Planet Fitness Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2024 and the related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2023 and the related notes contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2024. 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.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 and the related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2023 and the related notes contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2024. 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.

Previous wording

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 national brand. Our mission is to enhance people’s lives and democratize fitness by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone, where anyone—and we mean anyone—can feel they belong. 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 as low as $10 per month for our standard Classic Card membership. This attractive value proposition is designed to appeal to a broad population, including occasional gym users over age 14 who are not gym members, particularly those who find the traditional fitness club setting intimidating and expensive. We and our franchisees fiercely protect Planet Fitness’ 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.

Current wording

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 national brand. Our mission is to enhance people’s lives and democratize fitness by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone, where anyone—and we mean anyone—can feel they belong. 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 as low as $15 per month to new members for our standard Classic Card membership. This attractive value proposition is designed to appeal to a broad population, including occasional gym users over age 14 who are not gym members, particularly those who find the traditional fitness club setting intimidating and expensive. We and our franchisees fiercely protect Planet Fitness’ 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.

Previous wording

As of March 31, 2024, we had approximately 19.6 million members and 2,599 stores in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia. Of our 2,599 stores, 2,341 are franchised and 258 are corporate-owned.

Current wording

As of June 30, 2024, we had approximately 19.7 million members and 2,617 stores in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia. Of our 2,617 stores, 2,358 are franchised and 259 are corporate-owned.

Previous wording

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 U.S., Puerto Rico, Canada, Panama, Mexico and Australia, as well as revenues and expenses of the NAF. Our Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the U.S. and Canada. The Equipment segment includes the sale of equipment to franchisee-owned stores in the U.S., Canada, and Mexico. 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 following tables summarize the financial information for our segments:

Current wording

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 U.S., Puerto Rico, Canada, Panama, Mexico and Australia, as well as revenues and expenses of the NAF. Our Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the U.S., Canada and Spain. The Equipment segment includes the sale of equipment to franchisee-owned stores in the U.S., Canada, and Mexico. 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 following tables summarize the financial information for our segments:

Previous wording

We review the total amount of dues we collect from 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. System-wide sales is an operating measure that includes monthly membership dues and annual fee billings by franchisees that are not revenue realized by the Company in accordance with GAAP, as well as monthly membership dues and annual fee billings by our corporate-owned stores. While we do not record sales by franchisees as revenue, and such sales are not included in our condensed consolidated financial statements, we believe that this operating measure aids in understanding how we derive royalty revenue and is important in evaluating our performance. Provided our stores are open, we bill monthly dues on or around the 17 th of every month and bill annual fees once per year from each member based upon when the member signed his or her membership agreement. System-wide sales were $1.2 billion and $1.1 billion, during the three months ended March 31, 2024 and 2023, respectively.

Current wording

We review the total amount of dues we collect from 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. System-wide sales is an operating measure that includes monthly membership dues and annual fee billings by franchisees that are not revenue realized by the Company in accordance with GAAP, as well as monthly membership dues and annual fee billings by our corporate-owned stores. While we do not record sales by franchisees as revenue, and such sales are not included in our condensed consolidated financial statements, we believe that this operating measure aids in understanding how we derive royalty revenue and is important in evaluating our performance. Provided our stores are open, we bill monthly dues on or around the 17 th of every month and bill annual fees once per year from each member based upon when the member signed their membership agreement. System-wide sales were $1.2 billion and $1.1 billion during the three months ended June 30, 2024 and 2023, respectively, and $2.5 billion and $2.3 billion for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

(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 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. An immaterial adjustment for both the three months ended March 31, 2024 and 2023 reflect the difference between the higher rent expense recorded in accordance with GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $0.1 million for both the three months ended March 31, 2024 and 2023 are due to the amortization of favorable and unfavorable lease intangible assets. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our condensed consolidated statements of operations.

Current wording

(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 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. The rent related purchase accounting adjustments are adjustments to rent expense recorded in store operations on our condensed consolidated statements of operations, which reflect the difference between the higher rent expense recorded in accordance with GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred as well as the amortization of favorable and unfavorable lease intangible assets.

Previous wording

(4) Represents severance related expenses recorded in connection with a reduction in force during the three months ended March 31, 2024.

Current wording

(5) Represents severance related expenses recorded in connection with a reduction in force during the six months ended June 30, 2024 and the elimination of the President and Chief Operating Officer position during the three and six months ended June 30, 2023.

Previous wording

(5) Represents certain expenses recorded in connection with the departure of the Chief Executive Officer including costs associated with the search for a new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Current wording

(6) Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for and stock based compensation associated with certain equity awards granted to the Company’s new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Previous wording

(7) Represents a loss on the adjustment of the allowance for credit losses on the Company’s held-to-maturity investment.

Current wording

(8) Represents a loss (gain) on the adjustment of the allowance for credit losses on the Company’s held-to-maturity investment.

Previous wording

(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 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. An immaterial adjustment for both the three months ended March 31, 2024 and 2023 reflect the difference between the higher rent expense recorded in accordance with GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $0.1 million for both the three months ended March 31, 2024 and 2023 are due to the amortization of favorable and unfavorable lease intangible assets. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our condensed consolidated statements of operations.

Current wording

(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 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. The rent related purchase accounting adjustments are adjustments to rent expense recorded in store operations on our condensed consolidated statements of operations, which reflect the difference between the higher rent expense recorded in accordance with GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred as well as the amortization of favorable and unfavorable lease intangible assets.

Previous wording

(4) Represents severance related expenses recorded in connection with a reduction in force during the three months ended March 31, 2024.

Current wording

(5) Represents severance related expenses recorded in connection with a reduction in force during the six months ended June 30, 2024 and the elimination of the President and Chief Operating Officer position during the three and six months ended June 30, 2023.

Previous wording

(5) Represents certain expenses recorded in connection with the departure of the Chief Executive Officer including costs associated with the search for a new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Current wording

(6) Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for and stock based compensation associated with certain equity awards granted to the Company’s new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Previous wording

(7) Represents a loss on the adjustment of the allowance for credit losses on the Company’s held-to-maturity investment.

Current wording

(8) Represents a loss (gain) on the adjustment of the allowance for credit losses on the Company’s held-to-maturity investment.

Previous wording

(12)Includes $3.1 million of amortization of intangible assets recorded in connection with the 2012 Acquisition, other than favorable leases, for each of the three months ended March 31, 2024 and 2023, and $9.7 million and $9.5 million of amortization of intangible assets created in connection with historical acquisitions of franchisee-owned stores for the three months ended March 31, 2024 and 2023, respectively. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, in each period.

Current wording

(14)Includes $3.1 million for both the three months ended June 30, 2024 and 2023 and $6.2 million for both the six months ended June 30, 2024 and 2023 of amortization of intangible assets recorded in connection with the 2012 Acquisition, other than favorable leases, and $9.7 million and $9.9 million for the three months ended June 30, 2024 and 2023, respectively, and $19.3 million for both the six months ended June 30, 2024 and 2023, of amortization of intangible assets created in connection with historical acquisitions of franchisee-owned stores. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, in each period.

Previous wording

(13)Represents corporate income taxes at an assumed effective tax rate of 25.8% and 25.9% for the three months ended March 31, 2024 and 2023, respectively, applied to adjusted income before income taxes.

Current wording

(15)Represents corporate income taxes at an assumed effective tax rate of 25.8% for both the three and six months ended June 30, 2024 and 25.9% for both the three and six months ended June 30, 2023 applied to adjusted income before income taxes.

Previous wording

(14)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.

Current wording

(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.

Previous wording

(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. as of the beginning of the period presented. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and shares of Class B common stock for shares of Class A common stock.

Current wording

(2)Represents net income attributable to non-controlling interests and the assumed 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. as of the beginning of the period presented.

Previous wording

(4)Represents corporate income taxes at an assumed effective tax rate of 25.8% and 25.9% for the three months ended March 31, 2024 and 2023, respectively, applied to adjusted income before income taxes.

Current wording

(4)Represents corporate income taxes at an assumed effective tax rate of 25.8% for both the three and six months ended June 30, 2024 and 25.9% for both the three and six months ended June 30, 2023 applied to adjusted income before income taxes.

Previous wording

Total revenue was $248.0 million for the three months ended March 31, 2024, compared to $222.2 million for three months ended March 31, 2023, an increase of $25.8 million, or 11.6%.

Current wording

Total revenue was $300.9 million for the three months ended June 30, 2024, compared to $286.5 million for three months ended June 30, 2023, an increase of $14.5 million, or 5.1%.

Previous wording

Franchise segment revenue was $104.0 million for the three months ended March 31, 2024, compared to $92.7 million for three months ended March 31, 2023, an increase of $11.3 million, or 12.2%.

Current wording

Franchise segment revenue was $107.8 million for the three months ended June 30, 2024, compared to $98.8 million for three months ended June 30, 2023, an increase of $8.9 million, or 9.1%.

Previous wording

Franchise revenue was $84.2 million for the three months ended March 31, 2024, compared to $75.9 million for the three months ended March 31, 2023, an increase of $8.4 million, or 11.0%. Included in franchise revenue is royalty revenue of $72.3 million, franchise and other fees of $9.5 million, and placement revenue of $1.8 million for the three months ended March 31, 2024, compared to royalty revenue of $64.5 million, franchise and other fees of $9.4 million, and placement revenue of $1.6 million for the three months ended March 31, 2023. Of the $7.8 million increase in royalty revenue, $4.0 million was attributable to a franchise same store sales increase of 6.3%, $1.6 million was attributable to new stores opened since January 1, 2023 and $2.2 million was from higher royalties on annual fees.

Current wording

Franchise revenue was $87.7 million for the three months ended June 30, 2024, compared to $80.8 million for the three months ended June 30, 2023, an increase of $6.8 million, or 8.4%. Included in franchise revenue is royalty revenue of $73.1 million, franchise and other fees of $7.9 million, and placement revenue of $5.4 million for the three months ended June 30, 2024, respectively, compared to royalty revenue of $66.8 million, franchise and other fees of $6.9 million, and placement revenue of $6.3 million for the three months ended June 30, 2023, respectively. Of the $6.3 million increase in royalty revenue, $3.1 million was attributable to a franchise same store sales increase of 4.3%, $1.8 million was attributable to new stores opened since April 1, 2023 and $1.3 million was from higher royalties on annual fees.

Previous wording

National advertising fund revenue was $19.8 million for the three months ended March 31, 2024, compared to $16.8 million for the three months ended March 31, 2023, an increase of $3.0 million, or 17.7%. This increase was primarily attributable to $2.8 million from higher same store sales and new stores opened since January 1, 2023.

Current wording

National advertising fund revenue was $20.1 million for the three months ended June 30, 2024, compared to $18.0 million for the three months ended June 30, 2023, an increase of $2.1 million, or 11.8%. This increase was primarily attributable to $0.9 million from the collection of national advertising fund revenue on annual fees billed to new members and $0.9 million from higher same store sales and new stores opened since April 1, 2023.

Previous wording

Equipment segment revenue was $21.6 million for the three months ended March 31, 2024, compared to $23.7 million for the three months ended March 31, 2023, a decrease of $2.0 million, or 8.6%. This decrease was primarily attributable to $1.1 million of lower revenue from equipment sales to new franchisee-owned stores and $0.9 million of lower revenue from equipment sales to existing franchisee-owned stores. In the three months ended March 31, 2024, we had equipment sales to 14 new franchisee-owned stores compared to 18 in the same period last year.

Current wording

Equipment segment revenue was $67.7 million for the three months ended June 30, 2024, compared to $73.9 million for the three months ended June 30, 2023, a decrease of $6.2 million, or 8.4%. This decrease was primarily attributable to $4.7 million of lower revenue from equipment sales to new franchisee-owned stores and $1.5 million of lower revenue from equipment sales to existing franchisee-owned stores. In the three months ended June 30, 2024, we had equipment sales to 18 new franchisee-owned stores compared to 26 in the same period last year.

Previous wording

Cost of revenue, which primarily relates to our equipment segment, was $19.0 million for the three months ended March 31, 2024, compared to $19.4 million for the three months ended March 31, 2023, a decrease of $0.4 million, or 1.9%. This decrease was primarily attributable to lower equipment sales to new and existing franchisee-owned stores, as described above.

Current wording

Cost of revenue, which primarily relates to our equipment segment, was $51.9 million for the three months ended June 30, 2024, compared to $59.5 million for the three months ended June 30, 2023, a decrease of $7.5 million, or 12.7%. This decrease was primarily attributable to lower equipment sales to new and existing franchisee-owned stores, as described above.

Previous wording

Store operations expense, which relates to our Corporate-owned stores segment, was $74.4 million for the three months ended March 31, 2024, compared to $66.0 million for the three months ended March 31, 2023, an increase of $8.3 million, or 12.6%. This increase was primarily attributable to $4.6 million from new stores opened since January 1, 2023, $2.5 million from stores included in our same store sales base as a result of higher rent, occupancy, and payroll expense, and $1.2 million from the stores acquired in the Florida Acquisition.

Current wording

Store operations expense, which relates to our corporate-owned stores segment, was $70.2 million for the three months ended June 30, 2024, compared to $58.9 million for the three months ended June 30, 2023, an increase of $11.3 million, or 19.2%. This increase was primarily attributable to $6.4 million from stores included in our same store sales base as a result of higher marketing, rent, occupancy and payroll expenses and $4.8 million from new stores opened and acquired since April 1, 2023.

Previous wording

National advertising fund expense was $19.8 million for the three months ended March 31, 2024, compared to $17.0 million for the three months ended March 31, 2023, an increase of $2.8 million, or 16.5%. This increase was primarily a result of higher advertising and marketing expenditures due to higher national advertising revenue as described above.

Current wording

National advertising fund expense was $20.1 million for the three months ended June 30, 2024, compared to $17.9 million for the three months ended June 30, 2023, an increase of $2.2 million, or 12.4%. This increase was primarily a result of higher advertising and marketing expenditures due to higher national advertising revenue as described above.

Previous wording

Depreciation and amortization expense was $39.4 million for the three months ended March 31, 2024, compared to $36.0 million for the three months ended March 31, 2023, an increase of $3.4 million, or 9.4%. This increase was primarily attributable to the assets acquired in the Florida Acquisition as well as new stores opened since January 1, 2023.

Current wording

Depreciation and amortization expense was $39.8 million for the three months ended June 30, 2024, compared to $36.8 million for the three months ended June 30, 2023, an increase of $3.1 million, or 8.3%. This increase was primarily attributable to the new stores opened since April 1, 2023.

Previous wording

Interest income was $5.5 million for the three months ended March 31, 2024, compared to $3.9 million for the three months ended March 31, 2023, an increase of $1.5 million, or 38.9%. This increase was primarily due to a greater allocation of cash on hand into higher yielding marketable securities and due to higher interest rates on our cash, cash equivalents and investments in marketable securities in the current period compared to the same period last year.

Current wording

Interest income was $5.6 million for the three months ended June 30, 2024, compared to $4.2 million for the three months ended June 30, 2023, an increase of $1.5 million, or 34.9%. This increase was primarily due to a higher balance of cash and cash equivalents and investments in marketable securities and due to higher interest rates in the current period compared to the same period last year.

Previous wording

Other income, net was $0.6 million for the three months ended March 31, 2024, compared to $0.1 million for the three months ended March 31, 2023. This increase was primarily attributable to $0.4 million on the remeasurement of our tax benefit arrangements due to changes in our effective tax rate.

Current wording

Other income, net was $1.0 million for the three months ended June 30, 2024, compared to $0.4 million for the three months ended June 30, 2023. This increase was primarily attributable to $1.0 million on the remeasurement of our tax benefit arrangements due to changes in our deferred state tax rate.

Previous wording

Income tax expense was $14.3 million for the three months ended March 31, 2024, compared to $9.6 million for the three months ended March 31, 2023, an increase of $4.8 million, or 49.7%. This increase is primarily attributable to our higher income before taxes in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Income tax expense was $19.0 million for the three months ended June 30, 2024, compared to $15.8 million for the three months ended June 30, 2023, an increase of $3.2 million, or 20.0%. This increase is primarily attributable to our higher income before taxes in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

The Company’s effective tax rate was 28.4% for the three months ended March 31, 2024, compared to 27.6% in the prior year period. The increase in the effective income tax rate was primarily due to remeasurement of deferred tax assets.

Current wording

The Company’s effective tax rate was 27.3% for the three months ended June 30, 2024, compared to 26.3% in the prior year period. The increase in the effective income tax rate was primarily due to non-deductible compensation and remeasurement of deferred tax assets.

Previous wording

Franchise segment EBITDA was $76.3 million for the three months ended March 31, 2024, compared to $64.7 million for the three months ended March 31, 2023, an increase of $11.6 million, or 17.9%. This increase was primarily due to higher franchise and NAF revenue of $8.4 million and $3.0 million, respectively, as described above, $3.1 million of lower other losses, net primarily from the legal reserve recorded in the prior year period, as described above, and $0.7 million of lower selling, general and administrative expense, partially offset by $2.8 million of higher NAF expense.

Current wording

Franchise segment EBITDA was $77.4 million for the three months ended June 30, 2024, compared to $66.1 million for the three months ended June 30, 2023, an increase of $11.3 million, or 17.1%. This increase was primarily due to higher franchise and NAF revenue of $6.8 million and $2.1 million, respectively, as described above, a $3.1 million decrease in other losses, net due to a legal reserve recorded in the prior year period, as described above, and $1.5 million of lower selling, general and administrative expense, partially offset by $2.2 million of higher NAF expense.

Previous wording

Equipment segment EBITDA was $4.8 million for the three months ended March 31, 2024, compared to $5.6 million for the three months ended March 31, 2023, a decrease of $0.8 million, or 14.6%. This decrease was primarily driven by lower equipment sales to new and existing franchisee-owned stores, as described above.

Current wording

Cost of revenue, which primarily relates to our equipment segment, was $70.9 million for the six months ended June 30, 2024, compared to $78.8 million for the six months ended June 30, 2023, a decrease of $7.9 million, or 10.0%. This decrease was primarily attributable to lower equipment sales to new and existing franchisee-owned stores, as described above.

Previous wording

Selling, general and administrative expenses were $29.2 million for the three months ended March 31, 2024, compared to $27.8 million for the three months ended March 31, 2023, an increase of $1.4 million, or 5.1%. This increase was primarily attributable to higher consulting costs and higher severance related costs from a headcount reduction in the current year period, which were partially offset by lower expenses from marketing and travel expenses.

Current wording

Selling, general and administrative expenses were $60.8 million for the six months ended June 30, 2024, compared to $60.4 million for the six months ended June 30, 2023, an increase of $0.4 million, or 0.6%. This increase was primarily attributable to higher consulting costs and higher severance related costs from a headcount reduction in the current year period, which were partially offset by lower payroll expense from the headcount reduction and lower marketing expenses.

Previous wording

Other losses, net was $0.5 million for the three months ended March 31, 2024, compared to $3.9 million for the three months ended March 31, 2023, a decrease of $3.5 million, or 87.7%. The decrease was primarily the result of a legal reserve recorded in the prior year period.

Current wording

Other losses, net was $0.4 million for the six months ended June 30, 2024, compared to $7.8 million for the six months ended June 30, 2023, a decrease of $7.3 million, or 94.6%. The decrease was primarily the result of a legal reserve recorded in the prior year period.

Previous wording

Corporate-owned stores segment EBITDA was $42.1 million for the three months ended March 31, 2024, compared to $33.5 million for the three months ended March 31, 2023, an increase of $8.6 million, or 25.6%. This increase was primarily attributable to $8.0 million from the corporate-owned same store sales increase of 6.2% and $1.2 million from the stores acquired in the Florida Acquisition, partially offset by lower EBITDA of $1.1 million from new stores opened since January 1, 2023. Depreciation and amortization increased $2.5 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and was primarily attributable to the Florida Acquisition and new stores opened since January 1, 2023.

Current wording

Corporate-owned stores segment EBITDA was $91.4 million for the six months ended June 30, 2024, compared to $82.2 million for the six months ended June 30, 2023, an increase of $9.2 million, or 11.1%. This increase was primarily attributable to $8.8 million from the corporate-owned same store sales increase of 5.1% and $1.2 million from the acquisition of four stores in Florida in the prior year, partially offset by lower EBITDA of $1.0 million from new stores opened since January 1, 2023. Depreciation and amortization increased $4.8 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and was primarily attributable to new stores opened and acquired since January 1, 2023.

Previous wording

As of March 31, 2024, we had $301.7 million of cash and cash equivalents, $93.4 million of short-term marketable securities, $45.2 million of long-term marketable securities and $46.2 million of restricted cash.

Current wording

As of June 30, 2024, we had $247.0 million of cash and cash equivalents, $103.2 million of short-term marketable securities, $49.7 million of long-term marketable securities and $47.8 million of restricted cash.

Previous wording

For the three months ended March 31, 2024, net cash provided by operating activities was $89.7 million compared to $97.9 million in the three months ended March 31, 2023, a decrease of $8.2 million, or 8.4%. Of the decrease, $24.7 million was due to unfavorable changes in working capital primarily attributable to accounts receivable and other assets and other current assets and a lower relative increase in other liabilities and other current liabilities. This decrease was partially offset by $16.5 million of higher net income after adjustments to reconcile net income to net cash provided by operating activities.

Current wording

For the six months ended June 30, 2024, net cash provided by operating activities was $167.9 million compared to $157.3 million in the six months ended June 30, 2023, an increase of $10.6 million, or 6.7%. Of the increase, $28.6 million was due to higher net income after adjustments to reconcile net income to net cash provided by operating activities. This increase was partially offset by $18.0 million of unfavorable changes in working capital primarily attributable to an increase in other assets and other current assets, a lower relative increase in other liabilities and other current liabilities and higher payments made under tax benefit arrangements in the current year period partially offset by a lower reduction in accounts payable and accrued expenses compared to the prior year period.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities was $38.6 million compared to $23.0 million in the three months ended March 31, 2023, an increase of $15.6 million. The primary drivers of the increase were $12.3 million of cash used for the purchase of marketable securities, net of maturities and $3.3 million of higher capital expenditures.

Current wording

For the six months ended June 30, 2024, net cash used in investing activities was $90.4 million compared to $201.0 million in the six months ended June 30, 2023, a decrease of $110.6 million. The primary drivers of the decrease were $93.5 million of lower cash used for the purchase of marketable securities, net of maturities, and $26.3 million used for the Florida Acquisition in the prior year period, partially offset by $19.2 million of higher capital expenditures in the current year period.

Previous wording

For the three months ended March 31, 2024, net cash used in financing activities was $25.0 million compared to $24.6 million in the three months ended March 31, 2023, an increase of $0.4 million. The primary driver of the increase was a $6.3 million decrease in the proceeds from issuance of Class A common stock, partially offset by a $5.0 million decrease in cash used for share repurchases in 2024.

Current wording

For the six months ended June 30, 2024, net cash used in financing activities was $103.7 million compared to $130.9 million in the six months ended June 30, 2023, a decrease of $27.2 million. The primary drivers of the decrease were a $198.9 million increase in net cash provided from long-term debt, consisting of $800.0 million of borrowings, $589.1 million of principal payments and $12.1 million of deferred financing costs incurred, partially offset by a $175.2 million increase in cash used for share repurchases in 2024.