Financial Performance - Revenue for Q1 2024 was $80,245,000, a decrease of 12.5% compared to $91,700,000 in Q1 2023[20] - Net income for Q1 2024 was $2,249,000, compared to a net loss of $5,903,000 in Q1 2023[20] - Total revenue for the three months ended March 31, 2024, was $80.245 million, a decrease of 12.4% from $91.700 million in the same period of 2023[39] - Travel revenue decreased to $49.674 million in Q1 2024 from $55.128 million in Q1 2023, representing a decline of 9.4%[39] - Subscription revenue fell to $28.065 million in Q1 2024, down 23.2% from $36.511 million in Q1 2023[39] - Net income attributable to Inspirato Incorporated for Q1 2024 was $1.263 million, a turnaround from a net loss of $2.896 million in Q1 2023[68] - Basic earnings per share (EPS) for Q1 2024 was $0.35, compared to a loss of $0.90 per share in Q1 2023[68] - Free Cash Flow for Q1 2024 was $(8.7) million, compared to $(20.8) million in Q1 2023, indicating improved cash generation from operations[157] Assets and Liabilities - Total current assets decreased to $61,514,000 as of March 31, 2024, down from $74,840,000 as of December 31, 2023[17] - Total liabilities decreased to $462,891,000 as of March 31, 2024, from $485,425,000 as of December 31, 2023[17] - Cash and cash equivalents at the end of Q1 2024 were $22,626,000, down from $36,566,000 at the end of Q4 2023[17] - The company’s total equity (deficit) as of March 31, 2024, was $(149,847,000), an improvement from $(154,698,000) as of December 31, 2023[17] - The outstanding amount of the 8% Senior Secured Convertible Note was $26.0 million as of March 31, 2024, up from $25.5 million as of December 31, 2023[50] Revenue Recognition and Deferred Revenue - Deferred revenue as of March 31, 2024, was $162.878 million, down from $177.519 million as of December 31, 2023[42] - The company recognized $71.4 million of revenue from deferred revenue during the three months ended March 31, 2024, compared to $63.0 million in the same period of 2023[42] - Deferred revenue as of March 31, 2024, totaled $75.9 million for travel, $57.9 million for subscriptions, $18.0 million for travel credits, and $11.0 million for rewards[136] Expenses - Cost of revenue decreased by $11.5 million, from $60.1 million in Q1 2023 to $48.5 million in Q1 2024, a reduction of 19%[123] - General and administrative expenses decreased by $3.3 million, from $17.9 million in Q1 2023 to $14.6 million in Q1 2024, a decrease of 18%[124] - Sales and marketing expenses increased by $2.0 million, from $6.7 million in Q1 2023 to $8.7 million in Q1 2024, an increase of 30%[125] - Technology and development expenses decreased by $1.4 million, or 40%, from $3.4 million in Q1 2023 to $2.1 million in Q1 2024, primarily due to workforce reductions in the technology and development department[127] Stock and Equity - The company executed a 1-for-20 reverse stock split effective October 16, 2023, reducing the authorized shares of Class A Common Stock from 1 billion to 50 million[29] - The total number of shares of Preferred Stock authorized was reduced from 100 million to 5 million following the reverse stock split[29] - The Company had approximately 141,000 shares of Class A Common Stock available for issuance under the Employee Stock Purchase Plan as of March 31, 2024[73] Legal and Compliance - A class action lawsuit was filed alleging violations related to prior public statements about financial results, seeking unspecified damages[169] - The company is not currently a party to any material litigation that is likely to have a material adverse effect on its business[168] - The management is committed to ongoing remediation activities to ensure the reliability of financial reporting[165] Operational Metrics - Active subscriptions decreased from 15,700 in March 2023 to 13,000 in March 2024, reflecting a decline in user adoption[104] - The average daily rate (ADR) for residences decreased from $2,152 in Q1 2023 to $1,965 in Q1 2024[109] - Occupancy rates improved from 75% in Q1 2023 to 78% in Q1 2024 across all properties[109] Strategic Initiatives - In August 2023, the company entered into a $25 million strategic investment agreement with Capital One, resulting in net proceeds of approximately $23.1 million after debt issuance costs[97][98] - The company launched the Inspirato Rewards loyalty program in August 2023 to incentivize repeat business among members with exclusive discounts and benefits[96]

Financial Performance - Net income for Q1 2024 was $2.2 million, a significant improvement from a net loss of $5.9 million in Q1 2023[3] - Adjusted EBITDA for Q1 2024 was $4.1 million, compared to an adjusted EBITDA loss of $3.1 million in Q1 2023, marking a $7.2 million favorable swing[3] - Total revenue for Q1 2024 was $80.2 million, representing a 12% year-over-year decrease but a 13% increase compared to Q4 2023[3] - Adjusted EBITDA for Q1 2024 was $4,073 million, with an Adjusted EBITDA margin of 5.1%, compared to an Adjusted EBITDA of $(3,149) million in Q1 2023[33][34] - Free cash flow for the first quarter of 2024 was $(8,704) million, an improvement from $(20,796) million in Q1 2023[35] - The company reported a net cash used in operating activities of $(7,202) million for Q1 2024, compared to $(17,587) million in Q1 2023, indicating improved cash flow management[31] Operational Metrics - Gross margin expanded to 40% in Q1 2024 from 35% in Q1 2023, driven by a 19% year-over-year improvement in the cost of revenue[3] - Residence occupancy improved to 80% in Q1 2024, up from 77% in Q1 2023, aided by a 9% reduction in average daily rates (ADRs) to $1,965[3] - Total Active Subscriptions reached approximately 13,000 as of March 31, 2024, including about 10,900 Inspirato Club subscriptions and 2,100 Inspirato Pass subscriptions[3] Guidance and Future Outlook - The company reaffirms its 2024 guidance for total revenue between $275 million and $305 million, and adjusted EBITDA between a gain of $5 million and a loss of $15 million[5] - Management expressed confidence in achieving long-term growth and profitability goals, citing recent improvements in operational efficiency and occupancy rates[4] - The company aims to improve its free cash flow profile and liquidity through operational initiatives and potential financing options[5] Cash and Assets - Cash at the end of Q1 2024 was $33 million, down from $42 million at year-end 2023[5] - Total assets decreased from $330,727 million as of December 31, 2023, to $313,044 million as of March 31, 2024, representing a decline of approximately 5.4%[29] - Cash and cash equivalents decreased from $36,566 million at the end of 2023 to $22,626 million at the end of Q1 2024, a decline of approximately 38.2%[29] - Total current liabilities decreased from $245,194 million as of December 31, 2023, to $227,613 million as of March 31, 2024, a reduction of approximately 7.1%[29] - Deferred revenue decreased from $160,493 million as of December 31, 2023, to $142,821 million as of March 31, 2024, a decrease of approximately 11%[29] Upcoming Events - The company plans to discuss its 2024 first quarter operating and financial results in a conference call scheduled for May 8, 2024[37] Strategic Focus - Inspirato continues to focus on expanding its luxury travel subscription services and enhancing its portfolio of curated vacation options[38]

DENVER, May 07, 2024 (GLOBE NEWSWIRE) -- Inspirato Incorporated ("Inspirato" or the "Company") (NASDAQ:ISPO), the innovative luxury travel club, today announced its 2024 first quarter financial and operating results. Except as otherwise stated, all financial results discussed below are presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. As supplemental information, we have provided certain additional non-GAAP financial measures in this press releas ...

DENVER, April 25, 2024 (GLOBE NEWSWIRE) -- Inspirato Incorporated (NASDAQ:ISPO) (the "Company"), the innovative luxury travel subscription brand, today announced plans to release its first quarter 2024 financial and operating results after market close on Tuesday, May 7.   The Company will host a conference call on Wednesday, May 8, to discuss the results. To listen to the audio webcast and Q&A, please visit the Inspirato Investor Relations website at https://investor.inspirato.com or use the webcast link b ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Inspirato is a subscription-based luxury travel company offering access to a managed portfolio of luxury homes and hotel accommodations through an asset-light model - Inspirato is a subscription-based luxury travel company providing access to a managed portfolio of vacation options, including approximately **450 private luxury homes** and rooms at over **250 luxury hotel partners** as of December 31, 2023[18](index=18&type=chunk)[19](index=19&type=chunk) - The company's primary offerings are two paid subscription models: Inspirato Club (access with nightly rates) and Inspirato Pass (all-inclusive subscription), with newer channels like Inspirato for Good and Inspirato for Business expanding the customer base[20](index=20&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - A key business strategy is an asset-light model, leasing homes with flexible terms (typically terminable with 180 days to one year's notice) rather than owning them, allowing for portfolio curation in response to market trends[33](index=33&type=chunk) - The company's competitive strengths include its managed and controlled residential inventory, rate and calendar control, flexible cost structure, and predictable subscription revenue[37](index=37&type=chunk)[42](index=42&type=chunk) - As of December 31, 2023, the company employed approximately **630 team members** globally, with a high concentration in Operations and Sales and Marketing[47](index=47&type=chunk) - Travel revenues are seasonal, with the first, third, and fourth quarters typically being higher than the second quarter, while subscription revenues from existing members are not impacted by seasonality[51](index=51&type=chunk) [Risk Factors](index=19&type=page&id=Item%201A.%20Risk%20Factors) The company faces risks related to brand, member retention, property supply, financial losses, internal control weaknesses, and regulatory compliance - The business is highly dependent on its brand reputation, member retention, and the ability to secure and renew leases for attractive luxury properties[69](index=69&type=chunk)[71](index=71&type=chunk)[79](index=79&type=chunk) - The company has a history of net losses, incurring a **$51.8 million net loss** in 2023, and may not achieve or sustain profitability[105](index=105&type=chunk) - The company has identified material weaknesses in its internal control over financial reporting, which resulted in the restatement of financial statements for Q1 and Q2 2022 and may lead to misstatements or failure to meet reporting obligations[120](index=120&type=chunk)[121](index=121&type=chunk) - The company faces risks related to its debt, including a **$25.0 million Senior Secured Convertible Note**, and potential difficulties in complying with Nasdaq's continued listing standards, having received multiple non-compliance notices[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - Significant obligations exist under a Tax Receivable Agreement (TRA), requiring the company to pay Continuing Inspirato Members **85% of realized tax savings**, which could be substantial and may be accelerated under certain conditions[123](index=123&type=chunk)[124](index=124&type=chunk)[128](index=128&type=chunk) - The company is exposed to cybersecurity risks, including phishing and social engineering attacks, and must comply with complex and evolving data privacy laws like GDPR and CCPA, with non-compliance carrying significant potential penalties[144](index=144&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) [Unresolved Staff Comments](index=45&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[161](index=161&type=chunk) [Cybersecurity](index=45&type=section&id=Item%201C.%20Cybersecurity) The company integrates cybersecurity risk management through a dedicated committee, employee training, and an incident response plan - A cross-functional "Cybersecurity Risk Committee" is responsible for assessing and managing the company's Cybersecurity Program and reports regularly to the Audit Committee of the Board[165](index=165&type=chunk) - The company undertakes several activities to manage cybersecurity threats, including annual employee training, regular phishing simulations, carrying cyber liability insurance, and maintaining a Technical Review Committee to evaluate third-party technology partners[166](index=166&type=chunk) - An incident response plan is in place to coordinate activities for preparing, responding to, and recovering from cybersecurity incidents[163](index=163&type=chunk) [Properties](index=45&type=section&id=Item%202.%20Properties) The company's corporate headquarters are in Denver, Colorado, leasing approximately 44,715 square feet of office space - The company is headquartered in Denver, Colorado, with lease commitments for approximately 44,715 square feet of office space[166](index=166&type=chunk) [Legal Proceedings](index=46&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in a class action lawsuit alleging federal securities law violations related to financial statement restatements - On February 16, 2023, a class action lawsuit was filed against the company and certain officers, alleging violations of the Exchange Act related to the restatement of its Q1 and Q2 2022 financial statements[168](index=168&type=chunk)[420](index=420&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[169](index=169&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Inspirato's Class A Common Stock and Warrants are listed on NASDAQ, with no cash dividends paid or anticipated - The company's Class A Common Stock is listed on the NASDAQ Global Select Market under the symbol "ISPO"[172](index=172&type=chunk) - As of March 8, 2024, there were approximately **35 holders of record** of Class A Common Stock and **35 holders of record** of Class V Common Stock[173](index=173&type=chunk) - The company has not paid any cash dividends to date and does not intend to declare any in the foreseeable future[174](index=174&type=chunk) [Reserved](index=48&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total revenue decreased by 5% to $329.1 million in 2023, with net loss widening to $93.9 million due to asset impairments, while liquidity remains sufficient [Overview](index=49&type=section&id=OVERVIEW) The company launched Inspirato Rewards, secured a $25.0 million convertible note from Capital One, and executed a 1-for-20 reverse stock split - In August 2023, the company launched Inspirato Rewards, a new member loyalty program designed to incentivize repeat business with exclusive discounts and benefits[186](index=186&type=chunk) - The company secured a **$25.0 million strategic investment** from an affiliate of Capital One through the private placement of an 8% Senior Secured Convertible Note due 2028, with net proceeds of approximately **$23.1 million**[187](index=187&type=chunk) - A **1-for-20 reverse stock split** of the company's common stock became effective on October 16, 2023, with all historical share and per-share amounts in the report adjusted to reflect this split[191](index=191&type=chunk)[192](index=192&type=chunk) [Key Business Metrics](index=51&type=section&id=Key%20Business%20Metrics) Key business metrics declined in 2023, with active subscriptions decreasing to 13,800 and occupancy falling to 72% Active Subscriptions as of December 31 | | 2022 | 2023 | | :--- | :--- | :--- | | Legacy | 9,400 | 7,900 | | Pass | 3,600 | 2,500 | | Club | 3,100 | 3,400 | | **Total Active Subscriptions** | **16,100** | **13,800** | Total Travel Operating Statistics (Year ended December 31) | | 2022 | 2023 | | :--- | :--- | :--- | | Paid Nights Delivered | 106,600 | 103,300 | | Total Nights Delivered | 187,600 | 185,000 | | Occupancy | 80% | 72% | | ADR | $1,513 | $1,464 | [Results of Operations](index=56&type=section&id=Results%20of%20operations) Total revenue decreased by 5% to $329.1 million in 2023, with net loss widening to $93.9 million due to increased asset impairments Consolidated Statements of Operations Highlights (in thousands) | | Year ended Dec 31, 2022 | Year ended Dec 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$345,530** | **$329,100** | **(5)%** | | Gross margin | $116,204 | $54,314 | (53)% | | Asset impairments | $925 | $40,844 | n/m | | **Net loss** | **$(51,081)** | **$(93,859)** | **(84)%** | - **Total revenue decreased by $16.4 million (5%)** in 2023, with **travel revenue down $8.7 million** and **subscription revenue down $8.0 million**[213](index=213&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - **Asset impairments surged by $39.9 million to $40.8 million** in 2023, primarily due to identifying **63 underperforming leases**, most of which were in a single geographic location[219](index=219&type=chunk) - Operating expenses saw mixed changes: **General & administrative costs increased 10% to $72.1 million**, while **Sales & marketing, Operations, and Technology & development expenses decreased by 16%, 34%, and 20% respectively**, reflecting cost-saving initiatives[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company held $36.6 million in cash as of December 31, 2023, with $23.1 million from a convertible note, facing $326.2 million in lease obligations - As of December 31, 2023, the company had **$36.6 million of cash and cash equivalents** and **$5.7 million of restricted cash**[229](index=229&type=chunk) Summarized Cash Flow Information (in thousands) | | Year ended Dec 31, 2022 | Year ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(45,689) | $(51,393) | | Net cash used in investing activities | $(14,270) | $(12,124) | | Net cash provided by financing activities | $58,945 | $23,844 | - The company's principal source of liquidity in 2023 was the net proceeds of approximately **$23.1 million** from the issuance of a convertible note to Capital One[230](index=230&type=chunk) Future Minimum Annual Lease Commitments as of Dec 31, 2023 (in thousands) | Year | Amount | | :--- | :--- | | 2024 | $79,749 | | 2025 | $64,655 | | 2026 | $47,853 | | 2027 | $35,770 | | 2028 | $27,477 | | 2029 and thereafter | $70,703 | | **Total** | **$326,207** | [Non-GAAP Financial Metrics](index=62&type=section&id=Non-GAAP%20Financial%20Metrics) Adjusted Net Loss increased to $55.4 million in 2023, while Adjusted EBITDA improved to a loss of $29.3 million Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | | Year ended Dec 31, 2022 | Year ended Dec 31, 2023 | | :--- | :--- | :--- | | **Net loss and comprehensive loss** | **$(51,081)** | **$(93,859)** | | Interest, net | $188 | $1,133 | | Income tax expense | $799 | $721 | | Depreciation and amortization | $5,436 | $10,553 | | Equity-based compensation | $8,802 | $13,652 | | (Gain) loss on fair value instruments | $1,696 | $(2,368) | | Asset impairments | $925 | $40,844 | | Public company readiness costs | $1,092 | — | | **Adjusted EBITDA** | **$(32,143)** | **$(29,324)** | Reconciliation of Net Loss to Adjusted Net Loss (in thousands) | | Year ended Dec 31, 2022 | Year ended Dec 31, 2023 | | :--- | :--- | :--- | | **Net loss and comprehensive loss** | **$(51,081)** | **$(93,859)** | | Asset impairments | $925 | $40,844 | | (Gain) loss on fair value instruments | $1,696 | $(2,368) | | **Adjusted Net Loss** | **$(48,460)** | **$(55,383)** | [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency fluctuations, with a $2.7 million impact from a 10% USD change - The company's primary market risks are exposure to interest rates and foreign currency fluctuations[267](index=267&type=chunk) - The fair value of the **$25.0 million convertible note** is subject to changes based on the market price of the company's stock and interest rates[269](index=269&type=chunk) - In 2023, operating expenditures in foreign currencies were approximately **$27.1 million**, and a hypothetical 10% change in the U.S. dollar against the Mexican Peso and Euro would impact financial statements by **$2.7 million**[270](index=270&type=chunk) [Financial Statements and Supplementary Data](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for 2021-2023, including balance sheets, income statements, and cash flows [Consolidated Balance Sheets](index=72&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $330.7 million in 2023, with total liabilities at $485.4 million, widening the equity deficit to $154.7 million Consolidated Balance Sheets (in thousands) | | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | **$116,881** | **$74,840** | | Right-of-use assets | $271,702 | $209,702 | | **Total assets** | **$430,367** | **$330,727** | | **Total current liabilities** | **$278,118** | **$245,194** | | Lease liabilities, noncurrent | $208,159 | $196,875 | | Convertible note | $— | $23,854 | | **Total liabilities** | **$505,357** | **$485,425** | | **Total equity (deficit)** | **$(74,990)** | **$(154,698)** | [Consolidated Statements of Operations and Comprehensive Loss](index=73&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Total revenues were $329.1 million in 2023, with a net loss of $93.9 million, or $15.31 per share, due to asset impairments Consolidated Statements of Operations (in thousands, except per share amounts) | | 2022 | 2023 | | :--- | :--- | :--- | | Revenue | $345,530 | $329,100 | | Gross margin | $116,204 | $54,314 | | Asset impairments | $925 | $40,844 | | **Net loss and comprehensive loss** | **$(51,081)** | **$(93,859)** | | Net loss attributable to Inspirato Inc. | $(24,057) | $(51,755) | | Basic and diluted net loss per Class A share | $(9.20) | $(15.31) | [Notes to Consolidated Financial Statements](index=77&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including the reverse stock split, revenue recognition, convertible note, lease impairments, and contingent liabilities - A **1-for-20 Reverse Stock Split** became effective on October 16, 2023, with all historical share and per-share amounts adjusted to reflect the split[295](index=295&type=chunk)[299](index=299&type=chunk) - In August 2023, the company launched a loyalty program, "Rewards," with deferred revenue related to this program totaling **$10.7 million** as of December 31, 2023[325](index=325&type=chunk)[353](index=353&type=chunk) - The company issued a **$25.0 million 8% Senior Secured Convertible Note due 2028** to an affiliate of Capital One, with net proceeds of **$23.1 million**, and has elected to carry the note at fair value[360](index=360&type=chunk)[367](index=367&type=chunk) - During 2023, the company recorded a **$40.5 million right-of-use asset impairment** related to **63 underperforming leases**, primarily in a single geographic location[316](index=316&type=chunk)[377](index=377&type=chunk) - The company is subject to a class action lawsuit filed in February 2023 related to the restatement of its 2022 interim financial statements[420](index=420&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=115&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants on financial disclosure - None[441](index=441&type=chunk) [Controls and Procedures](index=115&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of December 31, 2023, due to ongoing material weaknesses in internal controls - Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were not effective at a reasonable assurance level[443](index=443&type=chunk) - Management's assessment concluded that internal control over financial reporting was not effective as of December 31, 2023, due to ongoing material weaknesses[447](index=447&type=chunk) - The material weaknesses relate to (1) processes and controls over financial closing and reporting and (2) the design and effectiveness of Information Technology General Controls (ITGCs), including user access rights and segregation of duties[449](index=449&type=chunk) - A remediation plan is in progress, which includes enhancing risk assessment processes, implementing additional controls, and providing more training to control operators, but the weaknesses were not fully remediated as of year-end[450](index=450&type=chunk)[452](index=452&type=chunk) [Other Information](index=117&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[454](index=454&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=119&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[455](index=455&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=119&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for its 2024 Annual Meeting of Stockholders[457](index=457&type=chunk) [Executive Compensation](index=119&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for its 2024 Annual Meeting of Stockholders[458](index=458&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=119&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan information is incorporated by reference from the 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for its 2024 Annual Meeting of Stockholders[459](index=459&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=119&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for its 2024 Annual Meeting of Stockholders[460](index=460&type=chunk) [Principal Accountant Fees and Services](index=119&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for its 2024 Annual Meeting of Stockholders[461](index=461&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=120&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K - This section provides a list of all financial statements, financial statement schedules (which have been omitted as not applicable or the information is included elsewhere), and exhibits filed with or incorporated by reference into the Form 10-K[463](index=463&type=chunk)[464](index=464&type=chunk)[465](index=465&type=chunk) [Form 10-K Summary](index=122&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[470](index=470&type=chunk)

Financial Performance - Full-year total revenue for 2023 was $329.1 million, within the guidance range of $320 to $340 million, representing a year-over-year decrease of 5%[3] - The net loss for Q4 2023 was $15.9 million, compared to a net loss of $14.6 million in Q4 2022, while the full-year net loss was $93.9 million, up from approximately $51.1 million in 2022[5] - Revenue for Q4 2023 was $70,710, a decrease of 18.4% compared to $86,627 in Q4 2022[31] - Total revenue for the year 2023 was $329,100, down from $345,530 in 2022, representing a decline of 4.8%[31] - Free Cash Flow for the year 2023 was $(63,517), a decline from $(59,959) in 2022[38] - The basic and diluted net loss attributable to Inspirato Incorporated per Class A share for 2023 was $(15.31), compared to $(9.20) in 2022, indicating a worsening loss per share[31] Adjusted EBITDA - Adjusted EBITDA loss for 2023 was $29.3 million, which was better than the previously guided range of $30 million to $45 million[5] - Adjusted EBITDA for Q4 2023 improved to $(5,364), a 43.1% reduction in losses compared to $(9,548) in Q4 2022[10] - Adjusted EBITDA margin for Q4 2023 was (7.6)%, an improvement from (11.0)% in Q4 2022[10] Subscriptions and Memberships - Total Active Subscriptions as of December 31, 2023, were approximately 13,800, with over 75% of new sales in 2023 for contract terms of two years or more[3] - Active Subscriptions are a key metric for assessing market penetration and revenue generation, with a focus on full paid subscriptions and expected renewals[27] Future Outlook - For 2024, the company anticipates total revenue between $275 million and $305 million and expects to reach breakeven on an Adjusted EBITDA basis[5] - The company expects a year-over-year decrease of 5-10% in residence and hotel ADRs for 2024 due to recent pricing adjustments[7] - The company plans to focus on profitable operations and improved member engagement in 2024, anticipating a reduction in its Pass member base[6] Asset and Liability Management - Total current assets decreased from $116,881 in 2022 to $74,840 in 2023, a reduction of 36%[34] - Cash and cash equivalents dropped significantly from $80,278 in 2022 to $36,566 in 2023, a decline of 54.5%[34] - Total liabilities decreased slightly from $505,357 in 2022 to $485,425 in 2023, a reduction of 3.7%[34] - The company reported asset impairments of $40,844 for the year 2023, compared to $925 in 2022, reflecting a significant increase in asset write-downs[31] - Total asset impairments increased significantly to $6,496 in Q4 2023 from $925 in Q4 2022[10] Operational Highlights - Inspirato launched its first loyalty program, Inspirato Rewards, in August 2023, with approximately 47% of members earning Rewards status by year-end 2023[3] - Inspirato for Good and Inspirato for Business had contracted sales of $9.6 million and $14.5 million for the full year 2023, respectively[5] - Inspirato is focused on expanding its luxury travel subscription services and enhancing its portfolio of vacation options[43] Market Conditions and Risks - The company is navigating various risks, including market conditions and competition in the luxury travel industry[44] - Future financial performance and strategic initiatives will be guided by ongoing assessments of market trends and consumer preferences[44] Miscellaneous - Interest expense increased to $71 in Q4 2023 from $19 in Q4 2022, reflecting a rise of 273.7%[10] - Equity-based compensation decreased to $2,578 in Q4 2023 from $3,373 in Q4 2022, a reduction of 23.6%[10] - The company plans to discuss its 2023 fourth quarter and year-end results on March 6, 2024[41]

Financial Data and Key Metrics Changes - For Q4 2023, total revenue was $71 million, a decrease of 18% year-over-year, primarily due to declines in both subscription and travel revenue [25][58] - Full year gross margin was $54 million, or 17% of revenue, compared to $116 million, or 34% of revenue in 2022 [31][63] - Adjusted EBITDA loss for 2023 was $29 million, slightly better than the previous guidance range of a loss between $30 million and $45 million [33][66] Business Line Data and Key Metrics Changes - Subscription revenue declined due to a decrease in both Pass and Club subscriptions, with 13,800 active subscriptions at year-end, consisting of approximately 2,500 Pass and 11,300 Club subscriptions [26][62] - Total nights delivered in Q4 2023 was approximately 41,000 with a residence occupancy of 65%, down from 47,000 nights and 73% occupancy in Q4 2022 [28][61] - Average Daily Rates (ADRs) were approximately $1,700 in Q4 2023, down from approximately $1,900 in Q4 2022, attributed to lowered rates [28][62] Market Data and Key Metrics Changes - Travel revenue accounted for approximately 65% of total revenue in 2024, compared to less than 60% in 2023 [70] - The company expects a decrease in Pass subscriptions in 2024, similar to the decline seen in 2023, which will create a subscription revenue headwind of nearly $30 million [36][67] - Residence occupancy decreased to 72% in 2023 from 81% in 2022, primarily due to increased availability [61] Company Strategy and Development Direction - The company aims to simplify its offerings and return to its roots as a travel club, focusing on member engagement and community [21][55] - In 2024, the focus will shift towards product offerings and customer acquisition strategies, with an emphasis on improving the Inspirato Pass [10][20] - The company plans to manage Pass memberships in conjunction with overall inventory to enhance profitability [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching breakeven on adjusted EBITDA in 2024, with total revenue expected between $275 million and $305 million [34][36] - The company has streamlined its cost structure, expecting approximately $30 million in lease expense savings compared to 2023 [38][94] - Management highlighted the importance of improving member engagement and operational efficiencies to drive future growth [48][51] Other Important Information - The company ended 2023 with a cash balance of approximately $42 million, indicating a slowdown in quarterly cash burn [66] - Inspirato for Good sold over 3,000 travel memberships in 2023, which are not included in subscription counts but are seen as potential future members [27] Q&A Session Summary Question: What does the new path for Pass look like? - Management indicated that changes to Pass aim to provide significant benefits to Pass holders while streamlining the product by removing non-profitable features [73][84] Question: Update on gross margin impairments related to leases? - Management confirmed that impairments related to leases were approximately $6 million in Q4 and about $40 million for the full year, with expectations of no large impairments going forward [75][106] Question: When will the Capital One partnership start showing results? - Management expects to be operational in the first phase of the partnership in the second half of 2024, with initial data points anticipated in Q3 [46][87]

Financial Data and Key Metrics Changes - In Q3 2023, total revenue was $83 million, consisting of $33 million in subscription revenue and $49 million in travel revenue, both metrics decreased year-over-year [15][44] - Adjusted EBITDA loss was $9 million, compared to approximately $7 million in Q3 2022; without severance expenses, the loss would have been approximately $4 million, indicating better-than-expected performance [20][21] - The company ended the quarter with over $50 million in cash following a $25 million investment from Capital One [47] Business Line Data and Key Metrics Changes - Approximately 46,400 total nights were delivered in Q3 2023, with 57% being paid nights, the highest level since Q2 2022 [16] - Subscription revenue saw a 14% year-over-year decrease, attributed to a $5 million decline in Pass subscriptions [44] - The company reported a residence average daily rate (ADR) of approximately $1,600, with occupancy at 73%, down from 81% in Q3 2022 [43] Market Data and Key Metrics Changes - The macroeconomic environment has contributed to fewer-than-anticipated new sales and increased resignations, particularly affecting the Club segment [18] - The company has seen a consistent decline in Pass subscriptions over the past four quarters, indicating a need for strategic evaluation [44][55] Company Strategy and Development Direction - The company aims to improve operational efficiency and liquidity as a foundation for stronger performance in 2024, focusing on cost control and margin improvement [13][14] - Strategic partnerships, such as with Capital One, are seen as crucial for increasing brand awareness and driving growth in luxury travel [13][51] - The company is rationalizing its product offerings and exploring new business lines to enhance growth prospects [25][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve profitability through cost-saving initiatives and operational improvements [21][53] - The CEO highlighted the importance of delivering exceptional travel experiences and the potential for growth in the luxury travel market [52][58] - The company is optimistic about stabilizing cash burn rates and does not foresee an immediate need for capital raises [27][53] Other Important Information - The company is targeting approximately $20 million in annual payroll savings through recent workforce reductions [19] - The anticipated annualized lease expense savings of at least $25 million in 2024 are expected to significantly improve the financial outlook [45] Q&A Session Summary Question: Insights on CEO's early observations and focus areas - The CEO noted impressive team execution in achieving operational efficiencies and emphasized a path towards profitability through cost reductions [24] Question: Cash burn rate and capital raise needs - Management confirmed a cash burn rate of about $15 million per quarter but expressed confidence in stabilizing this through cost-saving measures [53] Question: Weakness in Pass subscribers - Management acknowledged that the decline in Pass subscriptions is influenced by macro trends and is evaluating the offering to better meet customer needs [29][55] Question: Supply roadmap and sales force productivity - The CEO highlighted the importance of managing the homeowner experience and ensuring high satisfaction rates through a curated membership approach [60]

PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q3 2023 financials show decreased assets, a widened deficit, and a significantly increased net loss primarily due to asset impairments and reduced cash [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of **September 30, 2023**, total assets decreased to **$353.3 million**, cash declined, and the total deficit significantly widened to **$141.6 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Sep 30, 2023 (Unaudited) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $80,278 | $49,694 | | Total current assets | $116,881 | $79,928 | | Total assets | $430,367 | $353,329 | | **Liabilities & Equity** | | | | Total current liabilities | $278,118 | $243,663 | | Convertible note | $0 | $25,000 | | Total liabilities | $505,357 | $494,893 | | Total deficit | $(74,990) | $(141,564) | [Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q3 **2023** revenue decreased **11%** to **$82.6 million**, with net loss widening to **$25.4 million**, largely due to a **$34.3 million** asset impairment charge Key Operating Results (in thousands, except per share amounts) | Metric | Q3 2022 | Q3 2023 | Nine Months 2022 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $93,132 | $82,598 | $258,903 | $258,390 | | Gross Margin | $30,173 | $20,600 | $91,234 | $41,600 | | Asset Impairments | $0 | $4,294 | $0 | $34,348 | | Net Loss | $(7,252) | $(25,422) | $(36,491) | $(77,997) | | Net Loss per Share | $(1.13) | $(4.87) | $(6.99) | $(12.87) | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$45.4 million** for the nine months ended **September 30, 2023**, with overall cash decreasing by **$30.6 million** Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(48,279) | $(45,405) | | Net cash used in investing activities | $(9,865) | $(10,731) | | Net cash provided by financing activities | $58,933 | $25,553 | | **Net (decrease) in cash** | **$789** | **$(30,583)** | [Notes to Consolidated Financial Statements (unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) Key notes detail a **1-for-20 Reverse Stock Split**, new '**Rewards**' loyalty program, **$25 million** convertible note, significant asset impairments, and a **class-action lawsuit** - A **1-for-20 Reverse Stock Split** of the company's common stock became effective on **October 16, 2023**. All historical share and per-share amounts have been adjusted to reflect this split[27](index=27&type=chunk) - In **August 2023**, the company launched a member loyalty program, '**Rewards**'. This created a new performance obligation, resulting in the deferral of **$6.8 million** in revenue upon implementation[39](index=39&type=chunk)[56](index=56&type=chunk) - On **September 29, 2023**, the company issued a **$25.0 million, 8% Senior Secured Convertible Note** due **2028** to an affiliate of **Capital One**, receiving net proceeds of **$23.0 million**[66](index=66&type=chunk)[67](index=67&type=chunk) - The company recorded right-of-use asset impairments of **$34.0 million** and property and equipment impairments of **$0.3 million** for the nine months ended **September 30, 2023**, primarily related to underperforming properties in a single geographic location[86](index=86&type=chunk) - A **class action lawsuit** was filed against the company and certain officers in **February 2023**, alleging violations of the Exchange Act related to prior financial restatements[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 **2023** revenue decline, reduced gross margin due to impairments, declining subscriptions, and strategic initiatives including a new loyalty program and **Capital One** investment [Overview and Key Business Metrics](index=34&type=section&id=Overview%20and%20Key%20Business%20Metrics) The company, providing luxury travel, saw strategic developments including a reverse stock split and new loyalty program, but key metrics like subscriptions and ARR declined - The company executed a **1-for-20 reverse stock split**, effective **October 16, 2023**[117](index=117&type=chunk) - Launched '**Rewards**', a new member loyalty program, in **August 2023** to incentivize repeat business[122](index=122&type=chunk) - Secured a **$25.0 million** strategic investment from a **Capital One** affiliate via a convertible note issued on **September 29, 2023**[124](index=124&type=chunk) Active Subscriptions by Type | Subscription Type | Sep 30, 2022 | Sep 30, 2023 | | :--- | :--- | :--- | | Legacy | 9,800 | 8,300 | | Pass | 3,800 | 2,700 | | Club | 2,600 | 3,500 | | **Total** | **16,200** | **14,500** | - Annual Recurring Revenue (ARR) decreased to **$140.3 million** at **September 30, 2023**, from **$166.7 million** at **September 30, 2022**[130](index=130&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20operations) Q3 **2023** revenue decreased **11%** to **$82.6 million**, gross margin fell to **25%** due to impairments, and G&A expenses rose while other operating expenses decreased Comparison of Q3 2022 vs Q3 2023 (in thousands) | Metric | Q3 2022 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $93,132 | $82,598 | $(10,534) | | Gross Margin | $30,173 | $20,600 | $(9,573) | | Gross Margin % | 32% | 25% | -7 pp | | Net Loss | $(7,252) | $(25,422) | $(18,170) | - The nine-month gross margin decreased from **35%** in **2022** to **16%** in **2023**, largely due to **$34.3 million** in asset impairments and higher lease expenses[174](index=174&type=chunk)[182](index=182&type=chunk) - General and administrative expenses for Q3 **2023** increased by **39%** YoY to **$23.5 million**, mainly due to a **$4.1 million** increase in equity-based compensation expense, including severance charges for departing executives[166](index=166&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds **$49.7 million** in cash, bolstered by a **$25 million** convertible note, and believes current liquidity is sufficient for the next **12 months** - As of **September 30, 2023**, the company had **$49.7 million** of cash and cash equivalents[193](index=193&type=chunk) - In **September 2023**, the company received net proceeds of approximately **$23 million** from the issuance of a **$25 million** convertible note[191](index=191&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(48,279) | $(45,405) | | Net cash used in investing activities | $(9,865) | $(10,731) | | Net cash provided by financing activities | $58,933 | $25,553 | - Management believes its cash and cash equivalents on hand will be sufficient to meet working capital and capital expenditure requirements for at least the next **12 months**[194](index=194&type=chunk) [Non-GAAP Financial Metrics](index=51&type=section&id=Non-GAAP%20Financial%20Metrics) Non-GAAP metrics show Adjusted EBITDA loss worsening to **$9.2 million** in Q3 **2023**, with a Free Cash Flow outflow of **$56.1 million** for the nine-month period Adjusted EBITDA Reconciliation (in thousands) | | Q3 2022 | Q3 2023 | Nine Months 2022 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net loss and comprehensive loss | $(7,252) | $(25,422) | $(36,491) | $(77,997) | | **Adjusted EBITDA** | **$(6,765)** | **$(9,165)** | **$(22,593)** | **$(23,959)** | Free Cash Flow Reconciliation (in thousands) | | Nine Months 2022 | Nine Months 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(48,279) | $(45,405) | | **Free Cash Flow** | **$(58,144)** | **$(56,136)** | [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks are primarily interest rate and foreign currency, both considered immaterial due to fixed-rate debt and limited foreign exposure - The company has no financial statement risk associated with interest rate changes on its **$25.0 million** note, as it bears a fixed rate. However, the note's fair value is subject to change with market interest rates and stock price fluctuations[216](index=216&type=chunk) - Foreign currency risk is considered immaterial. A hypothetical **10%** change in the U.S. dollar against the Mexican Peso and Euro would not have had a material impact on the financial statements for the nine months ended **September 30, 2023**[217](index=217&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were **ineffective** as of **September 30, 2023**, due to **material weaknesses** in accounting, financial reporting, and IT controls, with remediation ongoing - Management concluded that disclosure controls and procedures were **not effective** as of **September 30, 2023**, due to ongoing **material weaknesses**[218](index=218&type=chunk) - The **material weaknesses** relate to: (1) accounting for leases under **ASC 842**, (2) financial closing and reporting processes, and (3) IT general controls, including user access and segregation of duties[221](index=221&type=chunk) - A remediation plan is in progress, involving increased finance headcount, employee training, and the engagement of third-party consultants to design and implement an improved control framework[222](index=222&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a **class action lawsuit** filed in **February 2023** alleging misleading statements related to prior financial restatements - A **class action lawsuit** was filed on **February 16, 2023**, alleging violations of the Exchange Act (Section **10(b)** and **20(a)**) against the company and individual defendants[226](index=226&type=chunk) - The complaint alleges that prior public statements were misleading due to misrepresentation and failure to disclose adverse facts related to the restatement of financial statements for the periods ended **March 31, 2022**, and **June 30, 2022**[228](index=228&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) Key risk factors include dependency on key personnel, uncertainty of the '**Rewards**' program, need for additional capital, potential dilution from convertible notes, and **Nasdaq listing standards** compliance challenges - The company's success is highly dependent on retaining its senior management team, especially after recent significant leadership changes, including a new CEO and CFO in **2023**[229](index=229&type=chunk) - The new '**Rewards**' loyalty program, launched in **August 2023**, carries risks as the company has limited experience operating such a program, and its ability to enhance member loyalty and offset costs is uncertain[231](index=231&type=chunk) - The company may require additional capital to continue operations, and any future equity or debt financing could result in significant dilution to existing stockholders or more restrictive debt covenants[232](index=232&type=chunk)[233](index=233&type=chunk) - The conversion of the **$25 million** note could be significantly dilutive to common stockholders and may depress the market price of the Class A Common Stock[234](index=234&type=chunk) - The company faces challenges in complying with **Nasdaq listing standards**, noting a recent notice of non-compliance with the majority independent board requirement as of **September 2023**[248](index=248&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported - No unregistered sales of equity securities or use of proceeds were reported for the period[250](index=250&type=chunk) [Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - The company reported no defaults upon senior securities[251](index=251&type=chunk) [Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[252](index=252&type=chunk) [Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company - This item is not applicable to the company[253](index=253&type=chunk) [Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form **10-Q**, including corporate documents, debt agreements, and certifications

Inspirato Incorporated (NASDAQ:ISPO) Q2 2023 Earnings Conference Call August 9, 2023 11:00 AM ET Company Participants Kyle Sourk – Investor Relations Brent Handler – Founder and Chief Executive Officer Robert Kaiden – Chief Financial Officer Conference Call Participants Shweta Khajuria – Evercore ISI Brett Knoblauch – Cantor Fitzgerald Mike Grondahl – Northland Operator Good day and thank you for standing by. Welcome to the Inspirato Second Quarter 2023 Earnings Call. At this time all participants are in a ...