N A U P A K A K O H A L A C O A S T , H A W A I I Disclaimer Past performance is not necessarily indicative of future results. If any of these risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward-looking statements reflect Inspirato's expectations, plans, or forecasts of future events and views as of the date of this presentation. Inspirato anticipates that subsequent events and development ...

Financial Performance - Total revenue for Q2 2023 was $84,092, a slight increase of 0.5% compared to $83,698 in Q2 2022[17]. - Gross margin for Q2 2023 was negative at $(10,648), down from a positive $26,296 in Q2 2022[17]. - Net loss for Q2 2023 was $(46,672), significantly higher than the net loss of $(5,036) in Q2 2022, representing an increase of 826%[17]. - The company reported a basic and diluted net loss per Class A share of $(0.35) for Q2 2023, compared to $(0.04) for Q2 2022[17]. - The net loss for the first quarter of 2023 was $23.42 million, compared to a net loss of $12.30 million in the same period of 2022, indicating a year-over-year increase of approximately 90%[19]. - The company reported comprehensive losses totaling $46.67 million for the first quarter of 2023, compared to $24.20 million in the same quarter of 2022, indicating a significant increase in losses[19]. - For the six months ended June 30, 2023, the net loss and comprehensive loss increased to $52,575, compared to $29,239 for the same period in 2022, representing an increase of 79.5%[21]. - The company experienced a net loss of $2.90 million due to changes in accounting principles, impacting overall financial performance[19]. - The company reported a net loss and comprehensive loss of $46,672 million for the three months ended June 30, 2023, compared to a loss of $5,036 million for the same period in 2022[185]. Revenue Breakdown - Total revenue for the three months ended June 30, 2023, was $84.1 million, a slight increase from $83.7 million in the same period of 2022, while total revenue for the six months ended June 30, 2023, rose to $175.8 million from $165.8 million in 2022, representing a year-over-year growth of 6.4%[43]. - Subscription revenue for the six months ended June 30, 2023, increased to $72.5 million, up from $67.7 million in 2022, reflecting a growth of 7.5%[43]. - Subscription revenue as a percentage of total revenue was 43% for the three months ended June 30, 2023, compared to 42% for the same period in 2022[112]. - Travel revenue increased by $5.3 million from $98 million for the six months ended June 30, 2022, to $103 million for the same period in 2023, a 5% increase[158]. Asset and Equity Changes - Total current assets decreased from $116,881 in December 2022 to $85,048 in June 2023, a decline of 27%[15]. - Total equity (deficit) excluding noncontrolling interest shifted from $11,733 in December 2022 to $(11,984) in June 2023[15]. - Total equity as of March 31, 2023, was $245.27 million, down from $244.80 million as of December 31, 2022, reflecting a slight decrease[20]. - The balance of common stock as of March 31, 2023, was $66.70 million, reflecting an increase from $62.72 million at the beginning of the year[20]. - The company issued 5,000 shares of common stock during the first quarter of 2023, contributing to the overall equity increase[19]. Cash Flow and Liquidity - Cash and cash equivalents dropped from $80,278 in December 2022 to $44,383 in June 2023, a decrease of 45%[15]. - Cash flows from operating activities resulted in a net cash used of $29,308 for the six months ended June 30, 2023, compared to $26,411 for the same period in 2022, indicating a decline in operational cash flow[21]. - Cash, cash equivalents, and restricted cash decreased to $46,045 at the end of the period, down from $123,061 at the end of June 30, 2022, reflecting a decrease of 62.7%[21]. - Financing activities provided a net cash of $470 in the first half of 2023, a significant decrease from $71,627 in the same period of 2022, indicating a decline of 99.3%[21]. Expenses and Cost Management - Cost of revenue increased by $20 million from $104.7 million in the six months ended June 30, 2022, to $124.7 million in 2023, a 19% increase primarily due to higher direct travel costs[160]. - General and administrative expenses increased by $2.1 million from $33.9 million in the six months ended June 30, 2022, to $35.9 million in 2023, a 6% increase[163]. - Sales and marketing expenses decreased by $6.6 million from $21 million in the six months ended June 30, 2022, to $14.6 million in 2023, a 31% decrease[164]. - Operating lease expense for the three months ended June 30, 2023, was $22.4 million, up from $19.7 million in the same period of 2022, representing an increase of 8.5%[61]. - Technology and development expenses increased by 5% from $2.9 million in Q2 2022 to $3 million in Q2 2023, driven by investments in product development[149]. Legal and Regulatory Matters - The company is involved in various legal proceedings and has established reserves for specific legal matters where unfavorable outcomes are probable[12]. - A class action lawsuit was filed against the company alleging violations of the Exchange Act related to prior public statements about its financial condition[65]. - The company identified material weaknesses in internal controls over financial reporting, particularly related to the implementation of new accounting standards and IT general controls[202]. - The company is actively working on a remediation plan to address identified material weaknesses, including increasing finance staff and engaging third-party consultants[203]. Strategic Initiatives and Future Outlook - The company aims to enhance gross margin and operational efficiency through cost management and portfolio optimization[116]. - The company launched a new member loyalty program, Inspirato Rewards, in August 2023, aimed at providing exclusive discounts and benefits to members[95]. - A strategic investment agreement was entered into with Capital One for $25 million through an 8% Senior Secured Convertible Note due in 2028[96]. - The company may require additional capital to continue operations, which might not be available on acceptable terms[208]. - If additional funds are raised through equity or convertible debt securities, existing stockholders could suffer significant dilution[209].

Financial Data and Key Metrics Changes - The company generated total revenue of $92 million in Q1 2023, a 12% year-over-year increase compared to $82 million in Q1 2022 [12] - The net loss was $5.9 million, an improvement from a loss of $24 million in the same quarter last year [12] - Adjusted EBITDA loss was approximately $3.1 million, compared to a loss of $3.7 million in Q1 2022 [12] - Gross margin was 35%, down from 42% in Q1 2022, but consistent with performance over the past two years [12][49] Business Line Data and Key Metrics Changes - Subscription revenue increased 14% year-over-year to $37 million from $32 million [18] - Travel revenue increased 11% to $55 million compared to $50 million in Q1 2022 [18] - Inspirato for Good sold trip and membership packages for $2.3 million, up from $1.2 million in Q4 2022 [5] - Inspirato for Business generated approximately $4 million in sales, compared to just over $2 million in Q4 2022 [5] Market Data and Key Metrics Changes - Total nights delivered were 50,700, marking an 18% year-over-year increase and a 7% sequential increase from Q4 2022 [41] - Total occupancy rebounded to 77% from 73% in the previous quarter, but down from 87% in Q1 2022 [41] - The company ended the quarter with 726 controlled accommodations, an 11% year-over-year increase but a 1% decrease compared to year-end [46] Company Strategy and Development Direction - The company is focusing on monetizing available capacity through new member acquisition strategies and a member success team [13] - There is a strategic shift towards longer-term subscriptions, with over 80% of new club sales being multiyear contracts compared to approximately 15% in Q1 2022 [14] - The company aims to optimize its portfolio and reduce lease expenses, expecting over $5 million in savings for 2023 [17] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in consumer preferences towards urban hotels and a shorter stay trend, impacting the traditional vacation rental market [25] - The company is optimistic about the future of Inspirato for Business and anticipates strong growth in reward travel [54] - Management reaffirmed revenue guidance of $350 million to $370 million for fiscal year 2023, with adjusted EBITDA guidance of a loss between $10 million and $20 million [50] Other Important Information - The company exited the quarter with approximately $62 million in cash, down from $82 million at year-end [21] - The partnership with Saks was soft launched on May 1, with training for their 3,000 stylists underway [44] Q&A Session Summary Question: What drove the strength in demand trends in Q1? - Management noted a shift in demand from traditional vacation rentals to urban locations, particularly in European cities, and highlighted a strong booking calendar ahead of Q1 [53] Question: What is the strategic goal for Inspirato for Business? - The company is bullish on the future of reward travel, aiming to motivate and retain key employees through individual travel opportunities [54] Question: How is the company getting more club members into multiyear contracts? - The company shifted focus to long-term subscriptions, believing that members with a longer commitment will enhance profitability [58] Question: What is the overall supply strategy moving forward? - The company is rightsizing its portfolio, canceling leases that do not make sense, and focusing on partnerships with hotels to ramp up supply [59] Question: How does portfolio optimization impact subscriber choice? - Management emphasized that while some inventory may be reduced, the overall availability remains strong, and new properties are continuously added [96]

```markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Inspirato Incorporated's unaudited financial statements, management's discussion and analysis, and disclosures on market risks and internal controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Inspirato Incorporated's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on business and accounting policies [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Snapshot (in millions): | Metric | Dec 31, 2022 | Mar 31, 2023 | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $80.28 million | $59.92 million | | Total current assets | $116.88 million | $104.71 million | | Total assets | $430.37 million | $406.28 million | | Total current liabilities | $278.12 million | $263.91 million | | Total liabilities | $505.36 million | $486.28 million | | Total deficit | $(74.99) million | $(80.00) million | - Total assets decreased by **$24.09 million**, primarily due to a reduction in cash and cash equivalents[17](index=17&type=chunk) - Total deficit widened from **$(74.99) million** to **$(80.00) million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Statements of Operations (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | | Revenue | $82.07 million | $91.70 million | | Cost of revenue | $47.31 million | $60.05 million | | Gross margin | $34.76 million | $31.65 million | | Gross margin percent | 42% | 35% | | Net loss and comprehensive loss | $(24.20) million | $(5.90) million | | Basic and diluted net loss per Class A share | $(0.29) | $(0.04) | - Net loss significantly improved by **76%** year-over-year, from **$(24.20) million** to **$(5.90) million**[19](index=19&type=chunk) - Revenue increased by **12%** to **$91.70 million**, but gross margin percentage decreased by **7 percentage points** to **35%**[19](index=19&type=chunk) [Condensed Consolidated Statements of Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(Deficit)) Equity (Deficit) Changes (in millions): | Metric | Dec 31, 2022 | Mar 31, 2023 | | :-------------------------- | :----------- | :----------- | | Additional paid-in capital | $245.65 million | $245.27 million | | Accumulated deficit | $(233.93) million | $(236.92) million | | Total deficit | $(74.99) million | $(80.00) million | - Total deficit increased by **$5.01 million** to **$(80.00) million**, primarily due to the net loss incurred during the quarter[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(12.67) million | $(17.59) million | | Net cash used in investing activities | $(1.17) million | $(3.21) million | | Net cash provided by financing activities | $65.96 million | $0.44 million | | Net increase (decrease) in cash | $52.12 million | $(20.36) million | | Cash, cash equivalents, and restricted cash – end of period | $135.08 million | $61.58 million | - Net cash used in operating activities increased by **$4.92 million**, and net cash used in investing activities increased by **$2.04 million**[21](index=21&type=chunk) - Net cash provided by financing activities decreased significantly by **$65.52 million** due to the absence of reverse recapitalization proceeds in 2023[21](index=21&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [(1) Nature of Business](index=10&type=section&id=(1)%20Nature%20of%20Business) - Inspirato is a subscription-based luxury travel company providing exclusive access to curated vacation options[22](index=22&type=chunk) - The company completed a reverse recapitalization with Thayer Ventures Acquisition Corporation on February 11, 2022, with Inspirato LLC identified as the accounting acquirer[23](index=23&type=chunk) - Revenues recovered to pre-pandemic levels by March 31, 2023, despite the ongoing impact of the COVID-19 pandemic[24](index=24&type=chunk) [(2) Significant Accounting Policies](index=10&type=section&id=(2)%20Significant%20Accounting%20Policies) - Unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC interim reporting rules[25](index=25&type=chunk) - The company adopted ASU 2016-13 (CECL methodology) on January 1, 2023, leading to a **$0.2 million** net decrease in retained earnings[34](index=34&type=chunk)[35](index=35&type=chunk) - No significant changes to accounting policies were disclosed compared to the 2022 Annual Report on Form 10-K[32](index=32&type=chunk) [(3) Reverse Recapitalization](index=12&type=section&id=(3)%20Reverse%20Recapitalization) - The Business Combination on February 11, 2022, was a reverse recapitalization, with Inspirato LLC as the accounting acquirer[36](index=36&type=chunk)[37](index=37&type=chunk) - The resulting UP-C structure allows Continuing Inspirato Members to retain equity in Inspirato LLC and hold Class V Common Stock for voting[36](index=36&type=chunk)[39](index=39&type=chunk) - The company raised **$90 million** in gross proceeds from the Business Combination, with **$66 million** in net cash proceeds after **$25 million** in transaction costs[42](index=42&type=chunk) [(4) Revenue](index=14&type=section&id=(4)%20Revenue) Revenue Breakdown (in millions): | Revenue Type | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :----------- | :-------------------------- | :-------------------------- | | Travel | $49.77 million | $55.13 million | | Subscription | $32.17 million | $36.51 million | | Other | $0.13 million | $0.06 million | | **Total** | **$82.07 million** | **$91.70 million** | - Total revenue increased by **12%** to **$91.70 million** for the three months ended March 31, 2023[45](index=45&type=chunk) - Subscription revenue grew by **14%** and travel revenue by **11%** year-over-year[45](index=45&type=chunk) [(5) Prepaid Expenses and Prepaid Member Travel](index=14&type=section&id=(5)%20Prepaid%20Expenses%20and%20Prepaid%20Member%20Travel) Prepaid Expenses (in millions): | Category | Dec 31, 2022 | Mar 31, 2023 | | :--------------- | :----------- | :----------- | | Property operations | $4.30 million | $4.17 million | | Software | $3.60 million | $3.27 million | | Operating supplies | $1.44 million | $1.39 million | | Insurance | $1.58 million | $2.30 million | | **Total** | **$10.92 million** | **$11.13 million** | - Prepaid member travel increased from **$20 million** at December 31, 2022, to **$25 million** at March 31, 2023[47](index=47&type=chunk) [(6) Property and Equipment](index=15&type=section&id=(6)%20Property%20and%20Equipment) Property and Equipment, Net (in millions): | Category | Dec 31, 2022 | Mar 31, 2023 | | :-------------------------------- | :----------- | :----------- |\ | Residence leasehold improvements | $15.30 million | $16.32 million | | Internal-use software | $13.56 million | $14.30 million | | Total cost | $37.47 million | $39.24 million | | Accumulated depreciation and amortization | $19.17 million | $20.88 million | | **Property & equipment, net** | **$18.30 million** | **$18.36 million** | - Net property and equipment increased slightly to **$18.36 million** at March 31, 2023, from **$18.30 million** at December 31, 2022[49](index=49&type=chunk) [(7) Income Taxes](index=15&type=section&id=(7)%20Income%20Taxes) - Inspirato Incorporated is subject to U.S. federal, state, and local income taxes on its **49.2%** distributive share of Inspirato LLC's net taxable income[50](index=50&type=chunk) - The effective income tax rate was **negative 3.51%** for Q1 2023, differing from the statutory rate due to losses allocated to noncontrolling interests and a full valuation allowance against deferred tax assets[51](index=51&type=chunk)[52](index=52&type=chunk) [(8) Debt](index=15&type=section&id=(8)%20Debt) - The company's revolving line of credit (Revolver) with a **$14 million** limit was terminated in March 2023[54](index=54&type=chunk) - Interest expense related to the Revolver decreased from **$0.1 million** in Q1 2022 to **$0** in Q1 2023[54](index=54&type=chunk) [(9) Fair Value Measurements](index=16&type=section&id=(9)%20Fair%20Value%20Measurements) - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[55](index=55&type=chunk)[59](index=59&type=chunk) - Public Warrants are classified as Level 1 financial liabilities, and short-term/long-term borrowings are considered Level 2 liabilities[56](index=56&type=chunk) [(10) Loss per share](index=16&type=section&id=(10)%20Loss%20per%20share) Loss Per Share (in millions, except per share amounts): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to Inspirato Incorporated | $(12.30) million | $(2.90) million | | Basic and diluted weighted average Class A shares outstanding | 42,312 | 64,517 | | Basic and diluted net loss per Class A share | $(0.29) | $(0.04) | - Basic and diluted net loss per Class A share improved significantly to **$(0.04)** for Q1 2023 from **$(0.29)** in Q1 2022[63](index=63&type=chunk) - Anti-dilutive securities totaled **38.85 million** in Q1 2023, up from **19.70 million** in Q1 2022[63](index=63&type=chunk) [(11) Leases](index=17&type=section&id=(11)%20Leases) Operating Lease Expense (in millions): | Expense Type | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | | Operating lease expense | $18.33 million | $22.80 million | | Variable lease expense | $0.66 million | $0.39 million | - Operating lease expense increased to **$22.80 million** in Q1 2023 from **$18.33 million** in Q1 2022[65](index=65&type=chunk) - Total minimum operating lease payments as of March 31, 2023, were **$328.13 million**, with a weighted-average remaining lease term of **5.6 years** and a discount rate of **6.83%**[66](index=66&type=chunk) [(12) Commitments and Contingencies](index=18&type=section&id=(12)%20Commitments%20and%20Contingencies) - A class action lawsuit was filed on February 16, 2023, alleging misrepresentation of financial statements related to a prior restatement[68](index=68&type=chunk) - The company has future payment obligations of **$92 million** for **52** uncommenced leases as of March 31, 2023[70](index=70&type=chunk) [(13) Warrants](index=19&type=section&id=(13)%20Warrants) - **8.6 million** Public Warrants were outstanding at March 31, 2023, with a fair value of **$0.9 million**[71](index=71&type=chunk)[72](index=72&type=chunk) - Warrant fair value losses decreased significantly from **$18 million** in Q1 2022 to **$0.1 million** in Q1 2023[72](index=72&type=chunk) - A new Warrant Agreement with Saks.com LLC allows Saks to acquire up to **18 million** Class A Common Stock shares at **$2.00** per share, contingent on subscription referrals[73](index=73&type=chunk) [(14) Equity of Inspirato LLC](index=19&type=section&id=(14)%20Equity%20of%20Inspirato%20LLC) - Inspirato LLC equity units were recast using an exchange ratio of **1-for-37.2275** post-Business Combination[74](index=74&type=chunk) - Holders received Class A Common Stock or Class V Common Stock and New Common Units[74](index=74&type=chunk) [(15) Equity-Based Compensation](index=19&type=section&id=(15)%20Equity-Based%20Compensation) - The Unit Option Plan was terminated, and outstanding options were converted into Exchanged Options for Class A Common Stock[75](index=75&type=chunk)[76](index=76&type=chunk) - The 2021 Equity Incentive Plan, effective post-Business Combination, initially authorized **15.9 million** Class A shares, with an evergreen provision for annual increases[79](index=79&type=chunk) - Unrecognized compensation cost for RSUs was **$28 million** at March 31, 2023, to be recognized over a weighted average of **2.9 years**[80](index=80&type=chunk) [(16) Noncontrolling Interest](index=21&type=section&id=(16)%20Noncontrolling%20Interest) - **58.8%** of Inspirato LLC's consolidated net loss was allocated to noncontrolling interests from Feb 11, 2022, to Mar 31, 2022[81](index=81&type=chunk) - In Q1 2023, **2.16 million** Class A shares were issued in exchange for New Common Units, resulting in a decrease in noncontrolling interest ownership[81](index=81&type=chunk)[83](index=83&type=chunk) New Common Units Ownership (in thousands): | Entity | Jan 1, 2023 | Mar 31, 2023 | | :-------------------------- | :---------- | :----------- | | Inspirato Incorporated | 55,253 | 57,410 | | Continuing Inspirato Members | 59,653 | 57,714 | | Continuing Inspirato Members Subject to Vesting | 1,707 | 1,489 | | **Total** | **116,613** | **116,613** | [(17) Employee Benefit Plan](index=23&type=section&id=(17)%20Employee%20Benefit%20Plan) - Company matches **50%** of employee 401(k) contributions up to **6%** of eligible pay, with a **$1.50 thousand** annual cap[84](index=84&type=chunk) - Total company contributions to the 401(k) plan increased from **$0.5 million** in Q1 2022 to **$0.6 million** in Q1 2023[84](index=84&type=chunk) [(18) Related Party Transactions](index=23&type=section&id=(18)%20Related%20Party%20Transactions) - Balances due from related parties (Exclusive Resorts) decreased from **$0.7 million** at Dec 31, 2022, to **$0.4 million** at Mar 31, 2023[85](index=85&type=chunk) - Related party expenses for property usage agreements decreased from **$0.7 million** in Q1 2022 to **$0.4 million** in Q1 2023[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Inspirato's financial condition and operational results, highlighting revenue growth, improved net loss, and efforts to manage costs and internal control weaknesses [OVERVIEW](index=24&type=section&id=OVERVIEW) - Inspirato is a subscription-based luxury travel company with a portfolio of over **500** private luxury vacation homes and **300+** luxury hotel partners in over **225** destinations[90](index=90&type=chunk)[91](index=91&type=chunk) - New product offerings, Inspirato for Good (non-profit fundraising) and Inspirato for Business (B2B channel), were developed in Q3 2022 to expand the target market and accelerate growth at lower customer acquisition costs[92](index=92&type=chunk) - The company completed a reverse recapitalization on February 11, 2022, adopting an UP-C structure[93](index=93&type=chunk)[94](index=94&type=chunk) [Key Business Metrics](index=26&type=section&id=Key%20Business%20Metrics) - Active Subscribers increased from over **14,000** (Mar 31, 2022) to over **14,300** (Mar 31, 2023)[98](index=98&type=chunk) - Active Subscriptions grew from over **15,200** (Mar 31, 2022) to over **15,700** (Mar 31, 2023), with Club subscriptions increasing significantly[99](index=99&type=chunk) - Annual Recurring Revenue (ARR) increased from **$147 million** at March 31, 2022, to **$153 million** at March 31, 2023[102](index=102&type=chunk) - Subscription revenue consistently contributed approximately **40%** of total revenue for the three months ended March 31, 2023[100](index=100&type=chunk)[103](index=103&type=chunk) [Key Factors Affecting Our Performance](index=28&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) - Revenues recovered to pre-pandemic levels by March 31, 2023, as travel restrictions lifted, though recovery trends vary by region[105](index=105&type=chunk)[106](index=106&type=chunk) - The company conducted a **12%** workforce reduction in January 2023 to manage costs and optimize operations[109](index=109&type=chunk) - Macroeconomic and geopolitical conditions, such as inflation, labor shortages, and rising interest rates, continue to impact the discretionary travel industry[111](index=111&type=chunk) - Travel revenues are seasonal, with Q1, Q3, and Q4 typically having higher revenues than Q2, and holidays increasing rates and gross margins[112](index=112&type=chunk)[113](index=113&type=chunk) [Key Components of Results of Operations](index=30&type=section&id=Key%20Components%20of%20Results%20of%20Operations) - Revenue is primarily derived from subscription dues (recurring, enrollment fees) and travel operations (per trip, nightly, service fees)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - Cost of revenue includes direct travel costs, property lease payments, operating/maintenance costs, and depreciation related to residences[117](index=117&type=chunk) - Operating expenses include General and administrative, Sales and marketing, Operations, and Technology and development, with expectations for variability as a percentage of revenue[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Warrant fair value losses/gains reflect periodic changes in the fair value of warrant liabilities[127](index=127&type=chunk) [Results of operations](index=33&type=section&id=Results%20of%20operations) Consolidated Results of Operations (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | Amount Change (in millions) | Percent Change | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | :------------ | :------------- | | Revenue | $82.07 million | $91.70 million | $9.63 million | 12% | | Cost of revenue | $47.31 million | $60.05 million | $12.74 million | (27)% | | Gross margin | $34.76 million | $31.65 million | $(3.12) million | (9)% | | Gross margin percent | 42% | 35% | (7)pp | (19)% | | Sales and marketing | $10.14 million | $6.65 million | $(3.50) million | 34% | | Operations | $9.67 million | $8.21 million | $(1.47) million | 15% | | Technology and development | $2.81 million | $3.36 million | $0.55 million | (20)% | | Warrant fair value losses | $17.67 million | $0.10 million | $(17.57) million | 99% | | Net loss and comprehensive loss | $(24.20) million | $(5.90) million | $18.30 million | 76% | - Subscription revenue increased **14%** due to growth in Pass and Club subscriptions[130](index=130&type=chunk) - Travel revenue increased **11%** due to increased Club and Pass memberships driving paid travel, despite an **8%** decrease in total paid nights in residences, offset by a **14%** increase in average price per night[132](index=132&type=chunk) - Operations expenses decreased **15%** due to a reduction in workforce in January 2023[136](index=136&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents were **$60 million** and restricted cash was **$1.7 million** as of March 31, 2023[144](index=144&type=chunk) Cash Flow Summary (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(12.67) million | $(17.59) million | | Net cash used in investing activities | $(1.17) million | $(3.21) million | | Net cash provided by financing activities | $65.96 million | $0.44 million | | Net increase (decrease) in cash | $52.12 million | $(20.36) million | - The company believes its cash and cash equivalents are sufficient to meet working capital and capital expenditure requirements for at least the next **12 months**[147](index=147&type=chunk) [Non-GAAP Financial Metrics](index=39&type=section&id=Non-GAAP%20Financial%20Metrics) Adjusted Net Loss (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :------------------ | :-------------------------- | :-------------------------- | | Net loss | $(24.20) million | $(5.90) million | | Warrant fair value losses | $17.67 million | $0.10 million | | **Adjusted Net Loss** | **$(6.53) million** | **$(5.80) million** | Adjusted EBITDA (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(24.20) million | $(5.90) million | | Interest, net | $0.14 million | $(0.11) million | | Income taxes | $0.18 million | $0.20 million | | Depreciation and amortization | $1.03 million | $1.91 million | | Equity-based compensation | $0.40 million | $0.66 million | | Warrant fair value losses | $17.67 million | $0.10 million | | Public company readiness costs | $1.09 million | — | | **Adjusted EBITDA** | **$(3.69) million** | **$(3.15) million** | | **Adjusted EBITDA Margin** | **(4.5)%** | **(3.4)%** | Free Cash Flow (in millions): | Metric | 3 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(12.67) million | $(17.59) million | | Development of internal-use software | $(0.18) million | $(1.93) million | | Purchase of property and equipment | $(0.99) million | $(1.28) million | | **Free Cash Flow (deficit)** | **$(13.84) million** | **$(20.80) million** | [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Financial statements rely on management's estimates and judgments, which are continuously evaluated[164](index=164&type=chunk) - No material changes to critical accounting policies and estimates were reported compared to the 2022 Annual Report on Form 10-K[165](index=165&type=chunk) [Recently Adopted Accounting Pronouncements](index=42&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) - Refer to Note 2 for details on recently adopted accounting pronouncements[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are exposure to interest rate fluctuations and foreign currency risks. A hypothetical 100 basis points change in interest rates or a 10% change in the U.S. dollar's value against the Mexican Peso and Euro would not have a material impact on the financial statements for the three months ended March 31, 2023 - Principal market risks include interest rate and foreign currency risks[167](index=167&type=chunk) - A hypothetical **100 basis points** change in interest rates would not materially impact financial statements[168](index=168&type=chunk) - Foreign currency expenditures totaled **$4.0 million** in Q1 2023, primarily in Mexican Pesos and Euros; a hypothetical **10%** change in USD value would not have a material impact[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2023, due to material weaknesses in accounting, financial reporting, and IT controls, with remediation efforts underway - Disclosure controls and procedures were deemed not effective as of March 31, 2023, due to material weaknesses[170](index=170&type=chunk) - Material weaknesses persist in (1) accounting for ASC 842 (Leases) and controlled properties, (2) financial closing and reporting processes, and (3) IT general controls (user access, segregation of duties)[172](index=172&type=chunk) - Remediation efforts include increasing finance headcount, training, and engaging third-party consultants to design and implement an enterprise-level control framework[174](index=174&type=chunk)[176](index=176&type=chunk) [Material Weakness in Internal Control Over Financial Reporting](index=42&type=section&id=Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) - Material weaknesses in internal controls over financial reporting persist as of March 31, 2023[171](index=171&type=chunk)[172](index=172&type=chunk) - Specific areas of weakness include accounting for ASC 842 (Leases), financial closing and reporting processes, and IT general controls (user access, segregation of duties)[172](index=172&type=chunk) [Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting](index=44&type=section&id=Remediation%20Plan%20for%20Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) - Remediation plan includes increasing finance headcount and training on control execution and risk assessment[174](index=174&type=chunk)[176](index=176&type=chunk) - Third-party consultants have been engaged to assist with the design and implementation of an enterprise-level control framework[174](index=174&type=chunk) [Changes in Internal Control Over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during Q1 2023, apart from remediation efforts[175](index=175&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details legal proceedings, risk factors, and other required disclosures, including exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a class action lawsuit filed on February 16, 2023, alleging violations of Section 10(b) and Rule 10b-5 due to alleged materially false and misleading public statements related to the restatement of Q1 and Q2 2022 financial statements. The complaint seeks class certification and unspecified damages - A class action lawsuit was filed on February 16, 2023, alleging violations of Section 10(b) and Rule 10b-5[179](index=179&type=chunk) - The lawsuit claims prior public statements were materially false and misleading regarding the restatement of Q1 and Q2 2022 unaudited condensed consolidated financial statements[179](index=179&type=chunk) [Class Action Complaint Relating to Restatement](index=45&type=section&id=Class%20Action%20Complaint%20Relating%20to%20Restatement) - Class action lawsuit filed Feb 16, 2023, alleging violations of Section 10(b) and Rule 10b-5[179](index=179&type=chunk) - Allegations relate to materially false and misleading public statements concerning the restatement of Q1 and Q2 2022 financial statements[179](index=179&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors, except for Nasdaq listing compliance issues, including a notice for failing the minimum bid price requirement and potential delisting consequences - No material changes to risk factors, except for Nasdaq listing compliance[180](index=180&type=chunk) - Received Nasdaq notice on May 3, 2023, for failing to meet the minimum **$1.00** bid price requirement[184](index=184&type=chunk) - The company has **180 calendar days** (until Oct 30, 2023) to regain compliance and may propose a reverse stock split[185](index=185&type=chunk)[188](index=188&type=chunk) - Potential consequences of delisting include limited market quotations, 'penny stock' designation, reduced trading, and decreased ability to issue securities or obtain financing[189](index=189&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&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 for the period - None[189](index=189&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - Not applicable[190](index=190&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were applicable for the period - Not applicable[191](index=191&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - Not applicable[192](index=192&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or incorporated by reference as part of this Quarterly Report on Form 10-Q, including organizational documents, warrant agreements, employment agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Warrant Agreement with Saks.com LLC, employment agreements, and certifications (31.1, 31.2, 32.1+)[195](index=195&type=chunk) [SIGNATURES](index=34&type=section&id=SIGNATURES) [SIGNATURES](index=50&type=section&id=SIGNATURES) The report is duly signed on behalf of Inspirato Incorporated by Brent Handler, Chief Executive Officer and Director, and Robert Kaiden, Chief Financial Officer, on May 9, 2023 - Report signed by Brent Handler (CEO) and Robert Kaiden (CFO) on May 9, 2023[199](index=199&type=chunk) ```

Inspirato Incorporated (NASDAQ:ISPO) Q4 2022 Earnings Conference Call March 16, 2023 11:00 AM ET Company Participants Kyle Sourk - Investor Relations Brent Handler - Co-Founder and Chief Executive Officer Web Neighbor - Chief Financial Officer Conference Call Participants Shweta Khajuria - Evercore ISI Jed Kelly - Oppenheimer Mike Grondahl - Northland Capital Markets Brett Knoblauch - Cantor James Callahan - Piper Sandler Operator Thank you for standing by, and welcome to Inspirato's Fourth Quarter 2022 Ear ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39791 INSPIRATO INCORPORATED (Exact Name of Registrant as Specified in its Charter) Delaware 85-2426959 (State or ot ...

Inspirato Incorporated (NASDAQ:ISPO) Q3 2022 Earnings Conference Call December 20, 2022 11:00 AM ET Company Participants Kyle Sourk - Investor Relations Brent Handler - Co-Founder and Chief Executive Officer Web Neighbor - Chief Financial Officer Conference Call Participants Mike Grondahl - Northland Capital Markets Jed Kelly - Oppenheimer & Co. Brett Knoblauch - Cantor Fitzgerald Tom Champion - Piper Sander Jocelyn Hung - Evercore ISI Operator Good day and thank you for standing by. Welcome to the Inspirat ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39791 INSPIRATO INCORPORATED (Exact Name of Registrant as Specified in its Charter) Delaware 85-2426959 (St ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39791 INSPIRATO INCORPORATED (Exact Name of Registrant as Specified in its Charter) Delaware 85-2426959 (State o ...

Inspirato Incorporated (NASDAQ:ISPO) Q2 2022 Earnings Conference Call August 8, 2022 11:00 AM ET Company Participants Kyle Sourk - Investor Relations Brent Handler - Co-Founder and Chief Executive Officer Web Neighbor - Chief Financial Officer Conference Call Participants Jed Kelly - Oppenheimer Tom Champion - Piper Sander Shweta Khajuria - Evercore ISI Mike Grondahl - Northland Capital Markets Brett Knoblauch - Cantor Fitzgerald Operator Good day, ladies and gentlemen, thank you for standing by. And welcom ...