PLNT 10-Q Quarterly Report Sept. 30, 2023 | Alphaminr
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PLNT 10-Q Quarter ended Sept. 30, 2023

Balance Sheet
Cash Flow
Income Statement
Debt
PLANET FITNESS, INC.
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PROXIES
DEF 14A
Filed on March 26, 2025
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Filed on Dec. 31, 2024
DEF 14A
Filed on March 21, 2024
DEF 14A
Filed on Dec. 31, 2023
DEF 14A
Filed on March 22, 2023
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Filed on March 22, 2022
DEF 14A
Filed on Dec. 31, 2021
DEF 14A
Filed on March 19, 2021
DEF 14A
Filed on March 20, 2020
DEF 14A
Filed on March 19, 2019
DEF 14A
Filed on March 22, 2018
DEF 14A
Filed on March 30, 2017
DEF 14A
Filed on April 5, 2016
plnt-20230930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to ______________
Commission file number: 001-37534
PLANET FITNESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 38-3942097
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
4 Liberty Lane West , Hampton , NH 03842
(Address of Principal Executive Offices and Zip Code)
( 603 ) 750-0001
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A common stock, $0.0001 Par Value PLNT New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ☐ No ☒
As of November 2, 2023 there were 85,438,502 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 2,708,410 shares of the Registrant’s Class B Common Stock, par value $0.0001 per share, outstanding.



PLANET FITNESS, INC.
TABLE OF CONTENTS
Page
2

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:
• future financial position;
• business strategy;
• budgets, projected costs and plans;
• future industry growth;
• financing sources;
• potential return of capital initiatives;
• the impact of litigation, government inquiries and investigations; and
• all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with the following:
• Our success depends substantially on the value of our brand, which could be materially and adversely affected by the high level of competition in the health and fitness industry, our ability to anticipate and satisfy consumer preferences, shifting views of health and fitness and our ability to obtain and retain high-profile strategic partnership arrangements.
• Our and our franchisees’ stores may be unable to attract and retain members, which would materially and adversely affect our business, results of operations and financial condition.
• Our intellectual property rights, including trademarks, trade names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.
• We and our franchisees rely heavily on information systems, including the use of email marketing, mobile application and social media, and any material failure, interruption or weakness may prevent us from effectively operating our business, damage our reputation or subject us to potential fines or other penalties.
• If we fail to properly maintain the confidentiality and integrity of our data, including member credit card, debit card, bank account information and other personally identifiable information, our reputation and business could be materially and adversely affected.
• The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information, and/or damage to our employee and business relationships and reputation, all of which could harm our brand and our business.
• If we fail to successfully implement our growth strategy, which includes new store development by existing and new franchisees, our ability to increase our revenues and operating profits could be adversely affected.
• Our planned growth and changes in the industry could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.
• If we cannot retain our key employees and hire additional highly qualified employees, we may not be able to successfully manage our businesses and pursue our strategic objectives.
• Economic, political and other risks associated with our international operations could adversely affect our profitability and international growth prospects.
• Our financial results are affected by the operating and financial results of our relationships with and actions taken by our franchisees.
• We are subject to a variety of additional risks associated with our franchisees, such as potential franchisee bankruptcies, franchisee changes in control, franchisee turnover, rising costs related to construction of new stores and maintenance of existing stores, including rising costs due to inflation and supply chain disruptions, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.
• We and our franchisees could be subject to claims related to health and safety risks to members that arise while at both our corporate-owned and franchise stores.
3

• Our business is subject to various laws and regulations including, among others, those governing indoor tanning, electronic funds transfer, ACH, credit card, debit card, digital payment options, auto-renewal contracts, membership cancellation rights and consumer protection more generally, and changes in such laws and regulations, failure to comply with existing or future laws and regulations or failure to adjust to consumer sentiment regarding these matters, could harm our reputation and adversely affect our business.
• We are subject to risks associated with leasing property subject to long-term non-cancelable leases.
• If we and our franchisees are unable to identify and secure suitable sites for new franchise stores, our revenue growth rate and profits may be negatively impacted.
• Opening new stores in close proximity may negatively impact our existing stores’ revenues and profitability.
• Our franchisees may incur rising costs related to construction of new stores and maintenance of existing stores, including rising costs due to inflation, supply chain disruptions and other market conditions, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.
• Our dependence on a limited number of suppliers for equipment and certain products and services could result in disruptions to our business and could adversely affect our revenues and gross profit.
• The other factors identified under the heading “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission.
The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.
4
PART I-FINANCIAL INFORMATION
1. Financial Statements
Planet Fitness, Inc. and subsidiaries
Condensed consolidated balance sheets (Unaudited)
(Amounts in thousands, except per share amounts)
September 30, 2023 December 31, 2022
Assets
Current assets:
Cash and cash equivalents $ 308,970 $ 409,840
Restricted cash 46,381 62,659
Short-term marketable securities 108,460 —
Accounts receivable, net of allowances for uncollectible amounts of $ 0 and $ 0 as of
September 30, 2023 and December 31, 2022, respectively
36,362 46,242
Inventory 7,536 5,266
Prepaid expenses 18,073 11,078
Other receivables 8,678 14,975
Income tax receivables 5,659 5,471
Total current assets 540,119 555,531
Long-term marketable securities 10,252 —
Property and equipment, net of accumulated depreciation of $ 296,677 and $ 227,869 as of
September 30, 2023 and December 31, 2022, respectively
366,780 348,820
Investments, net of allowances for expected credit losses of $ 14,951 and $ 14,957
as of September 30, 2023 and December 31, 2022, respectively
46,037 25,122
Right-of-use assets, net 381,819 346,937
Intangible assets, net 385,462 417,067
Goodwill 717,502 702,690
Deferred income taxes 492,965 454,565
Other assets, net 3,911 3,857
Total assets $ 2,944,847 $ 2,854,589
Liabilities and stockholders’ deficit
Current liabilities:
Current maturities of long-term debt $ 20,750 $ 20,750
Accounts payable 28,364 20,578
Accrued expenses 56,430 66,993
Equipment deposits 13,933 8,443
Restricted liabilities – national advertising fund 805 —
Deferred revenue, current 64,352 53,759
Payable pursuant to tax benefit arrangements, current 38,193 31,940
Other current liabilities 50,019 42,067
Total current liabilities 272,846 244,530
Long-term debt, net of current maturities 1,966,682 1,978,131
Lease liabilities, net of current portion 379,810 341,843
Deferred revenue, net of current portion 32,670 33,152
Deferred tax liabilities 1,397 1,471
Payable pursuant to tax benefit arrangements, net of current portion 451,569 462,525
Other liabilities 4,803 4,498
Total noncurrent liabilities 2,836,931 2,821,620
Commitments and contingencies (Note 14)
Stockholders’ equity (deficit):
Class A common stock, $ .0001 par value - 300,000 authorized, 85,410 and 83,430 shares issued and
outstanding as of September 30, 2023 and December 31, 2022, respectively
9 8
Class B common stock, $ .0001 par value - 100,000 authorized, 2,733 and 6,146 shares issued and
outstanding as of September 30, 2023 and December 31, 2022, respectively
— 1
Accumulated other comprehensive loss ( 684 ) ( 448 )
Additional paid in capital 570,397 505,144
Accumulated deficit ( 726,800 ) ( 703,717 )
Total stockholders’ deficit attributable to Planet Fitness Inc. ( 157,078 ) ( 199,012 )
Non-controlling interests ( 7,852 ) ( 12,549 )
Total stockholders’ deficit ( 164,930 ) ( 211,561 )
Total liabilities and stockholders’ deficit $ 2,944,847 $ 2,854,589
See accompanying notes to condensed consolidated financial statements
5
Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of operations (Unaudited)
(Amounts in thousands, except per share amounts)
For the three months ended
September 30, 		For the nine months ended
September 30,
2023 2022 2023 2022
Revenue:
Franchise $ 80,587 $ 66,168 $ 237,313 $ 200,243
National advertising fund revenue 17,578 14,578 52,378 43,130
Corporate-owned stores 113,245 101,330 332,885 278,940
Equipment 66,141 62,310 163,664 133,191
Total revenue 277,551 244,386 786,240 655,504
Operating costs and expenses:
Cost of revenue 53,751 48,531 132,561 103,436
Store operations 63,120 57,892 188,011 161,789
Selling, general and administrative 33,290 27,148 93,705 86,176
National advertising fund expense 17,618 17,009 52,496 50,445
Depreciation and amortization 37,477 32,572 110,254 90,427
Other (gains) losses, net ( 56 ) ( 700 ) 7,705 ( 2,452 )
Total operating costs and expenses 205,200 182,452 584,732 489,821
Income from operations 72,351 61,934 201,508 165,683
Other expense, net:
Interest income 4,245 1,561 12,339 2,244
Interest expense ( 21,704 ) ( 21,917 ) ( 64,771 ) ( 66,527 )
Other income, net 148 4,762 631 9,000
Total other expense, net ( 17,311 ) ( 15,594 ) ( 51,801 ) ( 55,283 )
Income before income taxes 55,040 46,340 149,707 110,400
Equity losses of unconsolidated entities, net of tax ( 242 ) ( 2 ) ( 580 ) ( 334 )
Provision for income taxes 13,474 15,661 38,855 35,942
Net income 41,324 30,677 110,272 74,124
Less net income attributable to non-controlling interests 2,190 3,764 7,299 8,405
Net income attributable to Planet Fitness, Inc. $ 39,134 $ 26,913 102,973 $ 65,719
Net income per share of Class A common stock:
Basic $ 0.46 $ 0.32 $ 1.22 $ 0.78
Diluted $ 0.46 $ 0.32 $ 1.21 $ 0.78
Weighted-average shares of Class A common stock outstanding:
Basic 84,610 84,156 84,558 84,377
Diluted 84,886 84,547 84,870 84,798
See accompanying notes to condensed consolidated financial statements.
6
Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of comprehensive income (Unaudited)
(Amounts in thousands)
For the three months ended
September 30, 		For the nine months ended
September 30,
2023 2022 2023 2022
Net income including non-controlling interests $ 41,324 $ 30,677 $ 110,272 $ 74,124
Other comprehensive (loss) income, net:
Foreign currency translation adjustments ( 393 ) ( 516 ) 17 ( 638 )
Change in unrealized gain (loss) on marketable securities, net of tax 42 — ( 253 ) —
Total other comprehensive (loss) income, net ( 351 ) ( 516 ) ( 236 ) ( 638 )
Total comprehensive income including non-controlling interests 40,973 30,161 110,036 73,486
Less: total comprehensive income attributable to non-controlling interests 2,190 3,764 7,299 8,405
Total comprehensive income attributable to Planet Fitness, Inc. $ 38,783 $ 26,397 $ 102,737 $ 65,081
See accompanying notes to condensed consolidated financial statements.
7
Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of cash flows (Unaudited)
(Amounts in thousands)
For the nine months ended September 30,
2023 2022
Cash flows from operating activities:
Net income $ 110,272 $ 74,124
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 110,254 90,427
Amortization of deferred financing costs 4,114 4,129
Write-off of deferred financing costs — 1,583
Accretion of marketable securities discount ( 2,224 ) —
Dividends accrued on investment ( 1,490 ) ( 1,391 )
Deferred tax expense 34,884 35,026
Equity losses of unconsolidated entities, net of tax 580 334
Gain on adjustment of allowance for credit losses on held-to-maturity investment ( 6 ) ( 1,572 )
Gain on re-measurement of tax benefit arrangement — ( 8,381 )
Loss on reacquired franchise rights 110 1,160
Gain on sale of corporate-owned stores — ( 1,324 )
Equity-based compensation 6,326 6,942
Other 133 267
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable 10,086 ( 7,477 )
Inventory ( 2,270 ) ( 3,071 )
Other assets and other current assets ( 1,722 ) ( 567 )
Restricted liabilities (assets) - national advertising fund 805 ( 1,773 )
Accounts payable and accrued expenses ( 7,488 ) ( 22,521 )
Other liabilities and other current liabilities 6,855 1,728
Income taxes ( 104 ) ( 2,111 )
Payable pursuant to tax benefit arrangements ( 21,780 ) ( 14,211 )
Equipment deposits 5,495 26,049
Deferred revenue 9,428 11,506
Leases 4,662 1,550
Net cash provided by operating activities 266,920 190,426
Cash flows from investing activities:
Additions to property and equipment ( 84,636 ) ( 65,138 )
Acquisition of franchisees, net of cash acquired ( 26,264 ) ( 424,940 )
Proceeds from sale of corporate-owned stores — 20,820
Proceeds from sale of property and equipment 2 60
Purchases of marketable securities ( 155,007 ) —
Maturities of marketable securities 37,990 —
Other investments ( 20,000 ) —
Net cash used in investing activities ( 247,915 ) ( 469,198 )
Cash flows from financing activities:
Principal payments on capital lease obligations ( 152 ) ( 207 )
Proceeds from issuance of long-term debt — 900,000
Proceeds from issuance of Variable Funding Notes — 75,000
Repayment of long-term debt and Variable Funding Notes ( 15,563 ) ( 719,625 )
Payment of financing and other debt-related costs — ( 15,951 )
Proceeds from issuance of Class A common stock 8,575 779
Repurchase and retirement of Class A common stock ( 125,030 ) ( 94,314 )
Distributions paid to members of Pla-Fit Holdings ( 4,216 ) ( 2,945 )
Net cash (used in) provided by financing activities ( 136,386 ) 142,737
Effects of exchange rate changes on cash and cash equivalents 233 ( 729 )
Net decrease in cash, cash equivalents and restricted cash ( 117,148 ) ( 136,764 )
Cash, cash equivalents and restricted cash, beginning of period 472,499 603,941
Cash, cash equivalents and restricted cash, end of period $ 355,351 $ 467,177
Supplemental cash flow information:
Net cash paid for income taxes $ 4,394 $ 3,072
Cash paid for interest $ 60,964 $ 60,535
Non-cash investing & financing activities:
Non-cash additions to property and equipment $ 20,590 $ 11,566
Accrued taxes on share repurchases $ 1,048 $ —
Fair value of common stock issued as consideration for acquisition $ — $ 393,730
See accompanying notes to condensed consolidated financial statements.
8
Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of changes in equity (deficit) (Unaudited)
(Amounts in thousands)
Class A
common stock 		Class B
common stock 		Accumulated
other
comprehensive loss 		Additional paid-
in capital 		Accumulated
deficit 		Non-controlling
interests 		Total (deficit)
equity
Shares Amount Shares Amount
Balance at December 31, 2022 83,430 $ 8 6,146 $ 1 $ ( 448 ) $ 505,144 $ ( 703,717 ) $ ( 12,549 ) $ ( 211,561 )
Net income — — — — — — 102,973 7,299 110,272
Equity-based compensation expense — — — — — 6,326 — — 6,326
Exchanges of Class B common stock and other adjustments 3,413 1 ( 3,413 ) ( 1 ) — ( 9,096 ) — 9,096 —
Repurchase and retirement of Class A common stock ( 1,699 ) — — — — 3,117 ( 126,078 ) ( 3,117 ) ( 126,078 )
Exercise of stock options, vesting of restricted share units and ESPP share purchase 266 — — — — 8,611 — — 8,611
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments — — — — — 56,295 — — 56,295
Non-cash adjustments to VIEs — — — — — — — ( 389 ) ( 389 )
Deconsolidation of VIEs — — — — — — 22 ( 3,976 ) ( 3,954 )
Distributions paid to members of Pla-Fit Holdings — — — — — — — ( 4,216 ) ( 4,216 )
Other comprehensive loss — — — — ( 236 ) — — — ( 236 )
Balance at September 30, 2023 85,410 $ 9 2,733 $ — $ ( 684 ) $ 570,397 $ ( 726,800 ) $ ( 7,852 ) $ ( 164,930 )

Class A
common stock 		Class B
common stock 		Accumulated
other
comprehensive income (loss) 		Additional paid-
in capital 		Accumulated
deficit 		Non-controlling
interests 		Total (deficit)
equity
Shares Amount Shares Amount
Balance at December 31, 2021 83,804 $ 8 3,056 $ 1 $ 12 $ 63,428 $ ( 708,804 ) $ 2,510 $ ( 642,845 )
Net income — — — — — — 65,719 8,405 74,124
Equity-based compensation expense
— — — — — 6,942 — — 6,942
Exchanges of Class B common stock and other adjustments 548 — ( 548 ) — — 22,534 — ( 22,534 ) —
Repurchase and retirement of Class A common stock ( 1,528 ) — — — — 6,426 ( 94,314 ) ( 6,426 ) ( 94,314 )
Exercise of stock options, vesting of restricted share units and ESPP share purchase
73 — — — — 998 — — 998
Issuance of common stock for acquisition 517 — 3,638 — — 416,509 — ( 22,779 ) 393,730
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments — — — — — 17,528 — — 17,528
Non-cash adjustments to VIEs
— — — — — — — ( 686 ) ( 686 )
Distributions paid to members of Pla-Fit Holdings
— — — — — — — ( 2,945 ) ( 2,945 )
Other comprehensive loss — — — — ( 638 ) — — — ( 638 )
Balance at September 30, 2022 83,414 $ 8 6,146 $ 1 $ ( 626 ) $ 534,365 $ ( 737,399 ) $ ( 44,455 ) $ ( 248,106 )





9
Class A
common stock 		Class B
common stock 		Accumulated
other
comprehensive
loss 		Additional paid-
in capital 		Accumulated
deficit 		Non-controlling
interests 		Total (deficit)
equity
Shares Amount Shares Amount
Balance at June 30, 2023 83,980 $ 9 4,151 $ — $ ( 333 ) $ 564,170 $ ( 765,815 ) $ ( 13,992 ) $ ( 215,961 )
Net income — — — — — — 39,134 2,190 41,324
Equity-based compensation expense — — — — — 1,533 — — 1,533
Exchanges of Class B common stock 1,418 — ( 1,418 ) — — ( 4,430 ) — 4,430 —
Exercise of stock options, vesting of restricted share units and ESPP share purchase 12 — — — — 591 — — 591
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock — — — — — 8,533 — — 8,533
Deconsolidation of VIEs — — — — — — ( 119 ) — ( 119 )
Distributions paid to members of Pla-Fit Holdings — — — — — — — ( 480 ) ( 480 )
Other comprehensive loss — — — — ( 351 ) — — — ( 351 )
Balance at September 30, 2023 85,410 $ 9 2,733 $ — $ ( 684 ) $ 570,397 $ ( 726,800 ) $ ( 7,852 ) $ ( 164,930 )


Class A
common stock 		Class B
common stock 		Accumulated
other
comprehensive
loss 		Additional paid-
in capital 		Accumulated
deficit 		Non-controlling
interests 		Total (deficit)
equity
Shares Amount Shares Amount
Balance at June 30, 2022 84,230 $ 8 6,146 $ 1 $ ( 110 ) $ 529,026 $ ( 714,297 ) $ ( 43,636 ) $ ( 229,008 )
Net income — — — — — — 26,913 3,764 30,677
Equity-based compensation expense — — — — — 1,341 — — 1,341
Repurchase and retirement of Class A common stock ( 831 ) — — — — 3,432 ( 50,015 ) ( 3,432 ) ( 50,015 )
Exercise of stock options, vesting of restricted share units and ESPP share purchase 15 — — — — 624 — — 624
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments — — — — — ( 58 ) — — ( 58 )
Non-cash adjustments to VIEs — — — — — — — ( 229 ) ( 229 )
Distributions paid to members of Pla-Fit Holdings — — — — — — — ( 922 ) ( 922 )
Other comprehensive loss — — — — ( 516 ) — — — ( 516 )
Balance at September 30, 2022 83,414 $ 8 6,146 $ 1 $ ( 626 ) $ 534,365 $ ( 737,399 ) $ ( 44,455 ) $ ( 248,106 )

See accompanying notes to condensed consolidated financial statements.
10
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)


(1) Business organization
Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with more than 18.5 million members and 2,498 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia as of September 30, 2023.
The Company serves as the reporting entity for its various subsidiaries that operate three distinct lines of business:
• Licensing and selling franchises under the Planet Fitness trade name;
• Owning and operating fitness centers under the Planet Fitness trade name; and
• Selling fitness-related equipment to franchisee-owned stores.
In 2012 investment funds affiliated with TSG Consumer Partners, LLC (“TSG”), purchased interests in Pla-Fit Holdings.
The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”) and related transactions in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries (“Pla-Fit Holdings”). As of August 5, 2015, in connection with the recapitalization transactions, the Company became the sole managing member and holder of 100 % of the voting power of Pla-Fit Holdings. Pla-Fit Holdings owns 100 % of Planet Intermediate, LLC, which has no operations but is the 100 % owner of Planet Fitness Holdings, LLC, a franchisor and operator of fitness centers. With respect to the Company, Pla-Fit Holdings and Planet Intermediate, LLC, each entity owns nothing other than the respective entity below it in the corporate structure and each entity has no other material operations.
The Company is a holding company whose principal asset is a controlling equity interest in the membership units (“Holdings Units”) in Pla-Fit Holdings. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings’ financial results and reports a non-controlling interest related to the portion of Holdings Units not owned by the Company.
As of September 30, 2023, the Company held 100.0 % of the voting interest and approximately 96.9 % of the economic interest in Pla-Fit Holdings and the owners of Holdings Units other than the Company (the “Continuing LLC Owners”) held the remaining 3.1 % economic interest in Pla-Fit Holdings. As future exchanges of Holdings Units occur, the economic interest in Pla-Fit Holdings held by Planet Fitness, Inc. will increase.

(2) Summary of significant accounting policies
(a) Basis of presentation and consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023 and 2022 are unaudited. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) filed with the SEC on March 1, 2023, as amended on March 2, 2023. The Company’s significant interim accounting policies include the proportional recognition of national advertising fund expenses within interim periods. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.
11
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(b) Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of equity-based compensation awards, valuation of assets and liabilities acquired in business combinations, valuation of certain investments and other financial instruments including valuation of investments without readily determinable fair values, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, allowance for expected credit losses, contingent liabilities, the present value of lease liabilities, income taxes, including deferred tax assets and liabilities, and the liability for the Company’s tax benefit arrangements.
(c) Marketable securities
Marketable securities primarily consist of commercial paper, corporate debt securities, U.S. treasury securities, and U.S. government agency securities. We classify our marketable securities as available-for-sale at the time of purchase and reevaluate such classification at each balance sheet date. We may sell these securities at any time for use in current operations even if they have not yet reached maturity. The Company invests in a diversified portfolio of marketable securities and limits the concentration of its investment in any particular security. Securities with maturities greater than three months, but less than one year, are included in current assets and securities with maturities greater than one year are included within investments in non-current assets on the consolidated balance sheets. All marketable securities classified as available-for-sale are reported at fair value.
If the estimated fair value of an available-for-sale debt security is below its amortized cost basis, then the Company evaluates the security for impairment. The Company considers its intent to sell the security or whether it is more likely than not that it will be required to sell the security before recovery of its amortized basis. If either of these criteria are met, the debt security’s amortized cost basis is written down to fair value through other income (expense), net in the consolidated statements of operations. If neither of these criteria are met, the Company evaluates whether unrealized losses have resulted from a credit loss or other factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency, any adverse conditions specifically related to the security, as well as other factors. An impairment relating to credit losses is recorded through an allowance for credit losses reported in other income (expense), net in the consolidated statements of operations. The allowance is limited by the amount that the fair value of the debt security is below its amortized cost basis. When a credit loss exists, the Company compares the present value of cash flows expected to be collected from the debt security with the amortized cost basis of the security to determine what allowance amount, if any, should be recorded. Unrealized gains or losses not resulting from credit losses are recorded through accumulated other comprehensive income (loss). Realized gains and losses from the sale of marketable securities are determined based on the specific identification method. Realized gains and losses are reported in other income (expense), net in the consolidated statements of operations. Interest income from marketable securities is recognized as earned within the condensed consolidated statement of operations.
(d) Fair value
ASC 820, Fair Value Measurements and Disclosures , establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
12
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

The fair value measurements and levels of marketable securities are included in Note 3.
The carrying value and estimated fair value of certain liabilities as of September 30, 2023 and December 31, 2022 were as follows:
September 30, 2023 December 31, 2022
Carrying value Estimated fair value Carrying value Estimated fair value
Liabilities
Long-term debt (1)
$ 2,009,625 $ 1,763,500 $ 2,025,188 $ 1,730,634
(1) The estimated fair value of the Company’s fixed rate long-term debt is estimated primarily based on current bid prices for the long-term debt. Judgment is required to develop these estimates. As such, the fair value of long-term debt is classified within Level 2, as defined under U.S. GAAP.
(e) Recent accounting pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on the Company’s financial position or results of operations.
13
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(3) Investments
Investments - Marketable securities
The following table summarizes the amortized cost, gross unrealized gains (losses), and fair value of the Company’s cash equivalents and marketable securities:
September 30, 2023
Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash Equivalents Marketable Securities
Level 1
Money market funds $ 981 $ — $ — $ 981 $ 981 $ —
Level 2
Commercial paper 74,471 — ( 86 ) 74,385 7,955 66,430
Corporate debt securities 44,252 — ( 157 ) 44,095 — 44,095
U.S. treasury securities 4,988 — ( 5 ) 4,983 — 4,983
U.S. government agency securities 3,209 — ( 5 ) 3,204 — 3,204
Total level 2 126,920 — ( 253 ) 126,667 7,955 118,712
Total $ 127,901 $ — $ ( 253 ) $ 127,648 $ 8,936 $ 118,712
The Company held no marketable securities as of December 31, 2022. The Company primarily invests in current marketable debt securities with a maximum weighted average duration of up to twelve months. As of September 30, 2023, the fair value of non-current marketable debt securities with a maturity beyond twelve months from the end of the period was $ 10,252 , which are included within long-term marketable securities in the consolidated balance sheet. The remainder of the marketable securities are classified as current. Fair values were determined using market prices from third-party pricing sources.
For marketable securities with unrealized loss positions, the Company does not intend to sell these securities and it is more likely than not that the Company will hold these securities until maturity or a recovery of the cost basis and they are therefore all categorized as available for sale. No allowance for credit losses was recorded for these securities as of September 30, 2023.
Investments - Held-to-maturity debt securities
As of September 30, 2023, the Company’s debt security investment consists of redeemable preferred shares that are accounted for as a held-to-maturity investment, with a contractual maturity in 2026. The Company’s investment is measured at amortized cost within investments in the condensed consolidated balance sheets. The Company reviews its held-to-maturity securities for expected credit losses under ASC Topic 326, Credit Impairment , on an ongoing basis.
During the three and nine months ended September 30, 2023 and 2022, the Company’s review of the investee’s operations and financial position indicated that an adjustment to its allowance for expected credit losses was necessary. A roll forward of the Company’s allowance for expected credit losses on held-to-maturity investments is as follows:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Beginning allowance for expected credit losses $ 15,052 $ 15,617 $ 14,957 $ 17,462
(Gain) loss on adjustment of allowance for expected credit losses ( 101 ) 273 ( 6 ) ( 1,572 )
Write-offs, net of recoveries — — — —
Ending allowance for expected credit losses $ 14,951 $ 15,890 $ 14,951 $ 15,890
The amortized cost, including accrued dividends, of the Company’s held-to-maturity debt security investments was $ 29,767 and $ 28,277 and the allowance for expected credit losses was $ 14,951 and $ 14,957 , as of September 30, 2023 and December 31, 2022, respectively. During the three months ended September 30, 2023 and 2022, the Company recognized dividend income of $ 511 and $ 477 , respectively, and during the nine months ended September 30, 2023 and 2022, of $ 1,490 and $ 1,391 , respectively, within other income on the consolidated statements of operations.
14
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Equity method investments
On April 9, 2021, the Company acquired a 21 % ownership interest in Bravo Fit Holdings Pty Ltd, the Company’s franchisee and store operator in Australia, which is deemed to be a related party, for $ 10,000 . In the fourth quarter of 2022, the Company invested an additional $ 2,449 in Bravo Fit Holdings Pty Ltd. Following such additional investment, the Company’s ownership remained at 21 %. For the three months ended September 30, 2023 and 2022, the Company’s proportionate share of the earnings in accordance with the equity method was a loss of $ 94 and $ 2 , respectively, and for the nine months ended September 30, 2023 and 2022, the Company’s proportionate share of the earnings was a loss of $ 432 and $ 334 , respectively, recorded within equity earnings of unconsolidated entities on the condensed consolidated statement of operations. The adjusted carrying value of the equity method investment was $ 11,370 and $ 11,802 as of September 30, 2023 and December 31, 2022, respectively.
On June 23, 2023, the Company acquired a 12.5 % ownership interest for $ 10,000 in Planet Fitmex, LLC, which is classified as an equity method investment as a result of its organizational structure. In August 2023, the Company invested an additional $ 10,000 in Planet Fitmex, LLC. Following such additional investment, the Company’s ownership stake increased to 22.2 % with a total investment of $ 20,000 . Planet Fitmex, LLC, is a franchisee of the Company, store operator in Mexico, and is deemed to be a related party. For both the three and nine months ended September 30, 2023, the Company’s proportionate share of the earnings was a loss of $ 148 recorded within equity earnings of unconsolidated entities on the condensed consolidated statement of operations. The adjusted carrying value of the equity method investment was $ 19,852 as of September 30, 2023.
Subsequent to quarter end, in November 2023, the Company invested an additional $ 15,596 in Planet Fitmex, LLC, and following such additional investment, the Company’s ownership stake increased to 25.2 %.

(4) Acquisitions
Sunshine Fitness acquisition
On February 10, 2022, the Company and Pla-Fit Holdings (together with the Company, the “Buyers”), acquired 100 % of the equity interests (“Sunshine Acquisition”) of Sunshine Fitness Growth Holdings, LLC, a Delaware limited liability company and Planet Fitness franchisee (“Sunshine Fitness”). The Company acquired 114 stores in Alabama, Florida, Georgia, North Carolina, and South Carolina from Sunshine Fitness.
The following pro forma financial information for the nine months ended September 30, 2022 summarizes the combined results of operations for the Company and Sunshine Fitness, as though the companies were combined as of the beginning of 2021. The three and nine months ended September 30, 2023 and the three months ended September 30, 2022 total revenues, income before taxes, and net income are included within the condensed consolidated statements of operations.
For the nine months ended September 30, 2022
Total revenues $ 675,954
Income before taxes 110,246
Net income 74,008

15
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Florida acquisition
On April 16, 2023, the Company purchased from one of its franchisees a majority of the assets associated with four franchisee stores operating in Florida (the “Florida Acquisition”) for approximately $ 26,264 . As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $ 110 , which is included in other losses (gains), net on the condensed consolidated statement of operations. The loss incurred reduced the net purchase price to $ 26,154 . The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The preliminary allocation of the purchase consideration was as follows:
Amount
Property and equipment $ 3,851
Right of use assets 5,424
Other long-term assets 95
Intangible assets 6,880
Goodwill 14,812
Deferred revenue ( 687 )
Other current liabilities ( 17 )
Lease liabilities ( 4,204 )
Total $ 26,154
The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The following table sets forth the components of identifiable intangible assets acquired in the Florida Acquisition and their estimated useful lives as of the date of the acquisition:
Preliminary Fair Value Preliminary Useful Life
Reacquired franchise rights (1)
$ 6,650 6.8
Customer relationships (2)
230 6.0
Total intangible assets subject to amortization $ 6,880
(1) Reacquired franchise rights represent the fair value of the reacquired franchise agreements using the income approach, specifically, the multi-period excess earnings method.
(2) Customer relationships represent the fair value of the existing contractual customer relationships using the income approach, specifically, the multi-period excess earnings method.
The acquisition did not have a material effect on the results of operations of the Company.
Certain estimated values for the Florida Acquisition, including goodwill and intangible assets, are not yet finalized and are subject to revision as additional information becomes available and more detailed analyses are completed.

(5) Sale of corporate-owned stores
On August 31, 2022, the Company sold 6 corporate-owned stores located in Colorado to a franchisee for $ 20,820 . The net value of assets derecognized in connection with the sale amounted to $ 19,496 , which included goodwill of $ 14,423 , intangible assets of $ 2,629 , and net tangible assets of $ 2,444 , which resulted in a gain on sale of corporate-owned stores of $ 1,324 during the three months ended September 30, 2022.
16
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(6) Goodwill and intangible assets
A summary of goodwill and intangible assets at September 30, 2023 and December 31, 2022 is as follows:
September 30, 2023 Gross
carrying
amount 		Accumulated
amortization 		Net carrying
Amount
Customer relationships $ 199,043 $ ( 165,174 ) $ 33,869
Reacquired franchise and area development rights 274,708 ( 69,715 ) 204,993
473,751 ( 234,889 ) 238,862
Indefinite-lived intangible:
Trade and brand names 146,600 — 146,600
Total intangible assets $ 620,351 $ ( 234,889 ) $ 385,462
Goodwill $ 717,502 $ — $ 717,502
December 31, 2022 Gross
carrying
amount 		Accumulated
amortization 		Net carrying
Amount
Customer relationships $ 198,813 $ ( 153,243 ) $ 45,570
Reacquired franchise and area development rights 268,058 ( 43,161 ) 224,897
466,871 ( 196,404 ) 270,467
Indefinite-lived intangible:
Trade and brand names 146,600 — 146,600
Total intangible assets $ 613,471 $ ( 196,404 ) $ 417,067
Goodwill $ 702,690 $ — $ 702,690
A roll forward of goodwill between December 31, 2022 and September 30, 2023 is as follows:
Franchise Corporate-owned stores Equipment Total
As of December 31, 2022
$ 16,938 $ 593,086 $ 92,666 $ 702,690
Acquisition of franchisee-owned stores — 14,812 — 14,812
As of September 30, 2023
$ 16,938 $ 607,898 $ 92,666 $ 717,502
The Company determined that no impairment charges were required during any periods presented.
Amortization expense related to the intangible assets totaled $ 12,965 and $ 10,611 for the three months ended September 30, 2023 and 2022, respectively, and $ 38,517 and $ 29,644 for the nine months ended September 30, 2023 and 2022, respectively. The anticipated annual amortization expense related to intangible assets to be recognized in future years as of September 30, 2023 is as follows:
Amount
Remainder of 2023 $ 12,954
2024 49,190
2025 36,713
2026 32,079
2027 27,956
Thereafter 79,970
Total $ 238,862
17
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(7) Long-term debt
Long-term debt as of September 30, 2023 and December 31, 2022 consists of the following:
September 30, 2023 December 31, 2022
2018-1 Class A-2-II notes $ 593,750 $ 598,438
2019-1 Class A-2 notes 529,375 533,500
2022-1 Class A-2-I notes 418,625 421,812
2022-1 Class A-2-II notes 467,875 471,437
Total debt, excluding deferred financing costs 2,009,625 2,025,187
Deferred financing costs, net of accumulated amortization ( 22,193 ) ( 26,306 )
Total debt 1,987,432 1,998,881
Current portion of long-term debt 20,750 20,750
Long-term debt, net of current portion $ 1,966,682 $ 1,978,131
Future annual principal payments of long-term debt as of September 30, 2023 are as follows:
Amount
Remainder of 2023 $ 5,188
2024 20,750
2025 600,438
2026 419,312
2027 10,250
Thereafter 953,687
Total $ 2,009,625
On August 1, 2018, Planet Fitness Master Issuer LLC (the “Master Issuer”), a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, entered into a base indenture and a related supplemental indenture (collectively, the “2018 Indenture”) under which the Master Issuer may issue multiple series of notes. On the same date, the Master Issuer issued Series 2018-1 4.262 % Fixed Rate Senior Secured Notes, Class A-2-I (the “2018 Class A-2-I Notes”) with an initial principal amount of $ 575,000 and Series 2018-1 4.666 % Fixed Rate Senior Secured Notes, Class A-2-II (the “2018 Class A-2-II Notes” and, together with the 2018 Class A-2-I Notes, the “2018 Notes”) with an initial principal amount of $ 625,000 . In connection with the issuance of the 2018 Notes, the Master Issuer also entered into a revolving financing facility that allows for the incurrence of up to $ 75,000 in revolving loans and/or certain letters of credit (the “Letters of Credit”) under the Master Issuer’s Series 2018-1 Variable Funding Senior Notes, Class A-1 (the “2018 Variable Funding Notes”). The Company fully drew down on the 2018 Variable Funding Notes on March 20, 2020. On December 3, 2019, the Master Issuer issued Series 2019-1 3.858 % Fixed Rate Senior Secured Notes, Class A-2 (the “2019 Notes” and, together with the 2018 Notes, the “Notes”) with an initial principal amount of $ 550,000 . The 2019 Notes were issued under the 2018 Indenture and a related supplemental indenture dated December 3, 2019 (together, the “2019 Indenture”). On February 10, 2022, the Company completed a prepayment in full of its 2018 Class A-2-I Notes and an issuance of Series 2022-1 3.251 % Fixed Rate Senior Secured Notes, Class A-2-I with an initial principal amount of $ 425,000 and Series 2022-1 4.008 % Fixed Rate Senior Secured Notes, Class A-2-II with an initial principal amount of $ 475,000 (the “2022 Notes” and, together with the 2018 Notes and 2019 Notes, the “Notes”), and also entered into a new revolving financing facility that allows for the issuance of up to $ 75,000 in Variable Funding Notes (“2022 Variable Funding Notes”) and certain Letters of Credit (the issuance of such notes, the “Series 2022-I Issuance”). The 2022 Notes were issued under the 2018 Indenture and a related supplemental indenture dated February 10, 2022 (together, with the 2019 Indenture, the “Indenture”). Together, the Notes, 2018 Variable Funding Notes and 2022 Variable Funding Notes will be referred to as the “Securitized Senior Notes”. On February 10, 2022, the Company borrowed the full amount of the $ 75,000 2022 Variable Funding Notes and used such proceeds to repay the outstanding principal amount (together with all accrued and unpaid interest thereon) of the 2018 Variable Funding Notes in full. On May 9, 2022, the Company repaid in full its $ 75,000 of borrowings under the 2022 Variable Funding Notes using cash on hand.
The Notes were issued in securitization transactions pursuant to which most of the Company’s domestic revenue-generating assets, consisting principally of franchise-related agreements, certain corporate-owned store assets, equipment supply agreements and intellectual property and license agreements for the use of intellectual property, were assigned to the Master
18
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Issuer and certain other limited-purpose, bankruptcy remote, wholly-owned indirect subsidiaries of the Company that act as guarantors of the Securitized Senior Notes and that have pledged substantially all of their assets to secure the Securitized Senior Notes.
Interest and principal payments on the Notes are payable on a quarterly basis. The requirement to make such quarterly principal payments on the Notes is subject to certain financial conditions set forth in the Indenture. The legal final maturity date of the 2018 Class A-2-II Notes is in September 2048, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2018 Class A-2-II Notes will be repaid in or prior to September 2025. The legal final maturity date of the 2019 Notes is in December 2049, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2019 Notes will be repaid in or prior to December 2029. The legal final maturity date of the 2022 Notes is in February 2052, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2022 Class A-2-I Notes will be repaid in or prior to December 2026 and the 2022 Class A-2-II Notes will be repaid in or prior to December 2031 (together, the “Anticipated Repayment Dates”). If the Master Issuer has not repaid or refinanced the Notes prior to the respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.
As noted above, the Company borrowed the full $ 75,000 in 2022 Variable Funding Notes on February 10, 2022, which was repaid in full using cash on hand on May 9, 2022. If outstanding, the 2022 Variable Funding Notes will accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the secured overnight financing rate for U.S. Dollars, or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin and as specified in the 2022 Variable Funding Notes. There is a commitment fee on the unused portion of the 2022 Variable Funding Notes of 0.5 % based on utilization. It is anticipated that the principal and interest on the 2022 Variable Funding Notes, if any, will be repaid in full on or prior to December 2026, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue on the 2022 Variable Funding Notes equal to 5.0 % per year.
In connection with the issuance of the 2018 Notes, 2019 Notes, and 2022 Notes, the Company incurred debt issuance costs of $ 27,133 , $ 10,577 , and $ 16,193 respectively. The debt issuance costs are being amortized to interest expense through the Anticipated Repayment Dates of the Notes utilizing the effective interest rate method. As a result of the repayment of the 2018 Class A-2-I Notes prior to the Anticipated Repayment Date, the Company recorded a loss on early extinguishment of debt of $ 1,583 within interest expense on the Consolidated statements of operations during the nine months ended September 30, 2022, consisting of the write-off of remaining unamortized deferred financing costs related to the issuance of the 2018 Class A-2-I Notes.
The Securitized Senior Notes are subject to covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Securitized Senior Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Securitized Senior Notes are in stated ways defective or ineffective, (iv) a cap on non-securitized indebtedness of $ 50,000 (provided that the Company may incur non-securitized indebtedness in excess of such amount, subject to the leverage ratio cap described below, under certain conditions, including if the relevant lenders execute a non-disturbance agreement that acknowledges the bankruptcy-remote status of the Master Issuer and its subsidiaries and of their respective assets), (v) a leverage ratio cap incurrence test on the Company of 7.0 x (calculated without regard for any indebtedness subject to the $ 50,000 cap) and (vi) covenants relating to recordkeeping, access to information and similar matters.
Pursuant to a parent company support agreement, the Company has agreed to cause its subsidiary to perform each of its obligations (including any indemnity obligations) and duties under the Management Agreement and under the contribution agreements entered into in connection with the securitized financing facility, in each case as and when due. To the extent that such subsidiary has not performed any such obligation or duty within the prescribed time frame after such obligation or duty was required to be performed, the Company has agreed to either (i) perform such obligation or duty or (ii) cause such obligations or duties to be performed on the Company’s behalf.
The Securitized Senior Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, certain manager termination events, an event of default, and the failure to repay or refinance the Notes on the applicable scheduled Anticipated Repayment Dates. The Securitized Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Securitized Senior Notes, failure to comply with covenants
19
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments.
In accordance with the Indenture, certain cash accounts have been established with the Indenture trustee (the “Trustee”) for the benefit of the trustee and the noteholders, and are restricted in their use. The Company holds restricted cash which primarily represents cash collections held by the Trustee, interest, principal, and commitment fee reserves held by the Trustee related to the Securitized Senior Notes. As of September 30, 2023, the Company had restricted cash held by the Trustee of $ 46,381 .
(8) Leases
Leases Classification September 30, 2023 December 31, 2022
Assets
Operating lease ROU assets Right of use asset, net $ 381,819 $ 346,937
Finance lease assets Property and equipment, net 219 370
Total lease assets $ 382,038 $ 347,307
Liabilities
Current:
Operating Other current liabilities $ 33,589 $ 33,233
Financing Other current liabilities 140 38
Noncurrent:
Operating Lease liabilities, net of current portion 379,810 341,843
Financing Other liabilities 88 342
Total lease liabilities $ 413,627 $ 375,456
Weighted-average remaining lease term (years) - operating leases 8.1 8.1
Weighted-average discount rate - operating leases 5.2 % 4.7 %

During the three and nine months ended September 30, 2023 and 2022, the components of lease cost were as follows:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Operating lease cost $ 16,467 $ 14,677 $ 47,154 $ 41,411
Variable lease cost 5,917 5,691 16,936 15,415
Total lease cost $ 22,384 $ 20,368 $ 64,090 $ 56,826
The Company’s costs related to short-term leases, those with a duration between one and twelve months, were immaterial.
Supplemental disclosures of cash flow information related to leases were as follows:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Cash paid for lease liabilities $ 13,877 $ 14,172 $ 41,985 $ 40,405
Operating lease ROU assets obtained in exchange for operating lease liabilities, excluding acquisitions $ 38,683 $ 6,073 $ 59,410 $ 29,234
Operating lease ROU assets obtained in exchange for operating lease liabilities through acquisitions $ — $ — $ 4,204 $ 162,827

20
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

As of September 30, 2023, maturities of lease liabilities were as follows:
Amount
Remainder of 2023 $ 9,506
2024 60,149
2025 68,800
2026 69,264
2027 66,584
Thereafter 242,152
Total lease payments $ 516,455
Less: imputed interest 102,828
Present value of lease liabilities $ 413,627

As of September 30, 2023, future operating lease payments exclude approximately $ 29,938 of legally binding minimum lease payments for leases signed but not yet commenced.
(9) Revenue recognition
Contract Liabilities
Contract liabilities consist primarily of deferred revenue resulting from initial and renewal franchise fees and area development agreement (“ADA”) fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement, and national advertising fund (“NAF”) revenue billed in advance of satisfaction of the Company’s performance obligation. Also included are corporate-owned store enrollment fees, annual fees and monthly fees as well as deferred equipment rebates relating to its equipment business. The Company classifies these contract liabilities as deferred revenue in its condensed consolidated balance sheets.
The following table reflects the change in contract liabilities between December 31, 2022 and September 30, 2023:
Contract liabilities
Balance at December 31, 2022 $ 86,911
Revenue recognized that was included in the contract liability at the beginning of the year ( 50,443 )
Increase, excluding amounts recognized as revenue during the period 60,554
Balance at September 30, 2023 $ 97,022
The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2023. The Company has elected to exclude short-term contracts, sales and usage-based royalties and any other variable consideration recognized on an “as invoiced” basis.
Contract liabilities to be recognized in: Amount
Remainder of 2023 $ 40,424
2024 25,559
2025 4,967
2026 3,894
2027 3,417
Thereafter 18,761
Total $ 97,022
Equipment deposits received in advance of delivery as of September 30, 2023 and December 31, 2022 were $ 13,933 and $ 8,443 , respectively, and are expected to be recognized as revenue in the next twelve months.
21
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(10) Related party transactions
Activity with franchisees considered to be related parties is summarized below:
For the three months ended
September 30, 		For the nine months ended
September 30,
2023 2022 2023 2022
Franchise revenue - interim CEO $ 958 $ 729 $ 2,882 $ 2,461
Franchise revenue - other 656 233 1,206 434
Equipment revenue - interim CEO 1,294 1,648 2,305 1,661
Equipment revenue - other 1,641 — 1,641 —
Total revenue from related parties $ 4,549 $ 2,610 $ 8,034 $ 4,556
Additionally, the Company had deferred ADA and franchise agreement revenue of $ 722 and $ 467 as of September 30, 2023 and December 31, 2022, respectively. Of this amount $ 146 and $ 138 is from a franchisee in which the Company’s interim CEO has a financial interest.
As of September 30, 2023 and December 31, 2022, the Company had $ 81,687 and $ 80,717 , respectively, payable to related parties pursuant to tax benefit arrangements, see Note 13.
The Company provides administrative services to the NAF and typically charges the NAF a fee for providing these services. The services provided include accounting, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted to $ 893 and $ 651 for the three months ended September 30, 2023 and 2022, respectively, and $ 2,679 and $ 1,955 for the nine months ended September 30, 2023 and 2022, respectively.
For the three months ended September 30, 2023 and 2022, the Company incurred approximately $ 63 and $ 71 , respectively, and $ 427 and $ 246 for the nine months ended September 30, 2023 and 2022, respectively, which is included within selling, general and administrative expense on the condensed consolidated statements of operations, for corporate travel to a third-party company which is affiliated with the former Chief Executive Officer.
A member of the Company’s board of directors, who is also the Company’s interim Chief Executive Officer and a franchisee, holds an approximate 10.5 % ownership of a company that sells amenity tracking compliance software to Planet Fitness stores to which the Company made payments of approximately $ 101 and $ 109 , during the three months ended September 30, 2023 and 2022, respectively, and $ 270 and $ 198 during the nine months ended September 30, 2023 and 2022.

(11) Stockholders’ equity
Pursuant to the exchange agreement between the Company and the Continuing LLC Owners, the Continuing LLC Owners (or certain permitted transferees thereof) have the right, from time to time and subject to the terms of the exchange agreement, to exchange their Holdings Units, along with a corresponding number of shares of Class B common stock, for shares of Class A common stock (or cash at the option of the Company) on a one -for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and similar transactions. In connection with any exchange of Holdings Units for shares of Class A common stock by a Continuing LLC Owner, the number of Holdings Units held by the Company is correspondingly increased as it acquires the exchanged Holdings Units, and a corresponding number of shares of Class B common stock are canceled.
During the nine months ended September 30, 2022, in connection with the Sunshine Acquisition, the Company issued 517,348 shares of Class A Common Stock and 3,637,678 membership units of Pla-Fit Holdings, LLC, together with shares of Class B Common Stock. See Note 4.
During the three and nine months ended September 30, 2023, respectively, certain existing holders of Holdings Units exercised their exchange rights and exchanged 1,417,603 and 3,412,312 Holdings Units for 1,417,603 and 3,412,312 newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, 1,417,603 and 3,412,312 shares of Class B common stock were surrendered by the holders of Holdings Units that exercised their exchange rights and canceled. Additionally, in connection with these exchanges, Planet Fitness, Inc. received 1,417,603 and 3,412,312 Holdings Units, increasing its total ownership interest in Pla-Fit Holdings.
22
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

As a result of the above transactions, as of September 30, 2023:
• Holders of Class A common stock owned 85,410,391 shares of Class A common stock, representing 96.9 % of the voting power in the Company and, through the Company, 85,410,391 Holdings Units representing 96.9 % of the economic interest in Pla-Fit Holdings; and
• the Continuing LLC Owners collectively owned 2,733,410 Holdings Units, representing 3.1 % of the economic interest in Pla-Fit Holdings, and 2,733,410 shares of Class B common stock, representing 3.1 % of the voting power in the Company.
Share repurchase program
2022 share repurchase program
On November 4, 2022, the Company’s board of directors approved a share repurchase program of up to $ 500,000 , which replaced the 2019 share repurchase program. During the nine months ended September 30, 2023, the Company repurchased 1,698,753 shares of Class A common stock for a total cost of $ 125,030 . A one percent share repurchase excise tax of $ 1,048 was also incurred as a result of new legislation that went into effect beginning in 2023. All repurchased shares were retired. Subsequent to these repurchases, there is $ 374,970 remaining under the 2022 share repurchase program. The timing of purchases and amount of stock repurchased are subject to the Company’s discretion and dependent upon market and business conditions, the Company’s general working capital needs, stock price, applicable legal requirements and other factors. The ability to repurchase shares at any particular time is also subject to the terms of the Indenture governing the Securitized Senior Notes. Purchases may be effected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing.
Preferred stock
The Company had 50,000,000 shares of preferred stock authorized and none issued or outstanding as of September 30, 2023 and December 31, 2022.
(12) Earnings per share
Basic earnings per share of Class A common stock is computed by dividing net income attributable to Planet Fitness, Inc. by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to Planet Fitness, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.
Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Planet Fitness, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related Holdings Units, are exchangeable into shares of Class A common stock on a one -for-one basis.
23
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

The following table sets forth reconciliations used to compute basic and diluted earnings per share of Class A common stock:
Three months ended
September 30, 		Nine months ended
September 30,
2023 2022 2023 2022
Numerator
Net income $ 41,324 $ 30,677 $ 110,272 $ 74,124
Less: net income attributable to non-controlling interests 2,190 3,764 7,299 8,405
Net income attributable to Planet Fitness, Inc. $ 39,134 $ 26,913 $ 102,973 $ 65,719
Denominator
Weighted-average shares of Class A common stock outstanding - basic 84,609,522 84,156,488 84,557,902 84,377,324
Effect of dilutive securities:
Stock options 212,953 338,981 239,709 357,315
Restricted stock units 48,282 50,854 64,347 62,050
Performance stock units 15,562 290 8,354 1,235
Weighted-average shares of Class A common stock outstanding - diluted 84,886,319 84,546,613 84,870,312 84,797,924
Earnings per share of Class A common stock - basic $ 0.46 $ 0.32 $ 1.22 $ 0.78
Earnings per share of Class A common stock - diluted $ 0.46 $ 0.32 $ 1.21 $ 0.78
Weighted average shares of Class B common stock of 3,533,885 and 6,145,722 for the three months ended September 30, 2023 and 2022, respectively, and 4,236,271 and 5,773,562 for the nine months ended September 30, 2023 and 2022, respectively, were evaluated under the if-converted method for potential dilutive effects and were determined to be anti-dilutive. Weighted average stock options outstanding of 307,606 and 258,093 for the three months ended September 30, 2023 and 2022, respectively, and 250,595 and 243,507 for the nine months ended September 30, 2023 and 2022, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. Weighted average restricted stock units outstanding of 968 and 705 for the three months ended September 30, 2023 and 2022, respectively, and 5,684 and 323 for the nine months ended September 30, 2023 and 2022, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. Weighted average performance stock units outstanding of 36,717 and 1,058 for the three months ended September 30, 2023 and 2022, respectively, and 1,981 and 281 for the nine months ended September 30, 2023 and 2022, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive.
(13) Income taxes
The Company is the sole managing member of Pla-Fit Holdings, which is treated as a partnership for U.S. federal and certain state and local income taxes. As a partnership, Pla-Fit Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Pla-Fit Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro-rata basis.
Planet Fitness, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to the allocable share of any taxable income of Pla-Fit Holdings. The Company’s effective tax rate was 24.5 % and 33.8 % for the three months ended September 30, 2023 and 2022, respectively. The effective tax rate for the three months ended September 30, 2023 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, partially offset by income attributable to non-controlling interests. The Company’s effective tax rate was 26.0 % and 32.6 % for the nine months ended September 30, 2023 and 2022, respectively. The effective tax rate for the nine months ended September 30, 2023 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, partially offset by income attributable to non-controlling interests. The Company was also subject to taxes in foreign jurisdictions.
Net deferred tax assets of $ 491,568 and $ 453,094 as of September 30, 2023 and December 31, 2022, respectively, relate primarily to the tax effects of temporary differences in the book basis as compared to the tax basis of the investment in Pla-Fit Holdings as a result of the secondary offerings, other exchanges, recapitalization transactions and the IPO.
24
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

As of September 30, 2023 and December 31, 2022, the total liability related to uncertain tax positions was $ 328 and $ 328 , respectively. The Company recognizes accrued interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense. Interest and penalties for the three and nine months ended September 30, 2023 and 2022 were not material.
Tax benefit arrangements
The Company’s acquisition of Holdings Units in connection with the IPO and future and certain past exchanges of Holdings Units for shares of the Company’s Class A common stock (or cash at the option of the Company) are expected to produce and have produced favorable tax attributes. In connection with the IPO, the Company entered into two tax receivable agreements. Under the first of those agreements, the Company generally is required to pay to certain existing and previous equity owners of Pla-Fit Holdings (the “TRA Holders”) 85 % of the applicable tax savings, if any, in U.S. federal and state income tax that the Company is deemed to realize as a result of certain tax attributes of their Holdings Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the exchanges of their Holdings Units for shares of Class A common stock and (ii) tax benefits attributable to payments made under the tax receivable agreement (including imputed interest). Under the second tax receivable agreement, the Company generally is required to pay to TSG AIV II-A L.P and TSG PF Co-Investors A L.P. (the “Direct TSG Investors”) 85 % of the amount of tax savings, if any, that the Company is deemed to realize as a result of the tax attributes of the Holdings Units held in respect of the Direct TSG Investors’ interest in the Company, which resulted from the Direct TSG Investors’ purchase of interests in Pla-Fit Holdings in 2012, and certain other tax benefits. Under both agreements, the Company generally retains the benefit of the remaining 15 % of the applicable tax savings.
As of September 30, 2023 and December 31, 2022, the Company had a liability of $ 489,762 and $ 494,465 , respectively, related to its projected obligations under the tax benefit arrangements. Projected future payments under the tax benefit arrangements are as follows:
Amount
Remainder of 2023 $ 11,129
2024 38,397
2025 47,379
2026 49,868
2027 52,515
Thereafter 290,474
Total $ 489,762
During the three and nine months ended September 30, 2023, 1,417,603 and 3,412,312 Holdings Units, respectively, were exchanged for newly issued shares of Class A common stock, resulting in an increase in the tax basis of the net assets of Pla-Fit Holdings. As a result of the change in Planet Fitness, Inc.’s ownership percentage of Pla-Fit Holdings, the Company recorded a $ 1,704 and $ 4,358 decrease to net deferred tax assets during the three and nine months ended September 30, 2023, respectively. As a result of these exchanges, during the three and nine months ended September 30, 2023, the Company also recognized deferred tax assets in the amount of $ 24,999 and $ 77,730 , respectively, as a result of the increase in tax basis. A portion of these exchanges were not made by TRA Holders, which did not result in an increase in the tax benefit arrangement liability. Of the exchanges that were made by TRA Holders, they resulted in an increase in the tax benefit arrangement liability of $ 14,762 and $ 17,077 in the three and nine months ended September 30, 2023, respectively. The offset to the entries recorded in connection with exchanges was to additional paid in capital within stockholders’ deficit.
(14) Commitments and contingencies
From time to time, and in the ordinary course of business, the Company is subject to various claims, charges, and litigation, such as employment-related claims and slip and fall cases.
On May 27, 2022, the Company and other defendants, including an officer of the Company who is a related party, received a final judgment after appeal to the joint and several judgment against them in a civil action brought by a former employee. In connection with the 2012 acquisition of Pla-Fit Holdings on November 8, 2012, the sellers are obligated to indemnify the Company related to this specific matter. The Company has incurred legal costs on behalf of the defendants in the case, which include a related party. These costs have historically not been material. During the fourth quarter of 2022, the Company and other defendants, as applicable, paid the final judgment in full, of which the Company paid $ 3,414 .
25
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Mexico Acquisition
On March 19, 2020, a franchisee in Mexico exercised a put option that requires the Company to acquire their franchisee-owned stores in Mexico. In February 2023, the Company and the franchisee agreed on a summary of terms for a settlement agreement (“Preliminary Settlement Agreement”), which will include the Company’s acquisition of the franchisee-owned stores and a release of all claims by all parties. In connection with the Preliminary Settlement Agreement, the Company recorded an estimated liability for the legal settlement of $ 8,550 as of December 31, 2022, inclusive of estimated future legal fees, through other loss on the statement of operations. The Company revised its estimate of the legal settlement and recorded an increase to the liability of $ 6,250 during the nine months ended September 30, 2023. The remaining liability as of September 30, 2023 is $ 14,500 , after utilization of the accrual for estimated legal fees during 2023.
Subsequent to quarter end, on October 20, 2023, the Company finalized its settlement with the franchisee in Mexico for $ 31,619 , which included the acquisition by the Company of five stores in Mexico and the settlement of all claims.
The Company is not currently aware of any other legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or result of operations.
(15) Segments
The Company has three reportable segments: (i) Franchise; (ii) Corporate-owned stores; and (iii) Equipment.
The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its interim Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments.
The Franchise segment includes operations related to the Company’s franchising business in the United States, Puerto Rico, Canada, Panama, Mexico and Australia, including revenues and expenses from the NAF. The Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the United States and Canada. The Equipment segment primarily includes the sale of equipment to franchisee-owned stores.
The accounting policies of the reportable segments are the same as those described in Note 2. The Company evaluates the performance of its segments and allocates resources to them based on revenue and earnings before interest, taxes, depreciation, and amortization, referred to as Segment EBITDA. Revenues for all operating segments include only transactions with unaffiliated customers and include no intersegment revenues.
The tables below summarize the financial information for the Company’s reportable segments for the three and nine months ended September 30, 2023 and 2022. The “Corporate and other” category, as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services which are not directly attributable to any individual segment.
Three months ended
September 30, 		Nine months ended
September 30,
2023 2022 2023 2022
Revenue
Franchise segment revenue - U.S. $ 95,209 $ 78,873 $ 281,836 $ 237,612
Franchise segment revenue - International 2,956 1,873 7,855 5,761
Franchise segment total 98,165 80,746 289,691 243,373
Corporate-owned stores - U.S. 112,080 100,247 329,505 275,962
Corporate-owned stores - International 1,165 1,083 3,380 2,978
Corporate-owned stores total 113,245 101,330 332,885 278,940
Equipment segment - U.S. 62,605 60,952 158,335 124,781
Equipment segment - International 3,536 1,358 5,329 8,410
Equipment segment total 66,141 62,310 163,664 133,191
Total revenue $ 277,551 $ 244,386 $ 786,240 $ 655,504

26
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Franchise revenue includes revenue generated from placement services of $ 5,884 and $ 4,376 for the three months ended September 30, 2023 and 2022, respectively, and $ 13,760 and $ 10,102 for the nine months ended September 30, 2023 and 2022, respectively.
Three months ended
September 30, 		Nine months ended
September 30,
2023 2022 2023 2022
Segment EBITDA
Franchise $ 67,583 $ 53,475 $ 198,418 $ 167,910
Corporate-owned stores 44,264 40,446 126,499 103,287
Equipment 16,434 15,803 39,134 34,638
Corporate and other ( 18,547 ) ( 10,458 ) ( 52,238 ) ( 41,059 )
Total Segment EBITDA $ 109,734 $ 99,266 $ 311,813 $ 264,776
The following table reconciles total Segment EBITDA to income before taxes:
Three months ended
September 30, 		Nine months ended
September 30,
2023 2022 2023 2022
Total Segment EBITDA $ 109,734 $ 99,266 $ 311,813 $ 264,776
Less:
Depreciation and amortization 37,477 32,572 110,254 90,427
Other income 148 4,762 631 9,000
Equity losses of unconsolidated entities, net of tax ( 242 ) ( 2 ) ( 580 ) ( 334 )
Income from operations 72,351 61,934 201,508 165,683
Interest income 4,245 1,561 12,339 2,244
Interest expense ( 21,704 ) ( 21,917 ) ( 64,771 ) ( 66,527 )
Other income 148 4,762 631 9,000
Income before income taxes $ 55,040 $ 46,340 $ 149,707 $ 110,400
The following table summarizes the Company’s assets by reportable segment:
September 30, 2023 December 31, 2022
Franchise $ 177,045 $ 161,355
Corporate-owned stores 1,624,489 1,559,985
Equipment 187,899 200,020
Unallocated 955,414 933,229
Total consolidated assets $ 2,944,847 $ 2,854,589
The table above includes $ 721 and $ 916 of long-lived assets located in the Company’s international corporate-owned stores as of September 30, 2023 and December 31, 2022, respectively. All other assets are located in the U.S.
The following table summarizes the Company’s goodwill by reportable segment:
September 30, 2023 December 31, 2022
Franchise $ 16,938 $ 16,938
Corporate-owned stores 607,898 593,086
Equipment 92,666 92,666
Consolidated goodwill $ 717,502 $ 702,690

27
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(16) Corporate-owned and franchisee-owned stores
The following table shows changes in corporate-owned and franchisee-owned stores for the three and nine months ended September 30, 2023 and 2022:
For the three months ended
September 30, 		For the nine months ended
September 30,
2023 2022 2023 2022
Franchisee-owned stores:
Stores operated at beginning of period 2,230 2,091 2,176 2,142
New stores opened 24 25 82 89
Stores acquired from the Company — 6 — 6
Stores debranded, sold, or consolidated (1)
— — ( 4 ) ( 115 )
Stores operated at end of period 2,254 2,122 2,254 2,122
Corporate-owned stores:
Stores operated at beginning of period 242 233 234 112
New stores opened 2 4 6 11
Stores sold to franchisees — ( 6 ) — ( 6 )
Stores acquired from franchisees — — 4 114
Stores operated at end of period 244 231 244 231
Total stores:
Stores operated at beginning of period 2,472 2,324 2,410 2,254
New stores opened 26 29 88 100
Stores acquired, debranded, sold or consolidated (1)
— — — ( 1 )
Stores operated at end of period 2,498 2,353 2,498 2,353
(1)     The term “debrand” refers to a franchisee-owned store whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. The Company retains the right to prevent debranded stores from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s store with another store located in close proximity with prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining store.

(17) VIE deconsolidation

During 2023, a triggering event occurred that resulted in the Company analyzing the PF Melville LLC and Matthew Michael Realty LLC VIEs to determine if they still met the criteria for consolidation. As a result of the analysis, the Company determined these entities no longer qualify for consolidation as VIEs as the Company no longer qualifies as the primary beneficiary of the VIEs and therefore deconsolidated the entities. The deconsolidation removed the net assets and non-controlling interest from the VIEs and did not impact the Company’s condensed consolidated statements of operations.

28
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context requires otherwise, references in this report to the “Company,” “we,” “us” and “our” refer to Planet Fitness, Inc. and its consolidated subsidiaries.
Overview
We are one of the largest and fastest-growing franchisors and operators of fitness centers in the world by number of members and locations, with a highly recognized international brand. Our mission is to enhance people’s lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone. Our bright, clean stores are typically 20,000 square feet, with a large selection of high-quality, purple and yellow Planet Fitness-branded cardio, circuit and weight-training equipment and friendly staff trainers who offer unlimited free fitness instruction to all our members in small groups through our PE@PF program. We offer this differentiated fitness experience primarily at only $10 per month for our standard membership. This attractive value proposition is designed to appeal to a broad population, including occasional gym users and the approximately 80% of the U.S. and Canadian populations over age 14 who do not belong to a gym, particularly those who find the traditional fitness club setting intimidating and expensive. We and our franchisees fiercely protect Planet Fitness’s community atmosphere—a place where you do not need to be fit before joining and where progress toward achieving your fitness goals (big or small) is supported and applauded by our staff and fellow members.
As of September 30, 2023, we had more than 18.5 million members and 2,498 stores in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia. Of our 2,498 stores, 2,254 are franchised and 244 are corporate-owned. As of September 30, 2023, we had commitments to open more than 1,000 new stores under existing ADAs.
Our segments
We operate and manage our business in three business segments: Franchise, Corporate-owned stores and Equipment. Our Franchise segment includes operations related to our franchising business in the United States, Puerto Rico, Canada, Panama, Mexico and Australia, including revenues and expenses from the NAF. Our Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the United States and Canada. The Equipment segment primarily includes the sale of equipment to our United States franchisee-owned stores. We evaluate the performance of our segments and allocate resources to them based on revenue and earnings before interest, taxes, depreciation and amortization, referred to as Segment EBITDA. Revenue and Segment EBITDA for all operating segments include only transactions with unaffiliated customers and do not include intersegment transactions. The tables below summarize the financial information for our segments for the three and nine months ended September 30, 2023 and September 30, 2022. “Corporate and other,” as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services that are not directly attributable to any individual segment.
Three months ended
September 30, 		Nine months ended
September 30,
(in thousands) 2023 2022 2023 2022
Revenue
Franchise segment $ 98,165 $ 80,746 $ 289,691 $ 243,373
Corporate-owned stores segment 113,245 101,330 332,885 278,940
Equipment segment 66,141 62,310 163,664 133,191
Total revenue $ 277,551 $ 244,386 $ 786,240 $ 655,504
Segment EBITDA
Franchise $ 67,583 $ 53,475 $ 198,418 $ 167,910
Corporate-owned stores 44,264 40,446 126,499 103,287
Equipment 16,434 15,803 39,134 34,638
Corporate and other (18,547) (10,458) (52,238) (41,059)
Total Segment EBITDA (1)
$ 109,734 $ 99,266 $ 311,813 $ 264,776
(1) Total Segment EBITDA is equal to EBITDA, which is a metric that is not presented in accordance with U.S. GAAP. Refer to “—Non-GAAP financial measures” for a definition of EBITDA and a reconciliation to net income, the most directly comparable U.S. GAAP measure.

29
A reconciliation of income from operations to Segment EBITDA is set forth below:
(in thousands) Franchise Corporate-owned
stores 		Equipment Corporate and
other 		Total
Three months ended September 30, 2023
Income (loss) from operations $ 65,949 $ 14,811 $ 15,172 $ (23,581) $ 72,351
Depreciation and amortization 1,845 29,484 1,262 4,886 37,477
Other (expense) income (211) (31) — 390 148
Equity losses of unconsolidated entities, net of tax — — — (242) (242)
Segment EBITDA (1)
$ 67,583 $ 44,264 $ 16,434 $ (18,547) $ 109,734
Three months ended September 30, 2022
Income (loss) from operations $ 51,442 $ 15,187 $ 14,543 $ (19,238) $ 61,934
Depreciation and amortization 1,852 25,350 1,260 4,110 32,572
Other income (expense) 181 (91) — 4,672 4,762
Equity losses of unconsolidated entities, net of tax — — — (2) (2)
Segment EBITDA (1)
$ 53,475 $ 40,446 $ 15,803 $ (10,458) $ 99,266
Nine months ended September 30, 2023
Income (loss) from operations $ 193,134 $ 39,406 $ 35,344 $ (66,376) $ 201,508
Depreciation and amortization 5,534 87,179 3,788 13,753 110,254
Other (expense) income (250) (86) 2 965 631
Equity losses of unconsolidated entities, net of tax — — — (580) (580)
Segment EBITDA (1)
$ 198,418 $ 126,499 $ 39,134 $ (52,238) $ 311,813
Nine months ended September 30, 2022
Income (loss) from operations $ 162,216 $ 34,828 $ 30,859 $ (62,220) $ 165,683
Depreciation and amortization 5,561 68,590 3,781 12,495 90,427
Other income (expense) 133 (131) (2) 9,000 9,000
Equity losses of unconsolidated entities, net of tax — — — (334) (334)
Segment EBITDA (1)
$ 167,910 $ 103,287 $ 34,638 $ (41,059) $ 264,776
(1) Total Segment EBITDA is equal to EBITDA, which is a metric that is not presented in accordance with U.S. GAAP. Refer to “—Non-GAAP Financial Measures” for a definition of EBITDA and a reconciliation to net income, the most directly comparable U.S. GAAP measure.
How we assess the performance of our business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our business is performing include the number of new store openings, same store sales for both corporate-owned and franchisee-owned stores, system-wide sales, EBITDA, Adjusted EBITDA, Segment EBITDA, Adjusted net income and Adjusted net income per share, diluted. See “—Non-GAAP financial measures” below for our definition of EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted net income per share, diluted, and why we present EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted net income per share, diluted, and for a reconciliation of our EBITDA, Adjusted EBITDA, and Adjusted net income to net income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, and a reconciliation of Adjusted net income per share, diluted, to net income per share, diluted, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Number of new store openings
The number of new store openings reflects stores opened during a particular reporting period for both corporate-owned and franchisee-owned stores. Opening new stores is an important part of our growth strategy and we expect the majority of our future new stores will be franchisee-owned. Before we obtain the certificate of occupancy or report any revenue for new corporate-owned stores, we incur pre-opening costs, such as rent expense, labor expense and other operating expenses. Some of our stores open with an initial start-up period of higher than normal marketing and operating expenses, particularly as a percentage of monthly revenue. New stores may not be profitable and their revenue may not follow historical patterns.
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The following table shows the change in our corporate-owned and franchisee-owned store base for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Franchisee-owned stores:
Stores operated at beginning of period 2,230 2,091 2,176 2,142
New stores opened 24 25 82 89
Stores acquired from the Company — 6 — 6
Stores debranded, sold, or consolidated (1)
— — (4) (115)
Stores operated at end of period 2,254 2,122 2,254 2,122
Corporate-owned stores:
Stores operated at beginning of period 242 233 234 112
New stores opened 2 4 6 11
Stores sold to franchisees — (6) — (6)
Stores acquired from franchisees — — 4 114
Stores operated at end of period 244 231 244 231
Total stores:
Stores operated at beginning of period 2,472 2,324 2,410 2,254
New stores opened 26 29 88 100
Stores acquired, debranded, sold or consolidated (1)
— — — (1)
Stores operated at end of period 2,498 2,353 2,498 2,353
(1) The term “debrand” refers to a franchisee-owned store whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. We retain the right to prevent debranded stores from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s store with another store located in close proximity with our prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining store.
Same store sales
Same store sales refers to year-over-year sales comparisons for the same store sales base of both corporate-owned and franchisee-owned stores. We define the same store sales base to include those stores that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same store sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned stores.
Several factors affect our same store sales in any given period, including the following:
• the number of stores that have been in operation for more than 12 months;
• the percentage mix and pricing of PF Black Card and standard memberships in any period;
• growth in total net memberships per store;
• consumer recognition of our brand and our ability to respond to changing consumer preferences;
• overall economic trends, particularly those related to consumer spending;
• our ability and our franchisees’ ability to operate stores effectively and efficiently to meet consumer expectations;
• marketing and promotional efforts;
• local competition;
• trade area dynamics; and
• opening of new stores in the vicinity of existing locations.
Consistent with common industry practice, we present same store sales as compared to the same period in the prior year and which is calculated for a given period by including only sales from stores that had sales in the comparable months of both years. Same store sales of our international stores are calculated on a constant currency basis, meaning that we translate the current year’s same store sales of our international stores at the same exchange rates used in the prior year. Since opening new stores will be a significant component of our revenue growth, same store sales is only one measure of how we evaluate our performance.
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Stores acquired from or sold to franchisees are removed from the franchisee-owned or corporate-owned same store sales base, as applicable, upon the ownership change and for the 12 months following the date of the ownership change. These stores are included in the corporate-owned or franchisee-owned same store sales base, as applicable, following the 12th month after the acquisition or sale. These stores remain in the system-wide same store sales base in all periods. During the nine months ended September 30, 2023, the stores acquired in the Sunshine Acquisition came into the corporate-owned same store sales base.
The following table presents same store sales data for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Same store sales growth:
Franchisee-owned stores 8.2 % 8.1 % 8.8 % 12.1 %
Corporate-owned stores 10.1 % 9.7 % 10.7 % 13.9 %
Total stores 8.4 % 8.2 % 9.0 % 12.2 %
Number of stores in same store sales base:
Franchisee-owned stores 2,116 1,962 2,116 1,962
Corporate-owned stores 230 100 231 100
Total stores 2,350 2,180 2,351 2,180
Total monthly dues and annual fees from members (system-wide sales)
We define system-wide sales as total monthly dues and annual fees billed by us and our franchisees. System-wide sales is an operating measure that includes sales by franchisees that are not revenue realized by the Company in accordance with GAAP, as well as sales by our corporate-owned stores. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure aids in understanding how we derive royalty revenue and is important in evaluating our performance. We review the total amount of dues billed to our members on a monthly basis, which allows us to assess changes in the performance of our corporate-owned and franchisee-owned stores from period to period, any competitive pressures, local or regional membership traffic patterns and general market conditions that might impact our store performance. We bill monthly dues on or around the 17 th of every month in the US and Canada. We bill annual fees once per year from each member based upon when the member signed his or her membership agreement. During the three months September 30, 2023 and 2022, system-wide sales were $1,092.9 million and $968.1 million, respectively. During the nine months ended September 30, 2023 and 2022, system-wide sales were $3,348.4 million and $2,948.1 million, respectively.

Non-GAAP financial measures
We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures provide useful information to investors in evaluating our performance. EBITDA and Adjusted EBITDA as presented in this Quarterly Report on Form 10-Q are supplemental measures of our performance that are neither required by, nor presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA should not be considered as substitutes for U.S. GAAP metrics such as net income or any other performance measures derived in accordance with U.S. GAAP. Also, in the future we may incur expenses or charges such as those used to calculate Adjusted EBITDA. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting . As part of such disclosure in “Our Segments” within Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has provided a reconciliation from income from operations to Total Segment EBITDA, which is equal to the Non-GAAP financial metric EBITDA.
We define EBITDA as net income before interest, taxes, depreciation and amortization. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our board of directors also uses EBITDA as a key metric to assess the performance of management. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company’s core operations. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.
32
A reconciliation of net income to EBITDA and Adjusted EBITDA is set forth below for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30, Nine months ended September 30,
(in thousands) 2023 2022 2023 2022
Net income $ 41,324 $ 30,677 $ 110,272 $ 74,124
Interest income (4,245) (1,561) (12,339) (2,244)
Interest expense (1)
21,704 21,917 64,771 66,527
Provision for income taxes 13,474 15,661 38,855 35,942
Depreciation and amortization 37,477 32,572 110,254 90,427
EBITDA $ 109,734 $ 99,266 $ 311,813 $ 264,776
Purchase accounting adjustments-revenue (2)
45 84 378 213
Purchase accounting adjustments-rent (3)
173 109 461 328
Loss on reacquired franchise rights (4)
— — 110 1,160
Gain on settlement of preexisting contract with acquiree (5)
— — — (2,059)
Transaction fees and acquisition-related costs (6)
— 396 394 5,344
(Gain) loss on adjustment of allowance for credit losses on held-to-maturity investments (7)
(101) 273 (6) (1,572)
Dividend income on held-to-maturity investments (8)
(511) (477) (1,490) (1,391)
Legal matters (9)
— 238 6,250 1,189
Tax benefit arrangement remeasurement (10)
— (4,510) — (8,381)
Gain on sale of corporate-owned stores (11)
— (1,324) — (1,324)
Executive transition costs (12)
2,502 — 3,722 —
Other (13)
50 (153) (590) 1,447
Adjusted EBITDA $ 111,892 $ 93,902 $ 321,042 $ 259,730
(1) Includes a $1,583 loss on extinguishment of debt in the nine months ended September 30, 2022.
(2) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the “2012 Acquisition”). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred area development agreement fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up-front but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805 – Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.
(3) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $41, $45, $123, and $135 in the three and nine months ended September 30, 2023 and 2022, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $138, $65, $338, and $194 in the three and nine months ended September 30, 2023 and 2022, respectively, are due to the amortization of favorable and unfavorable leases. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our consolidated statements of operations.
(4) Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned stores. The loss recorded under U.S. GAAP represents the difference between the fair value and the contractual terms of the reacquired franchise rights and is included in other losses (gains), net on our consolidated statement of operations.
(5) Represents a gain on settlement of deferred revenue from existing contracts with acquired franchisee-stores recorded in accordance with ASC 805 – Business Combinations, and is included in other losses (gains), net on our consolidated statement of operations.
33
(6) Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned stores.
(7) Represents a (gain) loss on the adjustment of the allowance for credit losses on the Company’s held-to-maturity investments.
(8) Represents dividend income on held-to-maturity investments.
(9) Represents costs associated with legal matters in which the Company is a defendant. In connection with the Preliminary Settlement Agreement between the Company and a franchisee in Mexico, the Company recorded an estimated liability for the legal settlement of $8,550 as of December 31, 2022, inclusive of estimated future legal fees. During the second quarter of 2023, the Company revised its estimate of the legal settlement and recorded an increase to the liability of $6,250 during the nine months ended September 30, 2023 to $14,500, net of legal fees paid. In the three and nine months ended September 30, 2022, the amounts represent a reserve against an indemnification receivable related to a legal matter.
(10) Represents gains related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.
(11) Represents a gain on the sale of corporate-owned stores.
(12) Represents certain severance and related expenses in the three and nine months ended September 30, 2023 recorded in connection with the departure of the Chief Executive Officer and in the nine months ended September 30, 2023, also includes severance expenses recorded in connection with the elimination of the President and Chief Operating Officer position.
(13) Represents certain other charges and gains that we do not believe reflect our underlying business performance.

34
Our presentation of Adjusted net income and Adjusted net income per share, diluted, assumes that all net income is attributable to Planet Fitness, Inc., which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-recurring items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing Adjusted net income by the total shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with U.S. GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented. Adjusted net income and Adjusted net income per share, diluted, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net income and earnings per share, as calculated in accordance with U.S. GAAP. We believe Adjusted net income and Adjusted net income per share, diluted, supplement U.S. GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of Adjusted net income to net income, the most directly comparable U.S. GAAP measure, and the computation of Adjusted net income per share, diluted, are set forth below.
Three months ended September 30, Nine months ended September 30,
(in thousands, except per share amounts) 2023 2022 2023 2022
Net income $ 41,324 $ 30,677 $ 110,272 $ 74,124
Provision for income taxes, as reported 13,474 15,661 38,855 35,942
Purchase accounting adjustments-revenue (1)
45 84 378 213
Purchase accounting adjustments-rent (2)
173 109 461 328
Loss on reacquired franchise rights (3)
— — 110 1,160
Gain on settlement of preexisting contract with acquiree (4)
— — — (2,059)
Transaction fees and acquisition-related costs (5)
— 396 394 5,344
Loss on extinguishment of debt (6)
— — — 1,583
(Gain) loss on adjustment of allowance for credit losses on held-to-maturity investments (7)
(101) 273 (6) (1,572)
Dividend income on held-to-maturity investments (8)
(511) (477) (1,490) (1,391)
Legal matters (9)
— 238 6,250 1,189
Tax benefit arrangement remeasurement (10)
— (4,510) — (8,381)
Gain on sale of corporate-owned stores (11)
— (1,324) — (1,324)
Executive transition costs (12)
2,502 — 3,722 —
Other (13)
50 (153) (590) 1,447
Purchase accounting amortization (14)
12,954 10,611 38,485 29,644
Adjusted income before income taxes $ 69,910 $ 51,585 $ 196,841 $ 136,247
Adjusted income tax expense (15)
18,107 13,361 50,982 35,288
Adjusted net income (16)
$ 51,803 $ 38,224 $ 145,859 $ 100,959
Adjusted net income per share, diluted $ 0.59 $ 0.42 $ 1.64 $ 1.11
Adjusted weighted-average shares outstanding 88,420 90,692 89,107 90,571
(1) Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred area development agreement fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up-front but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805 – Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.
(2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting
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applied in accordance with ASC 805. Adjustments of $41, $45, $123, and $135 in the three and nine months ended September 30, 2023 and 2022, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $138, $65, $338, and $194 in the three and nine months ended September 30, 2023 and 2022, respectively, are due to the amortization of favorable and unfavorable leases. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our consolidated statements of operations.
(3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned stores. The loss recorded under U.S. GAAP represents the difference between the fair value and the contractual terms of the reacquired franchise rights and is included in other losses (gains), net on our consolidated statement of operations.
(4) Represents a gain on settlement of deferred revenue from existing contracts with acquired franchisee-stores recorded in accordance with ASC 805 – Business Combinations, and is included in other losses (gains), net on our consolidated statement of operations.
(5) Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned stores.
(6) Represents a loss on extinguishment of debt in the nine months ended September 30, 2022.
(7) Represents a (gain) loss on the adjustment of the allowance for credit losses on the Company’s held-to-maturity investments.
(8) Represents dividend income on held-to-maturity investments.
(9) Represents costs associated with legal matters in which the Company is a defendant. In connection with the Preliminary Settlement Agreement between the Company and a franchisee in Mexico, the Company recorded an estimated liability for the legal settlement of $8,550 as of December 31, 2022, inclusive of estimated future legal fees. During the second quarter of 2023, the Company revised its estimate of the legal settlement and recorded an increase to the liability of $6,250 during the nine months ended September 30, 2023 to $14,500, net of legal fees paid. In the three and nine months ended September 30, 2022, the amounts represent a reserve against an indemnification receivable related to a legal matter.
(10) Represents gains related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.
(11) Represents a gain on the sale of corporate-owned stores.
(12) Represents certain severance and related expenses in the three and nine months ended September 30, 2023 recorded in connection with the departure of the Company’s Chief Executive Officer and in the nine months ended September 30, 2023, also includes severance expenses recorded in connection with the elimination of the President and Chief Operating Officer position.
(13) Represents certain other charges and gains that we do not believe reflect our underlying business performance.
(14) Includes $3,096, $3,096, $9,288 and $9,288 of amortization of intangible assets, for the three and nine months ended September 30, 2023 and 2022, recorded in connection with the 2012 Acquisition, and $9,858, $7,515, $29,197 and $20,357 of amortization of intangible assets for the three and nine months ended September 30, 2023 and 2022, respectively, recorded in connection with historical acquisitions of franchisee-owned stores. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with U.S. GAAP, in each period.
(15) Represents corporate income taxes at an assumed blended tax rate of 25.9% for the three and nine months ended September 30, 2023 and September 30, 2022, applied to adjusted income before income taxes.
(16) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc.

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A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted, is set forth below for the three and nine months ended September 30, 2023 and 2022 :
For the three months ended
September 30, 2023 		For the three months ended
September 30, 2022
(in thousands, except per share amounts) Net income Weighted Average Shares Net income per share, diluted Net income Weighted Average Shares Net income per share, diluted
Net income attributable to Planet Fitness, Inc. (1)
$ 39,134 84,886 $ 0.46 $ 26,913 84,547 $ 0.32
Assumed exchange of shares (2)
2,190 3,534 3,764 6,145
Net income 41,324 30,677
Adjustments to arrive at adjusted income before income taxes (3)
28,586 20,908
Adjusted income before income taxes 69,910 51,585
Adjusted income tax expense (4)
18,107 13,361
Adjusted net income $ 51,803 88,420 $ 0.59 $ 38,224 90,692 $ 0.42
(1) Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted, of Class A common stock outstanding.
(2) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.
(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.
(4) Represents corporate income taxes at an assumed blended tax rate of 25.9% for the three months ended September 30, 2023 and 2022, applied to adjusted income before income taxes.

For the nine months ended
September 30, 2023 		For the nine months ended
September 30, 2022
(in thousands, except per share amounts) Net income Weighted Average Shares Net income per share, diluted Net income Weighted Average Shares Net income per share, diluted
Net income attributable to Planet Fitness, Inc. (1)
$ 102,973 84,870 $ 1.21 $ 65,719 84,798 $ 0.78
Assumed exchange of shares (2)
7,299 4,237 8,405 5,773
Net income 110,272 74,124
Adjustments to arrive at adjusted income before income taxes (3)
86,569 62,123
Adjusted income before income taxes 196,841 136,247
Adjusted income tax expense (4)
50,982 35,288
Adjusted net income $ 145,859 89,107 $ 1.64 $ 100,959 90,571 $ 1.11
(1) Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted, of Class A common stock outstanding.
(2) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.
(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.
(4) Represents corporate income taxes at an assumed blended tax rate of 25.9% for the nine months ended September 30, 2023 and 2022, applied to adjusted income before income taxes.

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Results of operations
The following table sets forth our condensed consolidated statements of operations as a percentage of total revenue for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Revenue:
Franchise revenue 29.0 % 27.1 % 30.2 % 30.5 %
National advertising fund revenue 6.3 % 5.9 % 6.7 % 6.5 %
Franchise segment 35.4 % 33.0 % 36.9 % 37.0 %
Corporate-owned stores 40.8 % 41.5 % 42.3 % 42.7 %
Equipment 23.8 % 25.5 % 20.8 % 20.3 %
Total revenue 100.0 % 100.0 % 100.0 % 100.0 %
Operating costs and expenses:
Cost of revenue 19.4 % 19.9 % 16.9 % 15.8 %
Store operations 22.7 % 23.7 % 23.9 % 24.7 %
Selling, general and administrative 12.0 % 11.1 % 11.9 % 13.1 %
National advertising fund expense 6.3 % 7.0 % 6.7 % 7.7 %
Depreciation and amortization 13.5 % 13.3 % 14.0 % 13.8 %
Other (gains) losses, net — % (0.3) % 1.0 % (0.4) %
Total operating costs and expenses 73.9 % 74.7 % 74.4 % 74.7 %
Income from operations 26.1 % 25.3 % 25.6 % 25.3 %
Other income (expense), net:
Interest income 1.5 % 0.6 % 1.6 % 0.3 %
Interest expense (7.8) % (9.0) % (8.2) % (10.1) %
Other income 0.1 % 1.9 % 0.1 % 1.4 %
Total other expense, net (6.2) % (6.5) % (6.5) % (8.4) %
Income before income taxes 19.9 % 18.8 % 19.1 % 16.9 %
Equity losses of unconsolidated entities, net of tax (0.1) % — % (0.1) % (0.1) %
Provision for income taxes 4.9 % 6.4 % 4.9 % 5.5 %
Net income 14.9 % 12.4 % 14.1 % 11.3 %
Less net income attributable to non-controlling interests 0.8 % 1.5 % 0.9 % 1.3 %
Net income attributable to Planet Fitness, Inc. 14.1 % 10.9 % 13.2 % 10.0 %

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The following table sets forth a comparison of our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
(in thousands)
Revenue:
Franchise revenue $ 80,587 $ 66,168 $ 237,313 $ 200,243
National advertising fund revenue 17,578 14,578 52,378 43,130
Franchise segment 98,165 80,746 289,691 243,373
Corporate-owned stores 113,245 101,330 332,885 278,940
Equipment 66,141 62,310 163,664 133,191
Total revenue 277,551 244,386 786,240 655,504
Operating costs and expenses:
Cost of revenue 53,751 48,531 132,561 103,436
Store operations 63,120 57,892 188,011 161,789
Selling, general and administrative 33,290 27,148 93,705 86,176
National advertising fund expense 17,618 17,009 52,496 50,445
Depreciation and amortization 37,477 32,572 110,254 90,427
Other (gains) losses, net (56) (700) 7,705 (2,452)
Total operating costs and expenses 205,200 182,452 584,732 489,821
Income from operations 72,351 61,934 201,508 165,683
Other income (expense), net:
Interest income 4,245 1,561 12,339 2,244
Interest expense (21,704) (21,917) (64,771) (66,527)
Other income 148 4,762 631 9,000
Total other expense, net (17,311) (15,594) (51,801) (55,283)
Income before income taxes 55,040 46,340 149,707 110,400
Equity losses of unconsolidated entities, net of tax (242) (2) (580) (334)
Provision for income taxes 13,474 15,661 38,855 35,942
Net income 41,324 30,677 110,272 74,124
Less net income attributable to non-controlling interests 2,190 3,764 7,299 8,405
Net income attributable to Planet Fitness, Inc. $ 39,134 $ 26,913 $ 102,973 $ 65,719
Comparison of the three months ended September 30, 2023 and three months ended September 30, 2022
Revenue
Total revenues were $277.6 million in the three months ended September 30, 2023, compared to $244.4 million in the three months ended September 30, 2022, an increase of $33.2 million, or 13.6%.
Franchise segment revenue was $98.2 million in the three months ended September 30, 2023, compared to $80.7 million in the three months ended September 30, 2022, an increase of $17.4 million, or 21.6%.
Franchise revenue was $80.6 million in the three months ended September 30, 2023 compared to $66.2 million in the three months ended September 30, 2022, an increase of $14.4 million or 21.8%. Included in franchise revenue is royalty revenue of $64.0 million, franchise and other fees of $9.4 million, and placement revenue of $5.9 million for the three months ended September 30, 2023, compared to royalty revenue of $55.9 million, franchise and other fees of $5.9 million, and placement revenue of $4.4 million for the three months ended September 30, 2022. Of the $8.0 million increase in royalty revenue, $4.4 million was attributable to a same store sales increase of 8.2% in franchisee-owned stores, $1.7 million was attributable to higher royalties on annual fees and $1.6 million was attributable to new stores opened since July 1, 2022. The $3.5 million increase in franchise and other fees was primarily attributable to higher online join fees. The $1.5 million increase in placement revenue was driven by higher existing equipment placements in the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Also included in franchise revenue in the three months ended September 30, 2023 was $1.3 million of revenue associated with the sale of HVAC units to franchisees.
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National advertising fund revenue was $17.6 million in the three months ended September 30, 2023, compared to $14.6 million in the three months ended September 30, 2022. The $3.0 million increase in national advertising fund revenue was primarily due to the same store sales increase noted above, new stores and the collection of national advertising fund revenue on annual fees billed to new members, which began in 2023.
Revenue from our corporate-owned stores segment was $113.2 million in the three months ended September 30, 2023, compared to $101.3 million in the three months ended September 30, 2022, an increase of $11.9 million, or 11.8%. Of the increase, $6.8 million was from the corporate-owned store same store sales increase of 10.1%, and $5.1 million was from new store openings since July 1, 2022 and the April 16, 2023 acquisition of 4 stores in Florida.
Equipment segment revenue was $66.1 million in the three months ended September 30, 2023, compared to $62.3 million in the three months ended September 30, 2022, an increase of $3.8 million, or 6.1%. The increase was driven by $5.6 million in higher sales to existing franchisee-owned stores in the three months ended September 30, 2023, compared to the three months ended September 30, 2022. We had equipment sales to 22 and 27 new franchisee-owned stores in the three months ended September 30, 2023 and September 30, 2022, respectively.
Cost of revenue
Cost of revenue was $53.8 million in the three months ended September 30, 2023 compared to $48.5 million in the three months ended September 30, 2022, an increase of $5.2 million, or 10.8%. Of the increase, $4.9 million relates to our equipment segment, which increased primarily as a result of higher equipment sales to existing franchisee-owned stores in the three months ended September 30, 2023 compared to the three months ended September 30, 2022, as described above. The remaining increase of $1.3 million was due to costs of HVAC units sold to franchisees.
Store operations
Store operation expenses, which relate to our corporate-owned stores segment, were $63.1 million in the three months ended September 30, 2023 compared to $57.9 million in the three months ended September 30, 2022, an increase of $5.2 million, or 9.0%. The increase was primarily due to higher rent and occupancy expense and higher payroll as a result of new stores opened or acquired since July 1, 2022.
Selling, general and administrative
Selling, general and administrative expenses were $33.3 million in the three months ended September 30, 2023 compared to $27.1 million in the three months ended September 30, 2022, an increase of $6.1 million, or 22.6%. This increase was primarily due to $2.5 million in higher severance related expense, $2.0 million in higher operational and administrative expenses, including higher information technology and professional services costs, and $1.5 million in higher compensation related expense.
National advertising fund expense
National advertising fund expense was $17.6 million in the three months ended September 30, 2023 compared to $17.0 million in the three months ended September 30, 2022, due to higher advertising and marketing expenditures in the current year period.
Depreciation and amortization
Depreciation and amortization expense consists of the depreciation of property and equipment, including leasehold and building improvements and equipment. Amortization expense consists of amortization related to our intangible assets, including customer relationships and reacquired franchise rights.
Depreciation and amortization expense was $37.5 million in the three months ended September 30, 2023 compared to $32.6 million in the three months ended September 30, 2022, an increase of $4.9 million, or 15.1%. The increase was primarily attributable to corporate stores opened or acquired since July 1, 2022.
Other gains, net
Other gains, net was a gain of $0.1 million in the three months ended September 30, 2023 compared to a gain of $0.7 million in the three months ended September 30, 2022.
Interest income
Interest income was $4.2 million in the three months ended September 30, 2023, compared to $1.6 million in the three months ended September 30, 2022, primarily as a result of higher interest rates in the three months ended September 30, 2023 compared to the three months ended September 30, 2022.
Interest expense
Interest expense primarily consists of interest on long-term debt as well as the amortization of deferred financing costs.
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Interest expense was $21.7 million in the three months ended September 30, 2023 and $21.9 million in the three months ended September 30, 2022.
Other income
Other income was $0.1 million in the three months ended September 30, 2023 compared to income of $4.8 million in the three months ended September 30, 2022. In the three months ended September 30, 2022, other income was primarily attributable to a gain on the remeasurement of our tax benefit arrangements due to changes in our effective tax rate.
Provision for income taxes
Provision for income taxes was $13.5 million in the three months ended September 30, 2023, compared to $15.7 million in the three months ended September 30, 2022, an decrease of $2.2 million. The decrease in the provision for income taxes was attributable to a $4.5 million remeasurement of deferred taxes in the three months ended September 30, 2022, as compared to the three months ended September 30, 2023.
Segment results
Franchise
Segment EBITDA for the franchise segment was $67.6 million in the three months ended September 30, 2023 compared to $53.5 million in the three months ended September 30, 2022, an increase of $14.1 million. The franchise segment EBITDA increase was primarily attributable to the franchise revenue increases as described above of $14.4 million, higher national advertising fund revenue of $3.0 million, partially offset by $1.3 million of higher cost of goods sold from HVAC units sold to franchisees, $0.8 million of higher selling, general, and administrative expenses, and higher national advertising fund expenses of $0.6 million.
Corporate-owned stores
Segment EBITDA for the corporate-owned stores segment was $44.3 million in the three months ended September 30, 2023 compared to $40.4 million in the three months ended September 30, 2022, an increase of $3.8 million. Of the increase, $3.9 million was attributable to the stores in the same store sales base and $2.2 million was from new store openings since July 1, 2022 and the April 16, 2023 acquisition of 4 stores in Florida, partially offset by $1.0 million of higher corporate store selling, general, and administrative expenses in the three months ended September 30, 2023 and a $1.3 million gain in the prior year related to the sale of corporate-owned stores.
Equipment
Segment EBITDA for the equipment segment was $16.4 million in the three months ended September 30, 2023 compared to $15.8 million in the three months ended September 30, 2022, an increase of $0.6 million. The increase was primarily driven by higher equipment sales to existing franchisee-owned stores in the three months ended September 30, 2023 compared to the three months ended September 30, 2022, as described above.
Comparison of the nine months ended September 30, 2023 and nine months ended September 30, 2022
Revenue
Total revenues were $786.2 million in the nine months ended September 30, 2023, compared to $655.5 million in the nine months ended September 30, 2022, an increase of $130.7 million, or 19.9%.
Franchise segment revenue was $289.7 million in the nine months ended September 30, 2023, compared to $243.4 million in the nine months ended September 30, 2022, an increase of $46.3 million, or 19.0%.
Franchise revenue was $237.3 million in the nine months ended September 30, 2023 compared to $200.2 million in the nine months ended September 30, 2022, an increase of $37.1 million, or 18.5%. Included in franchise revenue is royalty revenue of $195.3 million, franchise and other fees of $26.1 million, and placement revenue of $13.8 million for the nine months ended September 30, 2023, compared to royalty revenue of $171.1 million, franchise and other fees of $19.0 million, and placement revenue of $10.1 million for the nine months ended September 30, 2022. Of the $24.2 million increase in royalty revenue, $13.8 million was attributable to a same store sales increase of 8.8% in franchisee-owned stores, $5.0 million was attributable to new stores opened since January 1, 2022, and $5.8 million was from higher royalties on annual fees, partially offset by $0.8 million of lower royalty revenue primarily as a result of the stores acquired in the Sunshine Acquisition no longer being franchisee-owned stores. The $7.1 million increase in franchise and other fees was primarily attributable to higher online join fees, and the $3.7 million increase in placement revenue was primarily driven by higher replacement equipment placements. Also included in franchise revenue in the nine months ended September 30, 2023 was $2.1 million of revenue associated with the sale of HVAC units to franchisees.
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National advertising fund revenue was $52.4 million in the nine months ended September 30, 2023, compared to $43.1 million in the nine months ended September 30, 2022. The increase in national advertising fund revenue in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily due to higher same store sales, new stores opened since January 1, 2022 and the collection of national advertising fund revenue on annual fees billed to new members, which began in 2023.
Revenue from our corporate-owned stores segment was $332.9 million in the nine months ended September 30, 2023, compared to $278.9 million in the nine months ended September 30, 2022, an increase of $53.9 million, or 19.3%. Of the increase, $32.2 million was attributable to the acquisition of 114 stores in the Sunshine Acquisition in February 2022, $15.0 million was from new stores opened since January 1, 2022 and the April 16, 2023 acquisition of 4 stores in Florida, and $6.8 million was from the corporate-owned store same store sales increase of 10.7%.
Equipment segment revenue was $163.7 million in the nine months ended September 30, 2023, compared to $133.2 million in the nine months ended September 30, 2022, an increase of $30.5 million, or 22.9%. Of the increase, $41.2 million was driven by higher equipment sales to existing franchisee-owned stores, partially offset by $9.7 million of lower equipment sales to new franchisee-owned stores in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. In the nine months ended September 30, 2023, we had equipment sales to 64 new franchisee-owned stores compared to 82 in the prior year period.
Cost of revenue
Cost of revenue was $132.6 million in the nine months ended September 30, 2023 compared to $103.4 million in the nine months ended September 30, 2022, an increase of $29.1 million, or 28.2%. Cost of revenue, which primarily relates to our equipment segment, increased primarily as a result of higher equipment sales to existing franchisee-owned stores, partially offset by lower equipment sales to existing franchisee-owned stores in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, as described above. The remaining increase of $2.1 million was due to costs of HVAC units sold to franchisees.
Store operations
Store operation expenses, which relate to our corporate-owned stores segment, were $188.0 million in the nine months ended September 30, 2023 compared to $161.8 million in the nine months ended September 30, 2022, an increase of $26.2 million, or 16.2%. Of the increase, $9.5 million was attributable to rent and occupancy expense, $6.6 million was from higher marketing expense, $6.8 million was from higher payroll related expense, and $3.4 million repairs and maintenance expense, primarily as a result of new stores opened or acquired since January 1, 2022.
Selling, general and administrative
Selling, general and administrative expenses were $93.7 million in the nine months ended September 30, 2023 compared to $86.2 million in the nine months ended September 30, 2022, an increase of $7.5 million, or 8.7%. Of the $7.5 million increase, $7.6 million was related to payroll and severance expense and $2.0 million was from higher technology expense, which were partially offset by lower advisory fees as a result of the Sunshine Acquisition in the prior year.
National advertising fund expense
National advertising fund expense was $52.5 million in the nine months ended September 30, 2023 compared to $50.4 million in the nine months ended September 30, 2022, with the increase due to higher national advertising and marketing expenditures in 2023 as compared to 2022 as a result of higher national advertising fund revenue.
Depreciation and amortization
Depreciation and amortization expense consists of the depreciation of property and equipment, including leasehold and building improvements and equipment. Amortization expense consists of amortization related to our intangible assets, including customer relationships and reacquired franchise rights.
Depreciation and amortization expense was $110.3 million in the nine months ended September 30, 2023 compared to $90.4 million in the nine months ended September 30, 2022, an increase of $19.8 million, or 21.9%. The increase was primarily attributable to depreciation and amortization of the assets acquired in the Sunshine Acquisition and Florida Acquisition as well as new stores opened since January 1, 2022.
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Other losses (gains), net
Other losses (gains), net was a loss of $7.7 million in the nine months ended September 30, 2023 compared to a gain of $2.5 million in the nine months ended September 30, 2022. In the nine months ended September 30, 2023, the $7.7 million loss was primarily related to a $6.3 million increase in an estimated reserve for a legal matter. In the nine months ended September 30, 2022, the $2.5 million gain includes a $1.3 million gain on the sale of corporate-owned stores and a $2.1 million gain from the settlement of preexisting contracts in connection with the Sunshine Acquisition, partially offset by the $1.2 million loss on unfavorable reacquired franchise rights in connection with the Sunshine Acquisition and a $1.2 million reserve against an indemnification receivable related to a legal matter.
Interest income
Interest income was $12.3 million in the nine months ended September 30, 2023 compared to $2.2 million in the nine months ended September 30, 2022, primarily as a result of higher interest rates in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.
Interest expense
Interest expense primarily consists of interest on long-term debt as well as the amortization of deferred financing costs.
Interest expense was $64.8 million in the nine months ended September 30, 2023 compared to $66.5 million in the nine months ended September 30, 2022. The decrease in interest expense is due to a $1.6 million loss on extinguishment of debt from the write-off of remaining deferred financing costs in the prior year period and $0.5 million of lower interest expense from the repayment of the variable funding notes in May 2022. Partially offsetting these decreases is higher interest expense in the nine months ended September 30, 2023 from the increased principal balance as a result of the debt refinancing completed on February 10, 2022.
Other income
Other income was $0.6 million in the nine months ended September 30, 2023 and $9.0 million in the nine months ended September 30, 2022. During the nine months ended September 30, 2022, other income was primarily attributable to a gain on the remeasurement of our tax benefit arrangements due to changes in our effective tax rate which did not impact the nine months ended September 30, 2023.
Provision for income taxes
The provision for income taxes was $38.9 million in the nine months ended September 30, 2023, compared to $35.9 million in the nine months ended September 30, 2022. The increase was attributable to higher income before income taxes in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.
Segment results
Franchise
Segment EBITDA for the franchise segment was $198.4 million in the nine months ended September 30, 2023 compared to $167.9 million in the nine months ended September 30, 2022, an increase of $30.5 million, or 18.2%. The franchise segment EBITDA increase in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily due to the $46.3 million of higher franchise segment revenue, partially offset by $2.1 million of higher NAF expenses, $2.2 million of higher selling, general and administrative expense and $1.1 million of higher equipment placement expenses. Also offsetting the revenue increase was a $6.3 million increase in an estimated reserve for a legal matter in the current year period as compared to a $2.1 million gain in the prior year period as described in other losses (gains), net above. Depreciation and amortization was $5.5 million and $5.6 million in the nine months ended September 30, 2023 and 2022 , respectively.
Corporate-owned stores
Segment EBITDA for the corporate-owned stores segment was $126.5 million in the nine months ended September 30, 2023 compared to $103.3 million in the nine months ended September 30, 2022, an increase of $23.2 million, or 22.5%. Of the Segment EBITDA increase, $15.0 million was attributable to corporate-owned stores acquired in the Sunshine Acquisition, $6.6 million was attributable to the stores included in the same store sales base, and $5.0 million was from new stores opened or acquired since January 1, 2022, partially offset by higher selling, general and administrative expense of $1.8 million. Depreciation and amortization was $87.2 million and $68.6 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in depreciation and amortization was primarily attributable the Sunshine Acquisition and Florida Acquisition.
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Equipment
Segment EBITDA for the equipment segment was $39.1 million in the nine months ended September 30, 2023 compared to $34.6 million in the nine months ended September 30, 2022, an increase of $4.5 million, or 13.0%, driven by higher equipment sales to existing franchisee-owned stores, partially offset by lower equipment sales to new franchisee-owned stores in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Depreciation and amortization was $3.8 million for both the nine months ended September 30, 2023 and 2022.
Liquidity and capital resources
As of September 30, 2023, we had $309.0 million of cash and cash equivalents, $108.5 million of short-term marketable securities, $10.3 million of long-term marketable securities and $46.4 million of restricted cash.
We require cash principally to fund day-to-day operations, to finance capital investments, to service our outstanding debt and tax benefit arrangements and to address our working capital needs. Based on our current level of operations, we believe the available cash, cash equivalents, marketable securities, the cash generated from our operations, and amounts available under our 2022 Variable Funding Notes will be adequate to meet our anticipated debt service requirements and obligations under the tax benefit arrangements, capital expenditures and working capital needs for at least the next 12 months. Our ability to continue to fund these items and continue to reduce debt could be adversely affected by the occurrence of any of the events described under “Risk Factors” in the Annual Report. There can be no assurance that our business will generate sufficient cash flows from operations or otherwise to enable us to service our indebtedness, including our Securitized Senior Notes, or to make anticipated capital expenditures. Our future operating performance and our ability to service, extend or refinance our indebtedness will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.
The following table presents summary cash flow information for the nine months ended September 30, 2023 and 2022:
Nine months ended September 30,
( in thousands )
2023 2022
Net cash provided by (used in):
Operating activities $ 266,920 $ 190,426
Investing activities (247,915) (469,198)
Financing activities (136,386) 142,737
Effect of foreign exchange rates on cash 233 (729)
Net decrease in cash $ (117,148) $ (136,764)
Operating activities
For the nine months ended September 30, 2023, net cash provided by operating activities was $266.9 million compared to $190.4 million in the nine months ended September 30, 2022, an increase of $76.5 million. Of the increase, $61.6 million is due to higher net income after adjustments to reconcile net income to net cash provided by operating activities in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, and $14.9 million is due to favorable changes in working capital primarily as a result of more favorable changes in accounts receivable, accrued expenses and accounts payable, partially offset by lower equipment deposits and a higher payment pursuant to tax benefit arrangements.

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Investing activities
For the nine months ended September 30, 2023, net cash used in investing activities was $247.9 million compared to $469.2 million in the nine months ended September 30, 2022, a decrease of $221.3 million. The primary drivers for the cash used in investing activities in the nine months ended September 30, 2023 were investments in marketable securities, net of maturities of $117.0 million, $26.3 million used for the Florida Acquisition, and $20.0 million equity method investment. The primary drivers for the cash used in investing activities in the nine months ended September 30, 2022 were $424.9 million of net cash used for the Sunshine Acquisition in the prior year period, partially offset by $20.8 million of cash received on the sale of corporate-owned stores.
Capital expenditures for the nine months ended September 30, 2023 and 2022:
Nine months ended September 30,
( in thousands )
2023 2022
New corporate-owned stores and corporate-owned stores not yet opened $ 29,540 $ 29,661
Existing corporate-owned stores 38,044 23,587
Information systems 16,953 11,890
Corporate and all other 99 —
Total capital expenditures $ 84,636 $ 65,138
Financing activities
For the nine months ended September 30, 2023, net cash used in financing activities was $136.4 million compared to net cash provided by financing activities of $142.7 million in the nine months ended September 30, 2022. The primary drivers of the net cash used in financing activities in the nine months ended September 30, 2023, were share repurchases of $125.0 million and the repayment of long-term debt of $15.6 million, partially offset by proceeds from issuance of Class A common stock of $8.6 million. The primary drivers of the net cash provided by financing activities in the nine months ended September 30, 2022, was $239.4 million of net cash provided from long-term debt, consisting of $975 million of borrowings, $719.6 million of principal payments and $16.2 million of deferred financing costs incurred, in addition to share repurchases of $94.3 million.
Securitized Financing Facility
Planet Fitness Master Issuer LLC (the “Master Issuer”), a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, is the master issuer of outstanding senior secured notes under a securitized financing facility that was entered into in August 2018. In February 2022, the Master Issuer completed a refinancing transaction with respect to this facility under which the Master Issuer issued the Series 2022-1 Class A-2 Notes with initial principal amounts totaling $900 million. The net proceeds from the sale of the Series 2022-1 Class A-2 Notes were used to repay in full the Master Issuer’s outstanding Series 2018 Class A-2-I Notes, including the payment of transaction costs. The remaining funds were used for the Sunshine Acquisition and other general corporate purposes.
In connection with the issuance of the Series 2022-1 Class A-2 Notes, the Master Issuer also issued the Series 2022-1 Class A-1 Notes, which allow for the drawing of up to $75 million of Variable Funding Notes, including a letter of credit facility, which was used to repay the 2018-1 Class A-1 Notes. The 2022 Variable Funding Notes are undrawn as of September 30, 2023 due to repayment in full on May 9, 2022 using cash on hand.
Except as described above, there were no material changes to the terms of any debt obligations since December 31, 2022. The Company was in compliance with its debt covenants as of September 30, 2023. See Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.
Off-balance sheet arrangements
As of September 30, 2023, our off-balance sheet arrangements consisted of guarantees of lease agreements for certain franchisees up to a maximum period of ten years with earlier expiration dates possible if certain conditions are met. Our maximum total obligation under these lease guarantee agreements is approximately $5.6 million and would require payment only upon default by the primary obligor. The estimated fair value of these guarantees as of September 30, 2023 was not material, and no accrual has been recorded for our potential obligation under these arrangements.
Critical accounting policies and use of estimates
There have been no material changes to our critical accounting policies and use of estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.
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ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
Interest rate risk
The securitized financing facility includes the Series 2018-1 Senior Class A-2-II Notes and the Series 2022-1 Senior Class A-2 Notes, which are comprised of fixed interest rate notes, and the 2022 Variable Funding Notes, which allow for the incurrence of up to $75.0 million in revolving loans and/or Letters of Credit under the 2022 Variable Funding Notes. The issuance of the fixed-rate Class A-2 Notes has reduced the Company’s exposure to interest rate increases that could adversely affect its earnings and cash flows. However, the Company would be exposed to interest rate increases on any borrowings under the 2022 Variable Funding Notes. An increase in the effective interest rate applied to borrowings under the 2022 Variable Funding Notes of 100 basis points would result in a $0.8 million increase in pre-tax interest expense on an annualized basis. There are no current borrowings under the 2022 Variable Funding Notes.
Foreign exchange risk
We are exposed to fluctuations in exchange rates, primarily those of the Canadian dollar, Mexican peso, and Australian dollar, which are the functional currencies of our Canadian, Mexican, and Australian entities, respectively. Our sales, costs and expenses of our foreign subsidiaries, when translated into U.S. dollars, can fluctuate due to exchange rate movement. As of September 30, 2023, a 10% increase or decrease in the exchange rate of the U.S. and foreign currencies to which we are exposed would increase or decrease net income by a negligible amount.
Inflation risk
Given the recent rise in inflation rates, there have been and may continue to be increases in shipping, labor and equipment costs, which could impact our profitability and that of our franchisees. Although we do not believe that inflation has had a material effect on our income from continuing operations, we have a substantial number of hourly employees in our corporate-owned stores that are paid wage rates at or based on the applicable federal or state minimum wage. Any increases in these minimum wages will subsequently increase our labor costs. We may or may not be able to offset cost increases in the future.
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ITEM 4. Controls and Procedures
Evaluation of disclosure controls and procedures
Our management, with the participation of our interim Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.
Based on that evaluation, our interim Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings
We are currently involved in various claims and legal actions that arise in the ordinary course of business, most of which are covered by insurance. We do not believe that the ultimate resolution of these actions will have a material adverse effect on our business, financial condition, results of operations, liquidity or capital resources nor do we believe that there is a reasonable possibility that we will incur material loss as a result of such actions. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could have a material adverse effect on our business, financial condition and results of operations.
ITEM 1A. Risk Factors.
Our marketable debt securities portfolio is subject to credit, liquidity, market, and interest rate risks that could cause its value to decline and materially adversely affect our financial condition.
We maintain a portfolio of marketable debt securities through professional investment advisors. The investments in our portfolio are subject to our corporate investment policy, which focuses on the preservation of principal and avoiding speculative investments, maintaining adequate liquidity to meet our cash flow requirements, complying with our applicable debt covenants, minimizing risk through diversification, delivering competitive returns, providing fiduciary control over our cash and investments and complying with applicable laws. These investments are subject to general credit, liquidity, market, and interest rate risks. In particular, the value of our portfolio may decline due to changes in interest rates, instability in the global financial markets that reduces the liquidity of securities in our portfolio, and other factors, including unexpected or unprecedented events. As a result, we may experience a decline in value or loss of liquidity of our investments, which could materially adversely affect our financial condition. We attempt to mitigate these risks through diversification of our investments and continuous monitoring of our portfolio’s overall risk profile, but the value of our investments may nevertheless decline. To the extent that we increase the amount of these investments in the future, these risks could be exacerbated.
If we cannot retain our key employees and hire additional highly qualified employees, we may not be able to successfully manage our businesses and pursue our strategic objectives.
We are highly dependent on the services of our senior management team and other key employees at our corporate headquarters and our corporate-owned stores, and on our and our franchisees’ ability to recruit, retain and motivate key employees. Competition for such employees can be intense, and the inability to attract and retain the additional qualified employees required to expand our activities, or the loss of current key employees, or our ability to successfully identify and engage a highly qualified permanent CEO could adversely affect our and our franchisees’ operating efficiency and financial condition.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information regarding purchases of shares of our Class A common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the three months ended September 30, 2023.
Issuer Purchases of Equity Securities
Period Total Number of Shares Purchased Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1)
07/01/23 - 07/31/23 — $ — — $ 374,970,426
08/01/23 - 08/31/23 — — — 374,970,426
09/01/23 - 09/30/23 — — — 374,970,426
Total — $ — —

(1) On November 4, 2022, our board of directors approved a share repurchase program of up to $500,000,000, which replaced the previously approved November 5, 2019 share repurchase program.

In connection with our IPO, we and the existing holders of Holdings Units entered into an exchange agreement under which they (or certain permitted transferees) have the right, from time to time and subject to the terms of the exchange agreement, to exchange their Holdings Units, together with a corresponding number of shares of Class B common stock, for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. As an existing holder of Holdings Units exchanges Holdings Units
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for shares of Class A common stock, the number of Holdings Units held by Planet Fitness, Inc. is correspondingly increased, and a corresponding number of shares of Class B common stock are canceled.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
None.
ITEM 5. Other Information.
None.
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ITEM 6. Exhibits
Description of Exhibit
Incorporated Herein by Reference
Exhibit Filed Exhibit
Number Exhibit Description Herewith Form File No. Filing Date Number
10.1 8-K 001-37534 09/15/23 10.1
10.2 X
10.3 8-K 001-37534 11/01/23 10.1
10.4 X
10.5 X
10.6 X
31.1 X
31.2 X
32.1 X
32.2 X
101
The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Changes in' Equity (Deficit), and (vi) Notes to Consolidated Financial Statements tagged as blocks of text and including detailed tags
X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
X
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Planet Fitness, Inc.
(Registrant)
Date: November 9, 2023 /s/ Thomas Fitzgerald
Thomas Fitzgerald
Chief Financial Officer
(On behalf of the Registrant and as Principal Financial Officer)

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TABLE OF CONTENTS
Part I-financial InformationItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosure About Market RiskItem 4. Controls and ProceduresPart Ii-other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits

Exhibits

10.1 Separation Agreement, dated as of September 15, 2023, between Planet Fitness, Inc. and Chris Rondeau. 8-K 001-37534 09/15/23 10.1 10.2 Employment Offer Letterdated as of September 15, 2023between Planet Fitness, Inc. and Craig R. Benson. 10.3 Employment Offer Letter, originally dated as of September 15, 2023 and as amended by the Addendum on October 31, 2023, between Planet Fitness, Inc. and Craig R. Benson. 8-K 001-37534 11/01/23 10.1 10.4 Amended and Restated Planet Fitness, Inc. 2015 Omnibus Incentive Plan. 10.5 Amended and Restated Planet Fitness, Inc. Long-Term Cash Incentive Program. 10.6 Amended and Restated Planet Fitness, Inc. Non-Employee Director Compensation Program. 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002