Health and fitness club provider Viva Leisure (ASX: VVA) has delivered a strong set of numbers for the first half of the 2025 fiscal year (H1 FY25) with membership growth and network expansion propelling revenue and profitability to record levels.
Strong financial performance
All up, revenue of $99 million jumped by about 25 per cent from the same time last year, driven by the group’s ‘health clubs’ and ‘technology’ segments.
Similarly, operating earnings (EBITDA) lifted by 26 per cent year-on-year to reach $21 million in H1 FY25. Management noted that more than 90 per cent of total revenue is recurring nature, helping to reinforce the stability in Viva’s earnings.
The company’s EBITDA margin of 21.2 per cent increased by 20 basis points. According to the Viva, this points to improving operational efficiencies and scalability of its business model despite a broader operating climate characterised by rising costs.
Adjusted free cash flow of $15.9 million in H1 FY25 also grew by 22 per cent from the previous corresponding period. Meanwhile, net profit after tax (NPAT) of $5.5 million recorded a healthy 15 per cent rise during this time.
Expansion and balance sheet strength
On an operational level, Viva saw its total membership numbers surge by more than 70 per cent to just shy of 600,000, with corporate memberships surpassing 238,000.
The group’s network of health clubs now totals 476 open locations worldwide, with an additional 118 secured sites set to lift this number to 594 locations.
On the bottom line, Viva ended the half-year with a robust balance sheet consisting of $18.1 million in cash. The company is also continuing its on-market share buy-back program with $1.9 million worth of shares purchased in H1 FY25.
Furthermore, Viva is exploring additional capital management initiatives underpinned by an anticipated increase in free cash flow.
Viva Leisure chief executive officer and managing director, Harry Konstantinou, commented:
“1H FY25 has been a phenomenal period for Viva Leisure, with record-breaking results reflecting the strength of our diversified strategy and the resilience of our business model. Our expanding corporate and franchise network, combined with our high-margin technology and payments division, continues to drive sustainable and profitable growth.”
Bullish outlook
Looking ahead, Viva remains focused on optimising its existing network, driving free cash flow, and expanding its technology-driven offerings.
The company recently executed strategic investments in Boutique Investment Studios with a 34 per cent interest, and World Gym Australia with a 25 per cent stake.
It believes these investments have potential to unlock significant growth opportunities across the group’s technology, network, and payments divisions. Notably, Viva has the flexibility to acquire 100 per cent of these investments at pre-agreed values.
The company is projecting revenue to exceed $56 million in the fourth quarter of FY25, equating to more than $224 million on an annualised basis. This compares with about $164 million in total revenue in FY24.
Likewise, it anticipates EBITDA to top $12.5 million in the fourth quarter of the current fiscal year, which represents more than $50 million on an annualised basis. In FY24, total EBITDA clocked in at $35.4 million.