Soho House & Co Inc (SHCO, Financial) released its 8-K filing on March 15, 2024, revealing a mixed financial performance for the fourth quarter and fiscal year ended December 31, 2023. The company, known for its membership platform of physical and digital spaces that connects a vibrant, diverse group of members worldwide, reported a significant increase in total revenue and membership growth, while also facing a substantial net loss.
Financial Performance and Challenges
The fiscal year 2023 saw SHCO's total revenues increase by 16.8% year-over-year to $1,135.9 million, driven by a 32.5% increase in membership revenues, which now account for 31.8% of total revenues. The company's Adjusted EBITDA also saw a substantial increase, more than doubling from the previous year to $128.0 million. However, SHCO reported a net loss of $118.0 million, or $0.60 per share, which included a $47 million impairment charge predominantly related to Soho Works North America.
The company's performance is significant as it demonstrates its ability to grow its membership base and revenues in the competitive Travel & Leisure industry. However, the reported net loss, including the impairment charge, indicates challenges in certain segments of the business, particularly in North America. The impairment charge suggests that the company may need to reassess the value of its assets and potentially restructure its operations to improve profitability.
Membership and Operational Highlights
SHCO's membership base continued to expand, with total members growing to 259,884, a 14.6% increase year-over-year. Soho House members alone grew by 19.7% year-over-year. The company also reported a record waitlist of approximately 99,000, indicating strong demand for its membership offerings. The growth in membership is crucial as it provides a recurring revenue stream and enhances the company's network effect, which is vital for its business model.
Operational excellence was also a focus for SHCO, with the company achieving a 4% year-over-year growth in Revenue Per Available Room (RevPAR) on a like-for-like basis. This growth in RevPAR, a key metric in the hospitality industry, reflects the company's ability to drive accommodations performance and improve profitability.
Financial Statements Summary
Key details from SHCO's financial statements include a year-over-year increase in In-House revenues to $482.1 million and a House-Level Contribution margin improvement to 27% from 22%. The company ended the fiscal year with net debt of $638.4 million, an increase from the previous year's $531.7 million.
SHCO's CEO, Andrew Carnie, commented on the results, stating,
The strong results we delivered in 2023 demonstrate our continued focus on driving a better member experience and significant progress on improving profitability."Carnie also expressed excitement for the upcoming year and gratitude towards the company's teams and members.
Looking Ahead
For fiscal 2024, SHCO provided guidance anticipating further growth in membership and revenues, with membership revenues expected to be between $405 million and $415 million and total revenues projected to be between $1,200 million and $1,250 million. Adjusted EBITDA is forecasted to be between $155 million and $165 million.
Value investors and potential GuruFocus.com members may find SHCO's growth in membership and revenues appealing, despite the net losses incurred. The company's ability to expand its global presence and enhance member experience could present opportunities for long-term value creation. However, investors should also consider the challenges highlighted by the impairment charge and the increase in net debt when evaluating the company's financial health and future prospects.
For more detailed information and to join the conference call discussing these results, please visit www.sohohouseco.com.
About Soho House & Co: Soho House & Co (SHCO, Financial) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the Soho House & Co platform to work, socialize, connect, create and flourish all over the world. For more information, please visit www.sohohouseco.com.
Explore the complete 8-K earnings release (here) from Soho House & Co Inc for further details.
