Financial Data and Key Metrics Changes - Total revenue increased by 12.9% to $783 million, with average monthly dues growing by 10.0% year-over-year to $218 [4] - Net income for the quarter was $102 million, an increase of 147%, benefiting from a $5.7 million tax-affected gain on sale-leasebacks [4] - Adjusted net income rose by 65.2% year-over-year to $93 million, while adjusted EBITDA increased by 22% to $220 million, with an adjusted EBITDA margin improvement of 210 basis points to 28.1% [5] - Net cash provided by operating activities rose approximately 66% to $251 million compared to the prior year quarter [5] Business Line Data and Key Metrics Changes - Comparable center revenue grew by 10.6%, driven by strong performance in dues and in-center businesses, particularly in Dynamic Personal Training [4] - Revenue per center membership increased by 11.3% year-over-year, and in-center business revenue rose by 14.4% year-over-year [9] Market Data and Key Metrics Changes - The company ended the quarter with nearly 841,000 center memberships, with total memberships reaching approximately 891,000, in line with expectations [4] - Average monthly visits per membership reached 12.5, up 5.9% year-over-year, with total visits increasing by 7% year-over-year for the quarter [9] Company Strategy and Development Direction - The growth strategy focuses on accelerating new club growth and enhancing member experiences, aiming to deliver 12-14 new clubs in 2026 and beyond [7] - Membership optimization is emphasized, with strategies to improve the mix of couples and families while limiting qualified memberships in certain clubs [9] - The company is excited about the upcoming release of new features for Lacy, the AI health companion, and plans to expand its nutritional brand, LTH [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and growth, noting that all mature clubs are making more money than in the past [39] - There are no current signs of weakness in the consumer base, with strong performance across various markets [40] - The company is prepared for potential economic challenges, with strategies in place to adapt as necessary [71] Other Important Information - The company expects to complete between $55 million-$65 million of additional sale-leaseback transactions before the end of the year [5] - The average size of new clubs planned for 2026 is approximately 95,000 square feet, compared to 66,000 square feet in 2025 [96] Q&A Session Summary Question: In-center revenue opportunity and DPT penetration - Management highlighted the success of the personal training program and the potential for further growth in in-center revenue, particularly in cafes and spas [12][15] Question: Prioritizing club openings beyond 2026 - The company confirmed a strong pipeline for new clubs, with a focus on urban and suburban locations, and emphasized the importance of maintaining a healthy execution level [17][18] Question: Average member per center growth and revenue optimization - Management discussed the focus on brand and member experience, emphasizing membership optimization to increase revenue per membership without relying heavily on membership unit growth [21][25] Question: Consumer dislocations and geographic performance - Management reported no signs of weakness in consumer behavior, with all clubs performing well across various markets [38][40] Question: Capital allocation and stock buyback considerations - The company is focused on maintaining a strong balance sheet while considering stock buybacks as a potential option, depending on market conditions [41][43] Question: Dynamic Personal Training growth and capacity - Management noted that while some trainers are fully booked, there is still room for growth in Dynamic Personal Training, with ongoing recruitment of new trainers [74][76] Question: Design considerations for new clubs - The company emphasized the importance of flexibility in club design to adapt to changing consumer needs over time [104][105]

Core Points - The article highlights the challenges faced by consumers in prepayment scenarios, particularly in the education and training sector, where businesses often encourage upfront payments with promises of discounts, leading to difficulties in obtaining refunds when services are not delivered as promised [1][2][3] Group 1: Consumer Experience - A parent named Wu Man paid 17,188 yuan for music lessons but faced issues when the training institution suddenly closed, leaving her with 103 unfinished lessons and a complicated refund process [1][2] - The institution initially promised a refund but later provided various excuses for not returning the money, leading Wu Man to seek legal recourse [2][3] Group 2: Legal Framework - The implementation of the Supreme People's Court's interpretation on prepayment disputes grants consumers the right to terminate contracts when service delivery costs increase significantly due to business relocations [3][4] - The interpretation invalidates the common practice of calculating refunds based on original prices rather than discounted rates, which was a prevalent industry norm [7][8] Group 3: Industry Practices - The article discusses the prevalence of "professional closure" tactics among businesses, where they delay refunds, transfer assets, or disappear, complicating consumer claims [3][10] - The training institution involved in Wu Man's case was found to have a complex corporate structure, making it difficult for consumers to pursue claims against shell companies [7][8] Group 4: Regulatory Implications - The new regulations also hold brand franchisors accountable for consumer losses if they mislead consumers regarding their contractual obligations [8][9] - Shopping malls are required to verify the business licenses and qualifications of operators to prevent unlicensed businesses from collecting consumer prepayments [8][9] Group 5: Future Outlook - The article suggests that the rise of online training institutions has complicated the landscape, with many businesses exploiting consumer urgency to secure upfront payments while failing to deliver promised services [10] - The interpretation aims to encourage businesses to prioritize consumer rights and improve service quality, moving away from risky prepayment models [10]