Smart Fit Sees 71% Profit Drop While Revenue Climbs 36% in Q4

Smart Fit, Latin America’s largest fitness chain, reported a steep decline in fourth-quarter profit despite substantial revenue growth, according to financial results released Thursday.

The company earned R$196.5 million ($33 million) in Q4 2024, representing a 71% decrease from the same period last year. Revenue grew significantly to R$1.54 billion ($257 million), rising 36% compared to Q4 2023.

This growth came primarily from the company’s expanding business footprint, with its gym network increasing by 21% to 1,743 locations across Latin America.

The customer base expanded by 17%, reaching 5.21 million members by the end of December. EBITDA jumped 47% to R$487.1 million ($81 million), with margins improving by 2.3 percentage points to 31.6%.

When excluding tax effects, the profit decrease measured just 6% on a recurring basis. Smart Fit attributed the profit decline to expansion costs and higher financial expenses affecting overall profitability.

For the entire 2024 fiscal year, Smart Fit recorded a profit of R$539.4 million ($90 million), down 54% from 2023. Annual revenue climbed 31% to R$5.58 billion ($930 million), showing the company’s continued market penetration strategy remains effective.

Smart Fit’s 2024 Growth & Financial Outlook

The aggressive growth strategy has increased the company’s debt load considerably. Net debt rose to R$2.99 billion ($498 million) at year-end, more than doubling from R$1.3 billion a year earlier. The company’s leverage ratio increased from 0.68 to 1.16 times EBITDA.

Smart Fit maintained a healthy cash position of R$2.94 billion ($490 million) as of December 31. The company described 2024 as a year of “solid execution” with “record expansion,” surpassing its original guidance by opening 305 new gyms throughout the year.

Operating cash flow increased 8% to R$462.1 million ($77 million) in the quarter. The company reported a negative variation of R$34.2 million ($5.7 million) in its working capital during the same period.

“The results achieved in 2024 reinforce our commitment to excellence and long-term strategic vision,” Smart Fit stated in its earnings release. Management remains confident about future growth prospects despite the temporary profit decline.

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