Smartfit (SMFT3) Q4 2023 earnings summary

Executive summary

• Network reached 1,438 clubs in 15 Latin American countries, up 18%; total membership was 4.456m, up 17% YoY.

• Record expansion added 215 net clubs in 2023, including 132 in 4Q23; FY23 revenue rose 45% to R$4.245bn and adjusted EBITDA rose 120% to R$1.302bn.

Financial highlights

• 4Q23 net revenue was R$1.131bn, up 33% YoY and 4% QoQ; FY23 revenue was R$4.245bn, up 45%.

• 4Q23 adjusted EBITDA was R$332m, up 45% YoY; FY23 adjusted EBITDA was R$1.302bn, up 120%.

• Recurring net income was R$209m in 4Q23, up 180% YoY, and R$536m for FY23; recurring net margin was 12.6%.

• Operating cash flow was R$426m in 4Q23 and R$1.488bn for FY23, up 148% YoY.

Outlook and guidance

• Guidance calls for 240–260 net club openings in 2024; more than 70% was contracted or under construction by February.

• January 2024 added a record 322,000 members, bringing total membership to 4.8m.

• Smart Fit Nutri planned further rollout in Brazil and product testing in other countries during 2024.

• TotalPass expected strong 2024 growth, supported by product improvements, network expansion and higher commercial investment.