Soho House & Co Inc

Good morning, my name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the SoHo House and Company Incorporated first quarter 2024 results conference call. Today's conference is being recorded. 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 the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Thomas Allen, Chief Financial Officer. Please go ahead.

Thank you for joining us today to discuss Soho House & Co.' 's first quarter financial results. My name is Thomas Allen. I'm the Chief Financial Officer. I'm here with Andrew Carney, our CEO. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that make all of such differences are described in our SEC filings. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our Q1 earnings release, which can be found at sorohouseco.com in the news and events section. Additionally, we have posted our Q1 presentation, which can be found in the news and events section on our site. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliations from the most comparable GAAP measures are available in today's earnings press release. Now let me hand it over to Andrew.

Thanks, Thomas, and hello, everyone. I'm going to start by talking through the quarter's highlights, then provide an update on progress we've made against our strategic priorities. I'll then hand over to Thomas to talk through the financial performance, give an update on our balance sheet, and our guidance before moving on to Q&A. It's been a solid start to 2024, with year-on-year growth in membership and revenues as we continue to deliver against our strategic priorities. We welcome more than 4,000 members in the quarter, growing to 198,000 Soho House members overall, a year-on-year increase of 17%, which leaves us well on track to meet our full-year target. The vast majority of the growth in the quarter came from the 25 houses that we've opened since 2018. Total Sowerhouse & Co membership was also up, growing 10% year on year. And our waitlist continued to grow, pushing through the 100,000 mark for the first time and ending the quarter at 102,000. That's up from 99,000 in the fourth quarter and a 15% increase year on year, demonstrating the continuing strong appeal of our Sowerhouse membership globally. Total revenues grew 3% year-on-year to $263 million, supported by continued growth in our recurring membership revenues, which were up 20% year-on-year and 5% up quarter-on-quarter. While overall revenue in the quarter was solid, in-house revenues were lower, given macro conditions and in line with the commentary and guidance we gave you on our Q4 earnings. However, throughout the quarter, we saw sequentially stronger in-house revenue performance. And that trend has continued into April, strengthening our confidence in the year ahead. Q1 adjusted EBITDA was ahead of market expectations at 19.3 million. As we move more into our seasonally stronger quarters, we expect EBITDA to be higher year over year for the remainder of the year. We continue to control costs well, and so I've raised the midpoint of our adjusted EBITDA guidance for the year and reiterated guidance for all other metrics. We've made significant progress against our two strategic priorities in the first quarter and we will continue to focus on these areas. Growing and enhancing the value of membership and delivering operational excellence to drive profitability and free cash flow. Ensuring we deliver the best member experiences at the heart of what we do. We are improving service in our houses and we're seeing a positive impact with member satisfaction scores increasing quarter over quarter. We continue to execute on initiatives that make our member experience more personalized. We recently launched event recommendations on our app using reliable member data, which helped drive 6% higher event bookings in the quarter. We are continuing to invest in our existing houses, including carrying out refreshes at houses in London, LA, and New York. So House is known for our rooftops and pools. Our members love to spend the warmer months there. which is why we recently relaunched the rooftop at White City House and we're about to do the same at Sir House Holloway in Los Angeles and Dumbo House in New York. We've continued to introduce new menus, restaurants, pop-ups and wellness facilities that have all been very well received. We recently announced that we're working towards opening a gym within 180 House in London later this year. Our new openings are going from strength to strength. Sir House Portland has had a strong start since we opened in March And we've capitalized on six years in the city through our Cities Without Houses membership by already adding more than 1,000 members. I'm also really excited about the upcoming opening in Sao Paulo, where we've seen high demand for membership of our first house in South America and follows the strong performance of our other house in Latin America, Serra House Mexico City, which opened last September. Turning to our second strategic priority, operational excellence. As you know, our strategy here is centered on three key areas. First, leveraging data and member insight to operate and scale efficiently. Second, expanding in-house margins. And third, having operational discipline as we grow. We've made further progress over the quarter, again achieving positive cash flow from operating activities. Both in-house food and beverage margins improve year over year, despite continued cost inflation. Over the quarter, we set ourselves to go further in this area by conducting a full review of our beverage range, which we expect to deliver even stronger profitability in the future. As part of improving service and becoming more efficient, we launched a new best-in-class HR system in the UK that will roll out globally. This will allow our managers to spend more time with our members and their teams, whilst also allowing them to better manage their hours. Given the strength of our membership revenue, our house-level margins continue to improve in the quarter. Now, let me pass over to Thomas to give you more detail on the numbers and our updated guidance.