Juliet Starrett & Alex Alimanestianu - Quarterly Reports: $7.5 Billion Merger, a Surprise IPO, and Executive Shuffles

Hey friends, welcome to the Future of Fitness, a top-rated fitness and wellness industry podcast for over five years and running. I'm your host, Eric Malzone, and I have the honor of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. If you like the show, we'd love it if you took three minutes of your day to leave us a nice supporter review wherever you consume your podcast. If you're interested in staying up to date with the future of fitness, go to futurofitness.co to subscribe and get weekly summaries dropped into your inbox. Now onto the show. One theme keeps coming up: the right technology can make or break your business. That's why I'm thrilled to introduce our new presenting sponsor, Perfect Gym. Perfect Gym isn't just another gym management system. They are part of the Sport Alliance Group, Europe's leading fitness software company that has officially entered the US market. Now, I've seen this movie before, but here's the difference. They've opened up a U.S. headquarters in Boston because they understand that the American market deserves dedicated, localized support. After digging into the platform, one benefit especially stood out. They are simplifying the nightmare that keeps business owners up at night migrations. These guys were able to migrate one mega client with more than 250 locations in six different countries in just 20 days between two payment runs. No disrupting operations, no member loss, one seamless operation that simply works. Now, if you have ever switched platforms, you know how terrifying that process can be and how truly impressive that feat is. They give the power back to the operator. Instead of forcing you into their closed ecosystem, their Perfect Gym Marketplace connects with over 120 integration partners. So want to use your own app, your preferred payment processor, or class pass for booking? No problem. Whether you're running a single studio or managing a multi-location enterprise, Perfect Gym was built from the ground up for multi-club operations. They have invested a ton into this platform, and now they're bringing that European engineering excellence to America. The migration experts have arrived. Check out perfectgym.com where enterprise level sophistication meets operator freedom. All right, here we go. We are back. Juliet, Alex, great to see you guys. How are you doing?

Great to see you. We're good.

Yeah. We uh we have so much to talk about. Uh we're talking about how we have to get so well prepared for these things now because there's just headline after headline and drama and updates and all these things. And it's it's been a really interesting. So we're gonna go over, of course, you know, core uh Q4 in a full year of 2025 earnings. So there tells a lot of different stories. I think there's an acceleration of evolution, I would say, in the industry. So almost like a dumbbell effect that's happening or bifurcation is a fancy word for it. Uh premium seems to be winning, uh, value is winning. Everything in between is either fighting for relevance or renegotiating with its franchisees. We have five earnings reports today, as usual. We have a $7.5 billion industry merger, uh, which we can get into and I can talk about intimately. And then uh a surprise IPO filing, and the case-shaped economy seems to be finally showing up in gym membership. So we'll dig into that and more. But first of all, how you guys been? What's new?

Been well. Yeah, we were lucky enough to go on a ski, as we talked about, to a ski trip to Japan. And, you know, the routine is you ski, you onsen, you eat ramen or sushi, and then you like rinse and repeat each day. And it's hard to believe. Uh, you know, and I I would also say that I learned, and granted, I'm coming from the West Coast, but I can actually fly to Japan and spend a week skiing there for less than I could spend a week in like, you know, Park City or Big Sky or you know, any but any kind of travel skiing for me in the US, I could do just like financially the same flying to Japan, which is pretty crazy.

It's cool. I'm so glad you enjoy Japan. And I'm, you know, like I was telling you, I'm I'm gonna be going next February for my 50th birthday, and I guess I'll be a senior per senior discount. Yeah, that's great. And uh yeah, I'm gonna get a lot of intel and beta from you guys because I'm sure it's uh you guys had a great time. Well, Alex, what's what's new with you, sir?

Well, if you do go, I would say try to go try to go to some sumo wrestling. That is just so interesting and such a Japanese tradition, you really do get an insight into the culture that I didn't I felt like I didn't get anywhere else. And then the on center, the the spas that they have at the around the resorts are just world-class. Incredible. All the hotels have them, and yeah, it's it's it's an amazing spot. Yeah, I mean, I I'm not gonna whine about the snow conditions because that's pretty much what everybody's been doing for the last four months. But uh yeah, it's been a it's been a fun winter. I'm working on a a project here in Jackson, uh, a podcast. It has nothing to do with fitness. It is focused on local entrepreneurs and founders and execs who run businesses in in um you know a mountain town, which is incredibly difficult. But but there are a lot of great uh businesses around here, and I feel like they need uh a little bit more focus on them and and uh a little more spotlight on them. So that's been a fun project.

Yeah, that's it.

Can't wait to check it out, Alex.

Yeah, yeah. Does it uh is it launched? Is it published yet, or are you still working on it?

No, I'm doing five episodes and they'll all get edited and then aired on uh the local community radio station, KHOL. That's great. Uh 89.1. Shout out to them.

Yeah, yeah, that's great. Uh I love local. It's it's really cool. So if you guys ever expand other mountain towns, let me know. We have a lot of really strong entrepreneurial folks up here in Whitefish, too. So that's that's really cool. Good for you, Alex.

If it works here, I'd love to take it elsewhere.

Cool. Yeah, awesome.

Great idea, Alex. That's gonna be really cool. Thanks.

Well, okay, so let's get into it. We'll we'll get into our quarterly reports. We have Lifetime, uh, always leads us off, and then we'll get into exponential, oof, Planet Fitness, Peloton Interactive, and then Garmin. And uh, so lifetime, I'll just open with this. So premium box, big box is showing it's it's pricing power for sure. And the numbers finally have Wall Street's attention. Um, curious to get your thoughts on that, Alex, in a minute. So here's some high-level performance with them. So uh fiscal year 2025 revenue was 2.995 billion, so that's up 14.3%. Then an adjusted EBITDA of 825 million, that's up 21.9%. And the net income was 373.7 million, which was up 139%. Uh average revenue per member, which I think is probably the biggest story here, but I want to get your guys' opinions on that, is $3,531 per year, dollars per year. That's $11.7% increase. They raised their dues $10 to $30 per member with zero member attrition. I don't know how that could be true. That's impressive. Membership remained relatively flat, so 822,000 members, that's uh up 1.3%. So the growth is really about yield per head, not necessarily head count. And uh net leverage down to 1.6x and 2.3x, uh, 823 million liquidity, 500 million share repurchase authorized as well. And in their guidance for this year, 2026, they say revenue is going to be 3.3 uh billion, so that's up 10.7%, adjusted EBITDA 910 to 925 million, and 12 to 14 new clubs. And CEO Brahm Akarati says nearly all of next year's plan, 12 to 14 new clubs are currently under construction. The demand for a lifetime continues to grow across all markets. So so much to talk about. Where would you guys like to start?

Well, I mean, I went on a deep dive on the K-shaped K-shaped market, which was a term I was not familiar with before. And to me, when I saw all of these companies under that lens, it made so much sense to me. Like I sort of feel like all we've lumped all these companies in this like fitness market category, but really I don't even know if they if they should even be lumped together, right? Like I feel like we have premium fitness, we've got planet fitness, and then we have this sort of jumble in the middle. So I just love for me that framing of this, not just lifetime being at the upper part of the K-shape market, but framing for the whole conversation, because I wasn't even familiar with the K-shape market idea until this podcast. So that was my big initial overarching takeaway. I'm sure you know all about the K-shape market, Alex, but I was new to me.

Oh, it's pretty new to me, but I think that with you know, map macro, with income disparity becoming more and more pronounced, I guess, you know, the the the macro thinkers are looking at different industries and saying, okay, you know, where are the affluent people going in the fitness industry? Uh, and they're going to lifetime fitness, and how is that doing versus the the more uh low-priced uh opportunity uh uh providers like Planet Fitness? And there's a divergence, right? The uh Planet Fitness stock, just looking at the stocks, uh Planet Fitness down about 16% uh in the past year, and uh and lifetime is is not doing great either, but still relatively flat. And in terms of growth in 26, lifetime is expecting to grow faster than planet. So I you know I wonder if if you know that's just confirmation bias. Somebody has a theory and they're looking around and trying to find examples of things that confirm it. But you know, I lifetime is definitely uh uh performing the best in the in the in the universe that we're looking at. And you know, I would I would point out a couple things about there, you know, the recent uh earnings call and and the quarter. The $500 million share repurchase is is big news to me because they've never done it before. And what what happens is they allocate capital to buying back their own stock, which is a way of returning capital to shareholders. So it's sort of uh a way of uh benefiting shareholders when a company is doing well, and they've never done it before. They've always taken all their capital and reinvested it in growth. Planet Fitness, on the other hand, has been doing uh stock buybacks for a long time. And uh, you know, I've been I've been complaining a little bit on some posts and maybe on this pro on this podcast that Lifetime is a great uh company for members. It's a great it's a it's a a really good company for uh you know, I think employees, I think they pay them well, they treat them well, I think the executives have done well, but shareholders have not done that well. So this is an opportunity for them to say, okay, we're gonna prioritize uh the shareholders a little bit more, and uh if if you want to sell your stock, potentially the company uh will allocate capital to buy it back. We'll see what they actually do because they're not the fact that they've said, okay, we have 500 million that we're gonna allocate the buybacks doesn't mean they're actually gonna do it. And it doesn't, it doesn't mean they're gonna do it within a year or six months or 18 months. You know, so we'll see. I mean the other thing that uh jumps out at me is that their capital expenditure is gonna be over a billion dollars in in 2026. They've never gone above a billion as far as I know. So, you know, it's it at some point I I get a little uh concerned that that's just spending too much money.

Yeah, I have a question for you, Alex, and a point to make, but I always, you know, it's it's amazing to watch because clearly they're doing well with this model of just getting each one of their members to spend more, which is amazing. I mean, honestly, $3,500 per members, like that really stood out to me. That's a lot of money for you know average people to be spending on a gym membership. But at some point, especially spending all this money on building new clubs, they do need to also start increasing their member numbers, I assume. Has to be and not an or. And right now it seems to be an and. And then my question for you Alex, and I just might ask this every single podcast because I was looking at the stock and I was like, it's it's like you know, flat to down. And and it like I guess I never understand still why Wall Street doesn't like them and fitness companies. And part of me is like, is it because Wall Street sees them as just like a gym? Okay, versus what I think they're trying to reposition themselves as is like a premium wellness facility, right? Like, is there something in the perception of like it's bucketed in with like employment fitness? And so that just that gives off this impression we're just talking about a gym versus what they're really doing is like so much more than a gym. In fact, they're probably making more of their money from other things that aren't the gym. So I don't know, what's your take? I mean, I think I ask you this question every time because I'm always like, why? Why?

Why?

Why? Yeah, I I mean I think it comes back to you know what what I was saying before. Like, are they prioritizing shareholder returns or are they really prioritizing growth and you know, member experience, and which I I I mean, I I would never fault prioritizing member experience. I wouldn't I would never criticize that. Um I think the growth, the amount of capital they're putting into growth, I would question. So you want to grow 12 to 14 clubs, you want to spend a billion dollars a year, is that ego? Like what is that like building monuments to myself at some point? Uh is it really, you know, it why does it have to be 12 or 14? Why can't it be six or and why can't you spend 500 million instead of a billion and and and start paying dividends to your shareholders, for example? You know, increase the buybacks. Try to push that stock. You know, the analysts think the stock should be worth $35 to $40. It's it's stuck in the mid-20s. You know, it's not uh this is an issue that a lot of companies have faced, uh, you know, uh uh that that are public. And even Apple, you know, at one point they weren't paying dividends and they weren't doing buybacks. And shareholders were like, you got so much money, you know, so much cash, why don't you return some of it to shareholders? So I think that's what it is, Juliet. I I don't anybody disagrees that they know what they're doing uh with their investments, but why does it have to be a billion dollars? Why can't it be 500 million?

I think that makes a lot of sense.

Yeah, it does. And I that was the exact same question as why they Wall Street keep punishing these guys. It's it's it's an interesting thing. So well, any other last thoughts on on lifetime? I mean, they they just keep this, they just keep catering to that high-end consumer and they get them to spend more, and it seems to be winning, at least in the short term.

So strategy is good, and I would say the management is really stable, which I would love to see. Yeah.

Right on. Okay, so exponential fitness. Uh the franchise model is under a little bit of stress. It's real stress, you guys. System-wide sales are growing, but the unit economics don't seem to add up everywhere. So high-level performance for Expo. Uh fiscal year 2025 revenue is $314 million, that's uh down 2%. Uh adjusted EBITDA, $111 million, that's down 4%. Net loss, $53.7 million. North American systems-wide sales was $1.7 billion, so that's up 13%. And the growth was driven uh primarily by new studio openings, not same store performance. So Q4, same store sales, negative 4%. Q4 adjusted EVITA 22.9 million versus 30.8 million the prior year, so that's down 26%. Uh legal exposure. We'll sure we'll get into this. Uh 17 million FTC settlement pending and 22.75 million franchisee class action. Uh 2026 outlook uh revenue 260 to 270 million, so that's down 16% projected. Adjusted EBITDA 100 to 110 million and 150 to 170 net new openings. So Mark Grabowski, the CEO, we are committed to returning the business to sustainable, profitable growth through focused execution and strengthening our franchise relationships. And uh there's a lot going on here. So there's some activist pressure we can we can talk about. FTC settlement. You sent us a uh a screenshot uh a few weeks ago, Alex, when their when their top when their stock tanked. It was a brutal day. Yeah, and uh I think that was I think we aligned that with basically the FTC announcement and a couple other things, right? So there's a lot going on. Alex, you want to kick us off? What do you what are you thinking here for Expo?

Oh boy.

Well that says it all right there, Alex.

Yeah, stock's down about 50% over the you know last 12 months. And they just I they they can't get a break. I mean, the the uh uh not that it's it's not self-inflicted to some degree, but you know, the settlements that they that costs them, I think 40 or 50 million in cash, that's actually it's a lot of money, obviously. That is legacy that they're they're I feel like uh the current management inherited from prior uh history. And so I can't, you know, you can't blame the the current folks for for the uh all the questionable practices, I guess, that the government has uncovered and that and that uh franchisees have been damaged by. So, you know, part of that money is going to franchisees who felt they were misled, and then I think part of it's going to penalties to the government for franchise uh you know uh franchise. I get I don't think they've admitted any guilt, but they've agreed to pay 17 million dollars. So obviously there's something going on there. So I I you know I think the uh the company is so dependent on club Pilates, that is the crown jewel, that's where the cash, I think over 100 million of eBit Doc comes out of that system. And the uh Pilates, I don't know. I mean, what do you guys think? Is it based on the numbers? It looks like that uh those studios are declining a bit in terms of revenue. So is there just have we reached the saturation point for that modality? And and uh if that's your crown jewel and it's not really growing, at least not the mature units, you know how it it's a it's a healthy business, but it's not a it may not be a growth business anymore. So that's a challenge for them. The the activist investor owned uh They own 20% of the business of the of the stock. And I think they're they're uh they've been investing over the past few years, so they they're sitting on a pretty big loss, it sounds like. And uh they want to force a sale, uh, I think a go private. So I think the you know, in the future we may not have numbers from Expo if they if they do go private, unfortunately. But you know, the the activist makes a good point. The uh uh Pilates, the Club Pilates franchise is worth a lot of money. You know, I think if they're doing 100 million of EBITDA and uh, you know, it's uh uh 10 multiple or something like that, it's a billion dollar value. Uh right now, Expo's market cap is I want to say 300 million. So, you know, they could just the the the whole the the point the activist is making is that the uh Wall Street doesn't value the company based on Club Pilates, they value it you know based on the the portfolio, and the portfolio is five brands of which one is really profitable and the other's not so private. So I think it's a go private, it'll go private at some point. I wouldn't be surprised. And uh that's you know what what happened with the stock was it you know it dropped, and then uh after the after the earnings reports, where you know Club Pilates was shrinking, the the overall revenue for 26 is expected to shrink. So, you know, Wall Street was like, uh we don't this looks like a falling knife or something, and we don't want to we don't want to be in here. And uh, but as soon as Voss said, okay, this should go this should go private, and the value is a lot more than the than the the market says it is right now, uh the stock popped up, you know, significantly, you know, like 40% or something. So I uh yeah, it's it's a uh that yeah. What do you guys I mean do you think we're at peak Pilates and we're saturated? And that's that's pretty much you know, plateaued.

Do you want to go, Eric?

Yeah, so I I think it must. So I I had an interview that I published just about a month ago with Anthony Geisler, so the former CEO and founder of Expo. And he's on a SQL brands now. And one of the things I did ask him was like, you know, is there anything that you feel like you learned that you can now apply to SQL? And one of the first thing that came out of his mouth, maybe the only thing, was like, I wouldn't go public. We just blah, we just yell, I wouldn't go public. We're never going public, right? So I think that comes with a whole, you know, that's a major learning process of what it's and that's just the maturation of our industry, too. We just don't have a lot of public companies, right? There's not a lot of templates that you can look at. But you know, their so their their big flagship that they're hoping to be, hoping to be their flagship is the Pilates addiction franchise. So he's expecting by the end of the year 200 units sold. And I don't know, I can't remember how many openings that is specifically. So they're betting that it's still wide open. I just can't see the growth happening forever. I mean, how many Pilates places we've seen we've been around long enough to see these cycles of different things come and go, right? But you know, I think you had stated this last time, Alex, is like great operators will will have a will do a great job and they'll be successful as long as they operate according to their standards. And I but I just can't see it. I think most of the time, and I for mixed things too, like Pilates is flattening out, but uh, people are still making bad big bets there. And you know, even look at like a Legree Fitness, like what he's doing. He's he's booming right now. He's going global and he's doubling down on everything. And so there's a lot of players who've been around Pilates for a long time that are now reaping a lot of those rewards. But uh, I just I just don't see it possible. What do you what do you think, Juliet?

Yeah, I agree. I mean, I think there is a bear there, like it's not going away. I don't think it's a fad, but as a single, I I especially feel like in a weird macroeconomic climate, as a single modality, like to me, Pilates is something you do like in addition once or twice a week. But and I do know a few people who like the only thing they do is Pilates, but I just don't think it's just the thing. I think it's always gonna be an extra that you do in addition to an actual, you know, like fitness program. And so I think that's gonna be the first thing, especially in a weird macroeconomic climate, that like people will cut out, classes are expensive, you're usually buying them on a one-off, some people have a membership, but I I don't know. I guess I feel like, man, even where I live, there are Pilates, Pilates studios on every corner. And I I feel like it's some it's not gonna go away, but I just can't see massive growth in Pilates. There are so many Pilates studios out there.

Well, you you know, you start to see these trends too. Like I feel that when health clubs start to integrate certain modalities, like when spin went into health clubs, right? You kind of saw this batch, it just flattened out and now it's pervasive, right? And what we're seeing now is Crunch, is it CR Fitness is opening their first Pilates studios inside of a Crunch Fitness in Texas? And I'm like, oh it's happening. It's happening now, right? Reformers, no additional charge, it's just part of your membership. I'm like, okay, well, that's that to me is a really big sign.

But it happened across fit too, right? Like big gyms all of a sudden started having road fitness equipment and a place where you could Olympic lift and you know, kind of like functional fitness. They were like getting rid of racco-ball courts and making functional fitness areas, right? Like once those those modalities get subsumed by big clubs, I think sometimes people are like, okay, why would I go here and pay $30 per class when I could just loop that into my membership? So yeah, I see that. I think the other thing I wondered when I saw all this expo stuff is is this model of like the conglomerate model, does it make sense ever, right? Like obviously they're the only public company, but there's FitLab and a few others who are trying to conglomerate these fitness companies. And FitLab has kind of a, to me, sort of a random group of uh, you know, sub-brands. And, you know, is this a model that can work? I mean, it doesn't seem to be going that well, obviously, for Expo. And I don't know if the problems are because it's a public company, but I don't know, is it? I mean, do you think there's room for this kind of model at all, Alex, or either one of you? Like, is this a thing?

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I mean, I uh I like the idea of having a portfolio so that you know as things, as trends emerge, you know, and cycle up and down and popularity waxes and wanes, uh you you know, you always have a modality that is that is on the upswing, and uh you're you're sort of, you know, it's a portfolio theory, right? So the challenge is that uh you have to pick really carefully and really well, and you know, arguably uh Expo has you know they picked really well with Club Pilates by Cycle Bar and the rowing modality and the and the the running modality, and you know, they had they had a lot of of strikes, a lot of misses. And so so basically it's sort of uh you know it looks to be uh a one modality company right now, you know, and and I mean if yoga six or or stretch lab had really sustained, I think yoga six probably stable, uh not really going, but but stable. You know, stretch lab was had been on the ascendancy for a while and then it it kind of lost its mojo and and and now it's a liability. So it's you know, it I think a portfolio is great if you're if if your batting average is is higher than theirs than theirs has been.

Well, I think to that point too, I think it's it's a great theory if you're actively divesting and investing, but I just haven't seen them do a lot of that. You know, I haven't seen a lot of turnover in their brands, updating brands. I mean, they still have you know uh stride, but now it's running plus fitness, plus strength, right? Is like how they're rebranding. It's like, well, I think it's too late. I just do. I think it's too late. Like it's in the name, right? It's it's in the name. And uh yeah, but I think it can work, but I just I feel like it needs to be more fluid in the amount. But I don't know. I don't know how difficult it is to invest and divest in brands. I could be I'm completely talking out of the side of my face here, but I I that's what it seems like to me from an outsider perspective on the industry.

Yeah, well, I I don't I don't know that we'll be talking about them much for for the more quarter.

Yeah, yeah, yeah. There there seems to be a pretty strong sentiment from uh the people that matter within their structure that uh yeah, they won't be won't be public too much longer. So let's see, let's let's move on to Plant Fitness. So Planet is Planned Offense. Uh 20.8 million members and a down macro says more about brand trust than any earning metric. So let's talk about some high-level performance here. So uh full year 2025 revenue, 1.324 billion. So that's up 12%. Uh Justed Ebita, $550 million. That's up 13%. Net income, $220 million. Uh, they have 20.8 million members. That's just that's it's amazing.

Every time that blows my mind.

It's so many. Their first full year after 50% increase hike for the new classic card members, demand barely flinched. So that's a really good sign for them. And then we'll talk about price elasticity, I'm sure. But system-wide same club sales was up 6.7% uh fiscal year, and 2,896 tool clubs uh that was opening 181 new ones in 2025. Equipment revenue, which I'm curious to give your your guys' take on this, was up 21.1%. Cash position, cash position, they have 607 million, no near-term debt pressure, really. And their 2026 guidance is revenue up 9%, same club sales up 4.5% or 5%, uh Just Divida up 10%, and black card price increase summer 2026. So a lot to go on this year. And the CEO quote, Colleen Keating, says adding approximately 1.1 million of net new members in 2025, the first full year of our 50% price increase for new classic card members, highlights the incredible demand for our brand. Okay, where do we want to start? Juliet?

I mean, I'll just start by saying I'm a I continue to be my I'm amazed by this company. I I think it's amazing that they were able to both raise prices that much and continue to grow their membership, you know, especially after watching Lifetime as, you know, that they're focusing on the movie else but not raising their number of members. So I thought that was interesting. I do think as I thought through this whole thing with the lens of K-shaped economy and to the extent that the macroeconomic, I'm assuming the reason Wall Street does not favor Planet Fitness is that they think that their consumers are more likely to be impacted by, you know, negative macroeconomic trends. And so they're always just sort of like, ugh, we don't know about this business model because you know, if the economy starts to go south, like you know, planet fitness is going to be the first company to take a hit because those consumers are gonna be so much more price sensitive than a lifetime or even Peloton or any of the other brands we talk about. So still still amazed, but I guess I see in the larger economic climate why Wall Street it, you know, why Wall Street doesn't reward this company for all their awesome work.

Yeah. Yeah. Yeah. They they kind of made a uh a mistake, I think. They had an analyst day last year and and they showed what they expected the business to do over the next three years, and the the growth rate in revenue was expected to be around 15% a year. Now you don't have to have analyst days where you talk about the next few years. You know, people companies sometimes do that, not not every company does it, but it's it's a risky proposition. So basically, they you know, they have their analyst day in in the fall, they say we're gonna we're gonna grow at about 15% a year for the next three years, and then in February they have an earnings call where they say, well, we're just gonna grow about 9% uh in in the first year of our you know three-year period. And Wall Street's like, well, we put out all these reports saying you were gonna do this, and you know, our our our stock price projection was based on that, and now you're not now you're disappointing already. And then management starts talking about snowstorms uh in January and and uh you know some other things that justify you know the lower uh the lower projection, the guidance for for 2026. And so the analysts are spooked and the you know the Wall Street spooped. They don't they don't know what's going on, they're worried that this may there may be some underlying issues that they don't understand. You know, is HVLP too competitive? Is it with with Crunch and EOS and all the others having sold last year and now they have you know hundreds of millions of dollars to invest in new units? Is it just is it as with Pilates, is it just you know too too saturated or or pl is it plateauing? You know, the other thing that Planet Fitness did that was a little bit controversial was they adopted the click to cancel. So it's re it's it's you know it's become really easy to cancel your membership there, and that goes against what the industry typically believes, which is you gotta make it a little bit stickier than that, uh a little harder to cancel. And so, you know, is is attrition a problem? And uh did they make a mistake by adopting click to cancel? I mean, I think it's it's the right way, it's the right way to treat your members. You you should not have to send a certified letter to the corporate to your membership. That's just that's just like so antiquated and anti-consumer. But anyway, so so I think that that's my you know, I think that's what what happened here. The underlying business, I think, is still still perfor. I mean, it obviously is still performing, and four to five percent same-store growth is still very good. So it could be uh, you know, overreaction uh by uh by Wall Street at this point.

Do you think, Alex, there's any space for anyone not to be click to cancel anymore? I mean, I feel like we're all overcome by thousands of subscriptions and always trying to cancel and manage. And I've even noticed now like in my on my credit card statement, like I can go on to my credit card and just say, this is the subscription. Like one of the options is this is like a for a charge, is this is a subscription I canceled, and like my credit card will automatically refund me in two seconds. So it seems like there's just this pressure now to make it real easy for people to cancel. Otherwise, you know, you're in you know, you're subscription.

I don't know.

So I just like I don't know what normal like what does lifetime do? What are other gyms doing? I'm assuming Peloton is click to cancel because it's just you know it's a map, but I just I can't imagine there's much uh interest anymore in anything of like I I can't see how you can not have that click to cancel. Like who's doing that?

The industry uh resisted the click to cancel rule and objected to it. Uh and I would be surprised if a majority of clubs uh have adopted click to cancel because they don't have to, and I think a lot of them think it's against their economic interests. So I I don't know exact I don't think Lifetime has click to cancel. I don't think Equinox does. I but I you know I I haven't I haven't checked it. I I uh but I know that the majority opinion in the industry is that uh click to cancel is not appropriate for health club membership.

Interesting. What what do you uh when it says equipment revenue up 21%, what does that mean?

So they basically sell equipment to uh franchisees.

Okay.

If you have a planet fitness franchise, uh you buy your equipment from the corporate office, from the franchise owner, uh and they mark it up and and make a profit on it.

Nice. Nice. Yeah, well we'll see. We'll see what happens this year. It's it's uh you know, they're they're a big player in the industry and they're they're doing a lot of things right. But that that is noticeable is like the the analysts seem to be a little shy of of what they're doing and and uh downgrading them a little bit as far as their growth this year. So it's interesting. Any last thoughts on on Planet? All right, let's go to uh Peloton. So Peloton's profitability pivot is real, but subscribers keep leaving, and that's the number that matters most long term. Some high-level performance numbers here. Q2 uh 2026 revenue, 656.5 million. That's down 3%. Uh sorry, that's full year 2026. Gross margin 50.5%. That's up 320 bips. Adjusted EBITDA 81.4 million, that's plus 39%. So net loss 38.85 million versus 92 million the prior year. So the losses are narrowing fast. That's good. Uh net net debt down 52% year over year to 31, uh 319 million. Paid connected fitness subscriptions, 2.661 million. That's down for 7%, year over year down minus 214K. So churn 1.9%. I don't know. So Peloton IQ, that's their AI personalization rolled out to all members. That seems to be kind of part of the game now for everybody. Nearly half of active members engaged within the first quarter. I'd be curious to see what it was the second quarter or what it will be second quarter. And uh full year 2026 guidance revenue 2.4 to 2.4.4 billion, say down 3%, adjusted EBITDA 450 million, up 18%. And uh the CEO quote from Peter Stern our second quarter represented the most substantial period of innovation at Peloton since our founding. We're proving we can simultaneously innovate, increase our profitability. So Peloton, sticking around, iconic brand, trying to figure it out. What uh what do you guys think? Juliet?

I to me, I feel like they are starting to maybe show that there's hope they can be a healthier business. Like the way that I thought about it was like, especially in terms of the way Wall Street's viewing them, they're like cautiously optimistic. They're sort of like still sitting in the penalty box, though. And I was pretty particularly interested with the interested in the AI, the AI piece that half, you know, you mentioned it, but that half their members were engaging with the the AI agents. Because I don't I don't know about you, but I'm just so curious. There, you know, we have Future and Latter and you know we're working with another company called Farron and there's so many it I'm so curious to see if this is how people want to consume their coaching and fitness and and or whether ultimately they're going to want to go back to you know a more in real life model, whether that's not really going to work for them. So I don't know, I mean I thought it was interesting that people like half of them engaged in it, but is that because it's a novelty or is that does that have staying power? Is that how they're going to want to continue to engage with their health and fitness journey. But I'm also curious because is it possible that you can get something that ultimately feels so much more personalized based on your data and your history and what's going on in your life that people will really enjoy it. So I don't know to me that was an interesting insight and I really want to see what happens with that going forward like to see if it's a novelty or whether people really use it. I don't know what their AI agent does like I just don't is it just a support agent at this point that you can engage with so who knows but but I to me that's interesting. And you know they obviously have the resources and technology to be able to deploy that in a gigantic scale and will be really interesting to see if consumers want to consume their fitness content that way you know their programming and coaching. I don't know what do you guys think I mean I'll I'll chime in on that.

I think that I've been following a lot of the AI everyone has an AI coach that they're developing at this point. And I think there is a distinct advantage of having the AI directly associated with the hardware. I think everyone has an app no one really wants to have a random training app that does everything. I think like eGim's a great example of like you know their AI is built into the hardware experience. And I think that's what a lot of people want or it's it gives them a greater opportunity for success because you go to the machine it remembers you maybe gives you a few things it's like it's there right it's it's just in the experience it's baked in. But I I don't know how it's all going to plan out. I mean I think there's already seeing a lot of technological fatigue from from people consumers but uh it it it is an interesting point you know uh I I thought too just the you know they're going towards this wellness play and I just don't get it I just don't get it I don't know what I'm missing but I just you know they're they're an exercise bike right they're they're a great piece of cardio machines and and so I at the wellness play I'm just not getting but yeah Alex what's your what's your take here oh boy well the face says it all too exactly I was like I was like we just know by by Alex's like initial sigh we're like nope it's not going well well I don't want to be I don't want to be uh totally focused on the stock price but you know down 33% over the past 12 months you know yeah if you look big picture at uh what's going on there the uh the subscription level connected subs so connected subscribers in 2026 is about where it was in 2021 at this point they used to have 8700 employees they currently have 2400 employees i mean that's just a dramatic change right i i i i I don't know many companies that have gone from 9000 to 2000 employees over over five years that have you know survived so uh you know but that being said uh the uh the EBITA is improving right the the dropout the attrition rate is is low at 1.9 percent per that's per month so you know it's 24 percent roughly uh over you know over 12 months so they're losing a quarter of their people but you know if if they keep losing 8% of their subs a year you know where are they in five years I mean that's you know they they can raise prices a certain amount but I'm not saying that's gonna happen I just I just if if if you're taking the bear case you're like okay this is what they call a melting ice cube you know it's it's only going one way which is getting smaller and smaller so uh you know when a CFO leaves like like this uh Liz Coddington left I think is leaving this month she's been there four years she's done a great job but basically and she probably has a lot of stock options so she's kind of saying yeah I don't expect this to pay off and I mean that's just speculation I I don't but but when you know when high level execs leave I I I get I worry that they don't have confidence in the future and you know that so that's a that's a concern they have to figure out how uh how to grow right and they just haven't figured it out they've they had a crit they had a a bunch of product innovations in the fall that they were hoping would would drive uh holiday sales uh they disappointed on holiday sales they did not hit the numbers they wanted to hit so what does that tell you I mean they're there's they've spent uh about a billion and a half dollars over the last five years on research and development can you point to anything that they've done in terms of innovation that's really driven revenue uh the the rowing machine the the guide the treadmill I just i you know those things are really expensive to develop and uh I just don't think the returns have been there on their RD.

I mean I'm sure they haven't been there on their RD and and uh you know if you spend a billion and a half you'd think you'd come up with a couple hits right but it it still is a it's a it's a bike company at the end of the day.

And it's just to me it seems like the amount of innovation one can do on a rowing machine a treadmill and a bike is not infinite and and like I go around all these gyms and use every one of those devices and like the concept two rower is hands down but like if you run into literally any other rower at a hotel gym or some connected gym it sucks. So you know people are innovating and not doing a great job. I don't know what Peloton has to show for it.

It's it's just a matter of like have we just with the advancement of tech this is what I think about the is the advancement of technology has the connected experience kind of already gone past us like you know is is it it was a really special place and time you know everyone was essentially stuck at home and it was a cool experience but it's not it's it's we're moving so quickly that consumer expectations are moving like they want something better now they want something more interactive they want in real life right it's just like the it it just seems to have had a moment in time that was very special and it's it's hard to build upon that because it just doesn't exist anymore. And you know the commercial B2B side the Pro Series you know seems to be growing in double digits. So hotels corporate wellness military but the you know the big question there is like how far can that go without cannibalizing the consumer aspect of it and then do they even care if it's growing it's growing right so I don't know there's there's certain signs here but I just wonder like when do they get acquired you know by someone yeah well it's another one where they could go private and you know some private equity group could f try to figure it out and uh you know why why you know could they combine with another company like Tonal would that make sense?

And you get some synergies and some economies of scale in manufacturing and content production and they seem like they're kind of addressing the same market. You know I don't know that that's a that's a a you know long term solution to growth but you know should they be in the wearable business should they be in the sleep business you know what what could they do? I my my assumption is they my hope is that they will figure out how to grow again and uh they they have some time to do that because they do have you know improving financials. I you know do they need at this point there they continue to cut employees I mean they just cut uh I want to say 11% 250 300 people in January they're down to what did I say 2400 or so?

Do they need 2400 people to run this do they need to spend 60 million dollars a quarter on RD you know it's it's amazing how many times they've uh you know restructured and they and they they don't seem to be at the uh uh done with the restructuring it's the rifts just keep coming yeah it's yeah one positive thing though I feel like we've talked about them every time and I felt less so this time is every time we've talked about them in the past I feel like they were doing sort of a you know just whack a mole strategy like they'd be like we're in University of Michigan and now we're renting our bikes and now we're doing this and I actually felt like this last quarter there wasn't a lot of that noise this time that maybe they were like hey we don't need to be doing these ton of these little one off random initiatives to see if they work like it seemed to me like they were you know cutting people cutting costs trying to just focus on the membership piece. So I thought that was a good sign because up until recently that's what they've been doing is like we're partnering here we're doing this and I I felt like there was less of that this time which I thought was a good sign.

Yeah I agree I agree that's a good point I like that all right Garmin let's go Garmin's fitness engine is running at full speed guys uh they just raised the bar for what a wearable company can look like financially and let's go over some high level performance here so 2025 revenue 7.25 billion um that's up 15% operating income uh 1.8 1.9 billion uh that's up 18% and operating margin 25 or 26% uh fitness segment specifically was 2.36 billion that is up 33% operating income 726 million that's up 50% margin 31% the clear earnings engine for the company the fitness segment is crushing it 2026 guidance revenue uh 7.9 billion gross margin 58.5 percent and uh yeah so CEO Cliff Pemble says we are all positioned with a strong lineup of innovative products and a growing ecosystem of health and wellness services and um you know I got to uh moderate a panel last month with connected I think connected health and fitness with uh Andy Beckman was on it and we talked a lot about data and I just wanted to remind Andy because I hope he's listening that we love Garment and we have sponsorship opportunities available and as I told you on stage during the the event. So where do we want to start?

I mean we have Andy shout out Andy yeah we love you Andy we love you buddy man I mean I just love this company and I I guess I still think it's sort of funny we talk about it because it does sort of seem like public fitness adjacent but it's just amazing to watch this company and I feel like they've really sort of like they're not just the hardware brand though. I feel like they're they're they've like tapped into this like health performance identity like people who want to have you know health and performance be their overall identity. Seems like they're expanding into this healthcare thing with their true med collaboration. You know obviously they have this whole obviously they have this huge and expanding fitness market but they still are doing all this other non-fitness stuff. So you know I guess I feel like they're that like Garmin is doing what I think all these other companies we talk about want to be doing in fitness and they aren't quite there yet.

It's just this company continues to slay at every level it seems to me yeah and and uh to carry on with the fitness too so they're up 33% like we discussed but you know out tour was only up 5% and auto OEM is still unprofitable and you know you got to wonder is the fitness wearables boom you know is it kind of masking some of the structural pressure in in the other divisions or you know is the whole thing looking looking pretty healthy. So looking at the numbers from an from the uh wall street standpoint alex what do what do you what do you think well wall street was really happy I mean they're their uh their stock is up 11% over the last year which is good I mean it's not amazing but it's really good the my question though is who who is are they gaining market share?

I gotta believe they are versus uh versus who versus Apple versus Whoop versus uh Polar or Sunto or because are they tapping into a new market? Are they expanding the fitness uh wearables market uh or are they taking market share? I I don't I I I don't know that's a really interesting question to me because if if they're taking from other people it's probably a combination of both but if they're taking from others that means that what they're offering is perceived as being better than what you know Apple is offering or or whoop is offering or if they're expanding the market then you know people are happy with their Apple watches and and their you know and and their whoops but uh there are new people coming in who are saying I I want a I want a fitness wearable and uh that you know that means people are uh you know optimizing I guess and and paying more attention to their data and you know and that's a real change. So I don't I don't know. I don't know how you get 33% fitness you know growth uh without taking market share from other people but I but if we could figure that out that'd be pretty cool.

I do think the identity piece is so important with Garmin because I do feel like everybody I know that wears one are they're the people who care about tracking data. They sort of see themselves as an athlete and that that the Garmin brand is really like the performance brand and that that's that's the identity piece that they care about. I also you know speaking of market share even though I'm covered in like 17 tracking devices I do think people I do think especially as people become more subscription aware and you know they're having a whoop and an aura and then realizing you can have a garment with most of those insights and then some it's sort of like like this is the boutique fitness company and this is lifetime right like that's how I see these things. And so at some point you know you can get all this data your sleep data they've added nutrition you know there's tons of data plus you can use it to really clearly and probably the best to track your workouts the GPS is the best it stays charged. So I just wonder if it's not just I mean to the extent that I might be taking market share that's not just taking market share from Apple but from these other tracking devices. Because I will say when I first started using my Garmin I felt like especially the sleep tracking feature was pretty inferior to Whoop or Aura and now I feel like it is equal and I wonder if those if it's not also stealing some market share from those companies if it is well I I just did a quick little query here on Claude and so Morningstar confirmed that Garmin is gaining share.

Their fitness segment grew 33% as we said market expanding at 18% annually so they're outpacing the category by nearly double the primary victims are Fitbit Google. So they're down from 48 million to 40 48 to 42 million. So that was the big one Apple seems to be untouchable still overall but uh yeah it does it seems like they're they're eating away at the the market segment that that's a really good point about subscription I never thought about that like I have yeah at some point you're paying yeah like at some point you're like what if I could get this one watch with all this data and no subscription yeah or I have an aura or a whoop which I'm paying a recurring subscription and we all have subscription fatigue that's a consideration. Yeah and the TrueMed integration too I think I don't know if we talked about that but yeah now they have HSA FSA dollars you can you can purchase that which means that they're considered uh healthcare purchases not necessarily consumer electronics so that that's an interesting uh evolution I think that's something to to to make note of it because that a lot of companies are are going that way now too yeah we've been using TrueMed for I don't know I mean since they like very very like at the very outset of the company like I was I I was like I understand this we should all be doing this in fitness it makes sense so it's cool to see they're doing it too love Garmin. We love it we just love Garmin you know if we're gonna line with one brand here uh on this show I feel like that would be more if they sponsored your yeah future of fitness doesn't take much really shout out Andy shout out uh okay any last thoughts on Garmin you guys get on to some uh industry news and in transactions so we we talked about the K-shaped economy you know originally you had sent that article out Alex so we can we could probably move on but we can talk definitely about something that was probably one of the biggest news our industry's seen in in decades which is the playlist and eGym merger. So now they're a $7.5 billion company and you know I was uh I was lucky enough I I MC'd their kickoff event in Munich uh in January and it was uh the event was the day after the announcement so the energy was very high and uh got to interview Fritz and Philip on stage and talk to them about all that that was going on and you know obviously this is still meets regulation approval right regulatory approval but uh it's it's a big deal and uh I mean I have a lot of questions about but when you guys saw this what was your first reaction you go ahead Alex you go ahead I think I posted on LinkedIn that I it was a head scratcher to me I didn't really I didn't it wasn't something I expected to see or and and I wasn't really sure how uh or why playlist class pass mind body wanted to be in the uh hardware business not that eGym is only hardware they aren't but uh and then you know and then that I always look at sort of the the org structure and I and I try to read between the lines I don't have any inside information but you know it felt like the uh you know the the business was was uh pretty much going to be run by ClassPass and and eGym was was being subsumed so not a merger of equals and uh and and uh and then what you know what does that mean for the future of of the hardware side of things and does that get separated out at some point uh you know and and uh yeah so I I don't have a lot of intel on it but as an outside observer I was kind of scratching my head and saying this not not obvious to me that this is uh uh a merger that uh makes a lot of sense true yeah I mean I would all all I have to add is I thought the exact same thing head scratcher I didn't really get it and then I didn't honestly try to get it that much because I was like Eric is deep in this and I knew you were doing the thing in Munich and I was like Eric is going to have insights on this because you have interviewed everybody and been deeply involved so I'd punt it back to you Eric. Yeah yeah well you know a lot of it is TBD because once you know they're the the major announcement and then it's got to go you know uh regulatory review and then and then they'll start to have a clear idea and be able to unpack exactly what the plan is. So a lot of it's still hush hush and you know an interesting uh fun fact too is Fritz Landman actually lives in uh Missoula Montana he's a big flyer Freshman. That's how him and Philip got to know each other as he invited him to fly fishing. He also likes to ski. He's uh I just saw him a couple of weekends ago up here in Whitefish at the Ski Resort Somehow. So that was kind of fun. But here, I mean, here's the thing, and I've I've communicated this to people on both sides of eGym and and uh playlists is that uh, you know, Mind Body and ClassPass have kind of a complicated relationship with the operator community. You know, I I think uh ClassPass has revolutionized a lot of things, especially on the consumer side, but a lot of gym operators aren't huge fans. Mindbody's been around for a very long time and has a lot of fans, also has a lot of operators who are frustrated with the platform. So it's but then you got eGym. It's just like this this rock star brand. They're kind of like the rock star of the industry, right? They're cool, they're hip, they're doing tech, they're like, what are they up to next? Everyone, they're always doing cool releases and branding and all that stuff. And you're wondering like, how are those gonna mingle? Right? How are those two things is one gonna support the other? Is one gonna not support the other, if you know what I mean? So I don't know, it's gonna be interesting, but we just don't know yet. And uh of course, like the one of the big drivers that doesn't get enough press behind this is is well pass and eGM's corporate wellness solution, which is a substantial chunk of business and growing really fast. So we'll see. We just don't know yet. I don't I don't think they've they've given a lot to work with yet.

But I can I all I can add is as a former gym owner, we were not fans of class pass. I was like, why would I take five dollars for a client that would pay me $30? Like I they would come in, they would physically come in and I'd be like, help me understand why I would do that. Yeah, you know. And I, you know, they were never able to say the volume would outweigh the the discount they'd be giving to people. So I honestly, as a gym member, I understood from a consumer standpoint, especially if you just want a boutique for consumers, it's great. If you want to just hop around a boutique boutique fitness, boutique fitness, it's great, but for operators, it's terrible. So I never got it. I never, I was never a fan.

Yeah, and then I think my mind body gets you know kind of mediocre grades from most of the people I talk to. So I think they have work to do to to improve what they're offering. And yeah, I don't know. It felt like financial there the financial guys made it work on a spreadsheet, but the for the industry, you know, if you're if you're a gym owner or boutique owner, this doesn't really make sense to you. The well passengers I don't I I can't really cheap things, but yeah.

I mean, you know, it's it's exciting because this is the biggest valuation we've had of any company in our industry, right? So it's it's it's got a lot of attention and uh you know I I do like the leadership on both sides. You know, I I love EGM, of course. I really I got to know Fritz a little bit. He's a great guy, very aware of what the opportunities are and where the challenges are, and uh yeah, so we'll see. So I'm I'm overall I'm cheering for him. I hope they do well. And they got they raise a bunch of money, so that's cool.

You know, yeah. I mean, I think if unless I'm mistaken, I thought Class Pass Mind Body uh playlist was looking at an IPO a year ago, and so you know, maybe that just wasn't in the cards, and they felt like, okay, well, we gotta do something here, and uh you know, and this the opportunity that presented itself, and and I'm sure there's some strategy to you know to take it public at some point.

Yeah, but I mean that's the most obvious thing when you look at this, right? It's like it seems to be setting up for uh an interesting IPO.

Yeah, but you know, there's a there's a lot of a lot of road to be traveled before that makes sense.

Yeah. Well, speaking of IPO, Strava. So this snuck by me. Thank you for uh for throwing this out there, Alex. So yeah, so Confidential S1 filed late 2025. They formally announced in February 2nd of 2026. Strava, IPO. Uh looks like Goldman Sachs is leading. Yeah, but what what do we know here? What does this uh what does this mean for for the industry?

I don't know what we know, but what I originally thought was after watching Exponential and I think some other public companies feeling stank on going public, I thought it was a good sign that they wanted to go public. I thought maybe this was the end, like we weren't gonna see any other fitness companies go public because there seems to be some headwinds there. So I thought that was cool and a good sign to have you know another fitness company take a swing at this public company situation. It seems like Strava is a good one to do it. I mean, they have a lot of positive stuff going on in their company, and I'm a fan, you know, I'm a user and a fan of their of their stuff. And I thought it was exciting. It seems like I don't know, correct me if I'm wrong, Alex, but their goal was to try to uh potentially acquire some other companies and grow that way. But it's all seemed so early, but I thought it was exciting and you know, go go local San Francisco-based company.

There it is. Yeah. I've never actually used Strava, believe it or not, which is kind of odd. But uh, I mean, I know a lot of people who live by it, swear by it. And I'm curious, like, do you think something like this, like Wall Street, or the public will react and say this is a tech company or this is a fitness company?

Yes, fitness company, yeah.

It's uh it's uh social network. Or social. Yeah, I think that I think that's it's definitely then yeah, I mean it's definitely related to fitness, obviously, and athletics and sports and uh I don't yeah, it's it's a tech, it's more tech. So uh and they have they have a lot of members. I mean 180 million. Yeah, 180 million, but I don't I think only uh maybe 10% are paying. Yeah. Something like that. Are you a paying member?

I pay because I actually want to, you know, like to see well these days as I'm getting older, uh, my achievements are few and far between in terms of getting faster. So it is sometimes I'm like, why am I paying to see myself get like old and slow? But there's some features that you can't see as a free member that are fun, you know, like you're sort of tracking your own progress on segments, and you know, and I think there's some other, I think one of the other really amazing things they do is they have, you know, you can like follow legitimate professional athletes who are tracking, you know. I'm I love to watch cycling, like I'm a cycling fan and mountain biking fan. And so, you know, when like the greatest cyclist to ever live, Tade Pagachar, is just posting his daily rides and you can see what he's doing, like there's some there's some features that are fun and cool. You know, I I don't have time to spend a ton of time in there, but I'm a paying member and I I think it's worth it. It's fun.

Yeah, yeah, no, I definitely get benefit, and it's it's like 80 bucks or something a year. I don't know.

Yeah, for a year it's not, yeah.

It's really very affordable, and and uh I think you know they're it talking about AI, they are trying to provide some AI feedback on your on your on your workouts and your trends, and I think it's still you know early, early days in terms of of the the value of what they're providing, but uh but they're working on it. And uh and they have so much data that they can actually come up with some insights that yeah are pretty uh that aren't available elsewhere, I would say.

Awesome. Well, uh last little section we have here is there's been a number of executive changes. So we have tonal, peloton, expo, uh, crossfit. You know, we've talked about a couple of these already, and the tonal one, you know, not too long ago. So uh I did have Darren McDonald, the former CEO now on this podcast last year. Really like the guy. I was only there for 17 months. So the new CEO is Todd Barty from El Catterton. I hope I'm saying that right. So yeah, coming from the PE side, what is what does that signal for you guys? Uh first thoughts.

I'll punt it to you, Alex. I do not know.

Yeah, I mean, I think Elk Adderton's a big investor, and you know, the these these private equity groups have operating partners who are are executives, former CEOs. And uh yeah, I don't know, I don't have any uh intel on him. Uh he comes out of uh not out of fitness. So uh again, you know, it's a it's a recurring theme that the executive pool in fitness and you know, and whether it's equipment or or or you know, or the gym business or boutique. But I think especially in equipment, like you know, Peloton guys out of uh came out of uh Ford and Apple, and you know, this guy's out of uh I think he was at Dell at Aquasana.

Um didn't we have someone too coming from like fast food too? I can't remember what we had, right? Some of the CEOs came from fast food, I think. Taco Bell. Taco Bell, yeah, yeah, yeah. So you're like, okay.

Yeah, yeah. Yeah.

You know, interesting one about this too is L Catterton is also involved in eGym and L Playlist. So it's like, are they building a connected fitness ecosystem or they they they seem to be really they're into it?

Active in fitness investing, yeah. Yeah, but you know, the fact that that these guys have had three he's this guy, Todd Barti, is the fourth CEO in in three years, right? Because you had uh you had the founder leave in 23, then you had I think a woman named Zell, and then you had McDonald, and now you have Barti. So that's a revolving door, and uh you know, these are smart people, smart investors, uh, and they don't seem to be able to figure out how to grow the business enough to you know to to where the the shareholders are happy. Or or you know, or it could have been that McDonald had some, you know, there were some life issues that he was dealing with or whatever.

But yeah, who knows? I love my tonal. Always have, always will. But uh, I just don't know how many people have them, really. I mean, I don't know how how much demand there is there. Well, we uh we we covered the uh Peloton one, so as a CFO. Yeah, she's out. Exponential, the uh chief financial officer John Malun Malon out as well. Yeah, eight years.

Yeah, yeah, I thought I thought interesting, right? We lost Peloton and exponential CFOs. What does that say?

You know, and and no no permanent successor, so but they did reiterate their guidance. So you know, sometimes when CEOs leave public companies, you're worried that there's some monkey business going on. But in this case, I don't I don't see any evidence of that, and they reaffirmed their guidance. But uh, you know, given the history at Exponential and all the trouble and you know the the $40 million of recent settlements, I you know, I don't know if it's a coincidence or or related, but uh you know he seemed like a really solid guy based on you know the earnings calls and and uh you know eight-year track record. So I'll give him the give it you know the benefit of the doubt and and uh you know assume that he was just he had a better opportunity or or you know he was knocked out or whatever. But you know, it's uh I don't I don't want to say it's a sinking ship sinking ship, uh but you know it's a lot of a lot of new uh CEOs and and now a lost it's taken on water, you know, yeah, a little bit, a little bit. What about CrossFit?

You guys do the yeah, yeah. That's uh I saved this one for last because I know uh I'm sure Julia plenty of opinions on what's going on here. Yeah, so Don Falls steps down, he was there for four years. I I did get to interview him a couple years ago as well and really enjoyed the conversation. Uh it's it's just a tough one, right? I mean it's CrossFit's a tough one. It says they still have over 13,000 affiliates. I don't I don't know if that's correct or not. That seems a little high, but uh you know it's still up for sale, right? CrossFit's been for sale for uh a notable amount of time. They were talking about Mastrob buying it, but obviously his attention is elsewhere now with 24 hour fitness. So I don't know. What do you what do you think, Juliet? What's what's the future of CrossFit look like? And are you are you gonna be CEO?

Yeah. I need to, uh yeah, yes, that'd be great. You know, I have to say that Don Fall stayed longer than I expected. I do think he's a really nice, I've had my some plenty of personal interactions with him. I think he's a really nice, thoughtful guy and smart. And I think that is an extremely difficult organization to drop into and try to run, especially since it's been under financial pressure and you know, so many challenges over the last five years or six years since you know Greg Glassman left the company. So I give him major props, honestly, for staying that long. And I just do not know about a sale, like who is gonna buy this company? Um, that is for me, speaking of head scratchers, like a complete head scratcher, especially because to me the financial model is is confused, and I still think the sort of difference between the games and the affiliates continues to cause weird challenges in the perception of the brand. They still really struggle. It seems like we've gone to a complete division in the world where people are either like have a negative feeling of CrossFit or a positive feeling, and there's like literally no water in between those two feelings. So I have to think that's difficult. So I just think there are a ton of challenges. So a ton of challenges for whatever new CEOs is gonna come into the door. And I really don't know on a purchaser, like who's gonna purchase CrossFit? But I do still think there's so much value in the organization. It has, I think it's shown it has staying power, even though there's a high ROX competitor and that's a big thing going on. I don't know. I I what do you guys think?

I mean, uh to your point, I always struggle to find what where is the true value in CrossFit? Is it the brand? Is it the affiliate right network? Is it the the sport of fitness? Is it the education, right? Because those are all revenue streams. I don't know how substantial either one is opposed to the other, but it's like it's almost too diversified where it's like, who would buy it? Is a Nike gonna buy it and make Nike CrossFit training centers and take the brand to the next level and you know sponsor all the athletes and just do it, you know, from a pure branding perspective? Or, you know, is a really good operator gonna come in and maybe you know push this towards a franchise or something you know similar to that, where it's like, okay, you beef up the affiliate model and you continue to grow the brick and mortar. Is the games the thing where they just sell that off to somebody else and let high rocks buy it and take that over? Like, I don't know, or is it just get cut up into pieces and and sold that way? I I don't know, but that's where I always struggle is like, where's the real value in CrossFit? And people probably people are pounding on their computer right now, but like it's a community, Eric, that's the value. I'm like, oh well, okay. But how do you monetize that really? And that's that's more of a brand thing. So I don't know.

I I look at this, I don't think I'd want that job because I will say too though, that one thing I find interesting in, you know, because now we've talked about this over the last year and a half or so about how there has been, you know, in part because of the longevity community, this big push towards lifting weights. You know, more and more people are realizing the importance of weightlifting and strength training in their routine. And still to this day, no other modality has emerged, in my opinion, that does a better job of that than CrossFit. Like if I had a 52-year-old mom who's like, I have osteopenia and I realize I've just been running and only doing cardio, and I now realize I need to lift weights. What should I do? I mean, hands down, I would refer them to a CrossFit before any other gym in my area because I know that they're actually gonna learn how to lift weights correctly. There's gonna be, it's gonna be done in a coached environment, not free form in some globo gym. You know, they're actually gonna learn how to do, you know, barbell movements and some actual strength training that's actual strength training versus like moving weights through air, which is what a lot of strength training is. So there's something in the staying power of that, I think. But again, how do you monetize that?

Well, I think with that, and the here's here's to that scenario, Juliet. What which CrossFit affiliate would you refer them to? Because the quality amongst affiliates is so drastically different. And the experience that one has if they walk into one that's poorly run with shitty coaching is very different one than if they ran in, you know, went into San Francisco CrossFit and had the best, right? So it's like, where do you go from everything?

And this is always their right. I think this is always because I do think there's so much value in the affiliates, but how do they? I don't know, you know, there'd probably be extreme revolt over a franchise model, but how can they, you know, I still think most, you know, I would say like 75% of CrossFits are probably running a good show and a good program and have good coaches who care then, you know, but it is you, you know, I I will say I am I do my research before I refer people. So I don't just say go to any CrossFit. I am very careful. I like look, I check their website, I look at their programming, like I do some things to evaluate. Like, is this place legit? Not everybody can do that.

No, very few. Alex, what's your what's your take on many in the CrossFit world?

I think Eric and Juliet should uh be co-CEOs. And I think you guys have all uh what I've heard it makes a lot of sense from you from you know from the in but you guys are insiders uh to uh to a lot more than I am. But I yeah, I've always uh you know I thought the the foundational kind of the the the quality of the fitness product was not an issue. I I you know I think it's a lot of in, you know, maybe too many injuries and people trying to do too much and and uh so you know that maybe has to be addressed. It can't you know it's hard, it's it's a hardcore brand. So you'd have to you have to soften the brand a little bit if you want to appeal to a broader audience. And then the fact that they would sell a license to anybody anywhere as long as you got your certifications was just chaos, right? I mean, to me, it was chaos, yeah, beautiful in some ways. Yeah, it was chaos.

There were literally like two gyms next, there'd be like two CrossFit gyms next to each other in the same shopping mall. You're like, okay, chaos.

I mean, I get to grab a free iron and hit three of them for my gym. Darwinism and survival of the fittest is a great system, but not for gyms.

Yeah, and that was literally Greg Blaskin's perspective, by the way. I mean, he really was like the cream's gonna rise to the top, so we aren't, you know, if we put two gyms next to each other, one of them's gonna win, you know, and that was horrible. I mean, we all lived in, I think we all had this low level of fear all the time. Um, running our business that is in any day, someone would literally just open up shop next door, and then because customers are fickle and everybody likes the new cool shiny object, they're gonna bump over, right? So that was total chaos, complete chaos. I did, by the way, I think I mentioned this in a prior episode, but I wasn't a meeting with Donfall, and I still believe this to be true, and probably true about all these fitness companies, is apart from appointing Eric and Michael CEOs, which would be very fun, by the way, Eric. And they would totally take that job.

At least for a little bit. Yeah.

Yeah. There, I did ask Don why they don't ever have, and it's just like it goes across all these fitness companies, like why they don't have any insiders on their board. You know, it's all just financial dudes that sit on their board without any insiders. And I've always thought that was weird. And I suggested myself as a person, but I also said it's not me, you know, uh Jason Khalipa, or there's a a number of people who I think are.

Janeway Murrah would be great.

Yeah, I mean, I could literally think of 15 people who could fit that role, and I think would do such a good job of advising that board because it is such a, you know, the community piece of it is so, I mean, everyone's obsessed with it. And if you don't have someone on the board who really gets the community in that organization, like I don't see how they can operate. So I mean, I hope they do at least that with whatever new organ like they need to bring someone onto their board who is a CrossFit insider. That would really help, I think, guide the organization to me.

Well, there's no shortage of passion within the CrossFit community. You know, if you ever hang out in the CrossFit affiliates Facebook group, buckle up. It is uh it's an experience. Those people have a lot of opinions. Well, uh, I think that's that's just about a wrap, you guys. This is I do believe this is our.

longest one yet we had so much to cover and i appreciate you know everyone who who stuck through and and listened to the whole thing and there's a lot to to to noodle on here um with our industry i mean any any closing thoughts for for uh q1 2026 you guys juan anything anything coming to mind overall i feel like it you know continues to be overall positive for our industry i mean despite my sort of mixed feelings about the e-gym merger and but i think the straw ipo is very exciting it's really fun to see garmin and lifetime continue to implant it continue to really run solid amazing businesses and super curious to see what expo and uh peloton are going to do but you know overall I feel like industry wide there's a lot of good news there's a lot of positives Alex yeah I like that positive spin on on this uh quarter because if you just look at stock prices uh of you know of of basically the companies we're covering other than Garmin and lifetime to some degree but yeah you would think there was blood blood in the street and uh overall the yes the fitness industry has a lot of really healthy successful and growing companies and I just invested in for full disclosure in in a a company called Yoga Joint uh in the New York franchise that is opening a couple units this year and the the quality of the founder here Adam Shane I don't know if if if you heard his name but uh he he was a colleague of mine at TSI for for years and then went on to Equinox and then Barys was the main development chief development officer at Barry's and now he's uh rolling out this this uh yoga hit concept uh infrared with infrared uh and uh the so as long as we have founders like that entrepreneurs like that coming you know with new concepts uh I'm I'm gonna you know I'll be bullish on the industry and and uh um you know we I think we have plenty of them so I'm uh overall really bullish and I'm you know I'm hoping for some IPOs obviously selfishly so we have something to talk about on this show yeah it's coming I think it's coming okay yeah we're gonna lose we're gonna lose one though we're gonna lose one I think we will uh well there'll be new ones yeah well I'll double down on all that and you know I have this really great concept uh Alex where it's it's a shower where it's red light and vitamin D lamps with hydrogen water that comes down inside of a hyperbaric chamber.

So I think that's gonna be my next my next thing I'll put them on a napkin and I'll send it over to you. Yeah. But I think we're uh I'm I'm we have a lot of tailwinds within the industry right now and overall I think we're seeing in real time the convergence of fitness and health and wellness and and medicine which is really cool. Like that bridge that's the most exciting thing because I've been talking about for so long is how we're starting to finally integrate and communicate with the medical community and a lot of people are bringing medical services under the roof right of their gyms and I'm really fascinated with those models from you know Ramphone training system I just released a podcast with him to Monarch Athletic Clubs to Carbon World Health like all these cool things are popping up now and that gets me really excited.

So yeah and we we can talk a little bit of doomsday when it comes to the public markets but overall I think our industry is doing some really really cool shit so let's keep it up folks all right agree thank you guys thank you both thank you always a pleasure hey wait don't leave yet this is your host Eric Malzone and I hope you enjoyed this episode of Future of Minace if you did I'm gonna ask you to do three simple things it takes under five minutes and it goes such a long way we really appreciate it. Number one, please subscribe to our show wherever you listen to it iTunes Spotify Castbox whatever it may be number two please leave us a favorable review. Number three share put it on social media talk about it to your friends send it in a text message whatever it may be please share this episode because we put a lot of work into it we want to make sure that as many people are getting value out of it as possible. Lastly if you'd like to learn more get in touch with me simply go to the futurofitness dot co. You can subscribe to our newsletter there or you can simply get in touch with me as I love to hear from our listeners. So thank you so much. This is Eric Malzone and this is the future of fitness have a great day