Inspirato rporated(ISPO) - 2025 Q2 - Quarterly Results

Executive Summary & Strategic Overview This section provides an executive summary of Inspirato's Q2 2025 performance, highlighting key financial and operational achievements and outlining the strategic combination with Buyerlink Q2 2025 Performance Highlights Inspirato achieved significant operational and financial improvements in Q2 2025, with a 96% year-over-year increase in Adjusted EBITDA and reaching free cash flow breakeven, driven by portfolio optimization and operational efficiency - Net loss was $5.3 million, Adjusted EBITDA was negative $0.3 million, representing an $8.8 million or 96% year-over-year improvement in Adjusted EBITDA[7] - Gross margin reached $17.4 million, driven by portfolio optimization and a more efficient business model[7] - Cash operating expenses decreased by $7.1 million or 27% year-over-year, reflecting a continued focus on operational improvements[7] - Occupancy rate was 59%, with Average Daily Rate (ADR) increasing 24% to $1,670[7] - As of June 30, 2025, the company had over 11,000 active memberships, emphasizing a focus on high-quality, recurring revenue[7] Management Commentary Chairman and CEO Payam Zamani highlighted Q2 results as reflecting ongoing transformation progress, particularly in EBITDA improvement and free cash flow breakeven, with continued focus on operational efficiency and strategic growth - Chairman and CEO Payam Zamani stated that Q2 results reflect continued progress in the company's transformation, with an $8.8 million EBITDA improvement and achieving free cash flow breakeven[4] - The company remains focused on executing strategic initiatives: enhancing operational efficiency, elevating the brand, improving member experience, and advancing the digital platform to solidify the foundation for long-term profitable growth[4] - The strategic combination with Buyerlink is expected to further accelerate the company's strategy by adding proven technology and expanding global luxury travel market reach[4] Strategic Combination with Buyerlink Inspirato has entered a definitive agreement with Buyerlink for an all-stock reverse merger, expected to close in Q3 2025, forming One Planet Platforms, leveraging Buyerlink's technology and marketing expertise - Inspirato announced a definitive merger agreement with Buyerlink on June 26, 2025, an all-stock reverse merger transaction valuing Buyerlink's equity at approximately $326.3 million[5] - The transaction is expected to close in Q3 2025, with the combined company named One Planet Platforms and trading on Nasdaq under a new ticker symbol[5][6] - Inspirato's brand and travel products are expected to significantly benefit from Buyerlink's scalable infrastructure, AI technology, and performance-based marketing expertise[6] - Prior to closing, Inspirato will continue to operate as an independent public company, focusing on executing strategic priorities; post-merger, existing shareholders will hold shares in the new combined company, with only the ticker symbol updated[8] - Inspirato will no longer update its standalone guidance but remains on track to achieve its full-year 2025 targets[8] Q2 2025 Financial and Operational Results This section details Inspirato's Q2 2025 financial performance, including revenue, gross margin, and key operational metrics such as active memberships and average daily rates Revenue and Gross Margin Analysis In Q2 2025, Inspirato's total revenue decreased 6.3% year-over-year to $63.1 million, yet gross margin increased 7.4% to $17.4 million, with a 3.5 percentage point improvement in gross margin percentage due to cost optimization Q2 2025 Revenue and Gross Margin (Millions of USD) | Indicator | Q2 2025 | Q2 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Accommodations and Hotel Travel | $24.9 | $29.1 | (14.3)% | | Experiences and Custom Travel | 14.5 | 9.8 | 47.9% | | Total Travel Revenue | 39.4 | 38.8 | 1.4% | | Subscription Revenue | 19.4 | 25.2 | (23.3)% | | Ancillary and Other Revenue | 4.4 | 3.3 | 32.5% | | Total Revenue | 63.1 | 67.4 | (6.3)% | | Cost of Revenue | 45.7 | 51.2 | (10.7)% | | Gross Margin | $17.4 | $16.2 | 7.4% | | Gross Margin (%) | 28% | 24% | 3.5 pp | Operational Metrics In Q2 2025, total paid and total nights stayed decreased, but Average Daily Rate (ADR) significantly grew 24% to $1,670, indicating stronger pricing power, while total occupancy rate declined from 71% to 59% Q2 2025 Operational Metrics | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Residences | | | | Paid Nights Stayed | 9,700 | 13,600 | | Total Nights Stayed | 14,600 | 21,700 | | Occupancy Rate | 57% | 70% | | ADR | $1,957 | $1,535 | | Hotels | | | | Paid Nights Stayed | 6,100 | 8,300 | | Total Nights Stayed | 9,000 | 14,000 | | Occupancy Rate | 74% | 79% | | ADR | $1,210 | $1,035 | | Total | | | | Paid Nights Stayed | 15,800 | 21,900 | | Total Nights Stayed | 23,600 | 35,700 | | Occupancy Rate | 59% | 71% | | ADR | $1,670 | $1,346 | Active Memberships As of June 30, 2025, Inspirato's total active memberships were 11,200, a decrease from the prior year, primarily due to reductions in Club and Pass memberships Active Memberships (as of June 30) | Membership Type | 2025 | 2024 | | :--- | :--- | :--- | | Club | 9,900 | 10,800 | | Pass | 1,200 | 1,900 | | Invited | 100 | — | | Total Active Memberships | 11,200 | 12,700 | Non-GAAP Financial Measures & Key Metrics Definitions This section defines Inspirato's non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow, along with key business and operating metrics used for performance evaluation Non-GAAP Financial Measures Definitions Inspirato uses Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow as non-GAAP metrics to assess performance, budget, and communicate with investors, providing a clearer view of core operations and liquidity - Adjusted EBITDA is defined as net loss and comprehensive loss less net interest expense, income tax expense, depreciation and amortization, stock-based compensation, and gain or loss on fair value instruments[16] - Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of total revenue for the same period[16] - Free Cash Flow is defined as net cash generated from operating activities less purchases of property and equipment and capitalized software development costs for internal use[18] Key Business and Operating Metrics Definitions Inspirato utilizes key business metrics such as active memberships, Average Daily Rate (ADR), and total occupancy rate to evaluate business performance, measure trends, and inform strategic decisions - Active Memberships are defined as fully paid membership subscriptions as of the measurement date, and those expected to renew, used to assess the adoption of membership subscription products[21] - Average Daily Rate (ADR) is defined as total paid travel revenue divided by total paid nights, including rented residences or hotel rooms and suites[22] - Occupancy Rate is defined as all paid, Pass, IFG, IFB, employee, and complimentary nights divided by the total available nights for all at-risk properties[22] Condensed Consolidated Financial Statements This section presents Inspirato's condensed consolidated financial statements for Q2 2025, including statements of operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations and Comprehensive Loss Inspirato reported a net loss of $5.313 million in Q2 2025, a significant reduction from $15.393 million in the prior year, with total revenue decreasing but gross margin improving and operating expenses declining Q2 2025 Condensed Consolidated Statements of Operations and Comprehensive Loss (Thousands of USD) | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $63,108 | $67,382 | | Cost of Revenue | 45,736 | 51,201 | | Gross Margin | 17,372 | 16,181 | | Sales and Marketing | 5,325 | 8,772 | | Operations | 4,182 | 4,766 | | Technology and Development | 917 | 2,266 | | Depreciation and Amortization | 1,015 | 1,013 | | Interest Expense, Net | 488 | 373 | | Gain (Loss) on Fair Value Instruments | 261 | 316 | | Net Loss and Comprehensive Loss | $(5,313) | $(15,393) | | Net Loss and Comprehensive Loss Attributable to Inspirato Incorporated | $(5,313) | $(8,707) | | Basic and Diluted Net Loss Per Class A Share Attributable to Inspirato Incorporated | $(0.42) | $(2.33) | Condensed Consolidated Balance Sheets As of June 30, 2025, Inspirato's total assets were $252.6 million, down from $273.9 million on December 31, 2024, with corresponding reductions in total liabilities and total equity (deficit) Condensed Consolidated Balance Sheets (Thousands of USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | $16,724 | $21,845 | | Restricted Cash | 13,045 | 13,160 | | Total Current Assets | 50,599 | 58,383 | | Operating Lease Right-of-Use Assets | 165,546 | 175,228 | | Goodwill | 21,233 | 21,233 | | Property and Equipment, Net | 10,828 | 14,079 | | Total Assets | $252,642 | $273,885 | | Liabilities | | | | Total Current Liabilities | 193,258 | 211,856 | | Deferred Revenue, Noncurrent | 38,752 | 36,147 | | Operating Lease Liabilities, Noncurrent | 123,876 | 130,239 | | Convertible Notes | 23,225 | 22,336 | | Total Liabilities | 382,338 | 403,737 | | Equity (Deficit) | | | | Accumulated Deficit | (294,867) | (291,176) | | Total Equity (Deficit) | (129,696) | (129,852) | | Total Liabilities and Equity (Deficit) | $252,642 | $273,885 | Condensed Consolidated Statements of Cash Flows In Q2 2025, Inspirato generated $1.082 million in net cash from operating activities, a turnaround from a net outflow in the prior year, with investing activities remaining a net outflow and financing activities a net inflow Q2 2025 Condensed Consolidated Statements of Cash Flows (Thousands of USD) | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $1,082 | $(1,767) | | Net Cash Used in Investing Activities | $(834) | $(2,024) | | Net Cash Provided by (Used in) Financing Activities | $58 | $(14) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $306 | $(3,805) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $29,769 | $29,481 | Non-GAAP Reconciliations This section provides reconciliations of Inspirato's non-GAAP financial measures, specifically Adjusted EBITDA and Free Cash Flow, to their most directly comparable GAAP measures Reconciliation of Net Loss to Adjusted EBITDA In Q2 2025, Inspirato's Adjusted EBITDA was negative $0.329 million, a significant improvement from negative $9.156 million in the prior year, with Adjusted EBITDA Margin improving from negative 13.6% to negative 0.5% Reconciliation of Net Loss to Adjusted EBITDA (Thousands of USD) | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss and Comprehensive Loss | $(5,313) | $(15,393) | | Interest Expense, Net | 488 | 373 | | Income Tax Expense | 87 | 56 | | Depreciation and Amortization | 2,277 | 2,820 | | Stock-Based Compensation | 714 | 2,672 | | Gain (Loss) on Fair Value Instruments | 261 | 316 | | Asset Impairment | 386 | — | | Transaction Costs | 771 | — | | Adjusted EBITDA | $(329) | $(9,156) | | Adjusted EBITDA Margin | (0.5)% | (13.6)% | Reconciliation of Free Cash Flow In Q2 2025, Inspirato achieved $0.248 million in free cash flow, a significant improvement from negative $3.791 million in the prior year, primarily driven by positive cash flow from operating activities Reconciliation of Free Cash Flow (Thousands of USD) | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $1,082 | $(1,767) | | Capitalized Software Development for Internal Use | (632) | (1,904) | | Purchases of Property and Equipment | (202) | (120) | | Free Cash Flow | $248 | $(3,791) | Company Information & Disclosures This section provides essential company information, including an overview of Inspirato, forward-looking statements, important information for stockholders regarding the merger, and contact details About Inspirato Inspirato is a luxury travel club and property technology company offering curated vacation options through an innovative model, ensuring service, certainty, and value across exclusive homes, five-star hotels, and custom experiences - Inspirato (Nasdaq: ISPO) is a luxury travel club and property technology company offering curated vacation options[34] - Its portfolio includes exclusive luxury vacation homes, accommodations at five-star hotel and resort partners, and custom travel experiences[34] Forward-Looking Statements This press release contains forward-looking statements involving significant risks and uncertainties, where actual results may differ materially from expectations, and investors should exercise caution - This press release contains forward-looking statements regarding future financial performance, business, the combination with Buyerlink, strategic and operational initiatives and results, but actual results may differ materially due to various risks and uncertainties[35] - Risks and uncertainties include the Capital One partnership, ability to service debt, ability to complete the Buyerlink transaction, management team changes, Nasdaq listing compliance, strategic shifts, market acceptance, competition, employee retention, changing consumer preferences, brand maintenance, natural disaster impacts, capital requirements, cash flow generation, liquidity impacts, and other strategic alternatives[35][41] - The company undertakes no obligation to publicly revise any forward-looking statements, except as required by law[39] Important Information for Stockholders This communication may be deemed soliciting material for the proposed Inspirato-Buyerlink merger, and stockholders should carefully review the preliminary proxy statement and any amendments filed with the SEC for important information - This communication may be deemed soliciting material for the proposed Inspirato-Buyerlink merger, with relevant information available in Inspirato's preliminary proxy statement filed with the SEC on July 31, 2025[42] - Inspirato stockholders should carefully read the definitive proxy statement and other documents filed with the SEC, as they will contain important information and are available for free on the SEC's website[42] - Inspirato, Buyerlink, and their directors, executive officers, and other management members may be deemed participants in the solicitation of proxies for the merger, with information on their interests included in the definitive proxy statement[43] Investor and Media Contacts Contact information for Inspirato's investor relations and media relations is provided via email - Investor Relations contact: ir@inspirato.com[44] - Media Relations contact: communications@inspirato.com[44]