Inspirato Incorporated

Greetings and welcome to Inspirato's third quarter 2025 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. I would like to turn the call over to your host, Inspirato's Chief Marketing Officer, Vita Melanian. Please go ahead.

Thank you, Operator, and good morning. Joining us for today's presentation are Inspirato's Chairman and CEO, Payam Dhoni, and CFO, Michael Arthur. Before we begin, please note that today's call is being webcast live. and will also be archived on the investor relations section of our website at insprato.com. You can also find our press release and the supplemental materials currently available there for your reference. As a reminder, some of today's comments are forward-looking statements. These statements are based on assumptions and actual results could differ materially. For discussion of these risks and uncertainties, please refer to our filings with the SEC including our most recent annual report on Form 10-K and our subsequent third quarter report on Form 10-Q. 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 so the most directly comparable gap measures are included in our pressure. With that, I'd like to turn the call over to Insprato Chairman and CEO, Hayam Zawadi.

Hayam? Thank you, and good morning, everyone. Yesterday afternoon, we issued a press release announcing our financial and operational results for the third quarter. I encourage all listeners to review the press release, which has been posted to our investor relations website as it contains information relevant to today's call. I'm proud of the accomplishments we've made this quarter and a testament that we're heading in the right direction. This quarter, we delivered a 97% year-over-year improvement in adjusted EBITDA, reflecting meaningful progress in reducing fixed commitments while maintaining the exceptional experience our members expect. Year-to-date, adjusted EBITDA is up $13.2 million, and operating cash flow has improved by $15 million, showing the lasting impact of our disciplined approach. We've reviewed and renegotiated hundreds of vendor contracts, driving $4 million in additional annual savings, another important step in strengthening our foundation. During the quarter, we also began presale of our new PaaS membership, launching in January. It's redesigned to create a more flexible, innovative way to travel while delivering greater value for our members and advancing our mission to reinvent luxury travel. Since pre-selling began, we have added more new past members in less than three months than in the prior 12 months combined. The progress we've made over the past year has positioned Esprado for efficient growth in 2026 and beyond. Although we are not yet providing formal guidance for 2026, we fully expect continued improvement in our EBITDA margin as our transformation efforts take hold. At the same time, we are transforming the business and investing in a more robust digital marketing and technology platform, one that's designed to build a scalable, durable, and efficient growth model for the future. As part of this broader transformation, we announced the proposed business combination with BioLINK in June 2025. The goal of that transaction was to accelerate our digital strategy and platform evolution, helping us unlock this growth faster. However, we mutually agreed with BioLink to terminate the agreement in September. While the BioLink transaction is no longer moving forward, our strategy and business transformation initiatives have not changed. The rationale behind the proposed combination was not to alter our direction, but to speed up our progress toward becoming a leading platform for luxury travel. We remain deeply committed to this vision, continuing to modernize and strengthen our technology and digital foundation to elevate the member experience enabled by the talent and dedication of our existing team. I remain incredibly confident in the path ahead and believe that all the best days are yet to come. We expect to share additional updates on this strategic initiative beginning next year. Now, on to updates for the quarter. As you know by now, our strategy has been focused on four pillars that are the foundation for our business. As a reminder, these pillars are, one, operational efficiency, two, brand elevation, three, member experience, four digital platforms. First, we're focused on driving operational efficiency. Since I joined the business, we have been making changes to position the business for profitable growth. Through discipline, cost management, and organizational right-sizing, we've achieved adjusted EBITDA profitability on a training 12-month basis in Q2 and, again, Q3. This quarter, we completed a comprehensive review of our vendor agreements, evaluating hundreds of partnerships to ensure alignment with our current strategy and future objectives. As a result, we were able to identify $4 million in annual life savings. To be clear, these changes were made without any impact to the quality of service that our members expect. These are the types of improvements we have made over the last year that led to our 97% year-over-year adjusted EBITDA improvement in the quarter. We expect that the changes we made this quarter, along with a combined focus on operational efficiency, will help us manage costs effectively in the quarters ahead. We also know that the changes position us to scale efficiently and to build out our luxury travel technology platform. Turning to brand elevation, we're continuing to push InspirAuto forward and elevate our brand status. This quarter, we relaunched Inspirado Magazine, featuring our best properties and content tailored to our key customer demographics. The magazine captured strong media attention, amplifying brand recognition and reinforcing our image as a premier travel brand. We also expanded our social media presence to ensure we are both present and consistent across all platforms. This cohesive storytelling builds our audience and elevates our brand. Our goal is to create a clear, unified experience the first time people encounter our brand across any channel. It's rather synonymous with quality, luxury, and service. Third, we're continuing to build on and enhance the member experience. This quarter, we launched our redesigned PASS program. While the program was historically a successful draw for new members, as previously constructed, it had several limiting restrictions for our guests and ultimately wasn't a long-term profitable program for us. We've now redesigned the product to deliver exceptional value. Members can maintain two active reservations at any time, each up to seven nights, from our exclusive curated portfolio properties. Every state features consistent quality and white-globe service, no matter the destination. For a single fee of $40,000, members enjoy travel with no 90 taxes, rates, or additional fees throughout the year. The program is ideal for discerning travelers who value flexibility and want to maximize both luxury and value from their vacation experiences. We're excited to see members take full advantage of the opportunities our PASS program offers. Pre-sales began in August and since we sold more memberships in that time than we did in the prior 12 months combined. The newly revamped program has been extremely well received. We see this as another way to build a best in class member experience. Additionally, we continue to develop experience and partnerships that retain existing members and attract new audiences. For example, we recently expanded our Esprado sports collection to include a center court experience at the 2026 Wimbledon Finals, golf at four of the best courses around Spain, and a family adventure exploring three of Utah's iconic national parks. These curated experiences continue to resonate strongly with members who value shared moments of celebration and discovery. As we've scaled our business, we now offer more than 25 member-only journeys annually. We also recently added a partnership with Arrow to provide our guests with additional flying options to our marquee destinations. These semi-private flight options will help us provide a more cohesive travel experience for our guests. I've always believed that a vacation begins the moment you leave home, and this partnership helps bring that idea to life. Finally, we also made several strategic property enhancements to strengthen member satisfaction, drive higher occupancy, and reinforce our brand as a leader in curated luxury travel. We have additional improvements to more of our locations planned in the year ahead, which we will share as we go along. Lastly, we're building a robust technology and digital marketing platform that will unlock massive potential for Esproto. With the cost improvements and other enhancements we've made, we now have the right business operations in place to invest and grow. We believe the foundational technology investments we're making will help transform Esproto into the leader in luxury travel. We will create a world-class platform that allows us to reach targets and convert high-value travelers at a scale previously impossible for us. This will expand our total addressable market and fuel our growth for years to come. In closing, we continue to successfully execute our long-term business strategy third quarter, which has us well-positioned to meet our financial and operational targets for the year. Over the past 15 months, we've made tremendous strides to elevate the business while laying the operational groundwork to scale efficiently as we lean into our technology platform strategy. I want to thank our team for their relentless focus and our members for their trust and loyalty. I believe we are the start of something extraordinary and our results prove it. And I can't wait to share more progress with you in the quarters ahead. I'd like to also share that yesterday we announced the upcoming departure of our CFO, Michael Arthur, but I decided to pursue another opportunity. Michael will remain with Sprado through the end of 2025 to ensure a smooth transition while we conduct a search for his successor. Michael has been an exceptional partner and leader, helping to strengthen our financial foundation and advance our long-term strategic goals. On behalf of the entire company and our board of directors, I want to thank him for his many contributions and wish him continued success in his next chapter. With that, I'll turn it over to Michael to discuss our financial performance and outlook for the remainder of the year.