In This Article:
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Viva Leisure Ltd (ASX:VVA) reported a significant revenue increase to 99 million, up 25.2% from the previous corresponding period.
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The company achieved a record EBITDA of 21 million for the half year, marking a 26.2% increase from the previous period.
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Membership at corporate locations grew by 32.5%, reaching 238,565 members, driven by both organic growth and acquisitions.
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The technology and payments division showed significant growth, with a 124% increase over the prior period, driven by Viva Pay.
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Viva Leisure Ltd (ASX:VVA) has a strong recurring revenue model, with over 90% of total revenue being stable and predictable.
Negative Points
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The franchise segment experienced a one-off reduction in revenue due to the cancellation of rebates from a third-party direct debit payments provider.
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There is a substantial capital requirement of 1 to 1.5 million per new corporate location, which could impact cash flow.
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The company is moderating the pace of new greenfield site openings, which may slow down expansion.
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Viva Leisure Ltd (ASX:VVA) faces economic challenges such as rising inflation and interest rates, which could impact future performance.
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The integration of Viva Pay into World Gym cannot commence until 2027, delaying potential revenue growth from this segment.
Q & A Highlights
Q: Can you elaborate on the strategy of optimizing the existing portfolio over rolling out new greenfield sites? A: Harry Constantino, CEO: The focus is on maximizing utilization and updating older sites, which falls under our maintenance cap limit. We aim to capitalize on the existing network by reviewing pricing, selling additional services like supplements, and increasing vending machines and digital signage. This approach improves returns without significant capital outlay. Kim Gallagher, CFO, added that while greenfield sites have a great ROI, conserving cash for tech development and other projects is currently a priority. However, special opportunities like high-performing sites will still be pursued.
Q: What is the current strategy for franchise expansion and its impact on Viva's growth? A: Harry Constantino, CEO: The franchise segment is expanding internationally, with agreements in Singapore, Hong Kong, the Philippines, and the UK. This growth is driven by strategic investments and joint ventures, such as with World Gym Australia. The franchise model requires minimal capital, generates revenue through fees, and enhances our high-margin technology and payments business. This strategic shift prioritizes free cash flow generation and maximizes returns from established locations.