ONESPAWORLD HOLDINGS Ltd (OSW) Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 landed at the high end of guidance: total revenues $219.6M (+4% YoY), Adjusted EBITDA $26.6M (+5% YoY), and diluted EPS $0.15 (down vs $0.21 in Q1 2024 due to prior-year warrant benefit); management reaffirmed FY 2025 guidance and introduced Q2 2025 guidance of $235–$240M revenues and $28–$30M Adjusted EBITDA .
• Mix and productivity drivers were constructive: revenue days +2%, average guest spend +2%, and pre-booking ~23%, offset by a $1.5M decline in land-based spas (hotel closures) and $2.5M non-recurring severance in operating expenses .
• Capital return accelerated: $37.9M repurchases in Q1 under the prior $50M program; Board authorized a new $75M program and declared a $0.04 dividend, ending the quarter with $73.8M liquidity (incl. undrawn $50M revolver) .
• Near-term catalysts: ongoing fleet additions (Norwegian Aqua added in Q1; eight new ship builds later in 2025) and new contracts with P&O and Cunard (11 ships), supporting revenue visibility; Q2 guidance signals continued momentum .

What Went Well and What Went Wrong

What Went Well

• Demand and execution: “We are pleased to report first quarter results at the high end of our guidance and reaffirm our fiscal year 2025 guidance” — Leonard Fluxman (CEO) .
• Productivity and innovation: Medi-spa technology rollout (Thermage FLX, CoolSculpting Elite) with >20% growth in those treatments; pre-booking remained strong at ~23% and now live on Virgin Voyages .
• Strategic wins: Added Norwegian Aqua and signed an agreement to operate wellness centers on 11 ships for P&O and Cunard, expanding long-standing partnerships .

What Went Wrong

• GAAP EPS optics: Diluted EPS fell to $0.15 from $0.21 YoY, primarily due to the prior-year $7.7M favorable warrant fair-value change; Q1 2025 had a $1.8M reduction in interest expense partially offsetting .
• Land-based softness: Land-based spa revenues declined by $1.5M, partly from hotel closures; management highlighted renovation-related pressure in prior quarter commentary as well .
• One-time cost headwind: $2.5M severance (incl. $1.1M cash, $1.4M accelerated vesting) pressured operating income; Adjusted EBITDA included $1.1M cash severance .

Financial Results

Key Financials vs Prior Periods

Q1 2025 Actuals vs Wall Street Consensus

Values marked with * retrieved from S&P Global.

Notes:

• Adjusted EBITDA would have been $27.7M excluding $1.1M cash severance (management clarification) .
• Company and consensus definitions for EBITDA may differ; OSW guides and reports on Adjusted EBITDA .

Margins

Values marked with * retrieved from S&P Global.

Segment Breakdown

KPIs

Balance Sheet & Liquidity Highlights

• Cash: $23.8M; liquidity (incl. undrawn $50M revolver): $73.8M at March 31, 2025 .
• Total debt (net of deferred financing costs): $97.4M at March 31, 2025 .

Guidance Changes

Context: Q4 guidance flagged one fewer operating day and more dry docks in Q1 2025, with a ~$4.3M revenue headwind; Q1 still landed at the high end of the guided ranges .

Earnings Call Themes & Trends

Management Commentary

• “We remain confident in our ability to navigate an increasingly dynamic economic environment... we are well positioned to provide increasingly valuable service to our partners... in fiscal 2025 and beyond.” — Leonard Fluxman (CEO) .
• “We generated predictably strong free cash flow... funded the return of $42 million to our shareholders... We ended the quarter with a strong balance sheet, including $74 million of total liquidity.” — Stephen Lazarus (President, CFO & COO) .
• “Our Board of Directors approved a new $75 million share repurchase program... Together with our quarterly cash dividend, this program demonstrates our commitment to enhance shareholder value.” — Leonard Fluxman .
• “We continue to expand high-value services and products... next-generation technology with Thermage FLX and CoolSculpting Elite... reduced treatment time by up to 50%... generated over 20% growth.” — Leonard Fluxman .

Q&A Highlights

• On onboard spend and April trends: No decline observed; high-end medi-spa demand remains strong; slight improvement in April .
• Guidance sensitivity: Low end assumes moderate spend slowdown; no indicators of significant deterioration; bookings remain strong at cruise partners .
• Pre-booking visibility: ~23% of services; Virgin Voyages rollout; cruise lines remain engaged; no pullback in pre-booking engine investments .
• Tariffs and medi-spa inputs: Suppliers not indicating price increases; inventory build limited by expirations/refrigeration; operations largely tariff-insulated due to free trade zone logistics .
• Buybacks: Opportunistic approach; would continue even if business softens, driven by valuation dislocation assessment .

Estimates Context

• Revenue modest beat: $219.6M actual vs ~$218.94M consensus* .
• GAAP diluted EPS missed: $0.15 actual vs ~$0.21 consensus* .
• Adjusted EBITDA slight beat on company definition: $26.6M actual vs ~$26.15M consensus*; excluding $1.1M cash severance, Adjusted EBITDA would have been ~$27.7M (stronger beat) .
• Q4 2024 context: Revenues $217.2M vs ~$213.89M consensus*; diluted EPS $0.14 vs ~$0.21 consensus*; EBITDA $26.7M vs ~$26.72M consensus* .

Values marked with * retrieved from S&P Global.

Implication: Models should reflect the non-recurring severance impact and the lack of prior-year warrant benefit in GAAP EPS. With reaffirmed FY guidance and Q2 guidance, consensus may modestly lift revenues and Adjusted EBITDA for Q2 while maintaining FY midpoints .

Key Takeaways for Investors

• Core demand remains resilient; KPIs (revenue days, spend, staff productivity) improved, supporting high-single-digit FY growth targets reaffirmed at midpoints .
• GAAP EPS optics were pressured by prior-year warrant tailwind; focus on Adjusted EPS/EBITDA shows healthier underlying trend (+5% EBITDA YoY) .
• Capital return accelerates: $37.9M Q1 buybacks and a fresh $75M authorization plus $0.04 quarterly dividend—supportive for per-share metrics and downside protection .
• Pipeline catalysts: Eight new ship builds later in 2025 and new P&O/Cunard agreement enhance medium-term revenue visibility; Q2 guidance signals sustained momentum .
• Watch land-based spas: $1.5M drag (hotel closures); monitor renovation schedules and occupancy for improvement; maritime strength offsets .
• Operating leverage upside: Continued medi-spa rollout and pre-booking expansion (targeting >25%) could lift mix, pricing, and margins over time .
• Trading lens: Near-term set-up favors companies with visible capacity additions and buyback firepower; OSW’s reaffirmed guidance and contract wins are positive narrative drivers .

Appendix: Additional Data Points

• One fewer operating day and higher dry docks reduced Q1 revenue by ~$4.3M vs prior year setup; despite this, results hit the high end of guidance .
• Liquidity and debt: $73.8M liquidity, $97.4M net debt (facility undrawn), providing flexibility to continue buybacks and dividends .
• Share repurchases to date: Since May 1, 2024, repurchased 2.8M shares for $49.1M; $900K remaining on old program canceled and replaced by $75M authorization .