Executive Summary

Q1 2025 delivered modest top-line growth but stronger profitability: revenues ex. cost reimbursements +3% YoY to $827M, GAAP EPS $1.46, and adjusted EPS $1.66; adjusted EBITDA rose 3% to $192M with margin steady at 23.2% . Versus S&P Global consensus, EPS and EBITDA beat while total revenue was roughly in line/slightly below (EPS $1.66 vs $1.43*, EBITDA $186M actual vs $174.9M*, total revenue $1.200B vs $1.207B*) . Values retrieved from S&P Global.
Mix shift toward first-time buyers drove tours up ~1% and VPG down 4%; development margin improved 70 bps; Interval remained soft (revenue -9% YoY) .
Guidance update: contract sales lowered to $1.74–$1.83B (from $1.85–$1.925B), but adjusted EBITDA reaffirmed at $750–$780M; adjusted EPS nudged up to $6.40–$7.10 and FCF trimmed to $270–$330M. Management raised in-year modernization savings to ~$35M and now expects total 2025 in-year savings of $40–$50M, offsetting sales softness .
Balance sheet actions remain supportive: amended/extended $800M revolver, added $450M delayed-draw term loan (to address Jan-2026 converts), and completed a $450M ABS at 5.16%/98% advance; returned $91M to shareholders (repurchases + dividends) .
Potential stock catalysts: reaffirmed EBITDA despite lower sales, accelerated cost/efficiency wins, successful securitization and ongoing capital returns, plus new digital/AI initiatives and booking expansion into Marriott’s 9,000+ hotels this summer .

What Went Well and What Went Wrong

What Went Well
- Profitability resilience: Adjusted EBITDA +3% YoY to $192M (23.2% margin), with development profit +4% and margin +70 bps YoY despite lower VPG .
- Mix strategy delivering: first-time buyer sales +6% YoY; sales reserve at 12% as expected; delinquencies improved 60 bps YoY and improved again in April .
- Cost and modernization execution: G&A -3% YoY; in-year modernization savings increased to ~$35M from $15–$25M, contributing to maintained EBITDA guide despite sales pressure .
- Management quote: “We had a strong first quarter growing first time buyer sales and Adjusted EBITDA… We are reiterating our full-year Adjusted EBITDA guidance…” — John Geller, CEO .
What Went Wrong
- Top-line mix and Interval softness: consolidated contract sales -2% YoY to $420M; VPG -4% (half from higher first-time buyer mix); Exchange & Third-Party Management revenues -9% and segment adj. EBITDA -13% .
- Rental profit headwind: rental profit fell 10% to $46M on higher unsold maintenance fees and variable costs despite higher occupancy and transient revenue .
- Guidance: contract sales range reduced by ~$100M at midpoint; adjusted free cash flow lowered by ~$20M at midpoint; reflects cautious VPG assumptions and rental headwinds .

Financial Results

Headline metrics and trends

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($USD Billions)	$1.305	$1.327	$1.200
Revenues ex. Cost Reimbursements ($USD Billions)	$0.862 (766+55+… see segments)	$0.866 (817+49)	$0.827
GAAP Diluted EPS ($)	$2.12	$1.30	$1.46
Adjusted Diluted EPS ($)	$1.80	$1.86	$1.66
Adjusted EBITDA ($USD Millions)	$198	$185	$192
Adjusted EBITDA Margin (%)	23.8%	21.0%	23.2%

Q1 2025 Actual vs S&P Global Consensus

Metric	Q1 2025 Actual	Q1 2025 S&P Consensus	Delta
Diluted EPS ($)	$1.66	1.434*	+$0.23 / +16%
Total Revenue ($USD Billions)	$1.200	1.207*	-$0.007 / -0.6%
EBITDA ($USD Millions)	$186.0*	174.9*	+$11.1 / +6%

Values retrieved from S&P Global. For revenue, consensus typically references total revenue; company emphasizes revenues excluding cost reimbursements ($827M) .

Segment performance (Revenues ex. reimbursements)

Segment	Q3 2024	Q4 2024	Q1 2025
Vacation Ownership Revenues ex. Reimb. ($M)	$766	$817	$757
Exchange & Third-Party Mgmt Revenues ex. Reimb. ($M)	$55	$49	$56
VO Segment Adj. EBITDA ($M)	$231	$221	$221
VO Segment Adj. EBITDA Margin (%)	30.1%	27.0%	29.2%
Exchange & TPM Adj. EBITDA ($M)	$23	$22	$28
Exchange & TPM Adj. EBITDA Margin (%)	43.1%	44.2%	49.0%

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Consolidated Contract Sales ($M)	$459	$477	$420
VPG ($)	$3,888	$3,916	$3,979
Tours (#)	110,557	113,828	97,998
Total Active Interval Members (000s)	1,545	1,546	1,538
Avg Rev per Interval Member ($)	38.93	35.36	39.94

Cash, Liquidity, Debt

Liquidity: $865M ($196M cash + ~ $600M revolver availability) at 3/31/25 .
Corporate debt: ~$3.0B; non-recourse securitized debt: ~$2.0B; leverage ~4.1x at quarter-end per call; no maturities until early 2026 .
Securitization: $450M notes, 98% advance, 5.16% blended rate (May 6, 2025) .

Guidance Changes

Metric	Period	Previous Guidance (2/26/25)	Current Guidance (5/7/25)	Change
Contract Sales ($B)	FY 2025	$1.850–$1.925	$1.740–$1.830	Lowered
Adjusted EBITDA ($M)	FY 2025	$750–$780	$750–$780	Maintained
Adjusted Net Income ($M)	FY 2025	$250–$280	$250–$280	Maintained
Adjusted EPS – Diluted ($)	FY 2025	$6.30–$7.00	$6.40–$7.10	Raised
Adjusted Free Cash Flow ($M)	FY 2025	$290–$350	$270–$330	Lowered
Cash Interest ($M)	FY 2025 (FCF bridge)	(150)–(145)	(150)–(145)	Maintained
Cash Taxes ($M)	FY 2025 (FCF bridge)	(150)–(155)	(150)–(155)	Maintained
Corporate Capex ($M)	FY 2025 (FCF bridge)	(65)	(60)	Lowered
Inventory ($M)	FY 2025 (FCF bridge)	(75)–(60)	(85)–(70)	Higher outflow
Financing Activity & Other ($M)	FY 2025 (FCF bridge)	(20)–(5)	(35)–(20)	More negative
Supplemental: Interest expense, net ($M)	FY 2025	$173–$168	$173–$168	Maintained
Supplemental: D&A ($M)	FY 2025	$150–$148	$150–$148	Maintained
Supplemental: Tax rate (%)	FY 2025	36%–34%	36%–34%	Maintained
Qualitative: Modernization in-year benefit	FY 2025	$15–$25M	~$35M, total in-year savings $40–$50M	Raised
VO Rental Profit	FY 2025	Decline ~$15M (initial view)	Decline ~$15M re-affirmed	Maintained
Corporate G&A	FY 2025	Increase YoY (incl. incentives/tech)	Flat to down slightly	Improved

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
AI/Technology initiatives	Expanded digital self-service; chatbot resolving 85% of interactions; Salesforce owner data; data/analytics for targeting	AI-powered phone agents, expanding virtual voice agents; 70% of Marriott Vacations Points reservations booked online; summer launch to book into 9,000+ Marriott hotels with points	Accelerating digitization and AI deployment
Macro/consumer	Resilient leisure travel; high occupancy ~90%; focused promos for first-time buyers	“Most volatile economic environment… consumer remains strong”; tours and package pipeline healthy; delinquencies improving	Macro caution but healthy demand signals
Product performance	Q3: contract sales +5%; first-time buyer initiatives; owner VPG improved	Q1: contract sales -2%; first-time buyer sales +6%; VPG -4% YoY; April first-time buyer VPG +10% YoY post-adjustments	Mix shift toward new buyers; VPG stabilization efforts
Regional trends	Hawaii recovery; APAC sales +40% YoY; Waikiki opening	Continued strong occupancy and bookings for summer; inventory mix optimization	Normalizing; continued expansion
Interval/Exchange	Ongoing softness at Interval; Aqua-Aston Maui impact	Exchange & TPM revenue -9%, adj. EBITDA -13% YoY	Soft but margins remain high
Cost and modernization	$50–$100M run-rate efficiencies over 2 years announced (Q3); $150–$200M run-rate adj. EBITDA by end-2026 (Q4)	In-year savings raised to ~$35M; reaffirm $150–$200M run-rate by end-2026	Execution ahead of plan
Capital & ABS	Q3: $445M ABS at 4.52%	$450M ABS at 5.16% with 98% advance; revolver upsized and rate -25 bps; $450M delayed draw for 2026 converts	Strong ABS demand; enhanced flexibility

Management Commentary

Strategic focus and confidence: “We had a strong beginning to the year… We are reiterating our full-year Adjusted EBITDA guidance… and progress on our transformation initiatives.” — John Geller, CEO .
Demand signals: “Running more than a 90% resort occupancy in the first quarter with forward bookings remaining strong… we adjusted our strategies, helping drive 6% higher first-time buyer sales.” — Geller .
Digital/AI initiatives: “Our resort operations team is expanding the use of an AI-powered phone agent… Nearly 70% of Marriott Vacations Points reservations… booked online… this summer, we plan to launch the ability… to book directly into nearly any of Marriott’s 9,000-plus hotels… using their vacation ownership points.” — Geller .
Cost/efficiency program: “We are able to accelerate some of our initiatives, increasing this year’s savings to $35 million… [and] incremental $40–$50 million in savings this year… reaffirmed our adjusted EBITDA guidance.” — Jason Marino, CFO .
Capital allocation: “We returned $91 million in cash to shareholders… buying back 1.4% of our outstanding shares… closed… $450 million in ABS debt at… 5.16% and a 98% advance rate.” — Marino .

Q&A Highlights

Contract sales cadence and VPG: March and April down ~4% YoY in total, but first-time buyer VPG up ~10% in April after adjustments; owner VPG “down a little,” with promotions planned to support .
Inventory/product cost optimization: Lower product cost driven by mix (e.g., more repurchases) and selling lower-cost inventory; modulating repurchase prices to reduce cost .
Guidance framework: Contract sales midpoint lowered; hitting top-end requires VPG improvement; tours expected to grow low-single-digits; rental profit to decline ~$15M; corporate G&A flat-to-down; in-year savings lifted to ~$35M .
Owner base growth: Targeting higher mix of first-time buyers (35–40%+ ideal) for long-term system health; net owner growth should be up net of attrition .
Capital returns and leverage: Shares “materially undervalued”; repurchases to be balanced with goal to reduce leverage closer to 3x over time (from ~4x) .

Estimates Context

Q1 2025 beats/misses versus S&P Global: EPS $1.66 vs $1.43* beat; EBITDA $186M* vs $174.9M* beat; total revenue $1.200B vs $1.207B* slight miss. Note: company emphasizes revenues excluding cost reimbursements ($827M), while consensus typically tracks total revenue . Values retrieved from S&P Global.
Estimate revisions likely: Reaffirmed EBITDA guide despite lower contract sales and raised in-year savings should support upward revisions to profitability assumptions; however, lowered contract sales and rental headwinds could cap top-line estimate increases .

Key Takeaways for Investors

Profitability outperforming: Mix, cost actions, and modernization savings offset softer sales/VPG, enabling an EBITDA beat and reiteration of the FY25 EBITDA outlook .
Sales mix strategy is intentional: More first-time buyers (healthy for LT growth) temporarily weighs on VPG but management is adjusting promotions and sees early VPG improvement in April, supporting back-half stabilization .
Cost/efficiency ramp is the bridge: In-year savings increased to ~$35M, total 2025 in-year savings $40–$50M, underpinning EBITDA despite lower contract sales .
Rental and Interval are watch items: Rental profit guided down ~$15M; Interval trends remain soft; both temper top-line, but VO development/financing and margin discipline cushion earnings .
Balance sheet/liquidity supportive: Extended/upsized revolver, $450M delayed-draw for 2026 converts, and $450M ABS at strong terms; $91M returned to shareholders in Q1 (repurchases + dividend) .
Near-term trading implications: Confirmation of EBITDA trajectory and cost acceleration are positive; contract sales reset and rental headwind may cap multiple until VPG/tour momentum broadens; watch monthly sales/VPG and Interval trends into summer .
Medium-term thesis: Modernization benefits ($150–$200M run-rate adj. EBITDA by end-2026) plus digital/AI initiatives and Marriott-hotel points booking could structurally lift margins and owner satisfaction, supporting re-rating as sales normalize .

Other Relevant Q1 2025 Press Releases

Completed $450M term securitization at 5.16% blended rate and 98% advance; oversubscribed >3x per class .
Declared $0.79 quarterly dividend payable around June 6, 2025 .

Notes on non-GAAP: Adjusted results exclude items including insurance proceeds, restructuring, litigation charges, gains/other income, FX, and purchase accounting adjustments; see A-3/A-4 reconciliations .

S&P Global estimates disclaimer: Values marked with * are retrieved from S&P Global.

MARRIOTT VACATIONS WORLDWIDE Corp (VAC)·Q1 2025 Earnings Summary