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Inspirato Announces First Quarter 2024 Results; Improved Occupancy Rates Contribute to Margin Expansion and Quarterly Profits

DENVER, May 07, 2024 (GLOBE NEWSWIRE) — Inspirato Incorporated (“Inspirato” or the “Company”) (NASDAQ: ISPO), the innovative luxury travel club, today announced its 2024 first quarter financial and operating results.

Except as otherwise stated, all financial results discussed below are presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. As supplemental information, we have provided certain additional non-GAAP financial measures in this press release’s supplemental tables, and such supplemental tables include a reconciliation of these non-GAAP measures to our GAAP results. The sum of individual metrics and percent changes may not always equal total amounts indicated due to rounding.

2024 First Quarter Highlights:

Management Commentary

“I’m pleased with our first quarter results and believe they reflect our ability to successfully execute the early stages of our strategic plan,” commented Chief Executive Officer, Eric Grosse. “Recent Pass improvements, when combined with our continued efforts across Inspirato’s broader product portfolio, have us well-positioned for continued success. As we continue to focus on our near and medium-term objectives, I am confident we will be able to achieve our long-term growth and profitability goals.”

Chief Financial Officer, Robert Kaiden, added, “For the past year, we have been focused on improving our operating efficiency by optimizing our portfolio and improving our travel mix. In the first quarter, we began to realize the benefits of these efforts, as evidenced by a meaningful reduction in our lease expenses and our highest paid residence occupancy in two years. Importantly, these efforts also contributed to generating profits for the first time in more than three years. While we expect a mix of adjusted EBITDA income and loss in future periods due to the seasonality of our business, I’m pleased with our trajectory and results in the first quarter.”

2024 Guidance

The Company reaffirms its previously provided 2024 guidance ranges for total revenue between $275 million and $305 million, adjusted EBITDA between a gain of $5 million and loss of $15 million and cash operating expenses between $115 million and $125 million. Cash at quarter end was $33 million compared to $42 million at year-end. The Company is aiming to improve its free cash flow profile and liquidity position through a combination of operational initiatives and potential financing options.

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause Inspirato’s actual results to differ materially from these forward-looking statements.

Forward-looking adjusted EBITDA is a forward-looking non-GAAP financial measure. The Company is unable to reconcile forward-looking adjusted EBITDA to net income, its most directly comparable forward-looking GAAP financial measure, without unreasonable effort, as a result of the uncertainty regarding, and the potential variability of, reconciling items such as equity-based compensation expense. However, it is important to note that material changes to reconciling items could have a significant effect on Inspirato’s future GAAP results.

2024 First Quarter Financial Results and Operational Metrics

The following table provides the components of gross margin for the three months ended March 31, 2024 and 2023:

(Unaudited, in millions)      2024      2023      % Change
Travel revenue   $ 49.7   $ 55.1   (9.9 ) %
Subscription revenue     28.1     36.5   (23.1 ) %
Rewards and other revenue     2.5     0.1   n/m  
Total revenue     80.2     91.7   (12.4 ) %
Cost of revenue     48.5     60.1   (19.2 ) %
Gross margin   $ 31.7   $ 31.6   0.2   %
Gross margin (%)     40 %     35 %   5   pp
n/m = not meaningful                    
pp = percentage points                    

The following table provides a breakdown of Nights Delivered, Occupancy and ADR for the three months ended March 31, 2024 and 2023:

  Three Months Ended March 31, 
  2024   2023
Residences                  
Paid Nights Delivered   17,200         17,200    
Total Nights Delivered   26,000         29,900    
Occupancy   80   %     77   %
ADR $ 1,965       $ 2,152    
                   
Hotels                  
Paid Nights Delivered (1)   8,800         10,800    
Total Nights Delivered (1)   15,300         20,800    
Occupancy (2)   73   %     71   %
ADR (2) $ 1,053       $ 1,055    
                   
Total                  
Paid Nights Delivered (1)   26,000         28,100    
Total Nights Delivered (1)   41,300         50,700    
Occupancy (2)   78   %     75   %
ADR (2) $ 1,655       $ 1,728    
  (1) Includes net rate hotel nights.
  (2) Excludes net rate hotel nights as we purchase individual nights but do not have a total number of nights obligation.


Reconciliation of Non- GAAP Financial Measures

In addition to Inspirato’s results determined in accordance with GAAP, Inspirato uses Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as part of its overall assessment of performance, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies and to communicate with its Board concerning our business and financial performance. Inspirato believes that these non-GAAP financial measures provide useful information to investors about its business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by its management in their financial and operational decision making. Inspirato is presenting these non-GAAP financial measures to assist investors in seeing its business and financial performance through the eyes of management, and because we believe that these non-GAAP financial measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry.

There are limitations related to the use of these non-GAAP financial measures, including that they exclude significant expenses that are required by GAAP to be recorded in Inspirato’s financial measures. Other companies may calculate non-GAAP financial measures differently or may use other measures to calculate their financial performance, and therefore, our non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies. Thus, these non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any measures derived in accordance with GAAP.

Inspirato provides a reconciliation of Adjusted Net Loss, Adjusted EBITDA, Adjusted EBTIDA Margin and Free Cash Flow to their respective related GAAP financial measures. Inspirato encourages investors and others to review our business, results of operations, and financial information in its entirety, not to rely on any single financial measure, and to view Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in conjunction with their respective related GAAP financial measures.

Adjusted Net Loss. Adjusted Net Loss is a non-GAAP financial measure that Inspirato defines as net income (loss) and comprehensive income (loss) less fair value gains and losses on financial instruments and asset impairments.

The above items are excluded from Inspirato’s Adjusted Net Loss measure because management believes that these costs and expenses are not indicative of core operating performance and do not reflect the underlying economics of Inspirato’s business.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that Inspirato defines as net income (loss) and comprehensive income (loss) less interest, income taxes, depreciation and amortization, equity-based compensation expense, and fair value gains and losses on financial instruments. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of total revenue for the same period.

The above items are excluded from Inspirato’s Adjusted EBITDA measure because management believes that these costs and expenses are not indicative of core operating performance and do not reflect the underlying economics of Inspirato’s business.

Free Cash Flow. Inspirato defines Free Cash Flow as net cash provided by (used in) operating activities less purchases of property and equipment and development of internal-use software. Inspirato believes that Free Cash Flow is a meaningful indicator of liquidity that provides information to management and investors about the amount of cash generated from operations, after purchases of property and equipment and development of internal-use software, that can be used for strategic initiatives, if any.

See below for reconciliations of non-GAAP financial measures.

Key Business and Other Operating Metrics

Inspirato uses a number of operating and financial metrics, including the following key business metrics, to evaluate its business, measure its performance, identify trends affecting its business, formulate financial projections and business plans, and make strategic decisions. Inspirato regularly reviews and may adjust processes for calculating its internal metrics to improve their accuracy.

Active Subscriptions. Inspirato uses Active Subscriptions to assess the adoption of its subscription offerings, which is a key factor in assessing penetration of the market in which it operates and a key driver of revenue. Inspirato defines Active Subscriptions as subscriptions as of the measurement date that are paid in full, as well as those for which Inspirato expects payment for renewal.

Average Daily Rates (“ADR”) and Total Occupancy. Inspirato defines ADR as the total paid travel revenue, divided by total paid nights, which includes Inspirato for Good (“IFG”) and Inspirato for Business (“IFB”), in both leased residences or hotel rooms and suites. ADR does not include Pass nights utilized. Occupancy is defined as all paid, Pass, IFG, IFB, employee and complimentary nights in all at-risk properties divided by the total number of at-risk nights available. Net-rate hotel partners are excluded from Hotel Occupancy as these are dependent on the hotel having capacity for Inspirato requests.

 
Inspirato Incorporated
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(in thousands, except per share data)
 
  Three Months Ended March 31, 
  2024      2023
Revenue $ 80,245     $ 91,700  
Cost of revenue (including depreciation of $1,289 in 2024 and $927 in 2023)   48,524       60,056  
Gross margin   31,721       31,644  
General and administrative (including depreciation of $338 in 2024 and $0 in 2023)   14,649       17,907  
Sales and marketing   8,726       6,710  
Operations   7,023       8,296  
Technology and development   2,050       3,407  
Depreciation and amortization   1,001       979  
Interest, net   323       (113 )
(Gain) loss on fair value instruments   (4,149 )     104  
Other (income) expense, net   (295 )     57  
Income (loss) and comprehensive income (loss) before income taxes   2,393       (5,703 )
Income tax expense   144       200  
Net income (loss) and comprehensive income (loss)   2,249       (5,903 )
Net (income) loss and comprehensive (income) loss attributable to noncontrolling interests   (986 )     3,007  
Net income (loss) and comprehensive income (loss) attributable to Inspirato Incorporated $ 1,263     $ (2,896 )
           
Income (Loss) Attributable to Inspirato Incorporated per Class A Share          
Basic net income (loss) attributable to Inspirato Incorporated per Class A share $ 0.35     $ (0.90 )
Diluted net loss attributable to Inspirato Incorporated per Class A share $ (0.18 )   $ (0.90 )
 
Inspirato Incorporated
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except par value)
 
  March 31,    December 31, 
  2024     2023
Assets            
Current assets            
Cash and cash equivalents $ 22,626     $ 36,566  
Restricted cash   10,660       5,700  
Accounts receivable, net   2,238       3,306  
Accounts receivable, net – related parties   1,040       842  
Prepaid member travel   18,840       20,547  
Prepaid expenses   4,338       6,135  
Other current assets   1,772       1,744  
Total current assets   61,514       74,840  
Property and equipment, net   18,482       19,504  
Goodwill   21,233       21,233  
Right-of-use assets   206,822       209,702  
Other noncurrent assets   4,993       5,448  
Total assets $ 313,044     $ 330,727  
           
Liabilities            
Current liabilities            
Accounts payable and accrued liabilities $ 21,846     $ 22,748  
Deferred revenue   142,821       160,493  
Lease liabilities   62,946       61,953  
Total current liabilities   227,613       245,194  
Deferred revenue, noncurrent   20,057       17,026  
Lease liabilities, noncurrent   192,177       196,875  
Convertible note   20,176       23,854  
Other noncurrent liabilities   2,868       2,476  
Total liabilities   462,891       485,425  
           
Commitments and contingencies          
           
Equity (Deficit)          
Class A common stock, par value $0.0001 per share, 50,000 shares authorized, 3,676 and 3,537 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   7       7  
Class B common stock, par value $0.0001 per share, 5,000 shares authorized, no shares issued or outstanding as of March 31, 2024 and December 31, 2023          
Class V common stock, $0.0001 par value, 25,000 shares authorized, 2,871 and 2,907 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   6       6  
Preferred stock, par value $0.0001 per share, 5,000 shares authorized, no shares issued or outstanding as of March 31, 2024 and December 31, 2023          
Additional paid-in capital   257,038       255,527  
Accumulated deficit   (284,519 )     (285,782 )
Total equity (deficit) excluding noncontrolling interest   (27,468 )     (30,242 )
Noncontrolling interests   (122,379 )     (124,456 )
Total equity (deficit)   (149,847 )     (154,698 )
Total liabilities and equity (deficit) $ 313,044     $ 330,727  
 
Inspirato Incorporated
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
  Three Months Ended March 31, 
  2024      2023
Cash flows from operating activities:            
Net income (loss) $ 2,249     $ (5,903 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization   2,628       1,906  
Loss on disposal of fixed assets   129       46  
(Gain) loss on fair value instruments   (4,149 )     104  
Paid-in-kind interest included in net income   510        
Equity-based compensation   2,878       657  
Amortization of right-of-use assets   14,096       25,456  
Changes in operating assets and liabilities:          
Accounts receivable, net   1,068       (3,086 )
Accounts receivable, net – related parties   (198 )     297  
Prepaid member travel   1,707       (5,090 )
Prepaid expenses   1,797       (208 )
Other assets   153       (590 )
Accounts payable and accrued liabilities   (861 )     (2,826 )
Deferred revenue   (14,641 )     (3,772 )
Lease liabilities   (14,921 )     (24,578 )
Other liabilities   353        
Net cash used in operating activities   (7,202 )     (17,587 )
           
Cash flows from investing activities:          
Development of internal-use software   (236 )     (1,932 )
Purchase of property and equipment   (1,266 )     (1,277 )
Net cash used in investing activities   (1,502 )     (3,209 )
            
Cash flows from financing activities:          
Payments of employee taxes for share based awards   (276 )     (718 )
Proceeds from option exercises         1,156  
Net cash (used in) provided by financing activities   (276 )     438  
           
Net decrease in cash, cash equivalents and restricted cash   (8,980 )     (20,358 )
Cash, cash equivalents and restricted cash – beginning of period   42,266       81,939  
Cash, cash equivalents and restricted cash – end of period $ 33,286     $ 61,581  
 
Reconciliation of Net Income (Loss) to Adjusted Net Loss (Unaudited)
    Three Months Ended March 31, 
(in thousands)   2024   2023
Net income (loss) and comprehensive income (loss)   $ 2,249     $ (5,903 )
(Gain) loss on fair value instruments     (4,149 )     104  
Adjusted Net Loss   $ (1,900 )   $ (5,799 )
                 
Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)
    Three Months Ended March 31, 
(in thousands, other than percentages)      2024   2023
Net income (loss) and comprehensive income (loss)   $ 2,249       $ (5,903 )  
Interest, net     323         (113 )  
Income tax expense     144         200    
Depreciation and amortization     2,628         1,906    
Equity-based compensation     2,878         657    
(Gain) loss on fair value instruments     (4,149 )       104    
Adjusted EBITDA   $ 4,073       $ (3,149 )  
Adjusted EBITDA Margin     5.1   %       (3.4 ) %
 
Reconciliation of Free Cash Flow (Unaudited)
    Three Months Ended March 31, 
(in thousands)      2024   2023
Net cash used in operating activities   $ (7,202 )   $ (17,587 )
Development of internal-use software     (236 )     (1,932 )
Purchase of property and equipment     (1,266 )     (1,277 )
Free Cash Flow   $ (8,704 )   $ (20,796 )


2024 First Quarter Earnings Call and Webcast

The Company invites you to join Eric Grosse, Chief Executive Officer, and Robert Kaiden, Chief Financial Officer, for a conference call on Wednesday, May 8 to discuss its 2024 first quarter operating and financial results.

To listen to the audio webcast and Q&A, please visit the Inspirato Investor Relations website at https://investor.inspirato.com. An audio replay of the webcast will be available on the Inspirato Investor Relations website shortly after the call.

Conference Call and Webcast:

Date/Time: Wednesday, May 8, 2024 at 9am MT
Webcast: https://edge.media-server.com/mmc/p/hz3nbn4n

About Inspirato

Inspirato (NASDAQ: ISPO) is a luxury travel subscription company that provides exclusive access to a managed and controlled portfolio of curated vacation options, delivered through an innovative model designed to ensure the service, certainty, and value that discerning customers demand. The Inspirato portfolio includes branded luxury vacation homes, accommodations at five-star hotel and resort partners, and custom travel experiences. For more information, visit www.inspirato.com and follow @inspirato on Instagram, Facebook, X, and LinkedIn. 

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Our forward-looking statements include, but are not limited to, statements regarding our and our management team’s hopes, beliefs, intentions or strategies regarding the future or our future events or our future financial or operating performance. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would”, “guidance” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release may include, for example, statements about: future financial performance (particularly in “2024 Guidance”), and future business, strategic and operational initiatives and results. These forward-looking statements are subject to numerous risks and uncertainties and actual results may differ materially from those expressed in or implied by the forward-looking statements. These risks and uncertainties may relate to, among other things:

We caution you that the foregoing list does not contain all of the forward-looking statements made in this press release. Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievements. Actual results are subject to numerous risks and uncertainties, including those related to the factors described above and as detailed in Part I, Item 1A of our most recent Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”), those discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of this Form 10-Q and in Part II, Item 7 of our Form 10-K and those discussed in other documents we file with the SEC.

Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievements. We do not assume responsibility for the accuracy and completeness of any forward-looking statements. We assume no responsibility for updating forward-looking information contained or incorporated by reference herein or in any documents we file with the SEC, except as required by law.

Should one or more of the risks or uncertainties described herein or in any other documents we file with the SEC occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

Investors should consider the risks and uncertainties described herein and should not place undue reliance on any forward-looking statements. We do not undertake, and specifically disclaim, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this press release and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

Contacts:

Investor Relations:
ir@inspirato.com

Media Relations:
communications@inspirato.com


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