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, 2026 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, 2025 and the related notes contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2026. 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, 2026 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, 2025 and the related notes contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2026. 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

As of March 31, 2026, we had approximately 21.5 million members and 2,909 clubs in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, Australia and Spain. Of our 2,909 clubs, 2,617 are franchised and 292 are corporate-owned.

Current wording

As of June 30, 2026, we had approximately 21.5 million members and 2,930 clubs in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, Australia and Spain. Of our 2,930 clubs, 2,636 are franchised and 294 are corporate-owned.

Previous wording

As of March 31, 2026, we had contractual commitments to open approximately 750 new clubs.

Current wording

As of June 30, 2026, we had contractual commitments to open approximately 800 new clubs.

Previous wording

We operate and manage our business in three business segments: Franchise, Corporate-owned clubs and Equipment. Our Franchise segment includes operations related to our franchising business in the United States, Puerto Rico, Canada, Panama, Mexico and Australia, as well as revenues and expenses of the national advertising funds (“NAFs”). Our Corporate-owned clubs segment includes operations with respect to all corporate-owned clubs throughout the U.S., Canada, and Spain. The Equipment segment includes the sale of equipment to franchisee-owned clubs in the U.S., Canada and Mexico.

Current wording

We operate and manage our business in three business segments: Franchise, Corporate-owned clubs and Equipment. Our Franchise segment includes operations related to our franchising business in the United States, Puerto Rico, Canada, Panama, Mexico and Australia, as well as revenues and expenses of our National Advertising Fund (“NAF”) and Canadian Advertising Fund (“CAF,” and together with the NAF, the “NAFs”). Our Corporate-owned clubs segment includes operations with respect to all corporate-owned clubs throughout the U.S., Canada, and Spain. The Equipment segment includes the sale of equipment to franchisee-owned clubs in the U.S., Canada, Mexico, and Australia.

Previous wording

Clubs acquired from or sold to franchisees are removed from the franchisee-owned or corporate-owned same club sales base, as applicable, upon the ownership change and for the 12 months following the date of the ownership change. These clubs are included in the corporate-owned or franchisee-owned same club sales base, as applicable, beginning with the 13th month after the acquisition or sale. These clubs remain in the system-wide same club sales base in all periods. The following table shows our same club sales:

Current wording

Clubs acquired from or sold to franchisees are removed from the franchisee-owned or corporate-owned same club sales base, as applicable, upon the ownership change and for the 12 months following the date of the ownership change. These clubs are included in the corporate-owned or franchisee-owned same club sales base, as applicable, beginning in the 13th month after the acquisition or sale. These clubs remain in the system-wide same club sales base in all periods. The following table shows our same club sales:

Previous wording

We review the total amount of dues we bill to our members on a monthly basis, which allows us to assess changes in the performance of our corporate-owned and franchisee-owned clubs from period to period, any competitive pressures, local or regional membership traffic patterns and general market conditions that might impact our club 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 the Company’s corporate-owned clubs. While the Company does not record sales by franchisees as revenue, and such sales are not included in the Company’s consolidated financial statements, the Company believes that this operating measure aids in understanding how the Company derives its royalty revenue and is important in evaluating its performance. We typically bill monthly dues on or around the 17 th of every month and bill annual fees once per year to each member based upon when the member signed their membership agreement. System-wide sales were $1.4 billion and $1.3 billion during the three months ended March 31, 2026 and 2025, respectively.

Current wording

We review the total amount of dues we bill to our members on a monthly basis, which allows us to assess changes in the performance of our corporate-owned and franchisee-owned clubs from period to period, any competitive pressures, local or regional membership traffic patterns, and general market conditions that might impact our club 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 the Company’s corporate-owned clubs. While the Company does not record sales by franchisees as revenue, and such sales are not included in the Company’s consolidated financial statements, the Company believes that this operating measure aids in understanding how the Company derives its royalty revenue and is important in evaluating its performance. We typically bill monthly dues on or around the 17 th of every month and bill annual fees once per year to each member based upon when the member signed their membership agreement. System-wide sales were $1.4 billion during each of the three months ended June 30, 2026 and 2025, and $2.8 billion and $2.7 billion for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

(1) Represents severance related expenses recorded in connection with a reduction in force during the three months ended March 31, 2025.

Current wording

(1) Represents severance related expenses recorded in connection with a reduction in force during the three and six months ended June 30, 2025.

Previous wording

(2) Represents certain expenses recorded in connection with executive leadership transitions. During the three months ended March 31, 2026, amounts represent costs associated with the departure of the Chief Financial Officer and the search for a new Chief Financial Officer. During the three months ended March 31, 2025, amounts represent stock-based compensation associated with certain equity awards granted to the Company’s Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Current wording

(2) Represents certain expenses recorded in connection with executive leadership transitions. During the three and six months ended June 30, 2026, amounts represent costs associated with the departure of the Company’s former Chief Financial Officer and costs associated with the search for and equity-based compensation associated with certain equity awards granted to the Company’s new Chief Financial Officer and Chief Executive Officer. During the three and six months ended June 30, 2025, amounts represent costs for equity-based compensation associated with certain equity awards granted to the Company’s Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Previous wording

(1) Represents severance related expenses recorded in connection with a reduction in force during the three months ended March 31, 2025.

Current wording

(1) Represents severance related expenses recorded in connection with a reduction in force during the three and six months ended June 30, 2025.

Previous wording

(2) Represents certain expenses recorded in connection with executive leadership transitions. During the three months ended March 31, 2026, amounts represent costs associated with the departure of the Chief Financial Officer and the search for a new Chief Financial Officer. During the three months ended March 31, 2025, amounts represent stock-based compensation associated with certain equity awards granted to the Company’s Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Current wording

(2) Represents certain expenses recorded in connection with executive leadership transitions. During the three and six months ended June 30, 2026, amounts represent costs associated with the departure of the Company’s former Chief Financial Officer and costs associated with the search for and equity-based compensation associated with certain equity awards granted to the Company’s new Chief Financial Officer and Chief Executive Officer. During the three and six months ended June 30, 2025, amounts represent costs for equity-based compensation associated with certain equity awards granted to the Company’s Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

Previous wording

(7)Represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, associated with intangible assets created in connection with historical acquisitions of franchisee-owned clubs.

Current wording

(9)Represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, associated with intangible assets created in connection with historical acquisitions of franchisee-owned clubs.

Previous wording

(8)Represents corporate income taxes at an assumed effective tax rate of 26.0% and 25.9% for the three months ended March 31, 2026 and 2025, respectively, applied to adjusted income before income taxes.

Current wording

(10)Represents corporate income taxes at an assumed effective tax rate of 26.0% for each of the three and six months ended June 30, 2026 and 25.9% for each of the three and six months ended June 30, 2025, applied to adjusted income before income taxes.

Previous wording

(9)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

(11)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

(4)Represents corporate income taxes at an assumed effective tax rate of 26.0% and 25.9% for the three months ended March 31, 2026 and 2025, respectively, applied to adjusted income before income taxes.

Current wording

(4)Represents corporate income taxes at an assumed effective tax rate of 26.0% for each of the three and six months ended June 30, 2026 and 25.9% for each of the three and six months ended June 30, 2025, applied to adjusted income before income taxes.

Previous wording

Franchise revenue was $102.2 million for the three months ended March 31, 2026, compared to $93.2 million for the three months ended March 31, 2025, an increase of $9.0 million, or 9.7%. Included in franchise revenue are the following:

Current wording

Franchise revenue was $102.9 million for the three months ended June 30, 2026, compared to $96.9 million for the three months ended June 30, 2025, an increase of $6.0 million, or 6.2%. Included in franchise revenue are the following:

Previous wording

National advertising fund revenue was $32.2 million for the three months ended March 31, 2026, compared to $21.9 million for the three months ended March 31, 2025, an increase of $10.3 million, or 46.8%. This increase was primarily attributable to a 1% rate increase to NAF contributions from 2% to 3% for fiscal year 2026.

Current wording

NAF revenue was $32.9 million for the three months ended June 30, 2026, compared to $22.8 million for the three months ended June 30, 2025, an increase of $10.1 million, or 44.5%. This increase was primarily attributable to a 1% rate increase to NAF contributions from 2% to 3% for 2026, higher same club sales and new clubs opened since April 1, 2025.

Previous wording

Equipment segment revenue was $62.1 million for the three months ended March 31, 2026, compared to $27.8 million for the three months ended March 31, 2025, an increase of $34.3 million, or 123.4%. This increase was primarily attributable to $32.0 million of higher revenue from equipment sales to existing franchisee-owned clubs and $2.3 million of higher revenue from equipment sales to new franchisee-owned clubs. In the three months ended March 31, 2026, we had equipment sales to 14 new franchisee-owned clubs compared to 10 in the same period last year.

Current wording

Equipment segment revenue was $85.6 million for the three months ended June 30, 2026, compared to $82.2 million for the three months ended June 30, 2025, an increase of $3.4 million, or 4.1%. This increase was primarily attributable to $1.7 million of higher revenue from equipment sales to new franchisee-owned clubs and $1.6 million of higher revenue from equipment sales to existing franchisee-owned clubs. In the three months ended June 30, 2026, we had equipment sales to 21 new franchisee-owned clubs compared to 19 in the same period last year.

Previous wording

Cost of revenue, which primarily relates to our equipment segment, was $45.3 million for the three months ended March 31, 2026, compared to $22.5 million for the three months ended March 31, 2025, an increase of $22.9 million, or 101.6%. This increase was primarily attributable to higher replacement equipment sales to franchisee-owned clubs and higher equipment sales to new franchisee-owned clubs, as described above.

Current wording

Cost of revenue, which primarily relates to our equipment segment, was $64.5 million for the three months ended June 30, 2026, compared to $59.4 million for the three months ended June 30, 2025, an increase of $5.1 million, or 8.5%. This increase was primarily attributable to higher equipment sales to new and existing franchisee-owned clubs, as described above.

Previous wording

Club operations expense, which relates to our Corporate-owned clubs segment, was $88.2 million for the three months ended March 31, 2026, compared to $81.7 million for the three months ended March 31, 2025, an increase of $6.5 million, or 8.0%. This increase was primarily attributable to $5.1 million from new clubs opened since January 1, 2025 before they move into the same club sales base and $4.6 million from clubs included in our same club sales base as a result of higher marketing primarily due to the 1% rate increase in NAF contributions for fiscal year 2026, partially offset by $3.2 million of club operations expense attributable to the clubs located in California that the Company sold to a franchisee in August 2025.

Current wording

Club operations expense, which relates to our corporate-owned clubs segment, was $81.7 million for the three months ended June 30, 2026, compared to $77.4 million for the three months ended June 30, 2025, an increase of $4.3 million, or 5.5%. This increase was primarily attributable to $4.6 million from new clubs opened since April 1, 2025 before moving into the same club sales base and $3.2 million from clubs included in our same club sales base, both as a result of higher marketing, payroll, and occupancy related expenses. This increase was partially offset by $3.5 million of lower club operations expense attributable to the eight clubs located in California that the Company sold to a franchisee in August 2025.

Previous wording

Selling, general and administrative expenses were $34.2 million for the three months ended March 31, 2026, compared to $34.3 million for the three months ended March 31, 2025, a decrease of $0.2 million, or 0.5%. This decrease was primarily attributable to lower costs relating to consulting and marketing partially offset by higher payroll costs.

Current wording

Selling, general and administrative expenses were $34.4 million for the three months ended June 30, 2026, compared to $35.5 million for the three months ended June 30, 2025, a decrease of $1.1 million, or 3.1%. This decrease was primarily attributable to lower costs relating to consulting and marketing partially offset by higher rent expense associated with our new Boston office, which has not yet opened.

Previous wording

Depreciation and amortization expense was $40.3 million for the three months ended March 31, 2026, compared to $38.3 million for the three months ended March 31, 2025, an increase of $2.0 million, or 5.1%. This increase was primarily attributable to an increase in depreciation expense primarily from new clubs opened since January 1, 2025 partially offset by a decrease in amortization expense as a result of certain intangible assets becoming fully amortized during the prior year.

Current wording

Depreciation and amortization expense was $40.1 million for the three months ended June 30, 2026, compared to $38.4 million for the three months ended June 30, 2025, an increase of $1.7 million, or 4.5%. This increase was primarily attributable to an increase in depreciation expense, primarily from new clubs opened since April 1, 2025, partially offset by a decrease in amortization expense as a result of certain intangible assets becoming fully amortized during the current year period.

Previous wording

Interest income was $5.7 million for the three months ended March 31, 2026, compared to $5.8 million for the three months ended March 31, 2025, a decrease of $0.2 million, or 2.6%.

Current wording

Interest income was $5.3 million for the three months ended June 30, 2026, compared to $5.7 million for the three months ended June 30, 2025, a decrease of $0.4 million, or 7.4%.

Previous wording

Income tax expense was $19.3 million for the three months ended March 31, 2026, compared to $16.2 million for the three months ended March 31, 2025, an increase of $3.1 million, or 19.1%. This increase is primarily attributable to our higher income before taxes in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Current wording

Income tax expense was $28.5 million for the three months ended June 30, 2026, compared to $24.9 million for the three months ended June 30, 2025, an increase of $3.6 million, or 14.4%. This increase is primarily attributable to higher income before taxes in the current year period.

Previous wording

Franchise Segment Adjusted EBITDA was $94.7 million in the three months ended March 31, 2026, compared to $84.9 million in the three months ended March 31, 2025, an increase of $9.9 million, or 11.6%. This increase was primarily attributable to higher franchise and NAF revenue of $9.0 million and $10.3 million, respectively, and $2.2 million of higher other gain, net, partially offset by $10.3 million of higher NAF expense and $1.2 million of higher selling, general and administrative expense.

Current wording

Franchise Segment Adjusted EBITDA was $91.7 million for the three months ended June 30, 2026, compared to $86.5 million for the three months ended June 30, 2025, an increase of $5.2 million, or 6.1%. This increase was primarily attributable to higher NAF and franchise revenue of $10.1 million and $6.0 million, respectively, as described above, partially offset by $10.1 million of higher NAF expense and $0.4 million of higher selling, general and administrative expense.

Previous wording

Of the $6.0 million increase in royalty revenue, $2.8 million was attributable to a franchise same club sales increase of 3.5%, $2.2 million was attributable to new clubs opened since January 1, 2025 before they move into the same club sales base and $1.0 million was from higher royalties on annual fees. The $1.4 million increase in franchise and other fees was primarily attributable to higher ADA fees and “PF Perks” revenue. The $1.8 million increase in placement revenue was primarily driven by higher replacement equipment placements.

Current wording

Of the $10.7 million increase in royalty revenue, $4.5 million was attributable to a franchise same club sales increase of 2.6%, $4.7 million was attributable to new clubs opened since January 1, 2025 before moving into the same club sales base and $1.5 million was from higher royalties on annual fees. The $2.6 million increase in franchise and other fees was primarily attributable to higher “PF Perks” revenue and ADA fees and the $1.8 million increase in placement revenue was primarily driven by higher replacement equipment placements.

Previous wording

Corporate-owned clubs segment revenue was $140.6 million for the three months ended March 31, 2026, compared to $133.7 million for the three months ended March 31, 2025, an increase of $7.0 million, or 5.2%. This increase was primarily attributable to $6.9 million from the corporate-owned clubs in the same club sales base, of which $4.3 million was attributable to a same clubs sales increase of 3.5% and $2.6 million was attributable to higher other fees, and $4.9 million was from new clubs opened since January 1, 2025 before they move into the same club sales base. This increase was partially offset by $4.8 million of lower revenue attributable to the 8 clubs located in California that the Company sold to a franchisee in August 2025.

Current wording

Corporate-owned clubs segment revenue was $284.5 million for the six months ended June 30, 2026, compared to $272.7 million for the six months ended June 30, 2025, an increase of $11.8 million, or 4.3%. This increase was primarily attributable to $11.7 million from the corporate-owned clubs in the same club sales base, including $7.3 million attributable to a same club sales increase of 2.6% and $4.3 million attributable to other fees. Additionally, $9.9 million was from new clubs opened since January 1, 2025 before moving into the same club sales base. This increase was partially offset by $9.8 million of lower revenue attributable to the eight clubs located in California that the Company sold to a franchisee in August 2025.

Previous wording

National advertising fund expense was $32.2 million for the three months ended March 31, 2026, compared to $21.9 million for the three months ended March 31, 2025, an increase of $10.3 million, or 46.8%. This increase was primarily a result of higher advertising and marketing expenditures due to higher national advertising revenue as described above.

Current wording

NAF expense was $65.1 million for the six months ended June 30, 2026, compared to $44.7 million for the six months ended June 30, 2025, an increase of $20.4 million, or 45.7%. This increase was primarily a result of higher advertising and marketing expenditures due to higher national advertising revenue, as described above.

Previous wording

Interest expense was $33.0 million for the three months ended March 31, 2026, compared to $26.2 million for the three months ended March 31, 2025, an increase of $6.8 million, or 25.8%. This increase was primarily from a higher principal balance and blended interest rate on our indebtedness related to the issuance of the 2025 Notes in December 2025.

Current wording

Interest expense was $66.4 million for the six months ended June 30, 2026, compared to $52.4 million for the six months ended June 30, 2025, an increase of $14.0 million, or 26.7%. This increase was primarily attributable to a higher principal balance and blended interest rate on our indebtedness related to the issuance of the 2025 Notes in December 2025 and draw down on the Variable Funding Notes in the current year period.

Previous wording

The Company’s effective tax rate was 26.8% for the three months ended March 31, 2026, compared to 27.4% in the prior year period. The decrease in the effective income tax rate was primarily attributable to a lower net impact of the Spanish valuation allowance in the current year period compared to the prior year period.

Current wording

The Company’s effective tax rate was 28.4% for the six months ended June 30, 2026, compared to 28.8% for the six months ended June 30, 2025. The decrease in the effective income tax rate was primarily due to the remeasurement of deferred tax assets in the prior year period.

Previous wording

Equipment Segment Adjusted EBITDA was $19.5 million in the three months ended March 31, 2026, compared to $7.4 million in the three months ended March 31, 2025, an increase of $12.0 million, or 161.6%. This increase was primarily driven by higher equipment sales to existing and new franchisee-owned clubs, as described above.

Current wording

Equipment Segment Adjusted EBITDA was $43.8 million for the six months ended June 30, 2026, compared to $33.9 million for the six months ended June 30, 2025, an increase of $9.9 million, or 29.3%. This increase was primarily attributable to higher equipment sales to existing and new franchisee-owned clubs, as described above, partially offset by the timing of replacement equipment discounts.

Previous wording

As of March 31, 2026, we had $375.3 million of cash and cash equivalents, $98.5 million of short-term marketable securities, $97.0 million of long-term marketable securities and $81.2 million of restricted cash.

Current wording

As of June 30, 2026, we had $298.3 million of cash and cash equivalents, $102.5 million of short-term marketable securities, $70.7 million of long-term marketable securities and $72.9 million of restricted cash.

Previous wording

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 that with our available cash balance, the cash generated from our operations, and amounts available under our Variable Funding Notes (as defined below) will be adequate to meet the above needs for at least the next 12 months. Our ability to continue to fund these items could be adversely affected by the occurrence of any of the events described under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2025. 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.

Current wording

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 that with our available cash balance, 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 our tax benefit arrangements, capital expenditures and working capital needs for at least the next 12 months. Our ability to continue to fund these items could be adversely affected by the occurrence of any of the events described under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2025. 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.

Previous wording

Net cash provided by operating activities of $147.5 million for the three months ended March 31, 2026 was primarily attributable to $51.8 million of net income and $56.6 million of adjustments to reconcile net income to net cash provided by operating activities, primarily consisting of depreciation and amortization, deferred tax expense, equity-based compensation expense, amortization of deferred financing costs and other adjustments and a $39.2 million working capital cash inflow. The working capital cash inflow was primarily attributable to a decrease in accounts receivable primarily from collections in 2026, an increase in deferred revenue primarily from increased annual billing and NAF revenue, an increase in income taxes payable, and a decrease in inventory primarily from the delivery of equipment orders. The working capital cash inflow was partially offset by an increase in restricted assets for the NAF and a decrease in accounts payable and accrued expenses primarily related to equipment orders from prior year end.

Current wording

Net cash provided by operating activities of $193.4 million for the six months ended June 30, 2026 was primarily attributable to $119.2 million of net income and $106.0 million of adjustments to reconcile net income to net cash provided by operating activities, primarily consisting of depreciation and amortization, deferred tax expense, equity-based compensation expense, amortization of deferred financing costs, gain on sale of equity-method investment and other adjustments and a $31.7 million working capital cash outflow. The working capital cash outflow was primarily attributable to a decrease in the tax benefit arrangement liability as a result of payments made during the current year period and an increase in restricted assets for the NAF. The working capital cash outflow was partially offset by an increase in deferred revenue primarily from increased annual fee billing and NAF revenue, a decrease in right-of-use assets, net of lease liabilities primarily from the amortization of straight line rent, and a decrease in accounts receivable primarily from collections in 2026.

Previous wording

Net cash provided by operating activities of $133.9 million for the three months ended March 31, 2025 was primarily attributable to $42.1 million of net income and $51.4 million of adjustments to reconcile net income to net cash provided by operating activities, primarily consisting of depreciation and amortization, deferred tax expense, equity-based compensation expense, gain on insurance proceeds, amortization of deferred financing costs and other adjustments and a $40.4 million working capital cash inflow. The working capital cash inflow was primarily attributable to a decrease in accounts receivable primarily from collections in 2025, an increase in deferred revenue primarily from increased annual billing and NAF revenue, an increase in lease liabilities primarily from new corporate-owned clubs in 2025, an increase in income taxes payable and a decrease in inventory primarily from the delivery of equipment orders. The working capital cash inflow was partially offset by an increase in restricted assets for the NAF and a decrease in accounts payable and accrued expenses primarily related to equipment orders.

Current wording

Net cash provided by operating activities of $177.9 million for the six months ended June 30, 2025 was primarily attributable to $100.4 million of net income and $114.6 million of adjustments to reconcile net income to net cash provided by operating activities, primarily consisting of depreciation and amortization, deferred tax expense, equity-based compensation expense, amortization of deferred financing costs and other adjustments and a $37.1 million working capital cash outflow. The working capital cash outflow was primarily attributable to a decrease in the tax benefit arrangement liability as a result of payments made during the period, an increase in restricted assets for the NAF, an increase in other assets and other current assets, and a decrease in income taxes payable. The working capital cash outflow was partially offset by an increase in deferred revenue primarily from increased annual billing and NAF revenue, an increase in lease liabilities primarily from new corporate-owned clubs in 2025, an increase in equipment deposits and a decrease in accounts receivable primarily from collections in 2025.

Previous wording

For the three months ended March 31, 2026, net cash used in investing activities was $47.2 million compared to $28.1 million in the three months ended March 31, 2025, an increase of $19.1 million. This increase is primarily attributable to the issuance of promissory notes to certain franchisees of $20.6 million and higher capital expenditures of $2.4 million, partially offset by purchases of marketable securities, net of maturities of $4.5 million. Capital expenditures for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

For the six months ended June 30, 2026, net cash used in investing activities was $42.6 million compared to $71.0 million in the six months ended June 30, 2025, a decrease of $28.4 million. This decrease was primarily attributable to purchases of marketable securities, net of maturities of $31.3 million and proceeds from the sale of an equity-method investment of $24.3 million, partially offset by the issuance of a note receivable to a related party of $18.0 million and higher capital expenditures of $8.6 million. Capital expenditures for the six months ended June 30, 2026 and 2025 were as follows:

Previous wording

For the three months ended March 31, 2026, net cash used in financing activities was $55.6 million compared to $55.4 million in the three months ended March 31, 2025, an increase of $0.2 million.

Current wording

For the six months ended June 30, 2026, net cash used in financing activities was $191.5 million compared to $66.1 million in the six months ended June 30, 2025, an increase of $125.4 million. This increase was primarily attributable to a $199.2 million increase in cash used for share repurchases in the current year, partially offset by $75.0 million of borrowings under the Variable Funding Notes.

Previous wording

In February 2022 and December 2025, the Master Issuer issued the Series 2022-1 Class A-1 Notes (the “2022 Variable Funding Notes”) and the Series 2025-1 Class A-1 Notes (the “2025 Variable Funding Notes” and together with the 2022 Variable Funding Notes, the “Variable Funding Notes”), respectively, each of which allow for the drawing of up to $75 million of Variable Funding Notes, including letters of credit facilities. The Variable Funding Notes are undrawn as of March 31, 2026.

Current wording

In February 2022 and December 2025, the Master Issuer issued the Series 2022-1 Class A-1 Notes (the “2022 Variable Funding Notes”) and the Series 2025-1 Class A-1 Notes (the “2025 Variable Funding Notes” and together with the 2022 Variable Funding Notes, the “Variable Funding Notes”), respectively, each of which allow for the drawing of up to $75 million of Variable Funding Notes, including letters of credit facilities. As of June 30, 2026, the 2022 Variable Funding Notes are undrawn while the 2025 Variable Funding Notes are fully drawn. The proceeds from the 2025 Variable Funding Notes were used to partially fund share repurchases made during the three months ended June 30, 2026.

Previous wording

There were no material changes to the terms of any debt obligations in the three months ended March 31, 2026. The Company was in compliance with its debt covenants as of March 31, 2026.

Current wording

There were no material changes to the terms of any debt obligations in the six months ended June 30, 2026. The Company was in compliance with its debt covenants as of June 30, 2026. See Note 5 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

Previous wording

As of March 31, 2026, 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 $3.5 million and would require payment only upon default by the primary obligor. The estimated fair value of these guarantees as of March 31, 2026 was not material, and no accrual has been recorded for our potential obligation under these arrangements.

Current wording

As of June 30, 2026, 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 $3.3 million and would require payment only upon default by the primary obligor. The estimated fair value of these guarantees as of June 30, 2026 was not material, and no accrual has been recorded for our potential obligation under these arrangements.