What happened

Shares of Planet Fitness Inc. (NYSE:PLNT) were up 17% as of 1 p.m. EST Wednesday after the fitness center chain announced strong third-quarter 2017 results.

More specifically, Planet Fitness' quarterly revenue climbed 12.1% year over year to $97.5 million. On the bottom line, that translated to 17.9% growth in adjusted net income to $18.7 million, or $0.19 per diluted share. Both the top and bottom lines easily outpaced investors' expectations for adjusted earnings of $0.16 per share on revenue of $93.6 million. 

Planet Fitness gym exterior with purple/pink signs.


So what

"With the increased brand awareness and reach of our welcoming, non-intimidating fitness offering combined with our asset-light business model that includes our fast-growing, high-margin franchise segment, we continue to expand market share and generate significant profitability and cash flow," added Planet Fitness CEO Christopher Rondeau. "While this year marks Planet Fitness' 25th anniversary, I believe we are just beginning to scratch the surface of the company's full potential."

To be sure, Planet Fitness' top line was driven both by contributions from new locations and better-than-expected 9.3% growth in systemwide same-store sales. The latter included a 9.6% increase in same-store sales from franchisee-owned locations, and 5.1% growth from company-owned gyms.

Now what

Planet Fitness now expects full-year revenue to arrive between $425 million and $430 million, assuming systemwide same-store sales growth in the range of 9.5% to 10%. That should result in 2017 adjusted net income per share in the range of $0.80 to $0.82. Each of these ranges represents a significant bump from Planet Fitness' previous guidance provided last quarter, which called for 2017 revenue between $409 million and $415 million, same-store sales growth of 8% to 9%, and adjusted net income per share of $0.76 to $0.78.

In short, this was a straightforward beat-and-raise scenario as Planet Fitness continues to build out its massive location base and gain market share. And I think investors have every right to celebrate these results.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Planet Fitness. The Motley Fool has a disclosure policy.