Executive Summary

Q3 2025 showed strong underlying demand but headline results were dampened by $99M of revenue deferrals tied to projects under construction; reported revenue was $1.300B, net income $25M ($0.28), and Adjusted EBITDA to stockholders $245M .
Underlying sales momentum was robust: contract sales rose 16.7% to $907M, with tours up 1.9% and VPG up 14.7% YoY; resort & club remained steady with 69.9% margins .
Management reiterated FY25 Adjusted EBITDA guidance (ex deferrals/recognitions) of $1.125–$1.165B and expects 65–70% EBITDA-to-Adjusted FCF conversion; they plan ~$600M of 2025 capital returns via buybacks (3.3M shares, $150M in Q3; $47M more through Oct 23) .
S&P Global consensus context: Revenue ex reimbursements and EBITDA came in below S&P measures, while adjusted EPS was $0.60; adjusting for deferrals, management’s EBITDA run-rate was ~ $302M, near consensus (see Estimates Context) .
Catalysts: continued HGV Max adoption (surpassed 250k Max members), Bluegreen synergy run-rate at ~$94M (target $100M), $400M ABS at 4.69% WAC and Japan securitization platform to support cash generation and returns .

What Went Well and What Went Wrong

What Went Well

Broad-based sales strength with record pro forma contract sales: $907M (+16.7% YoY), tours +1.9%, VPG +14.7% YoY; double-digit VPG gains across mainland regions, including +10% in Las Vegas .
HGV Max momentum and Bluegreen integration: >250k HGV Max members (+70k TTM), run-rate cost synergies reached $94M (near $100M goal); cross-brand benefits and new AI-powered “My Explorer” chat for members .
Financing optimization and liquidity: completed $400M ABS (WAC 4.69%, 96% advance), executed Japan ABS (¥9.5B at 1.41%), finished Q3 with $215M cash and $632M revolver capacity, and reiterated 65–70% FCF conversion target .

What Went Wrong

Accounting deferrals muted reported results: $99M of VOI sales deferrals and $42M of associated expense deferrals reduced GAAP revenue and Adjusted EBITDA by a net $57M in Q3 .
Margin headwinds from growth investments and incentives: elevated package marketing spend (~$7M incremental) and higher FDIs (1–1.5 pts, $9–$15M impact) compressed flow-through; $8M of late-quarter sales fell into Q4 due to rescission timing .
Rental & ancillary softness persisted, particularly in Las Vegas (market-wide promotional pressure); segment posted a $(4)M loss vs $5M profit LY, though stabilization signs noted .

Financial Results

Headline Metrics (YoY and QoQ)

Metric	Q3 2024	Q2 2025	Q3 2025
Total Revenues ($B)	$1.306	$1.266	$1.300
Net Income Attributable to Stockholders ($M)	$29	$25	$25
Diluted EPS ($)	$0.28	$0.25	$0.28
Adjusted EBITDA Attributable to Stockholders ($M)	$303	$233	$245
Adjusted EBITDA Margin (%)	23.5%	18.8%	19.2%
Net Construction Deferral/(Recognition) Impact ($M)	+27 recognition	(45) deferral	(57) deferral

Segment Breakdown

Segment	Q3 2024 Revenue ($M)	Q2 2025 Revenue ($M)	Q3 2025 Revenue ($M)	Q3 2024 Adj. EBITDA ($M)	Q2 2025 Adj. EBITDA ($M)	Q3 2025 Adj. EBITDA ($M)
Real Estate Sales & Financing	814	760	789	233	176	184
Resort Operations & Club Mgmt	383	405	406	156	149	159

KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Contract Sales ($M)	777	834	907
Tour Flow (counts)	227,790	225,222	232,035
VPG ($)	3,392	3,690	3,891
Fee-for-Service Mix (%)	17.9%	17.0%	17.2%
Financing Revenue ($M)	105	126	128
Financing Profit Margin (%)	57.1%	57.1%	58.6%
Resort & Club Profit Margin (%)	72.1%	69.4%	69.9%
Rental & Ancillary Profit ($M)	5	(8)	(4)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA (ex deferrals/recognitions)	FY 2025	$1.125B–$1.165B	$1.125B–$1.165B	Maintained
Adj. FCF Conversion (% of Adj. EBITDA)	FY 2025	65%–70%	65%–70%	Maintained
Shareholder Returns (Repurchases)	FY 2025	~$600M target	~$600M target; $497M YTD by Oct 23, $531M remaining authorization	Maintained
Inventory Spend	FY 2025	~Just under $400M	~Just under $400M	Maintained
Inventory Spend	FY 2026	~Similar to FY25	~Similar to FY25	Maintained
LT Inventory Spend Run-Rate	LT	~$300M/year	~$300M/year	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
HGV Max adoption & upgrades	Max drove VPG; ~233k Max members incl. ~21k Bluegreen (Q2). Upgrade curve +20% since launch (Q2) .	Surpassed 250k Max members; +70k TTM; strong owner & new buyer contribution .	Strengthening engagement and upgrade-driven VPG.
Bluegreen integration synergies	Run-rate synergies $92M; Envision tech roll-out; rebrands planned over next 3 years (Q2) .	Run-rate synergies $94M, near $100M target; further rebrands and cross-benefits .	On track to target; incremental progress.
Financing optimization & ABS	First-ever Japan ABS (¥9.5B at 1.41%); U.S. ABS pipeline ~$400M (Q2) .	Completed $400M ABS (WAC 4.69%); 65–70% FCF conversion reiterated; ABS markets functioning .	Continued execution, supports cash returns.
Package sales & tours	Q2: ~200k packages sold; tour flow prioritized for high propensity; tours slightly down, VPG up 11% .	Incremental $7M marketing spend; package pipeline ~750k; tours +1.9%, VPG +14.7% YoY .	Investment now for future tours; pipeline building.
Las Vegas rental softness	Noted rate/occupancy pressure; reallocate room nights to marketing/club (Q2) .	Rental/ancillary loss $(4)M; LV remains soft though stabilizing; VPG up in LV ~mid-teens .	Soft rental environment persists; sales resilient.
Credit performance	Provision ~14% of owned contract sales (Q2); delinquencies stable to improving .	Annualized default rate ~10.1%; delinquencies stable; mid-teens provision expected .	Stable to improving credit; prudent provisioning.
Technology/AI	—	Launched AI-powered “My Explorer” chatbot for members .	New digital enhancements improving experience.

Management Commentary

“We delivered broad-based operational and financial performance across key channels and geographies in the third quarter, reflecting the strength of our brand and our business model.” – CEO Mark Wang .
“Adjusted for $99M of sales deferrals and $42M of associated expense deferrals, Adjusted EBITDA to shareholders would increase by a net $57M to ~$302M.” – CFO Dan Mathewes .
“We reached $94 million in our run-rate cost synergies… and remain on track with the targeted $100 million in savings.” – CEO Mark Wang .
“Our ABS market remains open and functioning… This, coupled with our $850 million warehouse, gives us confidence we can execute on our finance optimization strategy.” – CFO Dan Mathewes .
“We’ve upgraded our proprietary My Explorer chat box to provide our members a personalized AI‑powered tool tailored to their membership profile.” – CEO Mark Wang .

Q&A Highlights

2026 outlook: Management sees momentum carrying into 2026 with tour flow as the primary driver of contract sales growth; expects operating cost leverage and sustained strong FCF; financing margins could face some headwinds as optimization continues but may hold or improve depending on rates .
VPG strength drivers: Broad-based geography/channel gains; HGV Max upgrades and newer member cohorts support higher engagement; owner and new buyer VPGs both contributed .
Flow-through pressures and P&L puts/takes: ~$7M incremental package marketing expense recognized upfront; elevated FDIs by 1–1.5 pts ($9–$15M impact) and ~$8M of late-quarter sales past rescission into Q4 compressed Q3 flow-through .
Rental recovery path: Lower developer maintenance fees as recapture progresses and resort rebrands to Hilton drive ADR and OTA cost benefits over time; potential inorganic solutions for non-core inventory .
Cash conversion and inventory: FY25/FY26 inventory spend ~just under $400M before reverting to ~$300M run-rate; cash taxes mid-teens % of EBITDA; maintain 65–70% FCF conversion target .

Estimates Context

Wall Street consensus (S&P Global) vs. reported:
- Primary EPS: 0.94* vs actual adjusted diluted EPS $0.60 → miss* [Adjusted diluted EPS from press release: $0.60] .
- Revenue (ex cost reimbursements): $1.368B* vs $1.168B* actual → miss* (GAAP total revenue was $1.300B, including $132M of cost reimbursements) .
- EBITDA: $299.1M* vs $213.0M* actual → miss*; however, management stated Adjusted EBITDA to shareholders would be ~~$302M excluding net deferrals (~~$57M), closer to consensus .

Values retrieved from S&P Global.*

Metric	Consensus (Q3 2025)	Actual/Reported
Primary EPS	0.94099*	$0.60 adjusted diluted
Revenue ex reimbursements ($)	1,368,210,150*	1,168,000,000* (GAAP total revenue $1.300B)
EBITDA ($)	299,140,640*	213,000,000* (Mgmt Adj. EBITDA excl. deferrals ~ $302M)

Context: The company’s accounting for VOI sales under construction deferred ~$99M of revenue and ~$42M of related expenses in Q3, reducing reported Adjusted EBITDA by a net ~$57M; adjusting for this moves EBITDA closer to consensus .

Key Takeaways for Investors

Underlying demand remains healthy: record contract sales and double‑digit VPG growth supported by HGV Max upgrades and better tour quality; this should sustain revenue conversion into 2026 as packages convert to tours .
Headline misses vs S&P Global measures were largely timing/deferral-driven; on a “deferral‑adjusted” basis, EBITDA was ~in line with consensus, narrowing the perceived gap .
Cash generation remains the story: 65–70% EBITDA-to-Adjusted FCF conversion reiterated, supported by recurring resort/club profits (~70% margin) and ABS execution in the U.S. and Japan .
Capital returns are sizable: ~$600M targeted repurchases in 2025; $497M YTD through Oct 23; $531M authorization remains, providing support to EPS and downside protection .
Watch margin levers near term: elevated marketing spend and FDIs weighed on Q3 margins but should translate to future tours/sales; as recapture lowers maintenance fees and rebrands roll through, rental drag should ease .
Inventory spend normalizing: after 2025/2026 near-peak spend (~just under $400M each), LT run-rate to ~$300M supports higher sustained FCF and returns .
Risk monitor: Las Vegas rental softness, macro policy volatility, and credit performance (though delinquencies and defaults remain stable around ~10%) .

Additional Context and Events (Q3 2025)

$400M U.S. term ABS completed at 4.69% WAC and 96% advance rate, reflecting strong market access .
Secondary offering by Apollo-managed entities (7M shares) with concurrent $40M company repurchase authorization under the offering .
Liquidity at quarter-end: $215M cash, $632M revolver capacity; corporate debt $4.7B (5.98% W.A. rate), non-recourse debt $2.5B (5.10% W.A. rate); TTM net leverage ~4.0x .

Hilton Grand Vacations Inc. (HGV)·Q3 2025 Earnings Summary