DENVER, May 07, 2024 (GLOBE NEWSWIRE) -- Inspirato Incorporated ("Inspirato" or the "Company") (NASDAQ:ISPO), the innovative luxury travel club, today announced its 2024 first quarter financial and operating results. Except as otherwise stated, all financial results discussed below are presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. As supplemental information, we have provided certain additional non-GAAP financial measures in this press release's supplemental tables, and such supplemental tables include a reconciliation of these non-GAAP measures to our GAAP results. The sum of individual metrics and percent changes may not always equal total amounts indicated due to rounding. 2024 First Quarter Highlights: Net income of $2.2 million in the first quarter of 2024 compared to net loss of $5.9 million in the first quarter of 2023. Positive adjusted EBITDA, a non-GAAP financial measure defined below, on a quarterly basis for the first time in more than three years. First quarter 2024 adjusted EBITDA of $4.1 million compared to an adjusted EBITDA loss of $3.1 million in the first quarter of 2023, a $7.2 million favorable swing. Successfully executed portfolio optimization plan, contributing to a year-over-year cost of revenue improvement of 19% and gross margin expansion to 40% in the first quarter of 2024 from 35% in the comparable 2023 period. First quarter 2024 total revenue of $80.2 million, a 12% year-over-year decrease and a 13% increase compared to the fourth quarter of 2023. First quarter 2024 residence occupancy improved to 80% compared to 77% in the first quarter of 2023, reflecting effectiveness of executing a 9% planned reduction in average daily rates ("ADRs") year-over year to $1,965, as well as due to continued successes in Inspirato Rewards and portfolio optimization efforts. Total Active Subscriptions of approximately 13,000 as of March 31, 2024, were comprised of approximately 10,900 Inspirato Club subscriptions and approximately 2,100 Inspirato Pass subscriptions. Management Commentary "I'm pleased with our first quarter results and believe they reflect our ability to successfully execute the early stages of our strategic plan," commented Chief Executive Officer, Eric Grosse. "Recent Pass improvements, when combined with our continued efforts across Inspirato's broader product portfolio, have us well-positioned for continued success. As we continue to focus on our near and medium-term objectives, I am confident we will be able to achieve our long-term growth and profitability goals." Chief Financial Officer, Robert Kaiden, added, "For the past year, we have been focused on improving our operating efficiency by optimizing our portfolio and improving our travel mix. In the first quarter, we began to realize the benefits of these efforts, as evidenced by a meaningful reduction in our lease expenses and our highest paid residence occupancy in two years. Importantly, these efforts also contributed to generating profits for the first time in more than three years. While we expect a mix of adjusted EBITDA income and loss in future periods due to the seasonality of our business, I'm pleased with our trajectory and results in the first quarter." 2024 Guidance The Company reaffirms its previously provided 2024 guidance ranges for total revenue between $275 million and $305 million, adjusted EBITDA between a gain of $5 million and loss of $15 million and cash operating expenses between $115 million and $125 million. Cash at quarter end was $33 million compared to $42 million at year-end. The Company is aiming to improve its free cash flow profile and liquidity position through a combination of operational initiatives and potential financing options. These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause Inspirato's actual results to differ materially from these forward-looking statements. Forward-looking adjusted EBITDA is a forward-looking non-GAAP financial measure. The Company is unable to reconcile forward-looking adjusted EBITDA to net income, its most directly comparable forward-looking GAAP financial measure, without unreasonable effort, as a result of the uncertainty regarding, and the potential variability of, reconciling items such as equity-based compensation expense. However, it is important to note that material changes to reconciling items could have a significant effect on Inspirato's future GAAP results. 2024 First Quarter Financial Results and Operational Metrics The following table provides the components of gross margin for the three months ended March 31, 2024 and 2023: (Unaudited, in millions)      2024      2023      % Change Travel revenue   $ 49.7   $ 55.1   (9.9 ) % Subscription revenue     28.1     36.5   (23.1 ) % Rewards and other revenue     2.5     0.1   n/m   Total revenue     80.2     91.7   (12.4 ) % Cost of revenue     48.5     60.1   (19.2 ) % Gross margin   $ 31.7   $ 31.6   0.2   % Gross margin (%)     40 %     35 %   5   pp n/m = not meaningful                     pp = percentage points                     The following table provides a breakdown of Nights Delivered, Occupancy and ADR for the three months ended March 31, 2024 and 2023:   Three Months Ended March 31,    2024   2023 Residences                   Paid Nights Delivered   17,200         17,200     Total Nights Delivered   26,000         29,900     Occupancy   80   %     77   % ADR $ 1,965       $ 2,152                         Hotels                   Paid Nights Delivered (1)   8,800         10,800     Total Nights Delivered (1)   15,300         20,800     Occupancy (2)   73   %     71   % ADR (2) $ 1,053       $ 1,055                         Total                   Paid Nights Delivered (1)   26,000         28,100     Total Nights Delivered (1)   41,300         50,700     Occupancy (2)   78   %     75   % ADR (2) $ 1,655       $ 1,728       (1) Includes net rate hotel nights.   (2) Excludes net rate hotel nights as we purchase individual nights but do not have a total number of nights obligation. Reconciliation of Non- GAAP Financial Measures In addition to Inspirato's results determined in accordance with GAAP, Inspirato uses Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as part of its overall assessment of performance, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies and to communicate with its Board concerning our business and financial performance. Inspirato believes that these non-GAAP financial measures provide useful information to investors about its business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by its management in their financial and operational decision making. Inspirato is presenting these non-GAAP financial measures to assist investors in seeing its business and financial performance through the eyes of management, and because we believe that these non-GAAP financial measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry. There are limitations related to the use of these non-GAAP financial measures, including that they exclude significant expenses that are required by GAAP to be recorded in Inspirato's financial measures. Other companies may calculate non-GAAP financial measures differently or may use other measures to calculate their financial performance, and therefore, our non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies. Thus, these non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any measures derived in accordance with GAAP. Inspirato provides a reconciliation of Adjusted Net Loss, Adjusted EBITDA, Adjusted EBTIDA Margin and Free Cash Flow to their respective related GAAP financial measures. Inspirato encourages investors and others to review our business, results of operations, and financial information in its entirety, not to rely on any single financial measure, and to view Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in conjunction with their respective related GAAP financial measures. Adjusted Net Loss. Adjusted Net Loss is a non-GAAP financial measure that Inspirato defines as net income (loss) and comprehensive income (loss) less fair value gains and losses on financial instruments and asset impairments. The above items are excluded from Inspirato's Adjusted Net Loss measure because management believes that these costs and expenses are not indicative of core operating performance and do not reflect the underlying economics of Inspirato's business. Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that Inspirato defines as net income (loss) and comprehensive income (loss) less interest, income taxes, depreciation and amortization, equity-based compensation expense, and fair value gains and losses on financial instruments. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of total revenue for the same period. The above items are excluded from Inspirato's Adjusted EBITDA measure because management believes that these costs and expenses are not indicative of core operating performance and do not reflect the underlying economics of Inspirato's business. Free Cash Flow. Inspirato defines Free Cash Flow as net cash provided by (used in) operating activities less purchases of property and equipment and development of internal-use software. Inspirato believes that Free Cash Flow is a meaningful indicator of liquidity that provides information to management and investors about the amount of cash generated from operations, after purchases of property and equipment and development of internal-use software, that can be used for strategic initiatives, if any. See below for reconciliations of non-GAAP financial measures. Key Business and Other Operating Metrics Inspirato uses a number of operating and financial metrics, including the following key business metrics, to evaluate its business, measure its performance, identify trends affecting its business, formulate financial projections and business plans, and make strategic decisions. Inspirato regularly reviews and may adjust processes for calculating its internal metrics to improve their accuracy. Active Subscriptions. Inspirato uses Active Subscriptions to assess the adoption of its subscription offerings, which is a key factor in assessing penetration of the market in which it operates and a key driver of revenue. Inspirato defines Active Subscriptions as subscriptions as of the measurement date that are paid in full, as well as those for which Inspirato expects payment for renewal. Average Daily Rates ("ADR") and Total Occupancy. Inspirato defines ADR as the total paid travel revenue, divided by total paid nights, which includes Inspirato for Good ("IFG") and Inspirato for Business ("IFB"), in both leased residences or hotel rooms and suites. ADR does not include Pass nights utilized. Occupancy is defined as all paid, Pass, IFG, IFB, employee and complimentary nights in all at-risk properties divided by the total number of at-risk nights available. Net-rate hotel partners are excluded from Hotel Occupancy as these are dependent on the hotel having capacity for Inspirato requests.   Inspirato Incorporated Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (in thousands, except per share data)     Three Months Ended March 31,    2024      2023 Revenue $ 80,245     $ 91,700   Cost of revenue (including depreciation of $1,289 in 2024 and $927 in 2023)   48,524       60,056