Sign in

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

II

Inspirato Inc (ISPO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered profitability and positive cash flow: Adjusted EBITDA of $1.94M, gross margin of 35%, and operating cash flow of $6.94M; net loss narrowed to $2.28M from $15.86M YoY .
  • Revenue declined 11% YoY to $63.11M on planned reductions in Pass subscriptions; travel revenue mix and ADRs improved, supporting gross margin expansion .
  • 2025 guidance targets full-year profitability: Adjusted EBITDA $0–$5M, revenue $235–$255M, cash OpEx $80–$90M, and ~300bps gross margin improvement, aligned with Q4 annualized revenue run-rate .
  • Management emphasized brand elevation, technology/digital marketing rebuild, and salesforce expansion as drivers of sustained profitable growth; Q1 and Q3 expected to be the strongest seasonal quarters .
  • Wall Street consensus estimates (S&P Global) for Q4 2024 were unavailable; beat/miss vs estimates cannot be assessed.

What Went Well and What Went Wrong

What Went Well

  • Achieved Q4 profitability and positive free cash flow as margin optimization took hold: “we delivered profitability and positive free cash flow in Q4” and plan for full-year profitability in 2025 .
  • Gross margin expanded sharply YoY to 35% in Q4 (from 18%), driven by portfolio optimization and lower lease/fixed costs; adjusted gross margin dollars and percentage increased per CFO .
  • Strong operational cash generation: Q4 net cash from operating activities was $6.94M, with free cash flow of $5.77M; year-end cash, cash equivalents and restricted cash at $35.01M .
  • Strategic focus: rebrand, technology rebuild, digital marketing platform, and doubling the salesforce to reaccelerate member growth with a healthier Club/Pass mix .

What Went Wrong

  • Top-line pressure: total revenue fell 11% YoY to $63.11M on subscription declines tied to deliberate Pass reductions; subscription revenue down 22% YoY in Q4 .
  • Active subscriptions continue to trend lower: Q4 ended with ~1,500 Pass and ~10,600 Club (down from Q2’s ~1,900 Pass and ~10,800 Club); management expects modest further declines in 2025 before health improves .
  • Seasonality and mix effects: Q4 revenue lower sequentially vs Q3; while ADRs were healthy, total occupancy was 67% in Q4 (flat YoY), reflecting fewer total nights delivered .

Financial Results

Revenue, EPS, Margins vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$67.382 $69.114 $63.114
Gross Margin ($USD Millions)$16.181 $49.389 $21.931
Gross Margin (%)24% 71% (includes ~$29.9M lease termination gain) 35%
Net Income (Loss) ($USD Millions)$(15.393) $6.622 $(2.282)
Basic EPS ($USD)$(2.33) $0.77 $(0.21)
Diluted EPS ($USD)$(2.33) $0.62 $(0.21)
Adjusted EBITDA ($USD Millions)$(9.156) $(3.354) $1.936
Operating Cash Flow ($USD Millions)N/A (semiannual)N/A (quarter)$6.943
Free Cash Flow ($USD Millions)$(3.791) (Q2) $(15.051) (Q3) $5.765

Notes:

  • Q3 gross margin includes a nonrecurring ~$29.9M gain on lease termination; Q4 gross margin improvement driven by lower lease/fixed costs and absence of impairments .
  • CFO highlighted adjusted Q4 gross margin of ~$22M (35%) versus Q4 2023 $19M (27%) excluding impairments and gains .

Segment Revenue Breakdown

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Travel Revenue$38.8 $42.6 $34.7
Subscription Revenue$25.2 $23.0 $24.9
Rewards & Other Revenue$3.3 $3.5 $3.5
Total Revenue$67.4 $69.1 $63.1

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Active Club Subscriptions~10,800 ~10,200 ~10,600
Active Pass Subscriptions~1,900 ~1,500 ~1,500
Total Members/Subs~12,000 members; ~12,700 subs ~11,700 members ~12,100 subs implied (Club+Pass)
Total Occupancy (%)71% 73% 67%
ADR – Residences ($USD)$1,535 $1,624 $1,828
ADR – Hotels ($USD)$1,035 $1,105 $1,135
ADR – Total ($USD)$1,346 $1,449 $1,475

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025None provided prior quarter $235–$255 New
Adjusted EBITDA ($USD Millions)FY 2025None provided prior quarter $0–$5 New
Gross Margin (%)FY 2025Not provided+~300 bps improvement expected Raised (qualitative)
Cash Operating Expenses ($USD Millions)FY 2025Not provided$80–$90 New
OI&E, Tax Rate, DividendsFY 2025Not providedNot providedMaintained (no guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Cost reductions/portfolio optimizationAnnounced ~$25M annualized saves; lease exits yielding ~$50M cash savings through 2031 Savings target increased to >$40M; early termination of seasonal leases; cash OpEx down 31% YoY in Q3 Q4 cost of revenue down ~20% YoY; cash OpEx targeted $80–$90M in 2025; savings executed Improving efficiency
Product/Member mix (Club vs Pass)Return to Club focus; Invited launched; Capital One integration expected Definitive return to initiation fee + annual dues; Pass de-emphasized; Club healthier ~1,500 Pass, ~10,600 Club; inflection expected in 2–3 quarters with salesforce doubling Mix shifting to Club
Technology/digital marketingCapital One integration near-term; systems lift Simpler model, access to capital, set up for profitability Rebrand, revamp website/UI; build scalable tech and digital marketing platform; CEO background in performance marketing Investing for scalable growth
SeasonalityQ3/Q4 stronger vs Q2 historically Q4 revenue lower seasonally vs Q3, EBITDA improvement expected Q1 strongest (ski/spring break), Q3 strong (summer); experiences timing may shift to Q2 Normal seasonality intact
Capital structure/liquidityOne Planet $10M; Nasdaq extension Access to additional $5.5M in Q4; improved cash burn Year-end cash/restricted $35.01M; operating cash flow positive in Q4 Strengthened footing
Management changesNew CEO; cost program; member mix focus CFO transition announced Oct 7 CFO emphasizes margin/OpEx discipline; team expansion (marketing/CTO) Execution continuity

Management Commentary

  • “We delivered profitability and positive free cash flow in Q4, along with our plan to achieve full year profitability in 2025.” — Payam Zamani, Chairman & CEO .
  • “We grew adjusted gross margin dollars…to $22 million or 35% of revenue…Fourth quarter cost of revenue was approximately $41 million, a 20% improvement YoY.” — Michael Arthur, CFO .
  • “We have almost double[d] the size of our sales [force]…that inflection point…is probably a couple of quarters away.” — Payam Zamani on membership growth trajectory .
  • “Our goal in the year ahead is…Adjusted EBITDA range of $0 to $5 million…cash operating expense…$80 million to $90 million…revenue…$235 million to $255 million.” — Michael Arthur on 2025 outlook .

Q&A Highlights

  • Membership mix and growth inflection: Management expects member count inflection in ~2–3 quarters as salesforce doubles; focus on signing “right members” to drive revenue and retention .
  • Seasonality and quarterly cadence: Q1 and Q3 expected to be strongest quarters; experiences may shift into Q2, affecting quarterly revenue timing .
  • Cost savings execution: >$40M annualized savings identified and actioned; major underperforming lease termination contributed significant EBITDA improvement; ongoing portfolio efficiencies expected .

Estimates Context

  • S&P Global Wall Street consensus estimates for Q4 2024 were unavailable; comparisons to consensus and beat/miss assessment cannot be made at this time.
  • Implications: Without consensus estimates, focus shifts to operational momentum—Q4 margin expansion, positive operating cash flow, and 2025 profitability guidance .

Key Takeaways for Investors

  • Margin-led turnaround: Structural gross margin improvement (35% in Q4) from portfolio optimization and lower lease/fixed costs supports 2025 profitability guidance .
  • Cash generation inflection: First quarter of positive operating cash flow ($6.94M) and FCF ($5.77M) is a pivotal liquidity milestone heading into 2025 .
  • Healthy mix reconstitution: Deliberate Pass reductions pressure revenue near-term but improve paid occupancy and ADR, underpinning margin gains; Club-centric model with initiation fees strengthens retention/LTV .
  • Execution catalysts: Rebrand, UI revamp, scalable tech stack, and digital marketing focus—paired with a larger salesforce—are key to reigniting growth while maintaining profitability discipline .
  • Watch seasonality and experiences timing: Q1 should be strong (ski/spring break), while experiences timing may shift revenue into Q2; monitor quarterly cadence vs guidance .
  • Ongoing efficiency runway: >$40M savings already actioned; management sees further optimization potential in leases and OpEx to support margins .
  • Risk considerations: Strategy depends on continued execution, member mix shift, and maintaining Nasdaq listing and debt covenant compliance as highlighted in forward-looking statements .

Additional Context from Q4 Period Press Releases

  • Strategic partnerships: BLADE Urban Air Mobility partnership enhances member airport-to-city convenience in NYC, aligning with elevated service positioning .
  • Leadership continuity: Michael Arthur promoted to CFO effective Nov 8, 2024; board refreshed to support strategic transformation .