Inspirato (ISPO) Q4 2024 Earnings Call February 25, 2025 11:00 AM ET Company Participants Kyle Sourk - Vice President FP&A & Investor RelationsPayam Zamani - Chief Executive Officer and Chairman of the BoardMichael Arthur - CFORommel Dionisio - Head of Research Conference Call Participants Mike Grondahl - Senior Research Analyst Operator Good day and thank you for standing by. Welcome to the Inspirato Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in a listen ...

Financial Data and Key Metrics Changes - Total company revenue and adjusted OIBDA grew 41% respectively [8] - Recorded music revenue grew 4% and music publishing revenue grew 7% [8] - In Q1, total revenue declined 4% and adjusted OIBDA declined 18% with a margin of 21.8%, a decrease of 390 basis points over the prior year quarter [20][21] - On an adjusted basis, total revenue grew 4%, adjusted OIBDA increased 1%, and margin decreased 80 basis points due to revenue mix and operational FX headwinds [21] Business Line Data and Key Metrics Changes - Recorded music revenue decreased 6% but grew 4% on an adjusted basis [22] - Subscription streaming grew 7%, reflecting expected deceleration from prior year price increases [22] - Ad-supported streaming declined by 7% due to timing of deal renewals and content delivery [22] - Physical revenue increased 8% due to strong new releases in the U.S. [22] - Music Publishing total revenue increased 7%, with digital and streaming both increasing by 6% and 7% respectively [25] Market Data and Key Metrics Changes - Atlantic, one of the flagship labels, increased its market share by 0.5 percentage points in the U.S. over the prior year quarter [12] - Warner Chappell landed at number two on Billboard's year-end HOT 100 publishing chart [12] Company Strategy and Development Direction - The company aims to increase market share, grow the overall value of music, and enhance operational efficiency [9][10] - Recent acquisitions and partnerships, such as with Tempo Music and local players like Skillbox in India, are part of the strategy to grow global market share [11][17] - The company is focused on collaborative innovation with DSPs to expand the music ecosystem [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future despite temporary macro trends affecting the industry and global economy [8] - The company anticipates high single-digit subscription streaming growth for the fiscal year [29] - Management noted that the music industry remains healthy and resilient, with new DSP deals focused on improved monetization [29] Other Important Information - The company announced the acquisition of a controlling interest in Tempo Music, which includes premium music rights to songs recorded by various artists [17][18] - Operating cash flow increased 13% to $332 million from $293 million in the prior year quarter [27] Q&A Session Summary Question: Comments on the new Spotify deal and its impact on revenue growth - Management highlighted a three-pronged strategy focusing on increasing market share, growing the overall value of music, and enhancing efficiency [34] - The new deal with Spotify is seen as a positive step towards achieving these goals [35] Question: Clarification on foreign exchange impacts - Management clarified that the foreign exchange impact is due to 58% of revenue being in non-U.S. dollar currencies, leading to in-period exposure affecting OIBDA [37] Question: Insights on new fan experiences and product offerings - Management indicated that not all partners need to be aligned for new product offerings to roll out, allowing for flexibility in innovation [42] Question: Expectations for ad-supported revenue and emerging platform deals - Management expects stabilization in ad-supported revenue over time, though it remains macro-driven [51] - No new announcements regarding emerging platform deals were made during the quarter [50] Question: Discussion on superfan monetization and subscription streaming trends - Management acknowledged the untapped potential in superfan monetization and is exploring various strategies to engage this segment [78] - Subscription streaming growth is primarily driven by subscriber growth and volume, with pricing expected to improve over time [80]

Financial Data and Key Metrics Changes - Net income for Q4 2024 was $111 million or $11.56 per share, compared to $80 million or $8.38 per share for Q4 2023, indicating a significant increase [3] - Full year net income for 2024 was $462 million or $48.22 per share, compared to $389 million or $40.44 per share for 2023, showing a strong year-over-year growth [3] Business Line Data and Key Metrics Changes - Petroleum additives sales for Q4 2024 were $626 million, down from $642 million in Q4 2023, while operating profit increased to $136 million from $110 million due to lower operating costs [4] - For the full year 2024, Petroleum Additives sales were $2.6 billion, down from $2.7 billion in 2023, but operating profit rose to $592 million from $514 million, driven by efficiency efforts and lower raw material costs [5] - Specialty Materials sales were $27 million for Q4 2024 and $141 million for the full year, with operating profit of $1.5 million for Q4 and $17.5 million for the full year, surpassing pre-acquisition expectations [7] Market Data and Key Metrics Changes - Shipments in the Petroleum Additives segment were flat year-over-year, with a small increase in lubricant additives offset by a decline in fuel additives [5] - The company faced challenges from an ongoing inflationary environment, impacting operational costs despite efficiency improvements [6] Company Strategy and Development Direction - The company completed the acquisition of American Pacific Corporation on January 16, 2024, enhancing its Specialty Materials segment with critical performance additives for space and military applications [6] - The company is focused on long-term value creation for shareholders and customers, emphasizing a safety-first culture, customer-focused solutions, and technology-driven products [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued strength in the Petroleum Additives and Specialty Materials segments moving into 2025 and beyond [8] - The company is committed to optimizing inventory levels and improving portfolio profitability while investing in technology to meet customer needs [6] Other Important Information - The company generated solid cash flows throughout the year and made significant payments on its revolving credit facility, returning $128 million to shareholders through dividends and share repurchases [7] - As of December 31, 2024, the net debt to EBITDA ratio improved to 1.2 from 1.9 at the end of Q1 [7] Q&A Session Summary - No specific questions or answers were documented in the provided content, as the call concluded with an invitation for questions via email or phone [10]