Vacasa, Inc.

Good morning. My name is Demi, and I will be your conference operator today. At this time, I would like to welcome everyone to the CASA fourth quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I would now like to turn the conference over to Jay Jansko, Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us for today's call. I'm pleased to be joined today by Vacasa CEO, Rob Graber, and CFO, Bruce Schumann. As a reminder, the content of today's call is the property of Vacasa and may not be reproduced or transcribed without our written consent. We have posted a shareholder letter on investor relations section of our website at investors.vacasa.com that will be referenced by our speakers. Comments made during this conference call and in our shareholder letter contain forward-looking statements. Such statements include those about future expectations, beliefs, plans, projections, strategies, targets, estimates, objectives, events, conditions, and financial performance, including guidance for future period results. We caution you that various risks and uncertainties could cause actual results to differ materially from those in our forward-looking statements. For additional information concerning these risks and uncertainties, please read the forward-looking statements section in the shareholder letter we issued earlier today and the forward-looking statements and risk factors section in our filings with the Securities and Exchange Commission. During this call, we may refer to various non-GAAP financial measures. Information regarding our non-GAAP financial results, including a reconciliation of our non-GAAP results to the most directly comparable GAAP financial measures, may be found in our shareholder letter. These non-GAAP measures should be considered in addition to our GAAP results and are intended to supplement but not substitute for performance measures calculated in accordance with GAAP. And now I will turn the call over to Rob Graver. Rob?

Thanks, Jay. Good afternoon, everyone, and thank you for joining us. I'll begin today with a recap on 2023 and then turn to how we're positioning the CASA in 2024 and beyond. I'll then hand the call to Bruce to review financial results. Before that, I wanted to note that today we shared with our team that we decided to reduce our headcount, impacting around 320 people, representing about 5% of our workforce. Decisions like this are always difficult, and this was no exception. As we have shared before, we are on a path to transform Vacasa to become a more efficient, high-performing organization, one dedicated to the service of our owners, our guests, and the people who serve them. On that path to transformation, 2023 was a pivotal year for the company. We concentrated on building a better, more efficient business against the dynamic macroeconomic and industry environments. We sharpened our organic sales engine, accelerated product delivery, and improved our cost structure. This allowed us to deliver an adjusted EBITDA profitable year despite double-digit declines in gross booking value per home across the industry on a year-on-year basis. 2023 had its challenges, and we made a great deal of progress in the business. Yet 2024 is off to a difficult start, and there remains much more to accomplish in an industry environment that remains challenging. In 2023, we made it our mission to focus on improving the owner experience. We visited local markets and examined how we care for homes and destinations across the country. We surveyed and listened to homeowners and analyzed our internal processes. We delivered a number of new technology tools to make our value proposition to homeowners stronger than ever. In previous calls, we've discussed the home care dashboard, like the SMS tool and clean inspection tool. We believe these products are significantly improving the homeowner experience as reflected in owner feedback we've received since implementation. In the fourth quarter, we also launched our homeowner communication tool, allowing owners to interact with our teams directly through our mobile apps and owner portals. We also introduced our proprietary market rates comparison tool, which gives our owners insights into how the price stays at their homes and allows them to model certain criteria to see how changes might impact their revenues. As a result of these initiatives and our team's relentless efforts on our homeowner experience, our homeowner satisfaction scores improved steadily through the second half of the year. So we are seeing positive trends in homeowner satisfaction, but we have not yet turned the corner on churn. Some aspects of churn are an industry phenomenon, but many are in our control. Improving the homeowner experience, including how we care for their guests, is central to those efforts. and homeowner retention will remain a critical priority throughout 2024. A few words about how we performed against the four critical priorities I shared with you all last year, which were improving execution in local markets and customer support functions, unlocking the potential of the individual sales approach, developing the right technology products, and prioritizing our business needs to drive profitable growth. We spent last year improving how we support and operate in our local markets. We implemented new processes enabled by technology, created efficiencies without sacrificing the service level excellence our homeowners and guests expect. For example, midway through 2023, we began rolling out our new field scheduling system. This tool is designed to optimize one of our most time consuming and expensive tasks, physical visits to homes. The effectiveness of this tool helped drive our highest guest reviews for the year in Q4 and our highest cleanliness and net promoter scores of 2023 across all major channels, all while driving efficiencies that led to year-over-year cost savings in Q4, including a 7% reduction in the cost of revenue per night sold and a 13% reduction in operations and support expense. Turning to our sales efforts. Entering 2023, we moved away from the portfolio acquisition approach toward our individual approach with the goal of improving our ability to consistently and sustainably add desirable homes to our platform over the long term. As part of this shift in strategy, we implemented a number of initiatives to streamline our organic sales processes and productivity and strengthen our team. We restructured the sales organization to drive more efficiency, emphasizing organic, sustainable home growth. We also redesigned sales incentive plans to better align performance and results, and improved our tools and systems to drive efficiencies in our sales enablement processes and owner and home onboarding, among other initiatives. Traction on these initiatives helped drive three consecutive quarters of year-over-year improvement in sales productivity to end 2023. We continue to add functionality to our technology platform, prioritizing investments that generate measurable efficiencies in our operations and deliver a better experience for homeowners and guests. In addition to the homeowner communications, market rates comparison, and field scheduling tools launched in 2023, during Q4, we made several other technology-driven improvements. We significantly upgraded our connectivity to Airbnb, enabling us to place critical information for guests directly into the Airbnb app, such as reservation confirmations, trip updates, and departure instructions. This has reduced the number of calls to our Guest Experience Center and helped drive higher guest satisfaction scores. We expanded and are ramping the number of channels through which we offer our homes. We're also offering curated inventory on some of those channels to target different types of guests and provide incremental revenue opportunities for our owners. We also continue to introduce artificial intelligence tools that improve productivity. The most recent launch in Q4 has greatly reduced the time we spend processing guest reviews. This allows us to more quickly identify a review that requires an immediate action versus a positive review that may require a simple acknowledgement and thank you. Finally, over the course of 2023, we drove cost efficiencies across the business while carefully managing expense spend, culminating in full-year adjusted EBITDA profitability that exceeded our guidance despite lower year-over-year revenue. We made it clear that 2023 would be a transition year for Vacasa, a year to reset, improve the organization, and position the business for the long term. 2024 will be a year of continued transformation to maintain momentum and capitalize on the improvements of 2023. As I mentioned before, 2024 is off to a difficult start. Increased supply in the market as well as softening demand is resulting in continued bookings variability. We are watching those dynamics very closely. However, the current conditions are creating uncertainty as we look forward. Therefore, it is as important as ever to sharpen our focus on execution, zero out defects, and raise the tempo on the top initiatives that are going to take the Casa to the next stage on our journey. Without dynamic as context, I'd like to outline the strategic priorities that are driving our decision-making for 2024. We will continue to focus on improving and aligning PCASA's product and technology capabilities for our owners, our guests, and the people who take care of them. We believe leveraging technology will support a superior experience for and value to homeowners and guests, while also making our operations more efficient. The team is already hard at work on a number of impactful new developments, which I look forward to sharing with you over the coming quarters. McCussell will also be putting a renewed focus into optimizing our service offerings and where we allocate resources. Adding desirable homes to our platform while minimizing churn is at the foundation of our long-term growth strategy, with the individual sales approach as the primary driver of that growth. However, against the backdrop of a persistently dynamic industry environment coming off the highs of 2021 and 2022, as well as our continued efforts to prioritize profitability, we will be very intentional with how we allocate resources across the business to drive long-term growth. We intend to prioritize investments in and allocate resources to creating or further leveraging tools to attract and retain homeowners and to explore additional service offerings and ways to monetize our platform. We will be revisiting our progress and strategy here in coming quarters. And finally, while we are focused on our long-term growth opportunities, we are continuing to execute on improving operational effectiveness and efficiencies across the organization. We made significant progress in this area in 2023, driving an over $50 million improvement in adjusted EBITDA year-over-year, primarily driven by reduced expenses and driving efficiencies throughout our business. We will be laser-focused on this throughout 2024 and beyond as a foundational principle of our culture at Vacasa. In closing, we made a lot of progress in 2023, particularly given the headwinds we encountered throughout the year, and there is more work to do in a challenging environment. But I believe we are making the right strategic decisions to allow the business to reach its full potential, and I am focused on continuing this phase of Vacasa's journey. I'll now turn the call over to Bruce to discuss financials.