Good morning. Welcome to the Life Time Group Holdings First Quarter 2023 Earnings Conference Call. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from the company. As a reminder, this conference is being recorded. I will now turn the call over to Ken Cooper with Investor Relations for Life Time. Good morning, and thank you for joining us for the Life Time First Quarter of 2023 earnings conference call. With me today are Bahram Akradi, Founder, Chairman, and CEO; and Bob Houghton, CFO. During this call, the company will make forward-looking statements which involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today. There is a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review. Also, the company will discuss certain non-GAAP financial measures, including adjusted EBITDA, net debt, free cash flow before growth capital expenditures, and free cash flow. For purposes of this call, free cash flow is defined as net cash provided by operating activities after total capital expenditures. This information, along with the reconciliations to the most directly comparable GAAP measures, where possible and without unreasonable efforts, are included in the company's earnings release issued this morning, our 8-K filed with the SEC, and within the investor relations section of our website. Our website also includes a supplemental presentation pertaining to the delevering of our business, a topic that Bahram and Bob will address this morning. I'm now pleased to turn the call over to Bob Houghton. Bob? Thank you, Ken. Good morning to all our stakeholders on today's call. We appreciate you joining us this morning. I will briefly cover our first quarter 2023 results, the full details of which can be found in the earnings release we issued this morning. Bahram will then provide a bit more color on the quarter and how we will continue to grow our business, improve our profitability, and reduce our leverage through the remainder of the year. We are off to a strong start this year. First quarter revenue increased 30% to $511 million, driven by a 31% increase in membership dues and enrollment fees and a 28% increase in in-center revenue. Center memberships increased 13% as we ended the quarter at approximately 764,000 memberships. We added 39,000 center memberships during the quarter, including one of the strongest January enrollments in our more than 30-year history. Including digital on-hold memberships, total memberships increased 9% to approximately 814,000 memberships. First quarter average center revenue per membership increased to $667, up from $640 in the fourth quarter and up 15% from $580 in the prior year quarter as we continue to benefit from higher membership dues and increased in-center activity. We generated net income for the first quarter of $27 million, compared with a net loss of $38 million in the first quarter of 2022. Adjusted EBITDA increased 196% to $120 million, and our adjusted EBITDA margin increased 13.1 percentage points to 23.5% versus 10.4% in the first quarter of 2022. We delivered another quarter of improving cash flow with net cash provided by operating activities of $74 million versus $9 million in the prior year quarter. As I move to an update on our adjusted EBITDA and leverage ratio, I will make reference to the new supplemental slides which are posted to our IR website. As detailed on slide 3, we reduced our net debt to adjusted EBITDA leverage in the quarter and expect further improvement in this key metric as we continue to grow our adjusted EBITDA and reduce our net debt. We are very pleased with our start to 2023. We are successfully executing our strategies to deliver significant revenue growth and improve profitability through growing memberships, increasing club usage through our expanded programming, and opening new clubs that are ramping faster in great locations across the country. We are also clearly seeing the benefits from the rewiring of the business and the strategic initiatives that we put in place last year. We remain confident in our ability to increase cash flow and improve our balance sheet. I will now turn the call over to Bahram. Thank you, Bob. I am very pleased with our first quarter results. Our team has been executing on our strategy with a great deal of passion and care. With our newly rewired structure, we delivered Q1 records of revenue and adjusted EBITDA for Life Time. We have great confidence that we can continue to elevate our programming and experiences for our dedicated member base while also growing our revenue and adjusted EBITDA. As Bob mentioned, memberships grew very nicely, up nearly 40,000 in the quarter. Our attrition has been coming down steadily each quarter, and we project June will be the first month with attrition rates below 2019 levels. Not only are memberships growing, our in-center businesses are also improving on both top and the bottom lines. These improvements are driving better margins and are reflected in our better than expected first quarter performance, our Q2 guidance and our updated outlook for 2023. First, we are reiterating our full-year revenue guidance of $2.2 billion-$2.3 billion. At the midpoint of that range, revenue increases approximately $430 million or 23.5% from last year. This guidance includes a revenue expectation of $560 million-$570 million for the second quarter, which is 21%-24% growth over last year's second quarter. Second, we're increasing our full year adjusted EBITDA guidance to $470 million-$490 million from $440 million-$460 million. This includes an adjusted EBITDA expectation of $124 million-$126 million in the second quarter. We continue to be very conservative in our assumptions and are focused on deleveraging our balance sheet. As I mentioned previously, our number one focus has been to lower our net debt to adjusted EBITDA by first, and most importantly, growing our adjusted EBITDA. We have made good progress in this effort. As Bob mentioned, page three of our supplemental presentation shows the improvement trend for our leverages over the last four quarters and our projection for 2023 year- end, which is around 3.5 x. It's important to mention, we have approximately $400 million of our debt associated with assets under development. These assets are not yet deployed, nor are they generating any revenue or adjusted EBITDA. Once these assets are brought online and mature a bit, debt to adjusted EBITDA will reduce by nearly a full turn. That's before any sale-leasebacks. As I've mentioned on prior earning calls, our future development strategy will include building more clubs that are financed by landlords, which typically require less than $10 million of capital on average per location for Life Time. Further emphasizing this strategy would allow Life Time to generate as much as additional $300 million of free cash flow each year that could be utilized to reduce debt. In closing, I'm very happy with the position we're in today, and we're very excited for the future. With that, we will answer your questions now. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from John Heinbockel with Guggenheim Securities. Please proceed. Hey, Bahram, can you hear me? Sure can, John. How are you? I'm good. I'm good. I wanted to start with, right, in-center revenue seasonally, right, for the two summer quarters. How do you think about members' spend, willingness to spend? Then the sort of things that you're gonna do, right, when you think about specifically for those quarters in terms of, you know, getting more involvement in the kids camp, some of the events that you run, right, in trying to get more engagement than you've ever gotten before. I love it. John, we have been improving our processes and our technology where they have started buying summer camp because the supply on that is basically limited in every club, and we can only take so many summer camp kids from our memberships that we started this year by taking those reservations a few months back. You know, I am absolutely certain that we will outperform anything we've done in the past because already we have kind of a view of how packed those programs will be. We are not seeing any resistance from the customer to spend at this time, even though we're extremely conservative and are baking in a pretty healthy macroeconomic headwind coming up, you know, sometime in the next six to 12 months. That's we're baking that into our assumptions. We are not seeing change. People love the programs, love the service, love all the additional changes we have made to make transactions for them easier and more robust. All of those programs are working. Personal Training is setting records in EBITDA on a monthly basis. Everything's working. I mean, I wish we, you know, there was something that we could tell you, but right now, all things are working. Great. Maybe as a follow-up, right, the transaction you just announced, Atlanta and Tampa, right, taking over existing facilities. Is there much of an additional opportunity to do that, right, given the condition some facilities or owners may be in coming out of COVID? Because obviously, that's attractive in terms of capital cost, you know, and member ramp, as long as the facilities are good. Is there an opportunity there? Absolutely. When we see these things, in order for them to become a Life Time execution, they require significant overhaul. Landlords who basically haven't been getting paid by some of these tenants, when they have the opportunity to take those assets back, they look around, and they look what tenant paid rent throughout COVID without monkeying around. They call us, and they ask us if we want it, and they're willing to make bigger concessions to have Life Time be the one going in there. Yes, we have significant discussions on these types of facilities, and they will become a bigger percentage of our growth as in the future years, because we are in discussions. We're talking to them. We'll take them. Many times we shut them down to completely overhaul them and get them back where the landlords are providing TI dollars for us to do so. They are extremely attractive from the economic standpoint. They're sometimes 2x, 3x times better on the return on invested capital than we would do it otherwise. Okay, thank you. Thanks a lot. Our next question is from Brian Nagel with Oppenheimer. Please proceed. Hey, guys. Good morning. Good morning, Brian. Congratulations on another nice quarter. Thank you. My question, as you look at the results, you know, a nice beat on EBITDA on a modest subside in your revenue. As you look at that, you know, the kind of how the model is flexing here, and, you know, and we talked a lot about, you know, the rewiring of the model and the cost controls and such. Is there a particular area, you know, as you're really getting ramping here, you're seeing better than expected efficiencies that are allowing you to get to drive these EBITDA beats? Yeah. I want to be clear, we're spending roughly $40 million-$45 million more than three, four years back on an annual basis in additional programming. We have focused on increasing, not cost cutting, improving the quality, improving the programming that we offer the members as part of the Signature Membership. We did go back, and we really looked at our infrastructure and the way the company was making decisions. We rewired that so that the decisions were going through two to three-stop at max rather than six or seven. We dramatically reduced the red tape in the company. Very little change in actually. There was no cuts in the number of people delivering services. I wanna be clear. That is completely contrary to my direction to the team that I want the highest NPS, I want the highest quality ever. We basically rewired the business, and the improvement in the percentages of the margins you guys are seeing are here, and they're permanent. They are not for a quarter or two quarters. You can expect roughly between 20% and 23% EBITDA margin, which is a good couple of% better than what we have done pre-COVID, right before pre-COVID. Once you add the rent back to our EBITDA, that number is about 2%, 3% better than the best numbers we had before on a steady basis. As far as the revenue, the revenue is actually a little better than it reflects the way you guys are seeing it. We've taken our foot off the gas on pushing the timing of the club openings. If it takes a little bit more time to negotiate the bids a little more, allow the quality come together, not spend money on overtime for delivery of the clubs. We have had delays in opening, so therefore, delays in revenue coming online. The outperformance of the total clubs, open clubs, are making up for the delays, and we're still kind of giving those revenues. The revenues are strong, as well as the EBITDA. It's not just the EBITDA. Membership sales, I mean, we gained 39,000-40,000 additional members, net memberships in the first quarter. Amazing results. Everything's working, Brian. Brian, it's Bob. Just to add, the PT business, as Bahram talked about in his comments, I mean, we're delivering record levels of EBITDA dollars, record levels of EBITDA margin. We're growing that business sequentially on the top line month-over-month. That's another business that's really working well for us. No, that's great. I appreciate all the color there. One quick follow-up, if I could. You know, Bob, you mentioned your comments, you know, just talked about here, too, just, you know, the strength of that membership growth. Particularly in January, which I guess is, you know, the typical New Year's resolution type season. As we head now into the pool season, you know, we have the guidance you gave. How should we be thinking about, you know, the membership here and, you know, the trajectory of membership, you know, and given that this will be the first, I guess, un-COVID-affected, you know, pool season for Life Time? Membership will be very strong here in May, June, July. At this point, we're not expecting any negative, you know, sort of a factor coming into play. You know, we are so ready. The clubs have been upgraded. The Beach Clubs are looking amazing. I think there will be significant pent-up demand for that. You know, we are also working on figuring out ways to make it easier for people to order food on the pool deck, and that will allow to kind of improve the opportunity on revenue side on that. We're pretty stoked about what's about to come here the next quarter as well. Congratulations again. Thanks for all the color. Appreciate it. Thank you. Thanks a lot. Thanks, Brian. Our next question is from Chris Carril with RBC Capital Markets. Please proceed. Hi, good morning. Could you expand a bit more on your latest thinking around dues pricing strategy? What are you seeing from new and existing members in terms of reaction to pricing actions and where do you potentially see further room for pricing? Really honestly, as I've mentioned this over and over, our pricing strategy has been a function of controlling the experience we want in the club. We are where we have more than abundant opportunity in a certain club to gain yet a couple thousand more memberships, we are not pressing the price point in that club. Where we have members in a club feeling like it's being over-membered, and we're trying to limit the membership coming into that club and control the experience, then we just raise the price. It's really speaks for itself. It... The customer clearly demonstrating that they like the new strategy. Our results shows that all across our NPS shows it. The NPS is higher, revenue is higher, EBITDA is higher. The customer who wants the Life Time Athletic experience isn't comparing Life Time Athletic country club experience to anything else. They just wanna be in Life Time. We have limited supply in every club before the experience gets tarnished. Managing that experience naturally guide us for where the price needs to be. That has allowed the prices to go to where they really need to be established. They're working right now. We don't have huge plans to adding additional new rack rates, except if nothing gets done, just Chris, to be. Nothing gets done systematically. We don't have a price increase ever across every club all the country or something like that. It is literally location by location, member by member. It's based on what makes the most sense overall. The way that I would tell you for you guys to think about and work with Bob Houghton and Ken Cooper is you really need to look at the average dues for all subscription. Right now, the full subscription, including the digital on-hold and All Access membership, is about, as we mentioned, 814, 000+. That number times the average dues for the full subscription, which is roughly about $152 or something. If you back out the $40,000 members that are on hold and you go to the 764 membership, I would look at that number and say, "you know, the average dues on this is about $162, whatever." What you should expect, that without doing anything at all, naturally, that number, that $162, that $152 is gonna grow a little bit each quarter because there is some churn, and the churn will naturally push that up. Then there is basically some modest legacy member dues increases. It's very methodical. We go through it systematically. They will always be paying. If they've been with us for five years, six years, seven years, the more likely they're gonna pay less than rack rate for a very, very long time because we give them the benefit of the fact that they've been a member for a long time, and that also reduces their desire to wanna drop out. Because if they drop out, they've been a long-term member, they wanna be a member, they drop out, they come back, now they've got to pay the new rack rate. The whole system's working. Does that help you? Yeah. No, that super clear. Then, just for my follow-up here, just circling back to the in-center revenue going forward. Can you update us on demand and trends around Dynamic Personal Training? I know, Bahram, that's been a big focus area for you this year. Thanks. Yeah. I'm really happy with our team, I just gotta say, the execution of our team has been phenomenal. I believe we set the record EBITDA number in March for that business. It's really awesome to see, you know, our newly invented Dynamic Personal Training model and the rewiring of that business has been so successful. We significantly, and I mean significantly, reduced the overhead that was outside of the clubs to the corporate office by, like, literally, like, 300%, so a third of what it used to be at that overhead. You know, I am involved personally, weekly with our Personal Training leads across the country. And it's the best momentum, the best model that we have ever had, and the results are coming. We're getting people who had left Life Time because they didn't like certain things and COVID kind of made it icing on the cake. You know, weekly, we're getting some of those people knocked it back on the door and wanting to come back and work on the new culture, new system. Then we are completely tooling the clubs with additional equipment, so the clubs have the best environment, the best setup, the best equipment for a trainer to train their customer. You couldn't find a better, you know, opportunity with equipment and spacing to train your customers. That also attracts the best trainers coming in. It's all positive momentum. I expect this year, on a monthly basis, we also break Personal Training revenue records, not just EBITDA records. It's all, it's all moving in the right direction. Awesome. Thanks so much. Yep. Our next question is from Brian Harbour with Morgan Stanley. Please proceed. Yeah, thank you. Good morning, guys. Hello, Brian. Good morning, Brian. Your comments on the cost side, I think were clear. I think one question I had was just, you know, as we see it, the kind of center operating expense is basically back to where it was kind of pre-COVID, actually a little bit better as a percent of revenue. Is, you know, should we expect that to continue? I know that there's some seasonality to that, but how should we think about that line? As I mentioned, we have fine-tuned the model of the way the clubs run with their management system converted to a leadership concept. Everybody's leading the way rather than bossing other people around. The GMs structure, they're called Lead Generals, they have a very clear approach on how they have lots of authority and their responsibility and authority is completely matched. Pretty much all the waste has been taken out of the clubs, the way they're running correctly, that they're running right now is the correct way. Where we're gonna see potential margin improvement still is going to be on the revenue that is still are there to increase. As the dues revenue increase in the clubs, the cost isn't gonna grow proportionally to that. There is room for that to improve. At this point, I would basically model what I told you guys is between... Assuming the rent will be between 12% and 13%, that's really the number that I think is gonna fall in. It could be a little lumpy when we do a big sale-leaseback. You know, they can get closer to 13%, and prior to that, this is gonna be closer to 12% of our revenue. If you think about that, then our EBITDA margin, you can kind of plan between 22% and 23%, is where it is right now. Can it improve? Yes. Will I commit to that improvement should you put it in your model? Not right now. Okay. Thank you. Mm-hmm. Could you also just comment on kind of the sale-leasebacks, the pacing of, what's still to be done and, you know, perhaps kind of the cap rates on those today relative to what you'd seen in the past? The cap rates we have done for the first $135 million is the same range at a mid-6s that we told you guys. We are not anticipating that there's gonna be much higher rates. I know I think, again, I emphasize these assets, when people are buying these, they're buying them, it's a 20-25 year lease with 25 years of options with fixed bumps in it. It's not tied into the two-year mortgage. It's two- year T-bills or three-year. you know, it's just a headwind for temporarily. I think the Our expectation is we're gonna get them done in the same range that we've done before. I'm pretty certain that is all gonna come together. That's all I can kinda share with you right now. Okay. Thank you. Mm-hmm. Our next question is from Robbie Ohmes with Bank of America. Please proceed. Good morning, Bahram. Great quarter. you know, I have two questions. The first is just, can you talk about, give us some insights on how the new clubs are ramping up and, you know, are they ramping up, you know, faster than normal, or sort of in line with normal? When you look at the ramp-up of new clubs and, what are the drivers you think are making some new clubs outperform other new clubs? That's a great question, pretty much they're universally they're working extremely well. They are ramping faster now in dues and in contribution margin, particularly than our old processes. The new model is working. Again, overall, the new model of execution and these clubs are ramping faster and they are, you know, getting to... We have clubs that just opened literally like in 60 days, they are contribution margin positive. In 90 days, they're contribution margin positive. They're working extremely well. I mean, we have virtually no... Nothing that looks like is less attractive than the past, Robbie. It's just, it's all positive to the past. Got you. That's, that's helpful. Maybe for Bob, the revenue guidance is the same, but the EBITDA, you know, guidance is up about $30 million. Could you maybe just, you know, maybe break out how we should think about where that $30 million, you know, comes from versus the previous guidance? Obviously, some of it's the beat today, but that might help us. Robbie, starting with the top line, as Bahram alluded to, the timing of opening new clubs is a driver. We've shifted those out a bit later than what was assumed in our original guide for the year. That's, that's one element. As Bahram said, we feel great about our revenue growth. All the investments we're making in the clubs are working in terms of higher activity within the club. You know, swipes or badge scans are up, you know, memberships are higher. All of that's working. It's just really the timing of shifting those clubs. In terms of, you know, the EBITDA guide, you know, we've taken it up $30 million. We still have significant macroeconomic headwind assumed in that guide. That's a little bit of context from a margin perspective in the back half of the year. Great. Thanks so much. Thanks, Robbie. Our next question is from Daniel Politzer with Wells Fargo. Please proceed. Hey, good morning, everyone, and hope you're all doing well. Morning, Dan. I had a question and wanted to unpack those margin comments a little bit more. I mean, the last couple quarters, your EBITDA margins have been, you know, 36.5%. I'm trying to kind of bifurcate or isolate for what the factors are that would change, you know, the last two quarters with the next three quarters. I mean, is this a function of in-center versus dues mix? Is it something, you know, seasonality where, you know, employment costs maybe go up? Is it, you know, also some inherent conservatism, which it does sound like that is a component as well? Got you. Part of it, Dan, is that we're trying to make sure we give we give the Street and you guys a guidance that can be met regardless of macroeconomic headwinds. You know, we keep telling you that we're baking in potentially a recession or at least, you know, major headwinds. We are baking that in. Can the results be better? Yes, they could be. We're not gonna put that out there and then disappoint. Okay? The second thing is that, yes, during the summer, we will have significant increase of revenue and cost. We have to fill these clubs up with lifeguards and, you know, the Beach Clubs are not inexpensive to run. There is a conservative modeling for the rest of the year. The 36.5% margin you mentioned is really where I would like to see things to continue to come. Is there a path that we can get that done throughout the year? Yes. Would I recommend you keep your horns in and be a little more conservative? Absolutely. Understood. Does that answer your question? Yeah. Yeah. Yeah, that's helpful. For my follow-up, the enrollment fees, you guys have talked about that I think a little bit last quarter. Is that still something you guys are considering rolling out or have you kinda, you know, pushed pause a little bit there? No, it's already rolled out. We need to charge a pool pass to make sure we can control the pool experience so they don't get overrun for new customers coming in and joining just for the summer, crowding the member who has remained a loyal member for three years, four years, five years. This is nothing new. It's exactly what we've done every year. You know, we fine-tune our doing based on what we learn and. We have already launched You know, in certain clubs. It's not, it's not universal, it's not the same. It's location by location based on how busy the club is already or isn't, that we manage that throttle of the pool pass amount or if there is any. We've already started that one week or two weeks ago. We have no reason to think. It's not a material number on the revenue side, I wanna be clear. It's not about making money. It's just totally about managing the experience and the flow of the customer through the club we wanna manage. Understood. Thanks for all the color. Thank you. Our next question is from Chris Woronka with Deutsche Bank. Please proceed. Hey, guys. Good morning. Thanks for all the color so far. First question was just kind of on ancillary build and ultimate long-term potential in these new centers. Is there any way to kinda compare and contrast what that ancillary picture might look like at a club you've opened in the last couple years versus, you know, kind of the older clubs in the system? I wanna understand your question better. You're talking about is the in-center different in the new clubs versus old clubs? Yeah. Kind of in terms of ancillary spend on top of the dues. It's a great question. There is no way that anybody could basically model that out because of the inconsistencies. We open a club that is, you know, a little smaller in an urban market, doesn't have a real bistro, a pool, doesn't have summer camp, doesn't have all of that. It's basically more just Personal Training and dues, maybe a little bit of a juice bar or something. You open up a big, big, big club in a suburban area with a big, huge Beach Club, full-sized cafe, summer camps. Those are will be kind of a give or take. The biggest revenue source for Life Time historically, after dues, has been Personal Training. One thing we are doing with the things we're working with the Personal Training are all working, and I think that is really just a function of launching the club with the right model of Personal Training. Yes, they do end up having a better start with the PT model, with a DPT, dynamic personal trainer model. We have a club in pre-sale right now in The Falls, and the way we're running that, they are basically selling Personal Training every day as they're selling new memberships, which is much better new model of execution than we've done in the past. Okay. Super helpful. Thanks, Bahram. Follow-up is, I know you've talked a little bit about the Atlanta and Tampa, I guess, club reopenings, conversions. There's also, I think we continue to read about a lot of big box retail, including some stores that might be typical of the size of your clubs closing in 2023. Is there any thought to potentially repurposing some of those? I know some of them are in markets you wouldn't wanna be in, but maybe some are. Is there any thought to looking at those? Yeah. I mean, I respond to your question like this: Our pipeline of opportunity is as robust as it's been ever before. With Life Time's execution, again, and the relationships we have established, we don't think of our landlords as landlords, we think of them as our partners. We treat them like a partner, as we treat our employees like a partner. It's the culture of Life Time. All I can tell you is, yes, there is significant opportunity for more additional capital-light growth coming up more than ever before, and we are uniquely in a position to take advantage of that. Okay. Very good. Thanks, guys. Thank you. Thanks, Chris. Our next question is from Simeon Siegel with BMO Capital Markets. Please proceed. Thanks. Hey, guys. Good morning. Hope you're all doing well. Good morning, buddy. How are you? Not bad. Looking forward to the summer and getting out there. We're almost there. I love it. Really nice job on the improved profitability, guys. This is nice to see. You've talked about the center OpEx efficiency. In addition to that, the G&A was down meaningfully and even ex the share-based comp. Anything you can dig in there as to what drove the savings and maybe what you think G&A should look like embedded in the 2Q and the full year guides? Bahram, I was just curious about this. With all the success of converting the digital on hold back to center memberships, the digital on hold memberships have actually been nicely lower than pre-COVID for the past several quarters. Just curious what you think about that. Is there kind of like a post-COVID normalization that happened and you'd expect that number to revert back up to what's historically been? Do you think there's something more structural as to why fewer people are going on hold? Okay. You're asking a bunch of really good questions. Let's talk about the G&A. I just be the first one to say when things are not great, they're under my dime, they're my fault, they're nobody's else fault. Our G&A was broken. I complained about it, but I wasn't forceful enough about it for years and years and years, and our G&A was growing pretty much linearly in a dollar for dollar for a top-line growth, which makes no sense whatsoever. As we rewired the business the last 8, 9 months, it's a franchisor-franchisee model, which basically means our corporate office G&A for all of the in-centers and all those things should not grow proportionally with... as the club. As we build another $1 billion worth of revenue coming out of centers, the corporate office shouldn't grow 50%. It should grow 10% from where it is today. It'll be very, very modest versus the new expansion of our revenue. I would feel embarrassed if I wasn't able to give our investors that margin expansion that would come from scaling the company correctly. It's all in place. I don't have any reason to believe it's gonna change. The field loves it. The Area Directors, VPs, and the Lead Generals, they love the new system. They have more clear lines of authority, and so that's working extremely well. The other question you had was about fundamental redesign of the on-hold digital. Yes. We changed that over time gradually. It used to be you could go on hold and stay on hold forever. We basically gradually took that down to like nine months, then six months, and now it's four months. You can go on hold for four months, but you can't go on hold forever. You automatically have to come back, it's just basically it just happens on autopilot. You can only go on hold 1 time a year. My anticipation is that the percentage of on-hold to the total membership really shouldn't fluctuate from here dramatically. Is that helpful? That is perfect. Okay. Best of luck for the rest of the year, guys. Nicely done. Thank you so much. Thanks, Simeon. Our final question is from John Baumgartner with Mizuho Securities. Please proceed. Good morning. Thanks for the question. Thank you. Just one for me. I wanted to come back to the growth in memberships. Do you have a sense, Bahram, from where those members are being sourced? Is it from, you know, other premium or specialty gyms? Is it from the at-home Peloton crowd? Is it folks trading up from lower priced clubs? Demographically, are there any themes you're seeing, whether it's newer, younger versus older, families versus singles? I'm curious when you think about that composition of members coming in, is it informing or requiring any sort of changes in how you're thinking about reinvesting at the margin, whether it's in programming or anything else? Thank you. Yeah. Great. Great, great question. When we looked at post-COVID from two years, three years ago, I did not believe that all the members that left would come back. I figured 85%, 80% would come back. We went to the redesign of what do we need to do. We overhauled and revamped our small group training. We made the small group training so easy for people to stay in it. This is equivalent of, you know, our Ultra Fit or GTX or Alpha, equivalent of certain boutiques. We made it a singular membership. They didn't have to make a double purchase. They buy a Signature Membership, and we dramatically increased the number of classes we offer. To the mention I mentioned, to the tune of like $45 million a year more spent in all the extra programming we're doing. That tripled, more than that. You know, we looked at it over like a 14-month period. We went from 16,000 unique participants to 56,000 unique participants in that space. That simply is where we're getting the membership. DPT, we're getting customers who come in, they want that. pickleball, we added at least 100,000 people, plus that they're playing pickleball in Life Time. Simply, if you increase the reasons for people to wanting to come to Life Time, then you will see that every roughly 10, 11 swipes ends up being one membership. It's not complicated. All we have to do is give a reason to people to wanna be in Life Time for a visit, and then every 10 or so. Now, to your question is across the board. We see people coming from boutiques. We see people coming who haven't been working out in clubs. They're tired of doing their home workout, which, you know, I don't know, at one point, everybody thought all the clubs are gonna go bankrupt and everybody forever is gonna be sitting on their bikes at home, bored to death. We knew that's not the case. All we had to do is deliver the experiences. Furthermore, if you go to Life Time and spend time to Life Time, it is the social country club that they get to do all the activities. They can do recovery, they can do hot tub, they can do cold plunge, they can do red, you know, they can do heat, you know, saunas. I mean, everything they can do, the red light therapy. I mean, it just... We are continually looking to see what are the things that the health and wellness customer wants. In our large format clubs, we provide them all the things related to health and wellbeing that they want in one place, conveniently at the highest level of execution. Results are, we have the highest satisfaction we've ever had. People are coming in. Many clubs surpassed their swipes over the past years. The customer came from everywhere. It's young, it's old, it's middle age. Because all the programs we invented and rolled out, they basically are working and they're pretty much now are in that leap stage. They are really, you know, producing fruit at this moment. Great. Thanks, Bahram. Thank you so much. We have reached the end of our question and answer session. I would like to turn the conference back over to Bahram for closing comments. We're thankful to all of you, all of our investors and our members and our amazing team members who have really passionately put their heart and soul on the line to make sure Life Time prevails and get back and go beyond where we were pre-COVID. We're excited for the future. We are very confident that we can deliver what we are promising you, and hopefully, we can improve that as time goes on. With that, we just look forward to seeing hearing you guys back on our next call in July, August. Thanks so much. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.