Life Time Raises Revenue Guidance on Continued High Engagement
Life Time CEO Bahram Akradi notes that for many members, the athletic country club is more than just a gym, it’s their “social place”
Life Time is raising its full-year revenue guidance to between $2.56 and $2.59 billion following strong second-quarter performance, with founder and CEO Bahram Akradi touting high engagement numbers and noting that Life Time clubs are “everything to our members.”
LTH shares rose 8.6% in early hours trading Thursday in response to the earnings announcement.
“The midpoint of this range will deliver approximately $1.31 billion of revenue in the back half of this year, versus $1.14 billion last year, implying a 14.6% revenue growth rate for the second half of 2024,” Akradi told investors on Thursday’s earnings call.
In the second quarter, Life Time’s revenue rose 18.9% to $667.8 million due to continued strong growth in membership dues and in-center revenue.
Life Time center memberships grew by 42,398, or 5.4%, since June 30, 2023, and increased by 30,626 from March 31, 2024. The operator’s total subscriptions (including center memberships and digital on-hold memberships) also trended upward by 5.5% to 878,767 from June 30, 2023.
“The second quarter also was an important inflection point for the company as we achieved positive free cash flow as expected and a net debt leverage ratio of 3.0 times, which was two quarters earlier than our plan,” Akradi said.
The luxury athletic country club operator opened three new centers in the quarter.
Member Experience Is Priority #1
In terms of consumer behavior, Life Time continues to have waitlists for its centers, and, despite an average monthly membership due of $190, is impervious to any tightening of the purse strings.
“For an entity focused on particular deliverables, as long as you’re delivering the customer what they’re looking for, I think there’s plenty of customers who are willing to pay for that,” Akradi said. “We are not seeing any weakness at all anywhere across our business.”
It’s a point that Akradi emphasized, noting that the demand to become a Life Time member is organic.
“These results are with zero salespeople in the company,” he stated. “We’ve told you guys this for the last three years, but maybe now the results speak for themselves: there’s zero promotions. There’s no advertising for the membership.”
Akradi takes issue with the term “gym,” underscoring Life Time’s commitment to serving as more than a place for fitness – but a lifestyle.
“(Life Time) — it’s everything to our members,” Akradi said. “It’s their social place, it’s their beach club, it’s their programs, it’s their network. Yes, they get a workout, and we are constantly working on how to improve those things from a member’s point of view.”
Investing in AI, Personal Training & Pickleball
When asked what other kinds of programs Life Time is looking to invest in, Akradi was quick to respond: artificial intelligence.
The lifestyle operator recently partnered with Microsoft to launch L.AI.C, an AI-powered Life Time member companion that lives within the Life Time member app. The initial iteration will answer basic questions such as club hours and descriptions but will eventually provide personalized class suggestions, tailored workout programs and more.
“I think the most important transformation in this era is AI,” Akradi said. “If you’re not going to be ahead, you’re going to be ridiculously behind.”
Providing a rough sketch of plans, Akradi said AI will first improve the Life Time member experience regarding engagement. Eventually, the club operator plans to use the technology to create additional efficiencies.
Personal training, stretching and nutrition are all seeing an increase in interest, while pickleball remains a priority. Life Time is continuing on its mission of establishing 1,000 courts in the next 18 months and just filed a patent for an improved ball for the popular racket sport.
Akradi, a personal fan of pickleball, remains bullish on the sport and says it’s the activity that will get America “off the couch.” Earlier this spring, Life Time signed Lululemon as its official pickleball and tennis apparel partner.
“I think it’s got a very high potential of being an Olympic sport by the next Olympics,” he said of pickleball. “We’re all in. We’re going to support the sport just like we do with everything else.”
Life Time also sees demand from an employer perspective, with roughly 20 times as many applicants from personal trainers.
“It’s really the best position we have ever been in,” Akradi said.
The athletic country club operator also appointed Erik Weaver as its executive vice president and chief financial officer. Weaver had served as Life Time’s interim CFO since January.
