Q1 2024 Inspirato Incorporated Earnings Call
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 your hand is raised.
To withdraw your question, press 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Kyle Sork, Investor Relations. Please go ahead.
Thank you and good morning. On today's call, we have CEO Eric Rosa and CFO Robert Caden.
Yesterday afternoon, we issued our press release announcing our first quarter of 2024 results, which is available on the investor relations page of our website at investor.inspirato.com.
Before we begin, 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
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 filing 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 financial results prepared in accordance with GAAP. Reconciliation of these measures to the most directly comparable GAAP measures are included in our earnings release.
With that, I'll turn the call over to our CEO , Eric Grosso.
Thanks, Kyle, and good morning, everyone.
On today's call, I'm excited to discuss our first quarter results and our strong start to 2024.
As you can read in our press release, Q1 marks a period in which we generated profits on both an EBITDA and net income basis.
This is the first time we've delivered profitability against either metric in more than three years.
Our Q1 results are a testament to the hard work throughout the organization and represent the third consecutive quarter of delivering results in line with our plan.
As I mentioned in my remarks last quarter, just as our members trusts us to deliver memorable experiences for their families and loved ones, we are also committed to building trust and credibility with our shareholders and broader investment communities.
We believe our Q1 results demonstrate that commitment.
While we spent several quarters articulating our heightened focus on execution and driving operating efficiencies,
These efforts do take time, and our Q1 results reflect a meaningful step towards sustained profitability.
In Q1, we also began to read the benefits of our work centered around our core products. When we imagining our portfolio, we asked ourselves questions like,
are our products functioning well on a standalone basis in conjunction with one another? And do they align with our membership satisfaction and profitability goals?
Some actions were more straightforward, like lowering our ADRs to give more value to our members. In Q1, our residents' ADR was down on a year-over-year basis, and one of the drivers of paid residents nights increasing per member over the same time frame.
In fact, our paid nights delivered as a percentage total nights delivered marked the highest level since the first quarter of 2022, a time when leisure travel was at an absolute peak.
Other actions, like reimagining Inspirado Pass, took a lot of work. So far, results have lived up to expectations.
We set out with a goal of positioning pass for the frequent and flexible traveler. One key change we made to make paths more appealing for the last-minute traveler was the introduction of flex trips.
Flex trips serve as a way to improve members' ability to book more close-in trips with significant value. Since its launch in mid-February, more than 800 reservations and more than 25% of all past trips books have been FLEC trips.
Even more impressive, approximately 80% of flex trip reservations have been for stays beginning within 60 days. In some cases, this is inventory that otherwise would have spoiled.
While these changes have been welcomed by many of our past numbers, as we expected, they haven't been for everyone.
At the end of the quarter, we had approximately 2,100 pass description.
down approximately 350 compared to year in 2023 and in line with their expectations.
Importantly, pass nights delivered per pass member and pass reservations per pass member have held steady, which means we're offering great value.
Pass is also more profitable now and fits in better with our portfolio overall.
Past nights represented 30% of total nights delivered, down from the 40% levels we alluded to in our last call.
All in all, we're approaching a much more sustainable, healthy, and profitable travel mix in our portfolio.
With respect to club membership, we continue to focus on selling longer-term contracts to stick to your prospects.
We're focusing these efforts not only on new member sales, but also with multi-year extensions for current members. Our goal is to identify and solidify our core, which are members that love to travel and appreciate the unique elements of the Inspirado community.
We view longer-term members and initiatives that further refine our offerings as important building blocks to grow our member base over the long run.
That said, in the short term, it's apparent that we must double down our efforts to reinvigorate our member base and product offerings.
While we've put in the work from a cost structure standpoint and have achieved our near-term profitability goal, I'm a firm believer that our path to lasting success lies in driving sustainable, profitable growth.
As I've outlined on previous calls, our first objective is to re-engage our members to drive increased travel and further entrenched them as true members of the Inspirado community.
While these efforts have led to churn of more idle members, which is apparent in our subscription count, we've also been successful in increasing the amount of travel revenue per member, which is a sign of a more active and engaged community.
Next, we can turn our attention to continuing to refine our offerings, which we expect will further improve retention over the long run.
I believe that the combination of a more engaged member base and a more aligned and profitable product portfolio will position as well to increase growth investments in 2025 and beyond.
And with that, I'd like to turn the call over to Robert to discuss our results in more detail. Robert?
Thanks, Eric. As you mentioned, I'm pleased to report our first quarter results highlighted by profitability, expanding growth margins, and solid travel behavior.
As such, we are reaffirming our 2024 guidance range of $275 million to $305 million of total revenue, adjusted ebidav between a gain of $5 million and a loss of $15 million, and then cash operating expenses between $115 million and $125 million.
In the first quarter, we generated total revenue of $80 million, a 12% decrease year over year. Importantly, Q1 total revenue was once again largely in line with their internal expectations.
Subscription revenue decreased 23% year over year due to the decrease in past subscriptions that Eric referenced, as well as an 11% decrease in club subscriptions. In total, we exited the quarter with 12,300 members and 13,000 active subscriptions.
Travel revenue decreased 10% year over year, largely due to the decrease in members as opposed to travel behavior.
In fact, there are several data points related to travel that I would like to highlight.
First, due to our decision to proactively lower ADRs, launch Inspirate Rewards, and stand up our member success team, as well as improved past functionality, our paid nights delivered as a percent of total nights delivered has returned to levels we haven't seen in two years.
63% in Q1. Second, we have been successful in our member traveling to our residence inventory. Compared to last year, we have a nearly identical number of paid nights in our residences despite having fewer members.
While there is an uplift in each of these figures due the nights associated with Inspirado for Good and Inspirator for Business, we're still encouraged by these early trends.
Third, our Inspirator-only experiences and bespoke custom travel continue to be member favorites. For example, just last month we launched six safaris and our two golf excursions, all planned for 2025, that nearly all sold out within days.
Finally, while traveling Q1 delivered upon many of the metrics we track, we are continuing to see some softness and bookings impacting QT travel. As such, we have our eye on how our calendar filled in for the remainder of the year as we continue building upon some of the positive trends of Q1.
Rounding out the travel discussion, we had 80% total residence
occupancy compared to 77% a year ago with ADRs down nearly 10%. Occupancy in our leased hotel rooms also improved to 73% compared to 71% a year ago while maintaining flat ADRs.
Moving to cost of revenue, Q1 marks the first quarter where we realized significant lease expense savings associated with our portfolio optimization efforts.
Year over year, total available nights at our lease properties decreased by approximately 20% to better align with our member base and portfolio realignment, whereas our lease expenses and fixed costs were down approximately 25%.
This is an indication of not only our flexibility in terminating expensive lease agreements, but also our effectiveness in renegotiating terms along the way.
While we expect further improvement in the coming quarters, the vast majority of savings were captured in Q1 and played in large bargaining expanding the gross margin as a percent of revenue to 40 percent in the first quarter from 35 percent in Q1 last year.
In terms of cash operating expenses, which is a combination of G&A, sales and marketing, operations, and tech and development, excluding stock-based compensation and depreciation, total expenses in Q1 were approximately $29 million or 36% of revenue.
This compares favorably to expenses of 36 million or 39% of revenue last year.
In total, and as mentioned previously, we generated positive adjusted EBITDA of 4.1 million compared to an adjusted EBITDA loss of 3.1 a year ago, an improvement of more than $7 million.
While this is a nice milestone for the company, it is merely the beginning of what we hope to accomplish in the long run. It is also important to remember that our businesses are subject to seasonality from a revenue, a just-de-bidat, and free cash flow perspective.
In Q1, we experienced solid levels of revenue and EBITAA due to the amount of travel delivered relative relative to other quarters.
We also further improved our cash burn to 9 million compared to just over 20 million in Q1 of last year.
In Q2, a period in which summer and even next winter travel is booked, we expect stronger performance in our free cash flow and less cash burn with lower revenue in EBITDA compared to the first quarter.
In terms of cash, we exit the quarter with $33 million compared to $42 million at year end. We have a keen focus on our liquidity and have several operational initiatives underway while we explore potential financing options to alter our overall liquidity.
Finally, I want to thank our employees for the continued hard work and our members for their continued support. We've shown meaningful progress over the past year, and I'm excited to continue executing our long-term plan. With that, I'd like to turn it over to the operator for Q&A.
Thank you. As a reminder, to ask a question, please press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, press Star 1-1 again.
One moment while we compile the Q&A roster.
Our first question will come from the line of Brett Noblock with Cantor Fitzgerald. Your line is open.
Hi guys, thanks for taking my question and congrats on the quarter.
Maybe if we could start with just residents occupancy, you know, very good up year over a year to that was not seen in quite a while. I guess what do you think is the upper bounds on residents occupancy rates?
Yeah, hey, Brent, it's Robert here. Thanks for the question. Yeah, we're really pleased with getting to 80% this quarter. There's obviously a balance we want to achieve. We want to make sure that we've got our residents available for all of our members who want to travel, and at the same time we want to optimize our occupancy rates. I think there's a, you know, we've got probably a few percentage points more. that we could go in an ideal world than this. Obviously, there's always weeks that get broken that you're never going to be able to fill in. There's maintenance that we like to do to keep our properties in top shape. But there's probably a few more percentage points in it
Maybe just talk about if that's embedded in your guidance for the year at all.
Eric: Hi, This is Eric.
Eric: We're pretty excited about capital line I think we've been consistent about that level of enthusiasm over the last couple of quarters.
Eric: And.
Eric: There have been a terrific partner for us and and what's happening right now literally as we speak as our teams are are continuing to work on technical integration and we're on track to sort of kick things off and to make ends prato inventory available in the back half of this year and that's consistent with the guidance.
Eric: That we've given and.
Eric: We expect.
Relatively modest volumes as we sort of test and ramp up the relationship in 2024, but we do hope and expect that it can be.
ideal circumstance.
Awesome. And then
I guess residents as a percentage of total nights delivered was, I think it was 66% up from 60% less.
Eric: Yes.
Eric: A very very big demand driver for us in 2025 and beyond but it will start to be clear, we do expect it to to begin in the back half of this year.
first quarter. I guess where do you expect that to go? I would assume we're continuing to de-emphasize hotels in lieu of residences. Do you think that's a percentage that could get to 70, 75, 80 percent?
Eric: And as the inventory that will go on that platform I'm, sorry, just one more is that yes sure.
Eric: Is that the inventory maybe.
Yeah, I think we have a fairly good balance. What we're trying to make sure we accomplish is that for our members, we're giving them the geographies that they want to travel in and the types of accommodations that they want to travel in. Clearly, our luxury residence is at the heart of what we do and what people need, but there are some folks who, you know, want to travel to locations where it's not practical to have a residence in some urban locations. Or they really need a smaller residence because they're just traveling. with one or two people versus a larger group. So directionally, I think the balance is fairly right. I think one of the things that we are trying to accomplish is to get the mix between our paid occupancy and our overall occupancy
Eric: Approaching those dates approaching that hasnt been booked yet that'll be going on there so it would be more for.
Eric: Shorter term bookings.
Eric: Or is it going to be more skewed to residents or hotels.
Speaker Change: Yes, it's really going to be resident's resident base than we have fences and designs into the product itself to ensure that we're.
Speaker Change: We're not creating any chat.
Eric: The challenges for our the experiences of our of our of our existing members.
Eric: So we really view this as a great way to give folks that arent.
Eric: <unk> members tasted.
Eric: Taste of the <unk> travel experience, which really is differentiated when people experience inspired travel for the first time.
Eric: So we're doing that in a way that I think is very responsible with respect to what we're doing to optimize our overall portfolio from our residents occupancy standpoint, and at the same time, making sure that our members are getting a great experience.
improving. And you've seen some of that this quarter where we've increased the percentage of our paid occupancy.
through a combination of factors, including trying to right size the past portfolio and making sure that passes is designed for that flexible traveler who wants that off-season or who wants that close-in inventory. And so by that, we've been able to, with a smaller portfolio, increase the percentage of paid occupancy.
Speaker Change: Got it. Thank you guys. So much I appreciate it.
Speaker Change: Thanks, we appreciate the questions Brett.
Speaker Change: One moment for our next question.
Speaker Change: And that will come from the line of Mike Grondahl with Northland Securities. Your line is open.
I think in the past you talked about past being unprofitable. How has the introduction of flex trips authored the economics on past?
Speaker Change: Hi, This is Logan on for Mike first off congrats on the quarter.
Logan: You guys provide some additional commentary about your top two priorities for the rest of the year and how youre feeling going forward. Thank you.
Sure.
Thanks, Brett. This is Eric. And we're really happy with the changes that we've put in place for past members and
Speaker Change: Oh I'm, sorry, I just didn't hear the question can you just dumped Logan do you mind repeating it.
Speaker Change: Yes of course.
We're encouraged by how they're really taking advantage of more last minute opportunities. So, as an example, 25% of trips booked, since we made the changes have been flex trips, and 80% of those flex trips have been for stays within 60 days.
Speaker Change: First Baptist, but congrats on the quarter can.
Speaker Change: Can you guys provide some additional commentary about your top two priorities for the rest of the year and how you are feeling.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Oh.
So we're basically moving more of our path holders more towards flexible, spontaneous last minute trips, which overall sort of helps us manage our portfolio as a whole.
Speaker Change: If youre, referring to sort of our capital priorities in our sort of our and our cash priorities.
Speaker Change: First and foremost making.
Speaker Change: Operational but necessary operational improvements to get us.
Speaker Change: Towards.
So that's overall encouraging trends, and we're very pleased with what we're seeing. That said, we are seeing some churn. We are seeing a decrease in the number of passholders, and that was expected.
Speaker Change: Breakeven.
Speaker Change: For the year and that is something that we're pushing hard for it and we view that this quarter as a first step.
Speaker Change: I think another component of it is is our cash balances as well and although we've made significant improvements on a year over year basis.
And, you know, I think that's really, you know, driven by a couple of factors, but, you know, mainly
Speaker Change: With respect to our cash.
Speaker Change: Where our burn for the first quarter was around $10 million that is significantly improved from where we were a year ago, but we still want to improve that further so that is a combination in terms of how we are attacking that we're improving occupancy levels were driving engagement.
Not everyone that was previously and originally had signed up for PAS really was expecting and desiring last minute trips. So those folks are falling off a little bit, but what's really good to see is that the members that have joined since we launched FlexTrips are really taking advantage of how we're designing the product. And again, I can't emphasize enough how important this is for our overall portfolio health as a whole. Pass is much more of a strong economic product for us and plays a very, very important role in terms of handling excess capacity for our overall residential inventory as a whole across the Inspirato network.
Speaker Change: Engagement levels in.
Speaker Change: Nights per member are we want to continue moving that sort of in a more positive direction and theres been a lot of activity around them are semi annual sale that we recently disclosed to basically drive more <unk> and drive more travel across our member base and then we're also as Robert alluded to continuing to to really.
Speaker Change: Drive more efficiencies across our operating cost infrastructure in particular with our with our with our leases.
Speaker Change: So so.
Speaker Change: We believe that these efforts will help position the company for.
Awesome. Maybe just own subscribers. I think I talked about.
Speaker Change: For a stronger financial outlook, but that said, we do understand that a stronger balance sheet would be a very very good thing and were actively looking through <unk>.
You know, your goal is to return to, you know, sustainable and profitable growth and I think a big
Part of that equation is getting subscribe return to plateau and ultimately reversed of growth.
Speaker Change: And across sort of all avenues to see what possibilities may exist that.
It's now been several quarters of current turn in a row. I guess do you have any visibility until when the end might be in sight for that and when we could expect growth to return?
Speaker Change: Our effective and work for.
Speaker Change: Members shareholders and our constituencies.
Speaker Change: Perfect. Thank you.
Speaker Change: One last question what additional measures have you guys been taking to drive better bookings.
Sure, sure.
Speaker Change: During this year and will you be doing in the future for that.
This is Eric again. And in terms of the driver behind some of the trends that we've seen around member declines, I alluded to some of what we're seeing with respect to pass. With respect to club, what we're really doing is focusing on member engagement and really, really long-term retention. So that means in practice, kind of de-emphasizing sort of month-to-month memberships and more focused on multi-year relationships, not only for existing members, but for new members as well.
Speaker Change: Thanks.
Speaker Change: Yes. So this is Eric again, thanks Logan.
Eric: So we are encourage on one on one from one standpoint that were seeing revenue per per member sort of improve but that's a little bit of a backward looking metric.
Eric: If we look at sort of bookings per member that's been kind of flattish to a little bit down.
Eric: And there's been a lot of activity that we have.
Eric: Taken on basically.
Eric: Drive that in the direction that we want.
So that is changing the dynamic and changing how our members are growing.
Eric: First is by being more aggressive around our overall ADR and sort of taking those down.
We're also, we've also, 2024 has really been and is really being a year around operational efficiency, solidifying our foundation, leveraging the cost structure improvements that we've put in place over the course of the last several quarters. You'll recall that it's about $50 million of OPEC efficiencies that we've generated.
Speaker Change: And then second.
Speaker Change: We're looking at how we other ways in which we can stimulate demand, particularly through our semiannual sale that just that just closed last Friday.
Speaker Change: And.
Speaker Change: There's other initiatives too like our like our rewards program that had been a big push to encouraging our members to travel more frequently one thing thats great to say is that.
which will really help us in 2024 positioning Inspirado as a whole for not only returning to growth, but to really return to profitable and sustainable growth.
Speaker Change: Just since we launched rewards last fall about 50% of our members already has some status, which is terrific and then a third of those members or excuse me a little bit more than a quarter of those members are already in our highest here. So that suggests that there are.
And we expect that dynamic to really start to switch towards the end of this year going into next year. And we do believe that there is a lot of platforms for growth in 2025 and beyond that can be really successful for Insprada. Partnerships have been very healthy for us. Capital One is a great source of mid-to-long-term growth.
Speaker Change: Really good engaged cohort of travel members or excuse me members of its broader that do travel and frequently with us and really value. It. Our objective now is this a spread spread that kind of enthusiasm across a wider portion of our member base.
And there's a lot of things that we do, more broadly speaking, with respect to managing high-end residential inventory.
to delivering pretty amazing premium experiences for our members that make us confident that once we get the fundamentals right, there's a long one way of growth ahead of us in 2025 and beyond.
Speaker Change: Thank you congrats again on the quarter.
Speaker Change: Thanks Logan.
Speaker Change: Thank you I'm showing no further questions in the queue at this time I would like to turn the call back over to management for any closing remarks.
Thank you.
Speaker Change: Terrific.
Maybe it's a model question on gross margins and it's to tie it into controlled accommodations, which we're down quite significantly, assuming a lot of leases finally rolled off.
Speaker Change: For bearing with US we apologize for the delay in the start we had some technical and communication issues, but.
Speaker Change: We don't want that to underlie.
I guess where do you see that trending for the rest of the year on controlled accommodations and likely, and I guess similarly, can you talk about where should we expect gross margin to go from here as well?
Speaker Change: Our enthusiasm for returning to profitability. This quarter. So thank you very much for the questions and for the engagement and we look forward to staying in touch in the quarters ahead.
Speaker Change: This concludes today's program. Thank you all for participating you may now disconnect.
Yeah, thanks for the question is Robert again.
So, yes, we're really happy. We've been talking about our growth margin pickup
with a reduction of controlled accommodations for many quarters now. And as we've said in the past, it was going to take some time with terminations between 180 and 365 days generally.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
And so we're happy with 40% we got to this quarter. We will continue to see a slight decline the rest of the year, kind of quarter over quarter in the overall controlled accommodations numbers. And that's, again, because they were rolling off between 180 and 365 days, and we started this back in, you know, the May and June timeframe. So we've had some of the long ones that are starting to roll off now, some of the shorter ones that have also rolled. But we've got a few more to go. So there'll be a little bit of improvement, but this was really the big quarter for it.
Speaker Change: Okay.
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Speaker Change: Yes.
Speaker Change: Yeah.
And then in terms of gross margin, as you know, gross margin is really impacted by, you know, with a fairly now fixed cost in terms of the cost of revenue line with the leases, the biggest impact is going to be around the revenue. And, you know, as we've talked about before, we have seasonality in our revenue. Q2 is historically the low point, low quarter of the year from a revenue perspective. And so we would expect to see lower gross margins in Q2. And then, you know, we have some improved seasonality, you know, rolling into Q3 and we'll see margins start to pick up there as well. And then longer term, we hope to keep to continue to be able to drive in 2025 our margins as we start to pick up on our revenue as well. And I'll see.
Speaker Change: Okay.
and optimize really the portfolio that we have, we'll be able to continue to improve our margins.
Awesome. And then maybe just one last question for me. Just on Capital One, can you just give us an update on where we are in that process? Have those members been able to access the inventory yet? If not.
When will they be able to and maybe just talk about if that's embedded in your guidance for the year at all?
Hi, this is Eric and yeah, we're pretty excited about Capital One. I think we've been consistent about that level of enthusiasm over the last couple of quarters.
And they've been a terrific partner for us.
And what's happening right now, literally as we speak, is our teams are continuing to work on technical integration, and we're on track to sort of kick things off and to make Inspirado inventory available in the back half of this year. And that's consistent with the guidance that we've given. And we expect relatively modest volumes as we sort of test and ramp up the relationship in 2024. We do hope and expect that it can be a very, very big demand driver for us in 2025 and beyond. But it will start, to be clear, we do expect it to begin in the back half of this year.
Speaker Change: [music].
And the inventory that will go on that platform, sorry, just one more. Is that? Yeah, sure. Yeah.
Speaker Change: Thank you.
Speaker Change: [music].
Is that the inventory maybe
approaching, those dates approaching that hasn't been booked yet that will be going on there. So it'll be more for shorter term bookings or is it going to be more spewed to residents or hotels?
Yeah, it's really going to be residents-based, and we have fences and designs into the product itself to ensure that we're not creating any challenges for the experiences of our existing members.
So, you know, we really view this as a great way to give folks that aren't
Inspada members, you know, taste of the Inspirado travel experience, which really is differentiated when people experience the Inspirotter travel for the first time.
So we're doing that in a way that I think is very responsible with respect to what we're doing to optimize our overall portfolio from a resident's occupancy standpoint, and at the same time making sure that our members are getting a great experience.
Got it. Thank you guys so much. I appreciate it
Thanks. We appreciate the questions, Brett. Thank you. One moment for our next question.
And that will come from the line of Mike Gondell with Northland Securities. Your line is open.
Hi, this is Logan. I'm from Mike. First off, congrats on that quarter. Could you guys provide some additional commentary about your top two priorities for the rest of the year and how you're feeling going forward? Thank you.
Oh, I'm sorry, I just didn't hear the question. Can you just, Logan, do you mind repeating it?
Yeah, of course. First off, just said, congrats in the quarter. Can you guys provide some additional commentary about your top two priorities for the rest of the year and how you're feeling?
Oh, so, um,
If you're referring to sort of our capital priorities and our cash priorities, we're first and foremost making the operational, the necessary operational improvements to get us towards break-even for the year. And that is something that we're pushing hard for, and we view that this quarter as a first step.
I think another component of it is our cash balances as well. And although we've made significant improvements on a year-over-year basis,
with respect to our cash, where our burning for the first quarter was around 10 million, that is significantly improved from where we were a year ago, but we still want to improve that further. So that is a common, and in terms of how we're attacking that, we're improving occupancy levels, we're driving engagement levels and nights per member. We want to continue moving that sort of in a more positive direction, and there's been a lot of activity around our semi-annual sale that we recently disclosed to basically drive more Ocatsby and drive more travel across our member base.
And then we're also, as Robert alluded to, continuing to really drive more efficiencies across our operating cost infrastructure, in particular with our leases.
So we believe that these efforts will help position the company for
Uh...
for a stronger financial outlook. But that said, we do understand that a stronger balance sheet would be a very, very good thing, and we're actively looking through and across sort of all avenues to see what possibilities may exist that are effective and work for members, shareholders, and our constituencies.
Speaker Change: Got it.
Speaker Change: [music].
Perfect. Thank you. Sure. One last question. What additional measures have you guys been taking to drive better bookings during this year, and we'll be doing in the future for that? Thanks.
Speaker Change: Thank you.
Speaker Change: [music].
Yeah, so this is Eric again. Thanks, Logan. So we are encouraged on one standpoint that we're seeing revenue per member sort of improved, but that's a little bit of a backward-looking metric. And if we look at sort of bookings per member, you know, that's been kind of flattished a little bit down. And there's been a lot of activity that we've taken on, you know, to basically drive that in the direction that we want. First is by being more aggressive around our overall ADRs and sort of taking those down. And then second, we are looking at how many other ways in which we can stimulate demand, particularly through our semi-annual sale that just closed.
Speaker Change: Yes.
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Speaker Change: Okay.
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last Friday.
And there's other initiatives too, like our rewards program that have been a big push to encouraging our members to travel more frequently. One thing that's great to say is that just since we launched rewards last fall, about 50% of our members already have some status, which is terrific. And then a third of those members, or excuse me, a little bit more than a quarter of those members, are already in our highest tier. So that suggests that there are some sort of those members. a really good engaged cohort of travel members of Inspirata that do travel and frequently with us and really value it. You know, our objective now is just to spread that kind of enthusiasm across the wider portion of our member base.
Speaker Change: Sure.
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Thank you. Congratulations on the Corrie.
Thanks, Logan.
Thank you. I'm showing no further questions in the queue at this time. I would allow me to turn the call back over to management for any closing remarks.
Terrific. Thanks for bearing with us. We apologize for the delay in the start. We had some technical and communication issues, but we don't want that to underlie our enthusiasm for returning to profitability this quarter. So thank you very much for the questions and for the engagement, and we look forward to staying in touch on the quarters ahead.
This concludes today's program. Thank you all for participating. You may now disconnect.
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Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Good day and welcome to the <unk> first quarter 2024 earnings call.
Speaker Change: At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is right to win.
Speaker Change: Jay Your question Press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker, Mr. Cao Sur Investor Relations. Please go ahead.
Cao Sur: Thank you and good morning on today's call, we have CEO, Eric <unk> and CFO Robert cadence.
Cao Sur: Yesterday afternoon, we issued a press release announcing our first quarter 2024 results, which is available on the Investor Relations page of our website at Investor <unk> Dot com.
Cao Sur: Before we begin 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.
Cao Sur: Guidance and growth prospects.
Cao Sur: Our strategy and plans and market position and potential market opportunities.
Cao Sur: These statements are based on assumptions that we assume no obligation to update them actual results could differ materially.
Cao Sur: We refer you to our SEC filings for a more detailed discussion of additional risks.
Cao Sur: In addition, during the call management will discuss non-GAAP measures, which are useful in evaluating the company's operating performance.
Cao Sur: These measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
Cao Sur: Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release.
Speaker Change: With that I'll turn the call over to our CEO Eric Bourassa.
Eric Grosse: Thanks, Kyle and good morning, everyone on today's call I am excited to discuss our first quarter results and our strong start to 2024.
Eric Grosse: As you can read in our press release Q1 marked a period in which we generated profit on both the EBITDA and net income basis. This is the first time, we've delivered profitability against either metric and more than three years.
Speaker Change: Our Q1 results are a testament to the hard work throughout the organization and represent the third consecutive quarter of delivering results in line with our plan.
Eric Grosse: As I mentioned in my remarks last quarter, just as our members trust us to deliver memorable experiences for their families and loved ones. We're also committed to building trust and credibility with our shareholders and broader investment community.
Speaker Change: We believe our Q1 results demonstrate that commitment.
Speaker Change: While we spent several quarters articulating our heightened heightened focus on execution and driving operating efficiencies. These efforts do take time, and our Q1 results reflect a meaningful step towards sustained profitability.
Speaker Change: In Q1, we also began to reap the benefits of our work is centered around our core products.
Speaker Change: <unk> our portfolio, we ask ourselves questions like our products functioning well on a standalone basis in conjunction with one another and do they align with our membership satisfaction and profitability goals.
Speaker Change: Some actions were more straightforward like lowering our ADR is to give more value to our members.
Speaker Change: Q1, our residents ADR was down on a year over year basis, and one of the drivers of paid residents nice increasing per member over the same timeframe.
Speaker Change: In fact, our paid nice delivered as a percent of total nice delivered mark the highest level since the first quarter of 2022.
Speaker Change: Taiwan leisure travel was at absolute peak.
Speaker Change: Other actions like re imagining it's broader path took a lot of work so far our results have lived up to expectations.
Speaker Change: Set out with the goal of positioning path for the frequent and flexible traveler.
Speaker Change: One key change we've made to make pass more appealing for the last minute traveler was the introduction of flex trips.
Speaker Change: <unk> chips serve as a way to improve members' ability to book more close in trips with significant value.
Speaker Change: Since its launch in mid February more than 800 reservations and more than 25% of all past chips books has been flip chips.
Speaker Change: Even more impressive approximately 80% of flex trip reservation had been first days beginning within 60 days.
Speaker Change: In some cases this is inventory that otherwise would have spoiled.
Speaker Change: While these changes have been welcomed by many of our past numbers as we expected they havent been for everyone.
Speaker Change: At the end of the quarter, we had approximately 2100 past subscriptions down approximately 350 compared to year end 2023 and in line with our expectations.
Speaker Change: <unk> past nice delivered per pass member and passed reservations per pass member has held steady which means we're offering great value.
Speaker Change: <unk> is also more profitable now and fits in better with our portfolio overall.
Speaker Change: Past nice represented 30% of total nights delivered down from the 40% levels, we alluded to on our last call.
Speaker Change: All in all we're approaching a much more sustainable healthy and profitable travel mix in our portfolio.
Speaker Change: With respect to club membership, we continue to focus on selling longer term contracts to stickier prospects. We are focusing these efforts not only on new member sales, but also with multiyear extensions for current members. Our goal is to identify and solidify our core which our members that love to travel and <unk>.
Speaker Change: Shaped the unique elements of the <unk> community.
Speaker Change: We view longer term members and initiatives that further refine our offering does important important building blocks to grow our member base over the long run.
Speaker Change: That said in the short term, it's apparent that we must double down our efforts to reinvigorate our member base and product offerings.
Speaker Change: While we've put into work from a cost structure standpoint and have achieved.
Speaker Change: Near term profitability goal I'm, a firm believer that our path to lasting success lies in driving sustainable profitable growth.
Speaker Change: As I've outlined on previous calls our first objective is to Reengage, our members to drive increased travel and further entrenched in a true members of the broader community.
Speaker Change: While these efforts have led to churn up more idle members, which is apparent in our subscription count. We've also been successful in increasing the amount of travel revenue per member, which is a sign of a more active and engaged community.
Speaker Change: Next we can turn around attention to continuing to refine our offerings, which we expect will further improve retention over the long run.
Speaker Change: I believe that the combination of a more engaged member base and a more aligned and profitable product portfolio will position us well to increase growth investments in 2025 and beyond.
Speaker Change: And with that I'd like to turn the call over to Robert to discuss our results in more detail.
Speaker Change: Robert.
Robert: Thanks, Eric as you mentioned I am pleased to report our first quarter results highlighted by profitability expanded gross margins and solid travel behavior.
Robert: Such we are reaffirming our 2024 guidance range of 275 million to $305 million of total revenue adjusted EBITDA between a gain of $5 million and a loss of $15 million cash operating expenses between $115 million and $125 million.
Speaker Change: In the first quarter, we generated total revenue of $80 million, a 12% decrease year over year. Importantly, Q1 total revenue was once again largely in line with our internal expectations subscription revenue decreased 23% year over year due to the decrease in pass subscriptions that Eric referenced.
Speaker Change: As well as an 11% decrease in cloud subscriptions in total we exited the quarter with 12300 members and 13000 active subscriptions.
Speaker Change: Travel revenue decreased 10% year over year, largely due to the decrease in members as opposed to travel behavior. In fact, there are several data points related to travel that I would like to highlight first due to our decision to proactively lower ADR.
Speaker Change: Launched is broader rewards and standup our members' success team as well as improved path functionality are paid nice delivered as a percent of total nights delivered has returned to levels. We haven't seen in two years, 63% in Q1.
Speaker Change: Second we have been successful in our member traveling to our residence inventory.
Speaker Change: Third to last year, we have a nearly identical number of paid 19 of residences. Despite having fewer members. While there is an uplift in each of these figures due to the nice associated with his broader for good in these broader for business. We're still encouraged by these early trends.
Speaker Change: Third our broader only experiences and bespoke customer travel continued to be member favorites. For example, just last month, we launched <unk>, our two golf Georges All plan for 2025 that nearly all sold out within days.
Speaker Change: Finally, while traveling Q1 delivered upon many of the metrics. We track were continue to see some softness in bookings impacting Q2 travel as such we have our eye on Howard calendar built in for the remainder of the year as we continue building upon some of the positive trends of Q1.
Speaker Change: Rounding out the child's discussion, we had 80% total residents occupancy compared to 77% a year ago with ADR down nearly 10% occupancy at our leased hotel rooms, also improved to 73% compared to 71% a year ago, while maintaining flat <unk>.
Speaker Change: Moving to cost of revenue Q1 marks the first quarter, where we realized significant lease expense savings associated with our portfolio optimization efforts year over year total available nights at our leased properties decreased by approximately 20% to better align with our member base and portfolio realignment, whereas our lease expenses and fixed costs were down.
Speaker Change: Proximately, 25%. This is an indication of not only our flexibility and terminating expensive lease agreements, but also of our effectiveness in renegotiating terms along the way.
Speaker Change: While we expect further improvement in the coming quarters. The vast majority of the savings were captured in Q1 and played a large part of expanding the gross margin as a percent of revenue to 40% in the first quarter from 35% in Q1 last year.
Speaker Change: In terms of cash operating expenses, which is a combination of G&A sales and marketing operations and tech and development, excluding stock based compensation depreciation total expenses in Q1 were approximately $29 million or 36% of revenue.
Speaker Change: This compares favorably to expenses of 36 million or 39% of revenue last year.
Speaker Change: In total and as mentioned previously we generated positive adjusted EBITDA of $4 1 million compared to an adjusted EBITDA loss of $3 1 million a year ago, an improvement of more than $7 million. While this is a nice milestone for the company. It is really the beginning of what we hope to accomplish in the long run. It is also important to remember.
Speaker Change: <unk> that our business is subject to seasonality from our revenue adjusted EBITDA and free cash flow perspective.
Speaker Change: Q1, we experienced solid levels of revenue and EBITDA due to the amount of travel delivered relative to other quarters.
Speaker Change: We also further improved our cash burn to $9 million compared to just over $20 million in Q1 of last year.
Speaker Change: Q2, a period in which some are in and even next winter travelers book, we expect stronger performance in our free cash flow and less cash burn with lower revenue and EBITDA compared to the first quarter in terms of cash we exited the quarter with $33 million compared to $42 million at year end, we have a keen focus.
Speaker Change: On our liquidity and have several operational initiatives underway, while we explore potential financing options to bolster our overall liquidity finally I want to thank our employees for the continued hard work and our members for their continued support we have shown meaningful progress over the past year and I'm excited to continue executing our long term plan.
Speaker Change: With that I'd like to turn it over to the operator for Q&A.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question.
Speaker Change: Star one again.
Speaker Change: One moment, while we compile the Q&A roster.
Speaker Change: Our first question will come from the line of Brett Knoblauch with Cantor Fitzgerald. Your line is open.
Brett Anthony Knoblauch: Hi, guys. Thanks for taking my question and congrats on the quarter.
Brett Anthony Knoblauch: Maybe if we could start with just resins occupancy.
Brett Anthony Knoblauch: Very good up year over year to levels not seen in quite a while I guess.
Brett Anthony Knoblauch: What do you think is the upper bound on resident occupancy.
Brett Anthony Knoblauch: Occupancy rate.
Brett Anthony Knoblauch: Yeah.
Brett Anthony Knoblauch: Yeah, Hey, Hey, Brian It's Robert here, Thanks for the question.
Robert: Yes, we're really pleased with getting to 80% this quarter.
Brett Anthony Knoblauch: Obviously balance we want to achieve we want to make sure that we've got a residence available.
Brett Anthony Knoblauch: Sure.
Brett Anthony Knoblauch: For all of our members who want to travel and then at the same time, we wanted to optimize.
Brett Anthony Knoblauch: Our occupancy rates I think we've got probably a few percentage points more that we could go in an ideal world. Obviously, there is always weak.
Brett Anthony Knoblauch: <unk> got broken that you're never going to be able to learn there is maintenance that wed like to do to keep our properties in top shape.
Brett Anthony Knoblauch: But there's probably a few more percentage points.
Brett Anthony Knoblauch: Deal.
Brett Anthony Knoblauch: Circumstance.
Speaker Change: Awesome and then.
Speaker Change: I guess residents as a percentage of total nights delivered.
Speaker Change: I think it was 66% up from 60% last first quarter.
Speaker Change: I guess, where do you expect that to go I would assume.
Speaker Change: You're continuing to deemphasize hotels in lieu of rising seas do you think that's a percentage that could get to 70% to 75% 80%.
Speaker Change: Yes, I think we have a fairly good balance what were trying to make sure. We accomplish is that for our members we're giving them.
Speaker Change: The geographies that they wanted to travel and the types of accommodations that they want to travel and clearly our luxury residence is at the heart of what we do.
Speaker Change: And what people need, but there are some folks who.
Speaker Change: Want.
Speaker Change: To travel to locations, where it's not practical to have a residence.
Speaker Change: Urban locations or they really need a smaller residents because theyre just traveling with one or two people versus a larger group. So the directionally I think the balance is fairly right I think one of the things that we are trying to accomplish is to get the mix between our paid occupancy and our overall occupancy improving and <unk> seen.
Speaker Change: Some of that this quarter, where we've increased the percentage of our paid occupancy.
Speaker Change: Through a combination of factors, including trying to right size, the past portfolio and making sure that passes is designed for that flexible traveler, who want that off season, or who wants that close in inventory and so by that we've been able to with a smaller portfolio increase the percentage of paid occupancy.
Speaker Change: I think in the past you guys talked about past being unprofitable.
Speaker Change: How has the introduction of.
Speaker Change: Flex trips all through the <unk>.
Speaker Change: Economics, one on past.
Speaker Change: Sure.
Speaker Change: Thanks, Brad this is Eric.
Eric: Really happy with the changes that we've put in place for pass members and.
Eric: We're encouraged by how they are really taking advantage of more last minute opportunities.
Eric: So.
Eric: As an example, 25% of trips booked since we've made the changes have been inflect trips and 80% of the reflect chips have been proved stayed within 60 days. So we're basically moving.
Eric: More of our pass holders more towards flexible.
Eric: <unk> last minute trip, which overall sort of helps R. R.
Eric: It helps us manage our portfolio as a whole so thats.
Eric: Overall, encouraging trends and we're very pleased with what we're seeing.
Eric: That said we are seeing some some some churn we are seeing a decrease in the number of pass holders and that was expected.
Eric: And.
Eric: I think thats really.
Eric: Driven by a.
Eric: Couple of factors, but mainly.
Eric: Not everyone that was previously.
Eric: Originally signed up for Paas.
Eric: It really was.
Eric: Expecting and desiring last minute trip. So those folks are falling off a little bit.
Eric: What's really good to see is that the members that have joined since we launched flex chips are really taking advantage of how we're designing the product and again I can't emphasize enough how important this is for our overall.
Eric: Portfolio of health as well as a whole.
Eric: <unk> is much more of a.
Eric: Sure.
Eric: Strong economic product for us and plays a very very important role in terms of handling excess capacity for our overall <unk>.
Eric: Identical inventory as a whole across the broader network.
Eric: Awesome.
Eric: Maybe just on subscribers and then you guys talked about.
Eric: Your goal was to return to sustainable and profitable growth and I think a big.
Eric: Part of that equation is getting subscriber churn to plateau and ultimately reversed of growth.
Eric: It's now been several quarters of current current in a row I guess do you have any visibility into when we end it might be in sight for that.
Eric: And when we could expect growth to return.
Speaker Change: Sure sure.
Eric: This is Eric again.
Eric: In terms of the driver behind some of the trends that we've seen around member declines.
Eric: I alluded to.
Eric: Some of some of what we're seeing with with respect to pass on with respect to club. What we're really doing is focusing on member engagement and really really long term retention.
Eric: So that means in practice kind of deemphasizing sort of month memberships and more focused on on multi.
Eric: Multi year multi year relationships not only for existing members, but for new members as well so that has changed the dynamic and changing how.
Eric: Our members are growing.
Eric: We're also we've also 2024 has really been and as really being a year around.
Eric: Operational efficiency solidifying our foundation of leveraging the cost structure improvements that we've put in place over the course of the last several quarters youll recall that about $50 million of Opex efficiencies that we've generated.
Eric: Which will really help us in 2020 for positioning <unk> as a whole for not only.
Eric: Returning to growth, but to really to return to profitable and sustainable growth and we expect that dynamic to really start to switch towards the end of this year going into next year and we do believe that there is a lot of platforms for growth in 2025 and beyond that can be really successful for <unk> brought up partnerships have been very healthy for us.
Eric: Capital one is a great source of.
Eric: Mid to long term growth and there's a lot of things that we do more broadly speaking with respect to.
Eric: Managing high end residential inventory.
Eric: To delivering pretty amazing premium experiences for our members that make us confident that once we get the fundamentals right. There's a long runway of growth ahead of us in 2025 and beyond.
Eric: Yes.
Speaker Change: Thank you.
Speaker Change: It is.
Speaker Change: Modeling question on gross margins.
Speaker Change: You can tie it into controlled accommodations, which.
Eric: We're down quite significantly I'm, assuming a lot of leases finally, hanmi wrote off I guess, where do you see that trending for the rest of the year on controlled accommodations and likely and I guess Similarly can you talk about.
Eric: Where should we expect gross margin to go from here as well.
Eric: Yes.
Eric: Thanks for the question, it's Robert again.
Robert: Yes, we're really happy we've been talking about our gross margin pick up with a reduction of control of accommodations for many quarters now and as we've said in the past it was going to take some time with terminations between 180 and 365 days generally.
Robert: And so we're happy with the 40% we got through this quarter.
Robert: We will continue to see a slight decline the rest of the year.
Robert: Quarter over quarter in the overall control of the accommodations.
Robert: Numbers and Thats again, because they were rolling off between 180 and 365 days when we started this back in there.
Robert: May and June timeframe. So we've had some of the longer ones that are starting to roll off now some of the shorter ones that have also rolled off but we've got a few more to go so there'll be a little bit of improvement, but this was really the big quarter for it and then in terms of gross margin as you know gross margin is really impacted by.
Robert: With a fairly now fixed cost in terms of the cost of revenue line with the leases.
Robert: The biggest impact is going to be around the revenue and as we've talked about before we have seasonality in our revenue Q2 is historically the low point low quarter of the year from a revenue perspective, and so we would expect to see lower gross margins in Q2, and then we have some improved seasonality Rowley.
Robert: Into Q3, and we will see margins start to pick up there as well and then longer term, we hope to keep continuing to be able to drive in 2025, our margins as we start to pick up on our revenue as well and optimize really the portfolio that we have we will be able to continue to improve our margins.
Speaker Change: Thank you.
Robert: Awesome.
Speaker Change: Maybe just one last question for me.
Speaker Change: Just on capital one can you just give us an update on where we are in that process.
Speaker Change: Those numbers <unk> been able to access the inventory yet.
Speaker Change: It's not.
Speaker Change: When will they be able to.
Speaker Change: Maybe just talk about if that's embedded in your guidance for the year at all.
Speaker Change: Hi, This is Eric and yes, we're pretty excited about capital line I think we've been consistent about that level of enthusiasm over the last couple of quarters.
Eric: And and.
Eric: There have been a terrific partner for us and and.
Eric: What's happening right now literally as we speak as our teams are are continuing to work on technical integration.
Eric: And we're on track to sort of kick things off and to make ends Prato inventory available in the back half of this year and that's consistent with the guidance that we've given and.
Speaker Change: We expect rep.
Speaker Change: Relatively modest volumes as we sort of test and ramp up the relationship in 2024, but we do hope and expect that data can be.
Speaker Change: A very very big demand driver for us in 2025 and beyond but it will start to be clear, we do expect it to to begin in the back half of this year.
Eric: And as the inventory that will go on that platform sorry, just one more is that yes sure.
Eric: Is that the inventory.
Eric: Maybe.
Eric: Approaching those dates approaching that hasnt been booked yet that'll be going on there will be more for.
Eric: Shorter term bookings.
Eric: Or is it going to be more skewed to residents or hotels.
Speaker Change: Yes, it's really going to be resident resident base than we have fences and designs into the product itself to ensure that we're.
Eric: We're not creating any chat.
Eric: Challenges for our the experiences of our of our of our existing members. So we.
Eric: We really view this as a great way to give folks that arent.
Eric: It's brought our members tasted.
Eric: Tastes of the Ens Brio travel experience, which really is differentiated when people experience inspired travel for the first time.
Eric: So we're doing that in a way that I think is very responsible with respect to what we're doing to optimize our overall portfolio from our residents occupancy standpoint, and at the same time, making sure that our members are getting a great experience.
Speaker Change: Got it. Thank you guys. So much I appreciate it.
Speaker Change: Thanks, we appreciate the questions Brett.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And that will come from the line of Mike Grondahl with Northland Securities. Your line is open.
Speaker Change: Hi, This is Logan on for Mike first off congrats on the quarter could.
Logan: Could you guys provide some additional commentary about your top two priorities for the rest of the year and how you are feeling going forward. Thank you.
Speaker Change: Oh Im sorry, I just didn't hear the question can you just don't Logan do you mind repeating it.
Speaker Change: Yes, yes of course.
Speaker Change: Congrats on the quarter.
Logan: Can you guys provide some additional commentary about your top two priorities for the rest of the year and how you are feeling.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: If you're referring to sort of our capital priorities in our sort of our.
Speaker Change: And our cash priorities.
Speaker Change: First and foremost making.
Speaker Change: The operational but necessary operational improvements to get us.
Speaker Change: Towards.
Speaker Change: Breakeven.
Speaker Change: For the year and that is something that we're pushing hard for and we view that this quarter is as a first step.
Speaker Change: I think another component of it is is our cash balances as well and although we've made significant improvements on a year over year basis.
Speaker Change: With respect to our cash.
Speaker Change: Where our burden for the first quarter was around $10 million that is significantly improved from where we were a year ago, but we still want to improve that further so that is a combination in terms of how we are attacking that we're improving occupancy levels, we are driving engagement.
Speaker Change: Engagement levels and nights per member I, we want to continue moving that sort of in a more positive direction and theres been a lot of activity around our semi annual sale that we've recently disclosed to basically drive more <unk> and drive more travel across our member base and then we're also as Robert alluded to continuing to to really.
Speaker Change: Drive more efficiencies across our operating cost infrastructure in particular with our with our with our leases.
Speaker Change: So so.
Speaker Change: We believe that these efforts will help position the company for.
Speaker Change: For a stronger financial outlook, but that said, we do understand that stronger balance sheet would be at a very very good thing and were actively looking through <unk>.
Speaker Change: And across sort of all avenues to see what possibilities may exist.
Speaker Change: Our effective and work for.
Speaker Change: Members shareholders and our constituencies.
Speaker Change: Perfect. Thank you.
Speaker Change: Okay. One last question what additional measures have you guys been taking to drive better bookings.
Speaker Change: During this year and will you be doing in the future for that.
Speaker Change: Thanks.
Speaker Change: Yes. So this is Eric again, thanks Logan.
Eric: So we are encouraged on one on one one standpoint that were seeing revenue per per member sort of improve but thats a little bit of a backward looking metric.
Eric: If we look at sort of bookings per member that's been kind of flattish to a little bit down.
Speaker Change: And there's been a lot of activity that we have.
Speaker Change: <unk> taken on basically.
Eric: Drive that in the direction that we want.
Eric: First is by being more aggressive around our overall ADR and sort of taking those down and then second.
Eric: We're looking at how we other ways in which we can stimulate demand, particularly through our semi annual sale that just that just closed.
Eric: Friday.
Eric: And there.
Eric: There is other initiatives too like our like our rewards program that had been a big push to encouraging our members to like to travel more frequently one thing thats great to say is that.
Eric: Since we launched rewards last fall about 50% of our members.
Eric: He has some status which is terrific.
Eric: And then a third of those members or excuse me a little bit more than a quarter of those members are already in our highest here. So that suggests that there are really.
Eric: A really good engaged cohort of travel members or excuse me members events broader that do travel and frequently with us and really value. It. Our objective now is this the spread spread that kind of enthusiasm across a wider portion of our member base.
Speaker Change: Thank you congrats again on the quarter.
Speaker Change: Thanks Logan.
Speaker Change: Thank you I'm showing no further questions in the queue at this time I would like to turn the call back over to management for any closing remarks.
Speaker Change: Terrific.
Speaker Change: Thanks for bearing with US we apologize for the delay in the start we had some technical and communication issues, but.
Speaker Change: We don't want that to underlie.
Speaker Change: Our enthusiasm for returning to profitability this quarter.
Speaker Change: Thank you very much for the questions and for the engagement and we look forward to staying in touch in the quarters ahead.
Speaker Change: This concludes today's program. Thank you all for participating you may now disconnect.