit.
Yeah. Thanks for the question, and great to be here with you today. I guess if I were to sum up 2025 in one word, the word that comes to mind most often is momentum. So I joined the business, many of you know, but I joined the business in mid-June 2024. And in 2024, we kind of laid out our strategic imperatives, shared the strategy, and talked about some additions to the leadership team to make sure that we had the right fit for strategy operating model, because it's really all about the execution, right? And in 2025, we brought on our new Chief Development Officer in January. We brought on our new Chief Marketing Officer in February. At the end of 2024, Jay joined in November, part of building out that blue ribbon team.
And I call it blue ribbon because you get a blue ribbon, even though purple is our favorite color. Blue ribbon means you're coming in first. You're winning. And again, for 2025, we executed on the strategic imperatives in a meaningful way and are really proud of the results, right, that culminated in net member growth, 20.8 million members at the end of 2025, 181 new unit openings, a majority of those domestic, largely franchise domestic. So again, the strategic imperatives were all about culminating in growth.
And just to state a couple of them, so in refining our brand positioning, our brand promise, and pulling it through our marketing, you saw that come to life in our new campaign that we launched last year in Q1 of 2025, had legs through the year, delivered very well for us to the point that we're communicating that brand promise and using the same core campaign, however, with some new creative coming into 2026. So the "We Are All Strong on This Planet" campaign was really resonating with consumers and driving joins.
The format optimization work that we've done. We indicated that by the end of 2025, we'd have about 80% of our estate on some version of an optimized format, so a more balanced complement of strength and cardio, augmenting the amount of the floor dedicated to strength equipment, answering the call for today's consumer while still having a very strong complement of cardio equipment, but thoughtful about what members are utilizing more. So maybe dialing up stair climbers, keeping the complement of treads, maybe a few less ellipticals and A rcs. Member experience has also been at the core of everything we're doing. A proof point of that is that we're seeing of our joins about a mid-30% rejoin rate pretty consistently. So members, if they lapse, they're coming back to Planet Fitness, delivering on that member experience, and also as evidenced in the join numbers as well.
And then the work that Chip and his team have been doing on the build-out and reducing the build cost while at the same time delivering a club format that today's consumer is looking for. So really have executed on a lot of the underpins of the strategic imperatives, which helped us deliver some really strong KPIs for 2025.
Speaking of, the pre-announcement yesterday caught the attention of the market, and you gave some year-end metrics in the announcement. Can you kind of talk to those metrics if they met internal expectations? Just any flavor you can provide on those metrics would be super helpful to the audience.
Yeah, I will. I talked a little bit about momentum. The other thing that we talked about internally, as we were on New Year's Eve in Times Square counting the final openings. So our unit openings number, as many of you know, it's right down to the wire. We tend to have a lot of our club openings in the fourth quarter. We had over 100 clubs open in the fourth quarter this year. We were thrilled. We were thrilled with the 181. We were also thrilled with the comp that we delivered this year and came in at 6.7%. Again, I touched on the 20.8 million members, and we were also delighted. We had a couple of the quarters we were still lapsing or lapping the anniversary Classic Card price increase from 2024.
And we had online member management that we put member management digitally and electronically in the hands of our members at the midyear last year. And with both of those factors, still had very, very strong net member growth and ended at 20.8 million members. So we were delighted.
That's great, so we turn the page on 2025, we get into 2026, and this time of year is a very important time of year for the gym space from a member growth perspective. Any color it can provide at all on just how you should feel or how we should be feeling about January?
So I appreciate you asking the question. You have to ask the question. We're not talking about January just yet. But at the end of the day, what I will say is when I talked about momentum coming off of last year and our confidence in the brand messaging and how that's been delivering, the fact that we were able to take that campaign and just shoot some new creative to put with it, but keep the core campaign coming into 2026, I think is indicative of how we're feeling about that marketing. And the other thing it's done for us is enabled us to put more money toward working media because we didn't have to build a completely new campaign from scratch.
Then you've also seen us over the course of last year, not talking specifically about January, but over the course of last year, we augmented our social team, augmented our digital team. You've seen us more present on social channels, using influencers more. One example of that is in the summer, we launched the High School Summer Pass with influencers. In 2024, we had just shy of three million participants. In 2025, we had 3.7 million participants. That is a massive increase in participation. That, which is telling us that using this influencer strategy is reinforcing our marketing strategic imperatives. One of those is the DCO work that we've talked about, which is the dynamic content optimization . The other is the AI-enabled CRM. Those work streams are underway.
That's great. And from a pricing perspective, we've seen the benefits of the White Card going from $10 to $15. The comps have been pretty strong in the business, a mixture of price growth plus member growth. You've indicated at the analyst day that you are intending to drive up or take up the price on the Black Card from $24.99 to $29.99. But we also have an environment where the consumer seems to be price sensitive, right? So when you think about the price increases on the White Card and now the Black Card , and you've done well with the White Card , what gives you confidence that the Black Card increase will take very well? And do you think you have to enhance the amenities in the business, perhaps the Black Card Spa, to kind of help with that price value equation in the business?
Yeah, let Jay start this one.
Yeah, so Randy, I can speak to that. I mean, as we talked about at Investor Day, we are in the golden age of fitness, right? You can't open up a headline and not see the importance that's being focused around fitness training, movement, and strength training. In addition, Gen Z, right, they grew up with fitness, and it's just part of their daily routine. So when we think about consumer and the way they spend their dollars, we think we are in a good position where they're going to choose to spend those discretionary dollars to maintain fitness and health. It's just part of who they are and what they do. So that's kind of from a consumer lens that we think about it.
And then from other lenses, when we look at the business, obviously, since we've done the Classic Card price increase about 18 months ago, we've seen overall penetration of the Black Card increase. To Q3, it was just north of 66%, so an all-time high. So those are some other metrics that we look at internally that tell us we have the ability to take price. Obviously, the two most used benefits of the Black Card are reciprocity, so use any club and then bring a guest. So to your question, right, we are testing and planning to continue to test new modalities in the Black Card Spa, and we can get into that more later. But the early reads are very strong, and there's some modalities that really resonate with the consumers today and will provide value.
So absolutely, we're going to do that, but we don't think we need to have that as we roll out the Black Card price to $29.99. And at $29.99, we think it's an incredible value with the equipment we offer, with the experience we offer today. And even at that price point, we'll still be below the average and the median of a monthly gym membership on a national basis.
Don't get rid of those tanning beds. I think when you opened, you said 181 units for the year. I believe that was above the high end of expectations. When you think about real estate supply and real estate rent trends, what are they looking like as we head into 2026 from a supply standpoint? And what does rent growth look like or not look like going forward?
Yeah, I think so we've started to see real estate availability easing a bit. Yet we're still not expecting it to be the year of the bumper crop. So we were sub-4 vacancy for what we're looking for, kind of shopping center space. Sub-4 vacancy, that's now 4.3%-4.4%. So vacancies improved a bit. The first two quarters of last year had negative absorption. That was the first time since 2020. Also, first two quarters of last year had rent growth below the rate of inflation. Again, first time since 2020, so a moderation in rent growth. But again, still 4.3%-4.4% vacancy. So what we're doing about it is our real estate team under our Chief Development Officer, Chip, really partnering with our franchisees and also partnering with landlords and brokers so that we do get the first call when space is becoming available.
And there've been a few others that are on a growth trajectory as well, tend to be in kind of the discount space, which is well aligned with our HVLP positioning. There have been some large groceries that have closed, and maybe they're space demising. Maybe an A ldi is going in with a smaller footprint, but that demising space frees up some availability for us. Or even some of the pharmacies have had a 20,000 sq ft footprint that have been opportunities for us. So it's really about being proactive and telling the value proposition of having Planet Fitness as a tenant. When you think about the fact that during COVID, when we had clubs closed for municipal reasons, not one club permanently closed for financial reasons.
The durability of this business and the resilience of this business, the durability of the cash flows should be really attractive to brokers and landlords when you consider there was a JLL study coming into this year that cited 9,900 retail closures for 2025. I've read a few things recently. One, I think it was Colliers that cited close to 15,000 in actuality. So the fact that ours is a very resilient business and the likelihood of lease fulfillment, we should be in the pole position when space is becoming available.
Great. Well, you're the Walmart of the gym space. So when you think about the analyst day at that analyst day, you guided for 6%-7% unit growth over the planning horizon in your outlook, which would, I guess, lead to an accelerating unit opening cadence in 2026 versus 2025 mathematically. So can you give us some perspective on what's the demand looking like from the franchisee community? What are they saying? Where are we going from here?
You want to start with Mel Chamlin?
Absolutely. So I think that ultimately you're asking about the franchisee sentiment, and there's several indicators that it's strong, one of which is the fact that we just opened 181 new clubs. A big part of that, we saw large growth significantly year over year in domestic franchise openings. So we think that's an indicator. I think the vote to shift the 1% from LAF to NAF is an indicator. We see the continued investment in the strength equipment that we started with plate loaded in 2024 and continued to roll out this year with over right around 80% of our system being some form of optimized equipment. So we think that's important as well and are all indicators to the franchisee sentiment.
In addition to the work that we're doing to partner with them from Brian Pomenelli with Chip to continue to focus on the unit economics because we know that's at the heart and the core of the franchisees. And as we showed at Investor Day, right, the top line trends of our new store openings are right in line with our target IRR rate, which is great. And then getting back to the Investor Day openings, right, really, and we're not providing guidance, we'll do that in February, but really no change from that, the 6%-7% unit growth. And if we think about 2026, we talked about that being under 200 and then exceeding 200 in 2027 and 2028.
Just to be clear, as a follow-up, those IRRs are returning back towards getting towards those historical levels. Not quite there yet, but they're coming back pretty nicely.
I would say solidly mid-20s, yeah. Solidly mid-20s.
Not bad.
Absolutely world-class.
Yeah, there are not a lot of places you can put your money and get that kind of a return.
Exactly. So speaking of, let's turn to international markets. One thing that struck me at the Analyst Day was just the amazing metrics put up around, let's say, Spain, for example. And you also talked about, at the Analyst Day, into one to two new markets internationally per year going forward.
The ramp of the first club that opened in Spain. So we had our first club opened in July of 2024. We showed the ramp curve, and the ramp curve on that club was as good as or better than the U.S. and the Mexico ramp curve. So we've seen that our brand resonates internationally. One of the things I love about the fact that we sponsor New Year's Rockin' Eve and have for the last 11 New Year's Eves is it puts our brand on a global stage in a very big way. So I think we've got greater brand awareness in global geographies than maybe we had given ourselves credit for and also a highly differentiated offering in Spain versus the other HVLP product there.
So from a member experience standpoint, the NPS, the Net Promoter Scores in Spain are just off the charts to the point that the survey company went back and did some hand auditing of the surveys because they couldn't believe that the scores were so high. So there's a big opportunity for us internationally. That said, we do want to be thoughtful. We want to go into a market. We're not going to go in and flag plant just so we can lay claim to another market. We're going to go in where we can really have a strong presence, bring the brand to life in a healthy way, and again, want the opportunity to do so with franchise partners. So Spain, we've talked about the fact that we will refranchise Spain. We've actually begun, just initiated a process.
So expect to be able to recycle that capital and bring a great franchise partner into Spain with us to further grow that market. But we've done well in Mexico, done well in Australia, as you know.
And just as a quick follow-up to that, when you think about that, you talked about the baton passing. It almost sounds like going from your balance sheet to a franchise partner in Spain fairly soon. Does it feel like that's the pattern going in a year later to franchise, or how should we just think about that?
Yeah, I think maybe for Spain in particular, building it on our balance sheet was important because it was our first entree into Europe. At the same time, we've gone into other international geographies with great franchise partners, particularly where they've had resources on the ground and really understood those geographies. That's also important. So we would be unafraid to go into a new market with a great franchise partner as well.
Great. So I guess not to bring up 2026 guidance because I know you're not going to give it, but are there any type of high-level puts or takes we should be thinking about as an audience as we think about modeling 2026 at all that we should be considering?
Right. So yeah, Randy, thanks. And I appreciate you recognizing that we're not going to provide guidance or too many straw models right now.
Give us something.
Yeah, but no, and we'll provide that in February. But a few things to think about when we think about 2026, and I'm sure everybody probably has already thought about these things, but just a few puts and takes to consider. From a revenue standpoint, as we think about the shift from LAF to NAF, we're going to have a 1% shift there. So that's going to increase our revenue. It's also going to increase our NAF expenses and have zero flow-through to EBITDA. Largely offsetting that increase in the revenue is going to be a portion of our equipment segment. So 2026 is the first year where under the new growth model, right, we extended the re-equip timelines about one year each for cardio and strength. So 2026 is the first year where we see that.
So a portion of the equipment segment will have a headwind in revenue because of that deferral. And then finally, the next piece I think about is on net income and EPS. Obviously, we've announced publicly we've done the refi and the upsizing. So we will have an impact to interest expense. That should be contemplated, but partially offsetting that will be the benefit of the ASR and buying back those shares. So the average weighted share count will come down.
So can we kind of add on to that and talk about capital allocation and just kind of remind everybody on how you think about that, utilizing your cash flow?
Yeah, absolutely. So capital allocation is a great thing to talk about in such a cash-generative business. And as we talked about at Investor Day, it's really kind of three pillars that we think about. First is investing to grow the business. Second is returning value to the shareholders via buybacks. And then third, maintaining a leveraged profile. And we talk about it in the four-to-six times range. When I think about growth of the business, obviously we are committed to maintaining the capital-light, asset-light model, 90% franchise, 10% corporate. So a lot of our investment is really going into making sure that we can continue to grow and scale the system, whether that's investments in data and analytics and insights or back-office platforms to make sure we can grow and scale, or if it's more member-facing, like things like AI or the app.
Second to that, then, is when we get into corporate clubs. Obviously, we want to make sure they maintain their competitiveness and they will continue to grow to maintain that 10%. So we will invest in the corporate clubs on new clubs as well as opportunistic re-equips and remodels. And so those are really the key elements. The other thing we think about, obviously in our position in the industry, we look at a lot of M&A opportunities. I think it makes sense that a lot of things come across our desk. And so that's something that we will continue to look at and review. And should an opportunity come to us, that's a point where we could operate and lever up a little bit in the top half of that leverage range. So then after all of those things, right, this business still generates a lot of cash.
We've demonstrated our ability and willingness to return that value to the shareholders via buybacks. We did the ASR that we announced for $350 million. Then prior to that, during this year, we invested $150 million in buybacks prior to that ASR. A sizable return of capital to the shareholders, and that's something that we would continue to do.
So Colleen, we have about a minute left, and I just want to kind of wrap it all up together. The way you've opened up the conversation is you used the word momentum. Jay used the words golden age of fitness. So as kind of we depart over the next 60 seconds here, what do you want the audience to kind of take away the most of what keeps you really energized and excited about the business over the next two to three to four to five years from now?
Yeah, over long term. So I think we talked about the momentum. I think the bigger thing is the fact that consumers today are more fitness-minded and fitness-aware than ever before. I think years ago we used to talk at Planet Fitness about the 80% that were on the couch. Today, I think we're talking about the 70% that are more fitness-aware than ever before. I was meeting last week with a major tech company, and that major tech company shared the statistic that 30% of Americans are wearing some type of a wearable that helps them monitor their fitness, their health, or their well-being. So whether it's a Fitbit or whether it's an Apple Watch, and they're looking at their Apple Watch to tell them that they need to stand up and stretch or they're counting their steps every day, we truly are in the golden age of fitness.
And when I think about that and the fact that Planet Fitness is the most welcoming, No Gymtimidation environment for people who are looking to embark on a fitness journey, I think we're perfectly situated to answer that call. And oh, by the way, we're getting a bit of a cool factor with the younger generation, and we're seeing Gen Zs join at an incredible rate, witness the roughly 30% lift in high school summer pass participation. I feel like we're perfectly situated to continue on a really, really strong growth trajectory.
It's really well put, Colleen, Jay. Thank you. Audience, thank you. Thanks very much.