Inspirato Incorporated

Good day and thank you for standing by. Welcome to the Inspirato first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand your conference over to our first speaker, Kyle Thorpe, Investor Relations. Kyle, the floor is yours.

Thank you, and good morning. On today's call, we have co-founder and CEO Brent Handler and CFO Robert Caden. Yesterday afternoon, we issued our press release announcing our first quarter 2023 results, which is available on the Investor Relations page of our website at investor.investor.com. Before we begin our formal remarks, we remind everyone that some of today's comments are forward-looking statements, including, but not limited to, our expectations of future operating results and financial position, guidance and growth prospects, business strategy and plans, and market position and potential market opportunities. These statements are based on assumptions, and we assume no obligation to update them. Actual results could differ materially. We refer you to our SEC filings for a more detailed discussion of additional risks. In addition, during the call, management will discuss non-GAAP measures, which are useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of these measures, of the most directly comparable GAAP measures, are included in our earnings release. With that, I'll turn the call over to our CEO, Brent Handler.

Thank you, Kyle, and good morning, everyone. Before beginning, I'd like to officially welcome Robert as our Chief Financial Officer to the Inspirato team. Robert was most recently the Chief Accounting Officer at Twitter and brings decades of public company accounting experience to Inspirato. He's made an immediate impact since joining in March, and I'm extremely excited to continue working closely with him moving forward. Shifting to our first quarter results, we saw continued strong travel demand as evidenced by our 50,700 total nights delivered. This is not only a year-over-year increase of 18%, but a sequential increase of 7% compared to the fourth quarter of 2022, and marks the second highest level in the company's history. Further, our total occupancy rebounded from 73% last quarter to 77% in the first quarter. This compares to 87% in the first quarter of 2022. We generated 92 million of total revenue, a 12% year-over-year increase compared to 82 million in the first quarter of last year. Our net loss of 5.9 million compared to a loss of 24 million in the first quarter of 2022. And we generated an adjusted EBITDA loss of approximately 3.1 million compared to 3.7 million in the first quarter of last year. Meanwhile, our gross margin of 35% is below our high watermark of 42% in the first quarter of last year, but more consistent with our performance of the past two years. As we messaged on our last call, the significant increase of our controlled accommodations and leased hotel inventory over the past two years has led to increased lease expenses, which is impacting our gross margins as we both grow into this new capacity and optimize the portfolio. I'll let Robert cover the portfolio optimization in more detail, but we expect reduced supply growth, lease renegotiations, and inventory allocation to not only expand our margins over time, but position us to achieve positive adjusted EBITDA. Along those lines, we spent much of the time on our last call focused on our path to profitability on an adjusted EBITDA basis. while highlighting several areas of focus that would help us achieve this goal. The first area of focus was monetizing our available capacity. We aim to achieve this through renewed focus on incremental bookings via our newly created member success team and our new member acquisition strategies, including Inspirato for Good, Inspirato for Business, and our SACS partnership. We're very excited about the early success of both Inspirato for Good and Inspirato for Business. In the first quarter, Inspirato for Good sold trip and membership packages for 2.3 million compared to 1.2 million in the fourth quarter of 2022. We're still learning about the seasonality of the nonprofit space. However, we have seen strong forward momentum early in the quarter and expect Q2 to deliver increased sales compared to the first quarter. Inspirato for Business also had solid results in Q1 with approximately 4 million of sales compared to our just over 2 million in the fourth quarter of 2022. Similar to Inspirato for Good, we are learning about the natural seasonality that exists in this business and expect to see strong growth over the year, especially in Q4, which is the typical buying season for reward travel. We ended the quarter with 15,700 active subscriptions compared to 15,300 at the end of the first quarter of 2022, and 16,100 at the year end 2022. Much of the subscription trends we're seeing can be attributed to a slowdown of new PATH subscription sales, whereas resignations actually slowed slightly on a sequential basis. Historically, a high percentage of PATH sales have come as upgrades from our existing subscribers. Our newly created member success team will have a high priority on educating club subscribers to the many benefits of PATH. As part of our continued focus on improving retention, we built a strategy around multi-year commitment. In the first quarter of 2023, more than 80% of our new club sales were multi-year contracts compared to approximately 15% in the first quarter of 2022. Further, as an offset to the decrease in active subscriptions, we sold approximately 850 Inspirato for Good packages in the quarter, which include a bundled Inspirato trip and a six-month or one-year trial membership. Through Q1 2023, we have sold over 1,300 Inspirato for Good packages since we launched this platform last fall. These members are not included in our reported subscription counts, and we are excited about getting them traveling in the portfolio with an upgrade path towards full membership. I am also extremely excited to announce the SACS partnership soft launch on May 1st, and we have begun to train their 3,000 stylists on how to sell Inspirato luxury travel subscription offerings to their discerning clients. As this partnership progresses, we look forward to providing updates on future calls. Lastly, we continue to explore exciting partnership opportunities in a variety of vertical markets. Finally, this morning we announced an exclusive member investor benefit for our loyal subscribers. Consistent with our relationship-driven approach, It has long been a vision to offer and reward our members with ownership opportunities in Inspirato. Now, to thank our members for their loyalty and advocacy, we are offering one complimentary vacation for every 50,000 shares owned and held for six months. We have conviction and confidence in our long-term vision and are excited to share this opportunity with our members. In summary, I'm very pleased with our start to the year. We continue to make strides on our path to profitability on an adjusted EBITDA basis, all while continuing to deliver on our promise of providing unique and curated luxury travel and experiences for our members. We have a number of growth initiatives that are now well underway and beginning to make an impact on both our top and bottom line. With that said, I'll turn the call over to Robert to provide a bit more detail on our quarterly results.