Fast Fitness Japan Incorporated Q4 FY2025 earnings call

Corporate Strategy

• The company follows a two-wheel growth strategy: maintain and accelerate growth by expanding and strengthening the core domestic AnyTime Fitness business, while investing in and nurturing new growth areas (overseas expansion, new fitness brands, EC/merchandise) to achieve sustainable long-term growth.
• Enacted a new corporate Purpose, Mission, Vision and Values (PMVV) in April 2025, developed with input from all employees via dozens of workshops to align the whole company on the purpose of "Healthy places for all people".
• The 3-year mid-term management plan announced in May 2024 plans for total investment of 9.6 billion yen over the plan period, with 3.7 billion yen invested in the first fiscal year (2025 March fiscal year) as planned.

Core Business Operations

• Domestic AnyTime Fitness uses a fixed-royalty franchise model limited to corporate franchisees, resulting in an average of 5.71 stores per franchise owner, with 24 franchisees operating 10+ stores and several operating 50+ stores, creating a strong virtuous cycle of profitable expansion.
• Two national promotions were held in the 2025 March fiscal year, delivering strong new member growth. The company now has accumulated data and know-how to run optimized regional marketing to effectively convert marketing spend into new members and brand awareness.
• The new AnyTime Fitness app (Access Pass) that enables door unlocking via smartphone has growing adoption. The company is expanding app functionality to improve member communication, boost customer satisfaction, reduce churn, and drive paid add-on services like personal training.
• Member count is on track to exceed 1 million in late May 2025, and the company will run a full-year "AnyTime YEAR" special campaign to mark this milestone.

New Growth Area Operations

• Germany: The company holds the master franchise right for Germany. After acquiring the business, it built out local store development and franchise development teams, and the second store opened in April 2025. Third and fourth stores are scheduled to open in August and October 2025 respectively, with one franchise contract already signed and 6 additional prospective franchisees in late-stage negotiations.
• Singapore: A third large store on a university campus is scheduled to open in July 2025, to build local business expertise and develop local talent.
• The Bar Method: A ballet-based low-impact, high-repetition training method with elements of physical therapy, anatomy, pilates and yoga. The second store will open to test multi-store operations ahead of future franchise expansion.
• A PROP EC store: The company plans to expand product assortment to include protein, supplements and subscription products in the first half of the 2026 March fiscal year, and will test in-store pop-ups, vending machine sales and corporate wholesale, with a revenue-sharing model that returns income to franchise owners.

Shareholder Return

• The company's base dividend policy targets a 40% consolidated payout ratio, with a 4.5% minimum DOE. For the 2025 March fiscal year, total annual dividend is 45 yen per share (25 yen year-end + 20 yen interim), for a 41.6% consolidated payout ratio.
• The company currently offers shareholder discount coupons for the A PROP online store, awarded based on share holdings.

1. Domestic AnyTime Fitness: Achieved 11.9% year-over-year revenue growth, reached 99.9% of the beginning-of-period plan, and delivered record-high operating profit, making it the core driver of the company's overall profit. It contributes approximately 90%+ of total company revenue, and 85.9% of the company's total overall revenue is stable stock-based revenue (royalties + direct-to-consumer membership fees) from this segment. As of the end of March 2025, the segment operates 1,194 stores across all 47 Japanese prefectures, with 974,000 total members, an average of 818 members per store (surpassing pre-COVID levels).
2. Overseas AnyTime Fitness: The segment is in the early investment stage, with 3 total stores (1 in Germany, 2 in Singapore) as of the end of March 2025. Revenue missed the initial period plan due to delayed launch preparation, with costs currently leading revenue.
3. The Bar Method (new boutique fitness brand): The segment is in the early launch investment stage. The first direct-operated store opened in November 2024, with the second store scheduled to open in June 2025. No material revenue contribution yet, with all resources allocated to operational trial for future franchise expansion.
4. EC・ Merchandise (A PROP): The segment is in the early build-out stage. The official online store was originally scheduled to open in October 2024, but was delayed to December 2024 due to negotiation delays. Revenue was well below the initial plan, with no material contribution to overall performance in the 2025 March fiscal year.

• For the 2026 March fiscal year (the second year of the mid-term management plan), the company will continue to make sufficient ongoing investments in new growth areas, and will focus on nurturing existing new businesses rather than just launching new initiatives. The company presents guidance as a range to account for external uncertainties, with the upper range of the guidance matching the original mid-term management plan target for the second year.
• The full-year dividend is maintained at 45 yen per share, with an expected payout ratio of 41.7% to 42.9%.
• The company expects net profit to grow over the medium term as new growth areas mature, following the current investment phase.

• Store saturation risk in highly developed urban areas such as Tokyo, where it is increasingly difficult to find available locations for new stores.
• Rising competition from low-cost competitors such as chocoZAP and FIT-EASY in the 24-hour gym segment.
• Early-stage investments in new growth areas lead to front-loaded costs that reduce near-term profit, while new businesses carry execution and market acceptance uncertainty.
• Dormant member growth as total member count increases, which can negatively impact churn and member utilization rates.
• Uncertainty around macroeconomic conditions and consumer disposable income that can impact gym membership demand.

Q: What are the key characteristics and trends in how quickly franchise owners open new stores? Do Tokyo-based franchise owners expand to other regions of Japan? / A: Fast Fitness Japan's high fixed-royalty model creates strong profitability for franchise owners, leading most franchise owners to have strong motivation to open new stores as quickly as possible. The current average is 5.71 stores per franchise owner, with many owners operating 10+ stores, proving the model's profitability that gives new franchise owners confidence to expand rapidly. While finding new locations in central Tokyo is becoming more difficult, regional cities have more available properties and stronger untapped demand. Early franchise owners who entered the business when the brand first launched in Japan now operate stores across the country, expanding from Tokyo to regions like Nagoya, Kansai, and Fukuoka.

Q: Is there a risk of market saturation in Japan's fitness gym market, and how does the company compete with new low-cost competitors like chocoZAP and FIT-EASY? / A: Japan's fitness participation rate is only less than 5%, far below 20% in the US, 15% in Europe and 10% in other parts of Asia. The Japanese government and corporations are actively promoting exercise to reduce rising healthcare costs, so the market is expected to grow 2x to 3x even with population decline, meaning there is no near-term saturation risk. Competitors target different customer segments: low-cost competitors focus on exercise beginners, while AnyTime Fitness targets people who already have an established exercise habit, and the company has actually seen many customers move from low-cost competitors to AnyTime Fitness, creating a largely win-win dynamic. AnyTime Fitness also has a 6x larger store network than FIT-EASY, and 15 years of accumulated brand, operating and customer experience know-how that cannot be easily replicated by new competitors.

Q: What measures is the company taking to address growing dormant members and reduce churn? / A: The company's monthly churn rate is currently between 3% and 4%. It is leveraging the communication features of the newly launched AnyTime Fitness app to increase engagement with members, improve retention and reduce churn. This strategy is still being rolled out and its impact is ongoing.