Inclusive gym franchise company (NYSE:PLNT) announced better-than-expected revenue in Q4 CY2024, with sales up 19.4% year on year to $340.5 million. Its non-GAAP profit of $0.70 per share was 13.4% above analysts’ consensus estimates.
Is now the time to buy Planet Fitness? Find out by accessing our full research report, it’s free.
Planet Fitness (PLNT) Q4 CY2024 Highlights:
- Revenue: $340.5 million vs analyst estimates of $324.4 million (19.4% year-on-year growth, 4.9% beat)
- Adjusted EPS: $0.70 vs analyst estimates of $0.62 (13.4% beat)
- Adjusted EBITDA: $130.8 million vs analyst estimates of $119.2 million (38.4% margin, 9.8% beat)
- 2025 Guidance: 5-6% same-store sales growth (miss vs expectations of 6.2% growth)
- Operating Margin: 26.4%, up from 25% in the same quarter last year
- Free Cash Flow Margin: 2.1%, down from 4.2% in the same quarter last year
- Same-Store Sales rose 5.5% year on year (7.7% in the same quarter last year)
- Market Capitalization: $8.35 billion
"We had strong results in 2024 and closed out the year with 19.7 million members, posting revenue growth of more than 10% and growing Adjusted EBITDA by approximately 12%," said Colleen Keating, Chief Executive Officer.
Company Overview
Founded by two brothers who purchased a struggling gym, Planet Fitness (NYSE:PLNT) is a gym franchise that caters to casual fitness users by providing a friendly and inclusive atmosphere.
Leisure Facilities
Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Over the last five years, Planet Fitness grew its sales at a 11.4% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Planet Fitness’s annualized revenue growth of 12.3% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. Note that COVID hurt Planet Fitness’s business in 2020 and part of 2021, and it bounced back in a big way thereafter. 
We can better understand the company’s revenue dynamics by analyzing its same-store sales, which show how much revenue its established locations generate. Over the last two years, Planet Fitness’s same-store sales averaged 6.9% year-on-year growth. Because this number is lower than its revenue growth, we can see the opening of new locations is boosting the company’s top-line performance. 
This quarter, Planet Fitness reported year-on-year revenue growth of 19.4%, and its $340.5 million of revenue exceeded Wall Street’s estimates by 4.9%.
Looking ahead, sell-side analysts expect revenue to grow 8.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Planet Fitness has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 17% over the last two years, quite impressive for a consumer discretionary business.
Planet Fitness’s free cash flow clocked in at $7.04 million in Q4, equivalent to a 2.1% margin. The company’s cash profitability regressed as it was 2.1 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.
Over the next year, analysts predict Planet Fitness’s cash conversion will slightly improve. Their consensus estimates imply its free cash flow margin of 16% for the last 12 months will increase to 17.2%, it options for capital deployment (investments, share buybacks, etc.).
Key Takeaways from Planet Fitness’s Q4 Results
We enjoyed seeing Planet Fitness beat analysts’ revenue expectations this quarter. However, 2025 same-store sales guidance missed, and this is weighing on the stock. Shares traded down 2.6% to $96.91 immediately following the results.
So do we think Planet Fitness is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.