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Inspirato Inc (ISPO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was the most profitable quarter since going public, with Adjusted EBITDA of $5.60M (8.5% margin) on revenue of $65.9M; gross margin reached 39% as portfolio optimization and cost discipline offset planned subscription declines .
  • Year-over-year revenue fell 17.9% and subscription revenue declined 25.6% due to the intentional shift away from Pass, but ADR rose 16% to $1,915 and occupancy held at 73%, underpinning margin improvement .
  • Management reiterated FY25 guidance: revenue $235–$255M, Adjusted EBITDA $0–$5M, and cash OpEx $80–$90M, targeting ~300 bps gross margin expansion; guidance was maintained vs. February levels .
  • Stock reaction catalysts: sustained margin expansion, cost optimization, and CEO-led transformation into a property technology platform; watch for Pass product enhancements and tech rollout in 2025 that could reaccelerate member growth and revenue mix .

What Went Well and What Went Wrong

What Went Well

  • Record Adjusted EBITDA ($5.60M) and margin (8.5%) despite lower revenue, driven by cost of revenue optimization and lower operating expenses .
  • ADR increased 16% to $1,915 with strong occupancy (73%), supporting gross margin improvement to 39% .
  • CEO emphasized a disciplined transformation and brand elevation: “We are transforming Inspirato into a leading property technology company in the luxury travel space… building a world-class platform” .

What Went Wrong

  • Revenue declined 17.9% YoY to $65.9M; subscription revenue fell 25.6% YoY as Pass volume was intentionally reduced, creating near-term topline headwinds .
  • Free cash flow was negative ($7.54M), including ~$2.6M one-time cash outflows tied to underperforming lease terminations; underlying burn was ~($4.5M) .
  • Active memberships decreased vs. prior year (11,600 vs. 13,000), with Club at 10,200 and Pass at 1,300; management expects stabilization in 2H25 into 2026 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$69.1 $63.1 $65.9
Gross Margin ($USD Millions)$49.4 $21.9 $25.5
Gross Margin (%)71% 35% 39%
Net Income ($USD Millions)$6.62 $(2.28) $1.62
Diluted EPS ($)$0.62 $(0.21) $0.12
Adjusted EBITDA ($USD Millions)$(3.35) $1.94 $5.60
Adjusted EBITDA Margin (%)(4.9)% 3.1% 8.5%
Free Cash Flow ($USD Millions)$(15.05) $5.77 $(7.54)

Notes: Q3 2024 gross margin included a non-recurring net gain on lease termination ($29.9M) .

Segment RevenueQ3 2024Q4 2024Q1 2025
Travel ($USD Millions)$42.6 $34.7 $41.7
Subscription ($USD Millions)$23.0 $24.9 $20.9
Rewards & Other ($USD Millions)$3.5 $3.5 $3.3
Total Revenue ($USD Millions)$69.1 $63.1 $65.9
KPIsQ3 2024Q4 2024Q1 2025
Total Occupancy (%)73% 67% 73%
Total ADR ($)$1,449 $1,475 $1,915
Residence Occupancy (%)71% 65% 74%
Residence ADR ($)$1,624 $1,828 $2,124
Hotel Occupancy (%)82% 79% 67%
Hotel ADR ($)$1,105 $1,135 $1,414
Active MembershipsQ1 2024Q1 2025
Club10,900 10,200
Pass2,100 1,300
Invited— 100
Total13,000 11,600

Guidance Changes

MetricPeriodPrevious Guidance (Feb 24, 2025)Current Guidance (May 7, 2025)Change
Revenue ($USD Millions)FY 2025$235–$255 $235–$255 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$0–$5 $0–$5 Maintained
Cash Operating Expenses ($USD Millions)FY 2025$80–$90 $80–$90 Maintained
Gross Margin Expansion (bps)FY 2025~300 bps ~300 bps Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Operational efficiency & cost structureReorganization, >$40M annualized savings; focus on gross/EBITDA margin expansion Record Adjusted EBITDA; continued optimization of cost of revenue and OpEx Improving
Membership mix & PassQ3: ~10.2k Club, ~1.5k Pass Q1: ~10.2k Club, ~1.3k Pass; Pass ~10–15% of base; intentional shift to profitability Stabilizing into 2H25/2026
ADR/OccupancyADR and occupancy stable/improving across Q3/Q4 ADR +16% to $1,915; occupancy 73% ADR rising, occupancy stable
Technology & digital platformQ4: investments for 2025 Build a “world-class platform” to reach/convert high-value travelers at scale in 2025 Ramping
Partnerships/brand elevationReaffirmed luxury brand; Q4 partnerships context SIXT, Andaz, Fairmont partnerships enhance member value (not near-term material to revenue) Enhancing brand
Cash flow & leasesQ3/Q4 volatility; Q4 ops CF positive Q1 FCF negative; ~$2.6M one-time lease termination outflows Improving ex-one-time

Management Commentary

  • “We are transforming Inspirato into a leading property technology company in the luxury travel space, supported by a curated portfolio of high-quality homes.” — Payam Zamani, CEO .
  • “We delivered record adjusted EBITDA in Q1… streamlining operations, reducing fixed commitments and improving cost discipline.” — Payam Zamani .
  • “We’ll begin to roll out what will ultimately become a world-class platform… to reach, target, and convert high-value travelers at scale.” — Payam Zamani .
  • “Total revenue… ~$66M, down 18% YoY; subscription revenue $21M, down 26%, primarily due to the expected and planned decline of Pass.” — Michael Arthur, CFO .

Q&A Highlights

  • Membership trajectory: Management expects member count headwinds through 1H25, with stabilization in 2H25 into 2026; emphasis on acquiring “the right members” consistent with brand and profitability .
  • Cost actions: Early cost cuts were straightforward; now focused on “visceral fat” and fine-tuning across properties and operations; a Chief Transformation Officer was hired to make operational efficiency a core competency by year-end .
  • 2025 milestones: Sustain profitability, embed operational efficiency, and launch/scale the digital marketing/platform initiative to transition fully into prop-tech growth levers .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2025 EPS/revenue was unavailable for ISPO at the time of retrieval; therefore, no vs-estimates comparison can be provided. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin expansion is the core story: despite lower revenue, Q1 gross margin rose to 39% and Adjusted EBITDA reached $5.60M, highlighting execution on cost and portfolio optimization .
  • ADR strength and occupancy stability should continue to support margins; further optimization of non-lease cost-of-revenue is a lever management is actively pursuing .
  • Near-term revenue headwinds from Pass contraction are intentional; watch for forthcoming Pass product enhancements that may reaccelerate mix and monetize engagement .
  • Guidance was maintained; focus on achieving FY25 profitability on $235–$255M revenue and $0–$5M Adjusted EBITDA; monitor quarterly gross margin progression against the ~300 bps expansion target .
  • Cash flow remains a watch item; Q1 FCF was negative due to one-time lease terminations—track underlying burn and lease exit cadence to assess liquidity trajectory .
  • Strategic catalysts: rollout of the digital marketing/technology platform in 2025, continued brand elevation, and partnerships that enhance member value though near-term revenue impact is limited .
  • For trading, narrative momentum around transformation and margin expansion is positive; stock likely reacts to tangible evidence of member stabilization, Pass relaunch, and sustained EBITDA generation quarter-on-quarter .
Additional Data Points and Cross-References:
- Q1 2025 revenue $65.889M vs. $80.245M in Q1 2024; gross margin $25.545M vs. $31.721M; diluted EPS $0.12 vs. $(0.18) diluted in Q1 2024 **[1820566_0001820566-25-000058_ispo_03312025x8k-exx991.htm:3]** **[1820566_0001820566-25-000058_ispo_03312025x8k-exx991.htm:1]**. 
- Q4 2024 op cash flow was $6.943M; Q1 2025 op cash flow $(6.627)M **[1820566_83793c8af9ac4e1f9448d69924f5992e_9]** **[1820566_0001820566-25-000058_ispo_03312025x8k-exx991.htm:5]**.
- NPS: 2024 score 71 (homes 70, experiences 80) — reinforces member satisfaction supporting brand elevation narrative **[1820566_99dd8f0db77b4b059e573d03c866d651_0]**.