Good morning, everyone, and welcome to SATS Q3 2025 presentation. I'm Sondre Gravir, the CEO of SATS, and I'm joined today by our CFO, Cecilie Elde. We will run a Q&A session in Teams at 10:00 O'clock today. You can find the link to this Q&A session in the Q3 Stock Exchange announcement published earlier this morning. Let's dive into the third quarter. SATS is the leading fitness club operator in the Nordics, with a well-established footprint across our key clusters. We ended the quarter with 274 clubs and 756,000 members. Every day, 10,000 passionate SATS employees create exceptional training experiences, driving, on average, 118,000 workouts across our clubs daily. Our financial performance remains solid and consistent. In the past 12 months, we have achieved 8% revenue growth, 17% EBITDA growth, and 31% EBIT growth, demonstrating the strong operational leverage in our model.
This quarter confirms that our momentum remains strong, both operationally and financially. What we are seeing now is the benefit of our stable subscription-based model, which gives us recurring revenues and predictable growth. Member engagement continues to rise. Workouts are up 7% year- over- year, driven by both member growth and higher activity level per member. That's a clear sign of satisfaction and loyalty among our members. On the financial side, EBITDA increased by 13%, reaching NOK 192 million, reflecting the solid operational leverage in our model. We are well on track toward our mid-term ambition of NOK 1.1 billion in EBITDA. I'd also like to highlight Sweden in particular. After lagging somewhat post-COVID, the growth is now contributing positively to group results, with a 19% increase in EBITDA. This shows our strategy in action, how operational improvements and stronger focus on group training are yielding clear results.
Leverage remains stable at 1.3x net debt to EBITDA even after returning significant capital to shareholders through dividends and share buybacks. That underlines our financial strength and discipline. Overall, Q3 is another quarter with consistent performance, continued improvement, and clear progress toward our long-term goals. Let's move to activity levels, one of the most important leading indicators for our business. As you can see, the total number of workouts is up by 7% year- over- year, increasing for the 16th quarter in a row. This tells us that our members are not only staying with us, but they are also training more frequently. A key driver behind this growth is group training, which grew by 10% in the quarter. Our investments in new concepts, better scheduling, and in-house developed content are really paying off. Group training is a powerful engine for both engagement and profitability.
Group training members stay almost twice as long as gym-only members. They pay more on average, and they have much higher satisfaction scores with an NPS of 77, which is really strong. From an operational point of view, group training is highly efficient. A group studio can handle around twice as many active members as the traditional fitness floor. The more we succeed in activating our members through group training, the stronger our long-term outlook becomes in terms of loyalty, revenue, and efficiency. We have made significant improvements to our group training offering in recent years, adding 24% more classes compared to Q3 just two years ago. This has been positive because we developed a complete in-house platform for group training, which has become one of SATS' biggest strategic advantages. We develop our own classes, meaning we're not dependent on external providers to scale.
We can offer group classes that our members prefer at lower cost, and we can easily scale up or down based on members' preferences and demand. This really sets us apart from competitors, and our group training setup is very difficult to replicate. We own our content, which means no license fees and full creative control. That gives us flexibility to innovate quickly and adapt to new fitness trends. That's why our group training setup is not just a product. It's a growth engine that strengthens both member loyalty and profitability across the entire SATS network. We have built a unique and scalable group training platform, but what truly sets us apart is the scale and reach we have achieved with it. SATS is by far the leading provider of group training in the Nordics, both in terms of scale and variety.
Just to illustrate that, in Oslo alone, we offer around 550 group training classes every single day, including, for example, 100 indoor running classes and 120 Pilates and yoga classes. That's a massive offering that no other operator in our markets can match. We have a strong micro-cluster setup within each city. Our clubs are located close to each other, which allows us to optimize the schedule, balance demand across locations, and offer members a wide variety of classes at convenient time slots throughout the day. This chart shows how we manage to serve different member groups with a continuous flow of activity across the day. It's a perfect example of how our model combines member convenience, operational efficiency, and scale advantages. In short, we are making training accessible, flexible, and inspiring, making it attractive for members to come back.
Now, let's take a closer look at Sweden, a great example of how our strategy with group training as a central part is now translating into tangible results. Sweden has truly turned a corner. After lagging somewhat post-COVID, the market is now delivering strong operational and financial performance, a clear sign that our initiatives are working. Over the past year, we have made significant improvements to the product offering, particularly within group training. We've added 16% more classes compared to last year, which has so far led to 9% more group training workouts, which we expect will continue to grow. Total workouts are up 8%. This activity growth drives tangible results: member growth of 4%, ARPM up 3%, and revenues up 7% year- over- year. These are direct effects of higher member engagement, more workouts, greater member satisfaction, and loyalty. The impact is also visible in profitability.
EBITDA in Sweden is up 19%, or 15% currency adjusted, reaching NOK 89 million in the quarter. In short, the efforts we first initiated in Norway, optimizing schedules and investing in more classes on the schedule, are now yielding results in Sweden as well. The trend is clearly moving in the right direction, and we expect continued improvement as these initiatives mature further. With that, I leave it over to you, Cecilie, for the financial section.
Thank you, Sondre, and good morning, everyone. Let's now move into the financial review of the third quarter of 2025. The main takeaway is that we, in the third quarter, once again demonstrate the underlying resilience of our business model. We are delivering consistent top-line growth, translating into stronger earnings and solid cash generation, while at the same time maintaining strict investment discipline and further strengthening our balance sheet. This provides us with both the flexibility to invest in growth and the capacity to return capital to shareholders. We have set a clear mid-term ambition and communicated that we will deliver strong and steady progress towards that target. This quarter's results are fully in line with that plan, reflecting solid operational execution and continuing financial progress. We are moving step by step towards our mid-term ambition of NOK 1.1 billion in EBITDA before IFRS 16.
We closed the second quarter with 756,000 members, a 4% increase year- over- year, or 28,000 additional members compared to the same period last year. The membership base grew with 18,000 this quarter compared to 9,000 last year. This year's autumn campaign was launched earlier than last year, moving the main marketing push from Q4 to Q3. That earlier timing explains the strong growth this quarter. It's still early in the quarter, but as of now, we do not expect the overall second half-year development to exceed last year. We do see that the product improvements introduced over the past year, particularly in group training capacity and scheduling, continue to drive new sales and strengthen retention across all markets. We also see better utilization of our existing clubs. Members per square meter increased by 3%, reaching 1.51, confirming that we are using our footprint more efficiently.
Moving to revenues, total revenues increased by 8% to NOK 1.29 billion, or a 7% increase on a currency-adjusted basis. The growth reflects a healthy balance between member growth and continued price improvements, confirming that our commercial strategy is working well. Membership revenues were up 8%, supported by the 4% increase in members and 4% uplift in average revenue per member. We continue to actively manage the trade-off between price and volume to maximize revenues. At times, we intentionally prioritize one over the other to maximize overall performance. In addition, this quarter's shift in membership mix, with more students, seniors, and corporate members, has a softening impact on the average yield, but these are attractive groups to attract over time in our member base. Other revenues grew 8%, supported by higher activity levels.
Overall, this quarter shows that we are balancing yield and volume effectively, with solid revenue progress on both fronts. Moving to costs, total operating costs, including overhead and direct costs, increased by 6% currency-adjusted. Club operating costs also increased by around 6%, and the increase reflects targeted product investments to support membership growth, higher club activity levels with more workouts, and a 12% increase in group training classes compared to last year. In addition, we stepped up marketing efforts in connection with the autumn campaign, which contributed to the strong member inflow this quarter. When adjusting for the additional group training capacity and extra marketing spend, the underlying club operating costs increased by around 4%, showing that the core cost base remains well controlled. Energy costs were higher than last year, partly offset by hedging agreements, although the effect is reflected under financial income.
Overhead costs were up about 6%, mainly due to wage adjustments and normal inflationary effects across the markets. While the cost level in the quarter is slightly elevated, the year-to-date cost development is in line with expectations, reflecting discipline, cost management, and balanced investment in growth and member experience. The overall pattern is similar to the quarterly trend. Total operating costs are up 6% currency-adjusted from last year, while club operating costs increased slightly less at 5%. As for the quarter, the increase mainly reflects the continued product improvements throughout the year. We also increased marketing activity in the first and third quarter to support solid member inflow. Again, if we adjust for these effects, the underlying club operating costs are up around 3%, confirming cost discipline in the core cost base.
Going forward, we expect cost growth to remain broadly in line with price changes on key input factors and wage adjustments from local agreements, combined with targeted investments in member experience and product quality. Turning to profitability, EBITDA before IFRS 16 increased by 13% year- over- year to NOK 192 million, corresponding to a margin of 15%, up from 14% last year. The improvement demonstrates the operating leverage in our model, where moderate revenue growth leads to proportionately stronger earnings. EBIT before IFRS 16 increased by 8% to NOK 137 million, corresponding to a margin of 11%. However, last year's EBIT included a one-off positive effect from extended depreciation periods, meaning that the underlying improvement in the quarter is even stronger, ending at 18%. We continue to invest selectively and with clear priorities, supporting both growth and member experience.
Total investments in the quarter amounted to NOK 79 million, and of this, NOK 75 million is related to upgrades and maintenance of our clubs, and NOK 3 million to expansion capex. Our investment this quarter has mainly focused around upgrading equipment and optimizing layouts in existing clubs, improving capacity, flow, and the overall member experience. These projects are part of our ongoing work to extract more value from the current portfolio and drive further growth within the existing footprint. On expansion, we opened one new club in the quarter in Helsinki and are currently preparing for two new openings later this year and in 2026. Further ahead, our pipeline includes two Oslo projects in 2027, reflecting our cluster-based approach to expansion in key Nordic cities.
We are actively working to expand the pipeline further, scouting locations in our key clusters and other larger cities in the Nordics, targeting a run rate of 8- 12 new clubs annually, but with a clear emphasis on quality over quantity. While the visible pipeline currently appears limited, we have a number of strong prospects under evaluation that we expect will materialize over the coming periods. Following a strong financial quarter, operating cash flow came in at NOK 142 million, equal to 74% cash conversion, and a free cash flow at NOK 125 million. The development reflects solid earnings and stable working capital development, combined with maintenance investments slightly above our 5% target due to timing differences. Over the past 12 months, we have generated NOK 568 million in free cash flow, corresponding to a cash conversion of 69%.
This demonstrates our strong and consistent cash-generating ability, even while investing in product quality and club upgrades. Tax payments are higher this year than in previous years, as expected, following improved profitability. Overall, our cash flow confirms a robust and predictable financial model, supported by both growth in investments and shareholder distributions. Our liquidity position remains solid, closing the second quarter with NOK 363 million in cash and NOK 990 million available in an undrawn revolving credit facility. In total, we distributed NOK 167 million to shareholders in the quarter, consisting of NOK 127 million in dividends and NOK 40 million in buybacks, while maintaining a stable leverage profile. Net debt ended at NOK 1.1 billion, and the leverage ratio remained unchanged at 1.3x net debt to EBITDA before IFRS 16, which is slightly below our long-term target range.
This confirms a strong balance sheet and continued financial flexibility to support dividends, share buybacks, and disciplined growth. I will leave the word back to Sondre for outlook.
Thank you, Cecilie. Let's round off by looking ahead at what will drive continued progress going forward. Our outlook remains strong and consistent with what we have communicated at the Capital Markets Day earlier this year. We continue to have a clear strategic focus on the core, meaning that everything we do should strengthen the member experience and operational execution. The priorities are the same: improving the product through club optimizations, innovating in training content, and disciplined execution in our daily operations. We also maintain a disciplined approach to both operational costs and CapEx. We are balancing cost control with targeted investments that support growth, as Cecilie commented on, aiming for 8- 12 new club openings per year, with a strong emphasis on quality over quantity. Looking ahead, Denmark plans to remove the VAT exemption on group training and personal training from January 2026.
We are worried about the impact this will have on public health, but our current assessment suggests no material financial impact for SATS as a whole. Regarding potential concerns about the spillover effect to other EU countries in SATS' portfolio, it's worth noting that Sweden and Finland apply a system of differentiated VAT rates, which remains in line with EU regulations. Finally, with the result in this quarter, we are well on track to deliver on our mid-term EBITDA ambition of NOK 1.1 billion, and we are confident in our ability to continue this positive momentum. With that, we thank you all for watching and wish you a healthy and happy day.