Q4 2023 Vacasa Inc Earnings Call
Uh huh.
Okay.
Good morning, My name is Stephanie and I will be conference operator today.
At this time I would like to welcome everyone to the Gaza Fourthquarter trends actually earnings conference call.
Lines have been placed on mute to prevent any background noise.
So just because robotics.
It 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 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 Genco, 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 Mcarthur, CEO, Rob Draper and CFO Bruce <unk>.
As a reminder, the content of today's call is the property of the cost that it 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 Casa Dot com and 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 strategy target.
Active events conditions and financial performance, including guidance for future periods 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 Kramer 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 are positioning the Costa 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 head count impacting around 320 people representing about 5% of our workforce.
Decisions like this are always difficult and this was no exception as.
As we have shared before we are on a path to transform <unk> 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 environment.
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 examine how we care for homes and destinations across the country, we surveyed and listened to homeowners and analyze our internal processes. We delivered a number of new technology tools to make our value proposition to homeowners stronger then.
In previous calls we've discussed the homecare dashboard to 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.
Also introduced our proprietary market rates comparison tool, which gives our owners insights into how we price stays at their homes and allows them to model certain criteria to see how changes might impact the revenue.
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 and homeowner satisfaction.
We have not yet turned the corner on churn.
Aspects of churn or 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 homeowners 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 task physical visits to homes.
The effectiveness of this tool will help 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.
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.
Option 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 update 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 continued to introduce artificial intelligence tools that improve productivity and most.
<unk> launched in Q4 has greatly reduced the time, we spend processing guest reviews. This allows us to more quickly identify review that requires an immediate action versus the positive reviews that may require a simple acknowledgements 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 <unk>, a year to reset improves the organization and positioning 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.
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 defect and raise the tempo on the top initiatives that are going to take the concept 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 our cost of 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 development, which I look forward to sharing with you over the coming quarters.
<unk> 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 is 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 we're further leveraging tools to attract and retain homeowners and to explore additional service offerings in 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 and over $50 million improvement in adjusted EBITDA year over year, primarily driven by reduced expense.
<unk> and driving efficiencies throughout our business, we will be laser focused on this throughout 2024 and beyond with a foundational principle of our culture at the cost of <unk>.
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 <unk> journey.
I'll now turn the call over to Bruce to discuss financials Bruce.
Thanks, Rob.
Les noted otherwise I will be comparing our fourth quarter results to the fourth quarter of 2022, and I'll be referencing the operating expense lines, excluding the impact of stock based compensation restructuring costs and business combination costs, which you can find outlined in our shareholder letter.
We finished 2023 with approximately 42000 homes down 5% year over year, reflecting the churn dynamic that we and the broader industry has been experiencing over the past few quarters.
For the fourth quarter gross booking value, which is the combination of night sold and gross booking value for nights sold was $337 million.
Down 19% year over year.
<unk> sold were $1 1 million in the fourth quarter down 5% year over year.
Gross booking value per night sold was $309 in the fourth quarter down 15% year over year.
Throughout 2023, we've discussed the year over year declines in average gross booking value per home.
Observing in the consumer bookings kind of dynamic.
And that's been affecting both gross bookings value per night sold a number of nights sold and that's coming off of two record years in 2021 and 2022. So look I think there are a combination of factors that are at play here I think that there is still a dynamic where there is a shift back to <unk>.
<unk> and international travel others have referenced that I think.
Supers are returning to the office or if theyre not theyre, certainly returning to kind of a more normal.
Dynamic in their own lives, where they are not working remotely for extended period of time I think theres also some potential concerns on the macro side I think when when you think about.
The work that the fed has been doing on obtaining inflation those things in the short run I think are terrific in the law.
The longer they are terrific in the short run that can put some pressure on the customer spending dynamics. So we'll see how all that plays out I think in addition to that I would say that we are seeing continued double digit increases year over year in supply in our markets and and that has an impact on the demand for home that you see.
Play out so when you think about those factors.
At play I think those are some of the drivers that we're watching closely when we think about the bookings pace that we're seeing at the start of 2024.
Volatile environment. There is there is there is some of the dynamics we've alluded to on the weakness at the close into the booking curve that we're observing in navigating and so.
When we think about how we're we're adapting and working through this environment. This is something that we've been seeing for a little while we're in the process of.
Understanding these new patterns, we're using that to sort of another motivation to really think about first how to operate efficiency efficiently and then second how to maximize the income for our homeowners.
There is a lot of work that we are we're doing on those fronts.
And I think that.
We've shown our ability to navigate some of those challenges for example in the fourth quarter with the cost of revenue for Knight and operations and support expense coming down on a year over year basis. So we're working hard to adapt to these changes we did that in 2023, we have to do it again in 2024, there's not really a blueprint here, but it.
Is that focus on execution and the tactics, which is really an important driver of our performance in the long run so.
As I think about it consumer demand is going to ebb and flow in our vertical and it's going to be driven by preference shifts within travel we're a broader economic environment, but we think we're focused on the right things by by focusing on our local market operations being nimble being thoughtful variable lodging our cost and then staying very focused on navigating on our front foot.
The changes changes in demand.
Your other question on <unk>.
Demand was.
Just on the monthly trends, if you could share anything like.
Operator: Good morning, my name is Temi, and I will be your conference operator today, as this time I would like to welcome everyone to the Vacasa fourth quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.
January February and then.
As January the toughest comp.
Yes, we're not going to parse the monthly dynamically Jed, we're clearly watching it it's difficult for us to call that out.
Operator: 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. I would now like to turn the conference over to Jay Jensko, Vice President, Investor Relations. Please go ahead.
Specially I think we're trying to be as open as we can about about about what it is that we're observing I think you've seen us do that before I think that there's a lot of industry data sources that are suggesting that it is.
The dynamics are something that the broad market are seeing.
And I think that is.
It's probably all of the same drivers.
Got it and then just as a follow up sorry, you gave 42000 homes.
Are you planning to give that metric quarterly and that kind of a sign that churn is maybe stabilizing a little bit. Thanks.
Jay Jensko: Good afternoon, everyone, and thank you for joining us for today's call. I'm pleased to be joined today by Vacasa CEO Rob Greyber and CFO Bruce Schuman. 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.
Yes, Hi, Jeff. This is Bruce Thanks for the question I'll take the first part of that and then maybe Rob can talk to the churn dynamic the short answer to your question is yes, we do plan on disclosing that on a quarter.
Jay Jensko: We posted a shareholder letter on the investor relations section of our website at investors.vacasa.com that will be referenced by our. 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.
Quarterly basis, just for the simple reason that number wanted to an important financial metric for us and we think just as a matter of transparency for investors I think that's important to disclose so we are going to be doing that on a on an ongoing basis.
Those are the churn dynamic Mako, our broad kind of talk through our progress there, but we are doing to try to get that more in your control, yes Jed.
Look I'm sure. The reality is it's not it's not where we want it to be.
There's a dynamic here that is that is still settling across the industry. We're focused on.
The key things that we hear from owners, we've shared those with you before.
On homeowner communications and on and on rates and revenue.
I would say that we've been we've been investing we've been focusing our work and and we've seen.
You've seen some of these leading indicators moving the right direction, but we're not yet we've not yet seen that.
Jay Jensko: 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 letters. 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 Greyber. Okay, Rob?
End result, which is churn move move to where we want it to be so on the drivers.
The focus on the homeowner experience that you've heard us talk about.
<unk> has led directly to steadily improving owner NPS, which has always been a key leading indicator for us and we havent seen it turned that corner, but it's been a big area of focus for us.
Robert Greyber: Thanks, Jay. Good afternoon, everyone, and thank you for joining us. I'll begin today with a recap of 2023 and then turn to how we're positioning Vacasa 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.
The the market rates comparison tool that we alluded to that's something that we had launched in a in a beta form.
Listening to owners and updating it and it really gives the owners more insight into.
How we are pricing stays in their home what the forward curves it looks like it allows them to model some different criteria on changes that might impact their revenue. So this is for us a very day to day execution driven thing, we're seeing as we've shared improvements month over month over month and guests and guest scores in owner.
Robert Greyber: 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, concentrating on building a better, more efficient business against the dynamic macroeconomic and industry environment. We sharpened our organic sales engine, accelerated product delivery, and improved our cost structure, which 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 challenged.
NPS.
We think that there is a dynamic that others are having to deal with but at the same time, we're focused on what's in our control and what we can do to drive that.
On the dynamics that are in.
In the industry overall, I am sure that owners or owners that are frustrated with they see when they see bookings come off their home.
What their home experienced during during the record highs in 2021 and 2022. So some cases, we think that there may be an aspect of people trying to find revenue that may not be there, but it's on us to be sure that we're that we're managing and then delivering those results and and helping them understand the market as best we possibly can.
<unk>.
Robert Greyber: 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 process. We delivered a number of new technology tools to make our value proposition to homeowners stronger than ever. In previous calls, we discussed the Home Care Dashboard, the Click-to-SMS tool, and the 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 we price stays at their homes and allows them to model certain criteria to see how changes might impact their revenue.
Thank you.
Okay.
Yes.
Okay.
Our next question comes from the line of Sidney Horowitz.
Your line is open.
Hi, This is Sean on for me. Thanks for taking our question. So on pricing pricing has continued to trend down.
Still remain meaningfully above 2019 beverage. So so do we have to walk back to 2019 that was before the pricing planes, a button audit could stabilize in between somewhere.
Hum.
From 2019 analytics now.
What's your expectation around that time.
Ill follow up.
Yes, Hey, Scott I can take that question.
I'd, just say look average gross booking value did decline year over year, we noted approximately 19% in the fourth quarter and gross booking value per night sold accounted for the majority of about that decline and.
Robert Greyber: 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.
And we talked about as Youll see when we file our 10-K use our home count decline about 5% and look we think this is an industry issue not just of the cost of industry issue or a cost issue as Rob talked about this decline is not catching us by surprise. We are working on it we think our revenue management team is doing a nice job kind of adapting to this.
Robert Greyber: 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 and 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 the home.
Not going to get into a guide situation to talk about specifically exactly where it's going to stabilize we hope it stabilizes soon but we're just focused on controlling what we can control our cost structure optimizing our rental income for our homeowners as we can and that's our focus.
Okay and then.
Thank you for that and then just.
Occupancy has been sending down.
2021.
That should be wastefully related to the pricing. So can you help us understand why do you think youre not getting the benefit of pricing going down.
Actually the translating into material occupancy rate.
Okay.
Sure I can try to take those also look neitzel the decline.
So did that metric nights sold was down about 5% year over year. This is really a function of the number of homes on our platform and the rate at which we need to price those to sell those through.
Robert Greyber: 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. Now, turning to our sales. 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 the 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.
This implies a nice sold per home that was relatively unchanged year over year in the fourth quarter that our home count was down about 5% leading to a 5% decrease in reported neitzel.
You can see the trend we've been talking about for a while.
Played out again in the fourth quarter. It is declining year over year from kind of a record levels in 'twenty. One 'twenty. Two remember we are constantly adjusting prices in real time to try to find that optimal mix between nights sold gross booking value per night sold again. The goal is to maximize gross booking value for homeowners and that's what we're focused on.
Alright, thank you so much.
Okay.
Next question comes from the line of Doug.
Endless rigidly to Michael Your line is now open.
Yes.
Thanks for taking the question.
Hello.
When youre looking at the macro conditions and looking into the first half of this area is it for.
Robert Greyber: 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. Focus 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've 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.
Are you expecting incremental headwind or is there something more of a normalization of the trends that you saw an.
How quickly.
Michael.
Sure.
Macro conditions have normalized.
I'll start to growth so let's.
Curious if it's incremental headwinds that you are expecting or is it.
Moreover, normalization of cycling through.
Yes, it's a great question.
As we said.
Really.
Don't feel like it's appropriate to kind of share a guy who are our read on the forward view here, but I would just kind of go back through the.
A couple of the drivers here, we've been talking about volatility, especially in the short end of the booking curve and is that customers that are delaying decisions deferring decisions. The dynamic of private normalizing of of length of stay customers picking alternatives, whether it's hotels or is.
Robert Greyber: This has reduced the number of calls to our guest experience center and helped drive higher guest satisfaction scores. We expanded and are ramping up the number of channels through which we offer our. 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 immediate action versus a positive review that may require a simple acknowledgement and thank you.
As.
As we've called out before exploring other destinations so.
We don't know it's too early for us to call something.
On what those drivers are but as we said we're watching we're watching very closely.
Got it and then as a follow up I mean looking at looking back just wondering if you guys are able to expand margins for the my statement.
Topline headwinds so unfortunately for if you feel like incremental margin gains are possible, whereas the objective more about preserving the margins.
And setting yourself up for a fifth terminal.
Robert Greyber: 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. However, as I mentioned before, 2024 is off to a difficult start.
Yes, I can try to answer that so yes. If you look at Q4 and full year. We definitely we're focused on we said we were going to get to adjusted EBITDA profitability, we did that.
We were able to deliver that despite a pretty substantial decline in revenue, but this is just.
This year over year improvement. This is just a result of better efficiency across the business every expense category was down Rob and I and the management team. We're very focused on that I think it's important to also note we did that without sacrificing.
Customer service and guest service level that was also very important to us.
So there will be steps forward and steps back, but we're very committed to this path I will tell you. This is a top priority for us Rob and I are going to continue and the management team, we're going to continue prioritizing and adjusted EBITDA profitability moving forward.
Robert Greyber: 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.
And I would just add to that.
If you look at what we are what we're able to deliver those efficiencies are coming with.
Robert Greyber: 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 Vacasa to the next stage on our journey. Without that 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 Vacasa'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. Vacasa will also be putting a renewed focus on optimizing our service offerings and where we allocate resources.
With better performance across a range of different operating metrics.
The guest experience has improved as we move through the year. The owner experience has improved as we've moved through the year. Those things are are important for us as we're driving these efficiencies in the business to remain.
To be become more effective as we are.
As we're driving these changes in the business.
It's a typical needle to thread, but that's what we're focused on and we have some early promising signs.
Got it thank you.
Yes.
Next question.
From the line of Ben.
Goldman Sachs.
Okay.
Thanks, so much for taking the questions maybe two if I can I'm curious just your thoughts on the broader competitive environment and how you're performing relative to other property managers that are also managing through the current environment.
Robert Greyber: 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 the coming quarters. And finally, while we are focused on our long-term growth opportunities, we are continuing to execute on improving operational effectiveness and efficiency across the organization.
And then second just on the local ops piece of the workforce reduction is that a function of the demand environment or is that because of the efficiencies that you're seeing through some of the automation tools that you've been implementing over the past year or so thanks so much.
In terms of why don't I start and then Bruce can Bruce can chime in.
I think when we look at the competitive environment.
First of all we think that we look at a number of the industry benchmarks, we think that our competitors.
Our homeowners are seeing the same thing that we're seeing in terms of the demand environment.
So we feel like this is going to be an environment, where being on your front foot. When it comes to revenue management being very focused on the owner experience and the guest experience and making sure that your teams are able to take care of.
Robert Greyber: 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 district. 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 was more work to do in a challenging environment. 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 the matter. Bruce, thanks, Rob.
Take care of.
Of our of our guests when they show up that's going to be tremendously important. There is everybody is going to be focused on those same dynamics were.
Just trying to be move as much resource as much focus as much of our of our time and attention to those to those topics as we can.
When it comes to local operations that was a very small portion of the actions that we took today.
A lot of that was the result of being able to be more be more efficient.
In terms of some of the investments that we've made.
Bruce Schuman: Unless noted otherwise, I will be comparing our fourth quarter results to the fourth quarter of 2022, and I'll be referencing the operating expense lines excluding the impact of stock-based compensation, restructuring costs, and business combination costs, which you can find outlined in our shareholder log. We finished 2023 with approximately 42,000 homes, down 5% year over year, reflecting the churn dynamic that we in the broader industry have been experiencing over the past few quarters. For the fourth quarter, gross booking value, which is the combination of nights sold and gross booking value for nights sold, was $337 million, down 19% year over year. Nights sold were $1.1 million in the fourth quarter, down 5% year over year. Gross booking value per night sold was $309 in the fourth quarter, down 15% year-over-year. Throughout 2023, we've discussed the year over year declines in average gross booking value per home.
I don't know if you'd add any other.
Well I can answer.
Thank you.
Okay.
Yeah.
Our next question comes from the line of bringing Mackinnon with Needham and company. Your line is open.
Great. Thank you for taking the questions.
Maybe just to start the <unk>.
Discussion on churn, but Rob you mentioned that there was double digit supply growth in your markets just wondering what youre seeing from the gross add side and if youre capturing.
Your fair share of gross adds and if now.
Some of the plants, maybe rectify that.
Yeah, I'm happy to happy to talk about that.
We are.
We're definitely seeing it.
Seeing supply growth.
It's unclear what what that's going to if thats going to continue as we move through the year, but it certainly is something that impacts pricing and supply is increasing faster than demand for over the over the over the medium term.
When it comes to our home growth look Theres puts and takes to home growth in terms of adding homes that really depends on the progress that we are able to make and what we've made in optimizing our individual organic sales approach.
This is this is something where we tried to be a lot more.
A lot more thoughtful than every quarter to try to be a lot more thoughtful here.
<unk> shared with you we've had a bias toward toward improving productivity and also a bias that if we choose between grew.
Growth and profitability, we're going to have a bias toward profitability I think the other dynamic on home growth for US is it's really centering around churn and we've seen we've seen that continue to be elevated we've seen a number of the leading indicators that we watch move in the right direction.
And to do that steadily, but we've not yet seen that show up in the results when it comes to churn in.
Thats the driver on on home growth in gross adds for us.
Got it and then just like a lot of discussion on efficiency and it seems like you guys are using technology to solve some of those issues do you think it was just maybe areas underinvestment before or just trying to think about what what any it could be in terms of using technology to drive efficiencies here.
It's hard for me to say.
The business has been operating on a strap.
Our strategy of building technology.
Technology and a platform to help operate this business more and more effectively and more and more scalable for a long time when I joined the team I saw an opportunity to try to align that work much more tightly with the business needs with the teams on the ground.
And really to do that as well as increase the pace of deliveries. So oftentimes you can see very large projects that can shift kind of all at once and we've adopted.
A mind set is much more focused on delivering something every week every other week.
And then constantly iterating on it to try to make it to try to make it better to try to make it more efficient. So I think aligning the work that we're doing better with our teams the team actually on the ground with the needs of our of our owners and our guests has probably been the biggest the biggest driver of that change.
Got it thank you.
Yes.
Next question comes from the line of Nick Jones with JMP Securities. Your line is open.
Thanks for taking the questions I guess.
Lay out a preference to preserving profitability versus maybe trying to drive growth.
Could you maybe kind of help us understand how much more wood to chop, there isn't kind of cutting costs given the wide range of outcomes.
It could happen in 2024.
Yes, I can just start on that I mean, I would say, we're not going to again give any kind of a guide on 'twenty for what I will tell you is Rob and I were watching the environment very carefully.
We're going to see how kind of the bookings environment shapes up how our summer peak season looks we are very committed and it is a top priority for us we will prioritize adjusted EBITDA profitability, even if that sort of at the expense of top line just a top priority for Robyn.
Got it and maybe a follow up on a prior question. If there is growth in your markets.
That's exactly the kind of incremental downward pressure on pricing.
Is that kind of a fundamental problem with churn.
Can you come back that if supply is growing.
Did that ostensibly is pricing folks out and making it harder to maybe pay the fees does that.
A fair way to kind of understand the situation and some of the markets, where you kind of needed supply to stabilize.
So.
I am not sure I, followed all the questions I missed that happy to jump in if you want to guide me back to it but it's been generally speaking.
We are.
As we've shared when we think about churn, we think about it as as broken down into the key components of what we can deliver better and thats been around.
Managing the communication dynamic.