Gym Group shares jump on strong results

Investing.com — Shares of Gym Ltd (LON:) jumped by over 6% on Monday after the company released its post-close trading update, signalling strong revenue growth and a positive outlook. 

The update reported solid progress in key areas, including membership gains and improved revenue per member, as well as the opening of new sites, which are expected to continue driving the company’s growth trajectory.

In the update, the company reported an 11% increase in revenues for FY24, reaching £226 million, surpassing consensus estimates by 1%. 

Memberships grew by 5%, reaching 891,000, while the company’s average revenue per member per month climbed by 7%, reaching £20.81. 

The company also reported a reduction in net debt, down to £61.3 million from £66.4 million, highlighting its strong financial position.

Analysts at Jefferies noted that the company’s updated guidance for FY24, which expects EBITDA to be slightly above the top end of the market forecast, indicates a 4% increase over current consensus expectations. 

This follows prior guidance upgrades in July and September, reflecting the company’s ongoing momentum. 

A 2% increase in EBITDA is expected in FY25 over current forecasts, with continued growth expected from accelerated site openings. The company has already opened 12 new sites in FY24 and is targeting 14-16 for FY25.

“Average members were c.0.8% higher than our estimate with ARPMPM c.1.4% lower- we would infer from this that Ultimate and Off-Peak remain a similar proportion of the mix, c.30% and high single digit,” said analysts at RBC Capital Markets in a note.