Sign in

You're signed outSign in or to get full access.

II

Inspirato Inc (ISPO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $55.5M with net loss of $4.5M and adjusted EBITDA essentially breakeven at $(0.1)M, a 97% YoY improvement; gross margin was $17.4M (31%) as ADR rose 20% to $1,742 while occupancy fell to 56% .
  • Full‑year 2025 guidance reinstated and tightened: revenue $235–$240M (lowered upper end), adjusted EBITDA $2–$4M (raised floor), and cash OpEx $80–$85M (tightened lower) .
  • Transformation levers continue to show through: year‑to‑date operating cash flow improved by $15.0M, adjusted EBITDA up $13.2M, $4.0M annualized vendor savings identified, and ~$(2.0)M FX headwind year‑to‑date from euro‑denominated leases .
  • CFO Michael Arthur resigned (transition through year‑end); management reiterated focus on tech/digital investments and PASS relaunch (January) as 2026 growth drivers .

What Went Well and What Went Wrong

  • What Went Well
    • 97% YoY improvement in adjusted EBITDA to $(0.1)M on materially lower cash OpEx (down $6.9M, 26%) and portfolio optimization; ADR +20% to $1,742 supported gross margin quality .
    • Structural savings and execution: $4.0M annualized vendor savings; YTD adjusted EBITDA +$13.2M and operating cash flow +$15.0M versus 2024; “set the business up for efficient growth in 2026 and beyond” (CEO) .
    • Subscription revenue stabilized sequentially (flat QoQ) after 10 quarters of average ~7% QoQ declines; management flagged an impending inflection with redesigned PASS in January 2026 .
  • What Went Wrong
    • Demand softness and mix: occupancy fell to 56% (73% a year ago) and paid nights dropped; total revenue declined 20% YoY to $55.5M despite higher ADR .
    • FX headwinds: approximately $2.0M unfavorable year‑to‑date impact to cost of revenue and adjusted EBITDA from a weaker USD vs EUR .
    • Guidance narrowed with a lower revenue ceiling ($235–$240M vs prior $235–$255M), reflecting conservatism on top‑line recovery; CFO transition introduces leadership uncertainty in finance .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$65.889 $63.108 $55.541
Net Income ($M)$1.622 $(5.313) $(4.521)
Diluted EPS ($)$0.12 $(0.42) $(0.36)
Gross Margin ($M)$25.545 $17.372 $17.421
Gross Margin (%)39% 28% 31%
Adjusted EBITDA ($M)$5.603 $(0.329) $(0.088)
Adjusted EBITDA Margin (%)8.5% (0.5)% (0.2)%
Cash from Ops ($M)$(6.627) $1.082 $(2.205)
Free Cash Flow ($M)$(7.542) $0.248 $(2.982)

Segment revenue breakdown ($M):

SegmentQ1 2025Q2 2025Q3 2025
Residence & hotel travel$38.3 $24.9 $25.9
Experiences & bespoke$3.4 $14.5 $8.0
Total Travel$41.7 $39.4 $33.9
Subscription revenue$20.9 $19.4 $19.3
Rewards & other$3.3 $4.4 $2.3
Total revenue$65.9 $63.1 $55.5

KPIs:

KPIQ1 2025Q2 2025Q3 2025
Occupancy (Total)73% 59% 56%
ADR (Total)$1,915 $1,670 $1,742
Paid Nights Delivered (Total)20,400 15,800 15,800
Active Memberships (Total)11,600 11,200 10,700
Club / Pass / Invited10,200 / 1,300 / 100 9,900 / 1,200 / 100 9,500 / 1,100 / 100

Notes:

  • Q3 YoY revenue down 19.6% and ADR +20%; occupancy decline pressured nights and top line .
  • 2024 had a large lease‑termination gain ($29.9M) that inflates prior‑year gross margin comps; not repeated in 2025 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$235–$255M (May) $235–$240M (Nov) Lowered (narrowed down)
Adjusted EBITDAFY 2025$0–$5M (May) $2–$4M (Nov) Raised floor (narrowed)
Cash Operating ExpensesFY 2025$80–$90M (May) $80–$85M (Nov) Tightened lower (improved cost control)

Management also noted reinstatement of standalone guidance post termination of Buyerlink merger .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q‑2 and Q‑1)Current Period (Q3 2025)Trend
Operational efficiency & cost disciplineRecord Q1 adjusted EBITDA; ongoing portfolio optimization; OpEx down ~$8M YoY 97% YoY adj. EBITDA improvement; $4M annualized vendor savings; cash OpEx −26% YoY Improving
Subscription trajectoryPASS de‑emphasized, Club focus; planned PASS redesign; member base stabilization expected in 2H25/2026 Subscription revenue flat QoQ; PASS relaunch Jan with two concurrent reservations, cap at 2,500 members Stabilizing/inflexion potential
ADR vs occupancyQ2 occupancy 59% with ADR +24% YoY Q3 occupancy 56% with ADR +20% YoY Mixed: pricing strength vs volume softness
Digital marketing/technologyFoundational tech investments; future digital platform ambition Testing SEM; early promising results; focusing on building scalable digital engine Building
Buyerlink transactionProposed reverse merger; pro forma scale; later abandoned Terminated; Inspirato remains independent; 2025 guidance reinstated Strategic reset
FX exposureNot highlighted in Q1/Q2 remarks~$2.0M YTD negative FX impact (EUR leases) Headwind

Management Commentary

  • “Our results for the third quarter, highlighted by our 97% year‑over‑year adjusted EBITDA improvement, reflect the material progress we've made to reducing our fixed commitments without compromising the guest experience… We believe that the changes we've made over the past year have set the business up for efficient growth in 2026 and beyond.” — CEO Payam Zamani .
  • “On a sequential basis, subscription revenue was flat quarter over quarter… This marks an encouraging stabilization in our subscription revenue base.” — CFO Michael Arthur .
  • “We have limited the number of members that we are willing to sign up for [the new PASS]… 2,500… Once we get to 2,500, we'll stop selling it… until our portfolio grows.” — CEO on PASS relaunch mechanics .
  • “We mutually agreed with Buyerlink to terminate the agreement in September… our strategy and business transformation initiatives have not changed.” — CEO on strategic direction .

Q&A Highlights

  • PASS product design and profitability: New PASS excludes hotels, focuses on company‑controlled inventory to monetize available nights; members can hold two reservations concurrently (up to 7 nights each); capped at 2,500 members to protect supply/demand balance .
  • Marketing engine ramp: SEM spend tests began in Q2 after near‑zero baseline; now “a couple hundred thousand dollars per quarter,” with promising early results as the team builds the digital engine .
  • CFO transition: Search initiated; Arthur to remain through year‑end for continuity .

Estimates Context

  • Wall Street consensus estimates for Q3 2025 EPS and revenue via S&P Global were unavailable; therefore, we cannot quantify beats/misses vs consensus for the quarter. Values retrieved from S&P Global.*
  • Management did not provide quarterly guidance but reinstated full‑year ranges; given the narrowed revenue range and higher adjusted EBITDA floor, estimates likely need to shift down for FY revenue and up for FY adjusted EBITDA, with OpEx trimmed to the lower end .

Key Takeaways for Investors

  • Mix shift to quality: Strong ADR and disciplined inventory/contracting are supporting margins, even as occupancy and paid nights remain soft; this underpins the raised EBITDA floor but caps near‑term revenue growth .
  • Clear FY guardrails: Guidance narrowed with revenue ceiling reduced ($240M) but profit outlook improved ($2–$4M adj. EBITDA; OpEx $80–$85M), increasing confidence in expense control while signaling conservative top‑line .
  • Subscription stabilization is a watch‑item: Flat QoQ subscription revenue in Q3 after a multi‑quarter decline is constructive; January PASS relaunch (capped at 2,500) is a 2026 growth lever to watch .
  • Liquidity/cash trajectory: YTD free cash flow improved by $17M vs last year (reported and adjusted), with Q4 seasonally stronger; monitor FX drag (~$2M YTD) and deferred revenue trends .
  • Leadership/execution risk: CFO departure introduces some uncertainty; search underway, with transition through year‑end .
  • Strategic independence: With the Buyerlink deal terminated, execution on the internal digital/tech roadmap is the next catalyst; early SEM tests are positive but scaled impact will take time .
  • Near‑term trading frame: Potential positive reaction to improved profitability guardrails and cost discipline; potential negative focus on lowered revenue ceiling, occupancy softness, and CFO transition .

Appendix: Additional data points

  • Q3 components of gross margin and operating metrics, including ADR/occupancy by residences and hotels, and active membership mix, are detailed in the company’s press materials .
  • Reconciliations show Q3 transaction costs ($0.816M) added back to adjusted EBITDA; prior year included a $29.9M lease‑termination gain that is not recurring, affecting YoY comparisons .

*Values retrieved from S&P Global.