Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chairman and CEO Payam Zamani is personally injecting $10 million of new capital into the company in Q3, strengthening liquidity and financial outlook.
- Inspirato Inc (ISPO, Financial) has made significant progress in cash burn reduction, improving by $23 million or 64% in the first half of 2024 compared to the first half of 2023.
- The company has implemented additional cost-cutting measures expected to result in approximately $25 million of annualized savings.
- Inspirato Inc (ISPO) has introduced new offerings like Inspirato by Invited, generating over $4 million in new cash flow since its limited introduction in June.
- The strategic partnership with Capital One is nearing completion, expected to increase brand recognition and drive future growth starting in Q4 2024.
Negative Points
- Inspirato Inc (ISPO) plans to reduce headcount by 15%, which could impact employee morale and operational efficiency.
- Total revenue for the second quarter decreased by 20% year over year, attributed to lower subscription revenue and a decrease in the number of Pass and Club members.
- The company reported an adjusted EBITDA loss of $9.1 million in the second quarter, despite improvements from the previous year.
- Occupancy rates and travel revenue have decreased, with a 12% decline in residents' revenue and fewer nights delivered in hotel revenue.
- Inspirato Inc (ISPO) has removed its 2024 guidance due to leadership changes and renewed cost reduction efforts, creating uncertainty about future performance.
Q & A Highlights
Q: What attracted you to Inspirato, and what is your vision for the company over the next three-plus years?
A: (Payam Zamani, CEO) I've been watching Inspirato for many years and am a big consumer of hotels and other travel options. The subscription model with 12,000 members is extremely interesting. The company has significant revenue but is spending more than it should. My vision is to make the business boring, with no drama, doing the same thing very well, simplifying our product, and focusing on profitability before growth.
Q: What will you focus the sales team on over the next 6 to 12 months?
A: (David Kallery, President) We will primarily focus on selling Club memberships, which are the heart of our offerings. About 80-85% of prospects are attracted to Club, 10% to Pass, and 5% to Invited. We tested Invited last year and found it attractive due to its flat pricing and two-year booking calendar.
Q: Any updated thoughts on the Capital One partnership and its impact on the business?
A: (David Kallery, President) We are very excited about the partnership. The technical work is nearly complete, and we expect to start taking reservations in Q4. Capital One is a prolific company, and we believe this partnership will increase brand recognition, drive demand, and contribute to future growth.
Q: Has there been an increase in the number of underperforming locations in the controlled accommodation portfolio?
A: (Robert Kaiden, CFO) We started optimizing the portfolio in Q2 last year due to oversupply and lower occupancy rates. We continue to refine the portfolio, exiting underperforming properties and replacing them with net rate hotel arrangements. We recently exited 37 units, which will fully drop off the books by March 2025.
Q: Have you considered different pricing models for Club memberships to attract a broader set of consumers?
A: (David Kallery, President) We have been guiding new Club subscribers toward multiyear deals by making them more attractive. The typical new membership is now close to 2.5 years, which we believe will improve our subscriber base and economics over time.
Q: Should we expect seasonality to be consistent with previous years for the rest of the year?
A: (Robert Kaiden, CFO) Yes, you should expect Q3 and Q4 to be stronger quarters than Q2 from a revenue and margin perspective. The year-over-year decline trend will likely continue, but Q3 and Q4 are typically stronger due to seasonality.
Q: Do you expect occupancy rates to improve towards the end of the year?
A: (Robert Kaiden, CFO) Yes, we expect occupancy rates to improve. The units we recently exited were seasonal and had a downward impact on Q2 occupancy. Q2 is generally a weaker quarter due to fewer holidays and less travel, but we anticipate better occupancy in Q3 and Q4.
Q: What are the financial implications of the recent portfolio optimization?
A: (Robert Kaiden, CFO) The recent exit of 37 units will result in lease expenses falling off by March 2025. This optimization is part of our ongoing efforts to align supply with demand and improve profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
