Vacasa(US:VCSA)2025-03-13 20:09PART I Business Vacasa operates a vertically-integrated vacation rental management platform in North America, managing approximately 36,500 homes and generating about $1.9 billion in Gross Booking Value (GBV) in 2024, with a pending merger with Casago and an ongoing reorganization to empower local operations - As of December 31, 2024, Vacasa's platform aggregated approximately 36,500 home listings and generated about $1.9 billion in Gross Booking Value (GBV) from over five million nights sold during the year24 - On December 30, 2024, Vacasa entered into a merger agreement with Casago, converting each Class A Common Stock share into the right to receive $5.02 in cash, subject to potential downward adjustments293132 - The company received an unsolicited, non-binding acquisition proposal from Davidson Kempner at $5.25 per share on February 3, 2025, which is under discussion38 - The company's growth strategy includes empowering local operations through its 2024 Reorganization, optimizing existing home supply, growing within existing markets, and expanding homeowner services40 - Approximately 70% of the company's Gross Booking Value (GBV) was generated through distribution partners such as Airbnb, Booking.com, and Vrbo for the fiscal years 2024, 2023, and 202248 - As of December 31, 2024, the company employed approximately 4,300 team members globally, split between local operations teams and central support staff50 Risk Factors The company faces substantial risks, including the potential failure to complete the merger with Casago, which could result in significant expenses and business disruption, and the ongoing Reorganization may not yield expected benefits and could negatively impact operations and employee morale - There is a risk that the merger with Casago may not be completed, which could result in a termination fee of approximately $4.1 million and substantial expenses from legal and regulatory costs858687 - The May 2024 Reorganization, aimed at reducing costs and empowering local teams, carries significant execution risks, including potential failure to achieve expected benefits, loss of continuity, and negative impacts on cash flows and profitability9596 - The company has substantial debt, including $81.0 million outstanding under its Revolving Credit Facility and $30.0 million in Convertible Notes as of year-end 2024, which may limit cash flow and operational flexibility9798 - Vacasa has a history of significant net losses, reporting losses of $154.9 million in 2024, $528.2 million in 2023, and $332.1 million in 2022, and may not achieve profitability in the future102 - Total revenue decreased by 19% from $1,118.0 million in 2023 to $910.5 million in 2024, highlighting revenue volatility and potential for future declines109 - The number of homes managed on the platform decreased by approximately 12% during the year ended December 31, 2024, compared to 2023, indicating challenges in homeowner retention and acquisition121 - Approximately 70% of Gross Booking Value (GBV) is generated through distribution partners, and the loss of key partners like Airbnb, Booking.com, or Vrbo would materially harm the business133134 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None336 Cybersecurity Vacasa has implemented a cybersecurity risk management program based on the NIST Cybersecurity Framework, which is integrated into its overall enterprise risk management, overseen by the Audit Committee, and has not identified any past material incidents - The company's cybersecurity risk management program is designed based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)338 - The Board's Audit Committee has oversight responsibility for cybersecurity risk, receiving regular reports from management343344 - The company has not identified any risks from known cybersecurity threats or prior incidents that have materially affected its operations, business strategy, results of operations, or financial condition340 Properties The company's corporate headquarters is a leased office in Portland, Oregon, supplemented by various owned and leased regional offices and facilities in the U.S. and internationally, which management deems adequate for current needs - The company leases its corporate headquarters in Portland, Oregon and owns or leases other regional offices and facilities to support its operations347 Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 21 of the consolidated financial statements included in Item 8 of this report - Details on legal proceedings are provided in Note 21 to the consolidated financial statements348 Mine Safety Disclosures This item is not applicable to the company - Not applicable349 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Vacasa's Class A Common Stock is listed on Nasdaq under the symbol "VCSA", completed a 1-for-20 reverse stock split on October 2, 2023, and has approximately 130 holders of record as of March 10, 2025, with no dividends paid or anticipated - The company's Class A Common Stock is listed on the Nasdaq Global Select Market under the symbol "VCSA"351 - A 1-for-20 reverse stock split of all common stock classes was completed on October 2, 2023353 - The company has never declared or paid dividends and does not expect to in the foreseeable future, retaining earnings for business development355 Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting a 19% decrease in revenue in 2024, a net loss of $154.9 million, and liquidity supplemented by debt draws and convertible notes Results of Operations For the year ended December 31, 2024, revenue decreased by 19% to $910.5 million, primarily due to a 19% decrease in Nights Sold, while total operating costs and expenses decreased to $1,058.1 million, resulting in a net loss of $154.9 million Consolidated Statements of Operations Summary | | Year Ended December 31, | | | |---|---:|---:|---:| | | 2024 | 2023 | 2022 | | (in thousands) | | | | | Revenue | $910,485 | $1,117,950 | $1,187,950 | | Total operating costs and expenses | 1,058,106 | 1,655,285 | 1,578,902 | | Loss from operations | (147,621) | (537,335) | (390,952) | | Net loss | $(154,943) | $(528,232) | $(332,149) | - Revenue decreased by $207.5 million, or 19%, in 2024 compared to 2023, primarily driven by a 19% decrease in Nights Sold due to lower guest demand, a reduction in available homes, and increased market competition389 - Cost of revenue decreased by $92.6 million (18%) in 2024, mainly due to lower personnel-related expenses, reduced home care costs, and lower payment processing fees resulting from decreased revenue and Nights Sold391 - Sales and marketing expenses decreased by $54.6 million (26%) in 2024, driven by reduced personnel costs from restructuring, lower listing fees paid to distribution partners, and a decrease in advertising spend400 - The company recorded a non-cash impairment charge on long-lived assets of $84.0 million in 2024 and $46.0 million in 2023, with no goodwill impairment recorded in 2024 compared to a $411.0 million charge in 2023409410 Key Business Metrics and Non-GAAP Financial Measures The company's key business metrics showed a decline in 2024, with Gross Booking Value (GBV) decreasing by 20% to $1.86 billion and Nights Sold falling by 19% to 5.1 million, while Adjusted EBITDA shifted from a gain of $23.5 million in 2023 to a loss of $0.7 million in 2024 Key Business Metrics | | Year Ended December 31, | | | 2023 to 2024 % Change | |---|---:|---:|---:|---:| | | 2024 | 2023 | 2022 | | | (in thousands, except GBV per Night Sold) | | | | | | GBV | $1,856,691 | $2,310,696 | $2,555,195 | (20)% | | Nights Sold | 5,080 | 6,260 | 6,195 | (19)% | | GBV per Night Sold | $365 | $369 | $412 | (1)% | Net Loss to Adjusted EBITDA Reconciliation | | Year Ended December 31, | | | |---|---:|---:|---:| | (in thousands) | 2024 | 2023 | 2022 | | Net loss | $(154,943) | $(528,232) | $(332,149) | | Depreciation and amortization | 29,959 | 78,247 | 83,335 | | Impairment of long-lived assets | 84,000 | 46,000 | — | | Impairment of goodwill | — | 411,000 | 243,991 | | Other adjustments | 20,241 | 26,496 | (22,281) | | Adjusted EBITDA | $(743) | $23,511 | $(27,476) | Liquidity and Capital Resources The company faced liquidity pressures in 2024, with cash and cash equivalents at $88.5 million at year-end, supplementing its position by drawing $81.0 million from its Revolving Credit Facility and issuing $30.0 million in Convertible Notes, and management believes existing liquidity is sufficient for the next 12 months - As of December 31, 2024, the company had cash and cash equivalents of $88.5 million436 - In 2024, the company supplemented its cash position by drawing $81.0 million under its Revolving Credit Facility and issuing $30.0 million of Convertible Notes436 Cash Flow Summary | | Year Ended December 31, | | | |---|---:|---:|---:| | (in thousands) | 2024 | 2023 | 2022 | | Net cash used in operating activities | $(110,025) | $(51,707) | $(51,907) | | Net cash used in investing activities | (8,169) | (13,367) | (108,175) | | Net cash provided by (used in) financing activities | 94,857 | (28,052) | (39,067) | | Net decrease in cash, cash equivalents and restricted cash | $(23,995) | $(93,823) | $(199,476) | - As of December 31, 2024, there were $81.0 million in borrowings outstanding under the Revolving Credit Facility, with $0.9 million available for borrowing438 Critical Accounting Estimates The company's critical accounting estimates involve significant judgment, including the impairment of long-lived assets and goodwill, and the fair value valuation of its Convertible Notes, which resulted in an $84.0 million impairment charge on homeowner contracts in 2024 and a $5.5 million net unrealized loss on Convertible Notes - The impairment of long-lived assets is a critical estimate, with an assessment as of March 31, 2024, resulting in an $84.0 million impairment charge on homeowner contract assets, based on a discounted cash flow analysis470 - Goodwill impairment testing is another critical estimate, with quantitative assessments as of March 31, 2024, and October 1, 2024, not resulting in any goodwill impairment charges473 - The company elected the fair value option for its Convertible Notes issued in August 2024, with the valuation based on a binomial lattice model, and for the year ended December 31, 2024, a net unrealized loss of $5.5 million was recognized for the change in fair value484486 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily from inflation and interest rate fluctuations, with the variable-rate Revolving Credit Facility creating interest rate exposure, though a hypothetical 100 basis point increase would not have materially impacted 2024 interest expense, and fixed-rate Convertible Notes are not materially sensitive to interest rate risk - The company's primary market risks are inflation and interest rate fluctuations489 - The $81.0 million drawn on the Revolving Credit Facility is subject to variable interest rates, creating exposure to interest rate risk494 - The $30.0 million of Convertible Notes bear a fixed rate of interest and are not considered materially sensitive to interest rate risk495 Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements for the fiscal years ended December 31, 2024, 2023, and 2022, including the Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Cash Flows, and Statements of Equity, along with accompanying notes and the independent auditor's report Consolidated Financial Statements The audited financial statements present the company's financial position and performance, with total assets of $535.9 million and total liabilities of $468.8 million as of December 31, 2024, and a net loss of $154.9 million on $910.5 million in revenue for the year Consolidated Balance Sheet Data (as of Dec 31) | | 2024 | 2023 | |---|---:|---:| | (in thousands) | | | | Total current assets | $250,624 | $265,845 | | Total assets | $535,929 | $669,148 | | Total current liabilities | $327,271 | $422,823 | | Total liabilities | $468,782 | $455,902 | | Total equity | $34,067 | $136,653 | Consolidated Statement of Operations Data (Year Ended Dec 31) | | 2024 | 2023 | 2022 | |---|---:|---:|---:| | (in thousands) | | | | | Revenue | $910,485 | $1,117,950 | $1,187,950 | | Loss from operations | $(147,621) | $(537,335) | $(390,952) | | Net loss | $(154,943) | $(528,232) | $(332,149) | | Net loss per share (Basic & Diluted) | $(6.37) | $(24.48) | $(15.92) | Consolidated Statement of Cash Flows Data (Year Ended Dec 31) | | 2024 | 2023 | 2022 | |---|---:|---:|---:| | (in thousands) | | | | | Net cash used in operating activities | $(110,025) | $(51,707) | $(51,907) | | Net cash used in investing activities | $(8,169) | $(13,367) | $(108,175) | | Net cash provided by (used in) financing activities | $94,857 | $(28,052) | $(39,067) | Notes to Consolidated Financial Statements The notes provide detailed information supplementing the consolidated financial statements, covering the pending merger, workforce reductions, liquidity challenges, revenue recognition, impairment charges, debt agreements, and equity structure - The company implemented significant workforce reductions in 2024, including the 'Reorganization' eliminating 800 positions and the '2024 Plan' eliminating 320 positions, incurring severance costs of $6.0 million and $1.9 million, respectively536537538 - The company recorded long-lived asset impairment charges of $84.0 million in 2024 and $46.0 million in 2023, primarily related to its homeowner contracts intangible asset564648 - Goodwill impairment charges of $411.0 million and $244.0 million were recorded in 2023 and 2022, respectively, with no goodwill impairment recorded in 2024410649 - As of December 31, 2024, the company had $81.0 million in borrowings outstanding under its Revolving Credit Facility and a principal balance of $31.4 million on its Convertible Notes (including paid-in-kind interest)677681 - A 1-for-20 reverse stock split of all common stock classes was completed on October 2, 2023698 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None765 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024, with no material changes to internal control over financial reporting during the fourth quarter of 2024, and this report does not include an attestation of internal controls from the independent auditor due to the company's emerging growth company status - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective at a reasonable assurance level767 - No material changes were made to the internal control over financial reporting during the quarter ended December 31, 2024768 - The annual report does not include an attestation of internal controls from the independent auditor due to the company's status as an emerging growth company771 Other Information This section discloses a significant executive transition, with Bruce Schuman resigning as Chief Financial Officer and Chief Accounting Officer effective March 14, 2025, and William Atkins appointed as Interim CFO - On March 10, 2025, CFO and Chief Accounting Officer Bruce Schuman announced his resignation, effective March 14, 2025773 - William Atkins was appointed as Interim Chief Financial Officer, effective March 14, 2025774 PART III Directors, Executive Officers and Corporate Governance Information required for this item, including details about directors, executive officers, and corporate governance practices, will be incorporated by reference from the company's 2025 Proxy Statement, to be filed within 120 days of the fiscal year-end, and the company has a Code of Business Conduct and Ethics available on its investor relations website - The required information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2025 Proxy Statement782 - The company has adopted a Code of Business Conduct and Ethics applicable to all employees, officers, and directors786 Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2025 Proxy Statement - The required information is incorporated by reference from the 2025 Proxy Statement788 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management is incorporated by reference from the company's 2025 Proxy Statement - The required information is incorporated by reference from the 2025 Proxy Statement789 Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2025 Proxy Statement - The required information is incorporated by reference from the 2025 Proxy Statement790 Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's 2025 Proxy Statement - The required information is incorporated by reference from the 2025 Proxy Statement791 PART IV Exhibits and Financial Statement Schedules This section lists the documents filed as part of the Annual Report, including the consolidated financial statements and an index of all exhibits, with all financial statement schedules omitted as they are not applicable or the required information is included elsewhere - This item contains the list of consolidated financial statements and the Exhibit Index for documents filed with the report793796 Form 10-K Summary The company has not provided a summary for its Form 10-K - None797