What Happened at Smart Fit in Q4 2025
What Happened
Smart Fit, Latin America’s largest gym chain, delivered its fourth-quarter 2025 results on March 11, reporting recurring net income of R$235 million ($45M), a 19% increase from R$197 million a year earlier. The figure fell short of the Bloomberg consensus estimate of R$249 million, primarily because of a higher effective tax rate on international subsidiary remittances. Smart Fit is a leading Latin American fitness company listed on B3 and a key holding for investors tracking regional consumer discretionary growth across The Rio Times’ Latin American financial news coverage.
Adjusted EBITDA reached R$610 million ($118M), up 25% year-on-year, while the EBITDA margin edged down 0.3 percentage points to 31.3%. Net revenue climbed 26% to R$1.95 billion ($377M) as a 12% increase in the average monthly ticket and an 8% expansion in the member base combined to drive top-line momentum.
Shares of SMFT3 rallied as much as 6.8% to R$20.02 in the first minutes of trading before settling around R$19.35, roughly 3% higher on the day. The market read the results as reassuring after a sharp January sell-off triggered by management commentary about margin headwinds in 2026.
Key Drivers Behind Smart Fit’s Q4 2025 Performance
Key Drivers
Record Network Expansion
Smart Fit added 217 gyms in 4Q25 alone — its largest-ever quarterly expansion — including a record 150 openings in December. For the full year, 341 net additions lifted the network to 2,084 locations across 16 countries, with 1,683 company-owned units (81%) and 401 franchises (19%).
Geographically, Brazil accounted for 161 of the 2025 openings (47%), other Latin American countries contributed 110 (32%), and Mexico added 70 (21%). The company also entered Morocco with two units, marking its first footprint on a new continent.
TotalPass Gaining Strategic Weight
The corporate wellness aggregator platform TotalPass continued to expand its role within Smart Fit‘s ecosystem. In 2025, TotalPass members accounted for roughly 15% of total attendance at the company’s owned gyms in Brazil, up from 13% a year earlier. Revenue contribution climbed to 12% of consolidated sales, a four-percentage-point increase versus 2024.
BTG Pactual analysts described TotalPass as an increasingly strategic tool for demand generation, user retention, and revenue diversification. However, TotalPass users carry a lower average revenue per user (ARPU) than direct members — management has indicated the gap should narrow from roughly 40% to 25–30% over time — creating near-term margin dilution.
Regional Margin Pressures
Brazil’s gross margin contracted 110 basis points year-on-year, weighed by pre-opening costs from 88 new units opened during the quarter. Mexico margins fell a steeper 400 basis points as revenue per owned gym remained flat while labor expenses rose, driven by minimum-wage increases and additional front-desk hiring aimed at improving sales conversion.
The other Latin American markets, meanwhile, continued to deliver margin expansion supported by operating leverage as the network matures in countries like Colombia, Chile, and Peru.
Smart Fit Q4 2025 Financial Detail
Financial Detail
Revenue and Profitability
Net revenue for 4Q25 reached R$1.95 billion ($377M), a 26% annual increase driven by a combination of the 12% higher average ticket across all regions, the 8% member-base growth to 5.2 million, and an 88% surge in revenue from “other business units” (studios, digital, TotalPass). Full-year 2025 revenue totaled R$7.24 billion ($1.40B), up 30% from 2024.
Adjusted EBITDA of R$610 million ($118M) grew 25%, though the margin slipped to 31.3% from 31.6% a year earlier as the front-loaded 4Q opening schedule and rising TotalPass mix weighed on unit economics. For the full year, EBITDA totaled R$2.29 billion ($443M), up 30%, with the annual margin at approximately 31.6%.
Capital Expenditure and Balance Sheet
Capital expenditure in 4Q25 totaled R$920.7 million ($178M), up 28% year-on-year, with expansion capex of R$783.5 million ($152M) accounting for 85% of the total. The heavy investment reflects 184 owned-unit openings in the quarter versus 122 in the year-ago period.
Net debt-to-EBITDA closed 2025 at 1.19x, a marginal increase from 1.16x a year earlier. The adjusted ratio excluding IFRS 16 lease effects stood at approximately 1.8x as of earlier in 2025, reflecting the company’s disciplined capital allocation even amid record expansion. Cash generation remained robust throughout the year, with the third quarter alone producing R$605 million in operating cash flow — 103% conversion over EBITDA.
Management Signals from Smart Fit
Smart Fit guided for 330–350 new gym openings in 2026, approximately 80% of which will be company-owned units. The range implies a 16–17% annual growth rate, broadly stable versus the record 341 additions achieved in 2025.
Management acknowledged that consolidated gross margins in 2026 may come under slight pressure from the accelerating TotalPass mix, but expects SG&A dilution from operating leverage to offset the impact, keeping the EBITDA margin trajectory broadly stable.
In a January investor event, executives noted that a weaker macro environment could paradoxically benefit the company by forcing smaller competitors out of the market and freeing up attractive real estate locations for new Smart Fit units.
What to Watch Next for Smart Fit
Watch Next
Investors will be listening closely to the 4Q25 results webinar on March 12 for further detail on Mexico’s margin recovery timeline, the pace at which TotalPass ARPU converges toward direct-member levels, and any color on the Moroccan expansion pipeline.
The Selic trajectory will also matter. Brazil’s central bank is widely expected to begin cutting from the current 15% level in mid-2026, which would lower Smart Fit’s interest expense on its BRL-denominated debt and could boost discretionary consumer spending — a tailwind for gym membership sign-ups.
Consensus remains overwhelmingly bullish: Goldman Sachs reiterated its buy rating with a R$38 ($7.35) price target, while BTG Pactual maintained buy at R$30 ($5.80), Safra at R$33.50 ($6.48), Itaú BBA at R$33 ($6.38), and XP at R$32 ($6.19). All targets imply significant upside from the roughly R$19 trading level.
Smart Fit Quarterly Financial Summary
| Metric | 4Q25 | 4Q24 | YoY Chg |
|---|---|---|---|
| Net Revenue | R$ 1,948M ($377M) | R$ 1,546M | +26% |
| Adj. EBITDA | R$ 610M ($118M) | R$ 488M | +25% |
| EBITDA Margin | 31.3% | 31.6% | −0.3 pp |
| Recurring Net Income | R$ 235M ($45M) | R$ 197M | +19% |
| Member Base | 5.2M | 4.8M | +8% |
| Total Gyms | 2,084 | 1,743 | +20% |
| Capex | R$ 921M ($178M) | R$ 719M | +28% |
| Net Debt / EBITDA | 1.19x | 1.16x | +0.03x |
Smart Fit Full-Year 2025 Summary
| Metric | FY 2025 | FY 2024 | YoY Chg |
|---|---|---|---|
| Net Revenue | R$ 7,242M ($1.40B) | R$ 5,571M | +30% |
| Adj. EBITDA | R$ 2,292M ($443M) | R$ 1,763M | +30% |
| Recurring Net Income | R$ 741M ($143M) | R$ 579M | +28% |
| Net Gym Additions | 341 | 305 | +12% |
Key Risks for Smart Fit Investors
Risks
Mexico’s margin trajectory is the most immediate concern. Revenue per owned gym has stagnated while labor costs climb, and the country’s minimum-wage policy creates a structural cost headwind that management cannot fully offset through pricing alone. A further deterioration in Mexican unit economics would pressure the consolidated margin outlook.
The TotalPass margin debate remains unresolved. While the platform drives traffic and retention, its lower ARPU dilutes gross margins at the gym level. If the narrowing of the ARPU gap takes longer than expected, or if competitors launch rival aggregator platforms, the revenue-quality trade-off could weigh on multiples.
Macro risks are twofold: Brazil’s 15% Selic rate elevates the company’s borrowing costs and may crimp discretionary spending if rate cuts arrive later than expected. At the same time, intensifying competition in Brazil’s fragmented gym market — including digital fitness alternatives — could compress membership pricing power over the medium term.
Sector Context for Latin American Fitness
Latin America’s fitness market remains deeply underpenetrated: fewer than 5% of the population above 15 years holds a gym membership, compared with more than 15% in Europe and 20-plus percent in the United States. Smart Fit is nearly eight times the size of the second-largest player in the region, giving it significant procurement, branding, and real-estate negotiating advantages.
The company’s high-value, low-price (HVLP) model has been the winning formula globally in gym chains, as evidenced by peers such as Planet Fitness in the U.S. and Basic-Fit in Europe. Safra analysts estimate there is room for approximately 1,780 additional Smart Fit gyms in Brazil alone, plus roughly 620 in Mexico, supporting a multi-year compound annual revenue growth rate of 23% through 2027.
At the current share price near R$19, SMFT3 trades at roughly 13x projected 2026 earnings, a discount to its historical average and to global HVLP gym peers, which analysts attribute to the macro uncertainty in Brazil and the evolving TotalPass margin narrative.