Leejam CEO says Q4 profit pressured by expansions, deferred revenues hit SAR 548M

He told Argaam that the new centers are in the initial ramp-up period, which lasts 18 to 24 months, during which profit margins are temporarily under pressure.

Al-Nemr said Leejam’s deferred revenue balance reached nearly SAR 548 million by the end of 2025, of which SAR 283 million will be recognized in the first quarter of 2026, along with sales expected to be generated during the same quarter.

He added that the company is nearing completion of its 2030 strategy, which focuses on enhancing customer experience and transforming services into an integrated lifestyle model, as well as adopting a measured expansion plan to maintain and grow market share.

The CEO disclosed that Leejam’s investment unit conducted a comprehensive review of all its investments and pilot projects.

Priority will be given to opportunities with the highest scalability potential, clear value creation, and the strongest alignment with long-term growth objectives. Moreover, the company will ensure capital is directed towards opportunities delivering the best returns for shareholders, he added.

Al-Nemr said that the 22.9% decline in Q4 2025 net profit, despite a 2.5% growth in revenue and an improvement in EBITDA margin to 49%, was primarily due to the continued impact of expansion, which put pressure on margins following the opening of 16 new centers last year, in addition to the full-year impact of centers opened in Q4 2024.

“We recorded non-recurring losses of around SAR 13 million due to impairment in the value of certain investments, which rose to SAR 20 million after accounting for our share of losses in an associate company. These items are not expected to recur next year,” he stated.

As for financing costs, he clarified that the debt balance reached about SAR 548 million by the end of December 2025, noting that Leejam has relied heavily on internal cash flows over the past three years to mitigate the impact of rising interest rates. The company will continue restructuring its financing to improve capital efficiency.

The 60% increase in financing costs during the quarter was mainly due to lease financing expenses related to newly opened centers and the full-year impact of financing centers opened in 2024, he added.

Al-Nemr stated that the number of Fitness Time centers reached 219 by the end of Q4 2025, while the total number of branches reached 239 by year-end due to the addition of academies and studios.

Regarding the revenue structure, the CEO explained that subscriptions and memberships accounted for 84% of total revenue, while personal training services contributed 13%.

Rental income from spaces and retail outlets within clubs contributed 2%, while revenue from other in-club services accounted for 1% during the quarter.

Meanwhile, the stability seen in personal training revenues in Q4 2025 was due to limited trainer capacity and challenges in recruiting new trainers. The company has invested in developing Saudi talent, with the first batch of more than 200 qualified Saudi male and female trainers graduating and already beginning work across the company’s network. Additional batches are being prepared to support growth in this segment and enhance customer experience, the CEO said.

According to Argaam’s data, Leejam reported a net profit of SAR 305 million in 2025, a decline from SAR 457 million a year earlier. Q4 2025 net profit stood at SAR 79 million.