Inspirato rporated(ISPO) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $93 million, representing a 44% year-over-year increase and an 11% sequential increase [24] - Subscription revenue reached $39 million, up from $53 million compared to Q3 2021, driven by a 60% year-over-year increase in Inspirato Pass subscriptions, totaling over 3,800 [25] - Travel revenue for the quarter was $55 million, a 38% increase from Q3 2021, with total nights delivered growing by 25% year-over-year to a record 51,000 nights [26] - Gross margin for the quarter was $30 million, or 32% of revenue, down from 35% in Q3 2021, impacted by the integration of new properties [27] - The company reported a net loss of $7.3 million and an adjusted EBITDA loss of $6.8 million, compared to losses of $9.1 million and $4.1 million in Q3 2021 [29] Business Line Data and Key Metrics Changes - Inspirato Pass subscriptions accounted for 24% of total active subscriptions, which ended the quarter at approximately 16,300, compared to 17% a year ago [25] - The company had 726 controlled accommodations as of September 30, an increase of nearly 50% year-over-year and 35% year-to-date [9] Market Data and Key Metrics Changes - The company anticipates full-year 2022 revenue of approximately $340 million and an adjusted EBITDA loss of approximately $35 million, reflecting a reallocation of resources and lower-than-expected subscription sales [11][12] Company Strategy and Development Direction - The company is focusing on growing the supply of accommodations to meet the demands of its growing subscriber base and has strategically entered key markets [10] - There is a shift towards portfolio optimization rather than expansion in 2023, with a goal of returning to positive adjusted EBITDA and achieving over $400 million in revenue [19][20] - New initiatives such as Inspirato for Business and Inspirato for Good are expected to diversify revenue streams and expand the subscriber base [14][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving approximately 45% revenue growth for the year despite rising interest rates and macroeconomic uncertainty [8] - The company is monitoring trends closely and believes it has built an appropriate level of risk into its 2023 guidance [12] - Management noted that the travel demand has softened slightly, but they are optimistic about the diversified revenue streams from new initiatives [62] Other Important Information - The company exited the quarter with approximately $84 million in cash and no outstanding debt, anticipating a year-end cash balance of approximately $80 million [29] - The company has invested in personnel in financial and accounting groups to improve reporting processes following its transition to a public company [23] Q&A Session Summary Question: Focus on Inspirato for Business and Inspirato for Good - Management indicated that about a third of the sales force will be allocated to these new initiatives, which are performing better than expected [33] Question: Marketing for JauntLiving - Management stated that marketing for JauntLiving leverages existing loyal subscribers, with positive responses anticipated [34] Question: Retention for Pass and Club subscribers - Management is monitoring retention closely and plans to provide robust data in early 2023 [35] Question: Impact of equity market downturn on Pass subscriptions - Management acknowledged that the Pass product performs better in stable market conditions and has seen some impact due to current economic uncertainty [38] Question: Revenue guidance breakdown for 2023 - Management did not provide detailed breakdowns but indicated that the mix between travel and subscription revenue would remain similar to current levels [39] Question: Supply roadmap for next year - Management confirmed a focus on delivering a pipeline of 70 contractually committed residences and maintaining occupancy around 80% [42] Question: Growth cadence for next year - Management expects a growth target of just below 20% for 2023, with seasonal variations in revenue [46] Question: Gross margin improvement expectations - Management anticipates gross margins to improve over time, although specific year-over-year forecasts were not provided [47] Question: Free cash flow expectations - Management indicated that Q3 typically sees the largest cash burn, but they expect this to be the bottom in terms of cash consumption [52] Question: Internal controls and accounting issues - Management has focused on improving internal controls and staffing to prevent future issues [55] Question: Portfolio optimization and property utilization - Management confirmed plans to prune the portfolio for better margin optimization [57] Question: Reaching positive EBITDA in 2023 - Management highlighted embedded growth in subscriber count and visibility into booking activity as key levers for achieving positive adjusted EBITDA [60]