Financial Data and Key Metrics - Q1 total revenue was $80 million, a 12% decrease year-over-year, largely in line with internal expectations [42] - Subscription revenue decreased 23% year-over-year, driven by a decrease in Pass and Club subscriptions [42] - Travel revenue decreased 10% year-over-year, primarily due to fewer members, not travel behavior [43] - Adjusted EBITDA improved to a gain of $4.1 million, compared to a loss of $3.1 million in Q1 2023, marking the first profitable quarter in over three years [37][47] - Gross margin expanded to 40% in Q1, up from 35% in Q1 2023, driven by lease expense savings and portfolio optimization [46] - Cash burn improved to $9 million in Q1, down from over $20 million in Q1 2023 [24] Business Line Performance - Pass nights represented 30% of total nights delivered, down from 40% in previous quarters, reflecting a shift toward a more sustainable and profitable travel mix [15] - Flex Trips, introduced in mid-February, accounted for over 800 reservations and 25% of all Pass trips booked, with 80% of Flex Trips being first stays within 60 days [14][73] - Pass subscriptions decreased by approximately 350 year-over-year, but Pass nights delivered per member and reservations per member remained steady, indicating improved profitability [39] - Club subscriptions decreased by 11% year-over-year, with a focus on selling longer-term contracts to improve retention [19] Market and Occupancy Data - Total residence occupancy improved to 80% in Q1, up from 77% a year ago, with ADR down nearly 10% [45] - Leased hotel room occupancy improved to 73%, compared to 71% a year ago, with flat ADRs [45] - Paid nights delivered as a percentage of total nights delivered reached 63%, the highest level since Q1 2022 [43] Strategic Direction and Industry Competition - The company is focusing on operational efficiency, cost structure improvements, and portfolio optimization to drive sustainable, profitable growth [13][40] - Efforts to reengage members and refine product offerings, such as Flex Trips and Inspirato rewards, are aimed at increasing travel revenue per member and improving retention [16][43] - The company is deemphasizing short-term memberships and focusing on multiyear relationships for both new and existing members to solidify its core customer base [57] - Partnerships, such as with Capital One, are expected to drive mid-to-long-term growth, with technical integration on track for the back half of 2024 [61][76] Management Commentary on Operating Environment and Future Outlook - Management reaffirmed 2024 guidance, with total revenue expected between $275 million and $305 million, adjusted EBITDA between a gain of $5 million and a loss of $15 million, and cash operating expenses between $115 million and $125 million [18] - The company expects stronger free cash flow performance in Q2, with lower cash burn despite lower revenue and EBITDA compared to Q1 [24] - Management highlighted the importance of seasonality in revenue, adjusted EBITDA, and free cash flow, with Q1 being a strong quarter due to travel delivery [48] - The company is exploring financing options to bolster liquidity, with $33 million in cash at the end of Q1, down from $42 million at year-end 2023 [49] Other Important Information - The company achieved $50 million in OpEx efficiencies over the past several quarters, which will help position it for profitable growth in 2024 and beyond [31] - Inspirato-only experiences, such as safaris and golf excursions, continue to be popular, with nearly all 2025 trips selling out within days [44] - The company is focused on improving member engagement and nights per member, with 50% of members already having some status in the rewards program launched last fall [70] Q&A Session Summary Question: What is the upper bound on residence occupancy rates? - Management believes there is room for a few more percentage points of improvement, balancing availability for members with optimization of occupancy rates [26][51] Question: How has the introduction of Flex Trips altered the economics of Pass? - Flex Trips have improved the profitability of Pass by catering to last-minute travelers and reducing excess inventory, with 25% of Pass trips booked being Flex Trips [29][73] Question: When can we expect subscriber churn to plateau and growth to return? - Management expects churn to stabilize as the company focuses on operational efficiency and long-term member retention, with growth expected to return in 2025 [31][76] Question: What are the top priorities for the rest of the year? - Priorities include improving occupancy levels, driving member engagement, and achieving breakeven for the year, while exploring financing options to strengthen the balance sheet [66][85] Question: What measures are being taken to drive better bookings? - Measures include lowering ADRs, leveraging the semi-annual sale, and enhancing the rewards program to encourage more frequent travel [88][89]
Inspirato rporated(ISPO) - 2024 Q1 - Earnings Call Transcript