Viva Leisure’s Rapid Expansion Raises Questions on Integration and Margin Sustainability

A Year of Unprecedented Growth

Viva Leisure Limited (ASX, VVA) has delivered a landmark financial performance for the year ended 30 June 2025, posting record revenue of $211.3 million, a 30% increase over the previous year. This surge was accompanied by a 25.6% rise in EBITDA to $99.1 million, underscoring the company’s robust profitability and operational efficiency. The company’s net profit after tax also climbed 60.9%, reflecting strong bottom-line momentum.

Central to this growth was a dramatic expansion in membership, which soared by nearly 67% to over 620,900 members across 491 locations. This rapid scaling highlights Viva Leisure’s increasing appeal in the competitive Australian fitness market and its successful multi-brand strategy.

Diversification Fuels Momentum

Viva Leisure’s diversified revenue streams played a pivotal role in its record results. The Technology, Payments, Licensing & Services (TPLS) segment was a standout, more than doubling its revenue with 127.7% growth. This segment’s expansion is driven by proprietary platforms such as Viva Pay and The Hub, which are enhancing member experience and unlocking new high-margin income sources.

Meanwhile, the company’s franchise network accelerated significantly, with over 170 new franchises sold across Plus Fitness, World Gym Australia, and Boutique Fitness Studios. Strategic investments in these brands have broadened Viva’s footprint and positioned it as a leader across multiple fitness segments, from mid-market gyms to premium boutique studios.

Strategic Capital Deployment and Operational Strength

Viva Leisure reinvested $60.9 million into growth initiatives, including $36.9 million in acquisitions and $19.2 million in capital expenditure. This disciplined capital allocation has fueled network expansion and enhanced operational capabilities. The company also executed a $4.7 million share buyback, reducing shares on issue and boosting earnings per share by 47.6%.

Operational cash flow remained strong, increasing 17.8% to $70 million, supporting these investments without compromising financial flexibility. Free cash flow improvements further underpin Viva’s capacity to pursue growth while maintaining balance sheet strength.

Looking Ahead, Confident and Focused

CEO Harry Konstantinou expressed confidence in the company’s trajectory, highlighting the momentum entering FY2026 with an EBITDA run-rate approximately 7% higher than FY2025. The company plans to focus on network optimisation, technology rollout, and franchise expansion, including the integration of World Gym’s payments platform and the launch of third-party technology licensing.

Viva Leisure’s strategy emphasizes quality over quantity, with plans to replace underperforming locations and open 4-5 new corporate sites by year-end. The company’s multi-brand approach, combined with its technology-driven ecosystem, positions it well to capture ongoing market opportunities and deliver sustained shareholder value.