WEBVTT - Planet Fitness CEO Colleen Keating Talks Earnings

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<v Speaker 1>Bloomberg Audio Studios, Podcasts Radio News got now for our

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<v Speaker 1>socc at the Hour taking a look at Shares a

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<v Speaker 1>Planet business. They've been under pressure all day long, the

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<v Speaker 1>biggest drop going back to twenty twenty three. Fourth quarter

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<v Speaker 1>results for the company actually did come in above estimates

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<v Speaker 1>both on a revenue basis and on the bottom line,

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<v Speaker 1>but the forecast that the company gave going forward here

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<v Speaker 1>implies maybe slightly below what the street was looking for.

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<v Speaker 1>Joining us right now to talk about the health of

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<v Speaker 1>the business and where it goes next is Colleen King.

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<v Speaker 1>She's a CEO over at Planet Fitness. All right, Colleen,

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<v Speaker 1>I got to start with the forecast here because that

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<v Speaker 1>seems to be what the market's reacting to. The EBODOC

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<v Speaker 1>growth number, about ten percent growth on an adjusted basis,

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<v Speaker 1>but that's below what the street was expecting. There seemed

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<v Speaker 1>to be this expectation that with some of the pricing

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<v Speaker 1>changes that you've made, the rollout of the black card program,

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<v Speaker 1>that we would maybe see a little bit more meaningful

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<v Speaker 1>growth on the bottom line.

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<v Speaker 2>What's going on, well, Remaine, we landed a very strong

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<v Speaker 2>twenty twenty five and think that's much reflective of the

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<v Speaker 2>momentum in the business and evidence that our strategic comparatives

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<v Speaker 2>are delivering. You know, our first imperative was our brand

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<v Speaker 2>promise and pulling it through our marketing, and that resulted

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<v Speaker 2>in one point one million net new members for twenty

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<v Speaker 2>twenty five, a ten percent lift versus the prior year,

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<v Speaker 2>and that was on top of a fifty percent lift

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<v Speaker 2>in our entry price point, the classic price point from

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<v Speaker 2>ten dollars to fifteen dollars for the full year twenty

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<v Speaker 2>twenty five. From a member experience standpoint, we're seeing members

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<v Speaker 2>utilizing our clubs more frequently. Utilization is up, as is

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<v Speaker 2>the percentage of members who are rejoining. We're seeing a

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<v Speaker 2>mid thirty percent rejoin rate. Our format optimization is resonating.

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<v Speaker 2>We finished the year with eighty percent or nearly eighty

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<v Speaker 2>percent of our estate with some version of an optimized

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<v Speaker 2>format and new equipment package, and all of this culminates

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<v Speaker 2>in growth, and we had our highest fourth quarter unit

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<v Speaker 2>openings number in the history of the company in the

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<v Speaker 2>fourth quarter of twenty twenty five and finished the year

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<v Speaker 2>with one hundred and eighty one units. So strong, strong growth,

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<v Speaker 2>and we remain confident in the three year Kaiger that

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<v Speaker 2>we outlined at our investor a day in November, So

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<v Speaker 2>you know, strong momentum.

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<v Speaker 1>Well, that's what I'm curious about. I mean, you're obviously

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<v Speaker 1>going through a bit of a transition here, kind of

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<v Speaker 1>reimagining the space of what meaning the physical space and

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<v Speaker 1>just really the ethos of what planet Fitness is. I

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<v Speaker 1>assume there are costs associated with that. Are those costs

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<v Speaker 1>permanent or is this just kind of a temporary thing

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<v Speaker 1>with regards to the revamping of the locations in any

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<v Speaker 1>marketing costs associated with it.

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<v Speaker 2>Yeah. One of the beautiful things about our model is

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<v Speaker 2>its high efficiency, and our franchisees have invested, have made

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<v Speaker 2>the investments in the equipment packages to optimize the format.

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<v Speaker 2>That said, one of the things that we rolled out

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<v Speaker 2>in twenty twenty four was our new growth model, and

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<v Speaker 2>this was to help our franchisees with their unit economics

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<v Speaker 2>and their IRRs. That is one of the things that's

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<v Speaker 2>influencing our guidance for twenty twenty six. This is the

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<v Speaker 2>first year we'll see a little bit of a push

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<v Speaker 2>out in equipment in equipment revenue. That was intentional and

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<v Speaker 2>again that was anticipated in the three year projections that

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<v Speaker 2>we rolled out.

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<v Speaker 3>Now, Colleen, I also want to dig into your membership

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<v Speaker 3>growth a little bit. You did mention an uplift there

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<v Speaker 3>twenty million use more than twenty million members at the moment.

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<v Speaker 3>Where do you think the next leg of membership growth

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<v Speaker 3>comes from? Is it a matter of improving the pricing

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<v Speaker 3>or perhaps finding you customer segments to penetrate, maybe adding

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<v Speaker 3>more units.

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<v Speaker 2>So a couple of things. So we finished at twenty

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<v Speaker 2>point eight million members or nearly twenty one million members,

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<v Speaker 2>and our you know, our reach is on paralleled. We

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<v Speaker 2>have a club within twelve minutes of one hundred and

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<v Speaker 2>seventy million of the US population. And at the same time,

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<v Speaker 2>we are in the golden age of fitness. I mean,

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<v Speaker 2>you can't open a news feed without reading about the

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<v Speaker 2>importance of fitness and wellness and how it contributes to

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<v Speaker 2>mental health as well. So interest in interest in working

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<v Speaker 2>out and fitness and wellness has never been higher. We

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<v Speaker 2>know that there are about fifty to sixty million people

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<v Speaker 2>adults in the US are that think about a gym

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<v Speaker 2>membership and express a willingness to pay. And there are

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<v Speaker 2>also about fifty to sixty million people in the US

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<v Speaker 2>who who have a gym membership. Who you know are

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<v Speaker 2>in the tam that that you know we could convert

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<v Speaker 2>to Planet Fitness as well. So a tremendous opportunity to

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<v Speaker 2>continue growing membership.

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<v Speaker 1>Calling only about a minute left. But I am curious

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<v Speaker 1>as to who you're positioning yourself against. You're like, who

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<v Speaker 1>are your competitors? Are you going up against the big

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<v Speaker 1>global jams, the boutique kind of fitness craze that's popped up.

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<v Speaker 2>Who we you know? We are solidly the industry leader

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<v Speaker 2>in the high value, low price space at a very

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<v Speaker 2>approachable price point. We democratized access to fitness while bringing

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<v Speaker 2>to bear a great offering of top shelf equipment. And

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<v Speaker 2>what makes us unique is that we have a judgment free,

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<v Speaker 2>no you know, no gym timidation environment that's welcoming to

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<v Speaker 2>all fitness levels.

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<v Speaker 1>All right, Colleen, I have to leave it there. I

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<v Speaker 1>really appreciate you joining us today, Colleen getting CEO over

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<v Speaker 1>aad Planet Fitness