Financial Data and Key Metrics Changes - For Q4 2023, total revenue was $71 million, a decrease of 18% year-over-year, primarily due to declines in both subscription and travel revenue [25][58] - Full year gross margin was $54 million, or 17% of revenue, compared to $116 million, or 34% of revenue in 2022 [31][63] - Adjusted EBITDA loss for 2023 was $29 million, slightly better than the previous guidance range of a loss between $30 million and $45 million [33][66] Business Line Data and Key Metrics Changes - Subscription revenue declined due to a decrease in both Pass and Club subscriptions, with 13,800 active subscriptions at year-end, consisting of approximately 2,500 Pass and 11,300 Club subscriptions [26][62] - Total nights delivered in Q4 2023 was approximately 41,000 with a residence occupancy of 65%, down from 47,000 nights and 73% occupancy in Q4 2022 [28][61] - Average Daily Rates (ADRs) were approximately $1,700 in Q4 2023, down from approximately $1,900 in Q4 2022, attributed to lowered rates [28][62] Market Data and Key Metrics Changes - Travel revenue accounted for approximately 65% of total revenue in 2024, compared to less than 60% in 2023 [70] - The company expects a decrease in Pass subscriptions in 2024, similar to the decline seen in 2023, which will create a subscription revenue headwind of nearly $30 million [36][67] - Residence occupancy decreased to 72% in 2023 from 81% in 2022, primarily due to increased availability [61] Company Strategy and Development Direction - The company aims to simplify its offerings and return to its roots as a travel club, focusing on member engagement and community [21][55] - In 2024, the focus will shift towards product offerings and customer acquisition strategies, with an emphasis on improving the Inspirato Pass [10][20] - The company plans to manage Pass memberships in conjunction with overall inventory to enhance profitability [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching breakeven on adjusted EBITDA in 2024, with total revenue expected between $275 million and $305 million [34][36] - The company has streamlined its cost structure, expecting approximately $30 million in lease expense savings compared to 2023 [38][94] - Management highlighted the importance of improving member engagement and operational efficiencies to drive future growth [48][51] Other Important Information - The company ended 2023 with a cash balance of approximately $42 million, indicating a slowdown in quarterly cash burn [66] - Inspirato for Good sold over 3,000 travel memberships in 2023, which are not included in subscription counts but are seen as potential future members [27] Q&A Session Summary Question: What does the new path for Pass look like? - Management indicated that changes to Pass aim to provide significant benefits to Pass holders while streamlining the product by removing non-profitable features [73][84] Question: Update on gross margin impairments related to leases? - Management confirmed that impairments related to leases were approximately $6 million in Q4 and about $40 million for the full year, with expectations of no large impairments going forward [75][106] Question: When will the Capital One partnership start showing results? - Management expects to be operational in the first phase of the partnership in the second half of 2024, with initial data points anticipated in Q3 [46][87]
Inspirato rporated(ISPO) - 2023 Q4 - Earnings Call Transcript