Strong Q1 2026 Performance Despite Minor Misses
Smart Fit reports robust financial results for the first quarter of 2026, with revenue reaching 2.1 billion BRL, a 25% increase year-over-year and the 19th consecutive quarter of growth. Earnings per share came in at 0.3225, slightly below the forecast of 0.3326, while revenue fell just short of the expected 2.11 billion BRL. Investors shrugged off the minor shortfalls, driving shares up 14.75% in after-hours trading to 20.3 BRL from 17.69 BRL.
Key Financial Highlights
Gross cash margin hit a record 51.8%, up 1.1 percentage points from last year, fueled by operational efficiencies and a maturing network. Adjusted EBITDA soared to a record 672 million BRL, reflecting 29% growth year-over-year with a margin of 32%. Recurring net income climbed 47% to 207 million BRL. Excluding pre-operating costs, the gross cash margin reached 52.7%.
- Membership base exceeds 5.6 million, up 6% from Q1 2025.
- Network expands to 2,013 gyms, with 29 net additions in the quarter and 354 over the past year.
- Average annualized net revenue per gym stands at 4.4 million BRL.
Strategic Expansion and Diversification
The company added gyms across regions, with Brazil accounting for 47% of net openings, Mexico 21%, and other countries 31%. Operations outside Brazil now represent 63% of revenue from owned gyms. TotalPass, the corporate wellness platform, contributed 9% of net revenue and 15% of gross cash profit, surpassing 2.1 million end users, up 25% from Q4 2025.
CEO Diogo Corona highlighted leadership in Mexico with 81% market share in active users. Mature units maintain a 52% gross cash margin for the 12th straight quarter, while 2024 vintage units achieved 56%.
Market Reaction and Valuation
The stock’s rally underscores confidence in Smart Fit’s growth trajectory, trading within its 52-week range of 16.62 BRL to 27.52 BRL. Metrics suggest attractive valuation relative to growth prospects.
Executive Insights
Chairman and Founder Edgard Corona emphasized long-term strategy: “Our consistent execution and strategic expansion have positioned us well for sustained growth.”
CFO José Luís Rizzardo Pereira noted operational strength: “Our strong financial performance and operational efficiency continue to drive value for shareholders.”
CEO Diogo Corona addressed TotalPass scale: “Scale is very favorable… The longer we are in the business, the better the financials.”
Outlook and Guidance
Forward guidance projects Q3 2026 EPS at 0.07 USD and revenue at 435.22 million USD, with Q4 EPS at 0.08 USD and revenue at 449.41 million USD. Executives anticipate continued network growth and product enhancements.
CapEx per unit remains stable year-over-year, focusing on expansion efficiency. Leverage stands at a healthy 1.71x adjusted net debt to EBITDA (last 12 months, excluding IFRS 16).
Risks and Q&A Highlights
Challenges include intense competition in Brazil, macroeconomic pressures in Mexico, potential delays in openings, and rising costs. In Q&A, executives discussed TotalPass mix evolution, aggregator impacts, and cost controls.
CFO Rizzardo affirmed TotalPass accretes to margins: “The nature of the TotalPass business… is accretive.” Chairman Corona addressed competition: “We are very strategic… looking into the long term.”
