Can Viva Leisure Sustain Its Rapid Profit Growth Amid Tech Expansion?

Strong Profit Growth and Cash Generation

Viva Leisure Limited (ASX – VVA) has delivered a robust set of financial results for the first half of FY2026, showcasing a remarkable 168% increase in statutory net profit after tax (NPAT) to $5.2 million. This surge comes alongside a 17.6% rise in revenue to $116.5 million, underscoring the company’s effective execution of its network optimisation and technology platform expansion strategies.

The company’s underlying NPAT also rose by nearly 47% to $8.1 million, while underlying EBITDA grew 20.8% to $25.4 million. Operational efficiencies have improved, reflected in an expanded EBITDA margin of 21.8%, up from 21.2% the previous year. Adjusted free cash flow increased by 25% to $19.9 million, highlighting Viva Leisure’s strong cash-generative business model.

Technology Segment Driving Growth

A standout performer in the half was the Technology, Payments, Licensing & Retail (TPLR) segment, which saw revenue jump 44.7% to $9.3 million, now accounting for 8.1% of total group revenue. This segment, which includes Viva Pay and licensing initiatives, is the company’s highest-margin and most scalable growth area. New technology products are slated for launch in the second half of FY2026, and the company is piloting access control technology with World Gym, signalling further innovation ahead.

Retail operations, including vending and supplements through the Supp Society brand, are also expanding, with a target of over 20 branded stores by the end of 2026. This diversification beyond traditional health clubs is positioning Viva Leisure well for sustained growth.

Network Expansion and Membership Growth

The company’s network grew modestly to 518 locations, with total membership surpassing 656,000. Corporate health clubs under the Club Lime brand saw revenue increase 16.3%, with corporate membership rising 11.3% to over 265,000 members. The franchise network, including Plus Fitness and World Gym Australia, expanded by 13.3% to 316 locations, adding nearly 390,000 members.

Notably, the company achieved this growth organically, with only one net new site added during the half, reflecting the success of its network optimisation strategy. Membership growth contributed an incremental $13 million in annualised recurring revenue since the period end.

Financial Discipline and Outlook

Viva Leisure maintained disciplined capital management, reducing senior debt by $2.6 million to $97.9 million and increasing net leverage covenant flexibility with the Commonwealth Bank of Australia. The company also plans to recommence a 10% on-market share buyback, funded from existing cash reserves and operating cash flows, signalling confidence in its valuation and future prospects.

FY2026 guidance is bullish, with revenue expected to exceed $237 million and statutory NPAT forecast to more than double to over $11.5 million, surpassing analyst consensus by over 20%. The company’s strategic focus remains on converting scale into shareholder returns through continued network optimisation and TPLR expansion, targeting over $28 million in TPLR revenue for FY2027.