Soho House & (US:SHCO)2021-11-17 18:55Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $180 million, representing a 57% increase compared to Q3 2020 [33] - Membership revenue reached $51 million, accounting for just under 30% of total revenue [33] - Adjusted EBITDA turned positive at $9 million, a significant improvement from the previous quarter [39] Business Line Data and Key Metrics Changes - Membership increased by 16,700 in the quarter, reaching a total of 145,000, which is 20% above 2019 levels [16] - In-house revenues grew by 120% compared to Q3 2020, with accommodation occupancy rates increasing to just below 70% [18] - Soho Home saw online sales surge by 116%, with an average order value increasing over 120% year-on-year [28] Market Data and Key Metrics Changes - The UK market was trading approximately 10% above 2019 levels, while North America was 10% to 15% below, and Europe lagged around 20% behind [35] - The waitlist for memberships grew to just under 68,000 globally, indicating strong demand [9] Company Strategy and Development Direction - The company plans to open 5 to 7 new Soho Houses annually, with a focus on expanding global membership [22] - New membership types, including Soho Friends and Soho Works, are being launched to enhance offerings [23] - The company is committed to a global efficiency program to improve operational performance [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from rising inflation, supply chain issues, and labor shortages but noted limited operational impact [8] - The strength of the waitlist and membership applications supports future growth [42] - Management expressed confidence in the ongoing recovery of the business despite uncertainties related to COVID-19 [42] Other Important Information - The company has launched an ESG program, House Foundations, aimed at building an inclusive culture and supporting young people from underrepresented backgrounds [44] - Membership credits issued during the pandemic were redeemed at a face value of $21 million, impacting financials but not included in revenue numbers [21] Q&A Session Summary Question: Changes in spending and visitation post-membership credits expiration - Management reported that visitation has returned strongly in October and November, with members eager to return to houses [51] Question: Impact of labor shortages on member experience - Management indicated that while labor shortages exist, they have not significantly harmed member experience due to proactive measures and increased wages [55][57] Question: Insights on Austin's performance and learnings for Nashville - Austin has seen rapid membership growth and strong occupancy, with Nashville expected to benefit from pre-opening activities and a strong waitlist [60] Question: Pricing power and guest behavior in the inflationary environment - Management confirmed price increases of 5% to 10% on food and beverage, with room rates up to 30%, while noting that members are understanding of these changes [66][70] Question: Long-term margin targets and investments - Management remains confident in long-term margin goals, citing strong membership retention and growth in recurring revenue [77] Question: Update on the Line acquisition and future acquisitions - The Line continues to perform well, contributing positively to EBITDA, with future acquisitions being opportunistic rather than a primary strategy [90] Question: Expectations for waitlist changes with new house openings - Management expects the waitlist to remain strong even with new openings, as demand for memberships continues to grow [94]