Inclusive gym franchise company (NYSE: PLNT) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 11.5% year on year to $276.7 million. Its non-GAAP profit of $0.59 per share was 4.1% below analysts’ consensus estimates.

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"We ended the first quarter with approximately 20.6 million members, an increase of approximately 900,000 from the end of 2024, and we grew system-wide same club sales by 6.1 percent," 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.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Planet Fitness grew its sales at a 12.6% 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.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Planet Fitness’s recent performance shows its demand has slowed as its annualized revenue growth of 11.6% over the last two years was below its five-year trend. 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 6.4% 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’s revenue grew by 11.5% year on year to $276.7 million but fell short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 10.7% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not catalyze better top-line performance yet.

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Operating Margin

Planet Fitness’s operating margin has been trending up over the last 12 months and averaged 27% over the last two years. On top of that, its profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.

In Q1, Planet Fitness generated an operating profit margin of 28.6%, up 2.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Planet Fitness’s solid 13.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

In Q1, Planet Fitness reported EPS at $0.59, up from $0.53 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Planet Fitness’s full-year EPS of $2.64 to grow 14.3%.

Key Takeaways from Planet Fitness’s Q1 Results

It was good to see Planet Fitness narrowly top analysts’ same-store sales expectations this quarter. On the other hand, its revenue, EPS, and EBITDA missed. Overall, this quarter could have been better. The stock traded down 2.2% to $99.50 immediately after reporting.

Planet Fitness’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.